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Equitable Life chief plans to pay out millions to policyholders

Equitable Life is preparing to pay out hundreds of millions of pounds to policyholders, paving the way for a ­potential sale nearly 18 years after it closed to new business.
Chris Wiscarson, the mutual insurer’s chief executive, has drawn up plans to pay some 300,000 policyholders a one-off sum of several thousand pounds each.
The polices are thought to be worth around ?15,000 on average.
A circular will be sent to Equitable Life members outlining the proposed payouts before its annual meeting, in plans first reported by The Sunday Times. This could clear the way for a ­restructuring and potential sale.
Goldman Sachs has been appointed to review options and potentially find a buyer.
Equitable Life nearly collapsed in 2000 after hundreds of thousands of policyholders lost money after the ­insurer failed to meet ambitious financial promises. A House of Lords ruling that year resulted in it closing to new customers.
The UK Government eventually had to shell out ?1.5bn in compensation to customers left out of pocket.
Equitable Life chief plans to pay out millions to policyholders

Equitable Life is planning to pay out hundreds of millions of pounds

Credit:
Dominic Lipinski/PA Wire
Equitable Life is the world’s oldest life insurer and at its peak had 1.5 million policyholders who trusted it with ?26bn. Mr Wiscarson has been in charge for the last nine years overseeing the gradual winding down of the society.
Any sale of the 256-year-old business could prove legally complex and entail a long court process to deal with any surplus cash to ensure policyholders are treated fairly. Parts of the business have been offloaded to other insurers in recent years.
In 2015 Canada Life bought an ?875m annuity book with some 31,000 policies.
But it still has more than ?6bn in ­assets. Equitable Life’s problems surfaced in 1999 when it lost a court case over forcing policyholders to accept bonus cuts.
The issues stemmed from so-called guaranteed annuity rate policies that the company sold to customers from the Fifties.
These promised to pay decent rates of income, but in the Nineties they ­became too expensive to honour owing to falls in interest rates and inflation.
This led to cuts in bonuses and by July 2000 the insurer was unable to meet its obligations and was put up for sale. However, it failed to find a buyer.
After a series of investigations George Osborne, chancellor at the time, announced the ?1.5bn compensation pot in 2010.
 
 
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