The Bank of England’s Prudential Regulation Authority (PRA) has issued a final notice imposing a GBP 10.625 million financial penalty on U K Insurance Limited (UKI Limited) for miscalculating its Solvency II balance sheet in 2023 and 2024, which led to the firm overstating its solvency to the PRA and to the market. The miscalculation was attributed to ineffective preventative and detective controls and resourcing issues in UKI Limited’s finance and actuarial functions, and it went undetected by Direct Line Group’s (DLG) internal controls for a significant period. After the issue was identified, DLG made a Regulatory News Service announcement acknowledging the error and its impact on the reported SCR Coverage Ratio, and disclosed the corrected figure. The PRA found breaches of PRA Fundamental Rule 6 and PRA Rulebook requirements on notifications and reporting, including rules 6.1 (Notifications) and rules 2.4 and 3.2 (Reporting). The events covered pre-date Aviva plc’s acquisition of DLG on 1 July 2025. The PRA applied a 50% enhanced reduction under the Early Account Scheme (EAS) because the firm made early admissions and agreed to resolve the matter, reducing the penalty from GBP 21.25 million. The PRA described the outcome as the first enforcement case in which the EAS has been used.
Bank of England 2026-03-11
Bank of England’s Prudential Regulation Authority fines U K Insurance Limited GBP 10.625m for Solvency II balance sheet miscalculation
The Bank of England's Prudential Regulation Authority imposed a GBP 10.625 million penalty on U K Insurance Limited for miscalculating its Solvency II balance sheet in 2023 and 2024, leading to overstated solvency. This was due to ineffective controls and resourcing issues, undetected by Direct Line Group's internal controls. The penalty was reduced by 50% under the Early Account Scheme due to early admissions, marking its first use in enforcement.