RSA Insurance Group Plc’s Irish unit chief executive officer, Philip Smith, resigned, saying he was made a “fall guy” amid an internal investigation into the insurer’s accounting practices.
“My family and I have been truly traumatised by recent events and I have taken this most difficult of decisions in the best interests of my family,” said Mr Smith, 45, in emailed statement. Resigning “offers me the opportunity to pursue justice outside the current flawed process”.
RSA said on Nov 8 that it suspended Mr Smith and two other executives pending an internal examination of accounting practices at the Irish unit. The probe sparked the biggest sell-off in the shares in more than a decade as analysts questioned internal controls and RSA injected €100m to bolster capital.
“RSA have seemingly made serious mistakes in Ireland at the local management level and at the group level,” said Sami Taipalus, a London-based analyst at Berenberg Bank, with a ‘hold’ rating on the stock.
“It’s not a very big surprise that Smith resigned, he was suspended already and clearly the investigation is ongoing.”
Britain’s biggest non-life insurer is investigating whether its Irish unit reported the amount of premiums paid to the company earlier than it should have, which could have served to increase profitability. The London-based firm, led by CEO Simon Lee, is also looking at the timing of when the unit set aside reserves for insurance claims.
The insurer said in a statement that Mr Smith’s resignation is effective immediately with no severance payment made. Adrian Brown, CEO of RSA’s UK and Western Europe business, remains as acting CEO of the Irish unit until a replacement has been found, it said.
“I am certain that, when the recent issues arose, I quickly became the ‘fall-guy’ for all issues,” said Mr Smith. “It is my firm belief that this opinion was arrived at irrespective of my involvement or otherwise, making it impossible for me to achieve justice and fairness.”
Ireland’s Central Bank first noted concerns over RSA’s local unit in August. The regulator said earlier this month that it “identified an issue with regard to delays in increasing case reserves on large claims in a timely manner.”
Smith became head of the Irish unit in 2007. The local business was “lauded for its strong regulatory and control environment” during his tenure and all internal and external audits produced “consistently favourable outcomes,” he said.
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