Equitable ends £2bn claim by settling with ex-directors

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The Independent Online

Vanni Treves, the chairman, and Charles Thomson, the chief executive, said that although they were "bitterly disappointed" with the legal proceedings' result, they had no regrets. In total, the action - which started out as a £2.2bn claim against its former auditors Ernst & Young and a £1.7bn claim against 15 of its former directors - cost the insurer £45m, some £10m more than it had budgeted.

Equitable was suing E&Y and its former directors for negligence in the period leading up to the society's collapse in 2000.

Mr Treves said that although this was an enormous sum of money, it was equivalent to just £75 per policyholder - a cost which he believes most policyholders would have been happy to sanction at the time. He added that the company was now in talks with two companies with a view to selling parts of the business. These are believed to be Prudential and Hugh Osmond's Life Company Investor Group. However, although Prudential is understood to be the lead bidder to buy a proportion of Equitable's deferred annuity book, industry executives yesterday remained sceptical that the society was anywhere close to selling its £10bn with-profits fund.

This would require the insurer's demutualisation. However, potential buyers of the book said they were unsure what level of earnings stream a demutualisation would produce, adding that Equitable had yet to make any calculations as to the future value of the company.

Although Hugh Osmond, Resolution and Swiss Re are all believed to have expressed interest in the closed with-profits fund, it is believed none of them are willing to entertain making an offer until Equitable clarifies its potential future earnings.

Equitable Life Members Action Group, one of the main policyholder organisations, yesterday reiterated calls for Mr Treves to resign, claiming the litigation had been "a rich man's game that policyholders couldn't afford".

However, Mr Treves said neither he nor Mr Thomson had any intention of resigning. He said: "We're looking at a major disappointment, but it was something we had to do, and when I reason that against all the things that have gone right, I think there is nothing to resign about. The society is in a better place than when we took office four and a half years ago ... [when] we were nearly bust. We are now not just in a solvent position, but in a financially stable condition."