Equitable Life wins High Court backing

Equitable Life successfully brought 12 months of fraught negotiations over its compromise scheme to a close yesterday when the High Court ruled that it was lawful.

Overturning the objections of a handful of policyholders who appeared in court, Mr Justice Lloyd said: "I am in no doubt that it is a scheme such as an intelligent and honest man might reasonably approve."

If policyholders want to appeal, they must apply to the Court of Appeal by Tuesday.

The hearing was the culmination of Equitable's efforts to cap £1.5bn of liabilities created when the House of Lords ruled in July 2000 that it had been under-paying bonuses to policyholders with guaranteed annuity rates (GARs) and had to refund the difference. Policyholders, who voted overwhelmingly in favour of the scheme in January, agreed to forgo their guarantees and the possibility of legal action against Equitable in return for one-off uplifts to the value of their policies.

Vanni Treves, the chairman, said: "We have put out dangerous fires which could have wrecked the society. We can now go toward a brighter future."

That will include injecting an extra £1bn into the society's depleted with-profit fund, which stands at £18bn. Most of the money is from reserves Equitable held to cover further liabilities if the scheme had failed, and £250m comes from Halifax, which bought most of Equitable's assets last year.