A unit of Aviva, U K Insurance Limited (UKI Ltd), has been fined £10.6m by the Prudential Regulation Authority (PRA) over a Solvency II balance sheet miscalculation during 2023 and 2024.

This resulted in UKI Ltd overstating its solvency to the PRA and to the market.

UKI Ltd is a subsidiary and principal underwriter of Direct Line Group (DLG), which is now part of Aviva following its acquisition last year. The PRA said the miscalculation arose due to ineffective preventative controls and resourcing issues in its finance and actuarial functions, which went undetected by DLG’s internal controls for a significant period.

Following the identification of the miscalculation, DLG made a regulatory announcement acknowledging the mistake 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.

Deputy governor for prudential regulation and CEO of the PRA, Sam Woods, 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.”

UKI Ltd’s co-operation with the regulator meant it qualified for a 50% reduction in its financial penalty.

---