RSA Insurance, the UK firm, said in a statement today that it had fired the RSA Ireland CFO, Rory O’Connor and the RSA Ireland claims director, Peter Burke, who "were dismissed for their roles in relation to large loss and claims accounting irregularities." Both dismissals were confirmed yesterday following the completion of appeal processes. The RSA Ireland chief executive Philip Smith who was suspended with his two colleagues in November, resigned that month.
A review by PricewaterhouseCoopers (PwC) of "electronic documents of circa 60 individuals has identified documentary evidence that supports the Board’s view that there has been inappropriate collaboration involving a small number of senior executives in Ireland. Specifically, this evidence suggests that certain individuals acted in such a way as to intentionally circumvent parts of the existing Control Framework."
RSA Insurance added: "In particular the large claim reserving policy was circumvented. By so doing, financial records did not fully reflect the financial position of the business and reports made to Group and Regional Management were inaccurate and potentially misleading. This undermined the effectiveness of controls which placed significant reliance on senior management integrity."
During Q4 2013, RSA announced a total of c.£200m (€242m) of losses within RSA Insurance Ireland. These losses comprise:
RSA said the end of year group reserve review is currently underway and we will report its findings as normal in our preliminary results in February.
The insurer said that controls within the Irish finance function did not operate effectively allowing inappropriate accounting for Net Earned Premium and pipeline earnings. "A local programme of remediation has already begun and we continue to work with the Irish regulator, the Central Bank of Ireland."
Martin Scicluna, RSA 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. The Board
is now confident that the financial and claims irregularities were isolated to
Ireland and do not reflect the quality of our control framework elsewhere in the
The scandal at the insurance group, which led to RSA delivering three profit warnings in six weeks in the run-up to Christmas, triggered the resignation of group chief executive Simon Lee.
RSA says that it "has a long tradition in the Irish market, writing non-life insurance business here since 1721. We are the largest and fastest growing insurer in the Republic of Ireland with an extensive range of Commercial and Personal lines products channelled through a network of insurance brokers and scale partners and via the well known 123.ie brand, one of the leading direct personal insurance providers."
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