28 May '03 - A personal impression of the Equitable Life AGM, By Paul Braithwaite

I was at Wembley. For six hours. The condition of my attendance there, as EMAG's observer, was my silence. I've been at the previous four ELAS AGMs. This one had about 300 members present. Well down on the last two years. But then, so is membership.

The 11 board members, with VT on an elevated stool, looked unfortunately like his mute puppets. Only three, other than CT, spoke.

Finally, we know there are 294,000 voting members currently. Just about 10% exercised their voting prerogative. About the same percentage as in the last three years. I'm tempted to say that members get what they deserve. It is thoroughly disheartening.

The remuneration vote may well be close. I can't see that Vanni can exercise ANY proxies as it includes his own package.

I remain confident that EMAG's Rodney Allen will have received a very high mandated vote, for an independent.

We learned some new info: A further £1.5bn has left in the first quarter of 2003 (under half having paid an MVA), taking the WP down to £11.5bn. So, by year end 2003 we'll be a sub £10bn WP fund. I wonder whether Sir Philip Otton's salary benchmarking consultants will reflect that in their recommendations?

An annuitant volunteered that it is wasteful to send him a letter every month to say his monthly DD has been paid. He points out that other providers don't and the board could save about £6, times the number of annuitants in a year. How VERY sensible.

Contrast it with the usual opulent OTT, MASSIVE stage set. The two TV cameras. The 50 or so stewarding staff. The dozen TV monitors and autocue playbacks in front of all directors. The conspicuous waste. One would have had much more respect for John Major's soapbox, under the circumstances.

I've read that the media "hook" has been that, as the Society got out of equities, the remunerations were warranted.

Talk about making a virtue out of a necessity!

As I recall, Prof Blake reported May 8th 2002 that the Society having 15% in equities was FAR too risky and that the GIR liability dictated that ELAS must get totally out of equities. CT rubbished him at the time. But I'd bet the FSA REQUIRED the reserving for the GIRs. So, not some bold decision at all - since CT's declared strategy in April was to get back into equities!

I observed today the insinuation that, with 80% plus in bonds, we're now totally safe. Not so: As Ned Cazalet has pointed out, if interest rates rise we are in more trouble. Making 4.8% when 80% of the fund has a 3.5% GIR leaves precious little for overheads.

Two alarm bells that I picked up, thus far not covered in press reports: CT repeatedly said: "We still have substantial uncertainty over provisions."
And: "Costs are still exceptionally high."

Provisions rose, for the same five broad unchanged categories, from £627m to £900m (whilst WP fell from £19bn to £13bn). I'd call that unstable. And those provisions are falling on fewer and fewer shoulders - mainly WP annuitants.

For three AGMs now we've heard that costs are far too high. Not only are the board not getting on top of them but speaker after speaker after speaker denigrated the appalling lack of quality of admin.

The star speakers IMHO were: Charted Accountant Julian Robins - who went first and launched a blistering, comprehensive attack. EMAG's Tom Lake for challenging the board to publish the Society's comprehensive equivalent version of the Burgess Hodgson report and NOT wait for it to be revealed (or not) in Penrose. Nicolas Bellord for going full-frontal on fraudulent misrepresentation. Chris Carnaghan for compelling CT to admit that the Society HAS been insisting of gagging orders (surprise, surprise). David Gordon for clearly stating that his perspicacity reveals that 10% of his 30% annuity cut is equivalent to the maturity value adjuster of 10% that others have suffered since July 2002, despite his annuity having been taken out in 1991. Gordon said his trust in the board, present last year, has now totally gone.

And candidate Rodney Allen for imploring the board to get behind EMAG in trying to get MPs on side in the quest for Government compensation.

By my count just 26 questions were taken before adjournment at 2.00pm. The meeting lasted until about 4.30pm

Vanni has to been admired for his professional patience and as a consumate performer. Paul Scofield couldn't have done it better.

Of course, we've seen it all before. Sadly, we've learned to our cost that any confidence engendered is unwarranted.

Paul B
28th May, 2003