RSA avoids further action for now after capital boost
THE Central Bank is unlikely to take further action against Ireland's biggest insurance group, Royal Sun Alliance (RSA), after it underwent an emergency injection of capital and oversaw the dramatic suspension of its three top executives on Friday.
The insurer, which has 90,000 customers and 1,000 staff in Ireland, took the swift action after "issues" emerged in its Irish division over the claims and its finance functions during a "routine internal audit".
It is understood that the action taken by the RSA has been enough to satisfy the regulatory body for now.
According to informed sources, the Central Bank has been working with the RSA over a "prolonged period" and does not intend to take further regulatory action for now, but will continue to closely monitor the business.
The suspension of the RSA's chief executive in Ireland, Philip Smith, took the sector by surprise on Friday evening. Mr Smith is a former president of the Insurance Institute of Ireland, which described him as a "leading figure within the insurance sector".
RSA's UK parent group also suspended the chief financial officer, Rory O'Connor, and its claims director, Peter Burke, pending an investigation into "issues in the Irish claims and finance functions".
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The company stressed that "no findings have been made against any individuals at this time".
The company has made a significant capital injection into RSA Ireland to boost its reserves "to ensure its insolvency ratio is comfortably in excess of 200 per cent".
In a statement on its website, RSA's UK parent company did not identify what the "issues" were.
However, it said that they were separate to concerns the company had raised earlier last week about the level of bodily injury claims in the Irish market.
Days before it moved to suspend its top executives, the RSA's UK parent warned in an interim management statement of "the emergence of adverse bodily injury trends" in the Irish market. It said it would probably need to strengthen its Irish bodily injury reserves and this would adversely impact on the group's performance this year.
However, it stressed that this issue was separate to the issues that emerged during the company's internal audit.
RSA said, as a result, its 2013 operating profits would be €83m lower than expected this year. The firm said that no policyholders had been affected and all Irish businesses were continuing to operate as normal.
Adrian Brown, the company's current chief executive officer in the UK and western Europe, along with two other key executives, will take over the running of the Irish operations for now.