LCCG has signed an agreement with Equitable Life to transfer all of its business to Reliance Life, a specialist UK run-off manager set up by the consolidator in 2017.
Danny Cox, chartered financial planner at Hargreaves Lansdown, described the move as “a wonderful windfall for Equitable Life policyholders, who now stand to pick up a nice bonus as the with profits fund and Equitable Life shuts up shop for good”.
“There’s still a bit of a wait, but the uplift is so substantial it’s well worth hanging on for.”
For sale
Equitable Life closed to new business in December 2000 after it made guarantees to policyholders it couldn’t meet.
In March 2018, Equitable, which administers £6bn ($7.9bn, €6.8bn) of assets for more than 250,000 policyholders, brought in Goldman Sachs to find a buyer.
The proposed transaction is the latest in LCCG’s strategy that has seen it snap up 10 businesses from Aviva, Axa and Generali.
Total policyholder assets at LCCG are currently around £24bn and predominantly unit-linked.
Next steps
The decision to select LCCG was about “long-term well being”, Equitable Life said.
“We are delighted to have been selected by Equitable Life to be its partner in providing on-going service, fund choice and security to its policyholders,” Paul Thompson, group chief executive of LCCG, said.
“As a group, we have significant experience in delivering policyholder value through well-managed run-off processes and our expertise in unit linked assets.
“We continue to see significant opportunities to add to our run-off assets through additional closed book life insurance transactions.”
Ian Brimecome, chairman of Equitable Life, said the “transfer to Reliance Life is fundamentally helpful in distributing capital to our policyholders as fairly and as soon as possible”.
As part of the agreement with LCCG:
- Equitable Life’s policies will transfer to Reliance Life under a part VII transfer, which includes a vote by the members of Equitable Life on the conversion of the ‘with profits’ policies. The vote will be followed by a court hearing – with the whole process due to complete at the end of 2019;
- The ‘with profits’ policies conversion to ‘unit linked’ funds are expected to benefit from an increase in the current 35% capital distribution to a level expected to be between 60% and 70%.
