Talk:The Equitable Life Assurance Society

Untitled
I am trying to clear the errors on this web page. I have checked for weasel words and cannot see anything bad so have removed the error tag. I must admit the rest of the page actually seems to contain some good accurate information, so I am not sure why some of the other errors are there. I did try to reduce them, but they were reverted. Elcadobes (talk) 13:58, 7 July 2009 (UTC)

Issues
This is an important and very long running UK political and financial topic. I completely agree with the issues raised but they are fixable, I believe the editors are fairly new to Wikipedia though they have substantial and detailed knowledge of the subject which I don't have. They should be aware this is a big topic for a first entry and not be discouraged.

I'm not an expert but am willing to provide some help and have a small section on Equitable in Ros Altmann. If you go to my talk page and click the 3rd box on the right, you can email me and we can plan it from there. JRPG (talk) 22:11, 20 July 2009 (UTC)

You are absolutely right that this is potentially a MASSIVE article, which will take an equally massive amount of work to get right. I am sorry that personal circumstances do not allow me to devote much time to wikipedia, and what time I do have is spread quite widely. But since I am the editor who added the tags, I will expand on just a few points:
 * History - there is nearly 250 years of history to this company, and we are in danger of concentrating almost entirely on the last 10 years or so. This is a classic example of WP:RECENTISM. See for instance:
 * Equitable Life Assurance Society (ELAS) archive
 * Importance of the archive
 * Historical research papers in actuarial journals
 * For many decades in the 20th century, the Equitable was regarded as one of the best-managed life offices in the UK - low expense ratio, efficient admin systems, excellent returns to policyholders (also part of the context to what went wrong)


 * Context, for example:
 * "Personal Private Pensions" - needs to be explained, and especially the criticism of them at the time
 * "the Hyman case"
 * "The MVA was set at 10%." - what's an MVA, why is it needed, ...
 * history of interest rates, how they affect annuity rates


 * Original research
 * "Equitable must have realised there was a problem and so started to sell as many products as possible to support the GAR liability."
 * "To sell the product Equitable offered extremely high bonuses by distributing all the income rather than keeping any for a rainy day"

These examples are only a small sample of the problems with the article.

I also emphasise the importance of reading the sources - all of them, very thoroughly. This isn't easy, with several thousand pages, often quite technical, but if you don't do it, you end up with the sort of inadequate mess we have at the moment.

Finally, please, no behind-the-scenes discussion by email. It is much better for discussion to be open for all to see on talk pages.

--NSH001 (talk) 21:44, 21 July 2009 (UTC)

Thanks for that NSH001. All experienced writers, and I have had items published elsewhere, recognise multiple issues here. Leaving aside NPOV, OR, balance and citations, it reads more like a set of notes than a proper article and serious consideration has to be given to starting with a clean sheet or reversion.

I hope to persuade people with the full recent background, including Penrose and the Judicial Review to contribute. This of course is only half the article and your additional sources are a welcome addition.

The email was to ensure competent authors albeit novice Wikipedians knew where to begin, and yes, first item is to check the discussion pages, second to get a list of unimpeachable sources. Disaster avoidance rather than anything more sinister, I assure you, and normal use of discussion page for planning thereafter. regards JRPG (talk) 10:47, 22 July 2009 (UTC)


 * I've just taken a quick look at the Ros Altmann article, and am very uneasy. It is full of inaccuracies and misleading statements. For example: "and the insurance company keeps the capital in exchange for a lifetime income". This is nonsense - the company retains the capital, and has to deplete it year-by-year in order to pay the annuity, since the annuity is greater than the investment return on the capital. The company is insuring the annuitant against excess longevity, and in fact in recent years annuity companies in the UK have made losses, not profits, on mortality. There's plenty more I could add, but that belongs on the Altmann talk page, not here. I just hope we can do a lot better on this article.
 * --NSH001 (talk) 07:48, 26 July 2009 (UTC)


 * It is full of inaccuracies and misleading statements.  Bit of a sweeping statement don't you think?  She is a political campaigner and the Pensionstheft and Equitable campaigns have been checked by others.  I fully understand the mechanism of an annuity -and agree with your description but the text seems a concise summary.  That said, I welcome any contructive contribution you can make. Feel free to rewrite, point out or fix errors on Ros Altmann, including the estimated financial drawbacks of Capital Guarantees, we both want to get it right ..but please don't bite the newbies, at least not those on this page!  regards JRPG (talk) 19:35, 9 August 2009 (UTC)

I've made some amendments to the text which I hope make it clearer. I've also broken the article into sections so it reads less like a list of events. I will try to take a longer look in the next few weeks.

Swinnow16 (talk) 17:29, 9 August 2009 (UTC)


 * Just breaking it up makes it look better. Could you leave the history section including the Hyman case, except for minor edits?  I'll do that including weasel killing.

NSH001, those references are good, and I don't know if I would have found them so thanks for that. JRPG (talk) 21:38, 10 August 2009 (UTC)

"Multiple Issues" all sorted??? Please advise.
I've rewritten most sections, using headings and events cited by Swinnow16 and Ecadobes and the history references supplied by NSH001. In general I've used newspaper or BBC references rather than original multipage reports, partly because it provides a summary that the user can very easily check and partly because these articles also link to main reports -and the context. The exception is the European Parliament which doesn't seem to have a convenient synopsis but is, I believe important because it is the only one entirely outside UK control. I've also linked to With-profits policy to provide definitions though I still need one for the Appointed Actuary referenced by several other insurance articles. Items like the historical reason for the term Actuary are of much wider interest and I will put them in William Morgan's profile.

Whilst post 2000 events are more than half the document, I think it is important to show the degree and quality of regulation and its consequences from NPOV. Of course this article could be improved, we all want that but I'd welcome either constructive criticism or removal of most of the issue warnings. Could you let me know if you have time to do this NSH001? If it isn't possible, and I do understand you are busy, I will find an alternate financial expert.

Regards JRPG (talk) 23:11, 31 August 2009 (UTC)


 * Thanks for your hard work, JRPG. I've removed most of the tags, leaving only the "recentism" and "expert" ones. This does not mean the article is perfect concerning the problems previously noted.


 * In general, newspaper and BBC reports are unsuitable for basing an encyclopaedic article, except for very recent events, where they are the only source available. For example, "wiping up to 50% off the value of policies" (from a newspaper ref) is misleading and does not belong in the lead in my view. Similarly I think the phrase "the additional £1.5B hole in its assets" is meaningless and unencyclopaedic. There really is no substitute for carefully reading through the reports, but even then, one has to be careful to guard against selective quotation, which might be regarded as original research.


 * FWIW, my view is that Equitable was a well-managed company that made a stupid mistake (it's an elementary principle of actuarial practice that you don't write an option against the company (the classic one is guaranteeing surrender values), but that if you do, you charge for it adequately, reserve for it prudently (very costly, one reason why you don't do it) and limit the maximum liability by reinsurance or restricting the volume of business), but that the real villains are the lawyers and legal system that turned a bad situation into a total disaster. That's the nub of it in my view (my view may change once I've read all the reports), but our job is to present the facts and let our readers decide.


 * Feel free to recruit other experts (but better than Ros Altmann, please). I am sure I will come back to spend a lot of time on this article in the future. I see it eventually turning into a large article which will have to be written summary style, spawning several sub-articles. In the meantime, I can't emphasise enough the importance of quality sources, and the need to avoid sensationalised news reports as sources.


 * --NSH001 (talk) 12:09, 1 September 2009 (UTC)


 * Firstly thanks for such a prompt reply, -and thanks for the award. You're right about summary style but outside my experience as previous articles were mostly grown from stubs.   This is important as seen from :-
 * An historical viewpoint as the first Life Assurance Company
 * A legal viewpoint. FWIW I believe the Law and customer expectations changed from Carlill v Carbolic Smoke Ball Company onwards as both Parliament and the HOL moved in favour of the the consumer. The GAD was satisfied as Equitable had taken legal advice.  I agree that issuing GARs and simplying relying on article 65 was an extraordinary gamble -which they would have won in 1800. I've hardly touched the legal aspects.
 * Parliament, the courts, HMG. The PO is responsible to Parliament, HMG is not the supreme body and must give cogent reasons for overturning her decisions. We may see a future judicial review covering a minister's authority to overturn a ruling going to the Supreme Court.
 * Regulation and the EU.  Huge questions here about how well UK regulation works, whether there is a level playing field and whether the UK will compensate non UK EU citizens to levels they would have expected before 3LD came into force. Equitable Life members are likely to be interested in this.  User talk:Lizatcookham has read the full documents.


 * In short, for good article status, this may require a range of expertise. Because of neck problems with RSI I can't give much more time though I may include something from the interesting Cazalet Financial Consulting Memorandum in the introduction and reduce the largely irrelevant failed legal efforts.
 * I had intended to ask an independent trustee with no Equitable connection to look at the article, in a QA role only as per best engineering practice -if he will.


 * FWIW I've been interviewed by BBC, Observer and Sunday Telegraph reporters and always been impressed with their accuracy. The difficulty we always had is getting complex corporate finance, and private equity deals understood by their business readers -even in longer articles.   It invariably had to be simplified.
 * Regards JRPG (talk) 18:30, 2 September 2009 (UTC)


 * Just some observations prompted by the above comments – but note what I am about to say is all from memory, as I have yet to plough through all the reports, so I may modify these comments after reading all the sources.
 * Please note that I did not say that relying on article 65 was an "extraordinary gamble". From memory (but I will have to check this), all Equitable's major competitors wrote similar GAOs (Guaranteed Annuity Options) in their policies. This was a natural consequence of the legislation introducing OMOs (Open Market Options): these policies were intended to provide annuities in retirement, but when OMOs were introduced, life companies were forced by market pressure to write them as pure endowments (maybe with bits of life cover tacked on) in order to compete on the lump sum at maturity, an obvious conflict with their intended purpose. So there was strong pressure to add GAOs.
 * It is not clear how these companies regarded the risks involved. Remember that the generation of actuaries running these companies had gotten used to a decade or two of interest rates in the range of 12% – 18%, so writing GAOs at 6% or 7% didn't seem that bad a risk. Nevertheless, they would have been aware, from their training, of the dangers of writing an "option against the office". The correct action would have been to offset the risk using derivative contracts with other financial institutions. In theory, this would have been quite cheap to begin with, though the cost would have later risen rapidly, both with the rising volume of business and falling interest rates.
 * Most companies took the view that this was just another of the risks/rewards shared by with-profit policyholders, so that no explicit offsetting of the risk with other institutions was necessary. Therefore, when interest rates fell and the options acquired significant value, they simply declared bonuses on the assumption that the options would be exercised. This is a perfectly reasonable interpretation of the respective offices' constitutions in my view.
 * No doubt Equitable's management shared the same view, but somehow presented it to its policyholders in such a way that it could be challenged in court.
 * In my view, it is perverse that the Equitable should have been singled out in this way to be royally fucked by the legal system. Remember, it was one of the best-run companies, not a charlatan like the Carbolic Smoke Ball Company.
 * Again, a personal view – I have little sympathy with the GAR policyholders, and even less for their legal advisors. In my view, their action had everything to do with greed, and very little to do with consumer protection. They had already had a good return on their money, and they (or their advisors) would have known that a "successful" outcome of their court case would simply have resulted in fucking everybody in sight, including themselves – the very opposite of consumer protection.
 * Of course all of the above is original research, written from my personal experience, so it can't go in the article without proper sourcing. But I am certainly, when I have time, going to come back to this article and read through all the sources with this view in mind. It is certainly possible that I may modify my view after reading through the sources. Please also note that I have no connection with the Equitable, unless you count working for one of its competitors. --NSH001 (talk) 18:21, 22 September 2009 (UTC)

Don't know what happened but I replied to this 2-3 weeks ago. I have a 1K with profits taken out in 1998 when Hyman was imminent, not a life changing event. The words "extraordinary gamble" come from one of the major cited reports (sorry forgotten which one). They are far too POV to be mine even on a discussion page, as I don't have a solid enough pension background. Equitable's solicitors appear complacent. I had no problems then as now with the concept of low reserves and low cost of sales but I agree they should have offset the risk. The European Parliament report was an eye opener. A CEO doubling as Reporting Actuary is unacceptable, the regulators were a waste of taxpayers money. I have benefited from your comments though. I haven't read the legal reports, something I want to do, but this is another section must be included before the article is complete. I'm sure the judges decision would have been based on ensuring it was what Parliament wanted. They would have been very well aware of the unfairness to Non-Gars but law based on equity has long been found to be inconsistent and consistency is essential. Regards JRPG (talk) 11:56, 13 October 2009 (UTC)

Some light Christmas reading
I've just opened my copy of the December issue of The Actuary magazine, as one does when one wants some light reading at Christmas, to find a letter to the editor saying: I trust that all actuaries properly recognise that Equitable Life was actually destroyed by a well-meaning but totally flawed judgement from the Law Lords in 2000. This judgement imposed on the Society a bonus policy that was partial in favour of one major group of policyholders, requiring the Society to pay benefits to these policyholders worth some £2bn more than had been earned by their own contributions.

[...]

Lawyers, particularly Lord Penrose, have sought to find others to blame for this tragedy. The latest version concocted by the parliamentary ombudsman is, in my view, totally scurrilous. The title of her report is certainly not supported by the flimsy content, most of which comments on matters totally irrelevant to those that brought about the demise of the Society.

[...]

While I naturally have great sympathy for the policyholders of Equitable Life who have suffered severe financial disappointment over the last nine years, I do not for one minute accept that they should receive financial compensation from taxpayers based on any purported failings of supervision by the GAD over the 10 years prior to the enforced closure of the Society. I would hope that all other actuaries would recognise the unfairness of such a false conclusion.

That pretty much sums up my own view. The full letter can be read here: http://www.the-actuary.org.uk/871312

--NSH001 (talk) 21:07, 26 December 2009 (UTC)


 * Seasonal greetings, I'm sure "The Actuary" letter page is being closely studied by Wikipedians albeit not always as scrupulously NPOV as you or I :)
 * A significant section missing from this article -on my long term todo list -is the reason for the HOL decision. Another fun read. I'm certain their Lordships would accept the judgement is grossly unfair on non GAR policyholders but will be cited in cases relevant to a whole range of industries and legal principles are that you avoid exceptions.
 * I can remember football world finances being similarly turned upside down by the Bosman ruling. JRPG (talk) 12:45, 27 December 2009 (UTC)


 * I've added a section describing the Lords ruling and a link to their judgment. I don't think it is "totally flawed", however unfortunate its consequences may have been.Swinnow16 (talk) 17:04, 2 January 2010 (UTC)


 * As it happens, I made a start yesterday on reading the Penrose Report, and was not impressed. Apart from the fact that the first few pages are out of order - making it very difficult to follow the flow - the substance of the report is no less confusing. It is often quite difficult to tell what the hell he is talking about. Even right at the beginning, in para 2. of the section on annuity guarantees, he is talking as if Equitable had written the 1950-1980 policies as pure endowments, with an annuity rate guarantee attached, an impression reinforced by the next paragraph. Now I would be surprised if that were in fact the case, since most companies wrote their policies as deferred annuities in that period; I suspect the guarantee he is referring to is the basic annuity written in the contract, quite a different matter from the annuity rate guarantees that the fuss is all about. It's clear to me that the only way I'm going to be able to make sense of this is to get hold of the actuarial returns submitted by Equitable. These returns set out, according to clear rules, the whole of the company's business and show inter alia for each class of policy the sum assured/annuity, premium, declared bonus and the corresponding actuarial reserve, together with a full description of the valuation basis. They also set out a full description of all the policies written, including, crucially, any options attached to the policies. This may be original research in primary sources, but it is the only way to decipher what the hell Penrose (and no doubt the other reports) are talking about, and to form a judgement about what sections of the reports are valid for basing a Wikipedia article on.


 * And FWIW, I think "totally flawed" is a charitable description of the legal decision. My impression, reinforced by reading Penrose, is that they really don't know what they are talking about.


 * --NSH001 (talk) 19:24, 2 January 2010 (UTC)


 * Re the HOL decision, I don't think they had much choice. Life Assurance is a very long term contract.  It probably is an exception case where Article 65 fairly and honourably applied previously had and should should continue to override whatever had been promised but if so, Parliament should have legislated specifying the exception accordingly. Without that, their lordships had to consider what effect their decision would have on every other vaguely similar guarantee.
 * Re WP:OR if the accounts have been audited and can be checked via Company House then the rational objection to primary sources, i.e. lack of independent verification simply isn't valid. It may be too difficult for another editor let alone a lay reader to check this though and it sounds a lot of work.  I personally found the European Parliament report interesting.


 * --Regards JRPG (talk) 23:42, 23 January 2010 (UTC)

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Incorrect logo associated with this page
The Equitable Life Insurance Company of Canada's logo appears instead of the logo of The Equitable Life Assurance Society. I don't know how to correct/edit this. Can someone please assist? Equitable Life of Canada (talk) 13:46, 6 March 2018 (UTC)


 * Err, there is no logo on this page. --NSH001 (talk) 18:19, 6 March 2018 (UTC)