Stricken insurer to pursue alternative claim againt former auditor, Ernst & Young
The High Court ruled today (Monday, 10 February), that Equitable Life's action against its former auditor Ernst & Young should be struck out. Stricken insurer Equitable was brought to its knees by guaranteed annuity rate (GAR) pensions it could not pay and sued E&Y for negligence and £2.6bn damages. Equitable alleged the business could have been sold for £2.9 billion in September 1998 if the accountants had assessed the true value of the GAR liabilities. Equitable now plans to mount an alternative claim against E&Y for the value of bonuses paid between 1998 and 2001. Mr Justice Langley said in Mondays judgment that this alternative claim was "seriously flawed" and "fanciful" but allowed it to proceed. Ernst & Young is represented by Barlow Lyde & Gilbert and Equitable by Herbert Smith.