("Chesnara" or "the Company")
LEI Number: 213800VFRMBRTSZ3SJ06
22 November 2019
Chesnara to acquire Dutch portfolio of term life and savings policies for €29.15 million
Chesnara plc ("Chesnara" or the "Company"), through its existing Netherlands-based closed book operation, the Waard Group ("Waard"), has agreed to acquire a portfolio of life insurance business in run-off from the Dutch branch of Belgian-owned Argenta Bank-en Verzekeringsgroep N.V (the "Transaction").
The Transaction will see the transfer of a portfolio of approximately 44,000 term and savings policies for a consideration of €29.15 million (approximately £25.0 million), to be paid in cash funded from existing reserves within Waard. The consideration represents a discount of 17% to the acquired portfolio's Solvency II own funds, calculated on a Chesnara-consistent basis, and a 22% discount to Chesnara's estimate of Economic Value ("EcV") as at 30 June 2019. On completion, the business will be integrated within Waard.
As at 30 June 2019, the acquired portfolio had gross assets of c.€380 million (c.£326 million). For the year ended 31 December 2018, it generated profits before tax of c.€3.7 million (c.£3.2 million).
The Transaction is expected to be both earnings and EcV accretive on completion. Chesnara estimates that the Company's EcV gain on completion will be c.€8.0 million (c.£6.9 million), and that the acquired portfolio will have a positive cumulative cash generation profile over its remaining life.
The Transaction follows last month's acquisition and successful integration by Waard of a term life and endowment portfolio of c.6,500 policies from Monuta Insurance, also in the Netherlands. It is strongly aligned with Chesnara's strategic objective of acquiring and integrating life and pensions companies and books of business within its target and value range, while supporting the Company's ongoing dividends.
The proposed transaction is subject to customary approvals from the National Bank of Belgium ("NBB") and from the Dutch Central Bank ("DNB") for the change of control. Antitrust clearance from the Netherlands Authority for Consumers and Markets (ACM) is also required. It is expected to complete in summer 2020.
John Deane, Chief Executive, Chesnara stated: "This is a very pleasing acquisition for Chesnara. It will create material operating synergies with the existing Dutch business and, after the Monuta portfolio, it is the second deal that will be integrated into, and add value to, our Dutch closed-book platform Waard Group.
"The business is well capitalised, cash generative and profitable, while fulfilling our acquisition strategy of being economic value accretive, operating within our core target markets and offering a strong strategic fit at an attractive discount.
"We have a tried and tested track record of safely and efficiently transferring in and servicing books of business to the best interests of customers and policyholders and continue to seek out appropriate transaction opportunities on behalf of our loyal shareholders."
Director, Capital Markets
Forward thinking communications
T - 020 7280 0651 / (+44) 7714 770493
E - [email protected]
Roddy Watt, FWD Consulting:
Notes to Editors
Chesnara is a life and pensions company listed on the London Stock Exchange. It administers over one million policies with approximately £7.8 billion of assets under management, with those assets spread broadly equally across businesses in the UK, the Netherlands and Sweden. Chesnara operates as Countrywide Assured in the UK, as The Waard Group and Scildon in the Netherlands, and as Movestic in Sweden.
Following a three pillar strategy, Chesnara's primary responsibility is the efficient administration of its customers' life and savings policies, ensuring good customer outcomes and providing a secure and compliant environment to protect policyholder interests. It also adds value by writing profitable new business in Sweden and the Netherlands and by undertaking value-adding acquisitions of either companies or portfolios.
Chesnara has a proven track record of acquiring and consolidating life and pension portfolios and businesses. The acquisition that is the subject of this press release is evidence of the continuation of this capability. The acquisition process adds value for our shareholders whilst also providing a solution for vendors to realise value and release capital. This is achieved by vendors divesting life and pensions businesses or portfolios which are not core to their wider strategic focus, or where diminishing scale creates operational and hence financial viability pressure. Chesnara's robust regulatory framework and strong solvency ensures policyholder interests are well protected and remain at the heart of any divestment decision.
Consistent delivery of the company strategy has enabled Chesnara to increase its dividend for 15 years in succession.
Further details are available on the Company's website (www.chesnara.co.uk).
The GBP equivalent for the figures shown have been translated at a rate of €1.1667/£1.