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

News release

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

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 

1. Final Notice
2. 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.
3. 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.)

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.

5. 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.