The long-awaited report into the near collapse of Equitable Life by Lord Penrose will shortly be released.
Equitable recently released its interim half-year accounts to the end of June 2003. In the documents, Equitable stated the likelihood of further policyholder claims, following the Penrose report. It also believes claims may arise from other areas but did not say what they were.
Our View
The news from Equitable does not appear to bode well for policyholders. The Penrose report has been over two years in coming and there now looks to be even more avenues for claims to be made.
Equitable maintains reserves for claims but according to the released accounts, that fund has fallen. New claims, not already accounted for could cause problems and policyholders need to take advice.
Equitable also mentioned that income for pensioners with with profits annuities should expect a drop in their income. The reasoning was a fall in inflation and investment returns. Whilst inflation affects us all, the fact that at least 95% of Equitable's with profits fund is in cash and fixed interest investments will have an impact on performance.
Basically, whilst the equity markets are on the up it will have the opposite effect on cash and fixed interest investments.
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