EMAG

The independent action group for current and ex Equitable Life policyholders, funded by contributions.

Equitable Members Action Group

Equitable Members Action Group Limited, a company limited by guarantee, number 5471535 registered in the UK
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Correspondence: 07/10/2002 - Letter from Alex Henney, chairman of EMAG to Vanni Treves

Correspondence Archive

38 Swains Lane
London
N6 6QR.

7th October, 2002

Mr. Vanni Treves
Chairman
Equitable Life Assurance Society
c/o Macfarlanes
10 Norwich Street
London EC4.
T: 020 7831 9222
F: 020 7831 9607
vanni.treves@macfarlanes.com

Dear Treves,

On 5th September I wrote as follows to Thomson:

"Article 65 of the Society's Articles of Association states "The Directors shall at such intervals as they deem expedient but at least once every three years…cause an investigation to be made into the financial condition of the Society…by the Actuary…the Directors report to the Members upon the results of the valuation". The Shorter Oxford English Dictionary (3RD Edition) defines the relevant meaning of the word "report" as follows:-

"An account brought by one person to another of some matter specially investigated".

"A formal statement of the results of an investigation, or of any matter on which definite information is required, made by same person or body instructed or required to do so".

While the Directors have made statements, they have not reported in the proper meaning of the word on the investigations made into the financial condition of the Society that led to cuts in policy value of July 2001, April 2002, July 2002. I would be obliged if you would provide the members of the Society with the reports as required by the Articles of Association by publishing them on the website."

I received the following reply from McGarahan on 16 September:

"The investigation under Article 65 is the annual valuation of the Society; published in the returns to the FSA, formerly to the Insurance Directorate. This document is on the Society's website."

The reference to timing in Article 65 is perhaps a feature of the Articles that need modernisation and I assume (I would be grateful if you would confirm this) that the Directors have decided on an annual investigation and valuation by the Actuary. This is mentioned as occurring in the section of the Directors' Report dated 15th April 2002 headed "Valuation and bonus declaration". Article 65 refers to a "Directors' report to members", not one to a regulatory authority and quite distinct from the Accounts prepared under Article 64. The intent of Article 65 has the Actuary reporting to the Board of Directors and then the Directors reporting to the members. Please note that the phrase "Provided that in the valuation of the assets the values thereof be not estimated beyond the market prices [if any] of the same ..." would seem to imply that future income should not be included unless "for reasons to be set out in the Directors' report to the members upon the results of the valuation". The Returns to the FSA include future income. There is nothing in the Directors report to members dated 15th April 2002 on future income. I can find nothing in the Articles of Association which refer to the provision of reports and notices to members in electronic form, and so the provision of a report on the website of the Society does not meet the requirements of the Articles [see Article 69]. I checked with Mr. Roger Allen, Head of the Insurance Division of the FSA. On Friday afternoon 27 September he advised me that solvency returns "are not used for valuing the assets and declaring bonuses. Valuation and bonuses are worked out from first principles. They [i.e. solvency returns] are not a tool in that process".

I repeat my request for the reports to which the members are entitled under Article 65. I would also be obliged if the Society cease trying to fob us off with obviously incorrect and misleading responses to our requests.

Yours sincerely,

ALEX HENNEY

c.c. EMAG Committee, EMAG Website, Board, Journalists