'Traumatised' RSA boss quits and claims he is probe 'fall guy'
SUSPENDED RSA Ireland chief executive Philip Smith quit yesterday, saying he was made a "fall guy" as RSA investigates the insurer's accounting practices.
"My family and I have been truly traumatised by recent events and I have taken this most difficult of decisions in the best interests of my family," Mr Smith (45) said in a statement. Resigning "offers me the opportunity to pursue justice outside the current flawed process".
The company's British parent sought to reassure policyholders yesterday.
The Irish unit, which is headquartered in Dundrum, Dublin, and employs 1,000 people, was thrown into the spotlight last month after the discovery of an €83m "black hole" during a routine audit. This forced the British group to issue two profit warnings in the space of a week and inject extra capital into that division. The discovery also prompted a Central Bank probe into the matter.
Mr Smith was immediately suspended by RSA, along with chief financial officer Rory O'Connor and claims director Peter Burke.
Announcing his resignation yesterday, he said he was being blamed "irrespective of my involvement or otherwise, making it impossible for me to achieve justice and fairness".
Mr Smith has also stepped down from his role as president of industry body Insurance Ireland.
Issuing a statement in response, the company sought to assure the market that "we continue to work constructively with the CBI on this investigation" and that "RSA Ireland's business continues to operate as normal".
Shares in RSA fell slightly in London but there was no big shock.
"RSA have seemingly made serious mistakes in Ireland at the local management level and at the group level," said Sami Taipalus, a London-based analyst at Berenberg Bank. "It's not a very big surprise that Smith resigned, he was suspended already and clearly the investigation is ongoing."
RSA said Mr Smith will receive no severance payment.
A search has now been launched for a replacement. The division is currently reporting to British executive Adrian Brown. Mr Smith's resignation brings to an end a six-year reign at the Irish business, during which he oversaw an aggressive expansion strategy.
But it has been dogged by problems in recent months. The €83m black hole was revealed just days after the group admitted it had pushed up motor premiums in Ireland by 13pc in the past year.
This was followed by an announcement that it would have to put aside more money into its reserves to allow for higher personal injury claims.
Mr Smith became head of the Irish unit in 2007. The local business was "lauded for its strong regulatory and control environment" during his tenure and all internal and external audits produced "consistently favourable outcomes", he said.
Shares in RSA have slumped about 12pc since it first announced the probe on November 8. They have dropped 15pc this year, giving the insurer a market value of £3.9bn (€4.7bn).