More Than-owner RSA is aiming to draw a line under an accounting scandal at its Irish arm that led to the departure of its chief executive, after a trio of reviews found the irregularities did not amount to a group-wide problem.
The insurer said today that a probe by accountancy firm PwC had confirmed that the issues were isolated to Ireland, where a small number of executives were alleged to have been involved in “inappropriate collaboration” to sidestep group governance controls.
PwC’s report found RSA’s governance processes were “appropriate” for a group of its size and complexity, and a number of recommendations aimed at “improving the balance of trust” have now been adopted.
The accountancy giant was brought in after a routine internal audit in November highlighted financial and claims irregularities totalling £72 million in Ireland, triggering three profit warnings. The amount set aside was later raised by £128m to cover a surge in motor insurance bodily injury claims.
Chairman Martin Scicluna, pictured, who took on an executive role when Simon Lee resigned as the group’s boss last month, said: “Our investigations have confirmed that the claims irregularities in Ireland were, in large part, the result of deliberate collaboration between a small number of executives there.
“These actions do not reflect the culture, ethos and values of our business that have served us well. We acknowledge that there are lessons to be learnt and we are tightening elements of our control and financial framework in response to these events.”
RSA Ireland chief Philip Smith resigned in November, claiming he had been made the “fall guy” for the problems at the group, which today said the division’s finance chief, Rory O’Connor, and claims director Peter Burke have also been dismissed “for their roles in relation to large loss and claims irregularities”.
PwC, which scoured through electronic documents of some 60 staff at RSA, found governance controls were appropriately strict and there were no obvious signs that the issues in Ireland had been ignored by group bosses.
Fellow accountant KPMG and RSA’s internal audit team also conducted reviews, which concluded the issues were a one-off.
Shore Capital analyst Eamonn Flanagan said the outcome was “encouraging” but pointed out that RSA’s dividend, slashed by a third at the half-year stage, could come under further pressure because of losses arising from last month’s ice storm in Toronto and severe flooding in the UK and Ireland over Christmas.
RSA said the impact of the extreme weather will be “taken into consideration” when its board decides its payout policy next month.
The insureris working with the UK’s Prudential Regulation Authority and the Central Bank of Ireland to further improve its controls.