The Prudential Regulation Authority (PRA) has imposed a financial penalty of £10,625,000 on Direct Line Group (DLG) subsidiary and principal underwriter, U K Insurance Limited (UKI Limited), in connection with a miscalculation of its Solvency II balance sheet during 2023 and 2024.
This resulted in UKI Limited, now part of Aviva, overstating its solvency to the PRA.
The PRA said the miscalculation arose due to ineffective preventative and detective controls and resourcing issues in its finance and actuarial functions. It went undetected by DLG’s internal controls for a significant period of time.
Following identification of the miscalculation, DLG made a regulatory news service announcement acknowledging the miscalculation and the knock-on effect on the reported SCR Coverage Ratio and reported the correct figure.
The PRA said DLG’s senior management notified the regulator without delay, undertook detailed investigations to ascertain the root cause of the error and remediated the position. Since its acquisition of DLG in 2025, Aviva has continued to improve DLG’s finance and actuarial control framework.
The PRA permitted UKI Limited to participate in the Early Account Scheme (EAS) and the firm made early admissions and agreed to resolve the matter, thereby qualifying for a 50% enhanced reduction in the amount of the financial penalty which otherwise would have been £21.25m.
Sam Woods, deputy governor for prudential regulation and CEO of the PRA, said: “We rely on accurate and reliable data from firms in order to be able to supervise them effectively. This penalty reflects the importance of firms getting their prudential reporting right.
“DLG and Aviva’s proactive engagement with the PRA, via the Early Account Scheme, shows how enforcement action can be more efficient when firms are open, candid and accept responsibility for failings at an early stage.”
