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Last Updated: Monday, 17 October 2005, 16:23 GMT 17:23 UK
Equitable drops 'lost sale' claim
Equitable Life
The Equitable has dropped part of its case
Troubled mutual insurer Equitable Life has abandoned part of its attempt to sue 11 of its former directors.

It has abandoned a claim that the directors through mismanagement had missed an opportunity for the mutual to be sold.

The Equitable said it had abandoned its "lost sale" claim in the High Court to reduce its legal costs.

However, the Equitable will continue to pursue its claim that the directors were negligent in their duties.

In recent weeks the Equitable has dropped similar actions against four former directors and auditors Ernst& Young.

Recoup losses

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 court decided the insurer had wrongly reneged on its obligation to pay a guaranteed level of income to 90,000 holders of special policies called Guaranteed Annuity Policies.

The High Court decision meant the cost of meeting the promise to these policyholders could only be financed from money set aside for all the other savers with the society.

This shortfall of about 1.5bn caused the society to close to new business and pushed it to the brink of collapse.

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