Charles Thomson formally took over as the new CEO of troubled U.K. insurer Equitable Life, which is facing a parliamentary investigation of its financial troubles, and has agreed to sell its offices, sales force and fund management operations to mortgage lender Halifax.
Thomson, who’s in the process of selecting a new board of directors, will oversee the completion of the sale, and his first challenge will be to convince Equitable’s policy holders to approve a cap on “with profits” annuity payments, a condition of the deal with Halifax. He has some leverage, however, as these bonus payments, estimated to total in excess of £1.5 billion ($2.17 billion), have been suspended pending the approval.
Meanwhile a select parliamentary committee is looking into the whole affair. According to the Financial Times, MP’s are expected to question Chancellor of the Exchequer Gordon Brown closely over the extent of his department’s involvement with Equitable. One MP told the FT that “This could be the last chance to get some answers and there is a real determination on both sides of the committee to secure details on when ministers were first informed and what they were told.”
Regulatory authorities have been harshly criticized for allowing Equitable Life’s problems to reach the proportions they did without earlier intervention, and for failing to inform the public of them as soon as they became evident.
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