More Than a local issue

13 December 2013 By George Hay Follow @gfhay

The UK general insurer’s CEO has quit and its shares have tanked after a third profit warning. The chairman is reviewing RSA’s empire and could sell units to shore up the capital position. But a piecemeal sale of crown jewels like Scandinavia would create its own problems.

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RSA, the British non-life insurer, said on Dec. 13 that it needed to increase reserves in its Irish business by 130 million pounds. This mostly relates to bodily injury claims in its motor and liability lines and is in addition to 70 million pounds of new requirements announced on Nov. 8.

Simon Lee, RSA’s chief executive, has resigned and chairman Martin Scicluna will act as executive chairman until a replacement CEO is appointed. A PwC probe into issues raised in Ireland should report back in January.

Scicluna is reviewing RSA’s businesses to improve the group’s performance and capital position. RSA expects a mid-single digit group return on equity in 2013. RSA said recent events would be considered when deciding the full-year dividend, suggesting it could cut its shareholder payout for the second year running. By 1045 GMT on Dec. 13 RSA shares had fallen 18.7 percent to 81 pence.

By 1045 GMT on Dec. 13 RSA shares had fallen 18.7 percent to 81 pence.

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