UK EQUITABLE CLOSES TO NEW BUSINESS AS PRUDENTIAL PULLS OUT

Equitable Life, the world’s oldest mutual assurance company, said today that it would immediately stop taking on new business after UK Prudential pulled out of talks to buy the group. Prudential said that it had terminated talks with UK-based Equitable because a deal would not be in the interests of shareholders or policyholders. Equitable noted that “the society remains solvent and will continue to pay out benefits and accept premiums under existing policies”. The mutual put itself up for sale last July after a House of Lords court ruling that it had acted unlawfully by cutting bonuses to holders of guaranteed annuities — a ruling that left Equitable with a hole in its capital that has been estimated at more than £1.5bn. Prudential was the only buyer left for Equitable after the extent of potential liabilities deterred about 15 other interested parties. Equitable president John Sclater today said that “this is a very sad day for all in the society — members and staff — but the board decided that closing the society to new business is the only realistic option now available”. Equitable also revealed that managing director Alan Nash had resigned and finance director Chris Headdon would become chief executive. Financial regulator the Financial Services Authority said in a statement that it had worked closely with the Equitable, particularly since it had become apparent in the past few days that the society might not receive a purchase offer, and would continue to monitor its operations closely.