Equitable Life has dropped negligence claims against two of the 15 former directors it has been pursuing for a total of £1.7bn.
Peter Martin, a former non-executive director, and Shaun Kinnis, a former sales and marketing director, have both agreed to end the action and pay their own costs, which could run in to millions of pounds. The deal follows a settlement two weeks ago that saw Equitable abandon its £700m claim against its former auditors Ernst & Young.
The move came as Nick Land, Ernst & Young's chairman, attacked the action as "ill-conceived and badly-prepared". He said he hoped the outcome would stop similar "opportunistic claims" and reinforce the Government's commitment to allow auditors to limit liability to discourage "deep pocket litigation".
Equitable wants the remaining directors, who include Jennie Page, the original chief executive of the Millennium Dome, and Wilson Bowden's chairman, David Wilson, to settle on the same terms, with each individual paying their own costs. But a number are reluctant to do so. Their costs are thought to be about £20m in total and only £5m is recoverable through insurance.
Some former directors, such as Mr Martin, defended themselves in court, and a number struck "no win, no fee" agreements with their solicitors that will see them bear most of the costs if they lose. Tim House, from Allen & Overy, which is representing six of the former directors, said: "The society should face up to the full consequences of this débâcle, discontinue the remaining claims and shoulder the necessary costs burden."
In another sign that Equitable's case against the ex-directors is crumbling, the insurer also had to admit yesterday that it was dropping a large part of its negligence claim against Chris Headdon, the former chief executive.
A statement from Mr Kinnis's solicitors said: "Although Mr Kinnis has agreed to pay his own costs his liability for such costs over and above his share of the directors' and officers' insurance is very modest. Whilst we were confident the claim against him would be unsuccessful, nothing is certain in litigation. This settlement gives Mr Kinnis certainty."
Paul Weir, an Equitable policyholder campaigner, said that though it was pragmatic to drop the claims against individuals, continuing with the case would have discovered the truth."Reuse content