Insurer asked 20 leading insurers to stop lending shares

The UK's biggest insurer Aviva has tried and failed to get other big European insurers to stop lending shares to hedge funds because it leads to short selling, the FT reports.

Aviva believes that short sellers caused a 40% fall in its share price in 48 hours two weeks ago.

"The days when insurers report [results] suddenly become days when everyone is volatile," Philip Scott, finance director told the FT. He said a results days had become "a day for the bears to feed".

Aviva's fund management arm has been considering whether to stop stock lending since last September. But after Aviva’s results and share pice fall, Scott emailed 20 leading European insurers asking for their views on a temporary withdrawal from equity stock lending.

Two of the insurers that responded said they no longer lent equities. The other was not supportive. Mr Scott said he would not now be pursuing the proposal any further.