Aegon, the Dutch insurance giant, announced a €1bn share sale as it revealed its fourth consecutive quarterly loss yesterday, saying it would use the cash to partly repay the €3bn (£2.5bn) of state aid received at the height of the financial crisis last year.
The group – Europe's sixth-largest insurer in terms of balance sheet size – said it would save at least €370m by making the payment before 1 December. Aegon plans to issue new shares representing up to 10 per cent of its existing share capital as part of a process which began yesterday. Chief executive, Alex Wynaendts, said the share sale was a "first step towards the goal of full repayment" of state aid. "It has been our intention to repay the €3bn to the Dutch government at the earliest opportunity, provided it is both feasible and responsible to do so," he said.
KBC Securities analyst Dirk Peeters questioned the move, wondering why the group needed to raise the money given its excess cash position. "It is somewhat strange that Aegon is raising €1bn to [partly repay the state] when Aegon's excess capital position at the end of June was €3.5bn," he explained.
The ratings agency Standard & Poor's said its ratings and outlook on the main holding company and its core subsidiaries were unaffected by the move. "Execution of Aegon's de-risking and capital preservation initiatives has been ahead of schedule, supporting its capital adequacy, while the equity issuance will improve capital quality," S&P said in a statement.
News of the share sale was accompanied by the revelation that the group had fallen to a net loss of €161m in the second quarter, thanks in part to a €385m loss on the sale of its Taiwan life insurance operations. The figures were a surprise, with analysts anticipating €9m in profits. Aegon recorded a €276m profit in the same period last year.
The group, which said it will not be paying an interim dividend, posted €404m in underlying earnings before tax, compared to market expectations of €531m, while impairments, or bad debts, around half of which were connected to the slowdown in the depressed US housing market, came in at €393m.