Delta Lloyd in Belgium has been convicted to pay a € 12,500 fine for misleading publicity and unfair business practices concerning a risky Branch-23 (unit-linked) product that was developed by Spaar Select (that went bankrupt) and was commercialised together with Kempar and (72,32 EUR, 0,00%) (later acquired by Delta Lloyd). Potential total claim could run up to € 65m as some 260 families have filed a claim for an average amount of € 250,000 per claim.
Final judgement and determination of claims compensation (if any) is expected for February 2012 but Delta Lloyd has still possibility to appeal which it will most likely do. Potential claim, if assigned, is not entirely to be born by Delta Lloyd, but Delta Lloyd has the deepest pockets. We see no reason to change our investment case since it is very likely that proceedings will be postponed for a very long period following likely appeal by Delta Lloyd.
We maintain our Accumulate rating and € 20 target price.