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Sir John Chadwick issues third and final interim report on an ex-gratia payment scheme

News Release issued by the COI News Distribution Service on 04 March 2010

Issued by the News Distribution Service on behalf of The Office of Sir John Chadwick.

Sir John Chadwick has today issued his third and final interim report on an ex-gratia payment scheme for policy holders most affected by events at Equitable Life, which sets out:

• the provisional answers to the questions Sir John needs to address in his advice to the Government;

• Sir John’s provisional view on which life companies are suitable as a basis for a comparator in the assessment of relative loss resulting from accepted maladministration;

• His provisional views as to what factors the Government may wish to take into account when considering which policyholders have experienced disproportionate impact from the accepted maladministration; and

• provisional quantitative advice from Sir John’s actuarial advisers, Towers Watson (formerly Towers Perrin) on how the Society’s financial position would have been presented differently to the public absent maladministration.

Sir John’s Third Interim Report develops from his Second Interim Report of December 2009, in response to which he received a number of representations. Many of these responses are also published today.

Those wishing to make representations on Sir John’s Third and final Interim Report are requested to send written comments to him by 9 April 2010.

Sir John will review all representations he receives while his team continue its further detailed analysis. To assist Sir John in deciding whether it is reasonable for him to rely on its advice, Towers Watson has appointed a panel of three senior external and independent actuaries to peer review its actuarial assumptions and methodology.

Sir John expects to provide his final advice to the Government in May 2010.

Notes to editors
1. Sir John’s interim report “Equitable Life ex-gratia payment scheme: Third Interim Report” is available from the HM Treasury website and that of the Office of Sir John Chadwick.

2. Sir John was engaged by the Government in January 2009 to advise on:
- the extent of relative losses suffered by Equitable Life policy holders;

- the proportion of losses which can be apportioned to a) the maladministration accepted by the Government, and b) the actions of Equitable Life and its advisers;

- which classes of policy holder have suffered the greatest impact as a result of the maladministration accepted by the Government;

- factors arising from this work which the Government might wish to take into account when reaching a final view on determining whether disproportionate impact has been suffered; and

- the nature and extent of the finding of maladministration and injustice in relation to Finding 5 and the nature and extent of the finding of injustice in relation to Findings 2 & 4 so far as those Findings are now accepted.

3. In December 2009 Towers Perrin merged with Watson Wyatt to form Towers Watson.

4. The actuarial peer review panel has been appointed by Towers Watson. Sir John welcomes its appointment. The Panel is comprised of Gavin Hill FIA, Peter Shelley FIA and Michael Urmston FIA, none of whom have or had any connection with Equitable Life.

a. Gavin Hill was a Managing Director at National Mutual Life from 1988 to 2002 and is now chief investment officer at ‘telent’

b. Peter Shelley has been a senior actuary at AXA UK since 1990 and is currently the With Profits Actuary for several funds

c. Michael Urmston was chief actuary and then Finance Director at Aviva Life. He retired in 1998 and is now non executive director on a range of life assurance company boards

5. Sir John issued his earlier document “Equitable Life ex-gratia payment scheme: Second Interim Report” on 16 December 2009.

6. For information about the Office of Sir John Chadwick, please refer to its website. This will allow access to all material produced by Sir John, as well as his ongoing reports of progress. Users can also sign up for automatic emails, updating them on any news or new material.

7. Representations and comment in response to this consultation document should be put in writing and sent by 9 April 2010 to: The Office of Sir John Chadwick, One Essex Court, Temple, London, EC4Y 9AR
Email: info@chadwick-office.org

Contacts:

NDS Enquiries
Phone: For enquiries please contact the above department
ndsenquiries@coi.gsi.gov.uk

Sir John Chadwick press office
Phone: 020 7270 5238
info@chadwick-office.org