Equitable Life's sales force will have to generate sales in excess of £1bn over the 24 months to Dec...
Equitable Life's sales force will have to generate sales in excess of £1bn over the 24 months to December 2004 if the company is to receive its full £1bn payout from Halifax.
Halifax agreed to purchase the mutual's operating and asset management arms for an initial £500m payout aimed at shoring up its business, including the with-profits fund, and a further £500m contingent on Equitable meeting sales figures and finding a solution to its guaranteed annuity rate (GAR) liabilities.
The £250m payable on a performance related basis is broken down into £200m for equivalent premium income of £1.05bn written under the Halifax/Equitable brand in the two years to 31 December 2004.
A further £50m is payable if new business profitability over the same period reaches 15% of effective premiums. Halifax will pay a proportion of the agreed amount for equivalent premium income of between £650m and £1.05bn on a straight line basis, meaning sales of £850m would be rewarded with a payout of £100m.
The same applies for the £50m payable for new business profitability with nothing paid if it reaches 10% or below, £25m for profitability of up to 12.5% and £50m paid if it reaches 15%. Some £250m will be payable upon completion of a scheme or proposal to remove the guaranteed rights under GAR policies written by Equitable. It was these which led to the House of Lords ruling that the insurer was in the wrong for paying out different levels to GAR members.
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