Nov. 28 (Bloomberg) -- RSA Insurance Group Plc’s Irish unit Chief Executive Officer Philip Smith resigned, saying he was made a “fall-guy” amid an investigation into the insurer’s accounting practices.
The company said in a statement today the resignation is effective immediately without any severance pay. RSA suspended Smith and two other top executives on Nov. 8, and this week opened a disciplinary process on all three after more evidence from the probe was revealed, said a person with knowledge of the proceedings, who asked not to be identified because the matter is private. Smith declined to engage in the process and resigned before the action was completed, the person said.
The London-based insurer, led by CEO Simon Lee, is investigating whether the unit reported the amount of premiums paid to the company earlier than it should have and the timing of when reserves were set aside to cover insurance claims. RSA Ireland Chief Financial Officer Rory O’Connor and claims director Peter Burke were suspended along with Smith.
“When the recent issues arose, I quickly became the ‘fall-guy’ for all issues,” Smith, 45, said in e-mailed statement today. “It is my firm belief that this opinion was arrived at irrespective of my involvement or otherwise, making it impossible for me to achieve justice and fairness.”
O’Connor and Burke didn’t immediately respond to e-mails sent through their LinkedIn Corp. pages.
While no legal proceedings have been issued to RSA, the company has been in regular contact with Smith’s lawyers, the person said. Paul Allen, a spokesman for Smith in Dublin, declined to comment beyond the statement.
The shares were down 0.6 percent to 106.20 pence at 3:57 p.m. in London. The stock has tumbled 16 percent this year, erasing about 721 million pounds of market value.
“My family and I have been truly traumatized by recent events and I have taken this most difficult of decisions in the best interests of my family,” Smith said. Resigning “offers me the opportunity to pursue justice outside the current flawed process.”
The investigation sparked the biggest sell-off in RSA shares in more than a decade as analysts questioned internal controls and Britain’s biggest non-life insurer injected 100 million euros ($136 million) into the business to bolster capital. Ireland’s central bank first noticed concerns over RSA’s local unit in August.
Smith was appointed head of the Irish unit in 2007 and had his role expanded beyond his local duties in September to become RSA’s group director of global brokers. Adrian Brown, CEO of U.K. and western Europe, will remain acting chief in Ireland until a replacement has been found, the company said.
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