Where There's Life.

(From Financial Director)

Byline: Peter Bartram.

Troubled pensions provider Equitable Life is in the news again as it tries to buy off another group of dissatisfied former policyholders.

The mutual has hardly been out of the headlines since the House of Lords ruled two years ago that it had to honour an undertaking made to holders of guaranteed annuity policies to increase payments.

The Law Lords' judgment blew a GBP 1.5bn hole in Equitable's accounts and led directly to it closing to new business after 238 years. It triggered the resignation of the entire board - now being sued by the new board for GBP 3bn - and set off a civil war among different classes of policyholder over the society's remaining assets.

So perhaps the surprise is not that Equitable is still in the news, but that it is still here at all. And FDs who think the only reason for studying its affairs is to wallow in schadenfreude, should think again. The way Equitable Life dug itself out of its GBP 1.5bn hole has a few useful lessons for companies that find themselves harassed by groups of dissatisfied stakeholders - and with more profit warnings on the horizon, it looks as though the ranks of the grumblers are set to grow.

Gavin Grant, vice-chairman of PR agency Burson-Marsteller, was close to the centre of Equitable Life in the months leading to the vote in January 2002 when members agreed a compromise plan that ended the immediate threats of legal action and winding up. He says: "Stakeholder power is without question on the rise and it's extremely unwise to say, 'It could never happen to us.'"