On Thursday night, Prudential (NYSE:PRU), was forced to deny that it was planning an imminent rights issue, as worries about the global economy spread to the plight of insurers as a whole. Shares in PRU fell almost 20% to 297.75p on concerns that it may have to raise capital. Goldman Sachs, one of the company's corporate brokers wrote a note that initially catalysed concerns.
Prudential currently has 0.79% of its Market Cap out on loan (%MCOL), down from 1.9% on August 26. Utilisation is at just 9.5%. Aviva (OTCQB:AIVAF) also saw its shares decline sharply, with its shares slipping 10% after Goldman Sachs said the insurer's ability to pay future dividends could be in doubt. Like PRU, Aviva has a very small percentage MCOL, at 0.5%, down from 1.9% since mid-September.
Legal and General [LGEN.L] has reassured investors that it has enough surplus capital after volatile stock markets and share repurchases deflated its cash cushion by £500m. The company has also called for a re-think on its bank dividend block. L&G has 2.28% MCOL, down from 6% in mid-September, when the insurance group lost 8.3% in the wake of the collapse of Lehman Brothers (LEH).
Standard Life (OTC:SLFPF), Admiral (OTCPK:AMIGF), and Friends Provident (OTC:FRDPY) all lost between 4 - 11%. Standard Life has 0.96% MCOL, Friends Provident 1.5%, and Admiral has 1.3%, with some short covering since July from 3%.