Britain’s Prudential Regulation Authority has hit UK Insurance Limited with a £10.63 million ($20.12 million) fine after it miscalculated solvency balance sheets in 2023 and 2024.

The error resulted in UKI – a subsidiary and principal underwriter of Direct Line Group, which is part of Aviva – “overstating its solvency to the PRA and to the market”.

The regulator says the miscalculation arose “due to ineffective preventative and detective controls and resourcing issues”. It went undetected by Direct Line Group’s internal controls for “a significant period of time”.

The PRA permitted UKI to participate in its Early Account Scheme and the company made early admissions and agreed to resolve the matter, qualifying for a 50% reduction of the potential fine.

Direct Line Group acknowledged the miscalculation and the knock-on effect, and reported the correct figure. Senior management notified the PRA “without delay” and undertook detailed investigations.

The case marks the first time the Early Account Scheme has been used. 

“We rely on accurate and reliable data from firms ... to supervise them effectively,” PRA CEO Sam Woods said. “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.”