Chesnara’s (CSN) April acquisition of Legal & General’s (LGEN) Dutch business – rebranded Scildon – provided a one-off £20.7m boost to the closed book life assurance consolidator’s profits during the first half. However, it was its pre-existing UK, Swedish and Dutch businesses that allowed it to do exactly what the market had hoped, increasing its cash generation and interim dividend payment.
Overall cash generation more than trebled to £46m, with two-thirds of that coming from the domestic business, which benefited from £9m of previously trapped surplus capital being extracted from two ring-fenced with-profit funds. Improved equity markets also helped increase the business’s economic value by £22m.
That was also true for the Swedish and Dutch businesses. Assets under management at Swedish open book life business Movestic increased by £0.3bn on the December year-end, helping push up its economic value by 6 per cent to £243m. Scildon – which is also open to new business – generated £1.7m in new business profit and increased its share of the term assurance market to 7.4 per cent. Management also de-risked the business’s portfolio, reducing its equity exposure and investing in lower-risk assets, which also cut its capital requirements.
Analysts at house broker Shore Capital expect economic value of 455p a share at December 2017, up from 390p (ex-dividend) in 2016.
| CHESNARA (CSN) | ||||
| ORD PRICE: | 390p | MARKET VALUE: | £584m | |
| TOUCH: | 390-393p | 12-MONTH HIGH: | 402p | LOW: 291p |
| DIVIDEND YIELD: | 5.0% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 286p* | SOLVENCY II RATIO: | 143% | |
| Half-year to 30 Jun | Net premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 32.9 | 0.2 | 0.4 | 6.8 |
| 2017 | 66.4 | 51.6 | 31.2 | 7.0 |
| % change | +102 | - | - | +3 |
| Ex-div: | 07 Sep | |||
| Payment: | 11 Oct | |||
| *Includes intangible assets of £190m, or 127p a share | ||||
