It was very much business as usual for closed-book life assurer Chesnara (CSN) in the first half, though for shareholders this meant another rise in the dividend payout. The period also marked the integration of Netherlands based Waard Group, acquired for €69.9m (£51.3m) at a near 30 per cent discount to embedded value and comprising three closed-book life companies.
The acquisition also gave a welcome boost to cash flow, with Waard's strong levels of solvency releasing a one-off £39.9m in cash, which was added to the £18.9m generated from the UK run-off business. This comes from a reduction in reserve requirements as insurance policies mature.
The company’s Swedish operation Movestic, which writes new business, continued to face headwinds, with new business contribution more than halving to £2.4m. Chesnara has taken a pragmatic and long-term view on this trend, pointing out that it remains focused on profitable unit-linked business, rather than chasing volume by offering policies with high guaranteed returns. Crucially, Movestic recorded positive cash generation of £3.3m for the first time since its acquisition in 2009.
Analysts at Panmure Gordon have upgraded their forecasts and now expect full-year pre-tax profits of £39.1m and EPS of 28.9p (from 34.3m and 23.1p in 2014).
| CHESNARA (CSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 350p | MARKET VALUE: | £442m | |
| TOUCH: | 346-354p | 12-MONTH HIGH: | 365p | LOW: 309p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 227p | |||
| Half-year to 30 Jun | Embedded value per share (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 348 | 27.4 | 19.9 | 6.42 |
| 2015 | 349 | 30.4 | 22.4 | 6.61 |
| % change | +0 | +11 | +13 | +3 |
Ex-div:10 Sep Payment:15 Oct | ||||
