Review finds that Irish reserves need to be strengthened by £130m

RSA group chief executive Simon Lee has resigned after the insurer issued its third profit warning within six weeks.

He stepped down today after a review of RSA’s Irish business found bodily injury reserves need to be strengthened by £130m.

This is in addition to the £70m strengthening related to claims and accounting irregularities RSA announced last month.

Non-executive chairman Martin Scicluna will act as interim executive chairman while RSA finds a permanent replacement. 

Scicluna said: “Simon felt it was in the best interests of the group that he step down to enable a change in leadership. He has offered to help in any way that he can to ensure a smooth transition.”

The group will inject £135m of capital into RSA Insurance Ireland today to keep its solvency ratio above 200%.

RSA warned the Irish reserve strengthening and the storms in Europe last week will lead to a further reduction in full-year profits. It now expects mid-single digit return on equity in 2013.

The search for Lee’s replacement is expected to take several months, after which Scicluna will revert to the role of non-executive chairman. 

Scicluna has launched a full review to improve the group’s capital strength, optimise its portfolio and deliver a sustainable dividend. An independent PwC review into RSA will report its findings in the new year.

“We have deep expertise and capability across our management team. The board and I are confident that RSA will re-emerge as a stronger group in 2014,” he added.

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