By Aby Jose Koilparambil and Iain Withers
LONDON (Reuters) -Direct Line lowered its end-2023 solvency capital ratio on Friday citing a previous miscalculation, sending shares in the British home and motor insurer down 3% in early trade.
Direct Line said its solvency capital ratio, a measure of its financial strength, had been recalculated as 188% for the end of last year.
The company had previously reported it as 197%.
A lower solvency ratio can limit the amount of surplus capital an insurer has to return to shareholders through share buybacks or dividends.
Direct Line’s shares were one of the biggest percentage losers on the FTSE 250 index.
The insurer has been trying to restore the confidence of investors under CEO Adam Winslow, who took on the role in March, after a period of sluggish performance.
The company fended off a takeover bid by Belgian insurer Ageas earlier this year.
The solvency capital ratio is used to assess how well an insurance company can cover short-term and long-term outstanding financial obligations.
The company said the recalculated solvency ratio remained above the group’s target range of 140-180%.
Direct Line said it expects its solvency capital ratio to climb to around 200% at the end of the half-year period to June 30, helped partly by strong capital generation in the form of operating earnings and one-off benefits from partnerships.
The firm added that it had taken action to strengthen its controls following identification of the miscalculation.
The company is scheduled to report half-year results on Sept. 4.
(Reporting by Aby Jose Koilparambil in Bengaluru and Iain Withers in London; Editing by Rashmi Aich, Janane Venkatraman, Jane Merriman and Tomasz Janowski)
