Financial News

  • 15 December 2013, 17:17

RSA Boss Quits Over Insurer's Irish Woes

Shares in More Than insurer RSA tumbled 19% on opening on Friday after its chief executive resigned amid the crisis in its Irish division.

Simon Lee, whose job was on the line after two recent profits warnings, stood down with immediate effect.

He held the job for two years and will receive his contractual entitlement of £824,000 in lieu of 12 months' notice, paid on a monthly basis.

RSA said a review of its Irish business found it will need to strengthen reserves by £130m, on top of the £70m hit identified last month after a routine internal audit uncovered a financial black hole in the division.

With this month's storms in the UK and Scandinavia costing it another £25m 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 chairman Martin Scicluna will take on Mr Lee's duties while a successor is found.

He said: "Simon felt it was in the best interests of the group that he step down to enable a change in leadership."

Mr Scicluna also announced a review of the group's businesses, which will be completed by the time of full-year results in the spring.

Philip Smith, the head of RSA's Irish division, resigned at the end of last month after he was suspended alongside two other executives pending the review's outcome.

It relates to a surge in bodily injury claims in the motor insurance market, which requires its reserves to be strengthened by £130m.

RSA will also inject £135m of capital into RSA Insurance Ireland to ensure that its solvency ratio is maintained above 200%.

Auditor PwC is currently carrying out the review of the Irish business and is expected to file its report next month.

The plunge in RSA's share price on the FTSE 100 was said by Barrie Cornes, an insurance sector analyst at Panmure Gordon stockbrokers, to have placed RSA on the radar screens of rivals looking to acquire some of its better performing businesses.

He added: "We would highlight the emerging markets business as being one which RSA might be 'forced' to sell but we suspect that the Canadian and Scandinavian businesses are the parts that competitors would be particularly interested in."