Equitable under fire from FSA

EQUITABLE Life was under fresh attack today when it was revealed the insurer had heavily overstated its financial position to the Financial Services Authority in 1999.

The FSA said Equitable had just handed it a letter in which the insurer agreed it would cap the amount it could claim under a reinsurance contract to substantially less than the £700m limit contained in the contract given to the regulator at the time.

Equitable had been required to take out the reinsurance to ensure it had sufficient reserves to meet its potential liabilities under guaranteed annuity rate policies. But an FSA spokesman said the regulator would not have accepted the reinsurance contract had it been aware of the letter.

It is thought the letter's discovery could lead to yet another claim for compensation against the embattled insurer by its policyholders.

The letter, dated 1 April 1999, was written by Equitable's in-house actuary, Christopher Headdon, to the Irish European Reinsurance Company. The FSA said Equitable had given it a copy on 24 September this year.

'The new management of the society said that they themselves had only recently become aware of its existence,' the FSA said. 'Consideration will be given to whether any action should be taken by the FSA.'