Equitable Life's 20,000 Irish with-profit policyholders will not get any returns on their investments for the six-month period January to July this year. But the mutual life assurer said yesterday that policyholders would not lose out. Equitable manager for the Republic, Mr Noel Creedon, said that the group is maintaining its forecast rate of return from 1st August 2000 to the end of the year at 13 per cent on pension policies and 10.75 per cent on investment policies.

Some of this return will come from the proceeds of the sale of the operation, he said. All the effective values as at 31st December 1999 on with-profit policy statements are being maintained.

These returns apply to both new and existing business. Customers with unit-linked investments and conventional annuities are not affected by the bonus changes.

Equitable said it would write to all its policyholders shortly to set out the reasons for the decision to demutualise and the position regarding their policies. The Equitable board was forced to reassess its position following last week's UK House of Lords ruling on Guaranteed Annuity Rates. The ruling, that Equitable was not entitled to give different levels of final bonus to policyholders who take their benefits using Guaranteed Annuity Rates, left the life assurer with liabilities estimated at £1.5 billion sterling.

In a statement yesterday, Equitable said that while no growth would be added to with-profit policies for the January to July period, it aimed to maximise the value obtained for members through the sale of the operation.

This should replace the loss of growth over the January to July period for the with-profit policy holders. Any windfall gains after liabilities are paid on the sale will be the property of members who had a with-profits policy in force before July 20th 2000 and who continue to hold such a policy until the sale is completed.