'Irrelevant, irresponsible and irrational', Equitable chairman hits back at critics

Equitable Life yesterday insisted it was solvent at an annual meeting that developed into one of its biggest clashes to date with disgruntled policyholders.

Vanni Treves, chairman of Equitable, also unleashed a stinging attack on the media for the way it has covered the saga of the society's dramatic decline in the last two years. Mr Treves said: "A great deal of what has been said has been irrelevant, irresponsible and irrational."

He made it clear that his temper is also fraying with policyholder action groups that frequently accuse Equitable's management of burying key information about the state of its finances. "I am sick and tired of being told that we are keeping things from you when the opposite is the case," Mr Treves said to about 1,000 policyholders who gathered at the Queen Elizabeth conference centre in London.

Equitable was again accused of "obfuscation" after it refused to hand out copies of its financial returns to policyholders and journalists last week.

The document shows that Equitable took into account £500m of future profits when calculating its free assets – the money which life assurers use as a cushion against major problems such as unexpected liabilities or a dramatic fall in the stock market.

Charles Bellringer, Equitable's finance director, repeatedly said Equitable was solvent and always had been. "We fully intend to keep it that way," Mr Bellringer said.

But Ned Cazalet, an independent analyst of life assurers, believes Equitable is close to breaching its solvency requirements. "If you strip out the £500m of future profits, which are meaningless to use, there is £66m of excess capital to cover a fund of £24bn as at the year end. That is a pretty tiny ratio. The society is now in the hands of the bond market and stock market."

Mr Cazalet also pointed out Equitable's financial returns contain an unusual statement by its directors conceding that had a formal valuation been done of the business at various points last year, the society may have been in breach of its solvency requirements.

It managed to sort its finances out slightly late last year by pushing through the compromise scheme with members, which capped its liabilities.

Equitable also came under fire at the prospect of large bonuses being paid to Mr Treves and Charles Thomson, Equitable's chief executive. Questioning by policyholders unearthed the fact that Mr Treves will earn a bonus of £225,000 on top of his £60,000 salary. The sum will be paid to Macfarlanes, the City law firm at which Mr Treves is a senior partner.

Mr Thomson will be paid £247,000 on top of his £275,000 salary. Both bonuses are 90 per cent of the maximum the two could have received under the terms of their contract.

Sir Philip Otton, chairman of Equitable's remuneration committee, defended the payouts, saying: "The society is very lucky to have Vanni Treves and Charles Thomson. The challenges they faced would have defeated lesser men."

Mr Treves and several directors are standing for re-election to Equitable's board. They are being challenged by three policyholders who are unhappy with Equitable's management. They include Paul Braithwaite, chairman of the Equitable Members Action Group, Rodney Allen, who is campaigning for with-profits annuitants, and Adrian Howard-Jones. The results of the vote will be published tomorrow.