1. Will ELAS restore my loss of seven months' growth (including interest)?
2. If I take my benefits now will I get my seven months' growth restored?
3. I have just taken my benefits, when will I get my seven months' growth?
There will be no repayment.
4. How much windfall will I get?
There will be no windfalls.
5. What will be the impact of future constraints on investment freedom?
Future returns will be affected by the Society having to take a more cautious investment stance on with-profits business. This will have an impact on future levels of bonus but it is difficult to say exactly how much they will be reduced due to uncertainties in future economic conditions.
If the historic outperformance of equities against fixed-interest stocks was repeated in future, investments returns might be in the order of up to 1 per cent pa lower on average than would have been the case without the realignment.
6. Will my policy suffer from any further drain from GAR liabilities?
The loss of seven months' growth covered our estimate of the cost of giving higher benefits to GAR policies in the future. This estimate is based on realistic assumptions reg arding future economic conditions, future premiums and the number of policyholders who will exercise their GAR option. The failure to sell the business does not affect the estimated cost. The actual cost of the GAR liability could be more or less than the estimated cost depending on a number of factors, most importantly future interest rates. If the final GAR liability exceeds the current best estimate there would need to be a further transfer of value from the non-GAR policyholders.
7. Have you altered your “financial adjustment” on surrenders now?
The Society has increased the financial adjustment made on with profits policy transfers, surrenders and switches to 10% of the current policy value.
This is to reflect further falls in the level of markets since July when the previous adjustment was imposed and to further protect the interests of continuing policyholders. The previous financial adjustment was approximately 5 per cent, on average, of policy values (20 per cent of final bonus).
8. Have final bonus rates been changed?
9. I just bought a policy (after July 20). Can I have my money back?
Policyholders who have effected policies within the preceding 14 days, and are therefore within the statutory cooling-off period, have the option of cancelling their new policies. The Society will extend this period to Dec ember 22, 2000 to allow such policyholders time for proper consideration of the impact of this announcement on them. For other policies, normal transfer or surrender terms apply.
1. Should future premiums be invested in the Equitable?
The Society will not write new business but will continue to accept premiums that policyholders are entitled to make under existing policies and issue new policies arising from options under existing policies (such as the purchase of an annuity at retirement).
Policyholders should consider their individual circumstances when considering whether to pay additional premiums under their existing policies.
Where policyholders require advice as to what action they should take, they should contact their usual Equitable representative at their local branch or telephone 0870 900 8020 (direct).
For general information, policy holders should telephone 0870 600 2272.
2. Will you alter the low charges/terms on my policy?
Charges will need to be reviewed in the light of emerging experience. No immediate changes are planned.
3. Who will provide customer service in future?
At present, the Society's field force and customer service staff can give advice. Our intention is to continue to offer policyholders advice on their policies.
4. Will Equitable now be completely free of the GAR problem?
The loss of seven months' growth covered our estimate of the cost of giving higher benefits to GAR policies in the future. This estimate is based on realistic assumptions regarding future economic conditions, future premiums and the number of policyholders who will exercise their GAR option. The failure to sell the business does not affect the estimated cost.
The actual cost of the GAR liability could be more or less than the estimated cost depending on a number of factors, most importantly future interest rates. If the final GAR liability exceeds the current best estimate there would need to be a further transfer of value from the non-GAR policyholders.
5. Will your with-profits bonus policy change going forward?
As a result of the rebalancing of the investment portfolio by an increased holding of fixed-investment securities, it is lik ely that bonuses for the current and future years are likely to be lower than in previous years (see also answer 5 of Immediate Impact above).
6. Will my unit-linked policy be affected?
No changes are planned. The closure to new business leaves existing unit-linked funds unaffected. Unit linked funds are invested separately from the with profits fund and therefore the investment strategy for these funds will be unchanged as a result of the Society's closure to new business.
7. Will my term assurance/conventional annuity policy be affected?
8. Will you honour the terms of my policy in full?
9. Will Equitable launch its own stakeholder product?
No, we are closed to new business.
10. Will future premiums to my GAR policy still entitle me to further GAR benefits?
Yes, provided the conditions for payment of premiums are met.
1. What will happen to the existing management/ board? When?
Alan Nash has resigned and Chris Headdon the Society's finance director has been appointed as chief executive.
2. What benefits will the existing management/board get?
There are no special arrangements for senior management or directors.
1. Will a vote take place?
As the Society will now remain a mutual, no vote will be necessary.
2. What happens next? When?
We will be writing to policyholders in the next few days to give more information about the impact of closing to new business. The Society will carry out a review of its operations to see what changes are appropriate now that new business is not being written. We shall also be talking to companies who may be interested in purchasing parts of the operation. The objective will be to continue to provide high-quality, low-cost service for members and to take opportunities to realise value from the operation where possible.
3. What are your intentions with regard to future products and service for group schemes?
The Society will no longer accept new business unless it arises from the exercise of options under existing policies.
A full service for existing business will continue.
4. Will customer service suffer?
We aim to maintain our comprehensive customer service.
1. Who bid and how much did they offer?
No formal final bids were received.
2. What information will be sent to German policyholders?
All information given to UK policyholders will be sent in German to German policyholders.
3. What do you intend to do with non-UK business?
The same approach will apply to the non-UK business as applies to the UK operation.