Chesnara looks insulated

In other words, it is at a remove from the activities the Prudential Regulation Authority had in mind when it recently warned UK insurers to balance profit distributions with commitments to existing policyholders. This – together with a belief in the prudence of its own financial management – explains why Chesnara saw fit to raise its final dividend for 2019.

That maintains an unbroken track record of increases dating back to its 2004 IPO. With the group’s various divisions forecast to generate £50.1m in dividend income in 2020 – equal to 157 per cent of last year’s total pay-out – there’s little reason to doubt distributions will climb this year.

It will be from a slightly weaker base, however. While positive investment movements pushed up Chesnara’s economic value by 7 per cent rise in 2019, the months since have seen a drop from £670m to £579m. Capital buffers nonetheless look robust; despite a small decline in surplus, the cover ratio currently sits at 163 per cent – a figure which includes payment of the 13.87p per share final dividend.

Panmure Gordon expects economic value to contract to 380p per share this year, and to 370p by the end of 2021.