RSA faces fine over £200m black hole

RSA Insurance Group is facing a fine of £35m following the discovery of a £200m black hole in its Irish subsidiary’s finances.

A PwC report into the accounting irregularities found “inappropriate collaboration” among managers in Ireland that led to the shortfall.

The report revealed there were weaknesses in the implementation of the large loss claims policy and financial control practices.

PwC added that there was...

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Comments

RSA IS PROBABLY THE LARGEST INSURER OF ACCOUNTANTS PI    1 thanks

GaryHorswell | | Permalink

This news could have an interesting affect on the market for Accountants PII. Its certainly a situation to watch.

When Aviva withdrew from the Accountants (and other professions) PI marketplace in April 2013, many brokers moved their books of business en mass to RSA who now insure schemes for ACCA and ICAEW members as well as many of the well known affinity group schemes.

There will be no shortage of replacement capacity should the worst happen (although I'm sure RSA will do everything possible to avoid a ratings downgrade which would devastate their business) but some likely substitutes have their own financial issues.

The outlook for commercial Insurers generally is challenging with competition (mostly) keeping a lid on their ability to increase premiums and with reduced ability to cover from investment income any shortfall of premiums collected vs claims incurred. 

Slightly tougher renewal conditions lie ahead.

Wake up to reality – fine those individuals responsible!    1 thanks

Duncan Alexander | | Permalink

With the PwC report saying that the RSA £200m black hole was due to accounting irregularities by managers in Ireland, would it not be appropriate that the £35m fine should be paid by those individuals and those Board members that oversaw their activities? Any shortfall should be provided by the ever changing regulators and national politicians who have presided over our present shambolic public shareholder rights situation.