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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Media Stories: 15/03/2007 - Press Coverage

“Equitable Life to transfer 50,000 policyholders to Pru.

Equitable Life may be entering the final chapter of its 200 years of chequered history after announcing plans today to transfer 50,000 holders of with-profits annuities to Prudential……….

Charles Thomson, chief executive of Equitable Life, said that after the deal to transfer £1.8bn of assets to the Pru "we will be left with a business that is straightforward and that will make it more attractive to other bodies. It is possible it will be bid for as well."

Any bid for the remaining with-profits fund is unlikely before next year as finalising the terms of the transaction with the Pru will take that long to complete. Policyholders must approve the transfer, as must the Financial Services Authority and the High Court.

Mr Thomson believes that the 50,000 holders of with-profits annuities stand a chance of a getting better returns from the Pru's ownership. Under Equitable's ownership, policyholders have been invested in a fund which has just 20% of its assets invested in equities - usually regarded as providing higher investment returns than bonds. With the Pru, policyholders can expect to have more of their funds invested in equities - around 36% - which in turn should help to boost the returns to policyholders……….

The with-profit annuitants have been regarded as the most troubled of the 300,000 Equitable Life policyholders as they are not able to surrender their policies. They may even receive a small bonus once the terms of the transfer are clarified with the Pru at the end of the year.

Assuming the deal goes ahead, Equitable will be left with around 250,000 policyholders………..

Equitable hopes to hold an extraordinary meeting of members in the autumn to win approval for the transfer to the Pru.

Jill Treanor, The Guardian March 15, 2007


Pru 'rescues' Equitable policies Equitable Life

50,000 policyholders now have some good news The Prudential insurance company has come to the rescue of 50,000 policy holders with the stricken Equitable Life pension company.

The Pru is buying up Equitable's with-profits annuity policies.

Under the Pru's control these pension policies should benefit from higher investment returns in the future.

Pensioners with these policies saw their pensions slashed after the Equitable narrowly avoided insolvency in 2000 when it shut to new business.

"The proposal, which will benefit all policyholders, to transfer with-profits annuity policies to Prudential is a further major success arising from the Society's ongoing review of strategic options," said Equitable chairman Vanni Treves.

"The board has been very conscious of the particular difficulties faced by with-profits annuitants and we are pleased to have negotiated this excellent proposition for them," he added.

The deal will require a vote among Equitable policyholders as well as court approval.

The assets of the policies that are being bought amount to £1.8bn. The pensioners - who hold 62,000 with-profit annuity policies between them - have an average age of 74.

They will become part of an actively managed fund, which is one of the largest and strongest in the UK Charles Thomson, Equitable Life

That was because they would benefit from future investment returns as their money would continue to be put into a broad spread of investments, rather than just in bonds.

However, the financial crisis at Equitable forced the company to cut the payouts on these policies by 20% and change the underlying investment strategy so that most of the money was invested in fixed-interest bonds after all.

Equitable said this meant its customers with these policies faced shrinking cash payouts each year.

Now, under the umbrella of the Prudential, the funds can be invested more adventurously with the prospect of greater returns and thus higher and increasing payouts to the policy holders.

"They will become part of an actively managed fund, which is one of the largest and strongest in the UK," said Equitable chief executive Charles Thomson.

"It will also help us in the search for the best strategic solution for the remaining 80% of policyholders," he added.

BBC 15th March 2007