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Direct Line Insurance Group PLC has disclosed a revision to its previously reported Solvency II own funds for the year ended 31 December 2023. This adjustment, identified during the preparation of the Group's half-year results, involves a miscalculation in the treatment of the whole account quota share reinsurance arrangement, which began on 1 January 2023. Notably, this correction does not affect the Group’s International Financial Reporting Standards (IFRS) figures.
Solvency Capital Ratio Correction
The miscalculation pertained to the translation of reinsurance debtors between IFRS and Solvency II own funds. As a result, the solvency capital ratio at the end of 2023 was recalculated to be 188%, slightly below the previously reported 197%. This revised ratio is still well within the Group's risk appetite range of 140% to 180%. The adjustment aligns with the Group’s commitment to accurate financial reporting and robust risk management practices.
Positive Capital Generation and Future Outlook
For the first half of 2024, Direct Line estimates a solvency capital ratio of approximately 200%, reflecting strong capital generation driven by operational earnings, one-off benefits from partnerships, and favorable market movements. This robust capital position underscores the Group’s financial resilience and effective management.
In response to the miscalculation, Direct Line has implemented measures to enhance the control environment related to the specific area of the error. These actions are part of the Group’s broader efforts to ensure accuracy and reliability in its financial reporting processes.
Upcoming Half-Year Results
Direct Line Insurance Group PLC is scheduled to report its full half-year results on 4 September 2024.
