LONDON (Reuters) - Beleaguered mutual life assurer Equitable Life says it has made significant progress towards greater stability in the first half of 2003, but has warned of continued uncertainties.
Equitable, which is awaiting the outcome of a key government inquiry into its near collapse in 2000, said on Wednesday it was possible that claims against the society may follow publication of the investigation, headed by Scottish judge Lord George Penrose.
But the world’s oldest life assurer noted there may also be compensation opportunities for policyholders if the Penrose inquiry finds other parties, such as the government, at fault.
"As this review makes clear, however, significant challenges, including those that may arise from publication of the Penrose Report and the continuing fundamental uncertainties -- particularly surrounding provisioning levels -- remain to be resolved," Chief Executive Charles Thomson said in a statement.
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Equitable almost imploded in 2000 after Britain’s highest court, the House of Lords, ordered it to honour guaranteed policies sold in the high interest rate years of the 1970s and 1980s, a decision which cost Equitable more than 1.5 billion pounds.
The court order meant Equitable had to compensate customers who held guaranteed pension policies but were not paid at the right rate.
On Wednesday, the company said it had made good progress towards resolving the major claims against but it warned that there remained the risk of exposure to other claims or that the level of provisions may prove insufficient.
While noting it was sufficiently capitalised at present, Equitable repeated that there may be uncertainty over whether it can make interest rate payments on its bonds and could possibly breach regulatory capital requirements.
The company said with-profits policy holders would continue to see falls to their income but by smaller amounts than the cuts that started in February 2003.
