Insurance big fined £10.6m for steadiness sheet errors earlier than Aviva takeover
Direct Line’s main underwriting subsidiary has been hit with a £10.6 million fine by the Bank of England’s Prudential Regulation Authority (PRA) for wrongly calculating its financial strength over a two-year period.
The PRA revealed that UK Insurance Limited (UKI) misstated its balance sheet during 2023 and 2024.
This was attributed to “ineffective preventative and detective controls and resourcing issues” across its finance and actuarial operations.
These significant errors went undetected “for a significant period of time”, according to the regulator, leading UKI to overstate its balance sheet strength to both the PRA and the wider financial market.
The penalty was initially set at £21.3 million but was reduced by half. This reduction was granted under the early account scheme, acknowledging Direct Line and UKI’s prompt admission of the error and their swift actions to resolve the matter.
This development follows Direct Line’s acquisition last year by FTSE 100 rival Aviva for £3.7 billion, having previously been listed separately on the stock market.
Sam Woods, deputy governor for prudential regulation at the Bank of England and chief executive 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.
“Direct Line Group 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.”
It was the first case to make use of the early account scheme, according to the PRA.
Direct Line alerted the stock market in 2024 when it found the errors and reported the correct figures.
Bosses at the insurance firm then notified the PRA, launched investigations into the issue and took action to address it.
“Since its acquisition of Direct Line Group in 2025, Aviva has continued to improve Direct Line Group’s finance and actuarial control framework,” according to the PRA.
Aviva said it was “fully aware of this matter prior to agreeing the terms of the acquisition of Direct Line Group and the outcome is fully provided for in the acquisition balance sheet”.
It added: “The resolution of this matter has no impact on the integration of Direct Line Group into Aviva, which is proceeding well, and no impact on the expected financial benefits arising from the acquisition.”
