Aegon seeks $1 billion U.S. government funds

AMSTERDAM (Reuters) - Dutch insurer AEGON (AGN.AM)NV said it may buy a small U.S. thrift company to qualify for potentially more than $1 billion in U.S. government support, sending its shares down more than 8 percent.

"This is part of our strategy to ensure Aegon has the strongest capital position possible," said Aegon spokesman Greg Tucker. "If Aegon is eligible, we would seek the minimum range of funding possible."

The range was 1 to 3 percent of its $125 billion in U.S. assets, he said, and the application was for the so-called Troubled Asset Relief Program (TARP) which the U.S. government has used to help banks hit by the credit crisis.

Shares in Aegon, which received 3 billion euros ($3.8 billion) in capital support from the Dutch government last month, fell as much as 8.5 percent and were down 6.6 percent at 3.23 euros by 5:20 a.m. EST. The DJ European insurance index <.SXIP> was down 2 percent.

"I think Aegon has bigger problems than we realize. They have invested precisely there where the problems are: the United States," said asset manager Fred Huibers of Dutch Haags Effectenkantoor, which does not own Aegon shares.

Aegon, which owns U.S. life insurer Transamerica and gets three-quarters of its operating profit from the United States, may buy a thrift company -- possibly Maryland-based Suburban Federal Savings Bank -- to be eligible for the support, Tucker said.

Shares of Dutch rival ING were down 6.6 percent due to concerns over its U.S. investments and operations, but shares of peers like German Allianz and French AXA fell less as their U.S. operations were smaller, Huibers said.

Aegon was not experiencing liquidity problems, and would use the U.S. money for its U.S. operations, Aegon's Tucker said.

Aegon's plans are similar to those of Hartford , a life and property insurer that has been hit by investment losses, and peers Genworth Financial Inc and Lincoln National Corp, who are all planning to buy small savings and loans companies and apply for federal support.

Aegon expected a decision from the U.S. authorities before the end of the year, and any deal to buy a U.S. thrift company would also be concluded within that period, Tucker said.

A deal to buy a thrift might take the form of a capital injection and the company concerned would not be a major institution, said Tucker. Suburban had about $300 million in assets, he said.

(Reporting by Gilbert Kreijger; editing by John Stonestreet and Hans Peters)