Equitable Life has assured its 25,000 Irish policyholders their money is secure and it will continue to be invested for them under the terms of their policies if they wish to continue that arrangement.
The society will immediately cease to sell new policies, having failed to attract a buyer to invest the necessary capital to restore the strength of its with-profits fund.
Mr Noel Creedon, Equitable Life's managing director in Ireland, said policyholders should consider their individual circumstances when considering whether to pay additional premiums under their existing policies.
It will continue to accept premiums that policyholders are entitled to make under existing policies but customers can alternatively opt to cancel that policy and be paid its full value without incurring an exit charge.
"Those policyholders who may need to take early decisions are those who have taken out a policy within the last 14 days, those who pay regular premiums or those who have an option to make additional payments within the next few days," Mr Creedon said yesterday.
Anyone who took out a policy within the last 14 days can still cancel that policy as they fall under the statutory cooling off period.
The society has decided to extend that period to December 22nd to allow for proper consideration by those affected.
The company has stressed that growth will accrue to with-profits policies in the normal way in line with the investment performance of the with-profits fund but it has pointed out, with regret, that the loss of growth in with-profits policy values from January to July 31st, 2000, is unlikely to be restored.
"All policyholders' benefits will continue to be paid out in line with the contractual obligations under their policies. Growth will accrue to with-profits policies in the normal way in line with the investment performance of the with-profits fund," he said.
The performance of the with-profits fund will be impaired by the fact that these funds will need to be invested to a greater extent in bonds and gilts rather than equities, which historically have generated higher returns in the longer term.
The society intends to re-balance the with-profits fund to this effect over an extended period lasting at least several months.
Unit-linked funds are invested separately from the with-profits fund and the investment strategy for these investments will remain unchanged going forward. Anyone with concerns can contact their local branch or Equitable's head office in Dublin at 01 676 3003.
A general information line is also available and can be reached at 0044 870 600 2272. The society has a website which contains helpful information at www.equitab le.co.uk.
