The former Executive Director and Chief Financial Officer of RSA Ireland Insurance has been disqualified from working in a financial company for more than eight years and been fined €70,000 by the Central Bank of Ireland.
The enforcement action was brought against Rory O’Connor for his admitted participation in a breach of financial services law which investigators said led to significant risk for RSA Ireland (RSAII) policyholders.
The Central Bank has disqualified him from being a person concerned in the management of a regulated financial service provider for a period of 8 years 4 months, and imposed a fine of €70,000 for his role in the company’s failure to maintain sufficient technical reserves from February 2010 to 30 September 2013.
The Central Bank already imposed a €3.5 million fine in 2018 on RSAII for understating their claim reserves by more than €29 million at one point.
The investigation found that deliberate and wrongful under-reserving of large loss claim reserve estimates resulted in incomplete and inaccurate information being relied upon in the calculation of RSAII’s technical reserves.
A decrease in technical reserves has the effect of decreasing an insurer’s technical expenses and thus increasing the amount that the firm could report as profit.
According to the Central Bank, Mr O’Connor knowingly and actively participated in RSAII’s failure to maintain sufficient technical reserves.
In particular they said he participated, along with certain others, in undocumented meetings during which certain large loss claim reserve estimates were deliberately and wrongfully under-reserved; gave instructions and transmitted information relating to those claims within RSAII knowing them to be under reserved; and concealed the under-reserving by knowingly providing inaccurate and misleading financial information to the Central Bank in his role as CFO.
Following a full investigation, the Central Bank determined that Mr O’ Connor’s misconduct merited a disqualification period of 12 years and a monetary penalty of €100,000. In accordance with the settlement discount scheme, these sanctions were reduced to 8 years 4 months and €70,000 respectively.
“For over three and a half years, in his roles as Chief Financial Officer and Executive Director on the board of RSAII, Mr O’Connor knowingly participated in the systematic under-reserving of large loss claims, actively facilitated the on-going operation of the under-reserving and concealed it from the Central Bank through the provision of inaccurate financial information,” Director of Enforcement and Anti-Money Laundering, Seána Cunningham said.
“The failure to maintain adequate technical reserves led to significant risk for policyholders in the event that RSAII did not hold sufficient assets to meet its liabilities and was, as a result, unable to pay claims made against and by its policyholders.”
“Mr O’Connor’s conduct in this case was deliberate and fell far below the standards expected of him in the roles he held in RSAII."
"The sanctions imposed on Mr O’Connor reflect the nature and seriousness of his actions in this case," Ms Cunningham added.