23 May 2002 - A note on the Equitable's AGM

The AGM was very well stage managed, and Treves successfully played to the majority of members who were in attendance and who were probably there to seek comfort. This they received when they were advised that the Society was solvent and would remain solvent - but it was not explained that this may be at the expense of further reducing policy values. We learnt a few new facts:-

• claims (i.e. withdrawals) have reduced to £300m/month

• the split of assets held by the with-profits fund, namely equities 25%, 56% bonds, 13% property, 6% cash

• the value of the annuitants part of the fund is about £7.9bn

• any compensation will go into the WP fund of the benefit of the members

• we cannot go after the regulators until after Penrose because we do not have the facts in our files

Jeremy Lever persisted with his request for a reasoned explanation of why the Society did not consider it appropriate to unit link the fund. Subsequently Charles Thomson agreed to prepare a paper on the issues within 6-9 months.

Colin Slater presented the results of our petition seeking change in the Memorandum & Articles of Association to be ratified at an EGM. But that was brushed aside with the false claim that the petition result was "old news", and that the Board would bring forward proposals to next year's AGM because an EGM would cost £1m to stage. (This is not correct - it should cost no more than £¼m).

Regrettably Treves, Thomson, and Belringer continued their policy of generally not answering questions and/or giving misleading or incorrect answers. Thus I received either no answer or an incorrect answer to the following questions:-

• please provide in laymen's terms an analysis of the with-profits fund's available assets together with a comparison between the available assets and aggregate policy values, where the latter are differentiated between guaranteed and non-guaranteed elements. No answer

• provide a proper analysis of the fund's performance i.e. return by asset class. No answer

The clear intentions of the FSA in its recently published "Feedback Statement on the With-Profits Review" is that the above information will be required in future.

• report the number of members in the with-profits fund end of year. No answer

• set out clearly the nature and implications of the GIR issue. Treves alleged that information about GIRs was included in the Compromise document. In fact there is no reference to GIRs in the document. Furthermore Treves (or one of the others) made the claim that GIR and non-GIR policyholders were treated equally, which is impossible - one group has a guarantee while the other does not

Treves/Belringer/Thomson made the following incorrect statements:-

• one of them claimed that the policy of bringing profits forward to share up the reserves was "used industry wide". On 5/6 the FT carried a piece which reported Ned Cazalet as saying that only seven other companies out of 44 used the practice

• Treves blamed the stock market for the further MVA announced on 15 April. In fact in April the FTSE was more or less where it was a year ago. The recent increase in the MVA conflicted with Treves' statement on Moneybox on 6/10/2001 that "Our MVAs are a function of the market conditions, and nothing else"

• Belringer incorrectly claimed that the reason for the delay in providing the solvency return was due to some story about the FSA providing it to Companies House from where members could request it. In fact under the Financial Services Market Act, via Rule 9.7 of the interim "Prudential Source Book: Insurers" policyholders have a right to receive "deposited documents" once they are deposited. There was thus nothing stopping the Society putting the return on its website the day after it was deposited with the FSA, nor providing it to any policyholder or journalist who asked for it. I subsequently learnt that he tried to fob off a number of professional actuaries who sought the solvency return, and the Association of Consulting Actuaries sent him an e-mail asking him to stop playing games. My informant commented that it was clear that the objective was to keep the return under wraps until after the AGM

• misleading statements were made about the format of the Annual Report & Accounts. Namely it was insinuated that 1) the policy that asset values should be within ­+5% of liabilities, and 2) discussion of the GIR issue could not be mentioned in the Annual Report. In fact the Companies Act prescribes a minimum that has to go in the accounts, but does not prescribe a maximum. Directors can put what they like in the Report and the Notes to the Accounts

Treves lost his composure a little at my question as to when the Society would stop "obfuscation and spin", and blamed the press for the Society's bad press because good news does not sell newspapers. But in reality he, Thomson, and Belringer have, through their reluctance to provide information and their willingness to provide incorrect or sloppy answers, have created the mistrust which came through in some of the press comment the following day.

Alex Henney

2) Other votes carried at the AGM were: