Equitable Life has announced the sale of one of their subsidiaries, University Life, to Reliance Mutual for an undisclosed sum, effectively leaving the company to operate as a large with-profits fund.
The company says the sale, which is expected to be completed in the second quarter of 2007, if approved by the Financial Services Authority, will benefit Equitable Life policyholders by removing the costs associated with University Life.
It suggests policyholders with University Life will benefit by becoming part of Reliance, a company which it says specialises in the administration of small closed life funds.
In a letter to University Life policyholders, Equitable says the sale will not affect policyholders in any way and states as the subsidiary now has less than 2,000 policyholders, it decided it was “appropriate to sell the company to Reliance Mutual”.
Charles Thomson, chief executive of Equitable Life, says: “The sale of University Life is in line with our goal of pursuing strategic options that benefit policyholders. Simplifying the business of Equitable Life makes it easier to assess the impact of strategic options and, if attractive, to implement them.”
The deal, which follows the transfer of £4.6bn of Equitable’s book of non-profit annuities to Canada Life in May, means the bulk of the company’s remaining business is now tied up in its with-profits fund, valued at just under £10bn, along with the remaining 10% of non-profit annuities which were not transferred to Canada Life.
As a result, there is the suggestion Equitable could be looking for a company willing to take on the liabilities of its with-profits fund, as Alistair Dunbar, spokesman for Equitable, admits the company is “still looking at the strategic options for the with-profits fund”.
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