Coverage of Equitable Life has been in the news again this week due to a number of issues.
Firstly, there was the appointment of a new finance and investments director, Nigel Brinn. Mr Brinn replaced Charles Bellringer who resigned in November.
The second piece of news relates to Equitable's legal battle with their former auditors, Ernst & Young. As people following the Equitable Life saga will know, the company is suing their former auditors for what could be over £3bn and alleging professional negligence. Ernst & Young, however deny that any blame lies with them for the current state of the company.
The court case follows Equitable's allegation that Ernst & Young should have realised their high risk exposure, especially with the number of guaranteed annuity clients and should not have okayed some of their accounts.
The court case is ongoing and will cost millions of pounds in legal fees between the two companies and may not be settled until 2005. The question that has to be asked is will 2005 be too late?
The third piece of news concerns the solvency of Equitable Life. Whilst Equitable admitted some time ago that it had breached its solvency margin, the industry regulator, the Financial Services Authority, permitted them to continue trading. They believed this was in the best interests of policyholders.
The minimum amount of assets above liabilities for insurance companies is 4% and Equitable is said to be very close to this now. One industry analyst believes that if matters get worse more bonus cuts and penalties could be on the way.
Equitable Life have apparently denied this.
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