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Chesnara PLC

Chesnara to use balance sheet strength for more deals


The dividend for the year rose 3% to 20.67p and Chesnara’s solvency ratio strengthened to 158% of its regulatory requirement

stock market

Quick facts: Chesnara PLC

Price: £2.89

Market: LSE
Market Cap: £432.65 m


  • Chesnara is consolidator of closed life and pension funds

  • Business is based in London, Sweden and the Netherlands

  • Grown through acquisition out of Countrywide Assured

  • Company valued at £532mln at 357p


What it does

UK: Since 2004, company 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 is it doing

In March, Chesnara PLC (LON:CSN) said it expects the recent market volatility to throw up more opportunities for acquisitions.

John Deane, chief executive,added Chesnara’s strong financial position gives its scope for deals..

These will likely be focused on The Netherlands and UK (and possibly Sweden), where its existing businesses currently operate and where it already has scale.

Expansion further afield would need the benefits to outweigh the costs of adding another regulatory environment, he added.

The dividend for the year rose 3% to 20.67p and Chesnara’s solvency ratio strengthened to 158% of its regulatory requirement following cash generation of £47.8mln.

On a statutory IFRS basis, profits fell to £23.7mln from £86.9mln.




Inflection points

  • More acquisitions
  • Dividend set rise by 3%
  • Market conditions improve
  • Yield 5.8% at 357p


What the broker says: Peel Hunt

In July, Peel Hunt started coverage of the Chesnara with a target price of 290p.

The broker said Chesnara is an attractive closed life fund, but fully valued.

Chesnara’s cash generation is improving gradually as its portfolio of UK and International Life funds matures, said the broker.

“We believe dividend growth of 3% pa can be maintained over the next few years, but that the pay-out ratio will exceed 100% in 2022.

In order to sustain this dividend growth, the company may either need to generate higher levels of new business, or management may need to take action to accelerate economic value, such as engaging in new deals.


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