Business Irish

Monday 18 December 2017

Three top executives suspended as €83m hole found in insurer RSA's accounts

Philip Smith, CEO of RSA Insurance Ireland
Philip Smith, CEO of RSA Insurance Ireland

THREE senior executives at insurance company RSA Ireland have been suspended after a black hole of €83m was discovered in the accounts of the group's operation here.

A spokesman for the Central Bank confirmed that an investigation was being carried out at the insurance company's Irish operation into a "regulatory issue".

It is understood the black hole was uncovered after a "routine internal audit".

In an unprecedented move, chief executive Philip Smith, chief financial officer Rory O'Connor and claims director Peter Burke have been suspended from their positions.

Mr Smith is president of Insurance Ireland, which used to be called the Irish Insurance Federation.

"The Central Bank remains in close and regular dialogue with the company," the regulator said.

It follows a shock revelation from the company this week that it had hiked its motor premiums – bucking the trend in the market – and would now have to boost its reserves.

The Dublin offices of RSA Insurance were closed yesterday after executives from London flew in and took control of the company. A London-based executive, Adrian Brown, has taken over temporary control of the Irish operation.

The company, which has 1,000 staff in Ireland, warned that there would now be a loss of £70m (€83m) in the company accounts due to the Irish operation. It is understood €100m has been injected into the Irish operation by the British parent.

But the group has yet to quantify the extent of a deficit in its reserves in Ireland.

The company said no findings had been made against the executives, and the development will have no impact on policyholders here.

The move to suspend executives comes days after the British-headquartered group admitted it had pushed up motor premiums in Ireland by 13pc in the past year.

It also said this week that it would now have to put aside more money into its reserves to allow for higher personal injury claims from motor accidents.

The premium hikes and the higher reserves are in contrast to other operators in this market, which have seen premiums fall.

RSA paid €60m in 2010 for insurance online brokerage 123.ie, which has rapidly become one of the main ways people buy motor insurance in this market. It claims it is now the largest general insurer in the country.

The company has denied it is now trying to recoup the huge cost of buying 123.ie, or that it is profiteering by pushing up premiums at a time when rates are not moving among its competitors.

Consumers have been expressing concern for ages about huge rises – some as high as 200pc – being imposed on motorists by RSA and 123.ie.

The Injuries Board said there was no justification for double-digit premium hikes, despite a higher level of personal injury claims earlier this year.

Its boss, Patricia Byron, said claims volumes had been falling back later in the year.

Shares in the London Stock Exchange traded RSA Group fell back heavily this week after the global company issued a profit warning and slashed its dividend.

By Charlie Weston Personal Finance Editor

Irish Independent

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