Chesnara Regulatory News (CSN)

26 Jun 2006 15:16

Chesnara plc ("Chesnara" or the "Company")26 June 2006Pre-close Period Trading UpdateCity of Westminster Assurance Part V11 Transfer approvedOn 2 June 2005, Chesnara announced the acquisition of City of WestminsterAssurance Company Limited ("CWA") and is now pleased to advise that today Courtclearance was granted for the transfer of the long-term business of CWA intoCountrywide Assured plc, a subsidiary of Chesnara, pursuant to Part VII of theFinancial Services and Markets Act 2000 (the "Transfer").As a result of synergies arising as a direct result of the Transfer, which werenot previously reflected in Chesnara's embedded value assumptions, thecompletion of the Transfer is expected to have a positive effect on thefinancial position and results of the Company for the six-month financialperiod ending 30 June 2006.It should also be noted that changes in the results and reported financialposition of the Company, as reflected in information which is supplementary tofinancial reporting in accordance with IFRS, are likely to arise following thedecision to begin presenting the results and financial position of the Companyin accordance with European Embedded Value methodology. The effect of thesechanges on the Company's Embedded Value will be in lieu of the Achieved Profitbasis of reporting and it is intended to implement them with effect from thesix-month financial period ending 30 June 2006.The Board currently believes that the above changes, taken as a whole, willhave a marginally positive effect on the Company's embedded value andshareholders should await the publication of the Company's Interim Results inSeptember 2006 for a full and detailed analysis of the effects of thesechanges.Commenting on the Court clearance, Graham Kettleborough, Chief Executive ofChesnara plc, said:"We are very pleased with the outcome of our application to transfer thebusiness of CWA into our subsidiary, Countrywide Assured plc. We are encouragedby the progress we have made towards integrating CWA and expect the additionalsynergies generated to assist us in maintaining a strong dividend yield for ourshareholders."Endowment ClaimsThe Company has previously made significant increases to the provisions whichit maintains in respect of its exposure to claims for mortgage endowmentmisselling redress. These provisions are sensitive, inter alia, to the numberof claims received and to the actual and projected performance of investmentmarkets. Notwithstanding recent weakness in equity markets and recent publicannouncements by other companies of their exposure to the continuing activitiesof complaints handling firms, the Company believes that there will be no netsignificant adjustment to these provisions at 30 June 2006, either in respectof experience for the six months ending on that date or in respect of forwardprojections from that date.Recent Stock Market VolatilityThe Company's results are sensitive to investment market performance, as itderives a significant part of its profits from periodic charges to theunit-linked funds under management, such charges being related to the value ofthose funds. While there has recently been significant weakness in globalequity markets, particularly in the second quarter of 2006, the impact ofinvestment market performance on the Company's results and financial positionin respect of the six months ending 30 June 2006 is expected to be broadlyneutral, taking the period as a whole.Notification of ResultsThe interim results of the Company for the six month period ending 30 June 2006will be announced on 6 September 2006.For further information please contact:Graham Kettleborough Chief Executive +44 (0) 7799 407 519 Ken Romney Finance Director +44 (0) 1772 840 002 Michael Henman Cubitt Consulting +44 (0) 20 7367 5100 ENDCHESNARA PLC