TIDMCSN
RNS Number : 3634T
Chesnara PLC
22 July 2022
Chesnara plc
LEI Number: 213800VFRMBRTSZ3SJ06
22 July 2022
ACQUISITION OF CONSERVATRIX'S INSURANCE PORTFOLIO
CHESNARA ENHANCES SCALE IN THE NETHERLANDS WITH SEVENTH
ACQUISITION IN DUTCH MARKET
Chesnara plc ("Chesnara", the "Company" or, together with its
subsidiaries, the "Group") is pleased to announce the acquisition
of the insurance portfolio of Nederlandsche Algemeene Maatschappij
van Levensverzekering "Conservatrix" N.V. ("Conservatrix"), a
specialist provider of life insurance products in the Netherlands
that was declared bankrupt on 8 December 2020 (the "Acquisition").
The insurance portfolio will be acquired by Waard, Chesnara's Dutch
closed book operation.
Acquisition highlights
-- Third acquisition announced by Chesnara over past year and
seventh transaction undertaken in Dutch market
-- Increases Waard's number of policies under administration to
165,000, transforming Waard into a second material closed book
consolidation business alongside Chesnara's existing UK
platform
-- Conservatrix customers to benefit from becoming part of a
well capitalised Group, after a significant period of
uncertainty
-- A Capital Contribution of GBP35 million to be provided by the
Group to support the solvency position of the Conservatrix
business, financed from the Group's existing resources
-- Waard to become a material contributor to the Group's
dividends following the completion of the Acquisition and the
recent Robein Leven transaction, further supporting Chesnara's
progressive dividend strategy
Steve Murray, Chief Executive Officer of Chesnara, stated:
"We are delighted to announce the acquisition of Conservatrix's
insurance portfolio and to welcome the Conservatrix customers and
staff to the Chesnara Group. We recognise that the bankruptcy of
Conservatrix has caused significant uncertainty for its customers
and employees, but we hope that today's announcement provides
certainty and a clear way forward for them.
"This transaction is Chesnara's third over the past year and
seventh in the Dutch market, and will further expand the scale of
our Dutch operations following the recent completion of the
acquisition of Robein Leven in April 2022. Together, these will
deliver material value creation for Chesnara and the expected
incremental cash generation will enhance the sustainability of our
progressive dividend strategy. Conservatrix's portfolio is well
aligned to Chesnara's acquisition strategy and will be integrated
within Waard, our existing Dutch closed book operation."
"We believe that acquisition opportunities across our target
markets remain strong, and we continue to be highly confident in
our ability to finance and execute such transactions on attractive
terms for both vendors and our shareholders."
Transaction background and benefits for Conservatrix
policyholders
In December 2020, the Dutch Central Bank, De Nederlandsche Bank
("DNB"), filed for bankruptcy of Conservatrix following a
deterioration of the Solvency II capital position and limited
feasibility of recovering this in the short term. The court
declared Conservatrix bankrupt on 8 December 2020 and appointed two
trustees (the "Trustees") who are authorised to administer the
estate.
The Acquisition will be effected through the transfer of the
insurance portfolio (together with certain other assets and
liabilities) to a subsidiary of Waard, after which that subsidiary
will be merged into Waard. However, in order to support the
solvency position of the Conservatrix insurance portfolio, a
Capital Contribution of GBP35 million will be provided by the
Group, consisting of a GBP21 million contribution from Chesnara and
GBP14 million of existing Waard resources.
Following completion of the Acquisition, Conservatrix customers
will benefit from becoming part of a solvent and well capitalised
company, providing security after a significant period of
uncertainty. In addition, Waard has proven expertise in integrating
businesses whilst continuing to provide high levels of customer
service.
The Acquisition is expected, subject to certain conditions
including regulatory and court approvals, to complete during Autumn
2022.
Strategic rationale for the Group
Key benefits to the Group include:
-- Enhanced Group scale through the acquisition of a sizeable
closed book: Conservatrix's savings, annuity and funeral plan
products are well aligned with Chesnara's existing life and pension
liability mix in the Netherlands. The Acquisition adds
approximately 70,000 additional policies and increases Group Assets
under Administration ("AuA") by GBP0.5 billion to GBP12.8 billion
as at the end of 2021 (1) .
-- Transformation of Waard into a second material closed book
consolidation business alongside Chesnara's existing UK platform:
The Conservatrix insurance portfolio will be integrated into Waard,
Chesnara's Dutch closed book platform, increasing its policies by
approximately 70% to 165,000 and AuA by approximately 90% to over
GBP1.0 billion (2) . The Acquisition is the seventh transaction
undertaken in the Dutch market by the Group and will provide Waard
with the scale and capacity to undertake a wider range of closed
book acquisitions in future.
-- Cash generation supporting Chesnara's dividend strategy: A
Capital Contribution of GBP35 million will be provided by the Group
to support the solvency position of the Conservatrix business.
Future cash generation from the Acquisition under steady state
conditions is expected to be GBP4 million per annum, supporting
Chesnara's progressive dividend strategy. Waard will become a
material contributor to the Group's dividends, with expected total
annual cash generation of GBP8 million following the
Acquisition.
-- Enhancement of Economic Value: The Acquisition is expected to
increase the Group's Economic Value ("EcV") by GBP18 million and
provides further EcV accretion potential from future real world
investment returns and the run-off of the risk margin.
-- Continued robust solvency position and financial flexibility:
The Capital Contribution will be funded from the proceeds of
Chesnara's Tier 2 Debt raise in February 2022 and existing funds
within Waard. Including the impact of the Acquisition, the Group's
pro-forma estimated year-end 2021 Solvency II ratio would remain
strong at 171% (1) , above the Group's normal operating solvency
range of 140 -160%, providing security for customers and continued
financial flexibility for future acquisitions.
About Conservatrix
Established in 1872, Conservatrix is a specialist provider of
life insurance and mortgages based in Utrecht, Netherlands.
Conservatrix was declared bankrupt in December 2020 following a
filing by the DNB as a result of a deterioration in the Solvency II
capital position of the Company and limited feasibility of recovery
in the short term.
For the year ended 31 December 2019 (being the date of
Conservatrix's latest financial information published prior to
entering insolvency), Conservatrix generated a pre-tax loss of
EUR161.8 million and had gross assets of EUR638 million at period
end. For the year ended 31 December 2021, Conservatrix generated
unaudited pre-tax profit of EUR75.6 million and, at period end, had
unaudited gross assets of EUR614 million. The Conservatrix asset
portfolio consists of a range of investments, including cash,
government bonds, corporate bonds and mortgages.
Conservatrix's employees are expected to remain with the
business following completion of the Acquisition.
Investor Enquiries
Sam Perowne
Head of Strategic Development & Investor Relations
Chesnara plc
E - sam.perowne@chesnara.co.uk
Media Enquiries
Roddy Watt
Director, Capital Markets
FWD
T - 020 7280 0651 / 07714 770 493
E - roddy.watt@fwdconsulting.co.uk
Notes
(1) Proforma as at 31 December 2021 for the estimated impacts of
the acquisitions of Sanlam Life & Pensions UK Limited and
Robein Leven N.V. completed in April 2022 and the issue of the
GBP200 million Tier 2 Debt in February 2022.
(2) Including the impact of the acquisition of Robein Leven N.V.
by Waard, completed in April 2022.
Information on Chesnara
Chesnara is a European life and pensions consolidator listed on
the London Stock Exchange. It administers approximately one million
policies and operates as Countrywide Assured and Sanlam Life &
Pensions in the UK, as The Waard Group and Scildon in the
Netherlands, and as Movestic in Sweden.
Following a three pillar strategy, Chesnara's primary
responsibility is the efficient administration of its customers'
life and savings policies, ensuring good customer outcomes and
providing a secure and compliant environment to protect
policyholder interests. It also adds value by writing profitable
new business in Sweden and the Netherlands and by undertaking
value-adding acquisitions of either companies or portfolios.
Consistent delivery of the Company strategy has enabled Chesnara
to increase its dividend for 17 years in succession.
Further details are available on the Company's website (
www.chesnara.co.uk ).
Important Notice
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 (as it forms part of
retained EU law as defined in the European Union (Withdrawal) Act
2018).
This announcement contains forward-looking statements with
respect to the operations, performance and financial condition of
Chesnara. By their nature, these statements are subject to risks,
assumptions and uncertainties that could cause actual results to
differ materially from those expressed or implied because they
relate to future events. Unless otherwise required by applicable
law, regulation or accounting standard, the Company does not
undertake to publicly update any forward-looking statements,
whether as a result of new information, future developments or
otherwise. Nothing in this document should be construed as a profit
forecast.
Nothing contained in this announcement constitutes or shall be
deemed to constitute an offer or invitation to invest in otherwise
deal in any shares or other securities of Chesnara.
The person responsible for arranging for the release of this
announcement on behalf of Chesnara is Al Lonie, Group Company
Secretary.
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