S&P downgrades RSA

Standard & Poor’s has lowered RSA’s financial strength and issuer credit ratings from A+ to A, attributable partly to losses related to issues in its Irish operations. The provider’s core operating entities’ ratings have all been similarly downgraded.

The ratings have been placed on CreditWatch with negative implications, while S&P considers the effect of any management actions to improve the financial risk profile of the group. This move will also enable the ratings agency to reassess RSA’s management and governance and enterprise risk management frameworks.

RSA has suspended Philip Smith, CEO for Ireland, and two other directors, as an investigation into issues in its Irish claims and finance functions gets underway. S&P stated: “Our capital and earnings assessment remains dependent on RSA continuing to strengthen capital adequacy through management actions and retained earnings through 2015.”

S&P said it continued to assess RSA’s enterprise risk management (ERM) as very strong and its management and governance as satisfactory. “We continue to view RSA Ireland Ltd. as highly strategically important to the group, based on its existing role in group strategy. RSA Ireland received a EUR100 million capital injection last week, which should enable it to maintain sufficient solvency as it reassesses case reserves, booked revenues, and bodily injury trends.” S&P may adjust the ratings during the next 90 days.