Salvaging something from Equitable Life

Daily Telegraph Yvette Essen, 22/12/2007

Vanni Treves had the unenviable task of taking the wheel of the Equitable ship after it had been holed below the water line. But he tells Yvette Essen, there will be survivors

Having received death threats and had his house windows smashed three times, Vanni Treves is used to having people protecting him.

Thankfully, the three "policemen" surrounding the non-executive chairman of Equitable Life this time are of a different sort. And his trio of PRs have good reason to fuss - this is the 67-year-old's first profile interview in years and he's about to put the society up for sale.

As someone who is finally being allowed a longer leash, Mr Treves is in fine spirits. Dressed in a smart suit, sharp blue shirt and incredibly scruffy trainers - he spends two hours a day walking to stay trim - he poses for photographs.

The hastily erected backdrop is a cardboard Equitable Life sign stuck to the wall of a meeting room. During the photoshoot it tumbles to reveal spots of blue tack. "It's the story of Equitable," he quips, blue eyes twinkling.

The long running story of Equitable, the UK's first mutual life assurance society, is no laughing matter. Created in 1762 it grew to become a £26bn business, with over 1m policyholders in its heyday. But its high-profile demise has left it a shadow of its former self - with just over £7bn of assets and half the number of customers.

The events leading up to the dramatic collapse of Equitable are well known. Having established a reputation as a well trusted brand - the Werther's Original family of the financial industry - it collapsed dramatically after realising in 1999 it could not afford to pay the guaranteed annuity rates it had promised its policyholders.

When it went all the way to the House of Lords - and lost - in its attempt to force policyholders to accept a cut in bonuses, the writing was on the wall. Unable to pay its £1.5bn legal fees, Equitable struggled to find a buyer, closed to new business and left over a million customers with severely diminished pension payouts and savings.

Mr Treves, a lawyer by background having clocked up 30 years as a partner at Macfarlanes, was parachuted into Equitable in February 2001 as part of a new management team to help salvage what remained. "People were disappointed. I understand that terribly well," he says, sympathetically recalling how the board used to pass on threatening letters to the police.

Vanni Treves

"But over the course of the years, the mood has changed appreciatively. I do not get any nasty letters. Most letters I receive now are very pleasant as policyholders understand that the situation - although far from perfect - is hugely better than it was."

He is keen to distance himself from previous management decisions, and instead dwells on the challenges he has faced pulling back Equitable from "the brink of extinction".

The past year has been a particularly busy one. It has seen the sale £4.6bn of non-profit pension annuities to Canada Life, and Equitable is in the throes of completing the transfer of £1.8bn of with-profits annuities to Prudential.

The father-of-three, however, has agreed to this interview as he sees the year ahead as the final chapter in the Equitable saga.

"We expect 2008 to be the year in which the future of the society is finally decided," he explains. "The future is a sale or run-off".

Mr Treves can barely contain his excitement when he talks about how various advisers are preparing a dataroom of information on the society for potential buyers sift through in the new year. He explains Equitable decided to officially hoist the for sale sign now after receiving a number of "informal" approaches and although he emphasises a sale is not compulsory, he is clearly optimistic it will be snapped up in its entirety.

"We had 96 different kinds of policies when I took this job," he recalls. "It was impossible to contemplate any one purchaser buying the lot. Now what remains is a much simpler body of assets and policies and therefore we think that there will be a great deal of market interest."

Another major decisive moment in the society's history will be the findings of the Parliamentary Ombudsman - should Ann Abraham ever get round to publishing her findings into whether the Government failed to regulate the mutual insurer correctly in the run-up to its collapse. The long-awaited report has been delayed three times and its publication date - initially planned for the end of 2005 - has now been put back until after April next year.

Mr Treves says he shares policyholder's frustration. However, he forecasts the prolonged delay is an indication that she may eventually find in policyholders' favour. "We think it very likely the Parliamentary Ombudsman will find there has been maladministration leading to injustice. Why else would she take such an enormous amount of time working on a report if she did not work on that direction?

"Assume she does find that maladminstration occurred. The question is, what is the Government going to do about it? We will do everything necessary to encourage the Government in the interest of policyholders to come to a quick and generous decision."

Mr Treves says should the Parliamentary Ombudsman find that the regulators were partly to blame for the collapse of Equitable, compensation should be paid out to those that saw thousands of pounds wiped off their savings and pensions.

How much would this cost the Government? "Given the number of people involved, it would be a great deal of money," he predicts. "How much, how it is divided up, we do not begin to know. It cannot be less than many hundreds of millions of pounds."

Mr Treves' frustration with the Government, and the way it bailed out troubled mortgage lender Northern Rock, is clear to see. "It is unfair," he says, arguing that had Equitable policies been sold through high-street branches, instead of through independent financial advisers, it could have been a different story.

"We did not have photos of Equitable policyholders queuing outside branches, wanting to surrender their policies. The emotive appeal of those photos cannot be exaggerated." Has he any regrets? "No," he says emphatically with a shake of the head.

Mr Treves is tight-lipped about whether it would be his swansong should he succeed in selling Equitable. "If there is a deal to be done, I will personally give an enormous party," he promises. "I expect all of us to leave very drunk, and I insist - if I am still here - on putting out the lights."