By Bart H. Meijer
AMSTERDAM (Reuters) -Shares of Dutch insurers took a hit on Wednesday as court rulings in a years-long fight over investment-linked products re-opened the prospect of large compensation claims.
In a case against insurer NN Group, a court in the Hague said on Tuesday the company had at various points offered customers insufficient information about the costs linked to its products, striking down a 2017 ruling that had cleared the company of these allegations.
The same court reached identical conclusions for three similar products sold by insurer Aegon, whose Dutch activities were acquired by Dutch peer ASR last year.
NN Group traded down almost 16% at 1230 GMT in Amsterdam, while ASR fell 11% and Aegon shares lost 4%, as NN warned of a possible “material adverse effect” from the interim court ruling.
ING analysts said they estimated NN would need a litigation provision of around 390 million euros ($411 million), while ASR would have a higher exposure at around 488 million euros.
NN Group and other Dutch insurers have been dealing with issues related to these insurance policies, popularly known as “woekerpolissen” for years.
The common theme is that customers were allegedly not informed how much of their premiums went to actual investments, and how much went to cover insurers’ costs.
“This also has impact for the legal cases against other Dutch insurers, who all sold similar unit-linked products at the time,” KBC analysts said in response to the verdict against NN.
“Following the acquisition of Aegon NL, ASR now has 2.4 million of these unit-linked products pending”, they added.
NN said it would appeal against the interim judgment to the Dutch Supreme Court, arguing the district court had misinterpreted “the law and societal views at the time the investment-linked products had been sold”.
Although the interim judgement did not lead to an immediate obligation for NN to compensate customers, the company said the case could ultimately have “substantial” financial consequences, which could not be reliably estimated at this time.
ASR said it would study the judgment and then decide whether to appeal to the Supreme Court. It declined further comment.
Between 2008 and 2010, Dutch insurers collectively paid clients about 3 billion euros in compensation over similar policies, but several consumer groups have since filed suits arguing the compensation was too low.
($1 = 0.9489 euros)
(Reporting by Bart Meijer, Editing by Christina Fincher and Mark Potter)