The Equitable Life Assurance Society
Introduction


**The Equitable Life Assurance Society** (**Equitable Life**), founded in 1762, is a [life insurance](/wiki/Life_insurance "Life insurance") company in the United Kingdom. The world's oldest [mutual insurer](/wiki/Mutual_insurer "Mutual insurer"), it pioneered age\-based premiums based on [mortality rate](/wiki/Mortality_rate "Mortality rate"), laying "the framework for scientific insurance practice and development" and "the basis of modern life assurance upon which all life assurance schemes were subsequently based". After closing to new business in 2000, parts of the business were sold off and the remainder of the company became a subsidiary of Utmost Life and Pensions in January 2020\.

At its peak in the 1990s, Equitable had 1\.5 million policyholders with funds worth [£](/wiki/Pound_sterling "Pound sterling")26 billion under management, but it had allowed large [unhedged](/wiki/Hedge_%28finance%29 "Hedge (finance)") [liabilities](/wiki/Liability_%28financial_accounting%29 "Liability (financial accounting)") to accumulate in respect of guaranteed fixed returns to investors without making provision for adverse market changes. Many policyholders lost half their life savings, and the company came close to collapse.

Following a July 2000 [House of Lords](/wiki/House_of_Lords "House of Lords") ruling and the failure of attempts to find a buyer for the business, it closed to new business in December 2000 and reduced payouts to existing members. Lord Penrose's 2004 [Equitable Life Inquiry](/wiki/Equitable_Life_Inquiry "Equitable Life Inquiry") found that the company had made over\-generous payouts leading it to be under\-funded. A 2007 European report concluded that regulators had focused on solvency margins and failed to consider the increasing risk of accrued terminal bonuses. In 2010, government announced compensation to policy\-holders of £1\.5bn.

In June 2018, Equitable Life announced that Life Company Consolidation Group (now Utmost Life and Pensions) had agreed to buy the company for £1\.8bn, with most policies to be transferred to Utmost's Reliance Life subsidiary and converted to [unit\-linked](/wiki/Unit-linked "Unit-linked"). Some of the proceeds of the sale would be returned to the remaining 400,000 policyholders in the form of increased bonuses on their policies. The sale completed at the end of 2019\.


What other examples of under-funded insurance companies exist?