RSA ‘slipped on an ugly banana skin in Ireland’

RSA Insurance chief Stephen Hester, who said the firm “slipped on a rather ugly banana skin in Ireland”, has announced a stock sale and tapped Warren Buffett for £550m reinsurance.

Mr Hester announced the £775m (€943m) share sale yesterday and also scrapped the dividend as he seeks to satisfy bond-rating firms. It is now “very hard for them to downgrade us,” the former RBS chief said.

Mr Hester succeeded Simon Lee, who quit in the wake of three profit warnings in the fourth quarter and a £200m capital injection into its Irish unit after an accounting probe.

The insurer also had claims relating to storms and floods across Europe, the UK, and Canada, which further depleted its capital to £200m.

“I thought from the beginning that we needed an amount of equity that would require a rights issue,” Mr Hester said.

“We slipped on a rather ugly banana skin in Ireland, and we didn’t have the resilience to ride that without the consequences we have all seen.

I haven’t detected anything in the culture that is wrong. You could argue there were some misjudgements at the top level. Every company would prefer to avoid fraud.”

RSA also posted a pretax loss of £244m for 2013 compared with a profit of £448m a year earlier.

— Bloomberg