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

Documents: 29/09/2005 - ELAS Interims - Burgess Hodgson’s summary

From the Interim Accounts, which can be downloaded at: http://www.equitable.co.uk/content/content_16.asp

“In largely finishing these reviews and making appropriate payments, a significant financial uncertainty relating to the Society’s past has been substantially reduced and the provisions attached to these reviews have been reduced by £90m.”

Some observations on the half-year results obtained from EMAG’s accountant advisers, Burgess-Hodgson:

  • The main feature seems to be an increase in asset values 'Changes in net asset values, valuation assumptions and valuation rates of interest £149m'
  • Reading between the lines this seems to arise from an up valuation of the property portfolio.
  • Equities don't amount to very much and Gilts are specifically excluded.
  • Interest rates fell by about 1/2 over the period increasing gilt values.
  • This seems to have been (rightly) eaten up increasing the future cost of the GIR.
  • As of Dec 2004 gilt returns were about 4.5% of which 1% went in expenses leaving 3.5% to cover the GIR.
  • Absolutely nothing to spare(indeed in 2004 there was a shortfall). It now looks as though the parity situation has been achieved, i.e. the Society can just about afford the GIR.
  • The other feature is a reduction in provisions. These seem to relate to the Managed Pension Review & the Rectification Scheme. I guess the write back of provisions for more general mis-selling will come next year.
  • Remaining policyholders are still stuck in the GIR straightjacket. They had no chance of benefiting from the uplift in equity values over the last 2 years. Nor will they in the future.
  • Concentration on the FFA is worrying. There is no provision for terminal bonuses.
  • The number remains open to actuarial juggling.
  • The Office Valuation would be much more reliable. (WP Assets at market value compared to aggregate policy values inc TBs as communicated to PHs)
  • This is a gilt fund with the prospect of some write back of provision in the future (or maybe some more claims).
  • Not an investment for widows & orphans or pensioners.