RSA pumped €400m into Irish unit following accounts probe
British insurance giant RSA has pumped almost €400m into its Irish arm since the unit was hit with an accounting scandal in 2013.
The parent group's latest injection into the Irish division means RSA has now provided almost four times the amount it initially coughed up to bolster the subsidiary when the accounting issue emerged less than two years ago.
RSA said in 2013 that it had uncovered a €274m hole in the accounts of its Irish business.
A filing just lodged with the Companies Office indicates that RSA provided its Irish unit with €20m back in November.
That brought the total the Irish division received last year to €137m.
That was received in four tranches, of €48.7m, €48.2m, €20m and another €20m.
In 2013, RSA provided the Irish unit with €261m, in tranches of €160.6m, €65.5m and €35.4m.
It brings the total amount of fresh capital provided to RSA Ireland to €398m.
"No substantive issues were found in 2014 but the cost of remediation, reserve strengthening and the level of required underwriting improvement was greater than expected at the start of 2014," said an RSA spokesman. "Hence capital injections were delivered to further ensure very strong ratios were maintained."
A spokeswoman for the Central Bank said yesterday that its probe into RSA - which the regulator launched after RSA revealed the extent of the problem - remains on-going and at an advanced stage.
There's industry speculation that the results of that probe might not be made public until the outcome of a constructive dismissal case taken by former RSA Ireland boss Philip Smith has been determined.
Mr Smith has claimed at the Employment Appeals Tribunal (EAT) this month that he was a "fall guy" for RSA, and that he was ejected from the company after an increase in claims brought its level of reserves to the attention of Central Bank scrutiny.
RSA, whose group chief executive is now former RBS boss Stephen Hester, has denied Mr Smith was made a scapegoat for the reserve shortfalls.
Former RSA Ireland chief financial officer Rory O'Connor claimed at the EAT hearing that Mr Smith had persistently under-reserved for large claims, in violation of company policy, in order to improve the perceived performance of the Irish division.
Mr Smith has denied that claim.
Counsel for RSA told the EAT that some former colleagues of Mr Smith who took part in an internal review as the group probed the Irish accounts were "weeping into their hands, weeping, crying, shaking with fear when they were talking… about Mr Smith".
Mr Smith has disputed allegations that he held sway over a culture of fear and intimidation, saying it was at odds with his own recollections of his relationships with former colleagues.
The two sides in that case are due back at the tribunal in May.
Mr Smith was suspended by RSA in November 2013 pending the outcome of an internal investigation. He resigned later that month.
RSA Ireland is likely to face the maximum €5m fine that can be levied against it by the Central Bank because of the financial irregularities at the unit.
Stephen Hester has said he's confident that the Irish RSA business can be returned to profitability next year.