Aegon cash call fears grow as capital shrinks

FEARS of a fresh rights issue overshadowed a consensus-beating second quarter performance from Dutch insurer Aegon yesterday, after the firm said its capital buffer had fallen.

Shares in Aegon fell 3.5 per cent to €4.37 (£3.60) as the life and pensions firm said tougher requirements from ratings agency Standard & Poor’s meant its reserve capital declined by €700m to €3bn. The shift means bailed-out Aegon will have to tap investors for a cash call if it decides to repay €2bn in state aid and a €1bn penalty this year.

Albert Ploegh, an analyst at ING, told City A.M.: “The question is how badly this derails the process. The market thinks the likelihood of a capital raising has increased.”

The news cast a gloom over otherwise strong three-month numbers. Aegon swung back to a net gain of €413m against a loss of €161m the year before, topping expectations, driven by growing pension sales and lower impairments on investments. Core pre-tax earnings were up 26 per cent year-on-year to €522m.

Chief executive Alex Wynaendts said he expected to receive the all-clear from the European Commission on plans to repay state aid soon.