Chesnara (CSN) M&A announcement summary

Deal rationale and strategic fit

• Acquisition expands presence in Luxembourg, a stable, AAA-rated market, supporting ambitions to be a leading European life and pensions consolidator and providing a platform for future cross-border consolidation.

• Adds a scalable platform with 46,000 policies and €1.7 billion in assets under administration, supporting further European expansion.

• Scottish Widows Europe’s closed life and pensions business aligns with existing expertise and product familiarity, with the experienced management team remaining post-acquisition.

• Enhances group scale and strengthens position in Europe, with a modern, scalable operating platform.

• Supports strategy of value-enhancing M&A and positions the group as a leading European consolidator.

Financial terms and conditions

• Total consideration is €110 million, representing 64% of Scottish Widows Europe’s eligible own funds.

• Funded entirely from available cash, including proceeds from a recent RT1 issuance, with no external fundraising required.

• Pro-forma solvency coverage ratio remains strong at 173%, above the 140%-160% target range, and leverage below 30%.

• Expected incremental cash generation of €250 million over the lifetime of the acquired policies, with €100 million in the first five years.

• Deal is expected to be materially value accretive at completion.

Synergies and expected cost savings

• Modern, efficient, and scalable platform enables operational leverage and supports future growth.

• Policy administration powered by a leading third-party technology provider (Lifeware), supporting efficiency.

• Structural synergies from increased group size and risk diversification across territories.

• Opportunity to extend proven capital management actions, such as reinsurance and hedging, to the new portfolio.

• Additional upside possible from late-stage integration synergies not yet included in disclosed numbers.