The head of RSA Insurance Group Plc has resigned, Bloomberg reported. Chief Executive Officer Simon Lee quit his post as the insurer increased its reserves in Ireland. The additional £130 million or $212 million pumped to its reserves was made as the insurance firm predicted a "further reduction" in its earnings this year, the report said. The company will be led by Chairman Martin Scicluna until such time that a new CEO will be named. The report said shares of the insurer dropped up to 22%.
The London-based insurer is looking into the possibility that the Irish unit reported the premiums paid to it earlier than it should have. It is also looking at the timing of setting aside the reserves for insurance claims, the report said. Last month, Ireland CEO Philip Smith already resigned. A suspension was issued to the unit's Chief Financial Officer Rory O'Connor. Peter Burke, the Claims Director, was also suspended.
The report quoted Shore Capital Group Ltd Analyst Eamonn Flanagan's note to investors which said, "The last remaining prop for the shares, namely the dividend, is now likely to be materially weakened. The decisive action taken by the board and the quality of its assets across the globe should ensure that any fall in price be contained." He puts a hold rating on the insurer's stock.
The report said the insurer received net claims of £25 million because of the storms that occurred in the UK and Ireland in December. The company also released a forecast of a "mid-single digit" return on equity for this year. A return on equity is a measure of profitability. The firm also said it will consider the events of the final quarter when determining the final dividend, the report said.
When the probe was announced last month, the report said it fueled a selloff of RSA shares in over a decade.
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