Equitable stops writing new business as the Pru pulls out

Life assurer Prudential announced today that it had ceased talks to buy mutual insurer The Equitable - prompting its one-time target to stop writing new business.

Life assurer Prudential announced today that it had ceased talks to buy mutual insurer The Equitable - prompting its one-time target to stop writing new business.

Prudential said in a statement: "After detailed consideration, the board of Prudential has concluded that it is not in the interests of either its shareholders or policy holders to proceed with a transaction."

The Equitable, the world's oldest mutual insurer, announced it was up for sale in July after it lost a legal battle and was ordered to make full final bonus payments to 90,000 holders of guaranteed annuity policies.

The House of Lords decision left The Equitable with obligations of £1.5 billion.

In a separate statement, The Equitable said it would immediately stop writing new business, and would sell or reorganise operations involved in new business.

But it said it remained solvent and would continue to pay out benefits and accept premiums under existing policies.

John Sclater, the society's president said the decision marked a very sad day for all the society's members and staff - but no other realistic option was available.

The decision not to write new business follows the society's failure to find a buyer.

Potential bidders, including CGNU, Eureko - a European financial services consortium - and Prudential, had been interested in the society, but none made firm proposals.