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Aviva PLC on Wednesday said the UK Prudential Regulation Authority has applied ‘the maximum’ discount to its penalty on Direct Line Group, which it acquired last year. The London-based insurer noted that the PRA’s investigation, into Direct Line’s main underwriter, UK Insurance Ltd, was regarding ‘an historical issue relating entirely to a period before Aviva completed its acquisition of DLG in July’. The PRA said that UKI miscalculated its balance sheet during 2023 and 2024 due to ‘ineffective preventative and detective controls and resourcing issues’ across its finance and actuarial operations, PA reported. It said the errors went undetected ‘for a significant period of time’, causing UKI to overstate its balance sheet strength to the regulator and the financial market. The PRA, the Bank of England’s banking stability watchdog, has fined Direct Line £10.6 million. This was reduced from an initial £21.3 million. Aviva, which acquired Direct Line for £3.7 billion, said: ‘The PRA has acknowledged that DLG and, subsequent to completion of the acquisition, Aviva, have co-operated with their investigation in an exemplary manner and, as a consequence, the financial penalty has been discounted by the maximum amount possible.’ Sam Woods, deputy governor for prudential regulation at the Bank of England and chief executive of the PRA, commented: ‘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.’ Aviva added that after completing the takeover it took ‘extensive action’ to improve the business’s financial reporting control environment. ‘Aviva was fully aware of this matter prior to agreeing the terms of the acquisition of DLG and the outcome is fully provided for in the acquisition balance sheet,’ the insurer noted. ‘The resolution of this matter has no impact on the integration of DLG into Aviva, which is proceeding well, and no impact on the expected financial benefits arising from the acquisition.’ Aviva shares were down 1.3% at 618.20 pence late on Wednesday morning in London. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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