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Equitable deal sees £1.8bn transferred

Equitable Life says it will consider offloading its entire book of with-profits business in 2008 for the right price after Prudential took on 60,000 of its policyholders in a deal last week.

Pru is taking Equitable Life’s £1.8bn portfolio of with-profits annuities subject to court approval and a vote from Equitable’s policyholders.

The deal is expected to generate £180m in premiums for Prudential and further boost its annuity book.

The portfolio of with-profits annuities would transfer into a sub-fund of Pru’s with-profits fund and policyholder payments would be serviced by Pru.

The Equitable policyholders involved could benefit from Pru’s significantly stronger balance sheet.

Both Pru and Equitable say they do not expect the outstanding legal claim by the Equitable Life Trapped Annuitants against Equitable to scupper the deal, with both parties expecting it to be finalised later this year.

Equitable Life chief executive Charles Thomson says: “If we did another deal, say in 2008, then it is likely to be for all the rest of the business. The chances of there being a worthwhile deal to do are reasonably high.”

Anand Associates financial architect James Brooke says: “Prudential is financially strong and Equitable isn’t, so if the money is managed by Pru, they could invest more in equities and other assets which will give a better return.”

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