LONDON (Alliance News) - Chesnara PLC, which acquires and manages life and pensions books, on Thursday increased its dividend after reporting higher annual pretax profit, boosted by its expansion to the Netherlands with the acquisition of Waard Group.
Pretax profit rose by just shy of 50% to GBP42.8 million in 2015, Chesnara said in a statement, and the company increased its total dividend for the year for the 11th successive year to 18.94 pence per share from 18.40p.
The numbers were boosted by the inclusion of a GBP16.6 million gain on the acquisition of Waard, as the acquired company's net assets - the difference between assets and liabilities - exceeded the purchase price.
Net cash generation, a measure of cash that became available for distribution to shareholders, rose to GBP82.4 million, including GBP44.2 million gross from Chesnara's existing businesses and a one-off boost of GBP39.9 million from the acquisition of Waard, from GBP71.1 million the prior year.
"The acquisition of the Waard Group has generated significant cash and, of equal importance, our entry to the Dutch market has enhanced the outlook for our ongoing acquisition strategy," Chief Executive John Deane said in a statement.
Movestic, the Swedish life assurance company open to new business, generated GBP5.1 million in gross cash, its first positive contribution since being acquired in 2009.
With Chesnara reporting a Solvency II ratio of 146% under European insurance rules that came into force at the start of 2016, calculating its position based on a standard formula set by regulators rather than using an internal model, Deane said the company is well capitalised under the new regime.
"The group Solvency II ratio is significantly in excess of both statutory and internal board requirements, which are set at a higher hurdle rate for the purposes of managing the day to day business," Chairman Peter Mason said in a statement.
"Our financial and governance foundations are strong and our existing books continue to generate reassuring levels of cash. In addition, with more certainty about the impact of Solvency II across the industry and with our entry to the Dutch market, the acquisition outlook is increasingly positive," Mason added.
Meanwhile, Mason said Chesnara will cooperate with a regulatory review into the treatment of closed-book customers by six life insurers. Chesnara's Countrywide Assured PLC was one of the life insurers put under investigation by the UK's Financial Conduct Authority.
"At the time of this report the findings are subject to a three month consultation period. As a result of this review the FCA announced the launch of an investigation into whether disclosure of paid up and early transfer charges to the customers of Countrywide Assured and other providers was adequate to enable those customers to make informed decisions," Mason said.
"We will of course co-operate fully with the FCA in its investigation. We also note that no conclusion has yet been reached as to whether there have been any breaches of regulatory requirements within CA," Mason said.
Shares in Chesnara were up 4.9% at 322.00 pence on Thursday.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Chesnara (CSN)