Vanni Treves: Society would have gone bust

Vanni Treves was facing about 300 policyholders at the company's annual general meeting in London.

Mr Treves told members that the majority of shares were sold when the FTSE 100 index was above 4,800, and by the end of 2002, the society had reduced its holding to less than 5% of non-traded equities.

A BBC News Online reporter at the meeting said policyholders focused their anger on big increases in directors' pay over the past year, which came at a time when members have seen their savings slashed in value.

Policyholders also complained about the cost of legal and consulting fees, and cuts to annuity policies.

Stark warning

Mr Treves said: "If we had not moved out of equities when we did, I can tell members that we would now be bust and in the hands of administrators," said Mr Treves.

The board was now "cautiously optimistic" about the society's prospects, he said.

Meanwhile, Charles Thomson, chief executive, said the society continued to meet its regulatory and solvency requirements.

Directors' pay

While Equitable was keen to stress its prudent investment strategies, policyholders voiced their anger at the board's pay.

Last year Mr Treves had his fee increased from �60,000, which was paid to his law firm Macfarlanes, to �125,000 paid to himself.

For the year 2002 to 2003 Charles Thomson, chief executive, had his salary increased to �371,250 from �275,000.

His discretionary bonus was cut from �275,000 to a maximum of �110,000.

The society paid him a bonus of �82,000 for the previous year, but he agreed to waive half of this.

Julian Robbins, a chartered accountant, said it was "another case of snouts in the trough".

He was among others upset by the �195,000 package given to former chief finance and investment officer Charles Bellringer, after he resigned.

Legal and consultants fees also came under attack, as policyholders accused the mutual of draining precious resources.

Compensation scheme

Equitable said it was "considering to appeal" a decision from the Financial Ombudsman Service, concerning so-called "late joiners".

Last week, the ombudsman ruled that the insurer failed to inform people who became Equitable customers after 1998 about the full extent of liabilities on guaranteed annuity rate policies.

The society has said it has allocated �70m to compensate up to 70,000 people.

Among them are 16,000 former policyholders who joined the society after 1998, but left before members signed a compromise deal.

Existing policyholders remain concerned about how the compensation scheme, and the ombudsman's rulings, will affect the insurer.

Liz Kwantes, of Equitable Life Members' help Group, said: "People will want to know the effect of the ombudsman's decision.

"I know they have reserved for it, but have they reserved enough?"

The one-time blue-chip insurer was thrown into turmoil in 2000 after it lost a legal battle over bonus payments to guaranteed annuity rate policies.

In an attempt to correct its �1.06bn pensions liability, it struck a compromise deal with many of its policyholders.