Shares in embattled British life assurer Britannic Group have slid more than 17 per cent, hit by fresh fears it might be dangerously close to solvency limits as the FTSE-100 headed for a critical level.
"In a conference call with their recent trading update they said...that a critical level (for solvency requirements) would be 3,300 and we're not far away from that," said Mr Roman Cizdyn, analyst at Commerzbank.
The drop in world equity values over the past three years has severely damaged the value of life assurers' equity investment assets, forcing them to save cash and cut costs.
In early afternoon trading Britannic was down 23 pence to 109-1/2 pence. The stock halved in value to 164 pence on January 6th after it issued a profit warning, scrapped its final dividend and deferred taking a decision on bonus payments due to around one million customers in 2003.
Analysts said with solvency limits looming Britannic might have to take further difficult decisions.
"They might have to stop writing new business. They've already decided to spend the dividend this year and not to pay any annual bonus this year," said Mr Cizdyn.
Meanwhile the FTSE 100 index stood at 3,500 points. It has fallen some 500 points or over 12 per cent since January 10th and now looks in danger of extending its losing streak to a record 12 consecutive sessions, reviving worries about solvency levels.