Life insurer Equitable Life has been granted High Court approval to transfer its policies to another regulated company, in a move that could release £1.8bn in extra capital for policy holders.
In June last year Equitable Life, which almost collapsed in 2000 due to mismanagement at the firm, announced it would transfer all is policies to Utmost Life and Pensions, sister firm of Reliance Life, as a way to return an average amount of £6,900 to the 261,000 remaining policies.
This was after it pledged in March it was looking to offer its policyholders thousands of pounds in cash from the reserves it had built up over the past two decades.
At the beginning of November this year eligible policyholders voted on the proposals, the results of which Equitable Life said were "overwhelmingly in favour" of the changes, and in a statement on its website yesterday (December 4) the insurer confirmed it had received High Court approval for the transfer.
The changes will be put into effect on January 1, 2020, but will not apply to Equitable Life's policies governed under German law.
In its statement the insurer encouraged policyholders to now decide which funds they would now like to invest in and confirmed the next communication would be from Utmost Life and Pensions detailing the exact amount of uplift and their investment choice.
Simon Small, chief executive Equitable Life, said: "We are delighted to have received High Court approval for our proposal, which we believe will return capital to policyholders quickly and fairly.
"Utmost Life and Pensions will provide policyholders with long-term security and peace of mind about their life and pensions policies."
Stephen Shone, chief executive at Utmost Life and Pensions, said: "We are looking forward to all Equitable policyholders joining us so we can secure your future together."
Equitable Life had found itself locked into paying out high interest rates promised at a time of high inflation - in the 1970s - at a time of low interest rates and inflation, when it found it hard to fund those commitments.
The debacle led the UK government to pay back £1bn to eligible policyholders by the end of 2014.
The Equitable Life payment scheme closed to new claims on 31 December 2015.
rachel.mortimer@ft.com
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