Main Aegon Shareholder to Sell 25% of Its Stake

Dutch insurance company Aegon said Sunday its main shareholder will sell a 25% stake in the group, raising about $3.7 billion in a deal to strengthen the insurer’s capital by more than $2 billion.

The transaction will reinforce Aegon at a time when investors and clients have grown increasingly anxious about the industry’s solvency. The deal also will help avoid a credit downgrade of one of the world’s top 10 insurers.

Aegon recently issued its first ever profit warning and, like other insurance companies punished by last year’s economic downturn, Aegon’s shares have plunged, losing more than two-thirds of their value this year.

The group’s chairman, Don Shepard, told a conference call that Aegon’s share price should benefit from this transaction, which will raise the company’s capital by more than 2 billion euros while helping unravel its complicated shareholder structure.

Aegon saw its capital fall about 11% to $13 billion as of June 30 and Standard & Poor’s recently warned it would cut the insurer’s credit rating if it did not boost its capital.

Aegon is the latest insurer to look to its shareholders to provide it with cash. Swiss Zurich Financial and Britain’s Legal & General Group have already announced plans for big capital increases.

The Dutch insurer’s main shareholder, Vereniging Aegon, known as the Association, will sell 350 million of its Aegon common shares, reducing its voting interest in the insurance company to about 33% from 52%.

At least $1.5 billion of the Association’s shares will be sold directly in an offering outside the United States.

The remainder will initially go to Aegon, which will then place these shares in the market in an international offering, including a public offering in the U.S.

Aegon is reported to be in talks to buy a majority stake in Sony Corp’s life insurance unit, and many analysts have been worried that any cash expenditure could jeopardize its standing with the credit agencies.