TIDMCSN
RNS Number : 4855L
Chesnara PLC
13 September 2021
Chesnara PLC
("Chesnara" or the "Company")
13 September 2021
ACQUISITION
CHESNARA ENHANCES SCALE IN THE UK WITH THE ACQUISITION OF SANLAM
LIFE & PENSIONS UK LIMITED
TRANSACTION HIGHLIGHTS:
-- Chesnara has entered into an agreement with Sanlam UK Limited
to acquire Sanlam Life & Pensions UK Limited (SLP), a
specialist provider of insurance and long-term savings products in
the UK.
-- Enhances the scale of its operations in the UK by adding
GBP2.9bn of assets under administration and c.80,000 policies.
-- Cash consideration of GBP39.0m funded from Chesnara's
existing debt facility.
-- GBP48.1m estimated SLP Economic Value ("EcV") [1] on a
Chesnara defined basis.
-- Material further commercial value upside potential supporting
Chesnara's progressive dividend strategy.
-- Completion is expected to occur in early 2022, conditional
upon customary regulatory approvals.
STRATEGIC RATIONALE AND BENEFITS OF THE TRANSACTION:
-- Scale enhancement: SLP's specialist pension and long-term
savings propositions and risk profile are well aligned with
Chesnara's existing life and pension liability mix in the UK. Adds
c80,000 additional policies and increases Chesnara group AuA by 34%
to GBP11.4bn at the end of 2020 and UK AuA by 126% to GBP5.2bn.
-- Attractive financial terms: Cash consideration of GBP39.0m
represents an attractive discount to estimated EcV of GBP48.1m,
providing an incremental EcV per share of 4p after deal costs.
Provides future material value creation potential from expense and
capital synergies, real world returns above risk free and risk
margin run-off which will add further EcV accretion over time.
-- Enhanced dividend support: Incremental cash generation of
cGBP5m per annum under steady state conditions, supporting
Chesnara's progressive dividend strategy.
-- Preserved financial flexibility: Including the impact of the
acquisition, Chesnara's pro forma estimated year-end 2020 Solvency
II ratio would remain strong and within our target operating range
at 142%. Chesnara's debt leverage ratio will remain low at 15%,
leaving the Company with further financing capacity for additional
transactions.
-- Integration into our UK platform: the SLP business will be
integrated into Countrywide Assured plc, Chesnara's UK platform,
and will follow its tried and tested business model as a focused,
closed-book consolidator. SLP will retain a commercial relationship
with Sanlam Investments UK Limited for investment management.
COMMENTS ON THE TRANSACTION:
John Deane, Chief Executive Officer, Chesnara stated:
"We are delighted to announce this transaction which will expand
the scale of our UK operations and deliver potential for material
value creation for Chesnara. The expected incremental cash
generation from SLP will enhance the sustainability of our
progressive dividend strategy.
SLP's business is well aligned to Chesnara's acquisition
strategy and will be integrated with our existing UK operations. We
look forward to welcoming SLP's customers and staff to the Chesnara
group and continuing to work with Sanlam on the management of SLP
assets.
We believe that the market prospects for further acquisitions
across our target markets remain positive and we continue to be
confident in our ability to finance and execute such transactions
on attractive terms for both vendors and our shareholders."
Jonathan Polin, Chief Executive Officer, Sanlam UK Limited
stated:
"This deal is a testament to the strength and quality of SLP and
its long-standing track record of excellent client service. I would
like to thank all my colleagues there for their unstinting efforts.
Chesnara is a highly respected and established life insurance and
pensions consolidator and I am confident that the business will
flourish under its new ownership for the benefit of all its key
stakeholders, including policyholders."
Enquiries
Chesnara
John Deane, Chief Executive Officer - 01772 972079
Steve Murray, Chief Executive Officer (Designate) - 01772
972079
David Rimmington, Chief Financial Officer - 01772 972079
FWD Consulting
Roddy Watt - 0207 280 0651 / 07714 770493
Notes to Editors
LEI Number: 213800VFRMBRTSZ3SJ06
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).
About Chesnara plc
Chesnara is a life and pensions consolidator listed on the
London Stock Exchange. It administers approximately 900,000
policies with approximately GBP8.7 billion of assets under
management as at 30 June 2021, with those assets spread broadly
equally across businesses in the UK, the Netherlands and Sweden.
Chesnara operates as Countrywide Assured 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.
Chesnara has a proven track record of acquiring and
consolidating life and pension portfolios and businesses. The
acquisition that is the subject of this press release is evidence
of the continuation of this capability. The acquisition process
adds value for our shareholders whilst also providing a solution
for vendors to realise value and release capital. This is achieved
by vendors divesting life and pensions businesses or portfolios
which are not core to their wider strategic focus, or where
diminishing scale creates operational and hence financial viability
pressure. Chesnara's robust regulatory framework and strong
solvency ensures policyholder interests are well protected and
remain at the heart of any divestment decision.
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).
About Sanlam Life & Pensions UK Limited (SLP)
SLP is specialist provider of insurance and long-term savings,
with key products of unit-linked pensions and SIPPs, aimed
primarily at affluent and high net worth private clients in the
UK.
SLP is part of Sanlam UK Limited, a financial services group
offering wealth management, life and pension insurance products and
asset management services. Sanlam UK Limited is a wholly-owned
subsidiary of Sanlam Limited, an international financial services
group headquartered in South Africa and listed on the Johannesburg,
A2X and Namibia stock exchanges.
Key financial data for SLP:
GBPm, unless stated 31 December 2020
Alternative performance measures
-----------------
AuA (GBPbn) 2.9
-----------------
Policies (thousands) 80
-----------------
IFRS
-----------------
Result after tax (2.4)
-----------------
Total assets 2,976.3
-----------------
Shareholders' equity 32.1
-----------------
Solvency II
-----------------
Own Funds (1) 58.5
-----------------
Unrestricted Tier 1 / Own Funds
(%) 100
-----------------
Solvency ratio (%) (1) 133
-----------------
(1) As reported under the SLP basis of preparation
Important Notice
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.
[1] Chesnara estimate, as of 31 December 2020
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END
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