Chesnara PLC (LSE:CSN) has raised its profile with a transformational acquisition of HSBC Life, accelerating its consolidation of life insurance closed books.
This deal significantly boosts Chesnara’s scale, creating opportunities for operational and capital efficiencies over the coming years.
Peel Hunt highlights that the acquisition strengthens the company’s cash flow sustainability, underpinning a 3% dividend per share growth outlook extended across a 10-year forecast horizon.
Following the deal, cash earnings per share forecasts have been substantially increased by 23% in 2025, 136% in 2026, and 249% in 2027, to 16.8p, 24.0p, and 25.2p, respectively.
Adjusted earnings per share show a more modest shift in 2025, but then rise by 32% in 2026 and 50% in 2027.
Dividend per share estimates have also been upgraded, with growth of 2% and 3% projected for 2025 and 2026, and a progressive 3% annual increase now forecast out to 2035, up from the previous horizon of 2027.
Chesnara currently trades at a price roughly equal to its Solvency II Tier 1 net asset value, with a return on Solvency II Tier 1 NAV of 10% on cash earnings, and an attractive dividend yield of 8%.
Peel Hunt sees further potential for value creation through additional mergers and acquisitions, supporting their upgrade to a Buy rating and lifting the target price to 330p from 300p.
In afternoon trading, the shares were up 4% at 291.5p.