Longer life expectancy forces Equitable to take £75m hit

Equitable Life, the troubled mutual insurer which closed its doors to new business four years ago, took a £75m hit on its balance sheet yesterday, as it moved in line with the rest of the industry and increased its policyholder life expectancy estimates by about six months.

Equitable Life, the troubled mutual insurer which closed its doors to new business four years ago, took a £75m hit on its balance sheet yesterday, as it moved in line with the rest of the industry and increased its policyholder life expectancy estimates by about six months.

Announcing its first-half results, the insurer conceded it was necessary to accept that people are living even longer than its actuaries had previously calculated, creating the need for a deeper bed of reserves to pay its existing annuity customers.

While the group said its solvency position remained stable, it also conceded that it was unable to predict the outcome of the handful of major legal battles it faces over the coming year.

The society is suing its former directors and its former actuaries, whom it is due to face in the High Court in March. A group of about 800 annuity customers are also bringing a class action against the society, for which a hearing date has not been set. A loss in any of these cases could be extremely costly for the insurer.

Speaking to journalists yesterday, the chief executive, Charles Thomson, said he was now pinning his hopes on a positive outcome from the Parliamentary Ombudsman's inquiry into Equitable, which he hopes will mark the end of the Equitable saga. He added, however, that whatever the outcome he hoped policyholders would accept her conclusions as the final, definitive ruling.

"The best hope is that this is the final chapter in the Equitable Life saga," he said. "It would be lovely if [the Ombudsman] finds enough evidence of bad regulation to justify compensation from the Government. We hope it will be relatively fast, and that it will close the book. People should be prepared to accept that as the final decision."