Direct Line finds miscalculation in 2023 Solvency Capital Ratio
Direct Line Insurance Group
176.90p
16:40 12/09/24
Direct Line Insurance Group announced a correction to its previously-reported Solvency Capital Ratio (SCR) for the year ending 2023 on Friday, after it identified a miscalculation.
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The FTSE 250 company said the error was related to the treatment of a whole account quota share reinsurance arrangement initiated on 1 January 2023, specifically in the translation of reinsurance debtors between International Financial Reporting Standards (IFRS) and Solvency II own funds.
It said the correction revised the group's SCR at the end of 2023 to 188%, a slight reduction from the initially reported 197%.
Despite the adjustment, the revised ratio remained above its risk appetite range of 140% to 180%.
The firm emphasised that the correction did not affect its IFRS figures.
In preparation for its half-year results, the group estimated its SCR as of 30 June 2024 to be around 200%, attributing that to robust capital generation driven by operating earnings, one-off partnership benefits, and favourable market conditions.
Direct Line said it had implemented measures to enhance controls in the area where the miscalculation occurred.
It said it would release its half-year results on 4 September.
At 0830 BST, shares in Direct Line were down 2.43% at 184.4p.
Reporting by Josh White for Sharecast.com.