Equitable Life

In 1762, a group including mathematician James Dodson and an instrument maker named Edward Nairne established a new type of life assurance company. Their venture, The Equitable Life Assurance Society, was groundbreaking. It was a mutual society, owned by its policyholders, and it used mathematical principles to link premiums to age, a novel concept at the time. For over two centuries, this model proved incredibly successful. The company built a reputation for stability and reliability, becoming a cornerstone of the British insurance industry. By the mid-20th century, Equitable Life began offering guaranteed annuity rates (GARs). These policies promised a minimum income in retirement, a feature that became hugely attractive as interest rates fell in the late 1990s. The company found itself locked into promises it could no longer afford to keep. This led to a pivotal moment in the late 1990s when the company tried to dilute the value of these guarantees. A legal battle ensued, culminating in a House of Lords ruling in 2000 that went against Equitable Life. This decision triggered a financial crisis within the company. Facing insolvency, Equitable Life closed to new business in December 2000 and put itself up for sale. The near-collapse of the world's oldest mutual life assurer sent shockwaves through the UK's financial services industry. In 2007, the company sold a large part of its business to the specialist insurer Utmost Life and Pensions.