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RSA sacks Irish arm's finance boss and claims director over 'collaboration' RSA sacks Irish arm's finance boss and claims director over 'collaboration'
(about 1 hour later)
RSA Insurance, which owns the More Than brand, is trying to draw a line under the scandal at its Irish division after an independent investigation found "inappropriate collaboration" among managers led to a £200m hole in its finances. RSA Insurance, which owns the More Than brand, is trying to draw a line under the scandal at its Irish division after an independent investigation found "inappropriate collaboration" among managers led to a £200m hole in its finances.
The report, led by PricewaterhouseCoopers (PwC), confirmed that the issues were isolated to Ireland and alleged that executives sought deliberately to sidestep group governance controls.The report, led by PricewaterhouseCoopers (PwC), confirmed that the issues were isolated to Ireland and alleged that executives sought deliberately to sidestep group governance controls.
RSA said Irish finance boss Rory O'Connor and the division's claims director Peter Burke were dismissed over the issue on Wednesday following a disciplinary and appeals process. Irish chief executive Philip Smith had already resigned after being suspended. RSA said its Irish finance boss, Rory O'Connor, and the division's claims director, Peter Burke, were dismissed over the issue on Wednesday following a disciplinary and appeals process. Its Irish chief executive, Philip Smith, had already resigned after being suspended.
But RSA revealed yet more woes as it said the severe flooding in the UK and Ireland over Christmas, combined with the ice storms in Toronto, would further hit 2013 figures. The group's Irish crisis contributed to three profit warnings in six weeks before Christmas, which led to the resignation of group chief executive Simon Lee. RSA also revealed yet more woes, saying that the severe flooding in the UK and Ireland over Christmas and the ice storms in Toronto would hit its 2013 figures further. The group's Irish crisis contributed to three profit warnings in six weeks before Christmas, which led to the resignation of the group's chief executive, Simon Lee.
Martin Scicluna, RSA's executive chairman, said: "The issues which emerged in our Irish business in 2013 were completely unacceptable and I have made it my personal priority to ensure that this never happens again. We acknowledge that there are lessons to be learnt and we are tightening elements of our control and financial framework in response to these events."Martin Scicluna, RSA's executive chairman, said: "The issues which emerged in our Irish business in 2013 were completely unacceptable and I have made it my personal priority to ensure that this never happens again. We acknowledge that there are lessons to be learnt and we are tightening elements of our control and financial framework in response to these events."
PwC confirmed that further writedowns were not needed on top of the £200m set aside to cover the Irish accounting hit. But shares fell 2% amid fears over RSA's balance sheet strength and as Panmure Gordon analyst Barrie Cornes said the latest weather losses amounted to "yet another profit warning". PwC confirmed that further writedowns were not needed on top of the £200m set aside to cover the Irish accounting hit, but shares still fell 2% amid fears over RSA's balance sheet strength. As Panmure Gordon's analyst Barrie Cornes said, the latest weather losses amounted to "yet another profit warning".
RSA said it was too early to put a figure on the impact of the weather claims, but Cornes estimated profits could be knocked by another £35m. He added that it was likely the final shareholder dividend would be axed – a payout which is under review as RSA seeks to boost its finances and as a result of the further weather hit. RSA said it was too early to put a figure on the impact of the weather claims, but Cornes estimated profits could be knocked by another £35m. He also said it was likely the final shareholder dividend would be axed. The payment is under review as RSA seeks to boost its finances.
A routine internal audit flagged up problems in the group's Irish division in November, which it said would result in a £70m profits hit; a month later the amount set aside was increased by £130m to pay for a surge in motor insurance bodily injury claims in the division. A routine internal audit flagged up problems in the group's Irish division in November, which it said would result in a £70m profits hit. A month later the amount set aside was increased by £130m to pay for a surge in motor insurance bodily injury claims in the division.
It was reported in December that investors were calling on the 303-year-old business to put itself up for sale or dispose of international operations. It was reported in December that investors were calling on the 303-year-old business to put itself up for sale or dispose of international operations.
PwC, which scoured through electronic documents of some 60 staff at RSA, found governance controls were appropriately strict and there were no obvious signs that the issues in Ireland had been ignored by group managers. PwC, which scoured the electronic documents of saround 60 RSA staff, found governance controls were appropriately strict and there were no obvious signs that the issues in Ireland had been ignored by group managers.
Fellow accounting firm KPMG and RSA's internal audit team also conducted reviews, which concluded that the issues were a one-off. Fellow accounting firm KPMG and RSA's internal audit team also conducted reviews that concluded the issues were a one-off.
But PwC's report said controls in Ireland were weak and has recommended tightening controls at local country levels and a further review of how policies are followed across the group. PwC's report said controls in Ireland were weak and recommended tightening them at local country levels, along with a further review of how policies are followed across the group.
RSA is working with the Prudential Regulation Authority in the UK and the Central Bank of Ireland to improve controls. It added that its search for a new chief executive was "progressing". RSA is working with the Prudential Regulation Authority in the UK and the Central Bank of Ireland to improve controls. It added that its search for a new chief executive was progressing.
Scicluna, who is leading a review of the group's businesses, said: "The board and I remain confident that RSA will re-emerge as a stronger group during 2014."Scicluna, who is leading a review of the group's businesses, said: "The board and I remain confident that RSA will re-emerge as a stronger group during 2014."
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