EQUITABLE LIFE MEMBERS

Equitable Life to transfer £4.6 billion of non-profit pension annuities to Canada Life - Press Release

11 May 2006

Last Updated: Sunday, May 14, 2006 01:00 PM

The Equitable Life Assurance Society ("Equitable Life" or "the Society") announces today that it has reached agreement with Canada Life Limited ("Canada Life") for the reassurance and subsequent transfer of most of its non-profit pension annuity business, comprising approximately 130,000 policies.

The transaction will not affect the pension payments made to the transferring policyholders. Initially Equitable Life will continue to pay policyholders, with Canada Life assuming the obligations through reassurance. Following the completion of a Court process, it is intended that the policies will transfer to Canada Life under a Part VII scheme. Canada Life will then take over direct responsibility for the payment of the transferred pensions. Application to the Court is expected to be made later this year or in 2007.

Equitable Life will transfer to Canada Life £4,628 million of assets (as at 1 January 2006) in return for Canada Life accepting responsibility for the future pension payments (from that date). The amount of this transfer, together with all related costs, does not reduce Equitable Life’s available capital resources or its excess realistic assets as reported as at 31 December 2005.

Because Equitable Life is a mutual insurance company, its with-profits policyholders currently bear the risk of unexpected future increases in non-profit pensioners’ life expectancy leading to increased costs of paying pensions. The size of this risk is disproportionately high relative to the size of the Society’s free assets. This transaction removes most of that risk, improves the financial stability of the Society and reduces its capital requirements.

Canada Life has established expertise in the UK annuity market and is already making regular payments to over 150,000 UK annuitants.

Canada Life has proven experience in this type of acquisition having completed the transfer of a £2.18bn annuity book of business in 2005 involving 58,000 annuitants. Canada Life has the investment expertise and efficient cost base to make it profitable to take on this business.

This transaction represents a major strategic step in the continued expansion of Canada Life’s presence in the UK and is expected to enable Canada Life to benefit from greater economies of scale in a growing market.

The Society’s board of directors, which has received financial advice from Lexicon Partners Limited, actuarial advice from Deloitte and legal advice from Lovells, considers the transaction with Canada Life to be in the best interests of the Society and its policyholders as a whole.

Authorised and regulated by the Financial Services Authority. The Equitable Life Assurance Society is a mutual society registered in England No. 37038. Registered Office: 20-22 Bedford Row, London WC1R 4JS, United Kingdom. The Equitable group comprises: The Equitable Life Assurance Society, University Life Assurance Society. Authorised and regulated by the Financial Services Authority. The Equitable Life Assurance Society is a mutual society registered in England No. 37038. Registered Office: 20-22 Bedford Row, London WC1R 4JS, United Kingdom. The Equitable group comprises: The Equitable Life Assurance Society, University Life Assurance Society.

A Part VII scheme is a statutory process available for the transfer of insurance business under Part VII of the Financial Services and Markets Act 2000. The Part VII transfer will have to be approved by the Court and an Independent Expert will report considering the effect of the proposed transfer on all policyholders (those who are to transfer to Canada Life, those who are to remain at Equitable Life and those of Canada Life.) The Financial Services Authority (FSA) - which has a statutory responsibility to safeguard policyholders’ interests – is entitled to be heard by the Court and will approve the form of the Independent Expert’s report. The Society has discussed the proposed transaction with the Independent Expert and the FSA. The Independent Expert has indicated that his preliminary conclusion is that no policyholders will be adversely affected by the proposed transaction. The FSA has indicated that at present it is not minded to object to the proposed transaction.

Under the terms of the reassurance, Canada Life has agreed to reassure Equitable Life's liabilities in respect of the business from 1 January 2006 until the Part VII transfer becomes effective following its approval by the Court. This means that the economic risks and rewards associated with the business have been transferred from Equitable Life to Canada Life.

Vanni Treves, Equitable Life’s Chairman said:

"This is an important development arising from the Society’s ongoing review of strategic options. Whether or not further deals are possible, this is a very significant step forward which will increase the financial stability of the Society for the benefit of our remaining policyholders."

Charles Thomson, Equitable Life’s Chief Executive said:

"This is very good news for the Society’s policyholders. We have been able to run a competitive process which we believe has resulted in an attractive outcome. Our with-profits policyholders will benefit from the removal of a significant risk on attractive terms, whilst the transferring non-profit annuitants will move to a strongly capitalised group which is committed to expanding its operations in the UK market."

Ian Gilmour, Chief Executive Officer of Canada Life said:

"We are delighted to have agreed this transaction with Equitable. This is the largest acquisition of a non-profit annuity portfolio to have occurred in the UK. This transaction is a major strategic step in our continued expansion in one of our key business areas."

For further information contact Tim Balkwill e-mail TBalkwill5310448@aol.com