CITY AND SUBURBAN
There goes the vintage of 1762, as Equitable Life is made to honour its promises
CIIRISTOPHER FILDES
For the City of London, 1762 was a vin- tage year. Francis Baring set up shop, and some numerate citizens set up the world's first mutual life assurance office. Some non-vintage years have followed, Barings had to be sold for a pound, and now its twin, the Equitable Life, is being hawked around the City, with its directors hoping for a suitably better price. Theirs is a wretched story. They tried to save their society's skin at the price of its reputation, and have failed. The facts are by now well established. The Equitable threw in guaran- tees when selling life assurance, made no investments to match them, and when they proved to be expensive tried to wriggle round them. Holders of policies with guar- antees were told that their terminal bonus- es would be scaled down so that the guar- antees were not worth having. Macbeth, as I observed, had the same trouble with the witches:
Who keep the word of promise to our ears But break it to our hopes.
This was a hideous precedent. The Equi- table had never needed to rely on witchcraft. Its record spoke for itself and its promises were well worth having. To call their worth into question would suggest that it could ill afford to meet them. That could only be damaging to the society and so to the interests of all its members, whether they held guarantees or not. Still the directors maintained that this was the right thing to do and that the law allowed them to do it. They were wrong about that.
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