REG - Chesnara PLC - Final Results
27/03/2025 07:15
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250327:nRSa3924Ca&default-theme=true
RNS Number : 3924C Chesnara PLC 27 March 2025
27 March 2025
LEI Number: 213800VFRMBRTSZ3SJ06
Chesnara plc (CSN.L)
("Chesnara" or "the Company")
CONTINUED STRATEGIC DELIVERY DRIVING GROWTH IN CASH GENERATION, FUTURE VALUE
AND DIVIDENDS
Chesnara reports its 2024 full year results. Key highlights are:
· Cash Generation(1) of £60m (FY 2023(1): £52m) grew by 14%,
providing strong coverage of 1.60x (FY 2023: 1.45x) against the full year
dividend;
· Solvency Coverage Ratio of 203% (FY 2023: 205%) remained
significantly above the upper-end of the Group's operating range of 140% -
160%, providing significant flexibility to allocate capital to M&A and
other investment opportunities;
· Economic Value (EcV) Earnings of £69m (FY 2023: £59m) grew by 17%
supporting growth in the Group's EcV per share to 352p (FY 2023: 348p) after
dividend payments;
· IFRS pre-tax profits increased to £21m (FY 2023(2): £2m); with IFRS
pre-tax Contractual Services Margin (CSM) growing to £176m (FY 2023(2):
£157m), increasing the store of future value from the Group's insurance
portfolio;
· New Business Contribution was stable at £9m (FY 2023: £10m);
· Ongoing M&A momentum with announcement of Canada Life portfolio
transfer in December 2024, adding £11m of EcV which was £3m higher than
previously announced;
· The Board is recommending a 3% increase in the final dividend to
16.1p per share. Total dividend for FY 2024 of 24.7p per share.
Commenting on the results, Steve Murray, Group CEO, said:
"We have again delivered a strong set of financial results with increased Cash
Generation, positive organic EcV Earnings and a robust solvency position. This
financial performance has allowed us to extend our track record of
uninterrupted full year dividend growth to 20 years, unrivalled across listed
UK and European insurers. Our people have also continued to deliver on our
major operational programmes and our second portfolio acquisition from Canada
Life again demonstrates our ability to grow through M&A and deliver very
attractive returns for shareholders. Our M&A pipeline remains positive,
and we continue to have significant firepower to deploy on opportunities."
A full year results presentation is being held at 10:00am on 27 March 2025 -
participants can register here (https://brrmedia.news/CSN_FY_24) .
Further details on the financial results are as follows:
2024 FULL YEAR FINANCIAL AND STRATEGIC HIGHLIGHTS
STRONG CASH GENERATION AND 20 YEARS OF FULL YEAR DIVIDEND GROWTH
· Group Commercial Cash Generation((1)) of £60m in FY 2024 (FY
2023: £52m), driven by favourable market conditions, cost efficiencies and
other management actions undertaken during the year.
· The Board has proposed a 2024 final dividend of 16.1p per share
(2024 total dividend of 24.7p), a 3% increase compared to 2023, extending the
period of uninterrupted dividend growth to 20 years.
· The Group's 20-year full year dividend growth track record is
unrivalled across UK and European Listed insurers with Chesnara's business
model delivering sustainable returns to shareholders, with c£502m of
cumulative dividends paid over the 20-year period.
FINANCIAL RESILIENCE AND FLEXIBILITY IN FINANCING FUTURE M&A
· Solvency II Coverage Ratio of 203% at FY 2024 (FY 2023: 205%),
materially above the upper end of the Group's operating range of between 140 -
160%.
· Group Centre liquidity of £109m (FY 2023: £124m), with
expected further divisional dividends of £57m during 2025. This combined with
the Group's Revolving Credit Facility, provides £200m of immediately
available resources to fund future acquisitions.
· Leverage ratio(3) of 31% at FY 2024, broadly in line with
prior year (FY 2023(2): 30%).
DELIVERING LONG TERM VALUE
· Acquisition of a portfolio of unit-linked bonds and legacy
pensions from Canada Life announced in December 2024, increasing EcV by £11m
in FY 2024, a £3m improvement on the expected day one gain and net of £2m
consideration paid for the business. This was the second acquisition from
Canada Life, with the Part VII transfer and migration of the Canada Life
protection portfolio acquired in May 2023 onto our new strategic platform with
SS&C completing in February 2025.
· Increased EcV of £531m as at FY 2024 (FY 2023: £525m), with
strong growth in EcV Earnings of £69m (FY 2023: £59m) partly offset by the
payment of dividends and the negative impact of foreign exchange rates over
the period.
· Stable New Business Contribution(4) of £9m over FY 2024 (FY
2023: £10m).
· Increased IFRS pre-tax profits of £21m in FY 2024 (FY 2023(2):
£2m), driven by higher CSM releases, favourable investment returns and lower
Group Centre costs.
· IFRS Capital Base(2) of £449m at FY 2024 (FY 2023(2): £479m)
with increased CSM and pre-tax Profits, offset by FX movements and the
shareholder dividend.
· Process to merge our Dutch divisions is underway, with actions
already taken to generate pre-merger cost savings and potential for future
synergies.
DIVIDEND DETAILS
· The recommended final dividend of 16.1p per share is expected
to be paid on 20 May 2025. The ordinary shares will be quoted ex-dividend on
the London Stock Exchange as of 3 April 2025. The record date for
eligibility for payment will be 4 April 2025.
ANALYST AND INVESTOR PRESENTATION
· A presentation for analysts and investors will be held at
10.00am on 27(th) March 2025 at the offices of RBC Capital Markets, 100
Bishopsgate, London, EC2N 4AA, which will be available to join online and
subsequently be posted to the corporate website at www.chesnara.co.uk.
· To join the webcast, please register using the following link
here (https://brrmedia.news/CSN_FY_24) .
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 to Editors
Chesnara (CSN.L) is a European life and pensions consolidator listed on the
London Stock Exchange. It administers just under one million policies and
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 focused, profitable new business in
the UK, 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 20 years in
succession. Further details are available on the Company's website
(www.chesnara.co.uk (http://www.chesnara.co.uk) ).
Notes
Note 1 Commercial Cash Generation (referred to as Cash Generation)
represents the surplus cash that the group has generated in the period and is
used as a measure of assessing how much dividend potential has been generated,
subject to ensuring other constraints are managed. It is largely a function of
the movement in the solvency position, excluding the impact of technical
adjustments, representing the group's view of the commercial cash generated by
the business. Note, the 2024 result includes the day one impact of the most
recent Canada Life acquisition, and the 2023 comparator has also been restated
to include the day one impact of the acquisitions completed in 2023.
Note 2 IFRS restatement The IFRS prior year comparatives have been
restated following a change in the accounting methodology applied to the
portfolio transfer into the UK from Canada Life Ltd. Further details are set
out in Note A2 in the IFRS Financial Statements.
IFRS Capital Base is the sum of IFRS Net Equity and CSM (net of tax and
reinsurance).
Note 3 The Leverage ratio is a financial measure that demonstrates the
degree to which the company is funded by debt financing versus equity capital,
presented as a ratio. It is defined as 'debt' divided by 'net equity plus
debt plus net of tax and reinsurance CSM', as measured under IFRS. As per note
2, the FY 2023 IFRS results were restated which has also resulted in a
restated Leverage ratio for FY 2023.
Note 4 New Business Contribution is a more commercially relevant measure
of new business profit than that recognised directly under the Solvency II
regime, allowing for a modest level of return, over and above risk-free, and
exclusion of the incremental risk margin Solvency II assigns to new
business. This provides a fair commercial reflection of the value added by
new business operations.
The Board approved this statement on 26 March 2025.
CAUTIONARY STATEMENT
This document may contain forward-looking statements with respect to certain
plans and current expectations relating to the future financial condition,
business performance and results of Chesnara plc. By their nature, all
forward-looking statements involve risk and uncertainty because they relate to
future events and circumstances that are beyond the control of Chesnara plc
including, amongst other things, UK domestic, Swedish domestic, Dutch domestic
and global economic and business conditions, market-related risks such as
fluctuations in interest rates, currency exchange rates, inflation, deflation,
the impact of competition, changes in customer preferences, delays in
implementing proposals, the timing, impact and other uncertainties of future
acquisitions or other combinations within relevant industries, the policies
and actions of regulatory authorities, the impact of tax or other legislation
and other regulations in the jurisdictions in which Chesnara plc and its
subsidiaries operate. As a result, Chesnara plc's actual future condition,
business performance and results may differ materially from the plans, goals
and expectations expressed or implied in these forward-looking statements.
2024 FINANCIAL HIGHLIGHTS
COMMERCIAL CASH GENERATION (1)
£60M
2023: £52M
SOLVENCY COVERAGE RATIO (6*)
203%
31 DECEMBER 2023: 205%
ASSETS UNDER ADMINISTRATION (AuA) (2)
£14BN (Δ)
31 DECEMBER 2023: £11BN
(Δ) Includes impact of Canada Life portfolio acquisition, expected to Part
VII and migrate during 2025
ECONOMIC VALUE (3)
£531M
31 DECEMBER 2023 £525M
ECONOMIC VALUE EARNINGS (4)
£69M
2023: £59M
NEW BUSINESS CONTRIBUTION (5)
£9M
2023: £10M
IFRS
£21M - IFRS PRE-TAX PROFIT
2023: £2M **
£449M - IFRS CAPITAL BASE
2023: £479M
These financial highlights include the use of Alternative Performance Measures
(APMs) that are not required to be reported under International Financial
Reporting Standards.
1 - Cash Generation is calculated as the movement in the group's surplus Own
Funds above the group's internally required capital, as determined by applying
the group's prudent Capital Management Policy, which has Solvency II rules at
its heart. Commercial Cash Generation is used as a measure of assessing how
much dividend potential has been generated, subject to ensuring other
constraints are managed. It excludes the impact of technical adjustments and
modelling changes; representing the Group's view of the commercial cash
generated by the business. The 2023 comparator is shown as inclusive of day
one acquisition impacts.
2 - Assets Under Administration (AuA) represents the sum of all financial
assets on the IFRS balance sheet. Note - this measure was previously
referred to as 'Funds under Management' (FuM). There has been no change to the
basis of calculation.
3 - Economic Value (EcV) is a financial metric derived from Solvency II. It
provides a market consistent assessment of the value of existing insurance
businesses, plus adjusted net asset value of the non-insurance business within
the Group.
4 - Economic Value earnings are a measure of the value generated in the
period, recognising the longer-term nature of the Group's insurance and
investment contracts.
5 - New Business Contribution represents the best estimate of cash flows
expected to emerge from new business written in the period. It is deemed to
be a more commercially relevant and market consistent measurement of the value
generated through the writing of new business, in comparison to the
restrictions imposed under the Solvency II regime Note - this measure was
previously referred to as 'commercial new business'. There has been no change
to the basis of calculation.
6 - Solvency is a fundamental financial measure which is of paramount
importance to investors and policyholders. It represents the relationship
between the value of the business as measured on a Solvency II basis and the
capital the business is required to hold - the Solvency Capital Requirement
(SCR). Solvency can be reported as an absolute surplus value or as a ratio.
* On 31 December 2024 the PRA's restatement of Solvency II assimilated law
came into force. Throughout the document we refer to the new regime as
Solvency II, in line with the name of the prudential regime in PRA policy
material.
**The IFRS prior year comparatives have been restated following a change in
the accounting methodology applied to the portfolio transfer into the UK from
Canada Life Ltd. Further details are set out in the Note A3 in the 'IFRS
Financial Statements.
CHAIR'S STATEMENT
"The Group has delivered strong Commercial Cash Generation and value growth,
including through a further UK acquisition, supporting a proposed 3% increase
in our full year dividend, our 20th year of consecutive dividend increases."
LUKE SAVAGE, CHAIR
Increase in the full year dividend by 3%
I am pleased to report that we are proposing that our shareholders will
receive a total dividend of 24.69p per share, an increase of 3% on the prior
year, and the 20th consecutive year that we have increased the full year
dividend.
Cash generation and financial strength
Our proposed dividend is underpinned by strong levels of cash generation and
financial stability again in 2024, despite a continued backdrop of volatile
geopolitical and macro-economic factors.
Each of our operating divisions contributed to the Group's Commercial Cash
Generation of £60m, an increase of 14% compared to the same period in 2023
and against a total dividend cost of £37m.
Our Solvency II coverage ratio of 203% remained stable throughout 2024 and
remains significantly above our normal operating range of 140% - 160%. The
Group's diversified business model and our risk-based approach to financial
management is fundamental to providing financial security to our customers.
Our strong and resilient balance sheet continues to provide us with
considerable strategic flexibility to invest in our businesses and pursue
further M&A opportunities as they arise.
Operational delivery
Across the Group, our operating divisions continue to perform strongly in
support of the Group's key strategic priorities.
In the UK, we announced our second portfolio acquisition from Canada Life UK -
a closed portfolio of onshore bond and pensions products. We are pleased to
continue our relationship with Canada Life following our acquisition of their
UK life insurance policies and this latest transaction illustrates our ability
to add scale and provide attractive returns to our UK business.
The transfer of the earlier Canada Life UK Life insurance portfolio
acquisition to our new outsource partner, SS&C, completed successfully in
February 2025, marking a significant milestone for this programme.
The operational activities to transfer existing UK insurance portfolios to
SS&C are also progressing, with plans to migrate the remaining in scope
books within its portfolio over the next 18 to 24 months, including the
recently announced deal with Canada Life.
In the Netherlands, we announced our intention to merge our Scildon and Waard
businesses (subject to approval by De Nederlandsche Bank). The proposed
legal merger is expected to take place in mid-2025 with further integration
significantly simplifying our operating model in the Netherlands, alongside
ongoing initiatives to upgrade the IT estate and improve customer and broker
experiences.
In Sweden, we have seen strong growth in our custodian business as we continue
to build new partnerships and further-diversify our distribution model.
Overall new business sales momentum remains strong, benefiting from ongoing
enhancements to our product offerings and the digitisation of our service
offerings.
It has been another year of significant delivery across the Group and as ever,
I want to thank staff for their continued efforts and dedication.
Our people
Over 2024, we maintained our focus on ensuring that the Group benefits from a
broad range of skills and expertise on our Boards.
In April, we appointed Tom Howard as our Group CFO and Executive Director on
the Chesnara Board and at the same time, we announced that Mark Hesketh was
stepping off the Chesnara Board to allow his appointment as Chair of our UK
life company, Countrywide Assured plc.
We also confirmed that as Jane Dale will have served her third successive
three-year term, she will not be seeking re-election at our Annual General
Meeting in May 2025, in line with UK Corporate Governance Code for listed
companies. Jane, who has also been Chair of the Audit & Risk Committee,
will have served 9 years as a non-executive director of the Group and has made
an immense contribution to Chesnara's success over this period. On behalf of
the board, I want to thank Jane for her dedication to Chesnara and she leaves
with our best wishes for the future.
At the same time, I am delighted to announce that we have appointed Gail
Tucker to the Chesnara Board. Gail brings a wealth of experience to Chesnara,
particularly in the UK and European listed life insurance sector and I want to
welcome her to Chesnara and very much look forward to working with her. Gail
will chair the Chesnara Audit and Risk Committee and, subject to regulatory
approval, will also join the CA Board where she will also chair their Audit
and Risk Committee.
Purpose
At Chesnara, we help to protect customers and their dependants by providing
life, health, and disability cover or savings and pensions solutions to meet
future financial needs. These are very often customers that have come to us
through acquisition, and we are committed to ensuring that they remain
positively supported by us.
We have always managed our business in a responsible way and have a strong
sense of acting in a fair manner, giving full regard to the relative interests
of all stakeholders.
Maintaining our strong capital position and delivering strong and sustainable
financial returns will always remain of key importance. It underpins our
desire to offer compelling returns to our shareholders, to meet our debt
investor coupon payments and importantly, to ensure our customers can be
confident in the ongoing financial strength of our business.
As a purpose-driven organisation, we continue to balance our responsibilities
across the 3Ps - Profit, People and Planet. Sustainability is a key part of
the strategy of the Group, and we are progressing well against our
objectives. Sustainability is a key input into decision-making across the
Group and all of our people completed mandatory sustainability training in
2024. Ongoing delivery of this training is now a key part of our people's
broader learning journeys and professional development.
A key pillar of our commitments is to deliver a just transition to become a
net zero group. During 2024, we announced our initial interim 2030 emission
reduction target. By 2030, our target is to reduce the scope 1 and 2
emissions of the in-scope assets by 50% from a baseline of 2023. In-scope
assets are corporate bonds and listed equity, which we can control or
influence. All assets, alongside our operational activities, remain in scope
of our 2050 net zero target. During 2024, we have seen a reduction of 13% in
the calculated normalised emissions for our full portfolio against our 2023
baseline, together with a 25% reduction in our operational emissions, meaning
we are on track to achieve our target. Absolute scope 3 emissions from our
investments have increased during the year and so we also continued to engage
with our key asset managers and partners in our value chain to be able to
understand their own net zero journeys and identify areas of focus.
As a recent signatory to the Principles for Responsible Investment, and as a
member of bodies such as the United Nations Global Compact, UK Sustainable
Investment and Finance Association and the Institutional Investors Group on
Climate Change, we continue to engage on initiatives that create solid
foundations for longer term change together with shorter-term actions that
will begin to make a real-world positive impact.
Our Annual Sustainability Report (available on the Chesnara plc website)
provides further details of our sustainability commitments, long-term targets
and the activities underpinning our sustainability strategy.
Outlook
Our financial results in 2024 demonstrate that our diversified business model
continues to deliver strong levels of Cash Generation, value growth and
positive shareholder returns.
Our outlook for M&A remains positive and we have a strong capital base and
ambition to support further acquisitions.
Luke Savage,
Chair
26 March 2025
CHIEF EXECUTIVE OFFICER'S REPORT
"Our strong financial performance and additional UK acquisition in 2024
underpin our positive outlook for 2025 and beyond."
STEVE MURRAY, CEO
We have again remained disciplined in driving delivery against our three areas
of strategic focus namely:
1. Running our in-force insurance and pensions books
efficiently and effectively;
2. Seeking out and delivering value enhancing M&A
opportunities; and
3. Writing focused, profitable new business where we
are satisfied an appropriate return can be made.
We have just under 1 million policies across the Group and our people take
pride in the responsibility that comes with delivering for our policyholders
every single day.
This focus helped us deliver a strong financial result for the year with
Commercial Cash Generation of £60m, continued strong solvency of 203% and
incremental EcV of £69m. And as Luke highlighted, this has supported us
proposing an increase in the full year dividend of 3% to 24.69 pence per
share.
Operational delivery has continued
We have continued to make positive progress delivering the ambitious change
agenda we set ourselves and that will help ensure we have modern and
sustainable operating platforms right across the Group.
In the UK, work on our transition and transformation (T&T) programme,
which will lead to the transfer of our various UK books of business to
SS&C's more modern policy administration system, continues to progress
well. Our first migration was successfully completed in February 2025. And
we successfully met the UK Consumer Duty deadline for closed books in July
2024 and are making positive progress implementing our fully funded plan. As
part of this activity, we have made further positive changes for a number of
our UK customers and there has been no material financial impact on the Group
from any of the changes we are making here. It was also pleasing to secure our
second transaction with Canada Life UK in December 2024. The Part VII transfer
of policies from our first deal with Canada Life completed in Q1 2025.
In the Netherlands, our teams have been working hard on the new DORA (Digital
Operational Resilience Act) regulation and associated work required to meet
this new standard. We have also begun the preparation work to bring our two
Dutch businesses together to create bigger scale and more sustainable
business. This merger, which is planned for July 2025 and remains subject to
local regulatory approvals, should also enable us to drive further synergies
above and beyond some of the local restructuring work that was completed in
December 2024. Regulatory submissions have now been completed and we have
consolidated our teams based in Hilversum into one single location in December
2024.
And in Sweden, our teams also worked hard on implementing the new DORA
regulations, in advance of the January 2025 deadline. Further work has been
completed to enable us to more effectively promote and sell our risk product
offerings as well as enabling better integration with broker firms. The
leadership team has also been strengthened in the year with joiners in our
custodian business, operations and IT.
Creating a more sustainable Chesnara
We continue to make progress against our three sustainability commitments on
our journey to transition to become a sustainable Chesnara. We strongly
believe we have a responsibility to consider the needs of all our
stakeholders, balancing people, planet and profit over the long term. We
actively review our sustainability strategy and priorities to ensure that we
are working to address the needs of our stakeholders and managing the risks
and opportunities presented by a changing world.
Our targets and key aspects of progress are:
- Net zero emissions by 2050 - in 2024, we published our
initial interim 2030 decarbonisation target for a 50% intensity reduction from
our 2023 baseline figures in the scope 1 and 2 emissions for our listed equity
and corporate fixed income investments which we are able to influence or
control. During 2024, we saw a 13% reduction in the calculated
normalised scope 1 and 2 emissions from our investments and a 25% reduction in
our absolute operational emissions, which are very positive movements.
Absolute emissions from our investments did increase, however, driven by an
increase in scope 3 emissions, which is partly due to increased assets under
administration. Visibility of the causes of these movements is still limited
but we are taking positive actions to reduce emissions and further detail on
these is provided in our Annual Sustainability Report.
- Investments in nature and social impact solutions - during
the year, we increased our investments in positive solutions and held £135m
at the end of 2024, representing an increase of approximately 65% compared to
2023.
- A business where everyone feels welcome - we have
continued to commit time and resource to ensuring the Group is an inclusive
organisation. Activities including volunteering, internships, enhancing
customer care, and focusing on employee wellbeing have been supplemented by
delivering sustainability related training to all employees in the Group.
M&A continues alongside other management actions
We have proactively and diligently assessed a number of M&A opportunities
across 2024. This has included our participation in multiple due diligence
processes, primarily on a bilateral basis, as well as work on legal
documentation. We announced another UK acquisition on 23 December and our
second portfolio deal with Canada Life. Our latest deal involves the
acquisition of a portfolio of c17k onshore bond and personal pensions. We
expect an uplift in economic value of around £11m from the deal against the
£2m of consideration paid. The first step of the deal has been executed by
way of a reinsurance agreement between both parties.
We retain significant fire power for future acquisitions and can immediately
deploy around £200m in support of deals. We have additional financing
options available, should we have the opportunity to execute a larger value
enhancing opportunity.
Alongside the extensive activity this year on M&A, we have continued to
seek out other management actions to enhance Cash Generation and / or value.
We extended the Group's FX hedge during the year and also extended the mass
lapse reinsurance arrangements we have in the UK, both of which have reduced
SCR and enhanced Cash Generation.
Positive sales momentum in Sweden and the UK with discipline maintained in the
Netherlands
Overall, New Business Contribution remained broadly flat this year at £9m vs
£10m in 2023.
Movestic has continued to see strong sales in both our group pension and
custodian business where total sales are at their highest level for 5 years.
We have continued to see transfers out at a higher level than our longer-term
assumption (albeit in line with the short-term provision we made in the
balance sheet in 2024). Overall, it has been a stronger year than 2023,
being the first full year under Sara Lindberg's leadership, and we see further
opportunities to expand our partnerships in 2025.
It was a tougher market in the Netherlands for our main term life product with
overall new business materially lower compared to the same period in 2023.
However, it has been pleasing to see the team maintain their disciplined
approach to pricing against this more challenging market backdrop.
In the UK, we have continued to see positive flows into our intermediated
onshore bond proposition and we have been engaging positively with other
platforms in the market with a view to potentially expanding our distribution
of this product.
Continued work to strengthen our team
Luke highlighted the additional talent that has joined the Chesnara Board
including Tom Howard who joined us from Aviva in April. As a reminder, Tom
has held a variety of senior roles within Aviva plc, including Director of
Mergers & Acquisitions for Aviva Group and CFO for Aviva's Life and
General Insurance business in Ireland. Tom brings with him an extensive
European actuarial and financial reporting background. He has made a
positive start to life at Chesnara and is focussed on improving our capital
allocation discipline as well as helping to drive further M&A momentum.
We also announced Edwin Bekkering's appointment to the position of CFRO (Chief
Financial & Risk Officer) in Scildon, following the appointment of Pauline
Derkman as our new CEO 18 months ago. Edwin has extensive experience in
senior finance roles in major financial institutions including at Athora,
Vivat, SNS Reaal and ABN AMRO. Pauline and Edwin are also proposed as the CEO
and CFRO of the planned merged business in the Netherlands.
Outlook
It has been pleasing to see continued strong cash and economic earnings
generation in 2025. Whilst the volatile geopolitical and macro-economic
backdrop persists, and will continue to be a material factor in all our
markets, we remain confident that the Chesnara business model will continue to
generate cash across a wide variety of market conditions, as it has done this
year and over its history.
We also remain positive on the outlook for further M&A where we remain
very active and continue to see a positive pipeline of opportunities. We
believe we are well placed to execute further value accretive deals for
shareholders.
Our people have continued to deliver across a number of material operational
programmes and for our customers in the period. I thank them again for their
efforts.
As I highlighted in the interim results, we celebrated our 20th anniversary as
a listed company in May 2024. Chesnara has delivered 20 years of positive
returns for shareholders and I look forward to continuing to deliver for our
investors going forward. And the excellent work of our teams again this year
further supports my belief that there is a lot to look forward to here at
Chesnara.
Steve Murray,
Chief Executive Officer
26 March 2025
CHIEF FINANCIAL OFFICER'S REPORT
"2024 has been another year of growth for Chesnara. Our diversified business
model continues to deliver strong and resilient financial performance,
supporting increased returns to our shareholders"
TOM HOWARD, CFO
Overview
CASH RESULT CAPITAL POSITION FUTURE VALUE GENERATION
Commercial Cash Generation Solvency II Ratio Economic Value AuA
£60m (2023: £52m) 203% (2023: 205%) £531m (2023: £525m) £14bn (2023: £11bn)
Dividend Cover IFRS Leverage IFRS Capital Base
1.60x (2023: 1.45x) 31% (2023: 30%) £449m (2023: £479m)
Full Year Dividend
24.69p per share, up 3% YoY
I am delighted to have joined Chesnara at this exciting stage of the company's
development. I have been incredibly impressed by the drive and commitment of
the team and want to express my thanks to colleagues for the warm welcome they
have given me since joining the Group in April 2024.
I am pleased to say that 2024 was another year of strong and resilient Cash
Generation for the Group, with £60m of Commercial Cash generated, an increase
of 14% compared to 2023. Each of our operating divisions contributed
positively to this result, supporting strong coverage of the dividend and our
debt servicing costs.
The Solvency Coverage Ratio of 203% remains comfortably above our operating
range of 140% to 160% and continues to be resilient to a wide range of
financial scenarios and provides the Group with significant scope to pursue
M&A and other investment opportunities as they arise.
The Group continues to grow, with AuA increasing to £14bn (2023: £11bn),
benefiting from positive investment returns on existing business, the addition
of the Canada Life portfolio acquisition and value generated from new business
written.
The Economic Value of the Group grew from £525m to £531m with positive
contributions from operating activities, acquisitions and market conditions,
partially offset by stronger expense and demographic assumptions.
This strong set of financial results underpin the Board's recommendation to
increase the full year dividend by 3% to 24.69p per share.
Business performance
United Kingdom
Own Funds increased by £29m (2023: £51m) and SCR reduced by £5m (2023:
increase of £2m), resulting in a pre-dividend solvency coverage ratio of 182%
(2023: 179%). The growth in Own Funds arose primarily from the impact of
positive economic conditions on the in-force book, the second acquisition from
Canada Life and the writing of profitable new business over the period. The
extension of existing mass-lapse reinsurance arrangements alongside existing
book run off supported the reduction in SCR. The UK division held a Solvency
II surplus (before foreseeable dividends) of £60m above its Boards risk
appetite level (2023: £60m) and made remittances of £35m to Group Centre
over 2024. IFRS Pre-Tax Profit of £28m (2023: £3m) arose from strong
investment returns albeit lower than prior year and a much-improved positive
insurance result in the year, with the combined effect of these broadly
netting off. The prior year pre-tax profits were suppressed by a £21m
impairment of AVIF (Acquired Value of In Force) related to the CASLP book.
Sweden
Solvency surplus generation of £10m arose from an increase in Own Funds of
£15m (2023: £10m) offsetting an increase in SCR of £5m (2023: £13m), with
a closing solvency coverage ratio (before foreseeable dividends) of 153%
(2023: 153%). The increase in Own Funds and SCR were both largely driven by
positive market movements, alongside an adverse consolidation impact on
surplus due to depreciation of SEK against the pound and elevated levels of
short-term persistency experience. The business unit held a pre dividend
Solvency II surplus of £40m above its Board's risk appetite level (2023:
£39m) and made remittances of £3m to Group Centre. IFRS Pre-Tax Profit of
£10m (2023: £5m) arose from higher AUA generating higher fee income and fund
rebates. A positive contribution from the risk business also meant that the
insurance result was much improved compared to the prior year.
Netherlands
Solvency surplus generation of £3m arose from a reduction in Own Funds of
£4m (2023: £32m) and a reduction in SCR of £7m (2023: £19m), with a
closing solvency coverage ratio (before foreseeable dividends) of 237% (2023:
230%) noting the 2023 comparators included the day one impact of the
Conservatrix acquisition. Own Funds benefited from the impact of cost
management actions in Scildon, but were more than offset by the impact of
foreign exchange movements on consolidation. The reduction in SCR was driven
primarily by lower expense risk with partial offset from higher market risk
due to a lower interest rate environment. The Group's Dutch entities held a
Solvency II surplus of £68m above its Board's risk appetite levels and made
remittances of £7m to Group Centre (2023: £4m). IFRS Pre-Tax Profit of
£5m (2023: £23m) with the reduction primarily being driven by a positive but
less favourable investment return in the year compared to 2023, whilst the
2023 result also included a £7m day one gain from the Conservatrix
acquisition.
Capital & cash management
Solvency II Capital Position
SII ratio FY 2023 205%
Capital generation 16%
Management actions 4%
Acquisitions (3)%
SII adjustments (7)%
Dividend payments (12%)
SII ratio FY 2024 203%
At 31 December 2024, Group Solvency II surplus was £327m and the Group's
Solvency II Coverage Ratio was 203% (2022: £351m and 205% respectively). The
change in surplus since 31 December 2023 is driven by the positive impacts of
capital generation from the Group's operating activities and market conditions
in addition to management actions taken in the year offset by dividend
payments, the application of Tier 2/3 valuation restrictions and foreign
exchange impacts. The solvency capital requirement of £316m includes a £93m
benefit from Group diversification and the benefits of the Group's foreign
exchange hedging arrangements.
Cash Generation
Commercial cash generation by territory:
£m
UK 39.6
Sweden 10.6
Netherlands 16.2
Total 66.4
Commercial Cash Generation of £60m (2023: £52m) comprised contributions of
£66m from the operating divisions, partially offset by net surplus usage at
Group Centre to fund M&A activities, debt financing costs and central
overheads.
The contribution from the operating divisions of £66m (2023: £73m) benefited
from favourable market conditions across our operating territories, robust new
business performance and stronger operating performance relative to 2023.
Group Centre surplus usage reflected Group Centre and debt servicing costs,
partially offset by capital benefits from Group diversification and foreign
exchange hedging facilities.
Commercial Cash Generation represents 1.60x coverage of the total 2024
dividend, demonstrating that the Group has ample resources to finance ongoing
debt and dividend commitments whist maintaining a strong solvency coverage
ratio.
Centre Liquidity
Group Centre held liquid resources of £109m at FY 2024, and this is expected
to increase to £130m by half year 2025 following the receipt of planned
Dividend Remittances from our operating divisions, net of Group Centre costs
over the same period. This illustrates that we are continuing to generate
sufficient cash from our operating divisions to fund our dividends, debt and
Group Centre costs without impacting the Solvency Coverage Ratio.
Sensitivities
Solvency Coverage Ratio Solvency Surplus
Impact % Impact range £m
20% sterling appreciation 33.6% (9.0) to 0.0
20% sterling depreciation (12.3)% 25.7 to 35.7
25% equity fall 6.4% (63.5) to (33.5)
25% equity rise (4.6)% 30.3 to 60.3
10% equity fall 2.6% (21.4) to (11.4)
10% equity rise (1.9)% 11.8 to 21.8
1% interest rate rise 6.1% 6.5 to 16.5
1% interest rate fall (8.4)% (29.2) to (9.2)
50bps credit spread rise (3.6)% (16.2) to (6.2)
25bps swap rate fall (4.7)% (15.8) to (5.8)
10% mass lapse (0.2)% (27.7) to (17.7)
1% inflation (9.9)% (32.7) to (22.7)
5% mortality increase (3.6)% (13.5) to (8.5)
The Group regularly assesses the resilience of the Solvency II coverage ratio
against a range of scenarios as part of its internal risk management
processes.
Market risks largely arise from foreign exchange rate movements, changes in
equity valuations and movements in interest rates and inflation. Solvency
surplus is most sensitive to the effect of equity movements on the value of
the Group's AuA and the consequent impact on future earnings from charges
levied on these AuA.
The Group reviews the matching profile of its liabilities relative to their
matching assets on an ongoing basis. As a result, the impact on solvency
surplus of interest rate movements is not significant. The inflation stress
measures a permanent increase in inflation in all future years. This
significantly increases the Group's exposure to future costs and reduces
solvency surplus accordingly. It is worth noting that the sensitivities make
no allowance for recovery management actions that the Group would apply in
case of a prolonged stress event. These potential actions are regularly
reviewed as part of the Group's ongoing risk management processes.
Demographic risks mainly comprise lapse risk from early surrenders and
mortality risk on our protection and investment books. The Group manages lapse
risk through a combination of active customer engagement, high levels of
customer service and mass-lapse reinsurance arrangements. The Group manages
mortality and longevity risk through its reinsurance arrangements and reviews
the overall reinsurance programme on a regular basis.
Leverage
Leverage of 31% remained broadly unchanged as the impact of the increased CSM
largely offset the decrease in IFRS equity. Our leverage ratio remains in line
with our long-term preference of 30% or less and we continue to see
opportunities to manage leverage in line with or below our preferred level
into the longer term.
Capital Management Actions
Management actions are an important component of our strategy to maximise
value from existing business. In 2024, we renewed the Group's foreign exchange
derivative instrument, further reducing capital requirements relating to the
risk of extreme foreign exchange movements. In our UK division, mass-lapse
reinsurance arrangements were extended to provide the Group with further
capital relief against the risk of extreme lapse events. Taken in aggregate,
these actions increased the Group's Solvency Ratio by 5%
IFRS
IFRS Pre-Tax Profit
Group IFRS Pre-Tax Profit of £20.8m is £19.1m higher than 2023 (£1.7m) with
an improved Insurance service result, a positive but lower investment result
and an improvement in fee income net of expenses.
£m
FY23 Capital Base 479
CSM movement 26
Pre-Tax Profit 21
Other adjustments 2
FY24 Capital Base pre tax, FX & dividends 528
FX (22)
Tax (21)
Shareholder Dividends (37)
FY24 Capital Base 449
IFRS Insurance Result
The insurance service result comprises the revenue and expenses from providing
insurance services to policyholders and excludes economic impacts. Assumption
changes only apply to the insurance service result to the extent that they
relate to groups of onerous contracts in a 'loss component' position.
The insurance service result of £8.6m (2023: loss of £5.2m) comprises a
relatively stable and positive contribution from the release of the CSM and
the Risk Adjustment of £22.2m (2023: £23.0m). This is offset by some adverse
experience primarily in the Netherlands and assumption changes on lines of
onerous contracts also in the Netherlands, with these impacts being much more
significant in the prior year, resulting in the overall loss.
IFRS Investment Result
The investment result comprises the economic result from all the Group's
assets together with the impacts to its insurance and investment contract
liabilities.
The positive investment result of £52.7m (2023: £71.7m) reflects the strong
market performance in the year, although the investment returns from equities
and fixed income securities did not reach the levels seen in 2023.
Fee, commission and other operating income
Fee, commission and other operating income mainly comprises the fee income
generated in the UK and Sweden from unit-linked contracts measured under IFRS
9.
The income generated in the year after removing the effects of Swedish
policyholder yield tax, which has an equal and opposite offset within 'Other
Operating Expenses', was £73.4m (2023: £71.5m) with equity market returns in
the UK and Sweden being the largest contributory factors to the result.
Other Operating Expenses and Financing costs
Other operating expenses comprises those costs incurred by the group that are
not incurred from servicing insurance contracts, with such costs being
reported within the insurance result.
After stripping out the impact of the policyholder yield tax noted above, the
total other operating expenses and finance costs in the year was £113.9m
(2023: £143.0m) with the prior year amount also being impacted by an
impairment of AVIF in the UK segment of £21.0m.
IFRS Capital Base
Before allowing for the 2024 dividend, the IFRS Capital Base of £449.1m
increased by £6.2m over 2024 as a result of the positive IFRS profit after
tax of £3.9m, the increase in CSM net of tax of £15.2m and negative impacts
going through 'other comprehensive income' or directly to shareholder equity
of (£12.8m), these being mainly in respect of foreign exchange impacts.
In December 2024, the group announced that agreement had been reached with
Canada Life to transfer an in-force portfolio to Chesnara's UK division. This
acquisition contributed £0.7m to the increase in CSM gross of tax, however
this amount reflects the profits to be earned in the reinsurance phase only,
during which it will be accounted for at the reinsurance contract level under
IFRS 17. Following the legal transfer of the underlying policies, IFRS 9 will
then apply, as the policies are investment contracts and profits will
therefore be recognised as the fee income is earned.
A further £6.8m of CSM gross of tax arose from new business in Scildon,
offset by £18.9m released to the income statement. The closing CSM on the
balance sheet will be earned over the coverage period of the policies to which
it relates, and the expected earnings pattern is such that after 10 years more
than 40% will remain to be earned.
Economic Value Earnings
£m
EcV at FY 2023 525
Economic Earnings: Real World Returns 50
Operating Earnings 5
New Business 5
Acquisitions 11
Other Central and One-Off Items (2)
EcV at FY 2024 pre FX & dividends 594
FX (26)
Paid Dividends (37)
EcV at FY 2024 531
The Economic Value of the Group represents the present value of future profits
from existing business, plus the adjusted net asset value of non-insurance
business within the Group. Group EcV Earnings of £69m increased by £10m
(2023: £59m) with economic earnings being the largest component of Economic
Value Earnings, reflecting favourable market conditions throughout 2024.
EcV Economic Earnings
Positive global equity market movements contributed strongly to the growth in
the value of AuA over 2024, increasing the store of future value available
from investment-linked portfolios. This was partially offset by the impact of
foreign exchange movements, primarily from the strengthening of Sterling
against the Euro and the Swedish Krona.
EcV Operating Earnings
EcV Operating Earnings of £10m (2023: £6m) were supported by strong
contributions from the Group's Dutch businesses, and a small year-on-year
increase in contribution from new business.
The contribution from the in-force portfolio and new business was partially
offset by a strengthening of short-term lapse assumptions in the Group's
Swedish division, mortality assumptions in the Netherlands and expense
assumptions in the UK. Whilst these effects had the impact of reducing EcV
Operating Earnings by £8m, this is less marked than the prior-year (2023:
(£15m)), reflecting cost-containment and risk-management actions taken
throughout 2024.
Other EcV Earnings
The acquisition of the Canada Life portfolio results in an up-front EcV gain
of c£11m. Other non-operating items include the positive impact or risk
margin releases (£23m), offsetting central financing costs (including Tier 2
coupon payments) of £11m.
Economic Value as at 31 December 2024
Before allowing for dividends of £37m, the Economic Value of the Group grew
to £568m (2023: £525m)
Dividend
Our continued strong performance along with our strong and resilient solvency
position has supported the directors' decision to recommend a 3% increase in
the total dividend to 24.69p per share (2023: 23.97p).
Outlook
Chesnara has now delivered 20 years of consecutive dividend increases to our
shareholders. Looking forward, we continue to have a strong line of sight to
future Cash Generation over the medium and longer term. We have opportunities
to further optimise future value generation from our existing portfolio
through continued capital and investment management actions.
Our capital and liquidity resources remain strong and resilient to market
movements and position us strongly to generate further sources of future value
through acquisitions and investment in our operating divisions.
Tom Howard,
Chief Financial Officer
26 March 2025
STRATEGIC REPORT
OUR STRATEGY
Our strategy focuses on delivering value to customers and shareholders,
mindful of the interests of other stakeholders, through our three strategic
objectives, executed across our three territories.
STRATEGIC OBJECTIVES
1. 2. 3.
MAXIMISE THE VALUE FROM EXISTING BUSINESS ACQUIRE LIFE AND PENSIONS BUSINESSES ENHANCE VALUE THROUGH PROFITABLE NEW BUSINESS
Managing our existing customers fairly and efficiently is core to delivering Acquiring and integrating companies into our business model is key to Writing profitable new business supports the growth of our group and helps
our overall strategic aims. continuing our growth journey. mitigate the natural run-off of our book.
KPIs KPIs KPIs
Cash Generation Cash Generation EcV growth
EcV Earnings EcV growth Customer outcomes
Customer outcomes Customer outcomes IFRS Pre Tax Profit
IFRS Pre Tax Profit Risk appetite IFRS Capital Base
IFRS Capital Base IFRS Pre Tax Profit
IFRS Capital Base
BECOMING A SUSTAINABLE CHESNARA
UNDERPINNED BY A ROBUST RISK MANAGEMENT AND GOVERNANCE FRAMEWORK
RESPONSIBLE RISK BASED MANAGEMENT FOR THE BENEFIT OF ALL OUR STAKEHOLDERS GOOD TREATMENT OF CUSTOMERS MAINTAIN ADEQUATE FINANCIAL RESOURCES PROVIDE A COMPETITIVE RETURN TO OUR INVESTORS ROBUST REGULATORY COMPLIANCE A JUST TRANSITION TO A SUSTAINABLE GROUP
BUSINESS REVIEW | UK
The UK division manages c290k policies covering linked pension business, life
insurance, endowments, annuities and some with-profit business. The division
is largely closed to new business, generating future value through small
levels of new business, investment returns on unit-linked policies, increments
to existing policies and periodic acquisitions.
MAXIMISE VALUE FROM EXISTING BUSINESS
CAPITAL AND VALUE MANAGEMENT
- The division has continued the programme of migrating the
existing books of business to SS&C Technologies as part of the long-term
strategic partnership entered into in 2023. This now includes the migration
and integration of the Canada Life acquisitions. In December, the UK division
extended the scope of its existing mass-lapse reinsurance arrangements,
further reducing its associated capital requirements.
CUSTOMER OUTCOMES
- The division met the 31 July 2024 deadline for the closed-book
operations to comply with the FCA's Consumer Duty regulation. This regulation
sets high standards for consumer protection and focuses on ensuring firms act
in a way to deliver good outcomes for customers. The division is also on track
to meet the 31 March 2025 deadline for the FCA's Operational Resilience
regulation.
GOVERNANCE
- The insurance business of CASLP was transferred to Countrywide
Assured on 31 December 2023. CASLP Limited was de-authorised in Q3 2024, and
the remaining assets were subsequently transferred to Countrywide Assured. The
company was dissolved in January 2025. The division has supported the wider
Group's sustainability programme over the course of the year and rolled out
training for staff across the business to help embed sustainability into
day-to-day decision making.
KPIs
- Commercial Cash Generation: £40m (2023: £49m)
- SII ratio (pre dividend) 182% (2023: 183%)
- SII ratio (post dividend) 135% (2023: 149%)
- EcV Earnings: £20m (2023: £38m)
- IFRS Profit Before Tax: £28m (2023: £3m, noting the 2023
result included a one-off impairment charge of £21m).
- Dividend remittances in 2024: £35m
FUTURE PRIORITIES
- Continued migration of the majority of the existing and the
acquired books of business to SS&C.
- Implementation of Identified potential capital management
actions.
- Finalisation of the operational resilience programme to ensure
the regulatory deadline of 31 March 2025 is met.
- Continued focus on delivering good customer outcomes and
maintaining strong customer service performance
- Continued engagement with our asset managers on progress towards
net zero and investing in positive solutions and wider support of the
Group-wide sustainability programme including focus on operations, social
purpose and reporting.
ACQUIRE LIFE AND PENSIONS BUSINESSES
- In December 2024, the UK division reached agreement with Canada
Life UK to acquire a closed portfolio of unit-linked bonds and legacy pension
business with a total AuA of £1.5bn. This transaction is initially executed
via a reinsurance agreement, with the policies expected to transfer to the
Group through a Part VII insurance business transfer process following court
approval.
- During 2024, work progressed on the Part VII transfer of the
Canda Life individual protection business acquired in May 2023 under a
reinsurance agreement. The transfer completed on 24 February 2025 following
court approval.
KPIs
Acquisitions in the year have added:
- Day 1 OF: £10m
- Day 1 EcV: £11m (in excess of the expected day 1 gain as quoted
in the announcement of £8m)
- AuA: £1.5bn
- Policies: 17,000
In the last three years, acquisitions have added £39m of EcV at Group level.
FUTURE PRIORITIES
- Support the Group in identifying and delivering UK acquisitions.
- Continue to deliver strong financial outcomes from past
acquisitions.
ENHANCE VALUE THROUGH PROFITABLE NEW BUSINESS
- The division generated positive new business profits, through
significantly increased volumes of the on-platform onshore bond. This
resulted in a New Business Contribution of £m.
- Increased demand for the onshore bond is being driven in part by
changes to personal tax allowances. The Autumn Budget 2024 strengthened the
attractiveness of the product due to changes in capital gains tax and
inheritance tax.
- The division has developed a suite of adviser-facing technical
product documents and a tax tool which will go live in early 2025 and
continues to work on opportunities to improve the adviser and customer
proposition with platform partners.
KPIs
- APE: £13m (2023: £7m)
- New Business Contribution: £2m (2023: £2m)
FUTURE PRIORITIES
- Continue to enhance the customer and advisor proposition.
- Expand distribution of the onshore bond with existing and new
platform partners.
- Work with our strategic outsource partner to leverage technology
to generate administrative efficiencies.
BUSINESS REVIEW | SWEDEN
Our Swedish division consists of Movestic, a life and pensions business which
is open to new business. It offers personalised unit-linked pension and
savings solutions through brokers, together with custodian products via
private banking partners and is well regarded within both communities.
MAXIMISE VALUE FROM EXISTING BUSINESS
CAPITAL AND VALUE MANAGEMENT
- Over 2024, the division saw growth in AuA driven by positive
total net client cash flows and favourable investment markets. High transfer
activity within the Swedish occupational pension segment has continued,
affecting both inward and outward transfer flows. Inflows within both the
unit-linked and the custodian lines grew compared to the prior year,
generating a positive net client cash flow.
CUSTOMER OUTCOMES
- During 2024, Movestic released an updated version of its digital
service which helps customers to plan their retirement, start withdrawing and
change how they receive their occupational pension. To enable increased
individual adaptation, more flexible terms for pension withdrawals were
launched during the year. An additional digital service within salary
sacrifice savings was launched during the year and more customers than ever
signed up for individual pension advice within the "Movestic Freedom" concept.
GOVERNANCE
- Movestic's sustainability programme is aligned to the Group's
strategy and commitments, forming the basis of Movestic's own sustainability
work and targets. The EU commission adopted a new regulatory framework,
Digital Operational Resilience Act (DORA), and over 2024, work progressed on
this project to ensure compliance when it came into force. Work in the year
also concluded that Movestic is outside the scope of the EU-adopted Corporate
Sustainability Reporting Directive and the Global Minimum Tax regulations
which were implemented in Swedish law in 2024.
KPIs
- Commercial Cash Generation £11m (2023: £nil)
- SII ratio (pre dividend) 153% (2023: 153%)
- SII ratio (post dividend) 151% (2023: 147%)
- EcV Earnings: £31m (2023: £7m)
- IFRS Profit Before Tax: £10m (2023: £5m)
- Dividend remittances in 2024: £7m (payment in Q4 2024 and Q1
2025)
FUTURE PRIORITIES
- Continue building solid and long-term sustainable value creation
for customers and investor stakeholders through a diversified business
model.
- Continue offering modern and individually adapted high-quality
solutions within pension, savings and health insurance, and expand
customer-focused digital services.
- Increase the use of automation, streamline processes, and
improve administrative efficiency and control.
- Ensure Group sustainability reporting processes are embedded
into everyday operations
- Monitor developments in the regulatory landscape.
ACQUIRE LIFE AND PENSIONS BUSINESSES
- We have been engaging with other market participants and
investment bank advisers in order to better understand potential opportunities
for inorganic growth in the market.
FUTURE PRIORITIES
- Seek out opportunities to bring in additional scale through
M&A.
ENHANCE VALUE THROUGH PROFITABLE NEW BUSINESS
- New Business Contribution of £5m over 2024 which is an increase
on the prior year result of £3m.
- The division expanded its custodian distribution network in
2024, two new partner collaborations were launched in 2024 and a project to
onboard another new partner in custodian sales is ongoing, the launch is
planned for early 2025.
- To improve distribution and sales within the life and health
insurance segment, the division launched a new, updated risk insurance
offering, as well as new technical integrations for brokers and partners
during the year.
- A new partnership for the distribution of the digital life
insurance product has also been entered into over the course of the year.
KPIs
- APE: £100m (2023: £65m)
- New Business Contribution: £5m (2023: £3m)
- Occupational pension market share: 4.4% (2023: 4.4%)
- Custodian accounts market share: 12.2% (2023: 7.7%)
FUTURE PRIORITIES
- Continue to build customer value and loyalty through further
enhancement of the division's offering, consisting of individually adapted
pension and savings and life and health products, and associated digital
services. Focus on both growing new business and retention activities.
- Continued development and enhancement of partnerships with our
intermediaries within both the unit-linked and custodian business.
- Continued focus on growing the life and health insurance
business to diversify and offer our customers a broader selection.
BUSINESS REVIEW | NETHERLANDS
Our Dutch businesses deliver growth through our acquisitive closed-book
business, Waard, and our open-book business, Scildon, which seeks to write
profitable term, investments and annuity business.
MAXIMISE VALUE FROM EXISTING BUSINESS
CAPITAL AND VALUE MANAGEMENT
- Scildon's enhancement of its IT infrastructure completed in
2024, generating operating and cost efficiencies. Scildon also conducted asset
reviews to provide implement more efficient interest rate hedges, replaced
short-duration government bonds with investments in money market funds to
improve its overall return profile and increasing its investment in mortgage
funds to improve its asset/liability matching positions. Waard also made
changes to its asset mix to improve longer-term expected returns. The proposed
merger of the two Dutch businesses will result in a division stronger than the
sum of its parts, through scale and synergies.
CUSTOMER OUTCOMES
- Scildon has continued to make improvements to its customer
offering through new products and digitalisation options. Waard launched its
digital customer portal, making it easier for customers to access their
documents in digital format.
GOVERNANCE
- During 2024, the businesses progressed the implementation of the
requirements of the Digital Operational Resilience Act (DORA), becoming
compliant by the January 2025 implementation date. Work progressed over the
year in respect of the implementation of the Corporate Sustainability
Reporting Directive (CSRD), with both companies completing their double
materiality assessments and gap analyses in 2024. We are considering the
impact of the EU Omnibus proposals announced in February 2025, which would
mean we would no longer have to implement CSRD across the group.
- In January 2024, Chesnara Holdings BV was dissolved resulting in
Scildon, Waard Leven and Waard Schade becoming directly owned by Chesnara plc.
Chesnara Holdings BV was de-registered in April 2024. During the year, the
division prepared all of the required documents relating to the potential
merger and submitted these to the local regulator for approval in January
2025.
KPIs
- Commercial Cash Generation £16m (2023: £24m)
- SII ratio (pre dividend) Waard 350% and Scildon 205% (2023:
Waard 377% and Scildon 184%)
- SII ratio (post dividend): Waard 324% and Scildon 205% (2023:
Waard 353% and Scildon 184%)
- EcV Earnings: £21m (2023: £41m of which £21m related to the
day 1 gain from Conservatrix)
- IFRS Profit Before Tax: £5m (2023: £23m)
- Dividend remittances in 2024: £7m
FUTURE PRIORITIES
- Complete the proposed merger of the Waard and Scildon businesses
(subject to regulatory approvals), enhancing the scale, efficiency and
longer-term sustainability of the Group's Netherlands division
- Identify potential capital management actions, focusing on those
that generate the appropriate balance of value and Cash Generation.
- Ensure customers continue to receive high-quality service
throughout the change period of the merger.
- Regular engagement with customers to improve service quality, as
well as enhance existing processes, infrastructure, and customer experiences.
- Consider the impact of the EU Omnibus proposals announced in
February 2025 on the business's requirements under the Corporate
Sustainability Reporting Directive (CSRD).
- Prepare the roadmap for investments to become net zero in 2050.
ACQUIRE LIFE AND PENSIONS BUSINESSES
- The division has continued to support the Group's acquisition
strategy by assessing M&A opportunities and processes, including due
diligence activity, as appropriate.
FUTURE PRIORITIES
- Continue to remain active in seeking acquisitions and have
actively examined opportunities during the year
- Will continue to engage with possible vendors during 2025 on
opportunities
ENHANCE VALUE THROUGH PROFITABLE NEW BUSINESS
- Scildon generated a New Business Contribution of £2m (2023:
£5m) , against a backdrop of continued suppressed term market volumes and
pressure on pricing. Scildon has maintained a disciplined approach to pricing,
albeit at lower volumes.
- In April 2024, Scildon launched a Stop Smoking lifestyle
proposition on new business reflecting its focus on expanding offerings to
customers. The initiative won an award in the Customer Interest category of
the Adfiz Performance Survey 2025.
KPIs
- New Business Contribution: £2m (2023:£5m)
- Term assurance market share: 10.6% (2023: 11.2%)
FUTURE PRIORITIES
- Simple focused product portfolio offering primarily sold through
IFAs with digital options where preferred by customers.
- Look to offer more sustainable solutions for our unit-linked
proposition.
CAPITAL MANAGEMENT | SOLVENCY II
The Group's Solvency Coverage Ratio of 203% is significantly above our
operating range of 140% to 160%.
GROUP SOLVENCY 203%
SOLVENCY POSITION
£m 31 Dec 2024 31 Dec 2023
Own funds 643 684
SCR 316 333
Surplus 327 351
Solvency ratio % 203% 205%
SOLVENCY COVERAGE MOVEMENT
SII ratio FY 2023 205%
Capital generation 16%
Management actions 4%
Acquisitions (3)%
SII adjustments (7)%
Dividend payments (12%)
SII ratio FY 2024 203%
Group Solvency II surplus is £327m (2023: £351m) with a solvency coverage
ratio of 203% (2023: 205%), which includes the proposed final 2024 dividend of
£24m and payment of the interim 2024 dividend of £13m.
Own Funds include the impact of a £32m rise in the Tier 2/3 restriction and a
£10m day 1 gain from the acquisition of the policy portfolio from Canada
Life. The SCR reduced in 2024, mainly due to a general fall in market and
life underwriting risk, with a rise in LACDT in UK and Dutch businesses.
The numbers that follow present the divisional view of the solvency position
which may differ to the position of the individual insurance company(ies)
within the consolidated numbers. Note that year end 2023 figures have been
restated using 31 December 2024 exchange rates in order to aid comparison at a
divisional level.
UK
£m 31 Dec 2024 31 Dec 2023
Own funds (post dividend) 130 152
SCR 96 103
Buffer 19 21
Surplus 15 29
Solvency ratio % 135% 149%
The rise in surplus (pre-foreseeable dividend of £45m) to £60m (2023: £29m)
includes growth in Own Funds and an SCR reduction during 2024. Key drivers of
the increase in Own Funds included the portfolio acquisition from Canada Life,
new business profits and economic returns (rising equities and bond income).
SWEDEN
£m 31 Dec 2024 31 Dec 2023
Own funds (post dividend) 184 159
SCR 122 108
Buffer 24 22
Surplus 37 29
Solvency ratio % 151% 147%
Surplus growth of £11m (pre-foreseeable dividend of £2.5m) was underpinned
by economic factors, with unit linked equity returns driving the increase in
Own Funds, offsetting adverse lapse experience. An increase in the SCR was
also largely attributable to the impact of positive market conditions on the
equity risk component of the SCR.
NETHERLANDS - WAARD
£m 31 Dec 2024 31 Dec 2023
Own funds (post dividend) 82 94
SCR 25 27
Buffer 9 9
Surplus 48 59
Solvency ratio % 324% 353%
The reduction in Solvency II surplus (£10m) includes the Own Funds impact of
a foreseeable dividend (£7m) and a transfer of capital to Group, following
liquidation of Chesnara BV. The reduction in SCR was primarily due a fall in
life underwriting risks and an increase in LACDT, offsetting a rise in market
risks.
NETHERLANDS - SCILDON
£m 31 Dec 2024 31 Dec 2023
Own funds (post dividend) 140 127
SCR 68 69
Buffer 51 52
Surplus 20 5
Solvency ratio % 205% 184%
Growth in Solvency II surplus arose from higher Own Funds with a broadly flat
SCR over the period. Growth was driven by positive operating variances and
operating assumption changes from cost management actions. An increase in
LACDT outweighed rises in expense and lapse risks, resulting in a small
reduction in SCR (£1m).
CAPITAL MANAGEMENT | SENSITIVITIES
The group's solvency position remains strong and we proactively evaluate the
main factors that can affect our solvency.
The table that follows provides some insight into the immediate impact of
certain sensitivities on the Group's Solvency Coverage Ratio and Solvency
Surplus.
Solvency Coverage Ratio Solvency Surplus
Impact % Impact range £m
20% sterling appreciation 33.6% (9.0) to 0.0
20% sterling depreciation (12.3)% 25.7 to 35.7
25% equity fall 6.4% (63.5) to (33.5)
25% equity rise (4.6)% 30.3 to 60.3
10% equity fall 2.6% (21.4) to (11.4)
10% equity rise (1.9)% 11.8 to 21.8
1% interest rate rise 6.1% 6.5 to 16.5
1% interest rate fall (8.4)% (29.2) to (9.2)
50bps credit spread rise (3.6)% (16.2) to (6.2)
25bps swap rate fall (4.7)% (15.8) to (5.8)
10% mass lapse (0.2)% (27.7) to (17.7)
1% inflation (9.9)% (32.7) to (22.7)
5% mortality increase (3.6)% (13.5) to (8.5)
Foreign exchange:
Appreciation of sterling relative to our overseas currencies reduces the value
of overseas surplus with partial mitigation from the Group currency hedge.
Equity ealuations:
Lower equity valuations reduce the Group's AuA. In turn, this decreases the
value of Own Funds and the associated SCR as the value of the funds exposed to
market risk reduce. The reduction in SCR is limited by the impact of the
Solvency II symmetrical adjustment.
Interest rates:
An interest rate fall has a more adverse effect on surplus than an interest
rate rise. Group solvency is less exposed to rising interest rates as a rise
in rates causes capital requirements to fall, increasing solvency.
Credit spreads:
Higher spreads reduce surplus as the rise in spreads decreases the value of
Own Funds.
Swap rates:
A reduction in the swap discount rate profile reduces the Group's surplus by
increasing the time-value of the projected future liabilities associated with
the in-force book. This sensitivity assumes that this change applies with no
change in the value of the assets backing the liabilities.
Mass lapse:
A 10% mass-lapse event drives an immediate reduction in the Group's projection
of future surpluses, largely offset by the reduction in the associated SCR.
Inflation:
A permanent increase in inflation for all future years increases the Group's
future expense profile, reducing Own Funds and surplus.
Mortality rates:
A 5% increase in mortality rates across the Group will reduce the future
surplus projections from the in-force book, leading to lower Own Funds and a
reduction in Group's surplus.
FINANCIAL REVIEW
FINANCIAL REVIEW | CASH GENERATION
COMMERCIAL CASH GENERATION £59.6M
2023: £52.4M
BASE CASH GENERATION £51.6M
2023: £31.9M
Continued strong Cash Generation was reported in 2024, with total Commercial
Cash of £59.6m, benefitting from surplus generation from operating activities
and positive market conditions. Cash generation is the increase in the Group's
Solvency II surplus, after allowing for 'prudent management buffers', as
defined by the Group's Capital Management Policy.
UK SWEDEN NETHERLANDS NETHERLANDS SCILDON DIVISIONAL GROUP CENTRE ACQUISITIONS TOTAL
WAARD TOTAL
Commercial Cash Generation 39.6 10.6 1.6 14.6 66.4 0.9 (7.7) 59.6
Symmetric adjustment (2.8) (2.4) (0.1) (0.5) (5.8) (0.7) (6.5)
WP restriction look through (1.5) - - - (1.5) - (1.5)
Base Cash Generation 35.3 8.2 1.4 14.1 59.1 0.2 (7.7) 51.6
UK
- The UK reported another strong year of Cash Generation,
contributing £39.6m in 2024 (203: £48.5m). This was delivered through both
Own Funds growth and a reduction in capital requirements. Economic conditions
(mainly the positive impact of rising yields) supported both the growth in Own
Funds and the reduction in SCR, predominantly lapse risk (resulting from
management action on mass lapse reinsurance).
SWEDEN
- In Movestic, cash generation of £10.6m (2023: £0.3m) was
stronger with economic returns on the division's unit-linked business the
primary factor in Own Funds growth, exceeding a rise in SCR and underpinning
the cash result. The rise in SCR was also attributable to the equity
market-driven growth, with an increase in market-risk related capital
requirements.
NETHERLANDS - WAARD
- Waard recorded modest Cash Generation of £1.6m (2023: £15.8m),
with positive movements in both Own Funds and SCR. Own Funds growth, delivered
through operating profits, was restricted due to economic losses (mainly the
negative impact on bond holdings of interest rates). An increase in LACDT
offset a rise in market risk, owing partly to the purchase of government bonds
(with longer duration increasing interest rate SCR) and proactive re-risking
through an increase in corporate bond holdings (increasing spread SCR). The
divisional result also includes a material FX loss on consolidation owing to
sterling appreciation versus the euro.
NETHERLANDS - SCILDON
- Scildon generated an increased cash return £14.6m for the
period (2023: £8.2m). Operating profits, including management actions on cost
efficiencies, were the primary driver of Own Funds growth. This action also
had a positive effect on capital requirements, driving a reduction in SCR,
offsetting the adverse impact of economic conditions and lower interest rates.
GROUP
- The Group Centre component of Cash Generation include Tier 2
debt coupon payments (c£10m) and other central costs.
FINANCIAL REVIEW | EcV
The Economic Value of the Group represents the present value of future profits
of the existing insurance business, plus the adjusted net asset value of the
non-insurance businesses within the Group.
ECONOMIC VALUE (EcV) £531.0M
2023: £524.7M
Value movement: 1 Jan 2024 to 31 Dec 2024:
£m
EcV 31 Dec 2023 525
EcV Earnings 58
Acquisitions 11
Forex (26)
Pre-dividend EcV 567
Dividends (37)
EcV 31 Dec 2024 531
EcV Earnings:
EcV profits of £59m have been driven primarily by positive market conditions
during 2024, supported by operating profits.
Acquisitions:
The Group completed the acquisition of a closed portfolio from Canada Life,
the transaction delivering a day 1 EcV gain of £11m.
Foreign exchange:
The closing EcV of the Group reflects a foreign exchange loss in the period,
which is a consequence of sterling appreciation against both the Swedish krona
and also the euro.
Dividends:
Under EcV, dividends are recognised in the period in which they are paid.
Dividends of £37m were paid during the year, representing the final dividend
from 2023 and interim dividend for 2024.
EcV by segment at 31 Dec 2024 £m
£m
UK 189
Sweden 199
Netherlands 252
Other group activities (110)
EcV 31 Dec 2024 531
The above table shows that the EcV of the Group remains diversified across its
different geographical markets.
EcV to Solvency II - £m
£m
EcV 31 Dec 2024 531
Risk margin (42)
Contract boundaries 4
Tier 2 debt 200
RFF & Tier 2/3 restrictions (34)
Deferred tax asset adjustment 7
Dividends (24)
SII Own Funds 31 Dec 2024 643
EcV is based on a Solvency II assessment of the value of the business but
adjusted for certain items where it is deemed that Solvency II does not
reflect the commercial value of the business. The above waterfall shows the
key difference between EcV and SII, with explanations for each item below.
Risk margin:
Solvency II rules applying to our European businesses require a significant
'risk margin' which is held on the Solvency II balance sheet as a liability,
and this is considered to be materially above a realistic cost. We therefore
reduce this margin for risk for EcV valuation purposes from being based on a
6% (UK: 4%) cost of capital to a 3.25% cost of capital, risk tapering is
subsequently applied in line with the parameters and approach used in the
calculation of the risk margin under Solvency II in the UK.
Contract boundaries:
Solvency II rules do not allow for the recognition of future cash flows on
certain in-force contracts, despite the high probability of receipt. We
therefore make an adjustment to reflect the realistic value of the cash flows
under EcV.
Ring-fenced fund restrictions:
Solvency II rules require a restriction to be placed on the value of surpluses
that exist within certain ring-fenced funds. These restrictions are reversed
for EcV valuation purposes as they are deemed to be temporary in nature.
Dividends:
The proposed final dividend of £24.3m is recognised for SII regulatory
reporting purposes. It is not recognised within EcV until it is actually
paid.
Tier 2:
The tier 2 debt is treated as "quasi equity" for Solvency II purposes. For
EcV, consistent with IFRS, we continue to report this as debt. Under SII this
debt is recognised at fair value, while for EcV this remains at book value.
Tier 3:
Under Solvency II the eligibility of Tier 3 Own Funds is restricted in
accordance with regulatory rules. For EcV the Tier 3 Own Funds are recognised
at a deemed realistic value.
FINANCIAL REVIEW | EcV EARNINGS
Continued strong EcV Earnings have been delivered through economic profits,
new business gains and delivery of our acquisition strategy
EcV EARNINGS £69.2M
2023: £59.1M
Analysis of the EcV Earnings by source of value:
£m 31 Dec 31 Dec
2024 2023(†)
Expected movement in period 15.0 14.9
New business 5.2 4.4
Operating experience variances (9.1) 14.9
Operating assumption changes 9.0 (25.9)
Other operating variances (9.7) (1.9)
Total Operating Earnings(†) 10.4 6.4
Total Economic Earnings(†) 50.3 42.9
Other non-operating variances (11.3) (11.9)
Central costs (11.8) (14.1)
Risk margin movement 22.8 1.1
Tax (1.8) 6.3
EcV Earnings 58.6 30.7
Acquisitions 10.5 28.4
EcV Earnings inc. acquisitions 69.2 59.1
¹Prior year comparators have been restated following a reallocation of
components, with total EcV earnings remaining unchanged.
Total Operating Earnings:
Operating earnings of £10.4m were reported in 2024, driven by positive
results in our Dutch and Swedish businesses, offsetting an operating loss in
the UK.
Total Economic Earnings:
The economic result continues to be the largest component of the total EcV
earnings, with a profit of £50.3m in the year. The result is in line with
our reported sensitivities and is driven by the following key market
movements:
Equity indices:
- FTSE All Share index increased by 5.6% (year ended 31 December
2023: increased by 3.7%)
- Swedish OMX all share index increased by 5.6% (year ended 31
December 2023: increased by 15.6%)
- The Netherlands AEX all share index increased by 7.5% (year ended
31 December 2023: increased by 13.4%)
Credit spreads:
- UK AA corporate bond yields decreased to 0.68% (31 December 2023:
decreased to 0.71%)
- European AA credit spreads decreased to 0.56% (31 December 2023:
increased to 0.63%)
Yields:
- 10-year UK gilt yields increased to 4.64% (31 December 2023:
decreased to 3.64%)
- 10-year euro swap yield decreased to 2.37% (31 December 2023:
decreased to 2.49%)
Other costs:
The result also includes Group Centre, primarily associated with the M&A
strategy and development of the Group, and other non-operating items,
including the release of risk margin and financing costs, such as Tier 2 debt
servicing.
Analysis of the EcV result by business segment:
£m 31 Dec 31 Dec
2024 2023
UK 19.6 31.4
Sweden 30.9 6.8
Netherlands 21.4 19.5
Group and Group adjustments (13.3) (27.0)
Acquisitions 10.5 28.4
EcV earnings inc. acquisitions 69.2 59.1
UK
The UK's result of £19.6m was driven primarily by favourable market
conditions, predominantly the long-term impact of rising yields and equities
with an offset from non-recurring costs of investment in outsourcing
arrangements and the business acquisitions. The result was also supported by
higher year-on year new business earnings.
Sweden
Movestic result of £30.9m benefitted from favourable market conditions in
Sweden and Europe. New business volumes contributed further earnings of £2.3m
(on an EcV basis). The operating result was partially offset by the impact of
transfers out.
Netherlands:
The Dutch businesses reported combined growth of £21.4m, with positive
operating profits offsetting economic losses, primarily due to the impact of
rising interest rates on the value of bond holdings. Scildon generated EcV
growth of £14.0m, driven by positive operating variances, including the
impact of management actions driving cost efficiencies. New business profits
were muted, due to market pricing pressures and a smaller term market. In
Waard, the negative impact of economic conditions on the bond portfolio, was
offset by positive operating earnings and release of risk margin, delivering
overall growth of £7.0m.
Group:
This component includes Group Centre personnel costs; the cost of funding the
Group's acquisition strategy; debt financing costs and investment returns on
Group Centre assets.
FINANCIAL REVIEW | IFRS BALANCE SHEET
The transition to IFRS 17 is now fully embedded in the reporting of the
group's IFRS results and balance sheet. As at 31 December 2024, total net
equity is £314.4m and the CSM, which represents unearned future profits from
insurance contracts, is £175.8m (net of reinsurance and gross of tax).
HOW THE CSM HAS MOVED IN THE PERIOD
£m
CSM (gross of tax) Dec 23 157
Adjustment to 2024 opening 1
Interest accreted 4
New business 7
Acquisition 1
Experience & assumption changes 32
CSM release (19)
FX Impact (7)
CSM (gross of tax) Dec 24 176
The CSM represents future profits that are expected to be released to the
income statement over the lifetime of the portfolio. The CSM (net of
reinsurance and gross of tax) has increased by £18.9m from £156.9m to
£175.8m during 2024.
Positive experience and assumption changes across the group have added £32.0m
of CSM. New business in Scildon and the portfolio acquisition in the UK has
also added £7.5m of CSM, reflecting the future profits arising on profitable
new business added in the period. These additions are offset by the £18.9m
release to profit in the period as the insurance services have been provided
with other smaller net negative movements including the impact of foreign
exchange and the interest accretion totalling £1.7m making up the total
movement.
The CSM values are shown net of reinsurance but gross of tax. When calculating
the IFRS capital base† a net of reinsurance and net of tax figure is used.
The equivalent net of reinsurance and tax movement of CSM during 2024 is an
increase of £15.2m.
HOW DOES IFRS COMPARE TO ECV AND SOLVENCY II?
EcV and IFRS share common principles. However, for investment contracts,
expected future profits on existing policies are not recognised in the IFRS
balance sheet, with profits being reported as they arise. This differs to the
approach in EcV, where these future profits are fully recognised on the
balance sheet, subject to contract boundaries.
LEVERAGE
Applying the Fitch gearing definition of debt divided by debt plus equity,
with the equity denominator adding back the net of tax CSM liability, the
leverage of the group as at 31 December 2024 was 30.9% (31 December 2023
restated: 29.5%).
FINANCIAL REVIEW | IFRS INCOME STATEMENT
IFRS PRE-TAX PROFIT £20.8M
31 DECEMBER 2023 RESTATED: £1.7M
TOTAL COMPREHENSIVE INCOME £(11.0)M
31 DECEMBER 2023 RESTATED: £10.2M
Analysis of IFRS result
Restated
31 Dec 24 31 Dec 23
£m £m
Net insurance service result 8.6 (5.2)
Net investment result 52.7 71.7
Fee, commission and other operating income 104.2 89.4
Other operating expenses (133.6) (149.9)
Financing costs (11.1) (11.0)
Profit arising on business combinations and portfolio acquisitions - 6.7
Profit before income taxes 20.8 1.7
Income tax (charge)/credit (16.9) 16.9
Profit for the period after tax 3.9 18.6
Foreign exchange (loss)/gain (15.3) (7.8)
Other comprehensive income 0.4 (0.6)
Total comprehensive income (11.0) 10.2
Movement in IFRS capital base(†)
Opening IFRS capital base 479.4 469.2
Movement in CSM (net of reinsurance and tax) 15.2 34.5
Total comprehensive income (11.0) 10.2
Other adjustments made directly to shareholders' equity 2.1 0.9
Dividend (36.5) (35.4)
Closing IFRS capital base 449.1 479.4
Net insurance service result
The net insurance service result comprises the revenue and expenses from
providing insurance services to policyholders and ceding insurance business to
reinsurers and is in respect of current and past service only.
Assumption changes, relating to future service, are excluded from the
insurance result (as they adjust the CSM), unless the CSM for a given
portfolio of contracts falls below zero; thereby in a 'loss component'
position. Economic impacts are also excluded from the insurance service
result.
The net insurance service result of £8.6m is broken down into the following
elements:
- gains from the release of risk adjustment and CSM
of £22.2m (2023 restated: £23.2m). These gains represent a consistent source
of future profits for the group.
- losses of £13.6m (2023 restated: £28.5m loss)
caused by experience impacts and loss component effects where portfolios of
contracts with no CSM have suffered adverse impacts that would otherwise be
offset in the balance sheet if the CSM for those portfolios were positive.
Net investment result
The net investment result contains the investment return earned on all assets
together with the financial impacts of movements in insurance and investment
contract liabilities. The investment results include policyholder tax impacts
in the UK of £13.9m (2023: £14.2m) and the impact of effect of locked-in
discount rates has contributed a further £4.3m (2023: £12.8m), largely in
respect of groups of contracts in a loss component position and therefore
partly offsetting the losses noted above in the insurance service result.
Fee, commission and other operating income
The most significant item in this line is the fee income that is charged to
policyholders in respect of the asset management services provided for
investment contracts. There is no income in respect of insurance contracts in
this line, as this is all now reported in the insurance result.
Total fee, commission and operating income in the year was £104.2m (2023:
£89.4m) and was £73.4m net of Swedish policyholder yield tax (2023:
£71.5m). The year-on-year values are comparable with equity market returns in
the UK and Sweden, with the retention of pension business in Sweden being the
largest contributory factor.
Other operating expenses
Other operating expenses consist of costs relating to the management of the
group's investment contracts, non-attributable costs relating to the group's
insurance contracts and other certain one-off costs such as project costs.
Other items of note are the impairment and amortisation of intangible assets
in respect of investment business and the payment of yield tax relating to
policyholder investment funds in Movestic, for which there is a corresponding
offset within the fee income line.
After removing the impacts of policyholder yield tax (£30.8m in 2024 and
£17.9m in 2023) and the impact of the AVIF impairment (£21.0m) from the
prior year the other operating expenses in the year are £102.8m (2023:
£111.0m).
Financing costs
This predominantly relates to the cost of servicing our Tier 2 corporate debt
notes which were issued in early 2022. Further details can be found in Note
C5 of the financial statements.
Profit arising on business combinations and portfolio acquisitions
The portfolio acquisition of unit-linked bond and pension business from Canada
Life in December 2024 is not classed as a business combination under IFRS
accounting and has therefore been accounted for as an 'asset and liability'
transfer at cost, with no day 1 gain. The acquisition of the Conservatrix
insurance portfolio in 2023 did meet the requirements of a business
combination and the resulting day 1 gain is reported within the 2023 income
statement.
Foreign exchange
The IFRS consolidated result of the group reflects a foreign exchange loss of
£15.3m in the period, a consequence of sterling appreciation, against both
the Euro and the Swedish krona. The loss is partly offset by a £4.0m gain
from foreign exchange rate hedges, reported within the investment result.
Other comprehensive income
This represents the impact of movements in the valuation of land and buildings
held in our Dutch division.
Income tax
Income tax consists of both current and deferred taxes.
The income tax expense of £16.9m in 2024 predominately arises from a UK
deferred tax charge, driven by the investment returns on assets backing
policyholder liabilities. Under current UK tax legislation, these investment
returns are taxed over a seven-year period, leading to the deferred tax
impact.
Although current tax charges are being offset by carried-forward tax losses
(Excess Expenses) from prior periods, these losses had already been fully
recognized as a deferred tax asset by year-end 2023. As a result, their
utilisation in 2024 does not reduce tax expense but instead triggers a
deferred tax charge.
RISK MANAGEMENT
"We continue to monitor the volatile global economic and geopolitical backdrop
that appears to have become the new normal. Our solvency position remains
strong, and our financial sensitivities remain well within the Board's Risk
Appetite."
GAVIN HUGHES
GROUP CHIEF RISK OFFICER
Managing risk is a key part of our business model. We achieve this by
understanding the current and emerging risks to the business, mitigating them
where appropriate and ensuring they are appropriately monitored and managed.
HOW WE MANAGE RISK
RISK MANAGEMENT SYSTEM
Risk management system review and development
Clear accountabilities and responsibilities
Strategy: The risk management strategy contains the objectives and principles
of risk management, the risk appetite, risk preferences and risk tolerance
limits.
Policies: The risk management policies implement the risk management strategy
and provide a set of principles (and mandated activities) for control
mechanisms that take into account the materiality of risks.
Processes: The risk management processes ensure that risks are identified,
measured/ assessed, monitored and reported to support decision making.
Reporting: The risk management reports deliver information on the material
risks faced by the business and evidence that principal risks are actively
monitored and analysed and managed against risk appetite.
The Group adopts the "three lines of defence" model with a single set of risk
and governance principles applied consistently across the business.
In all divisions we maintain processes for identifying, evaluating and
managing all material risks faced by the Group, which are regularly reviewed
by the divisional and Group Senior Leadership teams and Audit & Risk
Committees. Our risk assessment processes have regard to the significance of
risks, the likelihood of their occurrence and take account of the controls in
place to manage them. The processes are designed to manage the risk profile
within the Board's approved risk appetite.
Group and divisional risk management processes are enhanced by stress and
scenario testing, which evaluates the impact of certain adverse events
occurring separately or in combination. The results, conclusions and any
recommended actions are included within divisional and Group ORSA Reports to
the relevant Boards. There is a strong correlation between these adverse
events and the risks identified in 'Principal risks and uncertainties'. The
outcome of this testing provides context against which the Group and divisions
can assess whether any changes to its risk appetite or to its management
processes are required.
RISK MANAGEMENT | ROLE OF THE BOARD
The Group Board is responsible for monitoring the Group Risk Management System
and carrying out a review of its effectiveness on an annual basis.
Risk Strategy and Risk Appetite
The Group and its divisions have a defined risk strategy and supporting risk
appetite framework to embed an effective risk management framework, with
culture and processes at its heart, and to create a holistic, transparent and
focused approach to risk identification, assessment, management, monitoring
and reporting.
On the recommendation of the Audit & Risk Committee the Chesnara Board
approves a set of risk preferences which articulate, in simple terms, the
desire to increase, maintain, or reduce the level of risk taking for each main
category of risk. The risk position of the business is monitored against
these preferences using risk tolerance limits, where appropriate, and they are
taken into account by the management teams across the Group when taking
strategic or operational decisions.
Risk and Control Policies
The Group has a set of Risk and Control Policies that set out the key
policies, processes and controls to be applied. Senior Management are
responsible for the day-to-day implementation of the Risk and Control Board
Policies. Subject to the materiality of changes, the Chesnara Board approves
the review, updates and attestation of these policies at least annually.
The Board is considering the provisions of the new UK Corporate Governance
Code, including the arrangements to implement and report on Provision 29
(effective for accounting periods beginning on or after 1 January 2026) in
relation to the effectiveness of internal controls.
Risk Identification
The Group maintains a Risk Register of risks which are specific to its
activity and reports these, along with the Principal Risks of each Business
Unit, to the Group A&RC on at least a quarterly basis.
On an annual basis the Board approves, on the recommendation of the Audit
& Risk Committee, the materiality criteria to be applied in the risk
scoring and in the determination of what is considered to be a principal risk.
At least quarterly the principal and emerging risks are reported to the
relevant Boards, assessing their proximity, probability and potential impact.
Own Risk and Solvency Assessment (ORSA)
On an annual basis, or more frequently if required, the Group produces a Group
ORSA Report which aggregates the divisional ORSA findings and supplements
these with an assessment specific to Group activities. The Group and
divisional ORSA policies outline the key processes and contents of these
reports.
The Chesnara Board is responsible for approving the ORSA, including steering
in advance how the assessment is performed and challenging the results.
The primary objective of the ORSA is to support the company's strategic
decision-making, by providing insights into the Company's risk profile over
the business planning horizon. Effective ORSA reporting supports the Board, in
its role of protecting the viability and reputation of the company, reviewing
and challenging management's strategic decisions and recommendations.
Risk Management System Effectiveness
The Group and its divisions undertake a formal annual review of and
attestation to the effectiveness of the risk management system. The assessment
considers the extent to which the risk management system is embedded.
The Chesnara Board is responsible for monitoring the Risk Management System
and its effectiveness across the Group. The outcome of the annual review is
reported to the Group Board which make decisions regarding its further
development.
RISK MANAGEMENT | EMERGING RISKS
On a regular basis the Senior Management teams scan the horizon to identify
potential risk events (e.g. political; economic; technological; environmental,
legislative & social), assessing potential outcomes in terms of threats
and opportunities. This section provides details on some of the emerging risks
that have been kept under close watch during 2024.
GEOPOLITICAL RISK
Geopolitical risk continues to create a greater level of uncertainty across
the Group risk profile, for example market volatility and investment
performance. To name some examples, the ongoing conflict between Ukraine and
Russia, unrest in the Middle East and growing tensions between China and
Taiwan all continue to be areas of emerging risk for the Group, in the sense
that these are evolving situations which have potential implications for the
Group's Principal risks.
During 2024, more than 40 countries, accounting for over 40 percent of the
world held national elections, making it the largest year for global
democracy. Against a backdrop of geopolitical tensions and economic
instability, significant political change is happening:
- The UK's Conservative Party was heavily defeated after 14 years
in power. Labour's first Budget announced significant changes impacting
business owners and employers with an anticipated inflationary impact.
- In the US former president Donald Trump was re-elected with a
decisive victory. Pledges made around tariffs and trade wars could impact
inflation, global markets and economic growth. The long-term effects of his
policies are unpredictable but could bring significant turbulence.
MACROECONOMIC VOLATILITY
Global economic growth is experiencing fluctuations due to various factors,
including geopolitical tensions, supply chain disruptions, and changes in
consumer behaviour. It was anticipated that 2024 would see a number of
interest rate cuts but inflation proved persistent, meaning central banks
have been reluctant to ease interest rates too quickly. The future path of
inflation remains difficult to predict with most commentators forecasting a
continuation of disinflation but with potential for smaller shocks or further
persistence in some areas.
Economic uncertainty remains a prominent emerging risk for the Group, with
inflation driven expense risk and future market risk exposures being the
potential key areas with greatest potential impact.
- Many of the Group's material supplier contracts, as well as a
majority of the Group's internal costs, are directly linked to wage/price
inflation measures.
- Changes in market conditions can affect the Group's capital
position, future growth and long-term investment performance.
ARTIFICIAL INTELIGENCE (AI)
Developments in the field of AI mean companies are looking towards both
self-developed and externally acquired AI applications, often with the aim to
automate or optimise existing processes and sub-processes. As a result,
financial services organisations are entering the AI space with many looking
at incorporating it into their long-term strategies.
The Group are exploring the use of Artificial Intelligence, including the
risks and opportunities arising from developments in the field of AI.
The EU Artificial Intelligence Act officially came into force in August 2024.
The regulations are designed to ensure that AI systems are safe, transparent,
and respect fundamental rights while promoting innovation within the EU.
In 2024, the UK has continued to develop its approach to AI regulation with a
focus on balancing innovation and security. The UK government has adopted a
principles-based, cross-sector framework for AI regulation. Various
regulators, including the FCA and the Information Commissioner's Office (ICO)
have been updating their strategic approaches to AI.
SUSTAINABILITY
Sustainability and the response to the challenges and opportunities presented
continues to be a key focus in the UK and Europe and is an evolving area of
potential risk for the business. The 2030 Agenda for Sustainable
Development, adopted by all United Nations Member States in 2015, however in
early 2025 the United States of America withdrew from the United Nations
Sustainable Development Goals. The agenda provides a shared blueprint for
peace and prosperity for people and the planet, now and into the future. At
its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent
call for action by all countries - developed and developing - in a global
partnership. The SDGs and the potential risks they look to address cover
areas including poverty, inequality, climate change, environmental
degradation, peace, and justice.
Of these, a prominent area of focus across the UK and the EU is the financial
risks of climate change. 2024 was the hottest year on record and the first
calendar year to exceed the 1.5°C warming threshold of the Paris Agreement,
with the global average at 1.6°C, and an understanding of the potential
impacts on businesses is developing.
The need for organisations, businesses and wider society to take action is
clear and to support this, the Group has published its sustainability strategy
together with its initial targets. This is an integral part of the company's
overall strategy and will look to address current and forthcoming
sustainability-related risks.
The risk information that follows includes specific commentary, where
appropriate, on the impact of emerging events on our principal risks.
RISK MANAGEMENT | PRINCIPAL RISKS AND UNCERTAINTIES
The following tables outline the principal risks and uncertainties of the
Group and the controls in place to mitigate or manage their impact. It has
been drawn together following regular assessment, performed by the Audit &
Risk Committee, of the principal risks facing the Group, including those that
would threaten its business model, future performance, solvency or liquidity.
The impacts are not quantified in the tables. However, by virtue of the
risks being defined as principal, the impacts are potentially significant.
Those risks with potential for a material financial impact are covered within
the sensitivities.
PR1 - INVESTMENT AND LIQUIDITY RISK
DESCRIPTION Exposure to financial losses or value reduction arising from adverse movements
in currency, investment markets, counterparty defaults, or through inadequate
asset liability matching.
RISK APPETITE The Group accepts this risk but has controls in place to prevent any increase
or decrease in the risk exposure beyond set levels. These controls will result
in early intervention if the amount of risk approaches those limits.
POTENTIAL IMPACT Market risk results from fluctuations in asset values, foreign exchange rates
and interest rates and has the potential to affect the Group's ability to fund
its commitments to customers and other creditors, as well as pay a return to
shareholders.
Chesnara and each of its subsidiaries have obligations to make future
payments, which are not always known with certainty in terms of timing or
amounts, prior to the payment date. This includes primarily the payment of
policyholder claims, reinsurance premiums, debt repayments and dividends.
The uncertainty of timing and amounts to be paid gives rise to potential
liquidity risk, should the funds not be available to make payment.
Other liquidity issues could arise from counterparty failures/credit defaults,
a large spike in the level of claims or other significant unexpected expenses.
Worldwide developments in Environmental, Social, and Governance (ESG)
responsibilities and reporting have the potential to influence market risk in
particular, for example the risks arising from transition to a carbon neutral
industry, with corresponding changes in consumer preferences and behaviour.
KEY CONTROLS RECENT CHANGE / OUTLOOK
- Regular monitoring of exposures and performance; There remains a high level of uncertainty in the external operating
environment with a varied outlook globally.
- Asset liability matching;
Uncertainty around geopolitics and monetary policy may bring continued market
- Maintaining a well-diversified asset portfolio; volatility and potential for shocks. Escalating tariffs could impact
inflation, equity and credit markets.
- Holding a significant amount of surplus in highly liquid "Tier
1" assets such as cash and gilts; With greater global emphasis being placed on environmental and social factors
when selecting investment strategies, the Group has an emerging exposure to
- Utilising a range of investment funds and managers to avoid "transition risk" arising from changing preference and influence of, in
significant concentrations of risk; particular, institutional investors. This has the potential to result in
adverse investment returns on any assets that perform poorly as a result of
- Having an established investment governance framework to provide "ESG transition". Work is ongoing to embed sustainability into the wider
review and oversight of external fund managers; strategy of the Group.
- Regular liquidity forecasts; Ongoing global conflict brings additional economic uncertainty and volatility
to financial markets. This creates additional risk of poor mid-term
- Considering the cost/benefit of hedging when appropriate; performance on shareholder and policyholder assets.
- Actively optimising the risk / return trade-off between yield on
fixed interest assets compared with the associated balance sheet volatility
and potential for defaults or downgrades; and
- Giving due regular consideration (and discussing appropriate
strategies (with fund managers) to longer-term global changes that may affect
investment markets, such as climate change.
PR2 - REGULATORY CHANGE RISK
DESCRIPTION The risk of adverse changes in industry practice/regulation, or inconsistent
application of regulation across territories.
RISK APPETITE The Group aims to minimise any exposure to this risk, to the extent possible,
but acknowledges that it may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT - The Group currently operates in three main regulatory domains
and is therefore exposed to potential for inconsistent application of
regulatory standards across divisions, such as the imposition of higher
capital buffers over and above regulatory minimum requirements. Potential
consequences of this risk for the Group are the constraining of efficient and
fluid use of capital within the Group or creating a non-level playing field
with respect to future new business/acquisitions.
- Regulatory developments continue to drive a high level of change
activity across the Group, with items such as operational resilience, climate
change, Consumer Duty and ESG reporting being particularly high profile.
Such regulatory initiatives carry the risk of expense overruns should it not
be possible to adhere to them in a manner that is proportionate to the nature
and scale of the Group's businesses. The Group is therefore exposed to the
risk of:
- incurring one-off costs of addressing regulatory change as well
as any permanent increases in the cost base to meet enhanced ongoing
standards;
- erosion in value arising from pressure or enforcement to reduce
future policy charges;
- erosion in value arising from pressure or enforcement to
financially compensate for past practice; and
- regulatory fines or censure in the event that it is considered
to have breached standards or fails to deliver changes to the required
regulatory standards on a timely basis.
KEY CONTROLS RECENT CHANGE / OUTLOOK
The Group seeks to limit any potential impacts of regulatory change on the There continues to be active regulatory agendas across the territories in
business by: which we operate.
- Having processes in place for monitoring changes, to enable The UK Treasury and EIOPA have both been undertaking a review of SII rules
timely actions to be taken, as appropriate; implementation. In the UK this resulted in a reduction in the SII Risk
Margin and similar is expected for the overseas entities from the EIOPA
- Maintaining strong open relationships with all regulators, and review. The European Parliament approved the final text of the Solvency II
proactively discussing their initiatives to encourage a proportional approach review in 2024 with the Solvency II Directive amended on 5 November 2024. It
is expected once fully entered into force Member States will have two years to
- Being a member of the ABI and equivalent overseas organisations transpose it.
and utilising other means of joint industry representation;
There is also potential for divergence of regulatory approaches amongst
- Performing regular internal reviews of compliance with European regulators with potential implications for the Group's capital,
regulations; and regulatory supervision and structure.
- Utilising external specialist advice and assurance, when The Group is subject to evolving regimes governing the recovery, resolution or
appropriate. restructuring of insurance companies. As part of the global regulatory
response to the risk that systemically important financial institutions could
Regulatory risk is monitored and scenario tests are performed to understand fail, banks, and more recently insurance companies, have been the focus of new
the potential impacts of adverse political, regulatory or legal changes, along recovery and resolution planning requirements developed by regulators and
with consideration of actions that may be taken to minimise the impact, should policy makers nationally and internationally. The PRA is expected to publish a
they arise. policy statement in the near future following CP2/24 Solvent exit planning for
insurers. UK Insurers will be required to prepare a Solvent Exit Analysis
(SEA) as part of BAU activities.
In July 2022, the FCA published final rules for a new Consumer Duty and
response to feedback to CP21/36 - A New Consumer Duty. The Consumer Duty
regulations set higher and clearer standards of consumer protection across
financial services and require firms to act to deliver good outcomes for
customers. The first key regulatory deadline of 31 July 2023 required
implementation for new business, whilst all products including closed books
must be compliant by 31 July 2024. Our UK business established a Consumer Duty
project which delivered all requirements across its businesses within the FCA
deadline.
The group has also been progressing activity to implement major regulatory
driven operational resilience programmes including UK Operational Resilience,
UK Third Party Risk Management and EU Digital Operational Resilience Act.
PR3 - ACQUISITION RISK
DESCRIPTION The risk of failure to source acquisitions that meet the Group's criteria or
the execution of acquisitions with subsequent unexpected financial losses or
value reduction.
RISK APPETITE The Group has a patient approach to acquisition and generally expects
acquisitions to enhance EcV and expected Cash Generation in the medium term
(net of external financing), though each opportunity will be assessed on its
own merits.
POTENTIAL IMPACT The acquisition element of the Group's growth strategy is dependent on the
availability of attractive future acquisition opportunities. Hence, the
business is exposed to the risk of a reduction in the availability of suitable
acquisition opportunities within the Group's current target markets, for
example arising as a result of a change in competition in the consolidation
market or from regulatory change influencing the extent of life company
strategic restructuring.
Through the execution of acquisitions, the Group is also exposed to the risk
of erosion of value or financial losses arising from risks inherent within
businesses or funds acquired which are not adequately priced for or mitigated
as part of the transaction.
KEY CONTROLS RECENT CHANGE / OUTLOOK
The Group's financial strength, strong relationships and reputation as a "safe During 2024 the Group announced a second portfolio acquisition from Canada
hands acquirer" via regular contact with regulators, banks and target Life which will see a closed portfolio of unit linked bonds and legacy pension
companies enables the company to adopt a patient and risk-based approach to business transfer to Chesnara's UK subsidiary.
assessing acquisition opportunities. Operating in multi-territories provides
some diversification against the risk of changing market circumstances in one There remains a positive pipeline of activity in relation to acquisitions,
of the territories. Consideration of additional territories within with the Group also looking at whether further M&A is possible in Sweden.
Western-Europe remains on the agenda, if the circumstances of entry meet the
Group's stated criteria. The successful Tier 2 debt raise in 2022, in addition to diversifying the
Group's capital structure, has provided additional flexibility in terms of
The Group seeks to limit any potential unexpected adverse impacts of funding the Group's future growth strategy.
acquisitions by:
- Applying a structured Board approved risk-based Acquisition
Policy including CRO involvement in the due diligence process and deal
refinement processes;
- Having a management team with significant and proven experience
in mergers and acquisitions; and
- Adopting an appropriate risk appetite and pricing approach.
PR4 - DEMOGRAPHIC EXPERIENCE RISK
DESCRIPTION Risk of adverse demographic experience compared with assumptions (such as
rates of mortality, morbidity, persistency etc.)
RISK APPETITE The Group accepts this risk but restricts its exposure, to the extent
preferred, through the use of reinsurance and other controls. Early warning
trigger monitoring is in place to track any increase or decrease in the risk
exposure beyond a set level, with action taken to address any impact as
necessary.
POTENTIAL IMPACT If demographic experience (rates of mortality, morbidity, persistency etc.)
deviates from the assumptions underlying product pricing and subsequent
reserving, more or less profit will accrue to the Group.
The effect of recognising any changes in future demographic assumptions at a
point in time would be to crystallise any expected future gain or loss on the
balance sheet.
If mortality or morbidity experience is higher than that assumed in pricing
contracts (i.e. more death and sickness claims are made than expected), this
will typically result in less profit accruing to the Group.
If persistency is significantly lower than that assumed in product pricing and
subsequent reserving, this will typically lead to reduced Group profitability
in the medium to long-term, as a result of a reduction in future income
arising from charges on those products. The effects of this could be more
severe in the case of a one-off event resulting in multiple withdrawals over a
short period of time (a "mass lapse" event).
KEY CONTROLS RECENT CHANGE / OUTLOOK
The Group performs close monitoring of persistency levels across all Groups of Continued cost of living pressures could give rise to higher surrenders and
business to support best estimate assumptions and identify trends. There is lapses should customers face personal finance pressures and not be able to
also partial risk diversification in that the Group has a portfolio of annuity afford premiums or need to access savings. The Group continues to monitor
contracts where the benefits cease on death. closely and respond appropriately.
The Group seeks to limit the impacts of adverse demographic experience by:
- Aiming to deliver good customer service and fair customer Since 2020, we have seen mortality experience in the Netherlands in excess of
outcomes; expectations due to the direct and indirect consequences of the COVID19
pandemic. This is reflected in the shorter-term assumptions but anticipated
- Having effective underwriting techniques and reinsurance to fade away in the longer-term assumptions, in line with industry practice /
programmes, including the application of "Mass Lapse reinsurance", where standard tables.
appropriate;
Any prolonged stagnation of the property market could reduce protection
- Carrying out regular investigations, and industry analysis, to business sales compared to plan, particularly in the Netherlands.
support best estimate assumptions and identify trends;
- Active investment management to ensure competitive policyholder
investment funds; and Following the introduction of new legislation in 2022 making it easier for
customers to transfer insurance policies in Sweden, the transfer market
- Maintaining good relationships with brokers, which is remains very active. This risk continues to be actively monitored.
independently measured via yearly external surveys that considers brokers
attitudes towards different insurers.
PR5 - EXPENSE RISK
DESCRIPTION Risk of expense overruns and unsustainable unit cost growth.
RISK APPETITE The Group aims to minimise its exposure to this risk, to the extent possible,
but acknowledges that it may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT The Group is exposed to expenses being higher than expected as a result of
one-off increases in the underlying cost of performing key functions, or
through higher inflation of variable expenses.
A key underlying source of potential increases in regular expense is the
additional regulatory expectations on the sector.
For the closed funds, the Group is exposed to the impact on profitability of
fixed and semi-fixed expenses, in conjunction with a diminishing policy
base.
For the companies open to new businesses, the Group is exposed to the impact
of expense levels varying adversely from those assumed in product pricing.
Similarly, for acquisitions, there is a risk that the assumed costs of running
the acquired business allowed for in pricing are not achieved in practice, or
any assumed cost synergies with existing businesses are not achieved.
KEY CONTROLS RECENT CHANGE / OUTLOOK
For all subsidiaries, the Group maintains a regime of budgetary control. The Group has an ongoing expense management programme and various strategic
projects aimed at controlling expenses and seeking opportunities to exploit
- Movestic and Scildon assume growth through new business such efficiencies/ synergies, whilst ensuring we have the capabilities and capacity
that the general unit cost trend is positive; to support our growth ambitions. whilst continuing to keep tight cost control
- The Waard Group pursues a low cost-base strategy using a Acquisitions also present opportunities for unit cost reduction and the UK
designated service company. The cost base is supported by service income business announced a long-term strategic partnership with FinTech market
from third party customers; leader SS&C Technologies ("SS&C") in May 2023, to provide policy
administration services to the Group's UK division.
- Countrywide Assured pursues a strategy of outsourcing functions
with charging structures such that the policy administration cost is more The merger of our businesses in the Netherlands is anticipated to create a
aligned to the book's run off profile; and more sustainable business with the potential for further synergies.
- With an increased current level of operational and strategic Through its exposures to investments in real asset classes, both direct and
change within the business, a policy of strict project budget accounting indirect, Chesnara has an indirect hedge against the effects of inflation and
discipline is being upheld by the Group for all material projects. will consider more direct inflation hedging options should circumstances
determine that to be appropriate.
PR6 - OPERATIONAL RISK
DESCRIPTION Significant operational failure/business continuity event.
RISK APPETITE The Group aims to minimise its exposure to this risk, to the extent possible,
but acknowledges that it may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT The Group and its subsidiaries are exposed to operational risks which arise
through daily activities and running of the business. Operational risks may,
for example, arise due to technical or human errors, failed internal
processes, insufficient personnel resources or fraud caused by internal or
external persons. As a result, the Group may suffer financial losses, poor
customer outcomes, reputational damage, regulatory intervention or business
plan failure.
Part of the Group's operating model is to outsource support activities to
specialist service providers. Consequently, a significant element of the
operational risk arises within its outsourced providers.
KEY CONTROLS RECENT CHANGE / OUTLOOK
The Group perceives operational risk as an inherent part of the day-to-day Significant operational change is underway across the Group particularly from
running of the business and understands that it can't be completely the merger in the Netherlands and through the Transition and transformation
eliminated. However, the Company's objective is to always control or mitigate programme in the UK. This may bring additional operational risk in the
operational risks, and to minimise the exposure when it's possible to do so in shorter term but is anticipated to significantly reduce the risk in the
a convenient and cost-effective way. longer-term.
The Group seeks to reduce the impact and likelihood of operational risk by: In addition, advancements in operational risk management and control continue
to be made as a result of major regulatory driven operational resilience
- Monitoring of key performance indicators and comprehensive programmes across the Group, as described below.
management information flows;
Operational resilience remains a key focus for the business and high on the
- Effective governance of outsourced service providers, in line regulatory agenda following the regulatory changes published by the BoE, PRA
with SS2/21 Outsourcing and Third Party Risk Management, including a regular and FCA. The Group continues to progress activity under the UK operational
financial assessment. Appropriate contractual terms contain various remedies resilience project. The next key regulatory deadline is 31 March 2025; the
dependent on the adverse circumstances which may arise. deadline by which all firms should have sound, effective, and comprehensive
strategies, processes, and systems that enable them to address risks to their
- Regular testing of business continuity plans; ability to remain within their impact tolerance for each important business
service (IBS) in the event of a severe but plausible disruption. To support
- Regular staff training and development; this the project is currently in the process of running a schedule of 'real
life severe but plausible' scenario testing.
- Employee performance management frameworks;
The Digital Operational Resilience Act (DORA) entered into force January 2023
- Promoting the sharing of knowledge and expertise; and and applied from January 2025. It aims at strengthening the IT security of
financial entities such as banks, insurance companies and investment firms and
- Complementing internal expertise with established relationships making sure that the financial sector in Europe is able to stay resilient in
with external specialist partners. the event of a severe operational disruption. Movestic, Scildon and Waard are
considered to be materially compliant with the new regulations, taking account
of their size and overall risk profile, as well as the nature, scale and
complexity of their services, activities and operations. Through 2025 there
will be further activity to fully embed DORA into business as usual
operations, closing any residual gaps and completing the first round of
regulatory reporting.
Each Division continues to carry out assurance activities through local
business continuity programmes to ensure robust plans are in place to limit
business disruption in a range of severe but plausible events.
PR7 - IT / DATA SECURITY & CYBER RISK
DESCRIPTION Risk of IT/ data security failures or impacts of malicious cyber-crime
(including ransomware) on continued operational stability.
RISK APPETITE The Group aims to minimise its exposure to this risk, to the extent possible,
but acknowledges that it may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT Cyber risk is a growing risk affecting all companies, particularly those who
are custodians of customer data. The most pertinent risk exposure relates to
information security (i.e. protecting business sensitive and personal data)
and can arise from failure of internal processes and standards, but
increasingly companies are becoming exposed to potential malicious
cyber-attacks, organisation-specific malware designed to exploit
vulnerabilities, phishing and ransomware attacks etc. The extent of the
Group's exposure to such threats also includes third party service providers.
The potential impact of this risk includes financial losses, inability to
perform critical functions, disruption to policyholder services, loss of
sensitive data and corresponding reputational damage or fines.
KEY CONTROLS RECENT CHANGE / OUTLOOK
The Group seeks to limit the exposure and potential impacts from IT/data The Group continues to invest in the incremental strengthening of its cyber
security failures or cyber-crime by: risk resilience and response options.
- Embedding the Information Security Policy and Group Cyber During 2024 there have been no reports of any material data breaches.
Response Framework in all key operations and development processes;
The risk of cybercrime campaigns particularly originating from state sponsored
- Seeking ongoing specialist external advice, modifications to IT attacks remains heightened as a result of the ongoing geopolitical unrest.
infrastructure and updates as appropriate;
During 2024 the Group has continued to test and seek assurance of the
- Delivering regular staff training and attestation to the resilience to cyber risks, this has included:
information security policy;
- Completing a ransomware scenario test, which involved one
- Regular employee phishing tests and awareness sessions; business unit, Group crisis management team and Group Board. A lessons learned
session has been held with relevant actions identified;
- Ensuring that the Board maintains appropriate information
technology and security knowledge; - Regular phishing testing and training campaigns;
- Conducting penetration and vulnerability testing, including - Board training and awareness; and
third party service providers;
- Ongoing penetration testing and vulnerability management.
- Executive committee and Board level responsibility for the risk,
including dedicated IT security committees with executive membership; Enhancements to the IT control environment have also been made as a result of
implementation of EU Digital Operational Resilience Act in our overseas
- Having established Group and supplier disaster recovery and business units, which came into effect on 17 January 2025.
business continuity plans which are regularly monitored and tested;
- Ensuring the Group's outsourced IT service provider maintains
relevant information security standard accreditation (ISO27001); and
- Monitoring network and system security including firewall
protection, antivirus and software updates.
- The Group has cyber insurance in place which covers all of the
UK operations including Head Office. Elsewhere in the Group, where cyber
insurance is not in place, we are able to access support and resources (e.g.
forensic analysis) through existing contracts with third parties.
In addition, a designated Steering Group provides oversight of the IT estate
and Information Security environment including:
- Changes and developments to the IT estate;
- Performance and security monitoring;
- Oversight of Information Security incident management;
- Information Security awareness and training;
- Development of Business Continuity plans and testing; and
- Overseeing compliance with the Information Security Policy.
PR8 - NEW BUSINESS RISK
DESCRIPTION Adverse new business performance compared with projected value.
RISK APPETITE The Group does not wish to write new business that does not generate positive
new business value (on a commercial basis) over the business planning horizon.
POTENTIAL IMPACT If new business performance is significantly lower than the projected value,
this will typically lead to reduced value growth in the medium to long term. A
sustained low-level performance may lead to insufficient new business profits
to justify remaining open to new business.
KEY CONTROLS RECENT CHANGE / OUTLOOK
The Group seeks to limit any potential unexpected adverse impacts to new Increased expenses and price pressure remains a risk for the ongoing viability
business by: of writing profitable new business across the Group and the Swedish transfer
market remains active following regulatory changes which give greater transfer
- Monitoring quarterly new business profit performance; freedom.
- Investing in brand and marketing; Market share is currently being maintained in the Netherlands with activity to
look at some broader wealth products.
- Maintaining good relationships with brokers;
In Sweden, action is being taken to diversify distribution partners whilst
- Offering attractive products that suit customer needs; expanding product offering across unit linked, custodian and life & health
markets.
- Monitoring market position and competitor pricing, adjusting as
appropriate; The UK continues to write new business primarily through the onshore bond
wrapper acquired as part of the Sanlam Life and Pensions.
- Maintaining appropriate customer service levels and experience;
and
- Monitoring market and pricing movements.
PR9 - REPUTATIONAL RISK
DESCRIPTION Poor or inconsistent reputation with customers, advisors, regulators,
investors, staff or other key stakeholders/counterparties.
RISK APPETITE The Group aims to minimise its exposure to this risk, to the extent possible,
but acknowledges that it may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT The Group is exposed to the risk that litigation, employee misconduct,
operational failures, the outcome of regulatory investigations, press
speculation and negative publicity, disclosure of confidential client
information (including the loss or theft of customer data), IT failures or
disruption, cyber security breaches and/or inadequate services, amongst
others, whether true or not, could impact its brand or reputation. The Group's
brand and reputation could also be affected if products or services
recommended by it (or any of its intermediaries) do not perform as expected
(whether or not the expectations are realistic) or in line with the customers'
expectations for the product range.
Any damage to the Group's brand or reputation could cause existing customers
or partners to withdraw their business from the Group, and potential customers
or partners to elect not to do business with the Group and could make it more
difficult for the Group to attract and retain qualified employees.
KEY CONTROLS RECENT CHANGE / OUTLOOK
The Group seeks to limit any potential reputational damage by: The Group is exposed to strategic and reputational risks arising from its
action or inaction as part of its sustainability strategy. This includes the
- Regulatory publication reviews and analysis risks associated with not meeting our published targets and there are
regulatory and reputational risks arising from our public disclosures on the
- Timely response to regulatory requests matter through the potential of unintentional greenwashing.
- Open and honest communications The Group has a published sustainability strategy which aims to provide clear
and honest disclosure of the actions being taken, the rationale for those
- HR policies and procedures actions and areas of uncertainty.
- Fit & Proper procedures
- Operational and IT Data Security Frameworks
- Product governance and remediation frameworks
- Appropriate due diligence and oversight of outsourcers and third
parties
- Proactive stakeholder engagement with inclusivity for all
stakeholders
PR10 - MODEL RISK
DESCRIPTION Adverse consequences from decisions based on incorrect or misused model
outputs, or fines or reputational impacts from disclosure of materially
incorrect or misleading information.
RISK APPETITE The Group aims to minimise its exposure to this risk, to the extent possible,
but acknowledges that it may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT The Group and each of its subsidiaries apply statistical, economic and
financial techniques and assumptions to process input data into quantitative
estimates. Inaccurate model results may lead to unexpected losses arising from
inaccurate data, assumptions, judgements, programming errors, technical
errors, and misinterpretation of outputs.
Potential risk impacts of inaccurate model results include:
- Poor decisions, for example regarding business strategy,
operational decisions, investment choices, dividend payments or acquisitions;
- Potentially overestimating the value of acquisitions resulting
in over payment;
- Misstatement of financial performance or solvency, resulting in
misleading key shareholders or fines; and
- Provision of inaccurate information to the Board on business
performance resulting in poorly informed or delayed decisions.
KEY CONTROLS RECENT CHANGE / OUTLOOK
Model risk management is becoming an increased area of focus of the
regulators, particularly in the UK Banking industry, with PS6/23 and SS1/23
- Robust model governance framework and independent standards of becoming effective for bank and building societies on 17th May 2024, and an
"do-check-review"; expectation that further guidance will follow for insurers.
- Independent model validation & internal audit review; The Group is in the process of embedding a new aggregation model (Tagetik)
that provides greater access control for Group consolidation on both IFRS and
- Monitoring and reporting of risk appetite limits; SII bases.
- Documented processes and policies; Many insurers, including Chesnara, are exploring the use of artificial
intelligence, including the risks and opportunities arising. While this
- Ongoing and regular data quality assessment checks; increases the opportunity to benefit from expense synergies, it also has the
potential to introduce additional model risk. Conversely though, there are
- Model version control and user access restrictions; also opportunities to reduce model risk by applying machine learning
techniques to validation and sense checking of results.
- Robust due diligence processes on acquisitions including
external support on model development / review; and As part of the Group's operational resilience programme, the Group is
undertaking a review of the operational resilience of its financial reporting
- -Intra-Group financial reporting planning, monitoring and and modelling processes. This includes resilience scenario testing of the
delivery management processes, and is expected to improve efficiency and model risk mitigation.
PR11 - CLIMATE CHANGE RISK
DESCRIPTION Exposure to adverse consequences of the physical or transitional risks arising
from climate change.
RISK APPETITE The Group aims to restrict its exposure to climate change risk, such that it
can continue to operate within the existing risk tolerance limits for the
associated risks and potential impacts. The risk impacts below can have a
direct impact on the operations of the Group and, more significantly, to the
businesses within the Group's investment universe.
POTENTIAL IMPACT Physical risks impacts
- Extreme weather events such as floods, hurricanes, and wildfires
can damage physical assets leading to direct business interruption as well as
indirect consequences due to the impact on the supply chain.
- Sustained but gradual changes in the weather can also lead to
both direct and indirect disruption of business operations, affecting
everything from third parties to data centres.
Transitional risks impacts
- New regulations aimed at reducing carbon emissions may impact
the profitability of certain investments, particularly in carbon-intensive
industries.
- As the economy transitions to greener technologies, there may be
shifts in market demand, affecting the value of investments in traditional
energy sectors.
- Inflationary impacts from global climate policy failure,
including on energy prices.
- Reputational damage if we are seen to be failing to manage the
effects of climate change or to deliver on our targets/commitments.
- Litigation risk if we are considered not to have published
enough information or to have made unsubstantiated claims leading to
'greenwashing.'
KEY CONTROLS RECENT CHANGE / OUTLOOK
- Quantitative analysis of the potential impact of climate change To manage the risks associated with climate change, financial institutions are
on our business increasingly adopting advanced data and modelling techniques. Additionally,
regulatory bodies require financial institutions to perform climate scenario
- Working towards embedding climate change risk into investment analyses to test their resilience to emerging climate-related financial risks.
and operational decision-making across the business COP 29 emphasised the crucial role of non-party stakeholders such as
businesses, investors and society, in driving global climate action. The
- Providing clear and honest disclosure on our targets and outcomes reflected the ongoing efforts to enhance global climate action and
commitments and where there are areas of challenge and uncertainty for those cooperation although it was made clear more ambition and concrete plans are
targets. needed to meet the 1.5°C target.
- Robust Risk and Governance Frameworks In early 2025 the United States of America implemented a number of actions and
executive orders that have potentially wide reaching implications for climate
- Monitoring of associated KPIs change and global action plans.
- Using external data providers to provide Group-wide ESG data on The Group has aligned its targets with the Paris Climate Agreement and aims to
our asset portfolio be net zero for all emissions by 2050. Our climate transition plan is being
developed using the IIGCC's Net Zero Investment Framework 2.0 and is due to be
- Factoring an assessment of climate commitments into the published later this year.
selection of prospective partners
A Chesnara Group Climate Risk Report was produced for the first time in 2024
- Factoring sustainability-related risk analysis into the due and was presented to the Board. The report includes an estimated impact on own
diligence completed on potential acquisitions. funds from climate risk, demonstrating the potentially significant impact of
climate change, and the mitigating actions that are being taken.
Whilst we consider climate change to be a cross-cutting risk, that manifests
through other Principal risks (e.g. equity, credit, regulatory etc), the Group
has recently enhanced its climate change risk modelling by utilising MSCI
data, and this has increased our assessment of the potential materiality of
potential impacts in the longer term. It is a significant step forward in
terms of coverage, granularity and robustness of Chesnara's climate risk
analysis compared to our previous approach and, as a result, climate change
risk has been included as an explicit Principal risk, to make more explicit
the exposure to potential adverse consequences of the physical and
transitional risks that could arise from climate change.
DIRECTORS' REsponsibilities STATEMENT
With regards to this preliminary announcement, the Directors confirm to the
best of their knowledge that:
The financial statements have been prepared in accordance with United Kingdom
adopted international accounting standards and give a true and fair view of
the assets, liabilities, financial position and profit for the Company and the
undertakings included in the consolidation as a whole;
Pursuant to Disclosure and Transparency Rules Chapter 4, the Chairman's
Statement and Management Report include a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties faced by the business.
On behalf of the Board
Luke Savage Steve Murray
Chairman Chief
Executive Officer
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF CHESNARA PLC ON THE
PRELIMINARY ANNOUNCEMENT OF CHESNARA PLC
As the independent auditor of Chesnara plc we are required by UK Listing Rule
LR 9.7A.1(2)R to agree to the publication of Chesnara plc's preliminary
announcement statement of annual results for the period ended 31 December
2024.
The preliminary statement of annual results for the period ended 31 December
2024 includes disclosures required by the Listing Rules and additional content
such as 2024 highlights, the Chair's Statement and Chief Executive Officer's
Report, narrative disclosures, the Management Report, Business Review,
Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet,
Consolidated Statement of Cash flows, Consolidated Statement of Changes in
Equity and certain notes to the consolidated financial statements. We are not
required to agree to the publication of presentations to analysts.
The directors of Chesnara plc are responsible for the preparation,
presentation and publication of the preliminary statement of annual results in
accordance with the UK Listing Rules.
We are responsible for agreeing to the publication of the preliminary
statement of annual results, having regard to the Financial Reporting
Council's Bulletin "The Auditor's Association with Preliminary Announcements
made in accordance with UK Listing Rules".
Status of our audit of the financial statements
Our audit of the annual financial statements of Chesnara plc is complete and
we signed our auditor's report on 26 March 2025. Our auditor's report is not
modified and contains no emphasis of matter paragraph.
Our audit report on the full financial statements sets out the following key
audit matters which had the greatest effect on our overall audit strategy; the
allocation of resources in our audit; and directing the efforts of the
engagement team, together with how our audit responded to those key audit
matters and the key observations arising from our work:
Expense assumptions used in the valuation of insurance contract liabilities
Key audit matter description
The group's insurance contract liabilities are one of the largest balances on
the balance sheet, held at £4.1bn (2023: £4.2bn) at 31 December 2024. The
valuation of insurance contract liabilities is determined using actuarial
assumptions that require complex judgments and forward-looking estimates to be
made by management. A number of the assumptions, such as mortality and
morbidity, economic assumptions and lapse rates, are made with reference to
industry tables and actual experience, and hence market benchmarking
highlights material deviations from industry practices.
The expense assumptions require management to make significant judgments and
estimates relating to the future expenses attributable to insurance contracts.
The risk associated with the expense assumptions is higher than other
actuarial assumptions as a result of:
· planned changes to the policy administration outsourcing
arrangements of CA plc, including the anticipated project costs of migration
and termination;
· the impact of inflation on future expenses in the short- and
long-term, particularly given recent changes in the group's macroeconomic
environments; and
· uncertainties in the costs of maintaining insurance portfolios in
run-off, particularly where variable cost assumptions are used.
Given the significance of the insurance contract liabilities held within CA
plc (£1.3bn), Scildon (£1.9bn) and Waard (£0.7bn), our key audit matter was
pinpointed to the expense assumptions within these divisions. As the expense
assumptions are susceptible to manipulation by management, impacting its
reported profit before taxation, we determined that there was a risk of
material misstatement due to fraud and therefore identified this area as a key
audit matter.
The group's accounting policy relating to its insurance contract liabilities
has been presented in Note A4, with details of the balance and movement from
31 December 2023 set out within Note F2. The expense assumptions used in
determining insurance contract liabilities are also referred to in the Audit
& Risk Committee Report.
How the scope of our audit responded to the key audit matter
In respect of the expense assumptions used in the valuation of insurance
contract liabilities, we performed the following procedures:
· obtained an understanding of relevant controls in place around
management's assumption setting processes at the group and divisional-level;
· with the involvement of actuarial specialists, evaluated the
appropriateness of expense assumptions and methodology. Our assessment
considered the reasonableness of forecasts for future periods with reference
to the group's internal and external business environments, the impacts of any
planned management actions, and whether the assumptions have been subject to
management bias.;
· tested actual expenses in the year-ended 31 December 2024 and
compared these to management's previous forecasts to understand the predictive
accuracy of management's process;
· assessed the mechanical accuracy of management's underlying
expense calculations, verifying that management's selected methodology had
been applied correctly; and
· assessed the appropriateness of the disclosures within the
financial statements in relation to expense assumptions used in the valuation
of the underlying insurance contract liabilities.
Key observations
Based on the procedures performed, we consider the expense assumptions used in
the valuation of insurance contract liabilities and related disclosures to be
appropriate.
Valuation of Chesnara plc's investment in Countrywide Assured plc ('CA plc')
Key audit matter description
Chesnara plc holds investments in subsidiaries totalling £389.9m (2023:
£399.6m) on its company balance sheet, measured at cost less cumulative
impairment losses.
In line with IAS 36 'Impairment of Assets', management are required to carry
out an impairment assessment if there is an indication of impairment loss at
the balance sheet date. Through its assessment, management evaluated whether
the investment in CA plc was carried at more or less than its recoverable
amount, which is the higher of fair value less costs of disposal and value in
use, and therefore whether an impairment is required. Management have
historically deemed economic value ('EcV') to be an appropriate proxy for
recoverable amount, with management's definition of EcV.
In recent years, the CA plc EcV has been on a downwards trend as dividends
paid to the parent company have exceeded EcV growth, with this dynamic being a
function of CA plc being a closed book insurer. The impairment assessment
performed by management at the balance sheet date highlighted £4.0m (2023:
£14.4m) of impairment over the carrying value of the investment.
Due to the potential for management to introduce inappropriate bias to
judgments made in the impairment assessment when determining the EcV, with
impairment losses impacting the parent company income statement and balance
sheet, we determined that there was a risk of material misstatement due to
fraud and therefore identified this area as a key audit matter.
The parent company's accounting policy relating to its subsidiary investments
has been presented in Note A4, with details of the impairment sensitivities
included in Note A5. The carrying value of Chesnara plc's investment in CA plc
is also referred to in the Audit & Risk Committee's report.
How the scope of our audit responded to the key audit matter
In respect of the valuation of Chesnara plc's investment in CA plc, we
performed the following procedures:
· obtained an understanding of relevant controls in place around
management's impairment assessment and EcV valuation processes;
· evaluated management's methodology for determining the
recoverable amount of CA plc in accordance with IAS 36 'Impairment of Assets',
including the appropriateness of using EcV as a proxy for recoverable amount;
· with the involvement of actuarial specialists, evaluated the
accuracy and completeness of adjustments made to CA plc's IFRS balance sheet
in order to determine the EcV and considered whether the adjustments have been
subject to management bias;
· performed a stand-back assessment of management's impairment
assessment against our knowledge and understanding of changes in CA plc's
internal and external business environment;
· evaluated management's impairment assessment by performing
benchmarking against other recent industry transactions to gain corroborative
and contradictory evidence; and
· evaluated the appropriateness of disclosures included in Note J1
of the financial statements.
Key observations
Based on the procedures performed, we consider the carrying value of Chesnara
plc's investment in CA plc to be appropriate.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we did not
provide a separate opinion on these matters.
Procedures performed to agree to the preliminary announcement of annual results
In order to agree to the publication of the preliminary announcement of annual
results of Chesnara plc we carried out the following procedures:
(a) checked that the figures in the preliminary announcement covering the
full year have been accurately extracted from the audited or draft financial
statements and reflect the presentation to be adopted in the audited financial
statements;
(b) considered whether the information (including the management commentary)
is consistent with other expected contents of the annual report;
(c) considered whether the financial information in the preliminary
announcement is misstated;
(d) considered whether the preliminary announcement includes a statement by
directors as required by section 435 of CA 2006 and whether the preliminary
announcement includes the minimum information required by UKLA Listing Rule
9.7A.1;
(e) where the preliminary announcement includes alternative performance
measures ("APMs"), considered whether appropriate prominence is given to
statutory financial information and whether:
· the use, relevance and reliability of APMs has been explained;
· the APMs used have been clearly defined, and have been given
meaningful labels reflecting their content and basis of calculation;
· the APMs have been reconciled to the most directly reconcilable
line item, subtotal or total presented in the financial statements of the
corresponding period; and
· comparatives have been included, and where the basis of
calculation has changed over time this is explained.
(f) read the management commentary, any other narrative disclosures and
any final interim period figures and considered whether they are fair,
balanced and understandable.
Use of our report
Our liability for this report, and for our full audit report on the financial
statements is to the company's members as a body, in accordance with Chapter 3
of Part 16 of the Companies Act 2006. Our audit work has been undertaken so
that we might state to the company's members those matters we are required to
state to them in an auditor's report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company's members as a body, for our audit
work, for our audit report or this report, or for the opinions we have formed.
Matthew Bainbridge (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Leeds, United Kingdom
26 March 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December
2024 2023 (restated)
£m £m
Insurance revenue 261.9 228.0
Insurance service expense (244.1) (224.8)
Net expenses from reinsurance contracts held (9.2) (8.4)
Insurance service result 8.6 (5.2)
Net investment return 1,286.1 1,023.5
Net finance (expenses)/income from insurance contracts issued (334.8) (314.9)
Net finance income / (expenses) from reinsurance contracts held 2.6 6.7
Net change in investment contract liabilities (740.4) (529.6)
Change in liabilities relating to policyholders' funds held by the group (160.8) (114.0)
Net investment result 52.7 71.7
Fee, commission and other operating income 104.2 89.4
Total revenue net of investment result 165.5 155.9
Other operating expenses (133.6) (149.9)
Total income less expenses 31.9 6.0
Financing costs (11.1) (11.0)
Profit arising on business combinations and portfolio acquisitions - 6.7
Profit / (loss) before income taxes 20.8 1.7
Income tax credit (16.9) 16.9
Profit / (loss) for the period 3.9 18.6
Items that may be reclassified subsequently to profit and loss:
Foreign exchange translation differences arising on the revaluation of foreign (15.3) (7.8)
operations
Revaluation of land and building 0.4 0.1
Items that will not be reclassified to profit and loss:
Revaluation of pension obligations after tax - (0.7)
Other comprehensive (loss) / income for the period, net of tax (14.9) (8.4)
Total comprehensive income / (loss) for the period (11.0) 10.3
Basic earnings per share (based on profit or loss for the period) 2.56p 12.42p
Diluted earnings per share (based on profit or loss for the period) 2.52p 12.29p
CONSOLIDATED BALANCE SHEET
As at 31 December 2023 (restated)
As at 31 December 2024
£m £m
Assets
Intangible assets 87.2 96.4
Property and equipment 7.8 8.4
Investment properties 91.7 88.1
Deferred tax assets 38.9 54.6
Insurance contract assets 1.8 3.9
Reinsurance contract assets 169.9 185.7
Amounts deposited with reinsurers 34.3 32.5
Financial investments 12,116.7 11,456.1
Derivative financial instruments 0.1 0.3
Other assets 68.7 57.7
Cash and cash equivalents 138.0 146.0
Total assets 12,755.1 12,129.7
Liabilities
Insurance contract liabilities 4,099.1 4,203.0
Reinsurance contract liabilities 16.6 17.1
Other provisions 20.3 23.2
Investment contracts at fair value through income 6,116.7 5,872.3
Liabilities relating to policyholders' funds held by the group 1,825.5 1,281.8
Lease contract liabilities 0.6 1.2
Borrowings 204.8 207.9
Derivative financial instruments 0.6 4.4
Deferred tax liabilities 24.7 24.3
Deferred income 1.3 2.8
Other current liabilities 129.7 131.7
Bank overdrafts 0.8 0.2
Total liabilities 12,440.7 11,769.9
Net assets 314.4 359.8
Shareholders' equity
Share capital 7.5 7.5
Merger reserve 36.3 36.3
Share premium 142.5 142.5
Other reserves (8.4) 6.5
Retained earnings 136.5 167.0
Total shareholders' equity 314.4 359.8
Approved by the Board of Directors and authorised for issue on 26 March 2025
and signed on its behalf by:
Luke Savage Steve Murray
Chairman Chief Executive Officer
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 December
2024 2023
(restated)
£m £m
Profit / (loss) for the period 3.9 18.6
Adjustments for:
Depreciation of property and equipment 0.9 0.8
Depreciation on right of use assets 0.8 0.8
Amortisation of intangible assets 16.1 17.1
Impairment of intangible assets - 21.0
Share based payment 2.0 0.7
Tax expense / (credit) 16.9 (16.9)
Interest receivable (18.5) (5.6)
Dividends receivable (34.9) (2.3)
Interest expense 10.5 10.3
Fair value (gains) / losses on financial assets and investment properties (1,286.1) (1,023.5)
Profit on business combinations and portfolio acquisitions - (6.7)
Increase in intangible assets related to investment contracts (11.3) (10.2)
Adjustment total (1,303.6) (1,014.5)
Interest received 18.1 7.5
Dividends received 35.2 19.6
Changes in operating assets and liabilities:
Decrease / (increase) in financial assets and investment properties 151.3 327.6
(Increase) / decrease in net reinsurance contract assets 14.8 7.8
Decrease / (increase) in amounts deposited with reinsurers (1.8) 0.3
(Increase) / decrease in other assets 16.2 (19.5)
Increase / (decrease) in net insurance contract liabilities 35.7 93.7
Increase / (decrease) in investment contract liabilities 1,121.0 526.4
Increase / (decrease) in provisions (2.2) 2.3
Increase / (decrease) in other current liabilities (12.9) 5.8
Cash utilised from operations 75.7 (24.4)
Income tax paid (37.1) (10.5)
Net cash generated from operating activities 38.6 (34.9)
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired - 30.3
Capital contribution received from subsidiary 5.8 -
Net proceeds / (purchases) of property and equipment (0.8) (0.8)
Net cash generated by investing activities 5.0 29.5
Cash flows from financing activities
Net proceeds from the issue of share capital - 0.2
Repayment of borrowings (2.6) (3.9)
Repayment of lease liabilities (0.3) (0.6)
Dividends paid (36.5) (35.4)
Interest paid (10.3) (10.1)
Net cash (utilised) / generated by from financing activities (49.7) (49.8)
Net (decrease) / increase in cash and cash equivalents (6.1) (55.2)
Net cash and cash equivalents at beginning of period 145.9 204.6
Effect of exchange rate changes on net cash and cash equivalents (2.6) (3.6)
Net cash and cash equivalents at end of the period 137.2 145.8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2024
Share capital Share premium Merger reserve Other reserves Retained earnings Total
£m £m £m £m £m £m
Equity shareholders' funds at 1 January 2024 7.5 142.5 36.3 6.5 167.0 359.8
Profit for the year - - - - 3.9 3.9
Foreign exchange translation differences - - - (15.3) - (15.3)
Other items of comprehensive income - - - 0.4 - 0.4
Total comprehensive income - - - (14.9) 3.9 (11.0)
Dividends paid - - - - (36.5) (36.5)
Share based payment - - - - 2.1 2.1
Equity shareholders' funds at 31 December 2024 7.5 142.5 36.3 (8.4) 136.5 314.4
Year ended 31 December 2023 - restated
Share capital Share premium Merger reserve Other reserves Retained earnings Total
£m £m £m £m £m £m
Equity shareholders' funds at 1 January 2023 7.5 142.3 36.3 14.9 183.1 384.1
Profit for the year - - - - 18.6 18.6
Foreign exchange translation differences - - - (7.8) - (7.8)
Other items of comprehensive income - - - (0.6) - (0.6)
Total comprehensive income - - - (8.4) 18.6 10.2
Dividends paid - - - - (35.4) (35.4)
Issue of share premium - 0.2 - - - 0.2
Share based payment - - - - 0.7 0.7
Equity shareholders' funds at 31 December 2023 7.5 142.5 36.3 6.5 167.0 359.8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 Basis of preparation
The consolidated and parent company financial statements have been prepared on
a going concern basis. The directors believe that they have a reasonable
expectation that the group has adequate resources to continue in operational
existence for a minimum of twelve months from the date of signing. In making
this assessment, the directors have taken into consideration the points as set
out in the Financial Management section of the Annual Report and Accounts
under the heading 'Maintain the group as a going concern'.
The financial statements are presented in pounds sterling, rounded to the
nearest one hundred thousand, and are prepared on the historical cost basis
except for insurance and reinsurance contracts which are stated at their
fulfilment value in accordance with IFRS 17 and the following assets and
liabilities which are stated at their fair value: derivative financial
instruments; financial instruments at fair value through profit or loss;
investment property; and investment contract liabilities at fair value through
profit or loss.
Assets and liabilities are presented in order of increasing liquidity in the
balance sheet. In addition, amounts expected to be recovered or settled
within a year are classified as current in the notes to the accounts. If they
are expected to be recovered or settled in more than one year, they are
classified as non-current in the notes to the accounts. Assets and liabilities
are presented on a current and non-current basis in the Company Balance Sheet.
The preparation of financial statements in conformity with IFRSs requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Judgements made by management in the process of applying the group's
accounting policies that have a significant effect on the financial statements
and estimates with a significant risk of material adjustment in the next year
are set out in section 2 below.
The group prepares interim financial statements at half-year and as permitted
by IFRS 17 has elected to apply the 'year-to-date' method and restate
estimates in respect of insurance contracts made in the previous interim
financial statements, in these year-end financial statements. This accounting
policy election applies to all groups of insurance and reinsurance contracts.
The accounting policies are materially unchanged from those set out in the
2023 Annual Report and Accounts and have been applied consistently to all
years presented in these consolidated financial statements.
The consolidated financial statements have been prepared in accordance with
United Kingdom adopted international accounting standards in conformity with
the requirements of the Companies Act 2006. Both the parent company financial
statements and the group financial statements have been prepared and approved
by the directors in accordance with United Kingdom adopted international
accounting standards.
Restatement of prior year numbers
A prior year restatement has been applied in respect of the accounting
treatment of the Canada Life portfolio in 2023.
In the previously reported financial statements for December 2023, a long
contract boundary was applied in valuing the future cash flows beyond the
expected termination of the reinsurance contract. On further assessment, as
there is no executable right under the reinsurance agreement itself to the
underlying policies, then under IFRS 17 requirements a short contract boundary
should have been applied.
This accounting change means that the resulting CSM reflects only the profit
to be realised in the reinsurance contract timeframe. Following the legal
transfer of the underlying policies, the CSM is recalculated to reflect the
profit to be earned on the full remaining duration of the policies.
Balance sheet:
Restated
As reported
£m £m
Present value of future cash flows 15.7 5.0
Risk adjustment (0.9) -
CSM (11.2) (1.5)
Assets for incurred claims 0.4 0.4
Insurance contract assets total 4.0 3.9
The total net assets reported at 31 December 2023 of £359.9m have therefore
been restated to £359.8m from £359.9m as previously reported.
Income statement:
Restated
As reported
£m £m
Insurance revenue 228.0 228.0
Insurance service expense (224.7) (224.8)
The total comprehensive income reported for 2023 of £10.3m has therefore been
restated to £10.2m.
Basic earnings per share has been restated from 12.41p to 12.36p.
Diluted earnings per share has been restated from 12.29p to 12.24p.
The Part VII business transfer for the transaction received court approval on
the 3 February 2025.
Standards and amendments issued but not yet effective
At the date of authorisation of these financial statements the following
standards and interpretations, which are applicable to the group, and which
have not been applied in these financial statements, were in issue but not yet
effective:
Title Effective date
IFRS 9 / IFRS 7 Amendments to the classification and measurement of financial 1 January 2026
instruments
IFRS 18 Presentation and disclosure financial statements 1 January 2027
The directors do not expect that the adoption of the IFRS 9 / IFRS 7
amendments have a material impact on the financial statements of the group in
future periods. The directors expect that the adoption of IFRS 18 will have a
material impact on the presentation of the primary statements in future
periods.
BEPS 2.0
The Organisation for Economic Cooperation and Development (OECD) has
introduced international tax reform measures under the Two-Pillar Solution,
including the Global Anti-Base Erosion (GloBE) rules, which establish a 15%
global minimum tax for multinational groups with a consolidated turnover of at
least EUR 750m in at least two of the past four years.
The Group operates in the United Kingdom, Sweden and the Netherlands, all of
which have enacted legislation implementing BEPS Pillar II effective from 1
January 2024. Based on the latest available guidance and the Group's financial
position, Chesnara remains below the EUR 750m threshold and is not in scope of
the GloBE rules for 2024.
The Group continues to monitor interpretations of BEPS legislation in each
jurisdiction to assess potential for future exposure, particularly the
treatment of policyholder investment returns in the UK and the application of
OECD guidance in Sweden in connection with insurance investment funds,
together with the classification of taxes paid therefrom.
Although Chesnara remains below the threshold, the group continues to assess
potential future exposure, including the impact of business growth and future
acquisitions; effective tax rates across jurisdictions; and the interaction of
local tax regimes with GloBE rules.
Discussions with relevant tax authorities and industry bodies are ongoing to
ensure continued compliance with evolving published and draft guidance.
Based on our assessment that Chesnara remains below the EUR 750m threshold,
and is not in scope for BEPS in 2024, no adjustments to current or deferred
tax have been made in respect of BEPS Pillar II, and no additional disclosures
are required necessary under IAS 12.
2 Significant accounting judgements and estimates
The critical accounting judgements and key sources of estimation and
uncertainty remain largely unchanged from those described in Note A6 of the
2023 Annual Report and Accounts. The potential impact on the group has been
considered in the preparation of these financial statements, including
management's evaluation of critical accounting judgements and estimates.
Further information on discount rates applied in these financial statements is
provided below.
Cash flows are discounted using currency-specific, risk-free yield curves
adjusted for the characteristics of the cash flows and the liquidity of the
insurance contracts. The group applies a 'bottom-up' approach to determining
discount rates and follows the methodology used by the PRA and EIOPA to
determine risk-free yield curves and ultimate forward rates for regulatory
solvency calculations. To reflect the liquidity or otherwise of the insurance
contracts, the risk-free yield curves are adjusted by an illiquidity premium,
which is aligned to the SII volatility adjustment.
For certain Dutch 'savings mortgage' products, there is a direct connection to
the policyholder's mortgage loan and the premiums to repay the loan in that
the crediting rate is set such that the account value will be equal to the
balance on the loan at maturity. For this product, the cash flows are
discounted using the same curve used to value the corresponding mortgage
assets which itself is derived from mortgage rates available in the market.
The cash flows are discounted using a discount rate that adjusts risk-free
yields for portfolio specific characteristics, with differences in liquidity
characteristics between the financial assets used to derive the risk-free
yield and the relevant liability cash flows (known as an illiquidity premium).
Inflation rates mainly relate to expense inflation. The assumptions in respect
of expense inflation reflect the group's best estimate view incorporating
market consistent data such as earnings indices and central bank inflation
targets.
The yield curves that were used to discount the estimates of future cash flows
that were modelled deterministically are shown in the table below:
Yield Curve Broad Product Category Currency 2024 2023
1 5 10 20 30 1 5 10 20 30
year years years years years year years Years years years
RFR Unit-linked/index-linked/with-profits - VFA EUR 2.24% 2.14% 2.27% 2.26% 2.39% 3.36% 2.32% 2.39% 2.41% 2.53%
Unit-linked/index-linked/with-profits - GMM (with high liquidity) GBP 4.46% 4.04% 4.07% 4.30% 4.23% 4.74% 3.36% 3.28% 3.43% 3.36%
Short-term protection SEK 2.25% 2.41% 2.63% 2.93% 3.05% 3.03% 2.26% 2.25% 2.76% 2.99%
RFR + VA Immediate annuities EUR 2.47% 2.37% 2.50% 2.49% 2.58% 3.56% 2.52% 2.59% 2.61% 2.70%
Term assurance & other non-linked GBP 4.70% 4.28% 4.31% 4.54% 4.47% 5.05% 3.67% 3.59% 3.74% 3.67%
Unit-linked/index-linked/with-profits - GMM (with medium liquidity)
Market Mortgage Rates Waard Savings Mortgage EUR 3.36% 3.32% 3.43% 3.39% 3.51% 4.77% 3.73% 3.80% 3.82% 3.94%
3 Earnings per share
Earnings per share are based on the following:
Year ended 31 December
2024 2023
(Loss)/profit for the year attributable to shareholders (£m) 3.9 18.6
Weighted average number of ordinary shares 150,938,024 150,528,597
Basic earnings per share 2.56p 12.36p
Diluted earnings per share 2.52p 12.24p
The weighted average number of ordinary shares in respect of the year ended 31
December 2024 is based upon 150,991,019 shares. No shares were held in
treasury.
There were 2,330,118 share options outstanding at 31 December 2024 (2023:
1,537,582). Accordingly, there is dilution of the average number of ordinary
shares in issue in respect of 2024 and 2023
4 Retained earnings
Year ended 31 December
2024 2023
£m £m
Retained earnings attributable to equity holders of the parent company
comprise:
Balance at 1 January 167.3 175.2
Profit / (loss) for the period 24.6 26.8
Share based payment 2.1 0.7
Dividends:
Final approved and paid for 2022 - (22.8)
Interim approved and paid for 2023 - (12.6)
Final approved and paid for 2023 (23.5) -
Interim approved and paid for 2024 (13.0) -
Balance at 31 December 157.5 167.3
The interim dividend in respect of 2023, approved and paid in 2023 was paid at
the rate of 8.36p per share. The final dividend in respect of 2023, approved
and paid in 2024, was paid at the rate of 15.61p per share so that the total
dividend paid to the equity shareholders of the parent company in respect of
the year ended 31 December 2023 was made at the rate of 23.97p per share.
The interim dividend in respect of 2024, approved and paid in 2024, was paid
at the rate of 8.61p per share to equity shareholders of the parent company
registered at the close of business on 20 September 2024, the dividend record
date.
A final dividend of 16.08p per share in respect of the year ended 31 December
2024 payable on 20 May 2025 to equity shareholders of the parent company
registered at the close of business on 4 April 2025, the dividend record date,
was approved by the directors after the balance sheet date. The resulting
total final dividend of £23.5m has not been provided for in these financial
statements and there are no income tax consequences.
The following summarises dividends per share in respect of the year ended 31
December 2023 and 31 December 2024:
Year ended 31 December
2024 2023
Pence Pence
Interim - approved and paid 8.61 8.36
Final - proposed/paid 16.08 15.61
Total 24.69 23.97
5 Operating segments
The group considers that it has no product or distribution-based business
segments. It reports segmental information on the same basis as reported
internally to the chief operating decision maker, which is the board of
directors of Chesnara plc.
The segments of the group as at 31 December 2024 comprise:
UK: This segment comprises the UK's life insurance and pensions business
within Countrywide Assured plc (CA), the group's principal UK operating
subsidiary and Sanlam Life and Pensions (UK) Limited, acquired by the group on
28 April 2022 and subsequently renamed to CASLP Limited (CASLP). The majority
of the assets and liabilities of CASLP were transferred to CA in 2023 under a
Part VII business transfer. CASLP was dissolved on 14 January 2025.
During the year, the group reached an agreement to acquire the unit-linked
bond and pension business of Canada Life Limited with the transaction
initially in the form of a reinsurance agreement accepted by CA.
Movestic: This segment comprises the group's Swedish life and pensions
business, Movestic Livförsäkring AB ('Movestic') and its subsidiary company
Movestic Fonder AB (investment fund management company). Movestic is open to
new business and primarily comprises unit-linked pension business and also
provides some life and health product offerings.
Waard Group: This segment represents the group's closed Dutch life insurance
business and comprises a number of acquisitions of closed insurance books of
business since the acquisition of the original Waard entities into the group
in 2015. The Waard group comprises a mixture of long-term savings and
protection business and also contains some non-life business.
Scildon: This segment represents the Group's open Dutch life insurance
business. Scildon's policy base is predominantly made up of individual
protection and savings contracts. It is open to new business and sells
protection, individual savings and group pension contracts via a broker-led
distribution model.
Other group activities: The functions performed by the parent company,
Chesnara plc, are defined under the operating segment analysis as Other group
activities. Also included therein are consolidation and elimination
adjustments.
The accounting policies of the segments are the same as those for the group as
a whole. Any transactions between the business segments are on normal
commercial terms in normal market conditions. The group evaluates performance
of operating segments on the basis of the profit before tax attributable to
shareholders of the reporting segments and the group as a whole. There were no
changes to the measurement basis for segment profit during the year ended 31
December 2024.
(i) Segmental income statement for the year ended 31 December 2024
Scildon Other Group Activities
Movestic Waard Group
Total
(UK) (Sweden) (Netherlands) (Netherlands)
£m £m £m £m £m £m
Insurance revenue 71.3 10.2 29.8 150.6 - 261.9
Insurance service expense (64.9) (2.6) (31.4) (145.2) - (244.1)
Net expenses from reinsurance contracts held (0.9) (1.8) (2.0) (4.5) - (9.2)
Segmental insurance service result 5.5 5.8 (3.6) 0.9 - 8.6
Net investment return 380.7 666.6 28.1 201.4 9.3 1,286.1
Net finance (expenses)/income from insurance contracts issued (98.4) (23.6) (23.2) (189.6) - (334.8)
Net finance expenses from reinsurance contracts held 3.1 0.3 - (0.8) - 2.6
Net change in investment contract liabilities (260.0) (479.6) (0.8) - - (740.4)
Change in liabilities relating to policyholders' funds held by the group - (160.8) - - - (160.8)
Segmental investment result 25.4 2.9 4.1 11.0 9.3 52.7
Fee, commission and other operating income 37.4 65.5 0.3 - 1.0 104.2
Segmental revenue, net of investment result 68.3 74.2 0.8 11.9 10.3 165.5
Other operating expenses (39.7) (54.9) (3.3) (4.3) (22.0) (124.2)
Financing costs (0.2) (0.4) - - (10.5) (11.1)
Profit / (loss) before tax and consolidation adjustments 28.4 18.9 (2.5) 7.6 (22.2) 30.2
Other operating expenses:
Amortisation and impairment of intangible assets (0.1) (9.3) - - - (9.4)
Segmental income less expenses 28.3 9.6 (2.5) 7.6 (22.2) 20.8
Post completion gain on portfolio acquisition - - - - - -
(Loss)/profit before tax 28.3 9.6 (2.5) 7.6 (22.2) 20.8
Income tax credit (17.0) (0.5) 0.8 (2.0) 1.8 (16.9)
(Loss)/profit after tax 11.3 9.1 (1.7) 5.6 (20.4) 3.9
(ii) Segmental balance sheet as at 31 December 2024
Scildon Other Group
Movestic Waard Group Activities Total
(UK) (Sweden) (Netherlands) (Netherlands)
£m £m £m £m £m £m
Total assets 4,473.8 5,269.7 851.9 2,035.7 124.0 12,755.1
Total liabilities (4,347.2) (5,177.8) (789.2) (1,920.7) (205.8) (12,440.7)
Net assets 126.6 91.9 62.7 115.0 (81.8) 314.4
Investment in associates - - - - - -
Additions to non-current assets - - - - - -
(iii) Segmental income statement for the year ended 31 December 2023
Scildon Other Group Activities
Movestic Waard Group
Total
(UK) (Sweden) (Netherlands) (Netherlands)
£m £m £m £m £m £m
Insurance revenue 65.8 11.1 36.1 115.0 - 228.0
Insurance service expense (65.7) (7.4) (37.8) (113.9) - (224.8)
Net expenses from reinsurance contracts held (5.5) (0.6) 0.4 (2.7) - (8.4)
Segmental insurance service result (5.4) 3.1 (1.3) (1.6) - (5.2)
Net investment return 339.3 432.5 63.2 181.2 7.3 1,023.5
Net finance (expenses)/income from insurance contracts issued (86.4) (16.0) (49.3) (163.2) - (314.9)
Net finance expenses from reinsurance contracts held 9.3 0.7 0.1 (3.4) - 6.7
Net change in investment contract liabilities (226.4) (299.6) (3.6) - - (529.6)
Change in liabilities relating to policyholders' funds held by the group - (114.0) - - - (114.0)
Segmental investment result 35.8 3.6 10.4 14.6 7.3 71.7
Fee, commission and other operating income 39.8 50.3 2.9 - (3.6) 89.4
Segmental revenue, net of investment result 70.2 57.0 12.0 13.0 3.7 155.9
Other operating expenses (39.9) (40.0) (3.5) (5.5) (23.1) (112.0)
Financing costs (0.2) (0.5) - - (10.3) (11.0)
Profit / (loss) before tax and consolidation adjustments 30.1 16.5 8.5 7.5 (29.7) 32.9
Other operating expenses:
Amortisation and impairment of intangible assets (26.7) (11.2) - - - (37.9)
Segmental income less expenses 3.4 5.3 8.5 7.5 (29.7) (5.0)
Post completion gain on portfolio acquisition - - 6.7 - - 6.7
(Loss)/profit before tax 3.4 5.3 15.2 7.5 (29.7) 1.7
Income tax credit 20.5 - (1.6) (1.9) (0.1) 16.9
(Loss)/profit after tax 23.9 5.3 13.6 5.6 (29.8) 18.6
(iv) Segmental balance sheet for the year ended 31 December 2023
Other Group Activities
Movestic Waard Group Scildon Total
(UK) (Sweden) (Netherlands) (Netherlands)
£m £m £m £m £m £m
Total assets 4,527.1 4,519.4 946.8 2,009.1 127.3 12,129.8
Total liabilities (4,376.6) (4,422.2) (867.0) (1,894.6) (209.5) (11,769.9)
Net assets 150.5 97.2 79.8 114.5 (82.2) 359.9
Investment in associates - - - - - -
Additions to non-current assets - - - - - -
6 Borrowings
Group
31 December
2024 2023
£m
£m
Tier 2 Debt 200.8 200.6
Amount due in relation to financial reinsurance 2.4 5.3
Term finance 1.6 2.0
Total 204.8 207.9
Current 1.4 2.8
Non-current 203.4 205.1
Total 204.8 207.9
The fair value of amounts due in relation to Tier 2 debt at 31 December 2024
was £166.1m (31 December 2023: £148.0m).
The fair value of amounts due in relation to financial reinsurance at 31
December 2024 was £2.3m (31 December 2023: £5.1m).
Term finance comprises capital amounts outstanding on mortgage bonds taken out
over properties held in the Unit-linked policyholder funds in the UK. The
mortgage over each such property is negotiated separately, varies in term from
5 to 20 years, and bears interest at fixed or floating rates that are agreed
at the time of inception of the mortgage. The fair value of the term finance
is not materially different to the carrying value shown above.
7 Financial investments
(a) Financial investments by classification
The carrying amounts of the financial investments and other financial assets
and liabilities held by the group at the balance sheet date are as follows:
31 December 2024 Total
Amortised Cost FVTPL - Designated FVTPL - Mandatory
£m £m £m £m
Financial investments:
Equity securities - - 191.5 191.5
Holdings in collective investment schemes - - 8,661.6 8,661.6
Debt securities - government bonds - 446.1 - 446.1
Debt securities - other - 634.7 10.1 644.8
Policyholder funds help by the group - 1,825.8 - 1,825.8
Mortgage loan portfolio - 346.9 - 346.9
Total - 3,253.5 8,863.2 12,116.7
Derivatives and other financial assets:
Amounts deposited with reinsurers - 34.3 - 34.3
Derivative financial instruments - - 0.1 0.1
Other assets 68.7 - - 68.7
Cash and cash equivalents - 138.0 - 138.0
Total financial investments and financial assets 68.7 3,425.8 8,863.3 12,357.8
Financial liabilities
Investment contracts at fair value through profit or loss - 6,116.7 - 6,116.7
Liabilities relating to policyholder funds help by the group - 1,825.5 - 1,825.5
Derivative financial instruments - - 0.6 0.6
Borrowings 204.8 - - 204.8
Other current liabilities 129.7 - - 129.7
Total financial liabilities 334.5 7,942.2 0.6 8,277.3
31 December 2023 Total
Amortised Cost FVTPL - Designated FVTPL - Mandatory
£m £m £m £m
Financial investments:
Equity securities - - 194.2 194.2
Holdings in collective investment schemes - - 8,376.2 8,376.2
Debt securities - government bonds - 716.5 - 716.5
Debt securities - other - 520.6 - 520.6
Policyholder funds help by the group - 1,281.8 - 1,281.8
Mortgage loan portfolio - 366.8 - 366.8
Total - 2,885.7 8,570.4 11,456.1
Derivatives and other financial assets:
Amounts deposited with reinsurers - 32.5 - 32.5
Derivative financial instruments - - 0.3 0.3
Other assets 57.7 - - 57.7
Cash and cash equivalents - 146.0 - 146.0
Total financial investments and financial assets 57.7 3,064.2 8,570.7 11,692.6
Financial liabilities
Investment contracts at fair value through profit or loss - 5,872.3 - 5,872.3
Liabilities relating to policyholder funds help by the group - 1,281.8 - 1,281.8
Derivative financial instruments - - 4.4 4.4
Borrowings 207.9 - - 207.9
Other current liabilities 131.7 - - 131.7
Total financial liabilities 339.6 7,154.1 4.4 7,498.1
The directors consider that the carrying value amounts of financial assets and
financial liabilities recorded at amortised cost in the financial statements
are approximately equal to their fair values.
(b) Financial investment fair values
Fair value is the amount for which an asset or liability could be exchanged
between willing parties in an arm's length transaction. The tables below
show the determination of fair value according to a three-level valuation
hierarchy. Fair values are generally determined at prices quoted in active
markets (Level 1). However, where such information is not available, the group
applies valuation techniques to measure such instruments. These valuation
techniques make use of market-observable data for all significant inputs where
possible (Level 2), but in some cases it may be necessary to estimate other
than market-
observable data within a valuation model for significant inputs (Level 3).
Fair value measurement at 31 December 2024
Level 1 Level 2 Level 3 Total
£m £m £m £m
Investment properties - - 91.7 91.7
Financial assets
Equities - Listed 191.5 - - 191.5
Holdings in collective investment schemes 8,454.1 38.9 168.6 8,661.6
Debt securities - government bonds 446.1 - - 446.1
Debt securities - other debt securities 644.8 - - 644.8
Policyholders' funds held by the group 1,781.6 - 44.2 1,825.8
Mortgage loan portfolio - 346.9 - 346.9
Amounts deposited with reinsurers - 34.3 - 34.3
Derivative financial instruments - 0.1 - 0.1
Total 11,518.1 420.2 304.5 12,242.8
Financial liabilities
Investment contracts at fair value through profit or loss - 6,116.7 - 6,116.7
Liabilities related to policyholders' funds held by the group - 1,825.5 - 1,825.5
Derivative financial instruments - 0.6 - 0.6
Total - 7,942.8 - 7,942.8
Fair value measurement at 31 December 2023
Level 1 Level 2 Level 3 Total
£m £m £m £m
Investment properties - - 88.1 88.1
Financial assets -
Equities - Listed 194.2 - - 194.2
Holdings in collective investment schemes 8,189.2 44.5 142.5 8,376.2
Debt securities - government bonds 716.5 - - 716.5
Debt securities - other debt securities 520.6 - - 520.6
Policyholders' funds held by the group 1,239.4 - 42.4 1,281.8
Mortgage loan portfolio - 366.8 - 366.8
Amounts deposited with reinsurers - 32.5 - 32.5
Derivative financial instruments - 0.3 - 0.3
Total 10,859.9 444.1 273.0 11,577.0
Financial liabilities
Investment contracts at fair value through profit or loss - 5,872.3 - 5,872.3
Liabilities related to policyholders' funds held by the group 1,281.8 - - 1,281.8
Derivative financial instruments - 4.4 - 4.4
Total 1,281.8 5,876.7 - 7,158.5
Investment properties
The investment properties are valued by external Chartered Surveyors using
industry standard techniques based on guidance from the Royal Institute of
Chartered Surveyors. The valuation methodology includes an assessment of
general market conditions and sector level transactions and takes account of
expectations of occupancy rates, rental income and growth. Properties undergo
individual scrutiny using cash flow analysis to factor in the timing of rental
reviews, capital expenditure, lease incentives, dilapidation and operating
expenses; these reviews utilise both observable and unobservable inputs.
Holdings in collective investment schemes
The holdings classified as Level 3 £168.6m (Dec 2023: £142.5m) also relate
to Scildon, and represent investments held in a mortgage fund. These are
classified as Level 3 as the fair value is derived from valuation techniques
that include inputs that are not based on observable market data.
Policyholder funds held by group
There is also a small holding of assets classified as Level 3 £44.2m (Dec
2023: £42.4m) from our Movestic operation which are unlisted. The valuation
of the vast majority of these assets is based on unobservable prices from
trading on the over-the-counter market.
Debt securities
The debt securities classified as Level 2 at 2023 and 2024 are traded in
active markets with less depth or wider bid-ask spreads. This does not meet
the classification as Level 1 inputs. The fair values of debt securities not
traded in active markets are determined using broker quotes or valuation
techniques with observable market inputs. Financial instruments valued using
broker quotes are classified at Level 2, only where there is a sufficient
range of available quotes.
These assets were valued using counterparty or broker quotes and were
periodically validated against third-party models.
Derivative financial instruments
The derivatives financial instruments include a foreign currency hedge related
to the group. This was deemed to manage the exposure to foreign exchange
movements between sterling and both the euro and Swedish krona.
An uncapped collar which consists of two hedges:
· one hedge to protect against the downside (sterling
strengthening) (starting at strike A), and one to remove the upside
(weakening) (strike B); with the strikes of these coordinated to result in no
upfront premium.
· the 2nd hedge (strike B) creates an uncapped liquidity
requirement when it bites.
The capped collar comes with an additional leg which creates value and
liquidity when exchange rates move beyond a certain point (strike C).
Within derivative financial instruments is a financial reinsurance embedded
derivative related to our Movestic operation. The group has entered into a
reinsurance contract with a third party that has a section that is deemed to
transfer significant insurance risk and a section that is deemed not to
transfer significant insurance risk. The element of the contract that does not
transfer significant insurance risk has two components and has been accounted
for as a financial liability at amortised cost and an embedded derivative
asset at fair value.
The embedded derivative represents an option to repay the amounts due under
the contract early at a discount to the amortised cost, with its fair value
being determined by reference to market interest rate at the balance sheet
date. It is, accordingly, determined at Level 2 in the three-level fair value
determination hierarchy set out above.
Investment contract liabilities
The investment contract liabilities in Level 2 of the valuation hierarchy
represent the fair value of linked and non-linked liabilities valued using
established actuarial techniques utilising market observable data for all
significant inputs, such as investment yields.
Significant unobservable inputs in level 3 instruments valuations
The level 3 instruments held in the group are in relation to investments held
in an Aegon managed Dutch Mortgage Fund that contains mortgage-backed assets
in the Netherlands. The fair value of the mortgage fund is determined by the
fund manager on a monthly basis using an in-house valuation model. The
valuation model relies on a number of unobservable inputs, the most
significant being the assumed conditional prepayment rate, the discount rate
and the impairment rate, all of which are applied to the anticipated modelled
cash flows to derive the fair value of the underlying asset.
The assumed conditional prepayment rate (CPR) is used to calculate the
projected prepayment cash flow per individual loan and reflects the
anticipated early repayment of mortgage balances. The CPR is based on 4
variables:
· Contract age - The CPR for newly originated mortgage loans will
initially be low, after which it increases for a couple of years to its
maximum expected value, and subsequently diminishes over time.
· Interest rate differential - The difference between the
contractual rates and current interest rates are positively correlated with
prepayments. When contractual rates are higher than interest rates of newly
originated mortgages, we observe more prepayments and the vice versa.
· Previous partial repayments - Borrowers who made a partial
prepayment in the past, are more likely to do so in the future.
· Burnout effect - Borrowers who have not made a prepayment in the
past, while their option to prepay was in the money, are less likely to prepay
in the future.
The projected prepayment cash flows per loan are then combined to derive an
average expected lifetime CPR, which is then applied to the outstanding
balance of the fund. The conditional prepayment rate used in the valuation of
the fund as at 31 December 2024 was 3.7% (31 December 2023: 3.2%).
The expected projected cash flows for each mortgage within the loan portfolio
are discounted using rates that are derived using a matrix involving the
following three parameters:
• The remaining fixed rate term of the mortgage
• Indexed loan to value (LTV) of each mortgage
• Current (Aegon) mortgage rates
At 31 December 2024 this resulted in discounting the cash flows in each
mortgage using a range from 4.06% to 4.26% (31 December 2023: 4.67% to 4.68%).
An impairment percentage is applied to those loan cashflows which are in
arrears, to reflect the chance of the loan actually going into default. For
those loans which are one, two or three months in arrears, an impairment
percentage is applied to reflect the chance of default. This percentage ranges
from 0.60% for one month in arrears to 13.70% for loans which are 3 months in
arrears (31 December 2023: 0.60% for one month in arrears to 13.70% for loans
which are 3 months in arrears).
Loans which are in default receive a 100% reduction in value.
The value of the fund has the potential to decrease or increase over time.
This can be as a consequence of a periodic reassessment of the conditional
prepayment rate and/or the discount rate used in the valuation model.
A 1 per cent increase in the conditional prepayment rate would increase the
value of the asset by £2.0m (31 December 2023: £1.9m).
A 1 per cent decrease in the conditional prepayment rate would reduce the
value of the asset by £2.2m (31 December 2023: £2.1m).
A 1 per cent increase in the discount rate would reduce the value of the asset
by £15.3m (31 December 2023: £11.4m).
A 1 per cent decrease in the discount rate would increase the value of the
asset by £17.5m (31 December 2023: £13.3m).
Reconciliation of Level 3 fair value measurements of financial instruments
31 December 2024
Investment properties Holdings in collective investment schemes Policyholder funds held by group Total
£m £m £m £m
At start of period 88.1 142.5 42.4 273.0
Additions - acquisition of subsidiary - - - -
Total gains and losses recognised in the income statement 8.1 33.5 1.9 43.5
Purchases 3.4 - 17.0 20.4
Settlements (7.9) - (13.9) (21.8)
Exchange rate adjustment - (7.4) (3.2) (10.6)
At the end of period 91.7 168.6 44.2 304.5
31 December 2023
Investment properties Holdings in collective investment schemes Policyholder funds held by group Total
£m £m £m £m
At start of period 93.3 145.4 35.1 273.8
Additions - acquisition of subsidiary - - - -
Total gains and losses recognised in the income statement (2.7) 0.5 (6.4) (8.6)
Purchases 2.3 - 20.5 22.8
Settlements (4.8) - (6.0) (10.8)
Exchange rate adjustment - (3.4) (0.8) (4.2)
At the end of period 88.1 142.5 42.4 273.0
31 December Carrying amount Fair value
2024 2023 2024 2023
£m £m £m £m
Financial liabilities:
Borrowings 200.8 200.6 166.1 148.4
Amounts due in relation to financial reinsurance 2.4 5.3 2.3 5.1
Term finance 1.6 2.0 1.6 1.9
Total 204.8 207.9 170.0 155.4
The fair value of the Tier 2 debt is calculated using quoted prices in active
markets and they are classified as Level 1 in the fair value hierarchy. The
amount due in relation to financial reinsurance is fair valued with reference
to market interest rates at the balance sheet date and is classed as level 2
in the fair value hierarchy.
There were no transfers between Levels 1, 2 and 3 during the year. The group
holds no Level 3 liabilities as at the balance sheet date.
8 Insurance and Reinsurance contracts
The following notes provide a quantitative analysis of the insurance and
reinsurance contract assets and liabilities and are disaggregated by the IFRS8
operating segments. This disaggregation has been chosen for the following
notes because it is management's view that it provides the most relevant
information for assessing the effect that contracts within the scope of IFRS
17 have on the entity's financial performance and position.
(i) Composition of the balance sheet
The following tables show the breakdown of the insurance and reinsurance
contract assets and liabilities for each of the operating segments within
Chesnara.
31 December 2024 Scildon
Movestic Waard Group
Total
(UK) (Sweden) (Netherlands) (Netherlands)
Insurance contracts £m £m £m £m £m
Insurance contract liabilities 1,308.5 174.1 720.4 1,896.1 4,099.1
Insurance contract assets (1.8) - - - (1.8)
Total insurance contract liabilities 1,306.7 174.1 720.4 1,896.1 4,097.3
Reinsurance contracts
Reinsurance contract assets 154.8 12.4 2.7 - 169.9
Reinsurance contract liabilities (2.0) - - (14.6) (16.6)
Total reinsurance contract liabilities 152.8 12.4 2.7 (14.6) 153.3
Current Non-current Total
£m £m £m
Insurance contract liabilities 730.5 3,368.6 4,099.1
Insurance contract assets (1.8) - (1.8)
Reinsurance contract assets 29.9 140.0 169.9
Reinsurance contract liabilities 0.5 (17.1) (16.6)
31 December 2023 Scildon
Movestic Waard Group
Total
(UK) (Sweden) (Netherlands) (Netherlands)
Insurance contracts £m £m £m £m £m
Insurance contract liabilities 1,383.0 171.8 785.3 1,862.9 4,203.0
Insurance contract assets (3.9) - - - (3.9)
Total insurance contract liabilities 1,379.1 171.8 785.3 1,862.9 4,199.1
Reinsurance contracts
Reinsurance contract assets 166.8 14.5 4.4 - 185.7
Reinsurance contract liabilities (2.2) - - (14.9) (17.1)
Total reinsurance contract liabilities 164.6 14.5 4.4 (14.9) 168.6
Current Non-current Total
£m £m £m
Insurance contract liabilities 1,801.1 2,401.9 4,203.0
Insurance contract assets - (3.9) (3.9)
Reinsurance contract assets 29.1 156.6 185.7
Reinsurance contract liabilities (2.1) 19.2 17.1
(ii) Fair value of underlying items
The following table shows the fair value of the underlying items of the
group's direct participating contracts for each reporting segment.
Scildon
Movestic Waard Group
Total
(UK) (Sweden) (Netherlands) (Netherlands)
£m £m £m £m £m
Fair value of underlying items as at 31 December 2024 711.0 142.4 54.9 1,322.8 2,231.1
Fair value of underlying items as at 31 December 2023 816.9 132.3 65.2 1,238.7 2,253.1
Composition of underlying items: The majority of the fair value of underlying
items across the group are held in collective investment schemes. A small
proportion is held in equities, debt securities and in cash and deposits.
(iii) Insurance contract balances - analysis by remaining coverage and
incurred claims
Liabilities for Remaining Coverage Liabilities for Incurred Claims
Excluding Loss Component Loss component For contracts not under PAA Total
PV of future cash flows Risk adjustment
£m £m £m £m
£m £m
Insurance contract liabilities as at 1 January 2024 3,958.1 89.4 113.3 37.1 1.2 4,199.1
Changes in the statement of profit and loss
Insurance revenue
Contracts measured under the fair value approach (59.0) - - - - (59.0)
Contracts measured under the fully retrospective approach (202.9) - - - - (202.9)
Insurance revenue total (261.9) - - - - (261.9)
Insurance service expenses - (24.0) 222.4 8.2 0.1 206.7
Incurred claims and other directly attributable expenses
Adjustments to liabilities for incurred claims - - - (6.0) (0.3) (6.3)
Losses and reversals of losses on onerous contracts - 40.0 - - - 40.0
Amortisation of insurance acquisition cash flows 3.7 - - - - 3.7
Insurance service expense total 3.7 16.0 222.4 2.2 (0.2) 244.1
Insurance service result (258.2) 16.0 222.4 2.2 (0.2) (17.8)
Net finance expenses from insurance contracts 333.3 0.7 - - 0.8 334.8
Effect of movements in exchange rates (128.8) (3.9) (2.2) (2.5) (0.1) (137.5)
Total amounts recognised in comprehensive income (53.7) 12.8 220.2 (0.3) 0.5 179.5
Investment components (332.8) - 332.8 - - -
Cash flows
Premiums received 291.9 - - - - 291.9
Claims and other directly attributable expenses paid - - (555.9) (8.3) - (564.2)
Insurance acquisition cash flows (6.8) - - - - (6.8)
Acquisitions 9.7 - (11.9) - - (2.2)
Total cash flows 294.8 - (567.8) (8.3) - (281.3)
Insurance contract liabilities as at 31 December 2024 3,866.4 102.2 98.5 28.5 1.7 4,097.3
Liabilities for Remaining Coverage Liabilities for Incurred Claims
Restated Excluding Loss Component Loss component For contracts not under PAA Total
PV of future cash flows Risk adjustment
£m £m £m £m
£m £m
Insurance contract liabilities as at 1 January 2023 3,582.2 83.5 116.0 38.2 1.6 3,821.6
Changes in the statement of profit and loss
Insurance revenue
Contracts measured under the fair value approach (58.2) - - - - (58.2)
Contracts measured under the fully retrospective approach (169.8) - - - - (169.8)
Insurance revenue total (228.0) - - - - (228.0)
Insurance service expenses 0.2 (50.4) 207.1 10.3 0.1 167.3
Incurred claims and other directly attributable expenses
Adjustments to liabilities for incurred claims - - - (3.4) (0.2) (3.6)
Losses and reversals of losses on onerous contracts - 57.7 - - - 57.7
Amortisation of insurance acquisition cash flows 3.4 - - - - 3.4
Insurance service expense total 3.6 7.3 207.1 6.9 (0.1) 224.8
Insurance service result (224.4) 7.4 207.1 6.9 (0.1) (3.2)
Net finance expenses from insurance contracts 312.7 0.4 - 2.0 (0.2) 315.0
Effect of movements in exchange rates (51.6) (1.9) (1.1) (1.1) (0.1) (55.8)
Total amounts recognised in comprehensive income 36.7 5.9 206.0 7.8 (0.4) 255.9
Investment components (309.8) - 309.8 - - -
Acquisitions - estimate of the present value of future cash inflows 327.6 - - - - 327.6
Cash flows
Premiums received 327.0 - - - - 327.0
Claims and other directly attributable expenses paid - - (518.5) (8.9) - (527.4)
Insurance acquisition cash flows (5.6) - - - - (5.6)
Total cash flows 321.4 - (518.5) (8.9) - (206.0)
Insurance contract liabilities as at 31 December 2023 3,958.1 89.4 113.3 37.1 1.2 4,199.1
(iv) Insurance contract balances - analysis by measurement component
Risk Adjustment CSM (new contracts and contracts measured under FRA) CSM (contracts measured under FVA) Total
Present value of future cash flows
£m £m £m £m £m
Insurance contract liabilities as at 1 January 2024 3,918.6 51.7 161.0 27.5 4,158.8
Changes that relate to current service
CSM recognised for services provided - - (18.1) (4.3) (22.4)
Change in risk adjustment for non-financial risk for risk expired - (4.9) - - (4.9)
Experience adjustments (23.0) - - - (23.0)
Revenue recognised for incurred policyholder tax expenses - - - - -
(23.0) (4.9) (18.1) (4.3) (50.3)
Changes that relate to future service (8.5) 1.7 9.5 - 2.7
Contracts initially recognised in the period
Changes in estimates that adjust the CSM (17.6) (18.7) 19.2 17.2 0.1
Changes in estimates that result in losses or reversals of losses on onerous 38.1 (1.0) - - 37.1
underlying contracts
12.0 (18.0) 28.7 17.2 39.9
Changes that relate to past service
Adjustments to liabilities for incurred claims - - - - -
- - - - -
Insurance service result (11.0) (22.9) 10.6 12.9 (10.4)
Net finance expenses from insurance contracts 326.4 2.8 4.0 0.8 334.0
Effect of movements in exchange rates (125.2) (1.5) (7.7) (0.4) (134.8)
Total amounts recognised in comprehensive income 190.2 (21.6) 6.9 13.3 188.8
Cash flows
Premiums received 282.6 - - - 282.6
Claims and other directly attributable expenses paid (555.9) - - - (555.9)
Insurance acquisition cash flows (6.8) - - - (6.8)
Acquisitions (2.2) - - - (2.2)
Total cash flows (282.3) - - - (282.3)
Insurance contract liabilities as at 31 December 2024 3,826.5 30.1 167.9 40.8 4,065.3
Restated Risk Adjustment CSM (new contracts and contracts measured under FRA) CSM (contracts measured under FVA) Total
Present value of future cash flows
£m £m £m £m £m
Insurance contract liabilities as at 1 January 2023 3,587.3 46.0 105.7 40.7 3,779.7
Changes that relate to current service
CSM recognised for services provided - - (17.5) (3.4) (20.9)
Change in risk adjustment for non-financial risk for risk expired - (6.5) - - (6.5)
Experience adjustments (29.7) - - - (29.7)
Revenue recognised for incurred policyholder tax expenses (0.1) - - - (0.1)
(29.8) (6.5) (17.5) (3.4) (57.2)
Changes that relate to future service (65.5) 9.2 59.2 - 2.9
Contracts initially recognised in the period
Changes in estimates that adjust the CSM (3.6) 0.1 14.1 (10.6) -
Changes in estimates that result in losses or reversals of losses on onerous 54.7 - - - 54.7
underlying contracts
(14.4) 9.3 73.3 (10.6) 57.6
Changes that relate to past service
Adjustments to liabilities for incurred claims - - - - -
Insurance service result (44.2) 2.8 55.8 (14.0) 0.4
Net finance expenses from insurance contracts 305.4 3.8 3.0 0.9 313.1
Effect of movements in exchange rates (50.0) (0.9) (3.5) (0.1) (54.5)
Total amounts recognised in comprehensive income 211.2 5.7 55.3 (13.2) 259.0
Acquisitions - estimate of the present value of future cash inflows 327.6 - - - 327.6
Cash flows
Premiums received 316.6 - - - 316.6
Claims and other directly attributable expenses paid (518.5) - - - (518.5)
Insurance acquisition cash flows (5.6) - - - (5.6)
Total cash flows (207.5) - - - (207.5)
Insurance contract liabilities as at 31 December 2023 3,918.6 51.7 161.0 27.5 4,158.8
(v) Reinsurance contract balances - analysis by remaining coverage and
incurred claims
Assets for Remaining Coverage Assets for Incurred Claims
Loss-Recovery component For contracts not under PAA Total
Excluding Loss-Recovery Component
Future cash flows Risk adjustment
£m £m £m £m £m £m
Reinsurance contract assets as at 1 January 2024 124.0 6.2 23.3 14.9 0.2 168.6
Reinsurance expenses - allocation of reinsurance premiums paid (52.3) - - - - (52.3)
Amounts recoverable from reinsurers: - - 44.4 1.9 - 46.3
Recoveries of incurred claims and other insurance service expenses
Changes in the expected recoveries for past claims - - - (2.3) (0.1) (2.4)
Changes in the loss recovery component - (0.8) - - - (0.8)
Effect of changes in non-performance risk of reinsurers - - - - - -
Net (expenses) / income from reinsurance contracts held (52.3) (0.8) 44.4 (0.4) (0.1) (9.2)
Net Finance expenses from reinsurance contracts 2.3 - - 0.3 - 2.6
Effect of movements in exchange rates 1.1 (0.3) (0.3) (1.0) - (0.5)
Total amounts recognised in comprehensive income (48.9) (1.1) 44.1 (1.1) (0.1) (7.1)
Investment components (2.8) - 2.8 - - -
Cash flows
Premiums paid net of ceding commission 48.3 - - - - 48.3
Recoveries from reinsurance contracts held - - (54.3) (2.2) - (56.5)
Acquisitions - - - - - -
Total cash flows 48.3 - (54.3) (2.2) - (8.2)
Reinsurance contract assets as at 31 December 2024 120.6 5.1 15.9 11.6 0.1 153.3
Assets for Remaining Coverage Assets for Incurred Claims
Restated Loss-Recovery component For contracts not under PAA Total
Excluding Loss-Recovery Component
Future cash flows Risk adjustment
£m £m £m £m £m £m
Reinsurance contract assets as at 1 January 2023 130.1 4.5 26.6 15.2 0.3 176.7
Reinsurance expenses - allocation of reinsurance premiums paid (52.3) - - - - (52.3)
Amounts recoverable from reinsurers: - - 40.2 3.1 0.1 43.4
Recoveries of incurred claims and other insurance service expenses
Changes in the expected recoveries for past claims - - - (1.2) (0.1) (1.3)
Changes in the loss recovery component - 1.8 - - - 1.8
Effect of changes in non-performance risk of reinsurers - - - - - -
Net (expenses) / income from reinsurance contracts held (52.3) 1.8 40.2 1.9 - (8.4)
Net Finance expenses from reinsurance contracts 6.0 - - 0.9 (0.1) 6.7
Effect of movements in exchange rates 0.6 (0.1) (0.2) (0.4) - (0.1)
Total amounts recognised in comprehensive income (45.7) 1.7 40.0 2.3 (0.1) (1.8)
Investment components (2.6) - 2.6 - - -
Cash flows
Premiums paid net of ceding commission 42.2 - - - - 42.2
Recoveries from reinsurance contracts held - - (45.9) (2.6) - (48.5)
Acquisitions - - - - - -
Total cash flows 42.2 - (45.9) (2.6) - (6.3)
Reinsurance contract assets as at 31 December 2023 124.0 6.2 23.3 14.9 0.2 168.6
(vi) Reinsurance contract balances - analysis by remaining coverage and
incurred claims
Risk Adjustment CSM (new contracts and contracts measured under FRA) CSM (contracts measured under FVA) Total
Present value of future cash flows
£m £m £m £m £m
Reinsurance contract assets as at 1 January 2024 106.9 15.2 26.4 5.6 154.1
Changes that relate to current service
CSM recognised for services received - - (3.1) (0.3) (3.4)
Change in risk adjustment for non-financial risk for risk expired - (1.6) - - (1.6)
Experience adjustments (1.4) - - - (1.4)
Total changes that relate to current service (1.4) (1.6) (3.1) (0.3) (6.4)
Changes that relate to future service (2.4) 0.6 1.9 - 0.1
Contracts initially recognised in the period
Changes in estimates that adjust the CSM (0.3) (4.1) 3.7 (0.9) (1.6)
CSM adjustment for income on initial recognition of onerous underlying - - - - -
contracts
Changes in recoveries of losses on onerous underlying contracts that adjust - - 0.5 - 0.5
the CSM
Total changes that relate to future service (2.7) (3.5) 6.1 (0.9) (1.0)
Changes that relate to past service
Adjustments to assets for incurred claims - - - - -
Total changes that relate to past service - - - - -
Effect of changes in non-performance risk of reinsurers - - - -
-
Net (expense) / income from reinsurance contracts held (4.1) (5.1) 3.9 (1.2) (7.4)
Net finance income from reinsurance contracts held 1.2 0.6 0.4 0.1 2.3
Effect of movements in exchange rates 2.2 (0.5) (1.2) - 0.5
Total amounts recognised in comprehensive income (0.7) (5.0) 2.2 (1.1) (4.6)
Cash flows
Premiums paid net of ceding commission 45.6 - - - 45.6
Recoveries from reinsurance contracts held (54.2) - - - (54.2)
Acquisitions - - - - -
Total cash flows (8.6) - - - (8.6)
Reinsurance contract assets as at 31 December 2024 97.6 10.2 28.6 4.5 140.9
Restated Risk Adjustment CSM (new contracts and contracts measured under FRA) CSM (contracts measured under FVA) Total
Present value of future cash flows
£m £m £m £m £m
Reinsurance contract assets as at 1 January 2023 112.6 14.3 26.0 7.9 160.9
Changes that relate to current service
CSM recognised for services received - - (0.5) (0.5) (1.0)
Change in risk adjustment for non-financial risk for risk expired - (2.2) - - (2.2)
Experience adjustments (6.1) - - - (6.1)
Total changes that relate to current service (6.1) (2.2) (0.5) (0.5) (9.3)
Changes that relate to future service (3.1) 0.9 2.2 - -
Contracts initially recognised in the period
Changes in estimates that adjust the CSM 2.8 1.7 (2.5) (1.9) -
CSM adjustment for income on initial recognition of onerous underlying - - (0.3) - (0.3)
contracts
Changes in recoveries of losses on onerous underlying contracts that adjust - - 1.8 - 1.8
the CSM
Total changes that relate to future service (0.3) 2.6 1.1 (1.9) 1.5
Changes that relate to past service
Adjustments to assets for incurred claims - - - - -
Total changes that relate to past service - - - - -
Effect of changes in non-performance risk of reinsurers - - - -
-
Net (expense) / income from reinsurance contracts held (6.4) 0.4 0.6 (2.4) (7.8)
Net finance income from reinsurance contracts held 4.9 0.7 0.3 0.1 6.0
Effect of movements in exchange rates 1.1 (0.2) (0.6) - 0.3
Total amounts recognised in comprehensive income (0.4) 0.9 0.3 (2.3) (1.5)
Cash flows
Premiums paid net of ceding commission 40.6 - - - 40.6
Recoveries from reinsurance contracts held (45.9) - - - (45.9)
Acquisitions - - - - -
Total cash flows (5.3) - - - (5.3)
Reinsurance contract assets as at 31 December 2023 106.9 15.2 26.4 5.6 154.1
9 Portfolio acquisition
On 23 December 2024, Chesnara announced it had reached an agreement to acquire
the UK unit-linked bond and pension business of Canada Life Limited,
representing approximately 17,000 policies. The transaction is initially in
the form of a reinsurance agreement with the non-unit cash flows of the
unit-linked policies ceded by Canada Life Limited and accepted by CA plc. The
date of recognition of the reinsurance contract under IFRS 17 is 23 December
2024, however under the terms of the contract the economic impacts are
backdated to 1 January 2024 and the cash-flows from this date are accordingly
recognised as a receivable in the December 2024 balance sheet.
The initial commission paid by CA plc to Canada Life Limited for this
reinsurance inwards transaction was £2.2m and was funded from internal group
resources. As no inputs and processes have been transferred as part of the
transaction it is not accounted for as a business combination, instead it is
recognised at cost. The CSM on initial recognition has been calculated as
£0.7m as at 31 December 2024.
Customers' policies are expected to transfer to CA plc in the future via a
Part VII transfer, following Court approval.
10 Post balance sheet events
The directors are not aware of any significant post balance sheet events that
require disclosure in the financial statements.
11 Approval of consolidated report for the year ended 31 December 2024
This consolidated report was approved by the Board of Directors on 26 March
2025. A copy of the report will be available to the public at the Company's
registered office, 2nd Floor, Building 4, West Strand Business Park, West
Strand Road, Preston, PR1 8UY and at www.chesnara.co.uk
(http://www.chesnara.co.uk)
FINANCIAL CALENDAR
27 March 2025
Results for the year ended 31 December 2024 announced
3 April 2025
Ex-dividend date
4 April 2025
Dividend record date
22 April 2025
Last date for dividend reinvestment plan elections
13 May 2025
Annual General Meeting
20 May 2025
Dividend payment date
KEY CONTACTS
Registered and head office
2nd Floor, Building 4
West Strand Business Park
West Strand Road
Preston
Lancashire
PR1 8UY
T: 01772 972050
www.chesnara.co.uk
Advisors
Burness Paull LLP
Exchange Plaza
50 Lothian Road
Edinburgh
EH3 9WJ
Auditor
Deloitte LLP
Statutory Auditor
1 City Square
Leeds
LS1 2AL
Registrars
MUFG Corporate Markets (formerly Link Group)
Central Square
29 Wellington Street
Leeds
LS1 4DL
Joint Stockbrokers and
Corporate Advisors
Panmure Liberum
25 Ropemaker Street
London
EC2Y 9LY
RBC Capital Markets
100 Bishopsgate
London
EC2N 4AA
Bankers
National Westminster Bank plc
135 Bishopsgate
London
EC2M 3UR
Lloyds Bank plc
3rd Floor, Black Horse House
Medway Wharf Road
Tonbridge
Kent
TN9 1QS
Public Relations Consultants
FWD
15 St Helen's Place
London
EC3A 6DQ
ALTERNATIVE PERFORMANCE MEASURES
Throughout this report we use alternative performance measures (APMs) to
supplement the assessment and reporting of the performance of the group.
These measures are those that are not defined by statutory reporting
frameworks, such as IFRS or Solvency II.
The APMs aim to assess performance from the perspective of all stakeholders,
providing additional insight into the financial position and performance of
the group and should be considered in conjunction with the statutory reporting
measures such as IFRS and Solvency II.
The following table identifies the key APMs used in this report, how each is
defined and why we use them.
APM What is it? Why do we use it?
Commercial Cash Generation Cash Generation is used by the Group as a measure of assessing how much Commercial Cash Generation provides stakeholders with enhanced insight into
dividend potential has been generated, subject to ensuring other constraints cash generation, drawing out components of the result relating to technical
are managed. complexities or exceptional items. The result is deemed to better reflect the
Group's view of commercial performance, showing key drivers within that.
Commercial Cash Generation excludes the impact of technical adjustments and.
modelling changes; representing the inherent commercial cash generated by the
business.
Base Cash Generation Base Cash Generation is used by the group as a measure of assessing how much Base Cash Generation is a key measure, because it is the net cash flows to
dividend potential has been generated, subject to ensuring other constraints Chesnara from its life and pensions businesses which support Chesnara's
are managed. dividend-paying capacity and acquisition strategy. Cash generation can be a
strong indicator of how we are performing against our stated objective of
Base Cash Generation is calculated as the movement in the group's surplus Own 'maximising value from existing business'.
Funds above the Group's internally required capital, as determined by applying
the group's Capital Management Policy, which has Solvency II rules at its
heart.
Divisional Cash Generation Divisional Cash Generation represents the movement in surplus Own Funds above It is an important indicator of the operating performance of the business
local capital management policies within the three operating divisions of before the impact of group level operations and consolidation adjustments.
Chesnara. Divisional Cash Generation is used as a measure of how much
dividend potential a division has generated, subject to ensuring other
constraints are managed.
Economic Value (EcV) EcV is a financial metric that is derived from Solvency II Own Funds. It EcV reflects the market-related value of in-force business and net assets of
provides a market consistent assessment of the value of existing insurance the non-insurance business and hence is an important reference point by which
businesses, plus adjusted net asset value of the non-insurance business within to assess the Group's value. A life and pensions group may typically be
the group. characterised as trading at a discount or premium to its Economic Value.
Analysis of EcV provides additional insight into the development of the
We define EcV as Own Funds adjusted for contract boundaries, risk margin and business over time. The EcV development of the Group over time can be a strong
restricted with-profit surpluses. As such, EcV and Own Funds have many indicator of how we have delivered to our strategic objectives.
common characteristics and tend to be impacted by the same factors.
Economic Value (EcV) Earnings The principal underlying components of the EcV Earnings are: By recognising the market-related value of in-force business (in-force value),
a different perspective is provided in the performance of the group and on the
- The expected return from existing business (being the effect of the unwind valuation of the business. EcV Earnings are an important KPI as they provide
of the rates used to discount the value in-force); a longer-term measure of the value generated during a period. The EcV
Earnings of the Group can be a strong indicator of how we have delivered
- Value added by the writing of new business; against all three of our core strategic objectives.
- Variations in actual experience from that assumed in the opening valuation;
- The impact of restating assumptions underlying the determination of expected
cash flows; and
- The impact of acquisitions.
EcV Operating Earnings This is the element of EcV Earnings that is generated from the company's EcV Operating Earnings provide an indication of the underlying value generated
ongoing core business operations, excluding any profit earned from investment by the business. This measure can identify profitable activities and also
market conditions in the period and any economic assumption changes in the inefficient processes and potential management actions.
future.
EcV Economic Earnings This is the element of EcV Earnings that is derived from investment market EcV Economic Earnings are important in order to measure the additional value
conditions in the period and any economic assumption changes in the future. generated from investment market factors.
New Business Contribution A more commercially relevant measure of new business profit than that This provides a fair commercial reflection of the value added by new business
recognised directly under the Solvency II regime, allowing for a modest level operations and is more comparable with how new business is reported by our
Note - this measure was previously referred to as 'commercial new business'. of return, over and above risk-free, and exclusion of the incremental risk peers, improving market consistency.
There has been no change to the basis of calculation. margin Solvency II assigns to new business.
Solvency Solvency is a fundamental financial measure which is of paramount importance Solvency gives policyholders comfort regarding the security of their
to investors and policyholders. It represents the relationship between the provider. This is also the case for investors together with giving them a
value of the business as measured on a Solvency II basis and the capital the sense of the level of potential surplus available to invest in the business or
business is required to hold - the Solvency Capital Requirement (SCR). distribute as dividends, subject to other considerations and approvals.
Solvency can be reported as an absolute surplus value or as a ratio.
Assets under Administration (AuA) AuA reflects the value of the financial assets that the business manages, as AuA provides an indication of the scale of the business, and the potential
reported in the IFRS Consolidated Balance Sheet. future returns that can be generated from the assets that the Group manages
Note - this measure was previously referred to as 'Funds under Management' and administers on behalf of customers.
(FuM). There has been no change to the basis of calculation
Leverage A financial measure that demonstrates the degree to which the Company is This measure indicates the overall level of indebtedness of the Group and is
funded by debt financing versus equity capital, presented as a ratio. It is also a key component of the bank covenant arrangements held by Chesnara.
defined as debt divided by debt plus equity, with the equity denominator
adding back the net of tax CSM liability, as measured under IFRS.
IFRS Capital Base IFRS net equity plus the consolidated CSM net of reinsurance and tax. It is a more appropriate measure of the value of the business than net equity
as it allows for the store of deferred profits held in the balance sheet, as
represented by the CSM, including those as yet unrecognised profits from
writing new business and acquisitions.
Policies / policy count Policy count is the number of policies that the Group manages on behalf of This is important to show the scale of the business, particularly to provide
customers. context to the rate at which the closed book business is maturing. In our
open businesses, the policy count shows the net impact of new business versus
policy attrition.
GLOSSARY
AGM Annual General Meeting.
ALM Asset Liability Management - management of risks that arise due to mismatches
between assets and liabilities.
APE Annual Premium Equivalent - an industry wide measure that is used for
measuring the annual equivalent of regular and single premium policies.
CA Countrywide Assured plc.
CALH Countrywide Assured Life Holdings Limited and its subsidiary companies.
CASLP Sanlam Life & Pensions UK Limited
BLAGAB Basic life assurance and general annuity business
Base Cash Generation This represents the cash that has been generated in the period. The cash
generating capacity of the Group is largely a function of the movement in the
solvency position of the insurance subsidiaries within the group and takes
account of the buffers that management has set to hold over and above the
solvency requirements imposed by our regulators. Cash generation is reported
at a group level and also at an underlying divisional level reflective of the
collective performance of each of the divisions prior to any Group level
activity.
Commercial Cash Generation Cash generation excluding the impact of technical adjustments, modelling
changes and exceptional corporate activity; the inherent commercial cash
generated by the business.
Core Surplus Emergence Absolute surplus movement of the divisions including Chesnara entity but
adjustments will be made for the impact of items such as FX, T2/T3
restrictions, acquisition impacts and shareholder dividends as deemed
appropriate. (Note: Any adjustments will be subject to Board approval (and
Remco approval if they impact remuneration) and will be transparently
reported.)
CSM Contractual Service Margin (CSM) represents the unearned profit that an entity
expects to earn on its insurance contracts as it provides services.
Divisional Cash Generation This represents the cash generated by the three operating divisions of
Chesnara (UK, Sweden and the Netherlands), exclusive of Group level activity.
Dividend Cover Defined as Commercial Cash Generation divided by the total of the interim and
final proposed shareholder dividend for the financial year.
DORA Digital Operational Resilience Act (European Union regulation)
DNB De Nederlandsche Bank is the central bank of the Netherlands and is the
regulator of our Dutch subsidiaries.
DPF Discretionary Participation Feature - A contractual right under an insurance
contract to receive, as a supplement to guaranteed benefits, additional
benefits whose amount or timing is contractually at the discretion of the
issuer.
Dutch business Scildon and the Waard Group, consisting of Waard Leven N.V., Waard Schade N.V.
and Waard Verzekeringen B.V.
Economic profit A measure of pre-tax profit earned from investment market conditions in the
period and any economic assumption changes in the future (alternative
performance measure - APM).
EcV Economic Value is a financial metric that is derived from Solvency II Own
Funds. It provides a market consistent assessment of the value of existing
insurance businesses, plus adjusted net asset value of the non-insurance
business within the group.
EcV Earnings Measure of the value generated by the Group in a period.
FCA Financial Conduct Authority
FI Finansinspektionen, being the Swedish Financial Supervisory Authority.
Form of proxy The form of proxy relating to the General Meeting being sent to shareholders
with this document.
FSMA The Financial Services and Markets Act 2000 of England and Wales, as amended.
GMM General Measurement Model - the default measurement model which applies to
insurance contracts with limited or no pass-through of investment risks to
policyholders.
Group Centre Parent Company operations of Chesnara plc
Group Own Funds In accordance with the UK's regulatory regime for insurers it is the sum of
the individual capital resources for each of the regulated related
undertakings less the book-value of investments by the group in those capital
resources.
Group SCR In accordance with the UK's regulatory regime for insurers it is the sum of
individual capital resource requirements for the insurer and each of its
regulated undertakings.
Group solvency Group solvency is a measure of how much the value of the company exceeds the
level of capital it is required to hold in accordance with Solvency II
regulations.
HCL HCL Insurance BPO Services Limited.
IFRS International Financial Reporting Standards.
IFA Independent Financial Advisor.
KPI Key performance indicator.
LACDT Loss Absorbing Capacity of Deferred Tax
Leverage A financial measure that demonstrates the degree to which the company is
funded by debt financing versus equity capital, usually presented as a ratio,
defined as debt divided by debt plus equity, with the equity denominator
adding back the net of tax CSM liability, as measured under IFRS
LTI Long-Term Incentive Scheme - A reward system designed to incentivise executive
directors' long-term performance.
Movestic Movestic Livförsäkring AB.
New business The present value of the expected future cash inflows arising from business
written in the reporting period.
Official List The Official List of the Financial Conduct Authority.
Operating profit A measure of the pre-tax profit earned from a company's ongoing core business
operations, excluding any profit earned from investment market conditions in
the period and any economic assumption changes in the future (alternative
performance metric - APM).
Ordinary shares Ordinary shares of 5 pence each in the capital of the company.
ORSA Own Risk and Solvency Assessment.
Own Funds In accordance with the UK's regulatory regime for insurers it is the sum of
the individual capital resources for each of the regulated related
undertakings less the book-value of investments by the company in those
capital resources.
PAA Premium allocation approach - a simplified measurement model which can be
applied to short term contracts.
PRA Prudential Regulation Authority.
PRA Prudential Regulation Authority.
QRT Quantitative Reporting Template.
RA Risk adjustment is the additional reserve held for non-financial risks.
Resolution The resolution set out in the notice of General Meeting set out in this
document.
RCF 3 year Revolving Credit Facility of £150m (currently unutilised) renewed in
July 2024
RMF Risk Management Framework.
Robein Leven Robein Leven N.V.
Scildon Scildon N.V.
Shareholder(s) Holder(s) of ordinary shares.
Solvency II A fundamental review of the capital adequacy regime for the European insurance
industry. Solvency II aims to establish a set of EU-wide capital requirements
and risk management standards and has replaced the Solvency I requirements.
Solvency (absolute) surplus A measure of how much the value of the company (Own Funds) exceeds the level
of capital it is required to hold
Standard Formula The set of prescribed rules used to calculate the regulatory SCR where an
internal model is not being used.
STI Short-Term Incentive Scheme - A reward system designed to incentivise
executive directors' short-term performance.
SCR In accordance with the UK's regulatory regime for insurers it is the sum of
individual capital resource requirements for the insurer and each of its
regulated undertakings.
Swedish business Movestic and its subsidiaries and associated companies.
S&P Save & Prosper Insurance Limited and Save & Prosper Pensions Limited.
TCF Treating Customers Fairly - a central PRA principle that aims to ensure an
efficient and effective market and thereby help policyholders achieve fair
outcomes.
Tier 2 Term debt capital (Tier 2 Subordinated Notes) issued in February 2022 with a
10.5 year maturity and 4.75% coupon rate.
Transfer ratio The proportion of new policies transferred into the business in relation to
those transferred out.
TSR Total Shareholder Return, measured with reference to both dividends and
capital growth.
UK or United Kingdom The United Kingdom of Great Britain and Northern Ireland.
UK business CA, S&P and CASLP
VA The Volatility Adjustment is a measure to ensure the appropriate treatment of
insurance products with long-term guarantees under Solvency II. It represents
an adjustment to the rate used to discount liabilities to mitigate the effect
of short-term volatility bond returns.
NOTE ON TERMINOLOGY
As explained in the IFRS financial statements, the principal reporting
segments of the Group are:
CA which comprises the original business of Countrywide Assured plc, the group's
original UK operating subsidiary; City of Westminster Assurance Company
Limited, which was acquired by the group in 2005, the long-term business of
which was transferred to Countrywide Assured plc during 2006; S&P which
was acquired on 20 December 2010. This business was transferred from Save
& Prosper Insurance Limited and Save & Prosper Pensions Limited to
Countrywide Assured plc on 31 December; and Protection Life Company Limited
which was acquired by the group in 2013, the long-term business of which was
transferred into Countrywide Assured plc in 2014, as well as the portfolio of
policies acquired from Canada Life on 16 May 2023 and reinsured into
Countrywide Assured plc;
CASLP - 'SLP' 'SLP' - Sanlam Life & Pensions (UK) Limited which was acquired 28 April
2022. CASLP was dissolved by court order on 14 January 2025; and
Movestic Movestic which was purchased on 23 July 2009 and comprises the group's Swedish
business, Movestic Livförsäkring AB and its subsidiary and associated
companies;
The Waard Group which was acquired on 19 May 2015 and comprises two insurance companies; Waard
Leven N.V. and Waard Schade N.V.; and a service company, Waard Verzekeringen;
Robein Leven NV acquired on 28 April 2022; and the insurance portfolio of
Conservatrix acquired on 1 January 2023;
Scildon which was acquired on 5 April 2017; and
Other Group activities Other Group activities which represents the functions performed by the Parent
Company, Chesnara plc. Also included in this segment are consolidation
adjustments.
Cautionary and Forward-Looking Statements
This document has been prepared for the members of Chesnara plc and no one
else. Chesnara plc, its directors or agents do not accept or assume
responsibility to any other person in connection with this document and any
such responsibility or liability is expressly disclaimed. Nothing in this
document should be construed as a profit forecast or estimate.
This document may contains, and we may make other statements (verbal or
otherwise) containing, forward-looking statements with respect to certain of
the plans and current expectations relating to the future financial condition,
business performance, and results, strategy and/or objectives (including
without limitation, climate-related plans and goals) of Chesnara plc.
Statements containing the words 'believes', intends', 'will', ' expects',
plans', 'aims', 'seeks', 'targets', 'continues' and 'anticipates' or other
words of similar meaning are forward looking.
By their nature, all forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances that are beyond the
control of Chesnara plc including, amongst other things, UK domestic, Swedish
domestic, Dutch domestic and global economic, political, social, environmental
and business conditions, market-related risks such as fluctuations in interest
rates, currency exchange rates, inflation, deflation, the impact of
competition, changes in customer preferences, delays in implementing
proposals, the timing, impact and other uncertainties of future acquisitions
or other combinations within relevant industries, the policies and actions of
regulatory authorities, the impact of tax or other legislation and other
regulations in the jurisdictions in which Chesnara plc and its subsidiaries
operate. As a result, Chesnara plc's actual future condition, business
performance and results may differ materially from the plans, goals and
expectations expressed or implied in these forward-looking statements.
No representation is made with regard to forward looking statements, including
that any future results will be achieved. As a result, you are cautioned not
to place undue reliance on such forward-looking statements contained in this
document. Chesnara undertakes no obligation to update any of the
forward-looking statements contained within this document or any other
forward-looking statements we make. Forward-looking statements in this report
are current only as of the date on which such statements are made.
The climate metrics used in this document should be treated with special
caution, as they are more uncertain than, for example, historical financial
information and given the wider uncertainty around the evolution and impact of
climate change. Climate metrics include estimates of historical emissions and
historical climate change and forward-looking climate metrics (such as
ambitions, targets, climate scenarios and climate projections and forecasts).
Our understanding of climate change and its impact continue to evolve.
Accordingly, both historical and forward-looking climate metrics are
inherently uncertain and Chesnara expects that certain climate disclosures
made in this document are likely to be amended, updated, recalculated or
restated in the future.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR BCGDXIXDDGULRecent news on Chesnara
See all newsREG - Chesnara PLC - Total Voting Rights
AnnouncementREG - Chesnara PLC - Block listing Interim Review
AnnouncementREG - Chesnara PLC - Director/PDMR Shareholding
AnnouncementREG - Official List - Official List Notice
AnnouncementREG - Stock Exch Notice - Admission to Trading - 10/04/2025
Announcement