Equitable Life today announced plans to hand back hundreds of millions of pounds to its beleaguered policyholders who have seen the value of their investments dive as a result of the problems at the society.
The mutual is set to increase the value of members' with-profits policies by 12.5% for those whose investments mature or who leave the society after April 1 this year.
It expects to hand over £40 million in additional payments to about 30,000 policyholders during the first year.
Overall, 400,000 policyholders are expected to benefit from the move, which the society expects to cost "hundreds of millions of pounds".
Equitable described the scheme as the "first major step towards the distribution of capital" to its remaining members.
It said it was able to make the payments after successfully rebuilding the society's capital position following a decade of uncertainty.
The majority of the group's assets are now invested in either fixed interest products, or are held in cash, giving it a higher degree of certainty about the returns it will earn than if the money was held in more volatile equities.
This in turn has enabled it to use some of its excess capital to make the payments.
Chris Wiscarson, Equitable Life's chief executive, said: "We've done a lot of talking about what we'd like to do to recreate policyholder value.
"Today we're actually doing what we said we were going to do. May this be the start of a better future for our policyholders."
Chairman Ian Brimecome added: "Getting millions of pounds of capital into policyholders' hands is what matters after a decade of distress."