Probe into RSA’s Irish business sees shares tumble

RSA chief executive Simon Lee said he was “extremely disappointed” by the disclosure as the group announced an independent review into financial and regulatory controls in the Ireland division.

Mr Lee insisted the issues would not have a material long-term impact on the group but this was not enough to prevent shares falling by as much as 16 per cent as investors digested the second RSA profits warning in less than a week.

A few days earlier the group said last month’s St Jude’s storm would leave it nursing a £65m hit after it wrought havoc across the UK and northern Europe.

The double blow meant that at one stage during yesterday’s session, shares were a fifth lower than they were at the close last Monday, though they later pared back some of the losses.

On Friday, the group announced after trading closed that RSA Insurance Ireland had suspended chief executive Philip Smith, chief financial officer Rory O’Connor and claims director Peter Burke pending the outcome of an investigation.

The group said a routine internal audit had uncovered “issues” that would result in an operating result £70m below market expectations, and that it was now co-operating with the Central Bank of Ireland on an internal probe.

It stressed: “No findings have been made against any individuals at this time.”

The group said at the weekend that PwC had been appointed to undertake a “comprehensive review of the issues identified last week in its Irish claims and finance functions” without giving further details of what the issues were.

In a statement, it said: “The review will focus on the financial and regulatory reporting processes and controls within the Irish business and the group oversight and controls of the Irish business during the relevant period.

“The review will also assess the adequacy of the remedial actions being taken. PwC will report back to the RSA board before the end of the year.”

Mr Lee said RSA’s capital position remains robust and the group will maintain its dividend.