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

Media Stories: 03/06/2006 - Guardian appraises sale prospects.

Equitable stokes the final fire sale

Rupert Jones in the Guardian 3rd June, 2006

Investors should not raise their hopes yet, as obstacles remain in the laying of a 244-year-old ghost, writes Rupert Jones

As Standard Life prepares for life as a stock market company, fellow mutual insurer Equitable Life appears to be getting ready to bring down the shutters on more than two centuries of glorious and inglorious history.

In what has all the hallmarks of a multibillion pound closing down sale, the scandal-hit insurer has been selling off the family silver. Last month, it offloaded a £4.6bn chunk of its empire.

That record-breaking deal - which saw the company announce it was transferring 130,000 non-profit pension annuities (policies that provide a guaranteed income) to Canada Life - has been widely heralded as paving the way for the possible break-up of the insurer. It removes a major obstacle in the path of the really big deal still to be done: the sale of Equitable's £10bn closed with-profits fund, in which 600,000 investors and pension scheme members still have money tied up. Several companies have been snapping up closed life insurance funds, and Equitable's directors have already received expressions of interest.

So, after 244 years of serving the great and the good - latterly becoming a byword for scandalous financial ineptitude - is the endgame approaching for the world's oldest mutual insurer?

As members who had rolled up for the company's annual meeting a fortnight ago chatted over tea and biscuits, some wondered aloud whether this might be the last AGM. But all the signs are that this saga has a few more chapters left in it.

Equitable Life's problems are well-documented. It was entrusted with more than £30bn of investors' cash, but an explosive chain of events led to it having to shut its doors and make savage cuts to people's investments in order to stay afloat.

In truth, the great Equitable sell-off began back in 2001, when its fund management arm, administration systems and sales force were bought by the Halifax for £750m, but effectively had to be put on ice while the insurer set about making its finances more stable.

During 2004 and 2005, the company auctioned off scores of valuable items ranging from paintings to decanters, raising a total of around £1m. Its most prized historic possession, a Gainsborough portrait of Sir Charles Gould, president of the insurer from 1773 until 1806, sold for £624,000.

Paul Braithwaite of Equitable Members Action Group (Emag) says it seems to be a case of "everything must go" at the insurer. "They are literally ripping up the decks."

So what exactly is left? Aside from the with-profits fund, not a lot. Equitable rents part of an office in London and premises in Buckinghamshire. It employs just 26 staff, a far cry from the 2,000 or so in its heyday.

Then, of course, there is the Equitable Life name - a household name, though for all the wrong reasons. "I'm afraid it [the name] is worthless," says Braithwaite. "It is synonymous with disaster and the exploitation of innocent investors."

In terms of what happens now, offloading the annuities makes it much more likely that someone will want to acquire the with-profits fund, but Equitable's directors don't want members to get their hopes up. There are a number of obstacles to a deal. It would need to be a win-win for both parties. "Someone isn't going to take it over for charitable reasons. How are they going to make money and also make it better for policyholders?" asks one insurance expert.

The board is likely to look most favourably on a potential buyer who is able to give some investment freedom to the fund. Just 5% of policyholders' money is invested in equities, which means the prospects for future investment growth are very limited.

Finally, a deal would require the approval of members, who are the owners of the fund - and they are a formidable and unpredictable lot.

Even if a sale of the fund cannot be achieved, the fact that Equitable's members are predominantly in the autumn of their lives might lead some to imagine the insurer has only got a few years of life left in it anyway. However, a fair number of younger people signed up with the company during the late 1990s. Many will have jumped ship since then, but in theory it could be decades before the last Equitable Life policyholder reaches retirement age and takes their pension benefits.