Delta Lloyd Drops Plan to Sell Belgian Bank as Talks Failed

Dutch insurer Delta Lloyd NV fell the most in more than a year after it abandoned plans to sell its Belgian bank.

The bank will stay part of Delta Lloyd after talks with a would-be buyer fell through on terms including the price, the insurer said in a statement. It didn’t identify the party that had been interested in the unit, which is profitable.

Shares fell as much as 4.6 percent, the most since Aug. 7, 2013, and were down 3.1 percent to 18.49 euros at 10:20 a.m. in Amsterdam.

Delta Lloyd, the second-biggest provider of group pensions in the Netherlands, put the Belgian unit up for sale a year ago to boost its financial buffers. Moelis & Co. was hired to advise on the disposal, it said at the time. The firm in November 2013 linked an increase of its solvency ratio to prospects of paying out a larger portion of dividends in cash.

Delta Lloyd offers shareholders who agree to receive dividends in stock at a 4 percent premium. The insurer in November 2013 said it would gradually reduce that premium once the group solvency ratio exceeds 200 percent for two consecutive quarters. The measure stood at 207 percent in the second quarter.

The sale of the Belgian bank would have added about 10 percentage points to the solvency ratio, Cor Kluis, an analyst at Rabobank Groep in the Dutch city of Utrecht, said in a note today. Excluding that boost, and taking into account market developments in the third quarter, including a drop in equities, the measure has probably retreated toward 200 percent.

Delta Lloyd Bank Belgium, which traces its roots to a wealth management firm founded in 1747, had 6.74 billion euros ($8.59 billion) in assets and reported a profit of 15.8 million euros last year, according to its annual report.

In August, the insurer said it was in talks with an unnamed party on the possible sale and that it expected an outcome before the end of the year.

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