This report of a meeting by another members group is made available here by EMAG for the general benefit of Equitable members. The views expressed by the committee in this document are those of the EPHAG committee -- not the EMAG committee.

Equitable Policy Holders Action Group
Meeting with ELAS - 6 November 2000

EPHAG, 14, Gloucester Road, Bristol BS7 8AE

A meeting took place at the registered office of Equitable Life Assurance Society between representatives of EPHAG and members of the Equitable Board on Thursday, 2nd November 2000.

The society was represented by Mr A. Nash, Managing Director, Mr C. Headdon, Finance Director, Mr P. Wilmot, Company Secretary and Mr N. Webb, Head of Public Relations. EPHAG was represented by Mr R. Bullen, Chairman, Mr J. Denbin, Mr R. Weddess and Mr K. Seager. The report on the 2.5 hour meeting has necessarily been abbreviated and takes a question and answer format, followed by the EPHAG Committee's comments.

Opening statement by Ron Bullen

We represent 1000+ concerned policy holders of the Society. Our members have many concerns, but in essence two simple immediate objectives:

1. to secure restoration of lost bonuses
2. to ensure that investment returns from the Society return to acceptable levels

We generally agree with the direction the Board has taken in attempting to secure a sales of the Society and are not here to press any alternative course of action.

Q1

What is the precise amount of capital input required to restore the Society's position?

A1

The best estimate is £ 1.5billion. This can not be defined exactly because it depends on several factors, such as future investment returns.

Q2

Why has this figure arisen, given that the original estimate communicated to members was £ 50million?

A2

The Society made provision of £ 200Million which would have been adequate to meet the situation arising after the Court of Appeal's ruling. The House of Lords ruling effectively created new law and the Borad could not have taken any prior action which would meet the deficit arising from this.

Q3

Why has it been necessary to offer the Society for sale? Has the suspension of bonuses yielded sufficient funds to meet the deficit?

A3

The suspension of funds is sufficient to meet the deficit, however the Society will need to increase its investment in fixed interest stock in order to create sufficient reserves to meet HM Treasury requirements. This means a loss of investment freedom which, in turn, will make the Society's With Profits based products unattractive to future investors.

Q4

What alternatives to sale of the Society have been, or are being considered?

A4

The Board has considered a flotation or continuing to operate as a closed fund. In the interests of all WIth Profits policy holders, they believe that the best option is to offer the Society for sale to a company with sufficiently strong resources to meet the deficit and restore investment freedom.

Comment

The Committee of EPHAG agree with this conclusion.

Q5

There has been press speculation regarding a possible `break-up' of the Society. Is this a real possibility and what would be the consequences?

A5

It would be possible to sell off some peripheral aspects of the Society's business but these would yield insignificant amounts.

Q6

Are you able to tell us how many bidders are seriously in the frame?

A6

We can disclose nothing regarding the names, or number of bidders. To do so may be damaging to potential bidders and to the Society's negotiating position.

Comment

The Committee understand the implication of this, press revelation of names or numbers would be damaging to members interests in that it may reduce the possibility of gaining a sufficiently high sale price to meet our objectives.

Q7

Are you, and your advisers, satisfied with the response to your original invitation to possible bidders?

A7

yes, we are extremely happy with the response. Final bids are now being prepared.

Comment

This point was repeated a number of times. The Committee did not form the view that there was an immediate difficulty, although this may change when final bids are confirmed.

Q8

Do you still believe that the sale of the Society will meet the objectives of restoration of bonuses and adequate future returns for investors?

A8

It remains the aim of the Board to achieve the best possible result for all With Profits policy holders.

Comment

There is clearly no conclusion yet to be reached on the outcome of the sale procedure. We did not form the view that the Board knew what the likely outcome would be. They could offer no clear responses to further questioning on this subject, other than to state that Press reports were speculation and had no basis in fact.

Q9

What is the purpose of the present increased advertising campaign?

A9

To maintain the Society's level of new business.

Q10

Is this strategy succeeding?

A10

Yes, Although business is 20% down on last year it is still at a level which most life offices would see as excellent. With Profits business is still being taken, although most is in other areas.

Comment

This is surprising in out view, but encouraging.

Q11

Why does the Board do nothing to supress press speculation by improving its communications with members?

A11

Frankly, we can see no way to do this? We can not disclose details of the sale process - what else is there to say?

Comment

We see the problem here. However, more regular updates could be helpful, in particular, more explanations for the development of the present situation.

Q12

Has there been any `flight of funds' by members?

A12

No. Withdrawals are at normal levels.

Q13

Has any assessment been made of the likely take-up of guaranteed annuities?

A13

There is no `track record'; it is currently running at 30%.

Comment

Not clear, on reflection, whether this figure means anything.

Q14

Is the time schedule for the sales process being upheld?

A14

Yes, We expect to have bids by the end of November, and to be in a position to convey a recommendation to members by the end of the year. Voting on the proposal woudl follow at an EGM in late March/April 2001.

The Board offered further meetings on a regular basis. We declined to meet regularly but agreed to seek further meetings at appropriate times.