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Equitable Life decides against sale of business

Equitable Life has decided that a sale of the business would not improve prospects for policyholders and will instead continue to run-off the business under existing management.

As part of the run-off the board of directors will be reduced to keep costs down and the society is currently recruiting a new chief executive to replace Charles Thomson when he steps down in the autumn.

Fred Shedden and Andrew Threadgold are also set to leave the board at the annual general meeting.

Equitable’s excess assets at the end of 2008 were £414m, down 33 per cent from the previous year when they stood at £621m, but they still represent 7 per cent of the with-profits fund.

As a result of poor investment returns, at the end of December the board decreased policy values by 3 per cent for with-profits pension policies and by 2.4 per cent for life assurance policies

Then in March, as a result of continuing poor returns, the board decreased policy values by a further 2 per cent for applicable with-profits pension policies and by 1.6 per cent for life assurance policies to give an overall effect since 1 January 2008 of a 5 per cent reduction in with-profits pension policies and a 4 per cent reduction for life assurance policies.

Until further notice, no interim bonus will be added for either pension policies or life assurance policies.

Equitable Life chairman Vanni Treves says: “The durability of the society’s financial position in the face of the global economic turmoil is clear evidence of the success of the steps we have taken.

“We are also pleased to update our policyholders on our plan to secure the run-off strategy for the future. We will also continue to lobby Government to pay the compensation which policyholders deserve.”

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