Equitable Life is to transfer £4.62 billion of non-profit pension annuities to Canada Life, which is thought to affect around 130,000 policies. The transfer is designed to limit longevity risk (the fact that people are living longer), with the mutual's beleagured with-profits policyholders carrying any unexpected future increases in life expectancy.
Equitable Life believes that doing this ˜removes most risks, improving the financial stability of the group and reducing capital requirements, which would improve long-term prospects for policyholders". The transfer will not affect payments made to policyholders. Initially, Equitable Life will continue to make the payments, with Canada Life ˜assuming the obligations" through a reassurance arrangement. Following completion of a court process, the policies will transfer to Canada Life and it will take over payments.
Our view
Gradually more and more assets and liabilities are being moved out of Equitable Life. One day, the assets under management will no longer be there and Equitable will cease to exist. Search the News Archive for more on Equitable Life.