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Aegon shares fall on weak markets, Lehman note

AMSTERDAM: Aegon shares fell around eight percent on Monday on concerns about the Dutch insurer's exposure to weak equity markets and after a Lehman Brothers research note suggested it might have to raise cash.

As major European bourses declined over three percent on worries about a prolonged US-led war in Iraq, Aegon shares were the largest percentage decliner among Dutch blue chips, losing 7.97 percent to 7.04 euros.

"This reaction is what we see most of the time because it costs Aegon money if bourses decline," one trader said.

Analyst Jaap Barendrecht of FBS Bankiers added that the market clearly feared insurers had a greater exposure to equities since peers that also have banking operations, such as ING and Fortis, were hit less.

Further pressure on Aegon's shares came from a note by Lehman Brothers which raised the possibility the Dutch insurer might have to raise cash to support its credit rating.

Lehman said ratings were based on the assumption that equity markets will recover and stabilise this year and therefore downgrades could be expected if a rebound did not materialise.

"This could provoke capital raisings to support high ratings if insurers feel that it is in their best interest to protect their ratings," Lehman said.

"In the longer term Aegon and the UK life insurers could have the greatest potential motivation to raise cash to support their ratings. However, we stress that this remains a remote possibility at present," it said.-Reuters