Cantillon: RSA digs in at bat

Howzat for a fall from grace for Irish cricket sponsor RSA?

In the space of six weeks, the FTSE 100 insurer has issued three profit warnings and pumped £235 million in additional capital into its Irish subsidiary to maintain its solvency ratio above 200 per cent.

Two members of the Irish management team – chief financial officer Rory O'Connor and claims director Peter Burke – are under suspension while group chief executive Simon Lee fell on his sword last week shortly after Irish boss Philip Smith resigned, claiming he was the "fall guy" for the claims and finance functions issues that have arisen here.

In addition to its problems in Ireland, RSA said adverse weather in early December from storms in Britain and Scandinavia had resulted in net claims of £25 million for the group.

Its share price slipped by 2.6 per cent in London yesterday, retreating for a seventh consecutive day, as ratings agency Fitch has warned that it is considering a downgrade of RSA's A credit rating and putting it on negative watch.

Speculation is rife that it will have to sell some of the family silver, extending to a possible sale of the entire group, which was unthinkable just a couple of months ago.

Some analysts believe the company needs to raise up to £1 billion to resolve the issues around its capital levels.

The precise details around the business in Ireland remain to be disclosed. PricewaterhouseCoopers is in the middle of a review of the Irish issues and is due to report to the company in January.

RSA is on a decidedly sticky wicket at present and executive chairman Martin Scicluna will have to bat hard for the company in the coming weeks and months if it is to retain control over its own destiny.