Equitable Life has said it will be "in the forefront of those calling on the government to do the right thing"

if the parliamentary ombudsman recommends govern-ment compensation for policyholder losses.

Unveiling annual results yesterday, Equitable chairman Vanni Treves and chief executive Charles Thomson said they expected the parliamentary ombudsman, Ann Abraham, to deliver her much-delayed inquiry into Equitable's regulation in the summer.

In the event of a recommendation for compensation, Equitable would "continue to work with politicians to support that goal", which had already been urged by the European Parliament.

Treves and Thomson, installed to turn the insurer round seven years ago, said it was from "a position of relative strength and security" that it would "invite third parties to approach us with proposals which could improve the prospects for policyholders".

In the past year Equitable has done two major deals to offload policies to Canada Life and Prudential. Hinting at a further sell-off and wind-down of the company, Treves and Thomson said that "if such a change appears to be the right way forward it would probably be implemented during 2009".

Equitable reported the settlement three months ago of the legal action against it for mis-selling with-profits annuities. It noted that 873 people had begun the action in 2004, but only 401 remained at the end. The pay-out, on which the claimants are subject to a gagging order, is said to be "well within the provisions which the society had made".

Some 50,000 with-profits annuities were similarly sold by Equitable in the period in question. It added that 78 legal claims had now been lodged "in various regional courts in Germany we will examine these claims in due course and consider them on their individual merits".

The with-profits fund made an effective net return of 1.9% last year, half the 2006 return. Policy values are again being increased by 5% for pensions and 4% for life policies. The early surrender penalty remains at 5%. Excess realistic assets, the measure of solvency, fell from £884m to £621m because of transferred policies, but are now 9.2% of the fund against 9.4%.