EQUITABLE Life, the British insurer that almost collapsed in 2000, has promised an extra 12.5 per cent payout to customers cashing in their policies.
The company, which has faced a 10-year battle with customers demanding the minimum payments it had guaranteed, said it had rebuilt its capital.
Policyholders who cash in their policies will from 1 April receive the extra payment, with around 30,000 customers expected to share £40m within a year.
“Getting millions of pounds into policyholders’ hands is what matters after a decade of distress,” Equitable chairman Ian Brimecome said in a statement.
The extra contribution, announced yesterday, comes on top of a £1.5m government payout to help compensate Equitable customers for the regulator’s failure to prevent the crisis.
Equitable, Britain’s oldest insurer with 1.5m customers at its peak, came close to collapse after it was forced to honour unsustainable guarantees of minimum returns offered to some customers.
The company, many of whose customers were saving for their retirement, was eventually forced to close its doors to new business and reduce the value of some policyholders’ savings.
Equitable said the government compensation, to be paid from mid-2011, is equivalent to about one third of total losses suffered.
But Liz Kwantes, of the Equitable Life Members Support Group, said she saw it as another way for Equitable to run the society down and encourage as many policyholders as possible to transfer out.