Prudential, one of the biggest UK life assurers, was on Thursday night forced to deny that it was planning an imminent rights issue, as worries about the global economy spread to the plight of ­insurers.

Shares in the Pru fell almost 20 per cent to 297¾p on concerns that it might need to raise capital - concerns initially sparked by a note from Goldman Sachs (NYSE: GS - News) , one of its corporate brokers.

The Pru said: "We have no intention of doing a rights issue. Our capital position is extremely strong."

People familiar with the situation insisted that the Pru had had no high-level contact with the Financial Services Authority, whose door is open to insurers that are struggling to meet the regulator's capital requirements.

The Pru is expected to reassure investors when it reports its third-quarter sales on Tuesday.

It said in August that at June 30 it had a £1.4bn surplus under European capital rules.

With market movements, it is thought this might have been reduced to about £1.2bn as at September 30.

With protection in place against further declines, it would take a 30-40 per cent fall in the group's share price since September 30 to weaken the Pru's solvency materially.

The life assurer is seen as a potential acquirer of the Asian assets of American International Group, the part-nationalised US insurer, and some observers suggested that worries about funding any deals could also be weighing on investors.

Shareholders are still smarting from the Pru's £1bn rights issue in 2004, which ultimately cost Jonathan Bloomer, then chief executive, his job.

One investor said that if the Pru raised additional equity then it would be "walk-the-plank time for the board", after it had rejected calls for a break-up.

Shares in Old Mutual also fell almost 22 per cent on concerns that further equity market falls would result in more losses in its troubled US life business.

Shares in Aviva slipped 10 per cent after Goldman Sachs said the insurer's ability to pay future dividends could be in doubt.

Shares in insurers have been hit hard by the sell-off in equities. But life assurers also have large holdings of corporate bonds. With concern about the global economy intensifying, investors are worried that life assurers' corporate bond portfolios will be hit by defaults.

Roman Cizdyn, analyst at Blue Oar Securities, said: "The whole thing is about if we go into economic recession, corporate bonds blow up, capital is going to be erased, dividends are going to be cut and we are going to have rights issues. That is the thesis."

The FSA, the UK regulator, has moved to ease some of the capital requirements on insurers amid sharp falls in stock and bond markets.