CITY AND SUBURBAN
More law than equity as Equitable Life puts its good name on the line
CHRISTOPHER FILDES
he search is for three Lords Justice of Appeal who have not insured themselves with the Equitable Life. Then they can hear the appeal against the judgment that has saved the Equitable's skin, though not its reputation. The case hinges on the guaran- tees that the Equitable once threw in when selling 'with-profits' life assurance policies. Buyers were promised that the policies, when they matured, could be used to buy annuities that yielded 12 per cent. When this promise turned out to be expensive and embarrassing, the Equitable found a way to honour it but to make sure that it was not worth having. Any- one who claimed on it would get less profits with his policy. His terminal bonus would be shrunk to fit. Macbeth had the same experi- ence with the three sisters Who keep the word of promise to our ear But break it to our hearts.
In the High Court, Sir Richard Scott has ruled that this was 'well within the discre- tion' of the Equitable's directors, and the case will now go to appeal. On the directors themselves and on their stewardship there can be only one verdict. They should be asked why, when the Equitable gave these guarantees, it made no investments to match them. The first life office in the world to work on actuarial principles appears to have let them drift out of the window. Worse is the harm done to its greatest asset, which is or has been its good name. Until now the Equitable has enjoyed a virtuous circle. It has been able to sell its policies without paying commissions to brokers, so its costs have been held down, so its results have benefited, so the word has been passed around — among barristers, for instance. Hence all those judges with interests to declare. What the Equitable cannot afford is to be perceived as desperate or devious or both. Then the circle would turn vicious.
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