Standard Life Sues 11 Insurers for Pension Losses

(October 13, 2011) — Britain’s fifth-biggest insurer, Standard Life, is suing insurers including ACE European Group Ltd. for £100 million ($157 million) over pension fund losses.

Edinburgh-based Standard Life, which manages about £157 billion, is suing 11 of its insurers, claiming its policy should have covered a loss on asset-backed securities fueled by the collapse of Lehman Brothers Holdings, Bloomberg reported. In 2009, following Lehman’s collapse, Standard Life was forced to inject £100 million into its Standard Life Pension Sterling Fund.

In early 2009, the fund lost 5% of its value as a result of its holdings in asset-backed securities, despite being marketed as a ‘cash’ fund. In response to the loss, advisers and investors voiced outrage, claiming that marketing materials has been misleading.

In a court hearing earlier this week, Sandy Crombie, Standard Life’s former chief executive officer and chairman, testified, noting that the company’s response to the losses was motivated by a desire to do “the right thing,” according to Bloomberg.  

Last year, Standard Life was fined £2.45 million by the Financial Services Authority (FSA), which said it had misled investors.