PRA Fines UK Insurance Limited £10,625,000 for Solvency II Miscalculation

Bank of England News

Filed March 11th, 2026

Detected March 11th, 2026

Summary

The Prudential Regulation Authority (PRA) has fined UK Insurance Limited (UKI Limited) £10,625,000 for miscalculating its Solvency II balance sheet during 2023-2024, leading to an overstatement of solvency. This is the first enforcement action where the PRA's Early Account Scheme was utilized.

View original document View source feed page

What changed

The Prudential Regulation Authority (PRA) has imposed a £10,625,000 financial penalty on U K Insurance Limited (UKI Limited) for miscalculating its Solvency II balance sheet between 2023 and 2024. This error resulted in UKI Limited overstating its solvency to both the PRA and the market, stemming from ineffective controls and resourcing issues in its finance and actuarial functions. The PRA permitted UKI Limited to participate in the Early Account Scheme (EAS), granting a 50% reduction on the potential £21.25 million fine due to early admissions and cooperation.

This enforcement action highlights the critical importance of accurate prudential reporting and robust internal controls for insurers. Regulated entities should review their financial reporting processes, particularly concerning Solvency II requirements, and ensure adequate preventative and detective controls are in place. While no specific compliance deadline is mentioned for other firms, the case underscores the PRA's commitment to enforcing reporting accuracy and the benefits of proactive engagement through schemes like the EAS for potential penalty mitigation.

What to do next

Review internal controls for Solvency II reporting accuracy.
Ensure finance and actuarial functions have adequate resourcing and preventative/detective controls.
Assess current prudential reporting processes for compliance with PRA Fundamental Rules.

Penalties

£10,625,000

Source document (simplified)

PRA fines U K Insurance Limited £10,625,000

The Prudential Regulation Authority (PRA) has imposed a financial penalty of £10,625,000 on U K Insurance Limited (UKI Limited) in connection with a miscalculation of their Solvency II balance sheet during 2023 and 2024.

Published on

11 March 2026

News release

UKI Limited, is a subsidiary and principal underwriter of Direct Line Group (DLG), and now part of Aviva plc.

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. DLG’s senior management notified the PRA 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.

This case is a landmark enforcement outcome for the PRA as it 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.”

Notes to editors

Final Notice
U K Insurance Limited (UKI Limited) is an insurer, and the principal underwriting subsidiary of the Direct Line Group (DLG). At the time of the events leading to the enforcement action, DLG was a FTSE 250 listed company. It was acquired by Aviva plc (Aviva) on 1 July 2025. The events described in the enforcement notice all pre-date Aviva’s acquisition.
Rule breaches - the PRA found that UKI Limited breached the following during the relevant period:

PRA Fundamental Rule 6 (A firm must organise and control its affairs responsibly and effectively).
Rule 6.1, Notifications part of the PRA Rulebook (A firm must take reasonable steps to ensure that all information it gives to the PRA in accordance with a rule is: (1) factually accurate or, in the case of estimates and judgments, fairly and properly based after appropriate enquiries have been made by the firm; and (2) complete, in that it should include anything of which the PRA would reasonably expect notice.)
Rules 2.4, Reporting part of the PRA Rulebook (The information which a firm submits to the PRA in accordance with 2.1 and 2.2 must comply with the following principles: (1) it must reflect the nature, scale and complexity of the business of the firm, and in particular the risks inherent in that business; (2) it must be accessible, complete in all material respects, comparable and consistent over time; and (3) it must be relevant, reliable and comprehensive.)
Rules 3.2, Reporting part of the PRA Rulebook (The information which a firm discloses in its SFCR must: (1) follow the structure set out in in Article 1A of Chapter 3A; (2) include the information referred to in 3.3 to 3.7C and 3.10; and (3) include the information required in 2.3 and must comply with the principles in 2.4.)
The Bank’s approach to enforcement: statutory statements of policy and procedure (November 2024) – see pages 33-39 for an overview of the PRA’s Early Account Scheme.

The Early Account Scheme (EAS) became part of the Bank of England’s enforcement policy for PRA firms and FMIs in January 2024. In appropriate cases, the EAS provides a mechanism for subjects of PRA and FMI investigations to provide a full account, along with all relevant material, to inform the investigation. The enforcement policy incentivises early admissions by subjects through the introduction of an enhanced settlement discount of up to 50% in appropriate cases.

Convert this page to PDF