A REVIEW of insurance giant RSA’s Irish operations is to be undertaken by PwC, after issues with its claims and finance functions are likely to hit profits by £70m.
The Big Four firm has been parachuted in by RSA Ireland’s parent company to run a “comprehensive review” of the financial and regulatory reporting processes and controls within the claims and finance functions.
On Friday RSA announced that its Ireland CEO Philip Smith, CFO Rory O’Connor and claims director Peter Burke had been suspended pending the outcome of investigations into the functions by internal auditors. RSA estimated that the issues would see its operating results £70m lower than market expectations. No findings have been made against the directors at this time.
The group has also injected capital into the Irish division to ensure its solvency ratio is in excess of 200%.
The review will also assess the adequacy of the remedial actions being taken. PwC will report back to the RSA board before the end of the year.
Simon Lee, RSA group chief executive, said: “We are extremely disappointed with the issues which have been identified and their financial impact on the group. While the investigation is ongoing, I am confident that these issues are isolated to the Irish business. No policyholders have been affected and all our Irish businesses continue to operate as normal. Nevertheless, we want to ensure that the actions being taken in Ireland and across the group are correct and that all lessons are learnt.
“While these issues are serious, they do not have a material, long term impact on the group.”
Adrian Brown (currently CEO UK & Western Europe) is acting CEO, Chris Rash (currently group chief accountant) is acting CFO for RSA Insurance Ireland and David Pitt (currently claims director UK & Western Europe) is leading the Irish claims function.
RSA’s share price has fallen to 104p in this morning’s trading, from 126p on Friday, valuing the group at £3.95bn by market cap.
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