* Shares lost more than a quarter of value in two days
* Capital issue may be needed as new EU rules loom
By Toby Sterling
AMSTERDAM, Aug 12 Shares in Delta Lloyd
fell sharply again on Wednesday because of worries the third
largest Dutch insurer may need to raise capital for the second
time this year, the latest in a rapid series of setbacks.
Delta Lloyd shares were down 8 percent by 1335 GMT and have
lost more than a quarter of their value over the past two
sessions since the insurer surprised the market with far
worse-than-expected guidance on its solvency ratio.
The ratio miss came hard on the heels of the resignation of
the company's chief financial officer and chairman on Aug. 3,
following a clash with regulators over the fallout from an
ethics case dating back to 2012.
Adding to concerns, research group Morningstar said late on
Tuesday that it has placed all the company's funds under review
until it has greater confidence that asset managers are running
them in a professional and ethical manner.
The most pressing worry for investors was the possible need
for new capital, which comes only five months after a 338
million euro ($377 million) share issue in March that management
said was the cure for uncertainty around its solvency ratio.
A spokesman for the insurer declined to comment beyond
remarks made by CEO Hans van der Noordaa on Tuesday that a
second capital increase was "not on the agenda."
However, ABN Amro analyst Jan Willem Knoll said that "a
capital raising is now unavoidable" and estimated that Delta
Lloyd needs 500 million euros.
The EU's new risk capital rules for insurers, known as
Solvency II, are due to take effect on Jan. 1, 2016 and analysts
have been looking for insurers to report strong and stable
The rules are designed to ensure that insurers have
sufficient resources to cover their liabilities.
Despite analyst concerns about the solvency ratio, Delta
Lloyd maintained an interim dividend of 0.42 euros per share.
Delta Lloyd told analysts on Tuesday that its Solvency II
rating fell "slightly below appetite level" -- meaning below the
low end of a 140-180 percent target range. The company itself
had indicated in March it was near the high end of that range.
The drop at Delta Lloyd contrasts with a 22 percentage point
rise in Solvency II capitalisation at Europe's largest insurer,
Allianz, which reported the ratio at 212 percent at
the end of the first half, compared with 191 percent in
Delta Lloyd said the fall came as rising bond yields led to
declines in the value of its fixed income investment portfolio
and also because it is fine-tuning how it will value assets
under Solvency II.
Delta Lloyd is the third largest insurer in the Netherlands
behind Transamerica owner Aegon NV and former ING
insurance arm NN Group. It focuses on life and general
insurance with significant pension, asset management and banking
($1 = 0.8972 euros)
(Editing by Keith Weir)