The Prudential Regulation Authority (PRA) has fined UK Insurance Limited (UKI Limited) £10,625,000 in connection with a miscalculation of their Solvency II balance sheet during 2023 and 2024, which led UKI Limited to overstate its solvency to the PRA and to the market.
UKI Limited is a principal underwriter of Direct Line Group (DLG). It was acquired by Aviva in July 2025, with these events pre-dating the acquisition.
The PRA says that the error was caused by “ineffective preventative and detective controls and resourcing issues in its finance and actuarial functions,” and it went undetected by DLG’s internal controls for a significant period of time.
Once the error was realised, DLG made a Regulatory News Service announcement acknowledging the miscalculation and the knock-on effect, as well as reporting the correct figure.
DLG’s senior management then notified the PRA, undertook detailed investigations to ascertain the root cause of the error and remediated the position.
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, which allowed UKI to qualify for a 50% enhanced reduction in the financial penalty, which otherwise would have been £21.25m.
This case is the first in which the EAS has been used.
Sam Woods, deputy governor for prudential regulation and chief executive officer 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."
