Chesnara PLC (LSE:CSN, FRA:6DE) said it is stepping its hunt for acquisitions after another solid half-year for the life and pensions group.
The dividend again rose by 3%, the 17th annual increase, said Chesnara, which added it expects to continue the policy of a 3% annual increase into the foreseeable future.
Rising interest rates and bond yields, coupled with equity market gains, have supported economic returns in each division, said the statement, though sterling appreciation against the euro and Swedish krona meant material foreign exchange translation losses.
In the UK, it operates as Countrywide (LSE:CWD) Assured, as The Waard Group and Scildon in the Netherlands, and as Movestic in Sweden and all divisions, except for Movestic, made positive cash contributions in the half-year to end June 2021.
At Movestic, the strong equity value recovery drove higher capital requirements, suppressing the cash outcome in the short term though the longer-term outlook is positive.
John Deane, chief executive, added: "We completed another acquisition in the Netherlands and have successfully transferred the policies onto the systems of Waard.
“We continue to actively seek out and engage on opportunities in our core markets and other appropriate territories and are increasingly optimistic that there are good opportunities for us.
"Our closed books continue to provide a strong and reliable source of cash generation and dividend. I am also encouraged by the material recovery in Scildon's surplus levels which creates significant future dividend potential.”
Deane said the rise in stock markets was also beneficial for the company’s economic value that includes policies in place, though there had been a short-term impact on cashflows, especially at Movestic.
Statutory pre-tax profits for the half-year to end June 2021 were £20.8mln (£9.1mln loss) while net income was £1.9mln (£15.1mln) reflecting a £15.9mln foreign exchange loss.
Commercial new business profits were stable at £6.6mln (£6.7mln) but are still at a lower level than pre-COVID-19, said Chesnara, while economic value was steady at £630mln (£637mln).
At the end of the period, the solvency ratio was 153% (31 December 2020: 156%) while the interim dividend rises 3% to 7.88p.
Earlier this month, Chesnara announced that Deane was standing down and Steve Murray will take over the reins as chief executive once UK approvals have been given, the company said today.
Chesnara administers approximately one million policies with the assets under management spread broadly equally across the businesses in the UK, the Netherlands and Sweden.