ELAS For Sale - Media Coverage

Equitable transfer deal boosts options

Financial Times, by David BlackwellPublished: January 3 2008

The transfer of £1.7bn ($3.4bn) worth of with-profits annuities to Prudential has paved the way for Equitable Life to sell its £7bn ($13.8bn) with-profits fund.

However, the troubled mutual is keeping all of its options open. It said on Wednesday that the completion of the Prudential transaction left it “able to focus fully on examining strategic options for the remainder of the business’’. The board was determined to “achieve the best possible outcome for all policy holders”.

The Prudential deal follows the transfer in February last year of £4.6bn of non-profit annuities to Canada Life. It had left Britain’s oldest mutual life insurer with “the financial strength and stability to continue to run off its policies securely should it choose that option”.
Meanwhile, it was expected soon to finish the compilation of a detailed specification of the remainder of its business. The so-called “data book” of the fund’s assets and liabilities would be available to any party interested in buying all or part of the remainder of the business.

There are 500,000 people with an interest in the with-profit fund. Selling or carving up the fund would, in effect, mean the end of the Equitable name, which was tarnished after the mutual came close to collapse in 2000, inflicting billions of pounds worth of losses on more than a million policy holders. The completion of the data book will mark the final stage of the restructuring of Equitable overseen by Vanni Treves, chairman, and Charles Thomson, chief executive.

“Whether we will run the society off or pass it to someone who can offer our policy holders something better, 2008 will decide the future of Equitable Life,” Mr Treves said.

“The success of the transactions completed in 2007 enables Equitable Life to face the future from a position of strength.”

EQUITABLE PLANS FOR A SPRING SALE AUCTION: Treves has had informal approaches

Daily Express, by Andrew Johnson 22nd December 2007

EQUITABLE LIFE, the insurer that almost collapsed in 2000, is putting itself up for sale in a move that could end its 245-year history.

Chairman Vanni Treves said yesterday that Britain’s oldest mutual had begun preparations for an auction in spring next year.

He said the firm had received “half a dozen” informal approaches and was putting toge–ther a data room of information.

The company has 500,000 policyholders and £7billion in assets. Possible buyers include Standard Life and Legal & General.

It is believed there are individuals looking to get into the closed life fund business who could “club together” to mount a bid.

The move comes after seven years in which Treves has taken the stricken company, once worth £26billion, and brought it back to financial stability.

A key part of the process was completed earlier this month when it transferred £1.7billion worth of pension annuities to insurance group Prudential, leaving a simpler business of greater appeal to buyers.

The Pru was not seen as a bidder. “I guess it would have had a look at the whole company when doing the pensions deal,” said one analyst. He added closed life fund consolidator Pearl might be out of the running because it would be busy integrating its acquisition, Resolution.

Treves was hoping to get an auction going to ensure a good price. But it is understood the company is stable enough to operate as a going concern and can run off its closed funds itself as policies mature.

Equitable Life to put itself up for sale

Daily Telegraph, by Yvette Essen, 22/12/2007

Equitable Life, the insurance mutual which sensationally collapsed in 2000, has decided to put itself up for sale after receiving several approaches.

The UK's oldest mutual life assurer, which was worth £26bn at its prime but today has just over £7bn of assets and around 500,000 policyholders, is looking to agree a sale next year.

Vanni Treves, non-executive chairman of Equitable, told The Daily Telegraph in an exclusive interview that it wants to find a buyer.

"As we speak, we are putting together a data room full of information," he said. "People interested in finding out everything about Equitable Life on the basis of confidentiality will be able to do so. They need that information in order to prepare a bid for all or part of the society."

Accountants Deloitte, lawyers Lovells and boutique investment bank Lexicon, which are advising Equitable, are gathering information for potential bidders. The data-room is expected to be opened early next year.

Equitable's remaining policyholders are saving for retirement through with-profits, endowment or group pension schemes.

Mr Treves said the company did not have to sell, but had decided to put itself up for auction after receiving "half a dozen" informal approaches.

"What we have the possibility of doing now, which we never had before, is balancing the benefits to policyholders of selling what remains against the benefits of just carrying on for the next 30 to 35 years.

"There is a real choice for the board and policyholders. We hope that we will be in a position to invite bids by the early part of next year."

The 67-year-old said Equitable expects to receive bids in the spring and if it does not agree a satisfactory deal, it will instead go into run-off. He explained there was a sea-change taking place with closed pension funds recently becoming attractive investments and that Equitable was more of a takeover target after making two major disposals this year.

"In this respect, we have been lucky as closed funds are very attractive to all kinds of organisations that did not exist five years ago. Now the society is a less complicated organisation, I think we will be even more attractive."

A single buyer for Equitable, which crashed after being unable to pay its policyholders' bonuses and having to close to new business, could emerge. It is thought that a consortium of smaller companies may also look to buy the business, possibly backed by private equity firms.

Buying closed pension schemes has become increasingly popular, with specialist insurers pooling together a number of "zombie funds" with the aim of obtaining better investment returns by reinvesting the assets. Resolution Group demonstrated the value zombie fund managers can create when it became the subject of a fierce takeover battle, eventually agreeing last month to be taken over by rival Pearl Group for £5bn.

Potential buyers for Equitable are thought to include buy-out specialists, such as Legal & General, Prudential and Paternoster. A sale could be agreed next year, but may take 18 to 24 months to complete as it would require approval from the company's board, policyholders, the Financial Services Authority, the High Court and an independent expert.

Mutuals could be Equitable bidders

Telegraph

"Building societies and other mutual insurers could emerge as potential bidders for Equitable Life, the UK's oldest mutual life assurer that has just put itself up for sale.

Shaun Tarbuck, chief executive of the Association of Mutual Insurers......... said that should a building society or mutual insurer look to buy Equitable, policyholders of both parties stood to maintain their ownership rights. He added research had shown that, on average, policyholders made more from with-profits bonuses when their policies matured than if they had accepted a windfall payout when their society demutualised......

It had previously been thought that specialist insurers, such as Prudential, Legal & General and Paternoster, would be the most likely bidders for Equitable's assets. Its 500,000 policyholders are saving towards retirement through with-profits, endowment, or group pension schemes....