RSA's chief executive resigns over Irish issues

Friday 13 December 2013 17.37
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RSA's chief executive, Simon Lee, resigns over issues related to the company's Irish subsidiary
RSA's chief executive, Simon Lee, resigns over issues related to the company's Irish subsidiary
Shares in insurance company drop sharply in London trade
Shares in insurance company drop sharply in London trade

The chief executive of insurer RSA, Simon Lee, has resigned over issues related to the company's Irish subsidiary.

RSA also said it is also injecting £135m sterling in fresh capital into its Irish unit to ensure it meets regulatory standards for solvency and has sufficient funds on hand to meet future claims.

This is in addition to the £70m in funding put into RSA Ireland in November after financial issues at the subsidiary first came to light.

RSA shares closed over 7% lower in London trade this evening, after falling as much as 18% in earlier trade. 

RSA said it had completed a review of its Irish business and its reserves, the money set aside out of premium income to cover possible future insurance claims.

A further review, which is being undertaken by consultants PwC, will be completed in January.

In a statement to the stock exchange, RSA said the impact of the further cash injection into its Irish operation would reduce its 2013 profits. This marks the third profit warning the insurer has had to issue in the past two months.

Along with this month's storms in the UK and Scandinavia costing it another £25 million in claims, RSA warned of a further reduction in earnings for this year and an impact on next year's dividend payout for shareholders.

RSA's chairman Martin Scicluna said Simon Lee had resigned "to enable a change in leadership" at the company. 

In a statement, RSA said Mr Lee would not receive any severance payment "beyond his contractual entitlement".

Last month, the chief executive of RSA Insurance Group's Irish unit, Philip Smith, resigned.

In a statement, Mr Smith said he was made a "fall-guy" amid an internal investigation into the insurer's accounting practices, which left it impossible for him to achieve justice and fairness. He said he was left with no other option but to resign.

Mr Smith, who became CEO of RSA's Irish business in 2007, and two other executives - its chief financial officer Rory O'Connor and claims director Peter Burke - were placed on leave on November 8 pending an internal investigation of accounting practices at the unit.   

Keywords: rsa