Central Bank of Ireland bans and fines former RSA Ireland Insurance CFO

Former RSA Ireland Insurance chief financial officer Rory O’Connor has been disqualified for eight years and four months and fined €70,000, after deliberate and wrongful under-reserving of large loss claim reserve estimates resulted in incomplete and inaccurate information being relied on in the calculation of technical reserves.

The Central Bank of Ireland imposed the ban and fine on O’Connor, who admitted his participation in RSA Ireland Insurance’s failure to maintain sufficient technical reserves from February 2010 to 30 September 2013.

The enforcement action against O’Connor follows a separate investigation conducted by the Central Bank of Ireland into RSA Ireland Insurance that resulted in a reprimand and financial penalty of €3.5 million for the insurer in December 2018.

According to the Central Bank of Ireland, the claim reserve estimates on RSA Ireland Insurance’s claims database were understated in the sum of approximately €29 million as at 30 September 2013.

O’Connor, who held the positions of executive director and chief financial officer at RSA Ireland Insurance, found that he knowingly and actively participated in the insurer’s failure to maintain sufficient technical reserves through his involvement in the under-reserving of large loss claim reserve estimates.

This participation included undocumented meetings during which certain large loss claim reserve estimates were deliberately and wrongfully under-reserved, giving instructions and transmitting information within the insurer in the knowledge that the claims were under-reserved, and concealing the under-reserving by knowingly providing inaccurate and misleading financial information to the central bank in his role as chief financial officer.

Seána Cunningham, director of enforcement and anti-money laundering, at Central Bank of Ireland, said: “The failure to maintain adequate technical reserves led to significant risk for policyholders in the event that RSA Ireland Insurance did not hold sufficient assets to meet its liabilities and was, as a result, unable to pay claims made against and by its policyholders. Mr O’Connor’s conduct in this case was deliberate and fell far below the standards expected of him in the roles he held in RSA Ireland Insurance.”

“It is imperative that individuals working in regulated financial services and particularly those in senior roles, fully understand the risks and consequences that their decisions, actions and behaviours may have for an organisation, its employees, its customers and the wider market.”