Did anyone learn anything from the Equitable Life? Lessons and learning from financial crises. (Sept 2012)
“The focus of this report is what lessons might potentially have been drawn from Equitable’s crisis and what was learned, and how they related to the subsequent financial crisis of 2007-08.
Richard Roberts, Professor of Contemporary History, Institute of Contemporary British History (ICBH), King’s College London
‘Shed a tear for the passing of the world’s oldest mutual life assurer,’ declared ‘Lex’ in the Financial Times on 21 July 2000, reporting a House of Lords legal ruling that resulted in Equitable Life being immediately put up for sale. The judgment was the unexpected culmination of the legal process initiated by Equitable seeking court backing for its differential bonus policy. But why was the illustrious 238-year-old institution in trouble?
The Equitable Life crisis, which began publicly in the late 1990s, was the biggest crisis in the modern history of British insurance and pensions.
This further report … presents an outline of Equitable’s historical development and crisis based on a range of written sources, particularly the reports on Equitable by Ronnie Baird (2001), the FSA’s internal auditor, and Lord Penrose (2004), a judge, and conversations with informed individuals.
The focus of this report is what lessons might potentially have been drawn from Equitable’s crisis and what was learned, and how they related to the subsequent financial crisis of 2007-08.
‘It is difficult to avoid the conclusion that the mutual has been guilty of hubris,’ commented the Financial Times in 2000.
Download a pdf here: Equitable_Life_Final_Report