Ireland's biggest insurance company RSA has said it will appeal the decision of the Employment Appeals Tribunal which found in favour of former CEO Philip Smith last month.

In November 2013 Mr Smith and two other senior managers were suspended for what RSA described as issues in the Irish claims and finance functions. These related to how large loss claims were reserved, and the overall reserving position of the company, which was found to be inadequate.

Mr Smith brought a case for constructive dismissal against RSA. The tribunal found in his favour, and the insurance group was ordered to pay Mr Smith €1.25 million.

The tribunal noted at the time that suspending Mr Smith on national television “was the equivalent of taking a sledge hammer to his reputation as well as to his prospects of ever securing employment in the industry again in Ireland, Europe or possibly beyond.”

RSA Group General Counsel Derek Walsh this morning said the company was "astonished" by the amount of the award made by the tribunal, adding that the finding created " a dangerous precedent".

He said the tribunal decision fails to appreciate the critical role of reserving for claims in an insurance company and the fundamental importance of setting accurate case reserves in accordance with the company’s legal and accounting responsibilities.

“We believe the tribunal has reached conclusions which were not supported by the evidence and which demonstrate a serious misunderstanding of and a failure to grasp the key issues,” he said.

He said no one at RSA Group level had any prior knowledge of the inappropriate large loss reserving practices which emerged in RSA Ireland.

“We continue to believe that Mr Smith’s case is without merit and in the circumstances have no option but to appeal the judgement,” he added.