Halifax buys Equitable for £1bn
The Halifax is buying Equitable Life for £1bn.
It will pay £500m to buy the Equitable's non-profit and unit-linked business, which has an embedded value of approximately £300m.
It will also take over its administration, which will be managed by Clerical Medical, and its sales force, which will be rebranded the Halifax Equitable.
Halifax will then try to achieve a settlement between the Equitable's guaranteed and non-guaranteed annuity policyholders - the cause of the life assurance society's problems.
It will pay £250m unconditionally and a further £250m, depending on whether the Halifax Equitable sales force meets targets for new business, sales and profitability in 2003 and 2004.
The Halifax will have no exposure to the Equitable's with-profits fund, which is closed to new business and remains mutually owned by its policyholders.
Halifax chief executive James Crosby says: "Halifax has structured a transaction which is rewarding to our shareholders and fair to the Equitable's policyholders.
"We now have an unrivalled opportunity to deliver value in the long-term savings market."
The transaction has been welcomed by the Financial Services Authority.
