Directors of Equitable Life have sought to calm the fears of members of the mutual life assurer, saying that the company is financially stable.

Your society has always been solvent, is solvent, and we fully intend to keep it that way

Charles Bellringer Equitable Life chief finance officer

At the first annual general meeting since Equitable's compromise deal to end its �1bn pension liability was passed, members were told that the company was "solvent".

The meeting came against a background of growing concern over the health of the life assurer, with its chief executive, Charles Thomson, recently admitting that the company's solvency margin was "relatively thin".

Equitable's chairman Vanni Treves admitted that 2001 had been an "annus horribilis" for the firm, and that he had suffered along with policyholders.

'Solvency abuse'

Press reports had raised worries over Equitable's accounting practices.

Documents submitted to the Financial Services Authority, the UK financial regulator, showed that the company counted �500m in future profits as capital for the year to December 2001, the Financial Times reported last week.

Vanni Treves said 2001 had been an "annus horribilis"

The news prompted criticism from analysts, who said the measure was designed to flatter the ailing company's financial position.

But speaking at the AGM, Equitable's chief finance and investment officer Charles Bellringer, accused the media of "solvency abuse".

"Your society has always been solvent, is solvent, and we fully intend to keep it that way," he told policyholders.

Sharing the pain

Mr Treves admitted 2001 had been a trying year, and said he had suffered from the society's woes himself as he was also a policyholder.

But he denied accusations made by the Equitable Members' Action Group that the board was keeping vital information from members.

Mr Treves is standing for re-election to Equitable's board at the meeting, along with two other board members. The result of the vote is expected later this week.

No bonus update

Policyholders worried about the assurer's bonus policy, which has become progressively less generous as the firm's difficulties mounted, were given no further clues at the AGM.

Equitable recently announced that bonuses on with-profits policies for 2001 would be 2% rather than the 3% it had hoped to pay.

But Mr Treves did not give an update on the 2002 bonuses, saying that the society did not want to promise more than it could deliver.

End of the tunnel?

Equitable is hoping to emerge from a prolonged crisis which began in 1999 when the company said it could no longer afford to pay guaranteed bonuses to policyholders, blaming lower interest rates.

Equitable settled a two-year court battle with aggrieved policyholders in February by offering them lump-sum payments in return for waiving their guaranteed bonus payments.

Other members received smaller payments on condition that they signed away their right to sue for mis-selling.

The affair has severely dented confidence in Equitable, with many policyholders trying to sell their policies early despite hefty exit penalties.