A positive investment performance helped boost first-half profits at life assurer Chesnara (CSN), with profits at the core Countrywide Assured closed book operation having jumped from £10.5m to £22.5m. Cash generation also rose from £12.4m to £21.9m - more than enough to cover the increased dividend.
As well as its closed life operation, Chesnara writes new policies through its Swedish subsidiary Movestic. After a protracted recovery period there, that unit delivered a 39.1 per cent increase in new business volumes - lifting pre-tax profit from £100,000 to £1m. Rebuilding relationships with independent financial advisers remains a work in progress, however, and reserve assumptions have been increased as persistency levels (the number of policies terminated) isn't expected to decline in the near-term. But new business wins meant that the ratio between business transferred in and business transferred out improved from 1:4 to 2:4. Moreover, capital reserves as a percentage of the minimum regulatory requirement rose from 198 per cent a year earlier to a robust 232 per cent.
Chief executive Graham Kettleborough also emphasised that Chesnara remains on the look-out for further open and closed book acquisitions in the £50m-£200m range.
Broker Panmure Gordon has upped its the full-year forecasts from pre-tax profit of £21.3m to £30.7m and EPS from 15.8p to 21.1p (from £19.7m/24.3p in 2012).
| CHESNARA (CSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 267p | MARKET VALUE: | £307m | |
| TOUCH: | 263-268p | 12-MONTH HIGH: | 272p | LOW: 176p |
| DIVIDEND YIELD: | 6.6% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 195p* | EMBEDDED VALUE | 294p | |
| Half-year to 30 Jun | Net premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 41.3 | 4.48 | 6.19 | 6.10 |
| 2013 | 38.0 | 21.8 | 15.0 | 6.25 |
| % change | -8 | +387 | +142 | +2 |
Ex-div: 9 Sep Payment: 14 Oct Includes intangible assets of £108m, or 94p a share | ||||
