Direct Line has updated its 2023 annual results after identifying a “miscalculation” within its audited Solvency II own funds.

The insurance group said the error arose in the Solvency II treatment of the whole account quota share reinsurance arrangement – incepted 1 January 2023 – and in particular the translation of the reinsurance debtors between IFRS and Solvency II own funds.

Direct Line noted that the miscalculation had no impact on the IFRS figures.

Correcting for the miscalculation, the solvency capital ratio at the end of the group’s 2023 financial year was 188%, which was above Direct Line’s risk appetite range of 140% to 180%. The previously reported solvency capital ratio was 197%.

In preparing to announce its half year results, the insurer has estimated its solvency capital ratio on 30 June to be around 200%. This followed “good capital generation” in H1, Direct Line said, from a combination of operating earnings, one-off benefits from partnerships, and market movements.

“The group has taken action to strengthen the control environment in relation to the specific area where the miscalculation occurred,” Direct Line said in a statement to the London Stock Exchange.

The insurer will report its half year results on 4 September.

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