The Financial Reporting Council (FRC) said it related to the 2008 and 2009 audits of Syndicate 218, a firm based at the Lloyds of London market.

Mark Taylor, a partner at KPMG, and former partner Anthony Hulse have both each been fined £100,000.

Douglas Morgan, a director at Syndicate 218, was also reprimanded.

It is not unusual for big auditing firms to be severely reprimanded over their work, particularly when a fine is involved.

But an FRC spokesman said: "While [a reprimand] has no effect financially, it is a stain on their reputation and will be considered by other companies when they are thinking about changing their auditors."

The FRC said it had begun investigating the audits in 2012 and commenced action against the two firms in 2016.

It said that in both 2008 and 2009, KPMG made "insufficient inquiries" about the process that Syndicate 218 used to review insurance claims and to ensure its financial reserves.

"Consequently, there was insufficient evidence to provide an unqualified audit opinion," the regulator said.

KPMG has been in the spotlight for its audit of Carillion

It also said that Mr Morgan, an in-house accountant, had handled the review process within Syndicate 218 in a "wholly improper" way.

It said he had failed to keep proper records and to properly disclose information to the company's board and auditors.

Mr Morgan has been excluded from membership of the Chartered Institute of Management Accountants for two years.

KPMG, which is one of the Big Four accountancy firms, has been in the spotlight for its audit work.

The FRC is investigating the accountancy giant's audit of the government contractor Carillion, which collapsed under £1bn of debt last year.

In June 2018, the FRC also found an "unacceptable deterioration" in KPMG's work and said it would be subject to closer supervision.

A KPMG spokesman said: "We are disappointed that aspects of our 2008 and 2009 audits were found not to have met the standards set by our regulator.

"Since this work was conducted, we have changed our insurance audit approach considerably, including how we work with actuaries when auditing insurance claims reserves.

"We will continue to work hard to put historical matters such as this to rest as quickly as possible."