The former executive director and CFO of RSA Ireland Insurance DAC (RSAII) has been disqualified for eight years and four months and fined €70,000 (£63,310) by the Central Bank of Ireland for his admitted participation in a breach of financial services law.
On 9 June 2020, the Central Bank of Ireland (the Central Bank) reprimanded Mr O’Connor, disqualified him from being a person concerned in the management of a regulated financial service provider for his admitted participation in RSAII’s failure to maintain sufficient technical reserves from February 2010 to 30 September 2013.
This enforcement action against Connor follows a separate investigation conducted by the Central Bank in respect of RSAII, at the conclusion of which the Central Bank reprimanded RSAII and imposed a financial penalty of €3.5m (£3.2m) in December 2018.
The Central Bank’s investigation in respect of RSAII found that “deliberate and wrongful” under-reserving of large loss claim reserve estimates resulted in incomplete and inaccurate information being relied upon in the calculation of RSAII’s technical reserves.
The investigation found that the claim reserve estimates on RSAII’s claims database were understated in the sum of approximately €29m (£26.23m) as at 30 September 2013.
The Central Bank’s investigation in respect of Mr O’Connor, who held the positions of CFO and executive director at RSAII, found that he “knowingly and actively participated “ in RSAII’s failure to maintain sufficient technical reserves through his involvement in the under-reserving of large loss claim reserve estimates.
The Central Bank of Ireland revealed, in particular, O’Connor participated, along with certain other individuals, in undocumented meetings during which certain large loss claim reserve estimates were deliberately and wrongfully under-reserved.
He also “gave instructions and transmitted information” relating to those claims within RSAII knowing them to be under reserved; and concealed the under-reserving by knowingly providing inaccurate and misleading financial information to the Central Bank in his role as CFO.
Following a full investigation, the Central Bank determined that Mr O’ Connor’s misconduct merited a disqualification period of 12 years and a monetary penalty of €100,000 (£90,370).
In accordance with the settlement discount scheme provided for in the Central Bank’s Administrative Sanctions Procedure, these sanctions were reduced to eight years and four months and €70,000 (£63,310) respectively.
The Central Bank’s director of enforcement and anti-money laundering, Seána Cunningham, said: “The Central Bank takes enforcement action against senior individuals in regulated financial services firms in order to hold them accountable where they have participated in serious or significant breaches of regulatory requirements.
For over three and a half years, in his roles as CFO and executive director on the board of RSAII, Mr O’Connor knowingly participated in the systematic under-reserving of large loss claims, actively facilitated the on-going operation of the under-reserving and concealed it from the Central Bank through the provision of inaccurate financial information.