The acting chief executive of RSA's insurance business in Ireland told The Irish Times yesterday that its decision to inject €100 million into the reserves of the business was to demonstrate that the UK parent company was fully committed to supporting its subsidiary and was here for the long term.
After a dramatic day that saw its Irish chief executive Philip Smith and two other senior executives being suspended, RSA announced that its UK parent had injected the additional capital into the business.
This had the effect of bolstering its capital ratios to 228 per cent, well ahead of the 150 per cent level required by the Central Bank of Ireland.
"It's more than enough to cover what we've found," said Adrian Brown, acting chief executive of RSA Ireland. "We've put money into this business to make sure it's very well capitalised on a go-forward basis.
“As a group we’ve got a lot of faith in our Irish business. It’s a very strong business. What we wanted to do was act with pace and make sure this was a well-capitalised company. We deliberately moved in excess of where we needed to give that surety.”
Mr Brown has been drafted in by RSA’s British parent group along with two other senior executives from the UK to run the Irish business on an interim basis while the three Irish executives – Mr Smith, chief financial officer Rory O’Connor and claims director Peter Burke – are suspended.
The trio were suspended pending the outcome of an investigation into issues in the Irish claims and finance functions identified during a routine internal audit. RSA expects its operating profit to be £70 million (€84 million) lower this year as a result.
The company’s group legal director and head of human resources have taken charge of the procedures around the suspensions.
Separately, the company is investigating a spike in “bodily injury” motor claims, which date from 2012 and 2013
No customer impact
Mr Brown said there was no customer impact from the two issues identified by the company and its business in Northern Ireland was not affected. RSA's Irish business is run on an all-island basis.
RSA held an emergency board meeting yesterday to rubber-stamp the additional capital.
The insurer set up a sub-committee of its board of directors, comprising independent non-executive directors, to lead the investigation.
The company spent most of last night trying to communicate with staff and customers about the issues that have rocked the business.
Mr Brown accepted that the publicity would not be helpful to Ireland’s biggest insurer. “Clearly this is going to have an impact,” he said. “I’m going to do everything in my power to demonstrate that we’re here for the long term.”
