Chesnara (CSN) H2 2023 earnings summary

Executive summary

• Delivered £53.0m commercial cash generation, £59.1m ECV earnings and a 205% Solvency II ratio; total dividend increased 3% to 23.97p per share, marking 19 consecutive annual increases.

• Strategic priorities remain growing existing business value, disciplined life and pensions acquisitions, and profitable new business; two transactions were completed during 2023 and the acquisition pipeline remained positive entering 2024.

Financial highlights

• Commercial cash generation was £53.0m versus £46.6m in FY 2022; base cash generation was £32.5m versus £82.7m.

• Closing ECV was £524.7m versus £511.7m; ECV earnings were £59.1m versus a loss of £84.7m, including day-one acquisition gains and excluding FX impacts and dividend payments.

• IFRS profit before tax was £1.8m versus a £62.1m loss; profit after tax was £18.7m versus a £33.7m loss.

• Commercial VNB was £10.1m versus £9.5m; FUM rose to £11.5bn from £10.6bn.

• IFRS capital base increased to £487.4m from £469.2m; total comprehensive income was £10.3m, including £7.8m FX loss.

Outlook and guidance

• Expected divisional dividends of £50m in 2024; five-year estimated dividend and debt-servicing costs total ~£245m, with identified cash sources expected to more than cover them.

• Solvency is expected to move toward the 140–160% normal operating range as further M&A is completed.

• Positive acquisition pipeline entering 2024, spanning a range of potential deal sizes; financing capacity includes existing cash, debt, equity and revolving credit facility options.

• Consumer Duty implementation remained on track for the July 2024 deadline, with no material commercial impact expected.