UK and Western Europe chief exec sorry but not surprised by Simon Lee’s resignation
RSA UK and Western Europe chief executive Adrian Brown has said the Irish business can now “draw a line” under past problems after strengthening reserves by a further £130m.
Revealing details of the review that led to today’s announcement and profit warning, Brown said the most experienced people from the UK had gone to Ireland to review more than 4,000 claims. The review covered all claims over £500,000 and 50% of all open claims for less than £500,000.
“We’ve done a significant amount of work to get to the bottom of this problem and understand the position so we can start going forward.
“We wanted to make sure that when we came out with the number we came out with today, it was based on real evidence and fact,” he told Insurance Times.
“We can’t impact what’s gone, but we can focus on what we’re doing in the future.
“I believe we’re now on top of the issues in Ireland and looking forward.”
Resignation and review
Group chief executive Simon Lee resigned this morning when the reserve strengthening was announced.
Brown said he learned that Lee would resign last night, and described his reaction as “sorry but not surprised”.
“Simon is the sort of person who puts the company before himself. I was disappointed personally because it’s always hard when a friend and colleague decides he’s in a position where he has to resign,” he said.
He added that he hoped the market would take a “balanced view” of Lee’s legacy including improving the profitability of its Scandinavia and Canada businesses.
“You can’t hide when things go wrong, but if you look at his total time in RSA he was a key person in helping the business turnaround. I’m sorry it’s ended up like this for him,” he said.
There are two more reviews into RSA pending.
Results of an independent review by PwC that will examine whether the issues in Ireland could happen elsewhere in the group will be announced in January.
“Clearly the group review by PwC may give us some other things to work on, as it may [for] other parts of the group. As far as Ireland’s concerned we’re drawing a line today,” Brown said.
The third review, an internal one into the group’s business portfolio and sustainability, was announced by executive chairman Martin Scicluna this morning.
RSA is taking disciplinary procedures against Ireland chief financial office Rory O’Connor and claims director Peter Burke. It suspended them along with chief executive Philip Smith on 8 November after discovering claims and accounting irregularities that it said would wipe £70m off its operating profit.
“There are lots of steps to follow along the way, including the right to appeal. We are thoroughly following the process,” Brown said.
Smith resigned on 28 November and claimed RSA’s process was “established to arrive at a pre-determined outcome” and had made him the “fall guy”.
Brown said the claims and accounting and bodily injury reserving issues were generally separate, but that “there’s a slight tainting of one issue and another”.
Brown brushed away analyst predictions that RSA, or parts of it, could be the subject of a takeover bid. “I’ve worked for RSA for 25 years. If I got worried every time somebody talked about a takeover I’d be much greyer,” he said. “As a business you carry on focusing on the customers.”
RSA won General Insurer of the Year at the Insurance Times Awards last week. The award was voted for by brokers.
“That tells me we’re doing lots of things right. I’m doing my hardest to make sure we retain the trophy next year,” he said.
Brokers today have come out in support of RSA.
“My phone’s been absolutely buzzing all morning with brokers offering support to the business. I think they know what RSA stands for. It’s been great for me today to get those signs of support.
“In our industry over a long period of time you build relations and at times like this those relationships are really important.”
Brown said he would not be drawn on whether he would apply for the group chief executive role. “I’m focused on working with Martin and whatever he wants me to do to help him. Whatever happens, happens,” he said.