UK headquartered Chesnara, a London Stock Exchange listed life and pensions consolidator, has reported a 14% fall in year-on-year pre-tax profits in the six months to June.
The acquirer’s economic value fell from £723m to £700m ($911m, €781m). Economic value is connected to its solvency II ratio, which measures the group’s ability to meet its obligations but does not include its ability to make acquisitions.
Its open book Scildon business, which it acquired in 2017 from Legal and General, was hit by lower valuations in Italian bonds.
Chesnara also operates in the UK and Sweden
In the UK it manages 287,000 Countrywide Assured policies using an outsourcer model.
Chesnara said the UK business showed strong cash generation and economic value. Its UK solvency ratio increased from 130% to 168%.
In Sweden Chesnara operates a challenger brand of life insurance; Movestic. This business saw its cash generation and economic value hit by the fall in the value of the Swedish Krona. It generated £10.6m on a constant basis and £7.3m on current basis.
Ian Forrest, investment research analyst at The Share Centre, said: “These figures suffered a little by comparison with those for the same period in 2017 when the company acquired Legal & General’s Dutch business, but Chesnara reported some progress in that country with a 29% increase in term contracts at its Scildon business in the period.
“These are clearly a mixed set of figures and the shares remained unchanged in early trading. While the drop in economic value is a concern the key measures for income-seeking investors remain positive and the business has the potential to build a strong proposition in its particular market segment, so we continue with our ‘buy’ recommendation for those willing to accept a higher level of risk.”
