UK life assurer Equitable Life says its reserves are stable at £532m and it hopes deal with most compensation claims arising out of its near-collapse by early 2005.
Equitable almost went under in 2000 after Britain's highest court, the House of Lords, ordered the mutual insurer to honour guaranteed policies sold in the high interest rate years of the 1970s and 1980s, a decision which cost it more than £1.5 billion.
The society, whose solvency level stood at £542m at the end of 2003, said the number of policies it had to pay out on continued to fall during the first half of 2004, easing the strain on its finances.
The number of policyholders surrendering their policies early also continued to drop during the first half of 2004. Equitable currently has around 700,000 policyholders.
Equitable said it had increased its provisions for people living longer by £75m, a step already taken by many other life insurers.
Equitable Life is reviewing compensation claims from some policyholders, but the mutual society has said there is a case for British government compensation for all policyholders after a recent report highlighted the lax regulatory environment surrounding Equitable in the run-up to its near-collapse.
The possibility of government compensation was raised in July when Britain's parliamentary ombudsman said she would relaunch a probe into the society's near-collapse.
Equitable Life is pursuing a £1.76 billion negligence claim against 15 former directors. The size of the suit was reduced from £3.2 billion after experts said the society had overestimated the value of the group. A negligence claim by Equitable against its former auditors, Ernst & Young, is also expected to be reduced to around £2 billion from £2.6 billion.
