The alert comes after Equitable Life chiefs revealed at its annual general meeting that the company had only escaped becoming insolvent by moving its funds out of the stock market in the nick of time.
Plummeting share prices brought Equitable to the brink of demise, forcing it to sell equities.
Chairman and director Vanni Treves called 2002 the ‘annus horribilis of the life and pensions sector’.
He said the sale of equities had been ‘quite simply a bet the bank’ decision, but explained the company had little choice but to reduce the effects of significant market turbulence.
Philip Long, head of corporate recovery at PKF, said he was convinced many insurance companies have been facing a similarly difficult position.
He said many firms have already cleaned up their books of losses, but warned there is still more ‘good housekeeping’ in asset management to be done.
‘I’m sure there are companies out there that when they come to the final year in their accounts they find that their equity position isn’t very healthy,’ he said.
Vanni Treves revealed the company’s equity position made the outlook for policyholders ‘unthinkably grim’. ‘If we had not moved out of the equities when we did, I can tell members that we would now be bust and in the hands of administrators,’ he admitted.
He went on to say that ‘given the turbulent equity markets, many other life and pensions offices have made similar or higher adjustments’.
Not only life assurance companies are at risk, throughout the insurance market companies have been on the brink of insolvency or have fallen over.
Last week, personal injury insurer, the Accident Group, showed how fragile the insurance market really is. When its parent company the Amulet Group went into receivership, it made 2,400 employees redundant by text message, keeping only 200 staff to handle ongoing claims.
Despite the redundancies, administrators from PricewaterhouseCoopers plan to advertise the remaining parts of the group for sale.
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies
Smith & Williamson has been appointed administrators of charity 4Children