- RSA Insurance Ireland reserve review completed - £130m strengthening of reserves
- RSA Board accepts resignation of Group Chief Executive, Simon Lee
- Martin Scicluna to become Executive Chairman; search for a new Group Chief Executive underway
- Review of the Group’s businesses commenced with the objectives of improving the Group’s performance and capital position
RSA Insurance Group plc today announces the completion of its review of Irish reserves referenced in the Group’s Interim Management Statement on 5 November. As a result, Irish reserves will need to be strengthened by £130m, the majority of which relates to bodily injury strengthening in motor and liability lines. This is in addition to the £70m previously announced on 8 November relating to claims and finance issues in Ireland.
RSA Group plc intends to inject £135m of capital into RSA Insurance Ireland today to ensure that the solvency ratio of RSA Insurance Ireland is maintained above 200%.
The PwC review of the issues raised in Ireland is ongoing and PwC is expected to report back to the Group Board in January when its findings will be announced.
We also experienced further adverse weather in early December with storms in the UK and Scandinavia leading to net claims of £25m for the Group.
The impact of this Irish reserve strengthening and the storms in Europe last week will lead to a further reduction in anticipated 2013 earnings. We now expect mid-single digit Group return on equity in 2013. The impact of events in the last quarter will need to be taken into consideration when the Board determines the 2013 final dividend recommendation in February 2014.
RSA has today accepted the resignation of Simon Lee, Group Chief Executive. Simon will stand down from the Board and leave the group with immediate effect. He will not receive any payment beyond his contractual entitlement, details of which will be available on the Group’s website shortly. Until a permanent replacement can be found the Board has asked Martin Scicluna, our Non-Executive Chairman to become Executive Chairman. The recruitment process has started with the appointment of an executive search firm. It is expected to take a number of months, at the conclusion of which Martin will revert to the role of Non-Executive Chairman.
Martin Scicluna, RSA Chairman 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.
“I would like to thank Simon for his contribution to RSA over the last decade. He has provided strong leadership to the business over the last two years, a period that has featured a number of significant challenges. In his previous role as Chief Executive of International he was instrumental in developing the Group’s global portfolio. The Board wishes him well for the future.
“The significant reserve strengthening in Ireland represents a further negative event and places additional strain on the capital metrics of the Group. The impact of this reserve strengthening, alongside the extreme weather in 2013 and the effect of financial irregularities in Ireland will be taken into consideration in the Board's dividend decision in February.
“I am initiating a full review of the Group’s businesses with the objectives of improving the capital strength of the Group, optimising the Group’s business portfolio and delivering a sustainable dividend into the future. We will update on the progress of this review at our full year results presentation.
“RSA remains a leading insurance brand. We have enviable market positions across the globe and attractive businesses with healthy underlying profitability. 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.”
Analysts & Investors
|Matt Hotson||Louise Shield|
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|Rupert Taylor Rea||Jon Sellors|
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A conference call for analysts and investors will be held at 8:15am on Friday 13 December. Participants should pre-register online using https://cossprereg.btci.com/prereg/key.process?key=PV8NGUGCN where they will be provided with personalised call details. Alternatively participants can ring 0800 389 7473 or 01296 480 104 using passcode 604984#.
With a heritage of over 300 years, RSA is one of the world’s leading multinational quoted insurance groups. RSA has major operations in the UK, Scandinavia, Canada, Ireland, Latin America, Asia and the Middle East and Central and Eastern Europe and has the capability to write business in around 140 countries. Focusing on general insurance, RSA has around 23,000 employees and, in 2012, its net written premiums were £8.4 billion.
Important disclaimer This press release and the associated conference call may contain ‘forward-looking statements’ with respect to certain of the Group’s plans and its current goals and expectations relating to its future financial condition, performance, results, strategic initiatives and objectives. Generally, words such as “may”, “could”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”, “seek”, “continue” or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. By their nature, all forward-looking statements are inherently predictive and speculative and involve risk and uncertainty because they relate to future events and circumstances which are beyond the Group’s control, including amongst other things, UK domestic and global economic business conditions, market-related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation or regulations in the jurisdictions in which the Group and its affiliates operate. As a result, the Group’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in the Group’s forward-looking statements. Forward-looking statements in this press release are current only as of the date on which such statements are made. The Group undertakes no obligation to update any forward-looking statements, save in respect of any requirement under applicable law or regulation. Nothing in this press release shall be construed as a profit forecast.