PRA fines insurer for solvency miscalculations

The PRA has fined U K Insurance Limited £10,625,000 in connection with miscalculation of its Solvency II balance sheet in 2023 and 2024. The miscalculations happened because of ineffective controls and resourcing issues within the finance and actuarial functions, and was not picked up by internal controls for some time. Once the Direct Line Group, of which UKI is a member, became aware of the miscalculation, it made an RNS announcement which also explained the knock-on effect on the reported SCR Coverage Ratio, and reported the correct figure. DLG senior management told the PRA immediately, investigated the cause and remediated the position. The group has since come under the control of Aviva, which has continued the improvement work.

The PRA’s early account scheme, which was used for the first time in this case,  meant the firm qualified for a 50% enhanced reduction of the original proposed fine.