EQUITABLE Life has abandoned negligence claims against two of the 15 former directors it has been pursuing in legal action and scaled back its claims against Chris Headdon, its previous chief executive.
In what is being seen as the latest attempt to disentangle itself from a raft of increasingly unsuccessful litigation, Europe's oldest mutual said it had reached settlement terms with Peter Martin and Shaun Kinnis, with each party agreeing to pay its
own legal costs.
The claim against the others continues, but after a similar case against auditors Ernst & Young - originally claiming £2 billion - was dropped a fortnight ago, industry watchers expect more cases to be dropped.
All the legal actions have been part of an attempt by the Equitable's current management to recoup some of the losses it suffered when it lost a High Court case in 2000.
The society said yesterday it had dropped one of three legal actions against Headdon, relating to his role as "reporting actuary" in the preparation of its annual accounts at a time when it came close to financial collapse. Equitable said it continued to pursue Headdon "in relation to his role as a director and as appointed actuary".
Equitable Life teetered on the brink of financial collapse and was forced to shut for new business in 2000 after the House of Lords ruled that it was obliged to meet guarantees offered to certain of its policyholders.
After the debacle, the new management at Equitable, led by chief executive Vanni Treves, launched a series of high-profile damages claims, initially accusing former auditors at E&Y of failing to spot the liabilities. It also launched a £1.7bn claim against the 15 former directors, accusing them of negligence as well.
The insurer shows signs of returning to financial health. Last week, it reported a 30 per cent increase in its solvency position during the first half and revived the possibility it might successfully sell the business. However, amid increasing fears that a court would rule against it in the E&Y claim "as a matter of fact", the insurer last month dropped its action against the auditors. In terms similar to yesterday's arrangement, both Equitable and E&Y agreed to meet their own legal costs, in a move expected to cost each party £30m.
Equitable did not disclose the expected legal costs of yesterday's settlements, although the two separate claims against Headdon and claims against 13 other of its former directors continue.
The full article contains 426 words and appears in The Scotsman newspaper.
