Chesnara boosts dividend cover

By Emma Powell

Chesnara's (CSN) acquisition of Legal & General's (LGEN) Dutch business – since renamed Scildon – not only ensured the stock retained its income status, but also meant it will be less reliant on making acquisitions to boost cash flows and dividends going forward. Following last year's acquisition, open book life assurance now accounts for around two-thirds of new business; Scildon contributed £16.2m in cash to the group post-acquisition, but is expected to generate even more following a two-year integration programme.

The purchase helped more than double overall cash generation to £84m, representing a dividend cover ratio of 2.8 times. The closed book UK business continued to be the biggest cash generator, benefiting from the release of £9m of previously trapped surplus from two ring-fenced with-profits funds. Improved equity markets also helped lift the business’s economic value by more than a fifth to £46m.  

Swedish open book business Movestic grew assets under management by 16 per cent, or £395m, thanks to strong investment returns and £170m in new business. That helped it increase its economic value by almost £25m, despite incurring £11m in losses relating to changes in future customer fee assumptions.

Analysts at Panmure Gordon expect an economic value of 496p a share at December 2018, up from 483p for 2017.