RSA Insurance has fired two Irish executives after a PricewaterhouseCoopers probe confirmed financial irregularities and “inappropriate collaboration” by managers.
RSA Ireland chief financial officer Rory O'Connor and claims director Peter Burke were dismissed "for their roles in relation to large loss and claims accounting irregularities", the London-based insurer said in a statement.
The British insurer has placed the blame for £200 million (€241.9 million) of losses on a “small number of senior executives” in Ireland after the PwC a review into financial irregularities confirmed inappropriate collaboration among managers.
PwC found evidence suggesting individuals intentionally circumvented parts of RSA’s controls, including its large-claim reserving policy.
As a result, the financial records didn’t fully reflect the financial position of the business, and reports made to more senior management were “inaccurate and potentially misleading,” RSA said.
The insurer estimates that the total costs from the irregularities and reserve review will be £200 million (€241.9 million).
“Our investigations have confirmed that the claims irregularities in Ireland were, in large part, the result of deliberate collaboration between a small number of executives there,” RSA executive chairman Martin Scicluna said in the statement.
“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.”
Last November, RSA revealed it had suspended Mr O’Connor and Mr Burke, as well as Ireland chief executive Phillip Smith, pending an investigation. Mr Smith resigned later that month saying he was made a “fall-guy.”
RSA also said an internal audit and testing from its newly appointed external auditor, KPMG, found the financial and claims irregularities were isolated to Ireland.
About £1.3 billion was wiped off the company’s market value in 2013 after RSA issued three profit warnings in the fourth quarter.
The insurer has said it now expects a “mid-single digit” return on equity for 2013.
The stock has climbed 9.3 per cent this week on speculation a competitor may make a takeover offer.
Bloomberg
