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

Correspondence: 29/12/2000 - to Messrs J. Sclater and C. Headdon, ELAS

38, Swains Lane
29th December 2000

Messrs J. Sclater and C. Headdon
President and managing Director
The Equitable Life Assurance Society
City Place House
55, Basinghall Street
London EC2V 5DR

Dear Mr. Sclater and Mr. Headdon,

I have been asked by the Committee of EMAG to express our concern about the press reports about disposals of sections of the Equitable's business. While we have no concern about the disposal of the Permanent Insurance Company, which was not core to the Society's main business, nor of the sales force who no longer have their traditional role, we are very concerned to read about proposals for disposal of the investment management function. Although it is not clear from press reports what exactly might be sold, we are concerned that responsibility for managing the main with-profits fund might be contracted out before there has been an opportunity to review the extent to which it may be advisable to switch to cheaper and possibly more beneficial passive investing, rather than the more expensive active style of the past which may not have performed particularly well. (We believe that there should be a thorough and objective review of past investment performance compared with what could have been achieved by passive management where there are indices and tracker packages available on the wholesale market). We are primarily concerned that part of a sale may be a contract to manage the with-profits fund, and this contract might lock in high management fees which would be to the long term detriment of the members. As a subsidiary point we are concerned that the Society's rush to sell this and that may look like a fire sale, and consequently may not raise as much money as a more measured approach.

It is our unanimous view that it is now a matter of the greatest urgency that a new caretaker Board be put in place to review all the available options and to prepare an overall plan - at our meeting with the non-executive directors I referred to a necessary first step in this process being as a "White Paper" which should be available to members. Only in the context of such a plan should disposals of significant assets be undertaken. At the same time, the known existence of the plan would help to restore morale amongst policy-holders and employees.

If the present position is permitted to persist and it turns out that disposals have been made and the required steps to safeguard policy-holders' interest have not been taken, the strength of feeling amongst policy-holders may well lead them to explore the possibility of obtaining legal redress against the members of the responsible Board.

Yours sincerely,


PS. On a purely personal note, I think it would be a pity to sell the Gainsborough - perhaps its sale should be put to the members.