These headline figures from life assurer Chesnara don't tell the whole story – adjust for the previous year's £15.9m acquisition-related exceptional profit and IFRS pre-tax profit rose 22 per cent in 2011, to £22.4m. Moreover, the dividend has been increased again, meaning a healthy yield, yet the shares – trading at a discount to embedded value – remain too cheap.
However, market volatility meant that 2010's £26.9m investment return became a £16.9m loss. Changes in economic assumptions – reflecting such factors as declining equity markets and bond yields – meant that embedded value basis profits fell from £73.1m in 2010, to a £40.1m loss. Accordingly, embedded value per share fell 17 per cent. Still, Chesnara's premium revenue showed solid progress, benefiting from a £7.5m first full-year contribution from Save & Prosper Insurance – the closed life operation acquired at the end of 2010. Furthermore, attrition rates – the number of people surrendering policies early – fell from 7.2 per cent of all policies to 6.5 per cent. And, despite a tough trading environment, Chesnara's Swedish Movestic unit moved into profitability for the first time.
Panmure Gordon is forecasting 2012 pre-tax profits of £19.7m, giving EPS of 14.4p.
| CHESNARA (CSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 190p | MARKET VALUE: | £218m | |
| TOUCH: | 188-190p | 12-MONTH HIGH: | 266p | LOW: 155p |
| DIVIDEND YIELD: | 8.9% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 182p* | EMBEDDED VALUE: | 256p | |
| Year to 31 Dec | Net premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 85.0 | 27.7 | 24.3 | 15.1 |
| 2008 | 77.0 | 22.7 | 19.2 | 15.6 |
| 2009 | 75.1 | 44.7 | 45.3 | 16.0 |
| 2010 | 79.3 | 34.2 | 29.1 | 16.4 |
| 2011 | 87.0 | 22.4 | 22.4 | 16.9 |
| % change | +10 | -35 | -23 | +3 |
Ex-div: 11 Apr Payment: 22 May *Includes intangible assets of £112m, or 98p a share | ||||
