DELTA LLOYD "Our capital position is now solid with the opportunity to improve further capital generation and dividends," Delta Lloyd CEO Hans van der Noordaa said in a statement. "In light of this, we cannot accept this proposal."
He said the bid was only 64 percent of Delta Lloyd's book value as of June 30 and the premium offered was "below market norms for cash transactions of this type and for companies at our stage of recovery".
NN launched its 5.30 euros a share bid on Wednesday saying that Delta Lloyd's boards had declined to meet to discuss an agreed offer.
Delta Lloyd shares, which closed at 4.12 euros before NN's bid was announced, ended at 5.26 euros per share on Thursday.
Investors and Dutch regulators have said they expect the Dutch insurance industry to consolidate, and Delta Lloyd's statement on Friday did not dismiss the possibility of a merger out of hand.
Potential benefits include cost savings from combining operations, lower spending on technology and product development, and benefits of scale and financing, it said.
"Delta Lloyd shareholders are in a position to benefit from the value of these synergies through a number of possible combinations," the company said.
It said NN Group's proposal failed to apportion an adequate share of the value of a merger for Delta Lloyd's shareholders.
While many investors and analysts have said NN's bid looked too low, several thought NN would eventually acquire Delta.
"We hope (management) will fight to get the highest possible price," said one investor.
Delta Lloyd shares have lost more than 60 percent of their value over the past two years, most of it in the summer of 2015, as its low Solvency II deficiency became clear. It restored the ratio to 173 percent by issuing shares and selling assets.
NN Group, by contrast, was spun out of ING Group with a strong solvency ratio of 252 percent according to its last report. Its stock is up more than 15 percent in the same period.
(Reporting by Toby Sterling; editing by David Clarke)
