13th December 2013
Shares of insurance giant RSA have plummeted in early morning trading after the announcement that its chief executive Simon Lee has quit the group, which is embroiled in controversy in regards to its Irish division writes Philip Scott.
In a statement issued today the firm said that following its review of Irish reserves, it has found that they will need to be bolstered by £130m, the majority of which relates to bodily injury strengthening in motor and liability lines. This is on top of £70m previously required.
As at 09:30 the FTSE 100 listed firm’s stock was down by 18%
In November the group suspended the boss of its Irish arm Philip Smith, after uncovering financial irregularities. Smith has since resigned.
The group, which owns the More Than brand said the impact of this Irish reserve strengthening and the storms in Europe last week will lead to a further reduction in anticipated 2013 earnings. It now expects mid-single digit group return on equity in 2013.
Until a permanent replacement can be found for Lee, the RSA’s board has asked Martin Scicluna, its non-executive chairman to become executive chairman.
Scicluna said: “The significant reserve strengthening in Ireland represents a further negative event and places additional strain on the capital metrics of the group. The impact of this reserve strengthening, alongside the extreme weather in 2013 and the effect of financial irregularities in Ireland will be taken into consideration in the Board’s dividend decision in February.
“I am initiating a full review of the Group’s businesses with the objectives of improving the capital strength of the group, optimising the group’s business portfolio and delivering a sustainable dividend into the future. We will update on the progress of this review at our full year results presentation.”