Equitable Life yesterday admitted that it would have been insolvent and in the hands of administrators had it not sold nearly £4bn of equities in the past year.
However, policyholders at the society's annual general meeting in Wembley were in no mood to congratulate the board for saving the society from insolvency, as they voted against the 2002 remuneration package to directors.
"Given the ongoing dire performance of the company and the cuts we have suffered, how dare you pay Charles Thomson more than £1m for his two years at Equitable? This cannot be justified," said one policyholder.
Mr Thomson, the chief executive, earned £679,288 last year, including a 35 per cent increase in his basic salary. Vanni Treves, the chairman, received £125,000 in fees, more than double the previous year.
Around two-thirds of the 348 members attending the meeting voted against the remuneration report on a show of hands. Mr Treves requested that the vote go to an official poll, the results of which will be revealed today.
Policyholders were at least reassured that Equitable had now come out of "intensive care" after coming so close to collapse. "It would have been a disaster for members had we not sold. We would have almost certainly become insolvent and gone in to administration, and the consequences of that would be too horrifying to describe," Mr Treves said.
Equitable now only holds 4 per cent of its £12.5bn portfolio in equities, with 70 per cent in bonds and the remainder in cash and property.
Mr Treves said that the society had had trouble selling its equities fast enough when the stockmarket entered a sharp decline. "There were times when our brokers could not act on our sell notices, because the effect of doing so would have worked against us and been extremely severe," he said.
However, Mr Treves was unable to guarantee that the £960m the company has set aside to compensate investors would be adequate.
The society has had a number of recent set backs in compensation settlements, with the High Court striking out its £2.6bn claim against its former auditor, Ernst & Young, and the Financial Ombudsman ruling that Equitable had mis-sold policies to some 70,000 customers. The society is also struggling to rectify payments to policyholders who left before the House of Lords ruled that its payout policy was illegal.
Mr Treves also issued a strong warning to the Government not to whitewash the report into the demise of the society by Lord Penrose. The report is due to go to the Treasury in July and may contain evidence of regulatory failings that could lead to Government compensation.
STANDARD LIFE'S OUTLOOK TURNS NEGATIVE
Standard Life, the UK's largest mutual insurer, which lost about £5bn on the stockmarket last year and was forced to use £1.5bn of future profits to help it meet its solvency requirements, was yesterday deemed to have a negative outlook by the credit ratings agency Standard & Poor's.
Standard lost its much-vaunted AAA rated crown from the ratings agency in January when fears that its capital resources had been greatly reduced caused S&P to drop the company's credit-worthiness to AA.
The negative outlook increases the chances of a further downgrade. Standard said it was "disappointed" by the decision.
Analysts watching the Edinburgh-based insurer have growing concerns that the value of Standard's assets is continuing to fall and its sales are slowing.
S& P said Standard had suffered a "sharper decline in long-term savings and investments than its peers".Reuse content