RSA's (RSA) shares slumped 18 per cent on news that the insurer has injected a further £135m into its troubled Irish unit and chief executive, Simon Lee, has resigned. The extra funds will strengthen reserves for bodily injury claims in motor and liability lines in Ireland.
This follows last month’s revelations of financial irregularities at the Irish business - forcing a £70m capital injection and the suspension of three top executives there. The precise nature of the problems in Ireland remain unclear but accountants PwC have been appointed to investigate - their findings are expected in January. Moreover, storms in the UK and Scandinavia earlier this month have also meant net claims of £25m. When that’s added to the extra reserves, management reckons that 2013’s anticipated earnings will suffer and that these events “will need to be taken into consideration when the board determines the 2013 final dividend”.
Following Mr Lee’s resignation, chairman Martin Scicluna will run the group as executive chairman until a new boss is recruited. Mr Scicluna has initiated a review “with the objective of improving the capital strength of the group, optimising the group’s business portfolio and delivering a sustainable dividend into the future”.
