What Chesnara does
UK: Since 2004, Chesnara PLC (LON:CSN) has acquired like and pension books from City of Westminster Assurance, Save & Prosper and Direct Line Life.
Netherlands: Scildon is an open life and pensions business that Chesnara acquired from Legal & General. The Waard Group is much smaller and a closed Life and Pension business.
Sweden: Movestic is a life and pensions business based in Stockholm
How it's doing
Chesnara increased its annual dividend by 3% again in 2020 after what it said was a solid performance in the face of Coronavirus (COVID-19) disruption.
Total funds under management closed higher at the end of December 2020 than the opening position, the pan-European group said.
Policy persistency in its closed operations was better than expected and despite the challenges of COVID-19, Scildon, previously known as Legal & General Nederland, goes into 2021 with over 7% more policies in-force than was the case pre-COVID-19, the company said in a statement.
Against a backdrop of priorities created by COVID-19, adverse operating conditions and continued downward pressure on yields, Chesnara reported a stable pre-dividend economic value and cash generation levels, said John Deane, chief executive.
New business market shares held up relatively well in Sweden and there were notable market share gains in the Netherlands, it said.
What the boss says: John Deane, chief executive:
“In summary, the business in terms of funds, policy counts and new business market shares remains strong and offers a solid foundation for profit growth post-COVID-19. In short, to date, we have weathered the pandemic storm well and emerge in good shape.”
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Inflexion points
- More acquisitions
- Dividend set to rise by 3%
- Market conditions improve
What the broker says: Peel Hunt
"Chesnara reported a 2020 economic value (EcV) of £637m, down 5% vs end-2019 but above our £596m estimate, with EcV earnings showing a £38m loss (vs PHe £42m loss).
"Group cash generation was lower than we had assumed at £28m, down from £37m in 2019, weighed down by the impact of low-interest rates in the Dutch business and the strain of writing new business.
"Nevertheless, the life funds up-streamed £48m to the parent company, which funds interest payments and the dividend.
"The company trades at 0.76x SII Tier I NAV, which we believe is fair, and we maintain our Hold recommendation."