Standard Life Plc (SL/) sued insurers including ACE European Group Ltd. for 100 million pounds ($157 million) claiming its policy should have covered a loss on asset-backed securities triggered by the collapse of Lehman Brothers Holdings Inc. (LEHMQ)
Standard Life, which is based in Edinburgh and manages about 157 billion pounds, was forced to inject 100 million pounds into its Standard Life Pension Sterling Fund in 2009 during the credit-market contraction that followed Lehman’s 2008 failure, according to documents filed at a London court. Because the fund was marketed as a low-risk, cash-based investment, the losses led to hundreds of complaints and media criticism.
Sandy Crombie, Standard Life’s former chief executive officer and chairman, testified in court today that the marketing literature for the fund had been “hopelessly inadequate.” The company’s response to the losses was motivated by a desire to do “the right thing,” he said.
Standard Life is suing ACE European Group, a London-based affiliate of ACE Ltd., and 10 other firms that provided professional indemnity insurance which it said should cover the costs. The Standard Life Pension Sterling Fund, which was valued at 2.2 billion pounds and had 97,000 customers at the end of 2008, invested around half its value in debt securities.
The case relates to the decision by Standard Life to make a payment of about 100 million pounds into the fund in February 2009, “something the insurers have refused to indemnify,” Standard Life spokesman Paul Keeble said in an e-mailed statement.
Clair Whitefield, a spokeswoman for ACE, declined to comment on the litigation.
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