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Daily Insurance Industry News
Tuesday 21st of May 2019
December 21, 2007

Equitable Life for sale

by Gill Montia

Story link: Equitable Life for sale

Equitable Life, the mutual assurance company that collapsed in 2000 after being unable to pay its policyholders’ bonuses, is putting itself up for sale.

The company, which is UK’s oldest mutual life assurer, was worth around £26 billion before its demise but today its assets stand at around £7 billion and policyholders number approximately 500,000.

The company has already received a number of approaches and is looking to agree a sale during 2008.

According to Vanni Treves, non-executive chairman of Equitable, the company is not being forced into a sale but decided to put itself on the market after “half-a-dozen” informal approaches were made.

Equitable’s remaining investors are policyholders saving for retirement through with-profits, endowment or group pension schemes and Mr Treves points out that: “What we have the possibility of doing now, which we never had before, is balancing the benefits to policyholders of selling what remains against the benefits of just carrying on for the next 30 to 35 years.”

The assurer will be in a position to provide full information to potential bidders in the New Year and offers for all or part of the business will be considered.

In the past five years there has been a surge in the number of companies interested in acquiring closed pension funds and Equitable is well placed as a takeover target, having made two major disposals during this year.

By pooling a number of closed funds, specialist insurers such as the fast growing Resolution, are obtaining better returns by reinvesting the assets.

In the case of Equitable Life, Legal & General, Prudential and Paternoster are possible contenders in the bidding process.

 

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