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Weather adds to RSA woes as Ireland scandal report blames local management

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Troubled insurer RSA (LON:RSA) has warned of more losses ahead, this time from the exceptionally cold weather in North America and recent flooding in the UK and Ireland.

RSA is still reeling from a claims scandal in its Ireland operation that prompted the resignation of group chief executive Simon Lee last month.

Martin Scicluna, who has stepped up to executive chairman, confirmed that losses from those problems would be in line with the £200mln already indicated.

The group also released excerpts from an independent report carried out by accountant PwC that indicated no material issues elsewhere in the group and that said the problems in Ireland were a one-off caused by senior management circumventing procedures over large claims.

“Our investigations have confirmed that the claims irregularities in Ireland were, in large part, the result of deliberate collaboration between a small number of executives there," said Scicluna.

“The board is now confident that the financial and claims irregularities were isolated to Ireland and do not reflect the quality of our control framework elsewhere in the world.

“The board has always believed that the group’s control framework is comprehensive and appropriate. The work undertaken by PwC, KPMG and our own internal audit team has been valuable in providing comfort to the board.”

But he added that during December RSA suffered further weather losses from an ice storm in Toronto and severe flooding in the UK and Ireland.

It was too early to quantify these losses, he said, but they would affect the 2013 results and be considered when the dividend is set in February.

Scicluna started a review of the business when he took over as executive chairman with a view to improve its capital strength and this will include the level of dividends in the future. The review is ongoing, RSA said today.

Shares fell 3% to 98p.

Quick facts: RSA Insurance Group

Price: 570.2 GBX

LSE:RSA
Market: LSE
Market Cap: £5.88 billion
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