At its recent AGM Equitable Life's chairman, Vanni Treves said that the company would definitely have gone bust had they not sold off most of their equity holdings last year. Most of the equities were sold when the FTSE 100 stood at 4,800, considerably higher than the lowest point hit.
Mr Treves also covered the subject of legal action against Equitable's former auditors, Ernst & Young. He said that the company intends to pursue legal action and that they have appealed against the recent ruling. This ruling disallowed most of the claims made by Equitable against Ernst & Young but did allow a case to go forward for £500m. The result of the appeal is due next month.
Finally, policyholders at the AGM put a spanner in the works over board member pay increases, forcing the approval of the pay package to be delayed until postal votes were received. Policyholders were annoyed at the large increases in basic salary and bonuses, quite justifiably so, when annuity holders had their income slashed by 20% last year. Equitable maintained that in order to retain quality, highly motivated staff, proper attention had to be paid to remuneration.
Our View
Equitable Life policyholders seem to have had enough of the so-called 'fat cat salary' generation when their own incomes are being slashed. Who can blame them? Only time will tell on both the equity sale front and also the legal action against Ernst & Young.
However, Equitable are still waiting the outcome of the Penrose enquiry into the handling of the company's problems. Equitable may well decide to take action against the Government and regulators but this could take years. It could also bring some policyholders' tempers down a few degrees though.
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