Insurer claims to have additional cover for actions against directors
Troubled Equitable Life insisted this week that it had additional directors' and officers' (D&O) cover, despite reports that it had already claimed the maximum available.
At the beginning of 2003, Equitable directors claimed £5m on its D&O policy with Royal & SunAlliance (R&SA) to mount defence costs.
One leading D&O broker said this week that this represented the limit of Equitable's D&O cover.
"Equitable only had £5m in D&O cover and this policy has already paid out," said the broker.
But an Equitable spokeswoman said that the life insurer did have extra D&O cover, but refused to reveal the limit of the cover it had in place.
The recent Penrose report on Equitable Life said the insurer was the "author of its own misfortunes".
Fifteen former Equitable directors are being sued for £3.3bn on the grounds of negligence and breach of duty.
He said that US and Bermuda insurers had seen the UK and Europe as "the crock of gold at the end of the rainbow".
"The US and Bermuda markets believe they can make a fortune by underwriting D&O in the UK and Europe," Firman said. "But D&O liability is not just a US problem, it's also a UK and Europe problem."
Firman cited the examples of Equitable Life and Parmalat as evidence of the risk of very large D&O claims occurring in the UK and Europe.
In 2002, it is estimated that global D&O premiums totalled £3bn, while £12bn was paid out in claims.