Equitable Life's management and former board have come under heavy fire in the Penrose report, with former directors described as being inadequately skilled to know they were being kept in the dark by the management team.
In his key findings, Penrose identifies that as early as 1983 the society's executive management had decided to meet the cost of its annuity guarantees from final bonuses, a decision not communicated to the board until 10 years later and not to policyholders until 1995.
He describes Roy Ranson, who between 1982 and 1992 was the appointed actuary and from 1992 to 1997 was both appointed actuary and chief executive, as “highly intelligent and articulate, but manipulative” and “autocratic”.
Penrose says the board was presented with technical and financial information but in a fragmented way so that it was unlikely to be able to build up a picture of the society's overall situation.
Ranson's successor as app-ointed actuary in 1997 was Chris Headdon, who took over as chief executive when Alan Nash resigned in 2000. Penrose says he did not “make good” the lack of information and advice on actuarial matters that occurred in Ranson's time.
Penrose describes the skills of Equitable's former board as inadequate for the job, believing it never got to grips with the society's financial situation.
He says: “Equitable's non-executive directors were so wholly dependent on actuarial input from the executive and in particular the chief executive/actuary that they were largely incapable of exercising any influence on the actuarial management of the society.”