Former RSA boss says reserve fund was 'treasure in the caves'
The former chief executive of RSA Insurance's Irish division has said he felt he was "thrown under the bus" after he was suspended while the company was investigating financial irregularities.
Philip Smith controversially resigned as the head of the British insurance company's Irish unit in November 2013.
He is now taking a constructive dismissal case against his former employer at an Employment Appeals Tribunal.
Mr Smith told the tribunal yesterday that he first started to work at the company in 2006 and was appointed as the chief executive in 2007.
The father-of-four told the hearing that the company had been left without financial security after they released over €250m in reserves to support the group in other areas between 2007 and 2011.
"Under group direction, RSA in Ireland released €250m in prior year reserves to support group results and to offset under performance," the hearing heard.
Mr Smith claims the Irish reserve margin "was almost unique in terms of its scale" and that it had been coined as the "treasure in the Irish caves".
He alleges that senior managers in the group had instructed him that this was "a group asset" and was to be "used as the group saw fit", which ultimately resulted in the Irish business having "no acorns put away for a rainy day".
This policy meant that the company's surplus was under when issues were discovered during a routine audit in 2013.
He told the tribunal that the Central Bank published its annual report at the end of 2012 and deemed RSA's risk rating to be "medium to low".
Mr Smith, with an address in Cabinteely, Dublin, said that by end of that year they were starting to see "adverse developments" and that among these was an increase in the number of motoring injury claims.
He said the report also found their risk reserve margin stood at just 5pc, in comparison to other companies in the sector who stood at 11pc.
Mr Smith, who was earning €34,000-per-month while he was at the helm of the company's Irish operations, told the hearing that after a meeting in London in October 2013 he felt "overwhelmed" with the support he was getting from group executives.
"I was quite upset during that meeting, because of the significant developments unfolding," the hearing heard.
He explained that a member of the HR department asked how he was and he advised her that he was "stressed out" and that he needed time off.
Mr Smith told the hearing that he returned to Dublin and held a "rallying call meeting" with his staff before spending the week in Galway with his family on a planned holiday.
He denies that he was verbally advised after this meeting in Dublin that his license was being revoked and claims the language used was "much softer".
Mr Smith said that his 81-year-old mother heard about his suspension on the news and that his son, who also didn't know his father had been suspended, received sympathetic text messages from friends which left him thinking he had died.
"It had a devastating effect on us at the time," Mr Smith added.
Tom Mallon, Mr Smith's senior counsel, told the tribunal that his client had an "excellent service record" with the company but went on to endure a "public whipping". He said Mr Smith has failed to obtain employment since.
RSA is expected to robustly defend the case, which continues today.