Unlike rival Phoenix (PHNX), the arrival of Solvency II did not dampen cash flow generation for closed-book life assurer Chesnara (CSN) last year. Gross cash generation was up 4 per cent at £44.2m. The acquisition of Dutch-based Waard Group, which comprises three closed-book insurance companies with a total of 80,000 policies, generated an additional £39.9m for the group. This took total net cash generation to £82.4m, from £71.1m a year earlier.
Solvency II has resulted in a lull in M&A activity among closed-life books in the UK. Therefore management are focused on further acquisition opportunities in western Europe, particularly the Netherlands, in the short term. Gross cash generation for the core UK run-off business was slightly up on the previous year at £42.5m.
The group's Swedish Movestic business, which writes new business, faced more difficult trading conditions. A more competitive transfer market during the first-half and pressure on unit-linked products from traditional guaranteed return products meant new business declined by more than a third to £5.7m.
Analysts at Panmure Gordon expect embedded value of 352p a share and adjusted EPS of 25p for 2016, down from EV of 360p and EPS of 31.5p in 2015.
CHESNARA (CSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 323p | MARKET VALUE: | £408m | |
| TOUCH: | 320-325p | 12-MONTH HIGH: | 365p | LOW: 266p |
| DIVIDEND YIELD: | 5.9% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 234p | EMBEDDED VALUE: | 360p | |
| Year to 31 Dec | Net premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 87.0 | 22.4 | 22.4 | 16.85 |
| 2012 | 80.2 | 19.7 | 24.3 | 17.35 |
| 2013 | 74.5 | 60.6 | 43.0 | 17.88 |
| 2014 | 76.7 | 28.8 | 22.1 | 18.4 |
| 2015 | 67.9 | 42.8 | 31.5 | 18.94 |
| % change | -11 | +49 | +42 | +3 |
Ex-div: 7 Apr Payment: 23 May | ||||
