New row over Equitable's former chief

A NEW row has erupted over the conduct of Christopher Headdon, former chief actuary to Equitable Life.

The Financial Services Authority last week said that the value of cover in a £700 million reinsurance contract Equitable had taken out was called into question by a letter Headdon wrote in April 1999.

The contract was a key element in Equitable's efforts to stabilise its finances when it became clear that it could face big payouts on guaranteed pensions.

Regulators were told of the reinsurance contract at the time. But Headdon's letter to Equitable's reinsurers - which, according to claims made by FSA sources, effectively reduced the value of Equitable's cover - came to light only a few weeks ago.

Friends of Headdon say the letter had no impact on Equitable's finances: the contract covered the society against violent swings in the stock market, not against changes in interest rates.

'The contract was required by the Treasury for solvency purposes and it insured the society against any fall in the stock market and so the value of the funds,' an associate of Headdon said.

'The letter was simply an indication, based on the size of the fund and market risk, of what might be claimed,' he said. 'The contract remains the contract and the letter did not affect the value. In any event, the contract fell down when the House of Lords ruling [that Equitable should honour guaranteed annuity pensions in full] went against the society.'

The FSA believes the letter and the failure to disclose it supports the regulator's assertion that Equitable may not have been acting openly with regulators.

Headdon, 45, joined Equitable as an actuarial trainee in 1978 after reading maths at Oxford. He took over the chief executive's role after Alan Nash stepped down last December and was ousted when Vanni Treves became chairman in March. Treves described Headdon as 'tarnished'.

Headdon is on 'gardening leave' from Halifax, which took over the operating arms of Equitable at the start of the year.