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Delta Lloyd plans to raise $1.06b in rights offer

Delta Lloyd plans to raise $1.06b in rights offer

AMSTERDAM: Delta Lloyd NV plans to raise as much as 1 billion euros ($1.06 billion) in a rights offer as the Dutch insurer seeks to improve its capital to meet new regulatory standards. The shares dropped.

“We realize this is a very substantial capital raise,” Chief Executive Officer Hans van der Noordaa said in a statement on Monday. “But after executing this plan, Delta Lloyd will be appropriately capitalized and well-positioned for the new regulatory regime.”

Delta Lloyd has been under pressure to reassure investors as the European Union introduces stricter capital requirements for insurers in January under rules known as Solvency II. The company has lost about 60 percent of its market value this year after a first-half loss reported in August fueled speculation that the company would seek a capital increase.

The company will change the way it calculates its solvency, adopting a standard model under Solvency II starting next year and dropping an internal model that was under review by the Dutch central bank. The rights offer and other steps planned by management will raise its solvency ratio to about 175 percent to 180 percent, the company said Monday.

Delta Lloyd fell by as much as 9.5 percent in Amsterdam trading and was down 3.4 percent at 7.23 euros as of 9:57 a.m.

“We saw over the course of 2015 that we were clearly dealing with a highly unstable Solvency II figure based on our internal model,” van der Noordaa said on a conference call with reporters Monday. “That led to a lot of indignation on the market. We’ve concluded that our internal model isn’t yet ready to steer Delta Lloyd in the right direction.”