Amid new revelations that the financial community and the government authorities knew a lot more about its financial problems, than previously revealed, the U.K.’s Equitable Life continues to seek a way to cap its liabilities to its guaranteed annuities holders, and to sell at least a portion of the company in order to maintain its viability.
Until recently, Aegon, the Dutch financial and insurance group, had expressed interest in acquiring Equitable’s 400 strong sales force, but it announced yesterday that it was no longer interested, as it didn’t see any way to make an adequate return on its investment.
GE Capital has also expressed some interest, but has never made a firm offer. The only company presently seeking a deal is Australia’s AMP.
Equitable wants to sell its sales force, asset management business and administrative operations in exchange for an initial payment, and future payments based on the amounts it actually has to pay its annuity holders. Most previous deals have foundered on this contingency, as no one has been able to accurately predict how much may be at stake. The minimum figure is £1.5 billion ($2.2 billion), but some estimates put it as high as £5 billion ($7.35 billion).
According to a BBC report representatives of the Bank of England, the Financial Services Authority and the Treasury met with Equitable management two days before it acknowledged that Prudential (U.K.), the last potential buyer, had backed out of the deal. The revelations have increased calls from policy holders, and the Conservative opposition, for a full investigation into how Equitable’s financial crisis was allowed to reach the proportions it has without regulators stepping in sooner.
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