'Astounded' RSA appeals €1.2m award to ex-CEO
Home and motor insurer RSA said it was "astounded" at a massive award made at an employment appeals tribunal to its former Irish boss and intends to challenge the decision.
Former chief executive Philip Smith was awarded €1.25m in a compensation payment last month. It is believed to be the largest award ever made by an Employment Appeals Tribunal in this country.
Mr Smyth took a tribunal case against RSA arguing that he was effectively forced out of the company in late 2013 and made the "fall guy" after huge holes were found in the reserves of the insurer.
Yesterday David Walsh, RSA Group general counsel, said the insurer fundamentally disagreed with the judgment and was seeking redress through the courts.
In unusually strong language for an insurance firm, Mr Walsh said RSA was "astonished by the amount of the award made by the tribunal" and added it "creates a dangerous precedent".
He said the company took issue with a number of findings made by the tribunal, and would now appeal the decision to the circuit court.
The tribunal found that at least a dozen people in the London-headquartered group knew about under-reserving.
But Mr Walsh said: "Contrary to the impression given by the tribunal decision, no-one at RSA Group level had any prior knowledge of the inappropriate large loss-reserving practices which emerged in RSA Ireland."
Mr Smith was one of three executives suspended by the company in 2013 as issues with its claims and finance operations were investigated.
The UK parent of RSA was forced to inject close to €400m into the company in a number of tranches to shore up the Irish division following the discovery of a hole in the reserves.
In the tribunal ruling, barrister Niamh O'Carroll Kelly said the tribunal was satisfied that, from an early stage in the investigation into Mr Smith's conduct, the claimant's fate had been determined by RSA.
She found that RSA then went on a "fact-finding exercise" to justify its predetermined decision.
She also found that suspending Mr Smith on national television was the equivalent of taking a sledgehammer to his reputation.
RSA said the tribunal's decision failed to appreciate RSA's obligations as a regulated financial institution, including its duty to provide any information reasonably requested by the Central Bank, and to do so quickly.
It added that RSA Ireland was part of a publicly-listed group and was required to immediately announce to its shareholders any material changes to the business or its performance.