Beleaguered insurer Equitable Life, which closed to new business after losing a landmark legal case, may face further challenges from disgruntled policyholders, a senior lawyer has warned.

Barrister Nicholas Warren has said that Equitable, which faced a �1.5bn funding gap after being forced by the House of Lords to honour payout guarantees on some policies, may be open to challenge by holders of other packages.

The warning followed a three-month search by Mr Warren for a legal foundation on which Equitable could construct an appeal against the Lords' ruling.

But he found instead that the ruling "does not preclude" the holders of non-guaranteed policies "from asserting... such contractual or other claims as they can establish", Mr Warren said in his report.

Equitable has asked Mr Warren to further investigate the likelihood of the insurer falling foul of further claims.

"This will take some weeks and the outcome will be published," Equitable's statement said.

"At that stage [the Equitable] will evaluate the implications (if any) of Mr Warren's further work."

Hopes dashed

Mr Warren also dashed Equitable's hopes of challenging July's House of Lords ruling, which prompted the insurer to sell its sales operations to the Halifax in an effort to raise cash to close the funding gap.

He said there was little opportunity for the Equitable to exploit an admission by one of the lords who heard the case that he was a holder of a guaranteed policy.

"There is nothing in this point since he expressly drew attention to this conflict and that the possible objection was, in our view, effectively waived," Mr Warren said.

Equitable said on Monday: "Clearly there is no way the House of Lords' ruling can be reopened."

Negligence probe

The report comes amid a campaign by the Equitable, which has come under new management, to step up efforts to recoup funds and settle its financial crisis.

The 239-year-old insurer last month revealed is might take legal action against former chiefs, and professional advisers.

"City law firm Herbert Smith will look at the possibility of bringing claims for alleged negligence against former directors and advisers," the company said in a statement.

The firm was led to crisis by payment pledges made in the 1970s and 1980s when the UK economy, then characterised by relatively high interest rates and high inflation, was expected to sustain strong investment returns.

Such returns have proved difficult to maintain under the recent economic climate.

Equitable's new chairman Vanni Treves is reported to be keen to persuade the holders of policies with guaranteed payouts to agree a compromise dividend.

This agreement would trigger the payment of �1bn from the Halifax into the Equitable's coffers.