Halifax buys Equitable for £1bn

The Halifax is buying Equitable Life for £1bn.

The Halifax is buying Equitable Life for £1bn.

It will pay £500m to buy the Equitable's non-profit and unit-linked business, which has an embedded value of approximately £300m.

It will also take over its administration, which will be managed by Clerical Medical, and its sales force, which will be rebranded the Halifax Equitable.

Halifax will then try to achieve a settlement between the Equitable's guaranteed and non-guaranteed annuity policyholders - the cause of the life assurance society's problems.

It will pay £250m unconditionally and a further £250m, depending on whether the Halifax Equitable sales force meets targets for new business, sales and profitability in 2003 and 2004.

The Halifax will have no exposure to the Equitable's with-profits fund, which is closed to new business and remains mutually owned by its policyholders.

Halifax chief executive James Crosby says: "Halifax has structured a transaction which is rewarding to our shareholders and fair to the Equitable's policyholders.

"We now have an unrivalled opportunity to deliver value in the long-term savings market."

The transaction has been welcomed by the Financial Services Authority.

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