Financial regulator flagged concerns over RSA’s Irish operation in August

Ireland’s financial regulator first identified concerns over RSA Insurance Group Plc’s (RSA) local unit in August, three months before the insurer suspended its three top executives in the country amid an accounting probe.

The Central Bank of Ireland carried out a review of RSA Insurance Ireland’s claims cases that month, the regulator said in an emailed response to questions yesterday.

The regulator “identified an issue with regard to delays in increasing case reserves on large claims in a timely manner”, according to the email.

The central bank said it reported its findings to RSA Ireland, which used them in an internal audit it had already scheduled.

Simon Lee, chief executive of the insurer’s London-based parent, said yesterday the results of a routine audit in mid-October triggered its investigation into claims of irregularities and accounting issues at its Irish unit.

The probe centres on the “timing of the recognition of earned premiums” and “the booking of large losses” within its claims division over the past two years, chief financial officer Richard Houghton told analysts on a conference call yesterday. Spokesmen for RSA in London and Dublin couldn’t immediately comment on the Central Bank’s involvement yesterday.

RSA rose 1.2% to 109.40 pence in London after declining as much as 16% yesterday. The shares have dropped 13% this year.

RSA, which last week injected €100 million into its Irish unit to shore up its financial position, “has assured the Central Bank that it will provide any further capital required, should it be necessary at the end of the current investigation,” the regulator said.

PricewaterhouseCoopers LLP has been advising RSA Ireland on its internal probe.

A team from the accounting firm has been working at RSA’s Irish office for two weeks, the Central Bank said. PwC is leading a separate review for RSA in London on the Irish unit’s claims, finance functions, oversight and controls.