Rumour has it that Equitable's non-Guaranteed Annuity Rate holders that signed up to the compromise deal, waiving their rights to compensation, may only get 0.5% rather than the expected 4%. The increase would be based on the value of the policy held. Equitable Life is also apparently negotiating to sell around £400m worth of property although they have not confirmed or denied the rumour. The life office is said to be selling the property in order to reinvest the proceeds into cash and bonds, such as corporate bonds and Government Gilts. Whilst Equitable did not comment on these most recent rumours they did confirm that if the right opportunity arose, they would sell property from their £2bn holding. This has been the case over the last few years.
Our View
For non-guaranteed annuity rate holders expecting 4%, this news (if true) will come as a blow. This is especially true because bonus rates have fallen and Equitable policyholders have received less than most over the last few years. In terms of the property sales, this will be a commercial decision. If Equitable feel that the time is right to sell and profits can be made, then they should sell. Holding the proceeds in cash at least will give them a level of stability and the bond holdings should produce rising income to the company. However, we cannot see all of the property being sold as Equitable needs to retain its spread of investments so as to take advantage of any rising market. Search the news archive for previous Equitable Life stories.