Equitable Posts an $898-Million Loss for 1991

Equitable Life Assurance Society of the United States said Monday that it lost $898 million last year under a new accounting system implemented to bring the insurer closer to becoming a public company owned by stockholders.

Equitable attributed the loss partly to a $562-million accounting charge against earnings, associated with the discontinuation of its guaranteed investment contract business. The figures are derived from generally accepted accounting principles, the required method for publicly owned companies.

The nation’s fourth-largest insurer is in the process of converting from a mutual concern, owned by policyholders, to a publicly traded company owned by shareholders. The switch will allow it to raise money through the sale of stock.

In 1991, Equitable spent $75.6 million on fees to bankers, attorneys and actuaries who worked the so-called demutualization. Executives expect Equitable, the largest insurer to demutualize, to incur similar costs this year as a result of the going-public process.

Equitable, which has assets of $46 billion, also reported a loss of $307.8 million from continuing operations based largely on write-offs and allowances taken against real estate, junk bonds and commercial mortgages.

Richard Jenrette, Equitable’s chairman and chief executive, said in an interview that results were adversely affected by aggressive write-downs taken to “get us ready for the public environment and get the problems behind us.”

In a letter to policyholders and employees, Jenrette noted that without the “special one-shot and non-recurring charges for reserves and asset valuation, Equitable would have reported pretax earnings of $198 million.”