Former bank chief to lead RSA in wake of scandal

RSA Insurance has hired former Royal Bank of Scotland chief executive Stephen Hester to lead the UK insurer, as it seeks to restore its reputation after a scandal at its Irish unit.

Mr Hester, 53, succeeds Simon Lee, who quit the insurer in December after injecting a second round of capital into its Irish business within six weeks amid an accounting probe.

Mr Hester, who left RBS in October, will be paid an annual salary of £950,000 (€1.2m), the company said yesterday.

“The challenges of recent months have demonstrated that we haven’t lived up to our stakeholders’ expectations and performed to our true potential,” Mr Hester said.

RSA is seeking to bolster its finances after injecting £200m into its Irish unit.

RSA Ireland’s CEO Philip Smith resigned in November, saying he was made a “fall guy” as the company investigated whether the unit reported the amount of premiums paid to the company earlier than it should have and the timing of when it set aside reserves to cover insurance claims.

RSA fired its Irish financial boss Rory O’Connor and claims director Peter Burke last month.

The company’s shares rose as much as 3.3% and traded 2.5% higher at 99.7p in London.

At RBS, Mr Hester had to deal with losses in its Ulster Bank subsidiary.

The UK government- controlled lender pumped £14.3bn into its Dublin-based unit Ulster Bank since 2009 as bad loan losses soared following western Europe’s worst real-estate collapse.