Bonus joy for Equitable Life savers

EQUITABLE Life chairman Vanni Treves today revealed the society is set to consider a sale of all or part of the business as he declared the mutual is in its best shape for years.

Bonuses for Equitable's 750,000 long-suffering policyholders are going up, with values for UK with-profit pension plans increased by 3.5%, against 2% in 2003.

Posting annual results, Treves said Equitable was 'more solvent, more stable and secure' than at any time since it lost a House of Lords case over guaranteed payouts to savers five years ago.

Equitable almost collapsed after the defeat but Treves now believes the exhaustive clean-up carried out since then means the board can now consider strategic options.

A full or partial sale is one of three potential moves, alongside investing much more of Equitable's £10bn with-profits fund back into equities or a 'unitisation' of the same fund, which would allow policyholders far greater exposure to the stock market. Treves said: 'We are ruling nothing in and nothing out.'

Equitable closed its doors to new business five years ago. The market for closed life insurance funds is buoyant, with buyers including former PizzaExpress entrepreneur Hugh Osmond. An outright sale is still unlikely, however, as Equitable would probably have to de-mutualise before any such move could be considered.

Equitable begins legal action against its former directors and former auditors Ernst & Young this month. Legal costs last year were £8.4m.