RSA Insurance has hired former Royal Bank of Scotland chief executive Stephen Hester to lead the UK insurer, as it seeks to put a scandal at its Irish unit behind it.
Mr Hester (53) succeeds Simon Lee, who quit the London-based insurer in December after injecting a second round of capital into its Irish business within six weeks amid an accounting probe into the unit.
Mr Hester, who left RBS in October, will be paid an annual salary of £950,000, the company said in a statement.
“The challenges of recent months have demonstrated that we haven’t lived up to our stakeholders’ expectations and performed to our true potential,” Mr Hester said in the statement.
RSA is seeking to bolster its finances after injecting £200 million into its Irish unit in the fourth quarter of last year. The head of the company's Irish business, Philip Smith, resigned in November, as the company investigated whether the unit reported the amount of premiums paid to the company earlier than it should have and the timing of when it set aside reserves to cover claims.
Well respected
Mr Hester is "a well-respected name in the City," said Barrie Cornes, an analyst in London with Panmure Gordo.
RSA rose 2.9 per cent to 99 pence in London trading, giving it a market value of £3.6 billion. Some £1.07 billion has been wiped off the company’s value in the last three months.
Mr Hester will oversee efforts to rebuild RSA capital. The company is reportedly planning the sale of assets in central and eastern Europe. At RBS, Mr Hester had to deal with losses in an Irish subsidiary – the UK government-controlled lender pumped £14.3 billion into Ulster Bank since 2009.
