The Equitable Life Assurance Society

The society, established via a deed of trust in September 1762 with the name of the "Society for Equitable Assurances on Lives and Survivorships", offered both whole life and fixed term policies. Premiums, which were constant for the duration of the policy, The first modern actuary, William Morgan, was appointed in 1775 and served until 1830. In 1776 the Society carried out the first actuarial valuation of liabilities and subsequently distributed the first reversionary bonus (1781) and interim bonus (1809) among its members. Its methods were successful enough for it to be able to reduce its premiums by 10% in 1777, and there was a further reduction in 1781. In the 20th century, Henry Manly devised the concept and theory of staff pensions, which the society marketed from 1913. In 1893 the memorandum and articles of association were adopted, incorporating the society as "The Equitable Life Assurance Society" and transferring power to the directors; the 1816 membership and bonus restrictions were removed. The archives of the society from 1762 to 1975 are held by the Institute of Actuaries. The society acquired the University Life Assurance Society and the Reversionary Interest Society in 1919 and the Equitable Reversionary Interest Society in 1920. ==Guaranteed Annuity Rates, Article 65 and the 1999 Hyman case==

Many of Equitable's with-profits policies were designed to provide a pension for the policyholder on retirement, and the lump sum available to buy an annuity depended on the sum assured, the reversionary bonuses and the larger terminal bonus. Both types of bonus were allocated at the discretion of the directors in accordance with Article 65 of the Articles of Association, the total being intended to reflect the investment return earned over the lifetime of the policy, subject to smoothing. In 1993 the CAR fell below the guaranteed annuity rate, thus prompting GAR policyholders to exercise their rights. According to actuary Christopher Headdon, policies issued from 1975 to 1988 were worth approximately 25% more than CARs; the total difference amounted to some £1 billion to £1.5 billion. They concluded that GAR policies required that the guaranteed rate was applied to calculate the contractual annuity; and that the effect of the differential terminal bonus rates was that the annuity was calculated at current annuity rates, not at the guaranteed rate, and was not lawful. "The self-evident commercial object of the inclusion of guaranteed rates in the policy is to protect the policyholder against a fall in market annuity rates ... The supposition of the parties must be presumed to have been that the directors would not exercise their discretion [in Article 65] in conflict with contractual rights." Even before that stage, Equitable, which had long claimed to be more transparent than its rivals, had assets worth £3 billion less than communications with policyholders had indicated. ==Aftermath of the Hyman case and partial sales, 2001–9==

Having not insured against losing the case, and with no other way to make provision for the immediate £1.5 billion increase in long-term liabilities, Equitable put itself up for sale. By the end of July, about ten companies, including the Prudential, had considered, but rejected a bid. Equitable had intended using money from the sale to allocate bonuses for the first seven months of 2000, but now this was not available. On 19 December, HM Treasury announced a review of the Financial Services Authority (FSA)'s regulation of Equitable. The following day, Equitable announced that their President and seven non-executive directors would step down. Vanni Treves became Chairman in March 2001, with Charles Thomson as Chief Executive. On 4 February 2001 the Halifax agreed to buy Equitable's operating assets, salesforce and non-profit business for a payment of up to £1 billion into the with-profits fund, subject to policyholder agreement. On 20 September 2001, compromise proposals were published offering 17.5% increase for GARs in exchange for the guarantee and 2.5% for non-GARs in exchange for abandoning any legal claim. The deal was accepted by 98% of GAR policyholders, and was sanctioned by the High Court in February 2002. Both groups of policyholders (those whose pensions had vested and those that had not) received further bad news. In July 2001 deferred pensioners (the second group) were angered to be told their savings had been reduced by 16%, 50,000 annuitants suffered a 20% reduction in income. Treves stepped down as chairman in September 2009 and was replaced by Ian Brimecome. ==2001 reports by the actuarial profession and FSA==

In May 2001, Ian Glick QC and Richard Snowden published their joint opinion on behalf of the Institute of Actuaries, which recommended, amongst other things, that the Appointed Actuary should require that there is a process for reviewing communications to policyholders, and should resist holding a dual role as Chief Executive, and that his work should be subject to peer review. In October, the Baird Report was published. This covered the Financial Services Authority's regulation of Equitable from 1 January 1999 to 8 December 2000, when the Society closed to new business. The report was produced by the FSA's director of internal audit with the help of independent accountants and lawyers. The review found that – with hindsight – there had been some "deficiencies" on the part of the FSA in the discharge of their regulatory responsibilities, but also stated that "the die had been cast" by the time the FSA had assumed regulatory responsibility for the Society, in relation to those who had already invested in Equitable. ==The Penrose report, 2004==

The Penrose report, commissioned by the Treasury in August 2001 and expected in 2002, was finally published in March 2004 after delays due to vetting by Treasury lawyers.{{cite news| url=https://www.telegraph.co.uk/finance/2868061/More-delays-as-Equitable-report-vetted.html| title=More delays as Equitable report vetted| date=2003-11-05| publisher=Daily Telegraph| accessdate=2009-07-19 ==European Parliament investigation, 2007==

In June 2007 the European Parliament issued a 385-page report on Equitable Life. ==Legal actions by Equitable Life, 2005==

In April 2005, in the light of Penrose's findings, Equitable started a £2 billion High Court action against auditors Ernst & Young, reduced 3 months later to £0.7 billion, claiming they had failed to inform the directors of the seriousness of its position. However lawyers advised they could not prove that correct advice would have changed the outcome, and the case was dropped in September. Ernst & Young described the case as "ill conceived". Simultaneously, Equitable started a £3.3 billion claim against former directors, claiming that they failed in their duties to policyholders. This claim was abandoned in December 2005; the costs of the two cases amounted to around £40m. ==Government response and the Parliamentary Ombudsman, 2008–09==

In July 2008, the Parliamentary and Health Service Ombudsman completed a four-year investigation, described by Equitable's chief executive as the "best chance of compensation". Her 2,819-page report accused the regulators, i.e. the DTI, GAD, and FSA, of "comprehensive failure", found the Government guilty of ten counts of maladministration, and called for a compensation scheme "to put those people who have suffered a relative loss back into the position that they would have been in, had maladministration not occurred". Equitable's chairman estimated that 30,000 policyholders had already died without receiving compensation. In January 2009 the Government issued their response and appointed retired judge Sir John Chadwick as an independent advisor to design an ex-gratia scheme for some policyholders "who have suffered a disproportionate impact as a result of the relevant maladministration". The Ombudsman accused the government of twisting the findings of her report by suggesting that whatever the regulators had done, it would have made no difference to the events which followed. She also said it had failed to give "cogent reasons" for rejecting some of her findings, mandatory since the Pensions Action Group Judicial Review. In March, the Public Administration Select Committee issued a second report in which it described the government response as "morally unacceptable", and repeated the Ombudsman's criticism that it had acted as judge on its own behalf. In May, the Ombudsman issued a supplementary report to the government's reply. In August 2009, Chadwick issued an interim report. == Government response, 2010 ==

In the Queen's Speech following the formation of a Conservative-LibDem coalition government in 2010, the Equitable Life (Payments) Bill was announced. The bill sought to secure compensation for nearly a million policyholders (UK-wide) hit by the near-collapse of the insurer. The Government also announced that the final report from Sir John Chadwick in relation to Equitable Life would be received by mid-July. A statement on the HM Treasury website confirmed two elements of the design of the scheme: that there should be no means testing, and that the dependents of deceased policyholders should be included in the scheme. The July 2010 announcement by Mark Hoban, the Financial Secretary to the Treasury, offered compensation starting by mid-2011 to 1.5m savers. However, policyholder compensation would be limited to the "absolute loss they suffered" estimated by Chadwick at a total of £2.3-£3B, compared with the £4B-£4.8B returns that similar companies produced, as calculated by consultants Towers Watson. Sir John, whose report was designed to compensate those who suffered "disproportionately", recommended a payment cap for each policyholder which would reduce total compensation to between £400m and £500m. In opposition, Hoban had promised that all ten counts would be considered. However, in 2013, the Commons Public Accounts Committee said that 200,000 people could miss out because of a lack of publicity ahead of the 2014 deadline. The report called on the Treasury and its administrator, National Savings and Investments, to "get their act together" and bring forward publicity for the deadline to July rather than September 2013. By March 2012, payments were only one third of that expected and Committee chairman Margaret Hodge also criticized the Treasury for destroying details of 353,000 policyholders on data protection grounds. In response, a Government Treasury spokesman criticized the Labour party for ignoring the problem for ten years. == Sale to Utmost, 2019 ==

In June 2018, Equitable Life announced that Life Company Consolidation Group (LCCG) had agreed to buy the company for £1.8bn, with policies to be transferred to LCCG's Reliance Life subsidiary and converted to unit-linked. LCCG (now Utmost Life and Pensions) is backed by Oaktree Capital Management and specialises in buying insurance businesses that are closed to new customers. Some of the proceeds of the sale would be returned to the remaining 400,000 policyholders in the form of increased bonuses on their policies. The sale required approval by policyholders and the High Court, and, having received this, completed at the end of 2019, with UK policies transferring to Utmost Life and Pensions. Irish and German policies remain with the Equitable Life, now a subsidiary of Utmost Life and Pensions. == Coat of Arms ==

The College of Arms granted Equitable Life the following coat of arms: ==References==