STEPHEN Hester, the former chief executive of Royal Bank of Scotland, has been hired to run RSA Insurance in the wake of the discovery of a £200m black hole at its Irish business.
Mr Hester has joined RSA with immediate effect, taking over from Martin Scicluna, the insurer's chairman, who stepped in to the chief executive role in December after the resignation of then boss Simon Lee.
Mr Lee's departure followed the shock announcement in November of a capital shortfall in the company's Irish business that was initially put at £70m, but has ended up at £200m.
Commenting on his appointment, Mr Hester said he would be working on a review of the business to help the company "re-emerge as an attractive solidly performing group".
"The challenges of recent months have demonstrated that we have not lived up to our stakeholders' expectations and performed to our true potential," he said. "We have an obligation to deliver shareholder value and excellent products and services that provide everyday protection for our customers."
RSA has warned that its 2013 dividend is under threat, following a 33pc cut in the previous year's payout. However, an investigation into the Irish losses supported an initial finding that the problems were an "isolated case".
The main issues facing RSA are improving controls to avoid a repeat of the scandal that saw the insurer's three most senior managers here suspended. Philip Smith, chief executive of the Irish business, has since resigned.
Mr Hester will be paid a salary of £950,000. However, he will be granted an initial award under RSA's long-term incentive plan of £2.85m, or 300pc of salary, and a bonus of 160pc of salary, or £1.52m.