Embattled mutual insurer Equitable Life has been bought by Reliance Life, part of the Life Company Consolidation Group.
Equitable Life, which has been in run-off since closing to new business in 2000, was still technically owned by its more than 300,000 remaining policyholders, most of whom hold with-profits funds.
The business came close to closing altogether 18 years ago after making poor provision for liabilities.
Equitable Life will shut down in 2019 with the closure of the with-profits fund, with all polices transferring to Reliance Life.
In a statement, Equitable Life says it expects to increase the current 35 per cent capital distribution on with-profits policies to between 60 per cent and 70 per cent.
For that to happen, policyholders will have to vote in favour of removing policy guarantees as well as on the deal to transfer to Reliance Life.
Voting is expected to take place in the middle of next year with the policy transfer following later in 2019.
Hargreaves Lansdown says £1.8bn will be added to 261,000 policies.
Equitable Life chief executive Chris Wiscarson says: “When the Equitable closed to new business in 2000, it was inevitable that at some point the Society had to come to an end. The benefit of bringing Equitable to an end sooner rather than later is that we can capture for with-profits policyholders the near record high values of the investments backing their policies.”
Hargreaves Lansdown chartered financial planner Danny Cox adds: “This is a wonderful windfall for Equitable Life policyholders, who now stand to pick up a nice bonus as the With Profits fund and Equitable Life shuts up shop for good. There’s still a bit of a wait, but the uplift is so substantial it’s well worth hanging on for.”