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Chesnara's acquisition of L&G Dutch insurance arm boosts 2017 results

Chesnara said it has made good progress on integrating Legal and General Nederland and the benefits were slightly ahead of expectations

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Chesnara is optimistic on meeting its strategic objectives

Life and pensions company Chesnara Plc (LON:CSN) more than doubled its full year profits on the back of its acquisition of Legal and General’s Dutch insurance unit.

Profit before tax rose to £89.6mln in 2017 from £40.7mln a year ago, including a £20.3mln gain on its takeover of Legal and General Nederland.

The €161mln acquisition of Legal and General Nederland was completed last April and the business was renamed as Scildon.

WATCH: Chesnara PLC keeping its head down and doing more of the same after 'excellent' year

Chesnara said it has made good progress on integrating the business with benefits delivered slightly ahead of expectations.

The deal contributed £65.4mln to the group’s economic value, which rose to £723.1mln last year from £602.6mln in 2017.

It also improved its solvency ratio – a measure of capital strength – to 146% at the end of 2017 from 144% and the end of the previous year.

New business profit edged up to £12.4mln from £11.7mln, including £11.8mln from the Swedish life and pension insurance division, Movestic, and £1.9mln from Scildon.

The group said Scildon is expected to deliver “more meaningful contributions” to new business profit after completing its two-year transformation plan.

“During the post-acquisition period, Scildon has delivered economic value growth and solvency surplus broadly in line with our initial expectations,” said chief executive John Deane.

“That said, we retain our view that the business would benefit from some focused improvements and have initiated a development programme to improve the profitability of new business.”

Chesnara hikes dividend on strong cash generation 

Cash generation rose to £83.9mln from £36.5mln, excluding a one-off positive impact of £48.9mln in respect of equity raised in 2016 ahead of the acquisition of Legal and General Nederland.

Chesnara raised its total dividend by 2.98% to 20.07p per share from 19.49p the prior year as the company issued a positive outlook.

Chairman Peter Mason said he remains “optimistic that Chesnara can continue to deliver against its strategic objectives, which in turn fund our well-established dividend strategy”.

“In particular, the UK business remains a robust source of cash, with additional potential to take management actions to enhance the core cash if required,” he said.

He added that Movestic has the scale to continue contributing to the cash position while Scildon has “significant” surplus capital and is also expected to be cash generative on an ongoing basis.

Quick facts: Chesnara PLC

Price: 326.944 GBX

LSE:CSN
Market: LSE
Market Cap: £490.62 m
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Full interview: Chesnara confident about dividends after 'steady' interims

Life and pensions group Chesnara (LON:CSN) expects to maintain its dividend policy even though current market conditions are putting pressure on the cash it generates. CEO John Deane talks Proactive London through the company's half year results with the company dividend up for the fifteenth...

on 30/8/19

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