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RSA chief Simon Lee quits as Irish woes deepen RSA shares fall 16% as chief Simon Lee quits over Irish woes
(about 1 hour later)
RSA Insurance Group's chief executive, Simon Lee, has resigned amid deepening problems at the firm's Irish division. Shares in RSA Insurance Group fell 16% in early trading after the firm's chief executive, Simon Lee, resigned amid deepening problems at its Irish unit.
RSA said he would stand down from its board and leave the group with immediate effect. RSA said he would leave the group with immediate effect.
Last month, RSA suspended the head of its Irish unit, Philip Smith, who later resigned, after alleged accounting irregularities were discovered.Last month, RSA suspended the head of its Irish unit, Philip Smith, who later resigned, after alleged accounting irregularities were discovered.
RSA has now said the unit's reserves will need to be strengthened by a further £130m.RSA has now said the unit's reserves will need to be strengthened by a further £130m.
The majority of this was to cover an increase in bodily injury claims in the motor insurance sector, it said.
"This is in addition to the £70m previously announced on 8 November relating to claims and finance issued in Ireland," the firm said in a statement."This is in addition to the £70m previously announced on 8 November relating to claims and finance issued in Ireland," the firm said in a statement.
It added that the impact of the strengthening its Irish reserves and of last week's storms in Europe would hit the group's earnings for this year and possibly reduce dividends. It added that strengthening its Irish reserves and last week's storms in Europe would hit the group's earnings for this year and possibly reduce dividends.
"We now expect mid-single digit group return on equity in 2013," it said."We now expect mid-single digit group return on equity in 2013," it said.
Problems 'isolated'Problems 'isolated'
RSA said that until it could find a permanent replacement for Mr Lee, Martin Scicluna would become executive chairman. RSA, which owns the More Than brand, said that until it could find a permanent replacement for Mr Lee, Martin Scicluna would become executive chairman.
Mr Scicluna said Mr Lee had "felt it was in the best interests of the group that he step down to enable a change in leadership".Mr Scicluna said Mr Lee had "felt it was in the best interests of the group that he step down to enable a change in leadership".
The problems in Ireland were discovered after a routine audit, but RSA has not given details about what happened.The problems in Ireland were discovered after a routine audit, but RSA has not given details about what happened.
Mr Lee said last month that RSA was "extremely disappointed with the issues which have been identified and their financial impact on the group".Mr Lee said last month that RSA was "extremely disappointed with the issues which have been identified and their financial impact on the group".
But he maintained that the problems were "isolated to the Irish business" and that "no policyholders have been affected".But he maintained that the problems were "isolated to the Irish business" and that "no policyholders have been affected".
Analyst Eamonn Flanagan of Shore Capital said that the share price fall could make RSA vulnerable to a takeover bid.
"Too strong a negative reaction is likely to deliver an opportunistic bid for the group, in our view," he added.