Equitable Life announces stronger financial position
Equitable Life today said its finances were in a stronger position than at any other point since the debacle that brought it to the brink of collapse six years ago.
Announcing its interim results, the mutual said that its decision to offload a £4.6bn (€6.8bn) pension annuity book to Canada Life had greatly reduced a “key risk” to the society.
The deal is set to go through in early 2007, but life expectancy and investment risks have already been passed to Canada Life.
Chairman Vanni Treves said removing these risks had increased confidence with which the board can “assess the strategic options” for the benefit of policyholders. It has already said that it will consider the sale of more parts of the business.
The value of the society’s assets minus liabilities – a key indicator of its solvency – was up by 17% on year-end figures of £669m (€989m) to £786m (€1.2bn), the society announced.
Despite being in a stronger financial position, Equitable Life said it did not expect to increase exposure to equity and property markets due to increased regulatory standards.
As a result, it said that it was to continue to explore strategic options to improve the long-term prospects for policyholders.
Announcing the half-year results, Mr Treves said: “Steady, continuing work on the fundamentals of the business, together with our strategic agreement with Canada Life, have brought us appreciably closer to the financial condition of other closed with-profits funds.”
Equitable Life came close to insolvency in 2000 after it emerged that the society had insufficient funds to pay bonuses guaranteed to some policyholders.
The debacle is the focus of a Parliamentary Ombudsman report due to be released in the autumn and a continuing European investigation.
Mr Treves said the board would continue to assist both inquiries.
