Shares in 123.ie parent company RSA plunged today after it suspended three senior executives in its Irish business over “issues” expected to result in a £70m (€83m) profits hit.
RSA chief executive Simon Lee said he was “extremely disappointed” by the disclosure as the group announced an independent review into financial and regulatory controls in the Ireland division.
Mr Lee insisted the issues would not have a material long term impact on the group but this was not enough to prevent shares falling by as much as 16% as investors digested the second RSA profits warning in less than a week.
A few days earlier the group said last month’s St Jude’s storm would leave it nursing a £65m (€78m) hit after it wrought havoc across the UK and northern Europe.
The double blow meant that at one stage during today’s session, shares were a fifth lower than they were at the close last Monday, though they later pared back some of the losses.
On Friday, the group announced after trading closed that RSA Insurance Ireland had suspended chief executive Philip Smith, chief financial officer Rory O’Connor and claims director Peter Burke pending the outcome of an investigation.
The group said a routine internal audit had uncovered “issues” that would result in an operating result £70m (€83m) below market expectations, and that it was now cooperating with the Central Bank of Ireland on an internal probe.
It stressed: “No findings have been made against any individuals at this time.”
The group said at the weekend that PwC had been appointed to undertake a “comprehensive review of the issues identified last week in its Irish claims and finance functions” without giving further details of what the issues were.
In a statement, it said: “The review will focus on the financial and regulatory reporting processes and controls within the Irish business and the group oversight and controls of the Irish business during the relevant period.
“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.
Mr Lee 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.
“Our capital position remains robust and we remain committed to our dividend policy which is aligned with market expectations for the full year final 2013 dividend.”