REG - Chesnara PLC - Half-year Report
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RNS Number : 9340W Chesnara PLC 28 August 2025
28 August 2025
LEI Number: 213800VFRMBRTSZ3SJ06
Chesnara plc (CSN.L)
("Chesnara" or "the Company")
STRONG FINANCIAL PERFORMANCE AND MAJOR STRATEGIC PROGRESS
Chesnara reports its 2025 interim results. Key highlights are:
Strong financial performance
· Cash Generation¹ up 26% to £37m (HY 2024: £29m);
· Eligible Own Funds of £632m (FY 2024: £643m), with increased
Solvency Coverage Ratio of 207% (FY 2024: 203%) providing significant headroom
to allocate capital to M&A and other growth opportunities;
· IFRS Capital Base² of £441m (FY 2024: £449m), with growth in the
Contractual Services Margin and Insurance Result before allowing for
shareholder dividends;
· New Business Contribution³ of £5m (HY 2024: £5m);
· Group Leverage⁴ ratio unchanged at 31% (FY2024: 31%), with the
proposed acquisition of HSBC Life (UK) and the Group's recent Restricted Tier
1 (RT1) issuance expected to reduce the Group's leverage ratio to 25%⁵;
· Economic value ('EcV') of £517m (FY 2024: £531m), with positive
contribution from operating and economic variances; and
· 3% increase in the 2025 interim dividend to 7.70p⁶ per share.
Major strategic progress
· Transformational HSBC Life (UK) Ltd acquisition announced on 3 July
2025, expected to generate incremental lifetime Cash Generation of >£800m,
>3x consideration of £260m⁷;
· Successful Rights Issue and Restricted Tier 1 (RT1) Issue completed
in July which together raised £290m;
· Admission to the FTSE 250 Index, effective from 18 August 2025;
· Completion of the legal merger of the Group's Dutch businesses on 2
July 2025.
Commenting on the results, Steve Murray, Group CEO, said:
"Chesnara delivered strong financial results in the first half of 2025, with
Cash Generation up 26%, an increase in our solvency ratio and a further 3%
increase in the interim dividend. We have made significant progress against
our strategy, announcing the acquisition of HSBC Life (UK). This is a
transformational deal, supporting a planned one year step-up in the dividend
and reinforcing sustainable long-term growth. Looking ahead, we are strongly
positioned with the financial firepower and track record to execute on our
active pipeline of opportunities."
Chesnara's interim results presentation is being held at 09:30am on 28 August
2025 - participants can register here (https://brrmedia.news/CSN_HY25) .
2025 INTERIM FINANCIAL AND STRATEGIC HIGHLIGHTS
STRONG CASH GENERATION AND MORE THAN 20 YEARS OF DIVIDEND GROWTH
· Group Cash Generation(1), up 26% to £37m in HY 2025 (HY 2024:
£29m), driven by organic capital generation and the implementation of
management actions.
· 2025 interim dividend of 7.70p⁶ per share, a 3% increase
compared to 2024, extending the period of uninterrupted dividend growth to
more than 20 years.
· The Group's dividend growth track record is unrivalled across UK
and European Listed insurers with Chesnara's business model delivering
sustainable returns to shareholders.
FINANCIAL RESILIENCE AND FLEXIBILITY IN FINANCING FUTURE M&A
· Eligible Own Funds of £632m (FY 2024: £643m) with increased
Solvency II Coverage Ratio of 207% (FY 2024: 203%), materially above the upper
end of the Group's operating range of between 140 - 160%.
· Group Centre liquidity of £126m (FY 2024: £109m), with divisional
remittances of £56m received during H1 2025.
· On 23 July, the Group successfully completed a £140m rights issue
which forms part of the financing package for the HSBC Life (UK) acquisition,
with strong support from existing shareholders.
· On 30 July, significant further support was received from debt
investors with announcement of a £150m RT1 Bond issuance at a coupon of 8.5%
(pre-tax), providing the Group with additional financial flexibility to grow
in the future.
· Leverage ratio⁴ of 31% at HY 2025 (FY 2024: 31%), with the
HSBC Life (UK) transaction and the RT1 Bond issuance expected to reduce the
Group's leverage ratio to 25%⁵.
HSBC LIFE (UK) ACQUSITION DELIVERS LONG TERM VALUE
· Announcement of Group's proposed acquisition of HSBC Life (UK),
adding approximately £4 billion in Assets under Administration (AuA) and
around 454,000 policies, bringing the Group's total expected AuA to £18bn and
policies to approximately 1.4 million⁷.
· Completion of the legal merger the Group's two Dutch businesses
on 2 July 2025, generating cost savings and potential for future synergies.
· IFRS pre-tax loss of £5m (HY 2024 restated⁸: £13m profit),
reflecting a stronger insurance result, offset by a lower investment result,
with positive but less favourable market conditions compared to the prior
year.
· IFRS Capital Base² of £441m at HY 2025 (FY 2024: £449m),
with organic growth pre-FX, tax and dividends driven by CSM generation which
grew by £11m over the period.
· EcV of £517m as at HY 2025 (FY 2024: £531m), with positive
economic and operating earnings offset by central and one-off items, and the
final dividend payment.
· Robust New Business Contribution³ of £5m over HY 2025 (HY 2024:
£5m).
DIVIDEND DETAILS
· The interim dividend of 7.70p per share is expected to be paid
on 17 October 2025. The ordinary shares will be quoted ex-dividend on the
London Stock Exchange as of 4 September 2025. The record date for eligibility
for payment will be 5 September 2025.
ANALYST AND INVESTOR PRESENTATION
· A presentation for analysts and investors will be held at
09:30am at the offices of Panmure Liberum, 25 Ropemaker Street, London, EC2Y
9LY, which will be available to join online and subsequently be posted to the
corporate website at www.chesnara.co.uk (https://www.chesnara.co.uk) .
· To join the webcast, please register using the following link
here (https://brrmedia.news/CSN_HY25) .
Investor Enquiries
Sam Perowne
Head of Strategic Development & Investor Relations
Chesnara plc
E - sam.perowne@chesnara.co.uk
Media Enquiries
Misha Bayliss - +44 20 7427 5465
Oscar Burnett - +44 20 7427 5435
Teneo
E - chesnara@teneo.com
Notes to Editors
Chesnara 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 Scildon in the Netherlands and as Movestic
in Sweden.
Following a three-pillar strategy, Chesnara's primary responsibility is the
efficient administration of its customers' life and savings policies, ensuring
good customer outcomes and providing a secure and compliant environment to
protect policyholder interests. It also adds value by writing profitable new
business in 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 over 20 years in succession. Further details are available on
the Company's website (www.chesnara.co.uk (https://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 2 IFRS Capital Base is the sum of IFRS Net Equity and CSM (net of tax
and reinsurance).
Note 3 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.
Note 4 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.
Note 5 Leverage pro-forma ratio is based as at the FY 2024 position, and
includes the proposed acquisition of HSBC Life (UK) and the expected impacts
of the rights issue and RT1 Bond Issue.
Note 6 Dividend pence per share has been rebased to reflect the rights issue
bonus factor of 1.1514x applied to historic dividend per share metrics.
Note 7 HSBC Life (UK) please refer to the RNS from 3(rd) July 2025 for all
numbers quoted regarding the proposed acquisition of HSBC Life (UK).
Note 8 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.
The Board approved this statement on 27 August 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.
NOTE ON ALTERNATIVE PERFORMANCE MEASURES
The Group uses a number of Alternative Performance Measures (APMs) throughout
this report to supplement the required statutory disclosures under IFRS and
Solvency II, providing additional information to enhance the understanding of
financial performance. Further information on these APMs can be found
throughout the Financial Review and in the APM section.
CEO REVIEW
"The Group delivered very strong Cash Generation(†) of £37m in H1 with the
Group's Solvency Coverage Ratio also increasing. The acquisition of HSBC
Life (UK) Ltd, announced on 3 July, is a significant strategic milestone for
the Group."
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.
This focus helped us deliver a strong financial result for the half year with
Cash Generation of £37m and continued strong solvency coverage of 207%,
leading to a proposed increase in the interim dividend of 3% to 7.70 (Δ)
pence per share.
On 3 July 2025, we announced an agreement to acquire HSBC Life (UK) Limited
for a total consideration of £260m. This transaction represents a significant
strategic milestone for Chesnara which would materially expand our presence in
the UK life insurance market. As at 31 December 2024, HSBC Life (UK) Ltd had
£314m in eligible Own Funds, £4bn of Assets under Administration (AuA) and
over 450,000 policyholders.
The acquisition is expected to generate over £800m in incremental lifetime
Cash Generation, with more than £140m anticipated within the first five years
post-completion. Supported by the strong financial profile of the acquisition,
the Group expects to accelerate its dividend growth. The final FY25 and
interim FY26 dividends, adjusted for the rights issue, are anticipated to
increase by 6%, doubling the recent annual growth rate of 3%. Subject to
regulatory approvals, completion of the acquisition of HSBC Life (UK) Ltd is
expected in early 2026.
Over the course of July we announced the successful completion of our £140m
rights issue which formed part of the financing package for the HSBC Life (UK)
Ltd acquisition, with 88% of our shareholders taking up their rights to the
issue of new shares. Later in July, we received significant further support
from debt investors for the issuance of a £150m Restricted Tier 1 Bond at a
coupon of 8.5%. This provides us with additional financial flexibility to
grow in the future.
Following our successful rights issue and the proposed HSBC Life (UK)
acquisition, Chesnara plc has been admitted to the FTSE 250 Index, effective
from Monday 18th August which marks another significant milestone in the
Company's growth following its listing in 2004.
Operational delivery continues
We have made 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.
The UK has continued to deliver on its Transition and Transformation (T&T)
programme and has so far delivered three successful migrations to our new
operating platform managed by SS&C Technologies (SS&C) including: our
acquired book of protection business from Canada Life; our acquired ISA and
GIA book from Sanlam; and the Sanlam unit pricing system.
In Sweden, the team has expanded and developed its custodian distribution
network. This includes a collaboration with a new partner, which consists of a
savings platform, aimed at customers within the segment of digital only wealth
builders. The partnerships continue to provide further diversification in
distribution for the Company.
And in the Netherlands, the team has been working on the plan to integrate our
Dutch businesses and the associated legal merger of Scildon and Waard, which
was completed at the start of July 2025. Key priorities going forward include
aligning IT systems, harmonising product portfolios and streamlining
governance and reporting structures in order to enhance the scale and
efficiency of the division and realise synergies. The transfer of Scildon's
group pension book to Allianz was announced to the market on 10 June 2025,
with the transfer expected to complete later this year.
Transitioning to a net zero group by 2050
We will publish the Group's inaugural Climate Transition Plan next month. The
plan details the steps we will take to continue our journey to become a net
zero group by 2050, based on our three principles:
Do no harm. Do good. Act now for later.
To reflect the changes we are making to the way we work as we continue our
journey to become a sustainable Chesnara, we have also updated our
sustainability pillars. This is to highlight the importance of embedding
sustainability into our business.
Our sustainability pillars are:
1. Support a sustainable future
2. Help to create a fairer world
3. Build a sustainable Chesnara
We remain committed to 'making a positive impact' (previously identified as a
standalone commitment), with current and planned activities associated with
this, now integrated into our other sustainability commitments
We delivered on M&A and further management actions
The agreement to acquire HSBC Life (UK) is a clear further demonstration of
our ability to execute on our M&A strategy. The £260m transaction will
add approximately £4bn in AuA and around 454,000 policies, which would bring
our total expected AuA to £18bn and increase the number of life and pension
policies to approximately 1.4 million. It is expected to generate over £800m
in incremental lifetime Cash Generation, with more than £140m anticipated
within the first five years post-completion. This acquisition reinforces our
track record of identifying opportunities that support both near-term
financial performance and long-term strategic growth.
As well as the success we have had on M&A this year, we have continued to
seek out other management actions to enhance Cash Generation and value. The UK
extended existing mass lapse reinsurance to include the most recent Canada
Life portfolio and implemented foreign exchange hedging arrangements, both of
which have further optimised the Group's solvency position.
Robust new business
Positive sales momentum in Sweden and the UK, with discipline maintained in
the Netherlands, saw New Business Contribution remaining robust with £5m over
the first half of the year.
People changes
In May this year, it was announced that after three successful years with
Chesnara, Karin Bergstein has stepped down as Independent Non-Executive
Director of the Company, as a member of the Board, Nomination & Governance
Committee and Audit & Risk Committee. I want to thank her for her support
over the past three years and wish her all the best for the future. Samantha
Tymms, has joined the Board as an experienced Non-Executive Director and
advisor to global financial services businesses, bringing a wealth of
knowledge to the business.
The planned departures of Lorens Kirchner and Maarten Simmons (formally the
CEO and CFRO of Waard respectively) also happened in July. We wish them the
very best for the future and look forward to working closely with Pauline
Derkman (Scildon CEO) and Edwin Bekkering (Scildon CFRO) as they drive forward
our combined business in the Netherlands.
Confident Outlook
The market backdrop has been volatile over the first half of the year, and the
weakness of the US dollar against most European currencies continues to be a
feature, as uncertainty persists around global trade tariffs and a more
uncertain geopolitical environment. At Chesnara, we remain confident that the
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 further pipeline of opportunities. We
believe we are well placed to execute further value accretive deals for
shareholders. After a busy period for the Group, there continues to be a lot
to look forward to here at Chesnara.
Steve Murray,
Chief Executive Officer
27 August 2025
(†) Note - this measure was previously referred to as 'Commercial Cash
Generation'. There has been no change to the basis of calculation. For further
information, please see Alternative Performance Measures in the Additional
Information section.
(Δ) Dividend per share has been rebased to reflect the rights issue bonus
factor of 1.15x applied to historic dividend per share metrics.
CHIEF FINANCIAL OFFICER'S REPORT
"The Group has delivered strong first half results whilst maintaining a
resilient capital position. We continue to increase returns to our
shareholders and the ongoing delivery of our growth strategy underpins our
confident outlook"
TOM HOWARD, CFO
Overview
The Group continues to perform strongly. Each of our operating divisions
contributed positively to the increased Group Cash Generation result of £37m
(HY24: £29m). The Solvency Coverage Ratio of 207% remains comfortably above
our operating range of 140% to 160% and continues to be resilient to a wide
range of scenarios, providing the Group with significant scope to pursue
further M&A and other investment opportunities as they arise.
The proposed acquisition of HSBC Life (UK) significantly enhances the store of
future value available to the Group and will transform the scale and financial
profile of Chesnara's UK division. On a proforma basis(†), the Group's
Solvency Coverage Ratio, post transaction and Restricted Tier 1 bond issue
remains above the upper-end of our operating range, at 198%.
This continued financial delivery underpins the Board's recommendation to
increase the interim dividend by 3% to 7.70(Δ )pence per share.
Business performance
UNITED KINGDOM
Own Funds increased by £13m (HY24: £14m) whilst SCR reduced by £13m (HY24:
decrease of £6m), resulting in a Solvency Coverage Ratio of 172% (HY24:
135%). The growth in Own Funds arose from both positive economic and operating
results on the in-force book, supported by the writing of profitable new
business over the period. The extension of mass-lapse reinsurance arrangements
to include the Canada Life portfolio (acquired in 2024) and the implementation
of a foreign currency hedge supported the reduction in SCR. The UK division
held a Solvency II surplus of £43m above its Board's risk appetite level
(HY24: £49m) and made remittances of £45m to Group Centre. IFRS pre-tax
profits of £9m (HY24 restated: £23m) were driven mainly by positive
investment experience, offset by a lower insurance result, primarily driven
by adverse operational experience and the effect of loss components.
SWEDEN
Own Funds increased by £3m (HY24: increase of £6m) whilst SCR increased by
£4m (HY24: increase of £8m). The Solvency Coverage Ratio reduced by 3
percentage points to 148% (2024: 151%). Own Funds and SCR were impacted by
positive equity market movements, offset by the negative impact of the
continued depreciation of the US dollar relative to the Swedish krona. The
Swedish division held a Solvency II surplus of £36m above its Board's risk
appetite level (HY24: £27m) and made remittances of £4m to Group Centre.
IFRS pre-tax profits of £2m (HY24: £3m) arose primarily from positive
operating contributions to the insurance result.
NETHERLANDS
Own Funds increased by £21m (HY24: £8m decrease) whilst SCR decreased by
£1m (HY24: £2m decrease), with a closing Solvency Coverage Ratio of 264%
(2024: 239%). Own Funds benefited from the impact of foreign exchange
movements, positive operating earnings in Waard and positive economic
experience in Scildon. The Group's Dutch divisions held a Solvency II surplus
of £92m above its Board's risk appetite levels and made remittances of £7m
to Group Centre (2024: £7m). Increased IFRS pre-tax profits of £12m,
(HY24: £3.2m loss) benefited from lower loss component experience relative to
HY24.
(†) Proforma basis calculated using reported FY24 solvency values.
(Δ) Dividend per share has been rebased to reflect the rights issue bonus
factor of 1.15x applied to historic dividend per share metrics.
Capital & Cash Generation
SOLVENCY II CAPITAL POSITION
FY24 Solvency Coverage Ratio 203% FY23 Solvency Coverage Ratio 205%
Capital Generation 8% 9%
Management Actions 4% -
SII Adjustments (4%) (9%)
Shareholder Dividends (4%) (4%)
HY25 Solvency Coverage Ratio 207% HY24 Solvency Coverage Ratio 201%
The Group's Solvency II surplus remained consistent over the first half of
2025. The Solvency Coverage Ratio of 207% (FY24: 203%) represents a Solvency
II surplus of £326m (FY24: £327m) The SCR decreased primarily due to a
reduction in market and life underwriting risks, alongside capital management
actions undertaken in the UK. The movement in Own Funds was influenced by
capital generation and management actions, offset by the shareholder dividend
payment and the application of Tier 2/3 valuation restrictions.
CASH GENERATION
£m HY25 HY24
UK 33 23
Sweden 2 2
Netherlands 20 5
Divisional Cash Generation 55 30
Central items and Adjustments (18) (1)
Cash Generation 37 29
Cash Generation of £37m (HY24: £29m) comprised contributions of £55m
(pre-FX) from the operating divisions, offset by £18m relating to Group
Centre costs, foreign exchange impacts and other one-off items, including the
funding of M&A activities.
The Divisional Cash Generation of £55m (HY24: £30m) arose from positive
operating experience, new business activity and selected capital optimisation
management actions within the UK business. Group Centre surplus usage
reflected central costs, development and M&A expenditure and debt
servicing costs.
Cash Generation represents 1.42(Δ)x (HY 24: 1.57x) dividend coverage,
demonstrating that the Group continues to generate significant resources to
finance ongoing debt and dividend commitments whist maintaining a strong
Solvency Coverage Ratio.
(Δ) Defined as Cash Generation divided by 50% of the projected full year
dividend cost
CENTRE LIQUIDITY
Group Centre held liquid resources of £126m at HY25, after allowing for the
receipt of dividend remittances from our operating divisions totalling £56m,
and payment of the final 2024 dividend of £24m.
LEVERAGE
Leverage(*) remained at 31% as the impact of the increased CSM largely offset
the decrease in IFRS equity. Following the completion of the HSBC Life (UK)
acquisition and the issuance of our Restricted Tier 1 bond, the Group's
proforma leverage ratio(†) will reduce to 25%, comfortably meeting our long
term target level of 30% or less.
CAPITAL MANAGEMENT ACTIONS
Management actions are an important component of our strategy to maximise
value from existing business. In the first half of 2025, the UK division
implemented a currency hedge, further optimising the capital requirements
relating to the foreign exchange risk. The UK division also extended existing
mass-lapse reinsurance arrangements to include the most recent Canada Life
portfolio acquisition, providing the Group with further capital relief against
the risk of extreme lapse events. Taken in aggregate, these actions increased
the Group's Solvency Coverage Ratio by 4%.
IFRS
IFRS PRE-TAX PROFIT
The Group's IFRS pre-tax loss of £5m (HY24: £13m profit) was driven mainly
by the impact of lower market returns within the investment result, partially
offset by a higher insurance result from more favourable operating experience.
The positive impact of foreign exchange movements over H1 also supported an
increase in the IFRS Capital Base but are excluded from the IFRS
pre-tax-profit measure and presented separately within Other Comprehensive
Income.
IFRS INSURANCE RESULT
The insurance service result comprises the revenue and expenses from providing
insurance services to policyholders and excludes economic impacts. Assumption
changes 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 £2m (HY24: loss of £3m) includes a positive
contribution from the release of the CSM and the Risk Adjustment of £12m
(HY24: £11m), partially offset by a reduced year-on-year adverse experience
impact on portfolios of onerous contracts, primarily in the Netherlands and
the UK .
IFRS INVESTMENT RESULT
The investment result comprises the economic result from the Group's assets
together with the impacts to its insurance and investment contract
liabilities.
The investment result of £16m (HY24: £40m) primarily reflects equity market
growth over the first half of 2025 compared to the prior-year. and is also
affected by a £8m loss on the Group FX hedge as sterling weakened against the
euro and the Swedish krona during the year (though this was offset by a larger
corresponding FX translation gain coming through other comprehensive income).
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 £37m (HY24: £35m) 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 of £60m (HY24: £59m) was
consistent with the prior year.
(*) Leverage is presented in line with the Fitch basis of calculation. For
further information, please see Alternative Performance Measures in the
Additional Information section.
(†) Proforma leverage ratio calculated using reported FY24 position as
basis.
IFRS CAPITAL BASE
HY25 HY24
£m £m
Opening Capital Base 449 479
CSM net of reinsurance movement (excluding FX and tax impacts) 11 4
Pre-Tax Profits (5) 13
Other Adjustments 2 1
Capital Base pre-FX, tax and dividends 457 497
FX Impacts 17 (11)
Tax (9) (13)
Shareholder Dividends (24) (24)
Closing Capital Base 441 449
Before allowing for foreign exchange impacts, taxation and the 2024 final
dividend payment, the opening IFRS Capital Base of £449m increased by £8m
over the first half of 2025 driven by growth in CSM.
After allowing for the release of the CSM to the IFRS income statement, the
CSM increased by £11m with positive contributions from profitable new
business activity, portfolio growth following the Part VII of the Canada Life
protection portfolio and positive assumption changes.
Economic Value Earnings
£m
FY24 Economic Value 531 FY23 Economic Value 525
Economic Earnings: Real world returns 1 32
Operating Earnings 13 (2)
New business 3 3
Other central and one-off items (28) (13)
HY25 Economic Value (pre-FX and Dividends) 520 545
FX Impacts 21 (13)
Shareholder Dividends (24) (24)
HY25 Economic Value 517 HY24 Economic Value 508
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. EcV losses of £11m (HY24: earnings of £20m)
included adverse economic experience in Sweden, driven mainly by the impact of
US dollar depreciation against the Swedish Krona and additional Group Centre
expenses relating primarily to M&A activity.
EcV ECONOMIC EARNINGS
EcV Economic Earnings were largely driven by positive investment variances in
the UK and the Netherlands, offsetting negative variances in Sweden. Whilst
the Swedish OMX closed the period broadly in line with the FY24 position, the
weakening of the US dollar against the Swedish krona had a negative impact on
policyholder AuA and investment returns.
EcV OPERATING EARNINGS
EcV Operating Earnings of £13m (HY24: earnings of £1m) were driven by
positive operating variances in the UK and Netherlands, partially offset by
adverse mortality experience in Scildon and adverse persistency experience in
Sweden.
OTHER CENTRAL AND ONE-OFF ITEMS
Other non-operating items include central financing costs (including Tier 2
coupon payments) of £5m and other central expenditure, including advisory
fees to support M&A activity and other development activity.
Shareholder Dividends
The Group's continued strong financial delivery has supported the directors'
decision to recommend a 3% increase in the interim dividend to 7.70p (Δ) per
share (2024 interim rebased: 7.48p (Δ)).
Confident Outlook
Ongoing delivery of the Group's operational and strategic priorities continues
to drive strong financial outcomes across the Group's key measures.
The proposed acquisition of HSBC Life (UK) will significantly enhance the
long-term financial profile of the Group, generating significant levels of
additional capital and liquid resources to further invest in future growth
opportunities.
Additionally, the Group's successful equity and debt issuances in July 2025
further strengthen the Group's balance sheet against the backdrop of an active
and attractive market for further M&A opportunities.
Tom Howard,
Chief Financial Officer
27 August 2025
(Δ) Dividend per share has been rebased to reflect the rights issue bonus
factor of 1.15x applied to historic dividend per share metrics
BUSINESS REVIEW | UK
The UK division manages c270k policies across linked pension business, life
insurance, endowments, annuities and some with-profit business. While largely
closed to new business, the division continues to generate future value
through our growing onshore bond business as well as investment returns on
unit-linked policies, strong cost control, increments to existing policies and
the active acquisition pipeline.
MAXIMISE VALUE FROM EXISTING BUSINESS
CAPITAL AND VALUE MANAGEMENT
As part of its long-term strategy, the UK division continues to deliver its
ongoing T&T programme, which includes consolidating the policy
administration, finance and investment administration onto a platform run by
the division's strategic outsource partner, SS&C . During the first half
of 2025, the programme has continued to deliver, with the migration to
SS&C of: our acquired book of protection business from Canada Life; our
acquired ISA and GIA book from Sanlam; and the Sanlam unit pricing system.
The division has continued to focus on delivering capital management actions
in the first half of the year, having implemented a new mass lapse reinsurance
arrangement which covers the onshore bond / pension business that was
purchased from Canada Life coupled with a new FX hedge which provides
protection to the business in relation to large US dollar and euro
fluctuations within the division's unit linked business.
CUSTOMER OUTCOMES
Delivery of good customer outcomes is a key area of focus. This includes
providing good service, competitive fund performance, fair value, and clear
product and policy information, with additional support for those who need it.
The division continues to focus on ensuring operational and financial
resilience across all core services and has met the regulatory deadline of 31
March 2025 to confirm adherence to the new Operational Resilience
requirements.
GOVERNANCE
Strong governance and constructive regulatory relationships remain central to
delivering strategic goals, with management maintaining a clear focus on
evolving and upholding robust governance frameworks.
The division has also continued to drive forward its Sustainability Plan with
active deliverables across social, operational, financial, governance and
reporting workstreams. There has been a particular focus on supporting the
publication of the Group's first Climate Transition Plan.
KPIs
- Cash Generation: £33m (HY24: £23m)
- SII ratio (pre dividend) 172% (FY24: 182%)
- SII ratio (post dividend) 172% (FY24: 135%)
- EcV Earnings: £15m (HY24: £14m)
- IFRS Pre-Tax Profit: £9m (HY24 restated: £25m).
FUTURE PRIORITIES
- Continued identification and implementation of potential capital
management actions that promote value and cash generation.
- Continued focus on strong customer service and delivering good
customer outcomes.
- Maintain positive and constructive relationships with regulators
and continued compliance with relevant regulations.
- Continued support and implementation of the Group's Climate
Transition Plan and continued progress against the UK Sustainability Plan
activities.
-
ACQUIRE LIFE AND PENSIONS BUSINESSES
The Group's proposed acquisition of HSBC Life (UK) is transformational for the
UK business and supports the division's scale and efficiency ambitions. It is
envisaged that, following completion, the operations of HSBC Life (UK) will be
transferred to the UK division's strategic outsource partner SS&C. The
acquisition brings with it further scale opportunities in the onshore bond
market, which will complement the division's existing proposition.
The integration of previous acquisitions into the wider business has continued
to progress under the UK's T&T programme. In addition, the programme has
overseen the Part VII transfer of the Canada Life protection book that was
purchased in May 2023 and is in the process of a further Part VII transfer of
the Canada Life bond book purchased in December 2024.
The final stage of the Sanlam Life and Pensions (subsequently renamed to
CASLP) acquisition was delivered during the first half of the year, with CASLP
Limited having been dissolved in January 2025.
FUTURE PRIORITIES
- Integration of HSBC Life (UK) Limited to the Group. This
includes ensuring that all pre-completion activities are delivered. This will
ensure that the acquisition completes on time and that the Group is ready to
deliver the planned activities post completion, which include the planned
migration to our strategic platform hosted by SS&C during 2026.
- Continued migration of existing and acquired books of business to
SS&C in line with the division's T&T programme, including the
planned delivery of the Part VII transfer and migration of the Canada Life
onshore bond / pension book by the end of the year.
- Continue to provide support to Group in identification, assessment
and delivery of UK acquisitions.
- Continue to deliver strong financial outcomes from previously
completed acquisitions.
ENHANCE VALUE THROUGH PROFITABLE NEW BUSINESS
The division has continued to generate positive new business profits through
increased volumes of the on-platform onshore bond.
This continued growth reflects our competitive and attractive investment
proposition for customers coupled with recent changes to personal tax
regulation introduced in the UK Government's Autumn Budget 2024.
The UK's Adviser Hub went live at the start of the year. This is available on
the Company website and has been well received by advisers. It contains a
range of useful information including a suite of adviser-facing technical
product documents and a tax tool.
The division has continued to invest in its onshore bond new business
proposition working with existing platforms on improvements to customer and
adviser journeys and providing additional inhouse expert support.
KPIs
- APE: £6m (HY24: £6m)
- New Business Contribution: £1m (HY24: £1m)
FUTURE PRIORITIES
- Continue to strengthen the advisor and customer proposition
through collaboration with platform partners.
- Broaden onshore bond distribution with existing and new platform
relationships.
- Collaborate 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
The recovery in equity markets and strong custodian inflows supported an
increase in the division's AuA in Q2, following the market volatility seen
during Q1. The continued weakening of the US dollar relative to the Swedish
krona has offset the AuA increase, primarily within the unit-linked
portfolios. Transfer levels within the brokered occupational pension market
continue to be elevated, but are lower than HY24. Total client cash inflows
were positive, driven by strong sales performance within custodian business.
Overall, these factors resulted in policyholder AuA growth of 9%.
CUSTOMER OUTCOMES
Movestic continues to enhance its product offerings to meet the ongoing demand
for individual adaptions and more flexible terms on pension withdrawals. From
1 January 2025 customers have been offered an option to pause pension
withdrawals during the first five years. The "Movestic Freedom" concept -
helping customers plan for their retirement - further increased traction as
more customers sign up each year.
GOVERNANCE
Movestic's sustainability programme is fully aligned to the Group's strategy
and commitments. Movestic is outside the scope of Corporate Sustainability
Reporting (CSRD), and the Company follows the development of EU's Omnibus
proposal and its impact on other regulations.
The Digital Operational Resilience Act (DORA) came into force in January 2025,
with Movestic compliant to the requirements. There will be continued focus
during the year to further embed the regulation as part of business-as-usual
operations.
KPIs
- Cash Generation £2m (HY24: £1m)
- SII ratio (pre dividend) 150% (FY24: 153%)
- SII ratio (post dividend) 148% (FY24: 151%)
- EcV Earnings: £(9)m (HY24: £12m)
- IFRS Pre-Tax Profit: £2m (HY24: £9m)
FUTURE PRIORITIES
- Continue building solid and long-term sustainable value
creation for customers and investors through a diversified business model.
- Continue offering modern and individually adapted
high-quality solutions within pension, savings and health insurance, and
expand the area of customer focused digital services.
- Implement AI solutions to increase the use of
automation, streamline processes, and improve administrative efficiency and
control.
- Ensure Group sustainability reporting processes are
embedded into everyday operations, supporting the implementation of the
Group's Climate Transition Plan.
- Monitor developments in the regulatory landscape.
ACQUIRE LIFE AND PENSIONS BUSINESSES
Movestic continues to support the Group's M&A strategy by actively
engaging with other market participants and investment bank advisors in order
to understand and assess 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 £1m during the first half of 2025 (HY24: £2m).
Movestic has continued to expand and further develop its custodian
distribution network. During Q1 2025, the business launched a collaboration
with a new type of partner - a savings platform within the segment of digital
only wealth builders. This provides further diversification in distribution
for the company. The pipeline for new potential partnerships also continues to
be strong.
Movestic continues to develop relationships with existing partners, with an
increase in cross selling between savings and health insurance products.
During Q2 2025, the business has also launched a new custodian occupational
pension product.
To improve distribution and sales within the life and health insurance
segment, the division has continued its focus on launching new, updated risk
insurance offerings in the broker channel.
KPIs
- APE: £80m (HY24: £52m)
- New Business Contribution: £1m (HY24: £2m)
- Occupational pension market share: 5.1% (2024: 4.4%)
- Custodian accounts market share: 13.5% (2024: 12.2%)
FUTURE PRIORITIES
- Continue building 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.
- Further deepen relationships with existing distribution
partners to provide their customers with a complete offering within wealth and
health insurance.
- Continued focus on growing the life and health insurance
business to diversify and offer our customers a broader product selection,
including the offering for our growing custodian business
BUSINESS REVIEW | NETHERLANDS
Our businesses in the Netherlands 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
On 2 July 2025, the merger between Waard and Scildon was completed, following
approval by the Dutch Central Bank (DNB). The merger of the two Dutch
businesses is expected to create a more sustainable division, driven by
enhanced scale and operational synergies.
Collaborative workstreams have been launched with representation from teams
across the division, focusing on streamlining operations, aligning governance
structures, and combining balance sheets.
An agreement has been reached to transfer Scildon's pension portfolio to
Allianz, with the transaction expected to close in Q3 2025. The decision
reflects recent performance trends and aligns with a more sustainable
long-term strategy.
CUSTOMER OUTCOMES
Scildon continues to advance its digital capabilities, with recent
enhancements to customer and advisor portals. These upgrades are designed to
simplify the user experience.
Waard successfully expanded the reach of its digital customer portal,
originally launched in 2024. The number of active users has been growing
steadily in the first half of 2025.
GOVERNANCE
The implementation of the Digital Operational Resilience Act (DORA)
requirements was successfully completed, and both Scildon and Waard have been
compliant with these requirements in accordance with the January 2025
deadline.
The EU Omnibus proposals, announced in February 2025, clarified we fall
outside the scope of mandatory reporting under the Corporate Sustainability
Reporting Directive (CSRD). Nevertheless, the business continues to monitor
developments and align with best practices where appropriate.
The Dutch Central Bank (DNB) approved the merger of Scildon and Waard, which
was formally completed on 2 July 2025. This regulatory approval reflects
strong governance oversight and alignment with local supervisory expectations
in relation to mergers in the Netherlands.
The transfer of Scildon's collective pension book to Allianz, expected to
complete later this year, continues to be overseen through strong governance
processes, ensuring alignment with regulatory expectations.
KPIs
- Cash Generation £20m (HY24: £4m)
- SII ratio (pre dividend) Waard 355% and Scildon 229% (FY24:
Waard 350% and Scildon 205%)
- SII ratio (post dividend): Waard 355% and Scildon 229% (FY24:
Waard 324% and Scildon 205%)
- EcV Earnings: £10m (HY24: £2m)
- IFRS Pre-Tax Profit: £12m (HY24: £(3)m)
FUTURE PRIORITIES
- Following the merger, the strategic focus for the remainder of
2025 will be on advancing the integration of both businesses and realising
synergies. Key priorities include aligning IT systems, harmonising product
portfolios, and streamlining governance and reporting structures
- Identify potential capital management actions, focusing on those
that generate the appropriate balance of value and Cash Generation.
- Ensuring customers continue to receive high-quality service
throughout the change period post-merger.
- Continued regular engagement with customers to improve service
quality, as well as enhancing existing processes, infrastructure, and customer
experiences.
- Perform an ALM study for the combined business and establish
investment strategy.
- Continue progressing the investment portfolio towards net-zero
emissions by 2050.
ACQUIRE LIFE AND PENSIONS BUSINESSES
Chesnara's businesses in the Netherlands continue 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 actively
examine opportunities during the year.
- Continue engaging with potential vendors in 2025 to explore new
opportunities.
ENHANCE VALUE THROUGH PROFITABLE NEW BUSINESS
Scildon achieved a New Business Contribution of £3m (HY24: £1.8m). In March
2025, Scildon launched a new Mortgage Lifestyle proposition, expected to boost
New Business Contribution throughout the year
Scildon demonstrated achievements that enhance our appeal to prospective
customers:
- Earned a 5-star rating from MoneyView in the Product Terms
category (2025).
- Awarded the Adfiz Award in the "Customer Interest" category
for the Lifestyle Quit Smoking Term.
- Secured 3rd place in the IG&H Performance Monitor for
the "Individual Life" category.
- Financial advisors rated Scildon an average of 8.0-just 0.1
points behind joint leaders.
KPIs
- New Business Contribution: £3m (HY24: £2m)
- Term assurance market share: 12% (HY24: 10%)
FUTURE PRIORITIES
- Simple focused product portfolio offering primarily sold through
IFAs with digital options, where preferred by customers.
- Complete the transition of the group pension portfolio to
Allianz.
FINANCIAL REVIEW | CASH GENERATION
CASH GENERATION(†) £37M
HY24: £29M
BASE CASH GENERATION £24M
HY24: £20M
Continued strong Cash Generation was reported in the first half of 2025, with
a total of £37m, 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 DIVISIONAL GROUP ADJ TOTAL
TOTAL
WAARD SCILDON
Cash Generation 33 2 4 16 55 (18) 37
Symmetric adjustment (2) (6) - (1) (9) (1) (10)
WP restriction look through (3) - - - (3) - (3)
Base Cash Generation 28 (4) 4 15 43 (19) 24
UK
- Cash Generation of £33m (HY24: £23m) from Own Funds growth and
a reduction in Solvency Capital Requirements, with both components supported
by the implementation of management actions, including the execution of
further mass lapse reinsurance of the latest Canada Life portfolio acquisition
and the implementation of an FX hedge.
SWEDEN
- Cash Generation pre-FX of £2m (HY24: £2m).Own Funds were
adversely impacted by market conditions, primarily from the weakening of the
US dollar against the Swedish krona, reducing policyholder AuA and investment
returns. Market conditions also resulted in a reduction in SCR, partially
offsetting the fall in Own Funds.
NETHERLANDS
- In Waard, Cash Generation pre-FX of £4m (HY24: £(3)m). Growth
in Own Funds and lower Solvency Capital Requirements, driven by positive
operating variances were partially offset by the impact of rising interest
rates.
- In Scildon, Cash Generation pre-FX equalled £16m (HY24: £8m).
An increase in Own Funds was underpinned by favourable economic and expense
experience, and positive assumption changes, supported by a reduction in the
SCR.
GROUP CENTRE
- The Group Centre result contains central financing costs,
including £5m in Tier 2 coupon payments, and central expenditure relating to
M&A activity in the first half of 2025, including fees associated with the
HSBC Life (UK) Limited acquisition.
( )
(†) Note - this measure was previously referred to as 'Commercial Cash
Generation'. There has been no change to the basis of calculation. For further
information, please see Alternative Performance Measures in the Additional
Information section.
FINANCIAL REVIEW | SOLVENCY II
The Group's Solvency Coverage Ratio of 207% is significantly above our
operating range of 140% to 160%.
GROUP SOLVENCY 207%
SOLVENCY POSITION
£m HY25 FY24
Own Funds 632 643
SCR 306 316
Surplus 326 327
Solvency Coverage Ratio % 207% 203%
SOLVENCY COVERAGE MOVEMENT
Solvency Coverage Ratio - FY24 203% Solvency Coverage Ratio - FY23 205%
Capital Generation 8% 9%
Management Actions 4% -
SII Adjustments (4%) (9%)
Shareholder Dividends (4%) (4%)
Solvency Coverage Ratio - HY25 207% Solvency Coverage Ratio - HY24 201%
Group Solvency II surplus is £326m (2024: £327m) with a Solvency Coverage
Ratio of 207% (2024: 203%), which includes the impact of the proposed interim
shareholder dividend (£13m) and payment of the final 2024 shareholder
dividend (£24m).
The movement in Own Funds reflects the dividend impacts noted above and a £7m
increase in the Tier 2/3 restriction, alongside the positive effects of
favourable economic conditions and operational performance variances. The SCR
reduced in 2025, mainly due to a general fall in life underwriting risk and
capital management actions implemented in the UK.
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.
UK
£m HY25 FY24
Own Funds (post dividend) 143 130
SCR 83 96
Buffer 17 19
Surplus 43 15
Solvency Coverage Ratio % 172% 135%
The rise in surplus to £43m (FY2024: £15m) includes growth in Own Funds and
an SCR reduction during the first half of 2025. Own Funds rose by £13m,
mainly due to rising bond values, driven by a decline in the yield curve at
shorter durations and positive operational assumption changes. The SCR reduced
by £13m, also benefitting from capital management actions, including mass
lapse reinsurance and a new FX hedge.
SWEDEN
£m HY25 FY24
Own Funds (post dividend) 187 184
SCR 126 122
Buffer 25 24
Surplus 36 37
Solvency Coverage Ratio % 148% 151%
The surplus reduction of £1m reflected capital requirements increasing more
than Own Funds, with the underlying movement being affected by the weakening
of the US dollar and its impact on AuA during the first quarter of 2025. The
effect of exchange rate movements has led to an overall increase to both Own
Funds and SCR when translating the results to sterling.
NETHERLANDS
WAARD SCILDON
£m HY25 FY24 HY25 FY24
Own Funds (post dividend) 89 82 154 140
SCR 25 25 67 68
Buffer 9 9 50 51
Surplus 55 48 37 20
Solvency Coverage Ratio % 355% 324% 229% 205%
Waard's Solvency II surplus increase of £7m includes a rise in Own Funds,
driven by positive operating earnings, whilst the SCR continued to be largely
unchanged.
Scildon's Solvency II surplus rose by £17m, with Own Funds growth including
expense related operating returns and economic returns benefitting from a
steepening yield curve, offsetting adverse mortality experience. Capital
requirements remained broadly stable.
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) £517M
FY24: £531M
Value movement: FY24 to HY25:
£m
FY24 EcV 531 FY23 EcV 525
EcV Earnings (11) 20
FX Impacts 21 (13)
Pre-dividend EcV 541 532
Dividends (24) (24)
HY25 EcV 517 HY24 EcV 508
EcV Earnings:
The EcV loss of £11m was impacted by adverse economic experience in Sweden
(driven by depreciation of the US dollar against the Swedish krona) and
additional Group Centre costs, which relate to M&A activity, offsetting
positive earnings in the UK and Netherlands.
Foreign exchange:
The closing EcV of the Group benefited from the depreciation of sterling
relative to the euro and Swedish krona.
Dividends:
Under EcV, dividends are recognised in the period in which they are paid.
Dividends of £24m were paid during the period, representing the final
shareholder dividend approved by the Board in March 2025.
EcV by segment
£m HY25 HY24
UK 157 205
Sweden 202 194
Netherlands 264 246
Group and Group adjustments (106) (137)
HY25 EcV 517 508
The above table shows that the EcV of the Group remains diversified across its
different geographical markets.
(†)Further information on EcV and it's relationship with Solvency II can be
found in the Additional Information section of this report.
FINANCIAL REVIEW | EcV EARNINGS
Operating Earnings in the UK and Netherlands offset adverse economic market
movements in Sweden.
EcV EARNINGS £(11)M
HY24: £20M
Analysis of the EcV Earnings by source of value:
£m
HY25 HY24
Expected movement in period 8 10
New business 3 2
Operating experience variances 1 (4)
Operating assumption changes 7 (7)
Other operating variances (3) -
Total Operating Earnings 16 1
Total Economic Earnings 1 32
Other non-operating variances (6) (5)
Central costs (14) (6)
Risk margin movement - 2
Tax (8) (4)
Other (28) (13)
EcV Earnings (11) 20
All amounts are now presented to the nearest £million. Comparative figures
have been rounded accordingly for consistency (previously rounded 1 dp).
Analysis of the EcV result by business segment:
£m
HY25 HY24
UK 15 14
Sweden (10) 12
Netherlands 10 2
Group and Group adjustments (26) (8)
EcV earnings (11) 20
All amounts are now presented to the nearest £million. Comparative figures
have been rounded accordingly for consistency (previously rounded 1 dp).
UK earnings of £15m, include the impact of management actions, new business
profits and positive economic returns. Sweden's loss of £10m arose mainly
from the adverse impact on policyholder's AuA of depreciation of the USD
relative to the SEK. The Netherlands reported £10m of earnings, driven by
operational cost efficiencies, positive economic returns, offset by adverse
mortality experience. Group and Group adjustments includes Group Centre costs,
costs associated with the Group's M&A activity, Risk Margin release, and
Tier 2 debt servicing costs.
FINANCIAL REVIEW | IFRS BALANCE SHEET
IFRS Capital Base supported by growth in the Contractual Service Margin.
HOW THE CSM HAS MOVED IN THE PERIOD
£m £m
FY24 Restated CSM (gross of tax) 176 FY23 Restated CSM (gross of tax) 157
Interest accreted 2 2
New business 3 3
Acquisition 7 -
Experience & assumption changes 10 8
CSM release (11) (9)
FX Impact 5 (3)
HY25 CSM (gross of tax) 192 FY24 Restated CSM (gross of tax) 158
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 £16m from £176m to £192m
during 2025.
Positive experience and assumption changes across the Group have added £10m
of CSM. New business and the recognition of additional CSM following the Part
VII of the Canada Life term assurance book has added a further £10m of CSM,
reflecting the future profits arising on profitable new business added in the
period. These additions are offset by the £11m release to profit in the
period as the insurance services have been provided with other smaller net
movements including the impact of foreign exchange and the interest accretion
totalling £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 2025 is an
increase of £13m.
LEVERAGE
The IFRS leverage of the Group as at HY25 was 31% (FY24: 31%).
FINANCIAL REVIEW | IFRS INCOME STATEMENT
IFRS PRE-TAX PROFIT £(5)M
HY24 restated: £13M
TOTAL COMPREHENSIVE INCOME £2M
HY24 restated: £(7)M
Analysis of IFRS result
HY25 HY24
restated
£m £m
Net insurance service result 2 (3)
Net investment result 16 40
Fee, commission and other operating income 60 55
Other operating expenses (78) (73)
Financing costs (5) (6)
(Loss)/Profit before income taxes (5) 13
Income tax (charge)/credit (6) (12)
(Loss)/Profit for the period after tax (11) 1
Foreign exchange (loss)/gain 12 (8)
Other comprehensive income 1 -
Total comprehensive income 2 (7)
Movement in IFRS Capital Base
Opening IFRS Capital Base (restated) 449 479
Movement in CSM (net of reinsurance and tax) 13 -
Total comprehensive income 2 (7)
Other adjustments made directly to shareholders' equity 1 1
Dividend (24) (24)
Closing IFRS Capital Base 441 449
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 £2m is broken down into the following
elements:
- gains from the release of risk adjustment and CSM
of £12m (six months to 30 June 2024: £11m). These gains represent a
consistent source of future profits for the group.
- losses of £10m (six months to 30 June 2024:
£14m 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 result also includes losses made on the
Group's currency hedging arrangement of £8m (six months to 30 June 2024: gain
of £5m).
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 six months to June 2025 was
£60m (six months to 30 June 2024: £55m) and was £37m net of Swedish
policyholder yield tax (six months to 30 June 2024: £35m).
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 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 the other operating
expenses in the six months to June 2025 are £60m (six months to 30 June 2024:
£59m).
Financing costs
This predominantly relates to the cost of servicing our Tier 2 corporate debt
notes which were issued in early 2022.
Foreign exchange
The IFRS consolidated result of the Group reflects a foreign exchange gain of
£12m in the period, a consequence of sterling weakening against both the euro
and the Swedish krona. This gain is partly offset by a £8m loss 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 total IFRS tax charge of £6m mainly represents UK policyholder tax that
is reflective of positive investment growth in the period (leading to an
increase in deferred tax liabilities). The charge is offset by equal and
opposite policyholder fund rebates primarily within the investment result.
RISK MANAGEMENT | PRINCIPAL RISKS
The Group's principal risks and uncertainties are detailed in this section,
highlighting any change in risk exposure since the Group's 2024 Annual Report
and Accounts, published in March 2025.
CURRENT RISK ENVIRONMENT
On a regular basis the senior management teams scan the horizon to identify
potential risk events (e.g. political; economic; technological; environmental,
legislative and social), assessing potential outcomes in terms of threats and
opportunities. Some of the key areas include:
- Geopolitical risk continues to create a greater level of
uncertainty across the Group risk profile, for example market volatility and
investment performance.
- Economic uncertainty remains a prominent emerging risk for the
Group, with inflation driven expense risk and future market risk exposures
being the key areas with greatest potential impact.
- Cyber risk is a growing risk affecting all companies,
particularly those who are custodians of customer data, as a result the Group
continues to invest in the incremental strengthening of its cyber risk
resilience and response options.
- The Group is exploring the use of artificial intelligence (AI),
including the risks and opportunities arising from developments in the field
of AI.
- 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.
PRINCIPAL RISKS
The principal risks being faced by the Group remain in line with those
detailed in the 2024 Annual Report and Accounts.
In July 2025 Chesnara announced an agreement to acquire HSBC Life (UK) and
whilst the proposed acquisition will significantly increase the scale in the
UK, currently it does not materially change the view of the Groups principal
risks.
directors' responsibilities statement
We confirm that to the best of our knowledge:
- the condensed set of financial statements has been prepared in
accordance with United Kingdom adopted IAS 34 'Interim Financial Reporting';
- the management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
- the management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of material transactions with related
parties in the first six months of the year and changes to related parties
transactions in the last annual report).
By order of the Board
Luke Savage Steve Murray
Chair Chief Executive Officer
27 August 2025 27 August 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Unaudited Unaudited Year
Six months ended 30 Jun 2025 restated ended 31 Dec
Six months ended 30 Jun 2024 2024
Note £m £m £m
Insurance revenue 136.0 136.0 261.9
Insurance service expense (136.7) (138.2) (244.2)
Net expenses from reinsurance contracts held 3.0 (1.2) (9.2)
Insurance service result 6 2.3 (3.4) 8.6
Net investment return (21.4) 811.8 1,286.
Net finance (expenses)/income from insurance contracts issued (18.4) (174.6) (334.8)
Net finance income/(expenses) from reinsurance contracts held 4.6 2.5 2.6
Net change in investment contract liabilities 46.5 (490.9) (740.4)
Change in liabilities relating to policyholders' funds held by the Group 5.1 (109.0) (160.8)
Net investment result 7 16.4 39.8 52.7
Fee, commission and other operating income 60.1 54.9 104.2
Total revenue net of investment result 78.8 91.3 165.5
Other operating expenses (77.9) (72.9) (133.6)
Total income less expenses 0.9 18.4 31.9
Financing costs (5.5) (5.6) (11.1)
Profit arising on business combinations and portfolio acquisitions - - -
(Loss)/profit before income taxes 5 (4.6) 12.8 20.8
Income tax (expense)/credit (6.2) (12.4) (16.9)
(Loss)/profit for the period 5 (10.8) 0.4 3.9
Items that may be reclassified subsequently to profit and loss:
Foreign exchange translation differences arising on the revaluation of foreign 12.0 (8.2) (15.3)
operations
Revaluation of pension obligations after tax 0.7 0.5 0.4
Revaluation of land and building - - -
Other comprehensive income/(expense) for the period, net of tax 12.7 (7.7) (14.9)
Total comprehensive income/(expense) for the period 1.9 (7.3) (11.0)
Basic earnings per share (based on profit or loss for the period) 3 (7.14)p 0.24p 2.56p
Diluted earnings per share (based on profit or loss for the period) 3 (7.02)p 0.24p 2.52p
CONSOLIDATED BALANCE SHEET (UNAUDITED)
Restated As at 31 Dec
Unaudited Unaudited 2024
As at 30 Jun 2025 As at 30 Jun 2024
Note £m £m £m
Assets
Intangible assets 88.7 92.1 87.2
Property and equipment 8.1 7.6 7.8
Investment properties 94.0 96.2 91.7
Deferred tax assets 37.8 41.1 38.9
Insurance contract assets 11 - 2.4 1,8
Reinsurance contract assets 11 162.8 179.8 169.9
Amounts deposited with reinsurers 34.1 33.5 34.3
Financial investments 9 12,859.5 11,885,7 12,116.7
Derivative financial instruments 0.6 0.1 0.1
Other assets 53.5 68.4 68.7
Cash and cash equivalents 170.2 131.1 138.0
Total assets 5 13,509.3 12,538.0 12,755.1
Liabilities
Insurance contract liabilities 11 4,113.6 4,179.4 4,099.1
Reinsurance contract liabilities 11 12.9 14.4 16.6
Other provisions 24.2 21.5 20.3
Investment contracts at fair value through profit or loss 6,143.7 6,065.3 6,116.7
Liabilities relating to policyholders' funds held by the Group 2,568.8 1,563.6 1,825.5
Lease contract liabilities 1.9 0.8 0.6
Borrowings 12 203.8 206.1 204.8
Derivative financial instruments 8.8 (0.2) 0.6
Deferred tax liabilities 28.2 21.4 24.7
Deferred income 1.2 2.6 1.3
Other current liabilities 108.1 133.2 129.7
Bank overdrafts 0.8 0.4 0.8
Total liabilities 5 13,216.0 12,208.5 12,440.7
Net assets 293.3 329.5 314.4
Shareholders' equity
Share capital 7.5 7.5 7.5
Merger reserve 36.3 36.3 36.3
Share premium 142.5 142.5 142.5
Other reserves 4.3 (1.2) (8.4)
Retained earnings 4 102.7 144.4 136.5
Total shareholders' equity 293.3 329.5 314.4
Approved by the Board of Directors and authorised for issue on 27 August 2025
and signed on its behalf by:
Luke Savage Steve Murray
Chair Chief Executive
Officer
consolidated statement of cash flows
Six months ended 30 Jun 2025 Restated
Unaudited Six months ended 30 Jun 2024
£m £m
(Loss)/profit for the period (10.8) 0.4
Adjustments for:
Depreciation of property and equipment 0.4 0.3
Depreciation on right of use assets 0.3 0.3
Amortisation of intangible assets 9.7 6.7
Share based payment 1.0 0.5
Tax expense / (credit) 6.2 12.4
Interest receivable (8.6) (4.1)
Dividends receivable (10.1) (2.1)
Interest expense 5.3 5.2
Fair value (gains) / losses on financial assets and investment properties (27.9) (811.8)
Increase in intangible assets related to investment contracts (5.5) (4.8)
Adjustment total (29.2) (797.4)
Interest received 7.6 5.9
Dividends received 9.2 4.0
Changes in operating assets and liabilities:
Decrease / (increase) in financial assets and investment properties (304.8) 130.1
Decrease / (increase) in net reinsurance contract assets 3.8 2.8
Decrease / (increase) in amounts deposited with reinsurers 0.2 (1.0)
(Increase) / decrease in other assets 38.6 5.2
Increase / (decrease) in net insurance contract liabilities (88.4) 43.0
Increase / (decrease) in investment contract liabilities 467.8 656.5
Increase / (decrease) in provisions 3.5 (1.3)
Increase / (decrease) in other current liabilities (48.8) 7.6
Cash generated/(utilised) by operations 48.7 55.8
Income tax paid 2.0 (38.7)
Net cash generated/(utilised) from operating activities 50.7 17.1
Cash flows from investing activities
Net proceeds / (purchases) of property and equipment (0.5) (0.1)
Net cash (utilised)/generated by investing activities (0.5) (0.1)
Cash flows from financing activities
Repayment of borrowings (0.9) (1.8)
Repayment of lease liabilities (0.2) (0.3)
Dividends paid (24.3) (23.5)
Interest paid 5.3 (5.2)
Net cash utilised by financing activities (20.1) (30.8)
Net increase /(decrease) in cash and cash equivalents 30.1 (13.8)
Net cash and cash equivalents at beginning of period 137.2 145.9
Effect of exchange rate changes on net cash and cash equivalents 2.1 (1.4)
Net cash and cash equivalents at end of the period 169.4 130.7
consolidated statement of changes in equity
Unaudited - six months ended 30 June 2025 Share premium Merger reserve Other reserves Retained earnings Total
Share capital
£m £m £m £m £m £m
Equity shareholders' funds at 1 January 2025 7.5 142.5 36.3 (8.4) 136.5 314.4
(Loss) for the year - - - - (10.8) (10.8)
Foreign exchange translation differences - - - 12.0 - 12.0
Other items of comprehensive income - - - 0.7 - 0.7
Total comprehensive income - - - 12.7 (10.8) 1.9
Dividends paid - - - - (24.3) (24.3)
Share based payment - - - - 1.3 1.3
Equity shareholders' funds at 30 June 2025 7.5 143.0 36.3 4.3 102.7 293.3
Unaudited - six months ended 30 June 2024 Share premium Merger reserve Other reserves Retained earnings Total
Share capital
£m £m £m £m £m £m
Equity shareholders' funds at 1 January 2024 (as reported) 7.5 142.5 36.3 6.5 167.1 359.9
Prior year restatement (note 1) - - - - (0.1) (0.1)
Equity shareholders' funds at 1 January 2024 7.5 142.5 36.3 6.5 167.0 359.8
Profit for the year - - - - 0.5 0.5
Foreign exchange translation differences - - - (8,2) - (8,2)
Other items of comprehensive income - - - 0.5 - 0.5
Total comprehensive income - - - (7.7) 0.5 7.2
Dividends paid - - - - (23.5) (23.5)
Share based payment - - - - 0.5 0.5
Equity shareholders' funds at 30 June 2024 7.5 142.5 36.3 (1.2) 144.4 329.5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 Basis of preparation
This condensed set of consolidated financial statements has been prepared in
accordance with International Accounting Standard 34 'Interim Financial
Reporting'. As required by the Disclosure and Transparency Rules of the
Financial Conduct Authority, this condensed set of consolidated financial
statements has been prepared applying the accounting policies and presentation
which were applied in the preparation of the Group's published consolidated
financial statements for the year ended 31 December 2024.
Any judgements and estimates applied in the condensed set of consolidated
financial statements are consistent with those applied in the preparation of
the Group's published consolidated financial statements for the year ended 31
December 2024.
The financial information shown in these interim financial statements is
unaudited and does not constitute statutory accounts within the meaning of
section 434 of the Companies Act 2006. The directors have elected to not
obtain a review opinion over these interim financial statements by the Group's
auditor, Deloitte.
The comparative figures for the financial year ended 31 December 2024 are not
the Company's statutory accounts for that financial year. The results for the
year ended and position as at 31 December 2024 have been taken from the
Group's 2024 Annual Report and Accounts. Those accounts have been reported on
by the Company's auditor and delivered to the Registrar of Companies. The
report of the auditor was (i) unqualified, (ii) did not include a reference to
any matters to which the auditor drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
Going concern
After making appropriate enquiries, including detailed consideration of the
impact on the Group's operations and financial position and prospects, the
directors confirm that they are satisfied that the Company and the Group have
adequate resources to continue in business for the foreseeable future, a
period of not less than 12 months from the date of this report. Accordingly,
they continue to adopt the going concern basis in the preparation of these
interim financial statements.
Restatement
A prior year restatement has been applied in these interim financial
statements in respect of the accounting treatment of the Canada Life portfolio
acquired in 2023. The prior year restatement was also applied in the published
consolidated financial statements for the year ended 31 December 2024.
In the interim financial statements for the period ended 30 June 2024, a long
contract boundary was applied in valuing the future cash flows beyond the
expected termination of the initial 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. Therefore, the previously reported
values in the 2024 interim financial statements for this business have been
restated as at 31 December 2023. The reinsurance agreement terminated in
February 2025 following the court approval of the Part VII application to
legally transfer the policies into CA plc.
Balance Sheet As reported Restated
£m £m
Present value of future cash flows 14.6 2.8
Risk adjustment (1.0) -
CSM (10.5) (0.4)
Assets for incurred claims 0.7 0.7
Insurance contract assets total 3.8 3.1
The total net assets reported at 30 June 2024 have therefore been restated to
£329.5m from £330.2m, as previously reported.
Income statement: As reported Restated
£m £m
Insurance revenue 136.1 136.0
Insurance service expense (138.2) (138.2)
The total comprehensive loss reported for the six months to 30 June 2024 at
£6.7m has therefore been restated to £7.3m.
Basic earnings per share (based on profit or loss for the period) has been
restated from 0.66p to 0.24p.
Diluted earnings per share (based on profit or loss for the period) has been
restated from 0.65p to 0.24p.
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.
2 Significant judgements and estimates
The critical accounting judgements and key sources of estimation and
uncertainty remain largely unchanged from those described in Note A5 of the
2024 Annual Report and Accounts. The potential impact on the Group has been
considered in the preparation of these interim 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.
Discount rates
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.
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.
When the present value of future cash flows is estimated using stochastic
modelling, the cash flows are discounted at scenario-specific rates
calibrated, on average, to be the risk-free rates as adjusted for illiquidity.
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 following table:
Yield Curve Broad Product Category Currency 30 June 2024 31 December 2024
Years Years
1 5 10 20 30 1 5 10 20 30
Risk-Free Rate Unit-linked/index-linked/with-profits - VFA EUR 1.90% 2..17% 2.52% 2.75% 2.84% 2.24% 2.14% 2.27% 2.26% 2.39%
Unit-linked/index-linked/with-profits - GMM (with high liquidity) GBP 3.80% 3.66% 4.04% 4.54% 4.57% 4.46% 4.04% 4.07% 4.30% 4.23%
Short-term protection SEK 1.73% 2.07% 2.46% 2.85% 3.00% 2.25% 2.41% 2.63% 2.93% 3.05%
Risk-Free Rate + VA Immediate annuities EUR 2.10% 2.37% 2.72% 2.95% 3.01% 2.47% 2.37% 2.50% 2.49% 2.58%
Term assurance & other non-linked GBP 4.05% 3.91% 4.29% 4.79% 4.82% 4.70% 4.28% 4.31% 4.54% 4.47%
Unit-linked/index-linked/with-profits - GMM (with medium liquidity)
Market Mortgage Rates Waard Savings Mortgage EUR 2.81% 3.08% 3.43% 3.66% 3.75% 3.36% 3.32% 3.43% 3.39% 3.51%
3 Earnings per share
Earnings per share are based on the following:
Restated
Unaudited Year ended
Six months ended 30 Jun 31 Dec
2025 2024 2024
(Loss)/profit for the period attributable to shareholders (£m) (restated) (10.8) 0.4 3.9
Weighted average number of ordinary shares 151,028,196 150,886,918 150,938,024
Basic earnings per share (7.14)p 0.24p 2.56p
Diluted earnings per share (7.03)p 0.24p 2.52p
The weighted average number of ordinary shares in respect of the six months
ended 30 June 2025 is based upon 150,991,019 shares in issue at the beginning
of the period and 151,124,742 at the end of the period. No shares were held
in treasury.
The weighted average number of ordinary shares in respect of the six months
ended 30 June 2024 is based upon 150,849,587 shares in issue at the beginning
of the period, and 150,954,119 shares in issue at the end of the period. No
shares were held in treasury.
The weighted average number of ordinary shares in respect of the year ended 31
December 2024 is based upon 150,849,587 shares in issue at the beginning of
the period and 150,991,019 shares in issue at the end of the period. No
shares were held in treasury.
There were 2,456,598 share options outstanding at 30 June 2025 (30 June 2024:
2,456,598). Accordingly, there is dilution of the average number of ordinary
shares in issue. There were 2,330,118 share options outstanding as at 31
December 2024.
4 Retained earnings
Six months ended 30 Jun
Unaudited
2025 2024
£m £m
Retained earnings attributable to equity holders of the parent company
comprise:
Balance at 1 January (restated) 136.5 167.0
(Loss)/ profit for the period (restated) (10.8) 0.4
Share-based payment 1.3 0.5
Dividends:
Final approved and paid for 2023 - (23.5)
Final approved and paid for 2024 (24.3) -
Balance at 30 June (restated) 102.7 144.4
The interim dividend in respect of 2024, approved and paid in 2024 was paid at
the rate of 8.61p per share.
The final dividend in respect of 2024, approved and paid in 2025, was paid at
the rate of 16.08p per share so that the total dividend paid to the equity
shareholders of the Company in respect of the year ended 31 December 2024 was
made at the rate of 24.69p per share.
An interim dividend of 7.70p(Δ) per share in respect of the six months ending
30(th) June 2025 is payable on 17 October 2025 to equity shareholders of the
Company registered at the close of business on 5 September 2025, the dividend
record date, was approved by the Directors after the balance sheet date. The
resulting dividend of £13.4m (pre rights issue) has not been provided for in
these financial statements and there are no income tax consequences.
The following table summarises dividends per share in respect of the six-month
period ended 30 June 2025 and the year ended 31 December 2024:
Six months ended Year
30 Jun 2025 Ended
31 Dec 2024
Pence Pence
Interim - approved/paid 7.70 8.61
Final - proposed/paid - 16.08
Total 7.70 24.69
( )
(Δ) Dividend per share has been rebased to reflect the rights issue bonus
factor of 1.15x applied to historic dividend per share metrics.
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 30 June 2025 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. CA contains a mix of unit-linked, with-profits and non-linked
products and represents the UK acquisition vehicle, recently acquiring 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.
The integration of the Waard and Scildon businesses, has been executed after
the balance sheet date and therefore has not been applied in the segmental
reporting in these financial statements.
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 six months ended 30 June 2025.
(i) Segmental reporting for the six months ended 30 June 2025
Unaudited Scildon Other Group and consolidation adjustments
Movestic Waard Group
UK Group
£m £m £m £m £m £m
Insurance revenue 41.8 5.2 13.5 75.5 - 136.0
Insurance service expense (44.6) (0.9) (13.4) (77.8) - (136.7)
Net expenses from reinsurance contracts held 3.0 (1.7) (0.5) 2.2 - 3.0
Segmental insurance service result 0.2 2.6 (0.4) (0.1) - 2.3
Net investment return 100.6 (120.1) 6.3 (2.6) (5.6) (21.4)
Net finance (expenses)/income from insurance contracts issued (32.4) 4.2 (3.8) 13.6 - (18.4)
Net finance income/(expenses) from reinsurance contracts held 3.7 0.3 0.1 0.5 - 4.6
Net change in investment contract liabilities (64.2) 111.1 (0.4) - - 46.5
Change in liabilities relating to policyholders' funds held by the Group - 5.1 - - - 5.1
Segmental net investment result 7.7 0.6 2.2 11.5 (5.6) 16.4
Fee, commission and other operating income 19.8 40.2 0.1 - - 60.1
Segmental revenue, net of investment result 27.7 43.4 1.9 11.4 (5.6) 78.8
Other operating expenses (16.9) (36.6) (0.9) (0.9) (16.6) (71.9)
Financing costs (0.1) (0.1) - - (5.3) (5.5)
Profit/(loss) before tax and consolidation adjustments 10.7 6.7 1.0 10.5 (27.5) 1.4
Consolidation adjustments:
Amortisation of intangible assets (1.5) (4.5) - - - (6.0)
Segmental income less expenses 9.2 2.2 1.0 10.5 (27.5) (4.6)
Income tax credit / (charge) (3.5) - (0.1) (2.6) - (6.2)
(Loss)/profit after tax 5.7 2.2 0.9 7.9 (27.5) (10.8)
(ii) Segmental assets and liabilities as at 30 June 2025
Unaudited Scildon Other Group and consolidation adjustments
Movestic Waard Group
UK Group
£m £m £m £m £m £m
Segment assets 4,401.1 6,047.7 855.6 2,067.8 137.1 13,509.3
Segment liabilities (4,313.5) (5,948.2) (795.9) (1,940.6) (217.7) (13,216.0)
Segment net assets 87.6 99.4 59.7 127.2 (80.6) 293.3
(iii) Segmental reporting for the six months ended 30 June 2024 (restated)
Unaudited Scildon Other Group and consolidation adjustments
Movestic Waard Group
UK Group
£m £m £m £m £m £m
Insurance revenue 36.7 5.1 14.5 79.7 - 136.0
Insurance service expense (33.5) (2.7) (17.5) (84.5) - (138.2)
Net expenses from reinsurance contracts held (0.9) (1.0) (0.1) (1.0) - (1.2)
Segmental insurance service result 4.1 1.4 (3.1) (5.8) - (3.4)
Net investment return 243.1 457.3 (2.4) 107.2 6.6 811.8
Net finance (expenses)/income from insurance contracts issued (64.0) (15.7) 3.7 (98.6) - (174.6)
Net finance income/(expenses) from reinsurance contracts held (2.0) - - (0.5) - (2.5)
Net change in investment contract liabilities (161.1) (330.7) 0.9 - - (490.9)
Change in liabilities relating to policyholders' funds held by the Group - (109.0) - - - (109.0)
Segmental net investment result 20.0 1.9 2.2 9.1 6.6 39.8
Fee, commission and other operating income 17.6 37.1 0.2 - - 54.9
Segmental revenue, net of investment result 41.7 40.4 (0.7) 3.3 6.6 91.3
Other operating expenses (17.4) (31.7) (3.7) (2.1) (11.1) (66.0)
Financing costs (0.2) (0.2) - 0.0 (5.2) (5.6)
Profit/(loss) before tax and consolidation adjustments 24.1 8.5 (4.4) 1.2 (9.7) 19.7
Consolidation adjustments:
Amortisation of intangible assets (1.5) (5.4) - - - (6.9)
Segmental income less expenses 22.6 3.1 (4.4) 1.2 (9.7) 12.8
Post completion gain on portfolio acquisition - - - - - -
(Loss)/profit before tax 22.6 3.1 (4.4) 1.2 (9.7) 12.8
Income tax credit / (charge) (12.9) - 0.8 (0.3) - (12.4)
(Loss)/profit after tax 9.7 3.1 (3.8) 0.9 (9.7) 0.4
(iv) Segmental assets and liabilities as at 30 June 2024 (restated)
Unaudited Scildon Other Group and consolidation adjustments
Movestic Waard Group
UK Group
£m £m £m £m £m £m
Segment assets 4,549.0 4,984.1 885.5 2,025.3 94.1 12,538.0
Segment liabilities (4,388.9) (4,887.9) (815.8) (1,912.5) (203.4) (12,208.5)
Segment net assets 160.1 96.2 69.7 112.8 (109.3) 329.5
(v) Segmental reporting for the year ended 31 December 2024
Scildon Other Group and consolidation adjustments
Movestic Waard Group
UK Group
£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) - (224.1)
Net (expenses) / income 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 2014.4 9.3 1,286.1
Net finance income from insurance contracts issued (98.4) (23.6) (23.3) (189.6) - (334.8)
Net finance (expenses)/income 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 net 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
Consolidation adjustments:
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 - - - - -
Profit/(loss) before tax 28.3 9.6 (2.5) 7.6 (22.2) 20.8
Income tax credit / (charge) (17.0) (0.5) 0.8 (2.0) (1.8) (16.9)
Profit/(loss) after tax 11.3 9.1 (1.7) 5.6 (20.4) 3.9
(vi) Segmental assets and liabilities as at 31 December 2024
Scildon Other Group and consolidation adjustments
Movestic Waard Group
UK Group
£m £m £m £m £m £m
Segment assets 4,473.8 5,269.7 851.9 2,035.7 124.0 12,755.1
Segment liabilities (4,347.2) (5,177.8) (789.2) (1,920.7) (205.8) (12,440.7)
Segment net assets 126.6 91.9 62.7 115.0 (81.8) 314.4
6 Insurance result
Six months ended 30 Jun 2025 Six months ended 30 Jun 2024
Unaudited (restated)
£m £m
Insurance revenue
Contracts not measured under the PAA:
Amounts relating to changes in the liability for remaining coverage:
Expected incurred claims and other directly attributable expenses 116.7 116.2
Change in risk adjustment for non-financial risk for the risk expired 1.4 2.7
CSM recognised for the services provided 11.5 10.5
Insurance acquisition cash flows recovery 1.6 1.9
Insurance revenue for contracts not measured under the PAA 131.2 131.3
Insurance revenue for contracts measured under the PAA 4.8 4.7
Total insurance revenue 136.0 136.0
Insurance service expenses
Incurred claims and other directly attributable expenses (86.3) (97.4)
Changes that relate to past service - changes in the FCF relating to the LIC 3.6 2.2
Losses on onerous contracts and reversals of those losses (52.4) (41.1)
Insurance acquisition cash flows amortisation (1.6) (1.9)
Total insurance service expenses (136.7) (138.2)
Net income/(expenses) from reinsurance contracts held
Reinsurance expenses (allocation of reinsurance premiums paid) - contracts not
measured under the PAA
Amounts relating to changes in the remaining coverage:
Expected amount recoverable for claims and other insurance service expenses (25.8) (23.2)
Change in risk adjustment for non-financial risk for the risk expired (0.4) (1.1)
CSM recognised for the services received (1.3) (1.6)
Reinsurance expenses (allocation of reinsurance premiums paid) - contracts not (27.5) (25.9)
measured under the PAA
Reinsurance expenses (allocation of reinsurance premiums paid) - contracts (1.4) (1.4)
measured under the PAA
Amounts recoverable for incurred claims and other incurred insurance service 33.3 26.9
expenses
Changes in amounts recoverable that relate to past service - adjustments to (1.3) (0.8)
incurred claims
Recoveries of loss on recognition of onerous underlying contracts 0.5 0.2
Recoveries of losses on onerous underlying contracts and reversals of such (0.6) (0.2)
losses
Total net expenses from reinsurance contracts held 3.0 (1.2)
Total insurance service result 2.3 (3.4)
7 Net investment result
Investment return on surplus shareholder assets is included in the insurance
contracts column.
Investment contracts (without DPF's)
Unaudited Insurance contracts Total
Investment result for the six months ended 30 June 2025
Net investment return £m £m £m
Interest revenue from financial assets not measured at FVTPL 0.1 - 0.1
Net gains on financial investments mandatorily measured at FVTPL (0.3) (46.8) (47.1)
Net gains on financial investments designated as FVTPL 23.4 (5.1) 18.3
Net gains from fair value adjustments to investment properties 7.3 - 7.3
Total net investment return 30.5 (51.9) (21.4)
Finance income/(expenses) from insurance contracts issued
Change in fair value of underlying assets of contracts measured under the VFA (1.8) - (1.8)
Interest accreted (32.6) - (32.6)
Effect of changes in interest rates and other financial assumptions 16.6 - 16.6
Effect of changes in fulfilment cash flows at current rates when CSM is (0.6) - (0.6)
unlocked at locked in rates
Total finance income from insurance contracts issued (18.4) - (18.4)
Finance income from reinsurance contracts issued
Interest accreted 3.4 - 3.4
Effect of changes in interest rates and other financial assumptions 1.6 - 1.6
Effect of changes in fulfilment cash flows at current rates when CSM is (0.4) - (0.4)
unlocked at locked in rates
Total finance expenses from reinsurance contracts issued 4.6 - 4.6
Net insurance finance expenses (13.8) - (13.8)
Net change in investment contract liabilities - 46.5 46.5
Change in liabilities relating to policyholder funds held by the Group - 5.1 5.1
Net investment result 16.7 (0.3) 16.4
Investment contracts (without DPF's)
Unaudited Insurance contracts Total
Investment result for the six months ended 30 June 2024 (restated)
Net investment return £m £m £m
Interest revenue from financial assets not measured at FVTPL 4.5 - 4.5
Net gains on financial investments mandatorily measured at FVTPL 326.4 374.8 701.2
Net gains on financial investments designated as FVTPL (128.9) 225.1 96.2
Net gains from fair value adjustments to investment properties 9.9 - 9.9
Total net investment return 211.9 599.9 811.8
Finance income/(expenses) from insurance contracts issued
Change in fair value of underlying assets of contracts measured under the VFA (175.8) - (175.8)
Interest accreted (37.4) - (37.4)
Effect of changes in interest rates and other financial assumptions 33.8 - 33.8
Effect of changes in fulfilment cash flows at current rates when CSM is 4.8 - 4.8
unlocked at locked in rates
Total finance income from insurance contracts issued (174.6) - (174.6)
Finance income from reinsurance contracts issued
Interest accreted 6.8 - 6.8
Effect of changes in interest rates and other financial assumptions (2.8) - (2.8)
Effect of changes in fulfilment cash flows at current rates when CSM is (1.5) - (1.5)
unlocked at locked in rates
Total finance expenses from reinsurance contracts issued 2.5 - 2.5
Net insurance finance expenses (172.1) - (172.1)
Net change in investment contract liabilities - (490.9) (490.9)
Change in liabilities relating to policyholder funds held by the Group - (109.0) (109.0)
Net investment result 39.8 - 39.8
8 Fund management-based fees recognised under IFRS
15
Fund management-based fees recognised under IFRS 15, included within fees,
commission and other operating income, has been disaggregated based on the
geographical region as follows:
Six months ended 30 Jun
Unaudited
2025 2024
£m £m
UK 18.7 17.4
Sweden 5.1 5.1
Total 23.8 22.5
9 Financial investments
The carrying amount of financial investments and other financial assets and
liabilities held by the Group at the balance sheet date are as follows:
Amortised cost FVTPL - Designated FVTPL - Mandatory Total
Unaudited
30 June 2025
£m £m £m £m
Financial investments
Equity securities - - 189.8 189.8
Holdings in collective investment schemes - - 6,688.9 6,688.9
Debt securities - government bonds - 394.6 - 394.6
Debt securities - other - 652.6 10.2 662.8
Policyholder funds held by the Group - 2,569.5 - 2,569.5
Mortgage loan portfolio - 353.9 - 353.9
Total - 3,970.6 8,888.9 12,859.5
Derivatives and other financial assets
Amounts deposited with reinsurers - 34.1 - 34.1
Derivative financial instruments - - 0.6 0.6
Other assets 53.5 - - 53.5
Cash and cash equivalents - 170.2 - 170.2
Total financial investments and financial assets 53.5 4,174.9 8,889.5 13,117.9
Financial liabilities
Investment contracts at fair value through profit or loss - 6,143.7 - 6,143.7
Liabilities relating to policyholder funds held by the Group - 2,568.8 - 2,568.8
Derivative financial instruments - - 8.8 8.8
Borrowings 203.8 - - 203.8
Other current liabilities 108.1 - - 108.1
Total financial liabilities 311.9 8712.5 8.8 9,033.2
Amortised cost FVTPL - Designated FVTPL - Mandatory Total
31 December 2024
£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 held 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 - 34.3 - 34.3
Amounts deposited with reinsurers - - 0.1 0.1
Derivative financial instruments
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 11,660.1
Financial liabilities
Investment contracts at fair value through profit or loss - 6,116.7 - 6,116.7
Liabilities relating to policyholder funds held 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
10 Financial asset and liability fair value disclosures
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).
Level 1 Level 2 Level 3 Total
Unaudited
Fair value measurement at 30 June 2025
£m £m £m £m
Investment properties - - 94.0 94.0
Financial assets
Equities - Listed 189.8 - - 189.8
Holdings in collective investment schemes 8,494.4 - 194.5 8,688.9
Debt securities - government bonds 394.6 - - 394.6
Debt securities - other debt securities 662.8 - - 662.8
Policyholders' funds held by the Group 2,524,9 - 44.6 2,569.5
Mortgage loan portfolio - 353.9 - 353.9
Amounts deposited with reinsurers - 34.1 - 34.1
Derivative financial instruments - 0.6 - 0.6
Total 12,266.5 388.6 333.1 12,988.2
Financial liabilities
Investment contracts at fair value through profit or loss - 6,143.7 - 6,143.7
Liabilities related to policyholders' funds held by the Group - 2,568.8 - 2,568.8
Derivative financial instruments - 8.8 - 8.8
Total - 8,721.3 - 8,721.3
Level 1 Level 2 Level 3 Total
Fair value measurement at 31 December 2024
£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 - 7,842.8
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 fair value of holdings in collective investment schemes classified as
Level 2 are related to the UK segment and Scildon. These do not meet the
requirements for classification as Level 1, as their fair value is determined
using valuation techniques with observable market inputs. The holdings
classified as Level 3 £194.5m (Dec 2024: £168.6m) 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 the Group
There is also a small holding of assets classified as Level 3 of £44.6m (Dec
2024: £44.2m) 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 2025 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 derivative financial instruments include a foreign currency hedge related
to the Group. This was entered into 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 instrument 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 four
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 CPR used in the valuation of the fund as at 30 June
2025 was 3.7% (31 December 2024: 3.7%).
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 30 June 2025 this resulted in discounting the cash flows in each mortgage
using a range from 3.86% to 4.62% (31 December 2024: 4.06% to 4.26%).
An impairment percentage is applied to those loan cash flows which are in
arrears, to reflect the chance of the loan actually going into default. For
those loans which are 1, 2 or 3 months in arrears, an impairment percentage is
applied to reflect the chance of default. This percentage ranges from 0.60%
for 1 month in arrears to 13.70% for loans which are 3 months in arrears (31
December 2024: 0.60% for 1 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 CPR would reduce the value of the asset by £1.9m
(31 December 2024: £2.0m).
A 1 per cent decrease in the CPR would increase the value of the asset by
£2.1m (31 December 2024: £2.2m).
A 1 per cent increase in the discount rate would reduce the value of the asset
by £14.2m (31 December 2024: £15.3m).
A 1 per cent decrease in the discount rate would increase the value of the
asset by £16.1m (31 December 2024: £17.5m).
Reconciliation of Level 3 fair value measurements of financial instruments
Unaudited 30 June 2025 Investment Holdings in Policyholder Total
properties collective funds held
investment by Group
schemes
£m £m £m £m
At start of period 91.7 168.6 44.2 304.5
Total gains and losses recognised in the income statement 6.4 19.3 (6.7) 19.0
Purchases 0.7 - 11.5 12.2
Settlements (4.8) - (7.0) (11.8)
Exchange rate adjustment - 6.6 2.6 9.2
At the end of period 94.0 194.5 44.6 333.1
31 December 2024 Investment Holdings in Policyholder Total
properties collective funds held
investment by Group
schemes
£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 (21.8)
Settlements (7.9) - (13.9) (10.6)
Exchange rate adjustment - (7.4) (3.2) (10.6)
At the end of period 91.7 168.6 44.2 304.5
Carrying amount Fair value
Unaudited 31 Dec Unaudited 31 Dec
30 Jun 30 Jun
£m 2025 2024 2025 2024
Financial liabilities
Borrowings 201.0 200.8 170.7 166.1
Amounts due in relation to financial reinsurance 1.6 2.4 1.6 2.3
Term finance 1.2 1.6 1.2 1.6
Borrowings consist of the Tier 2 debt, an amount due in relation to financial
reinsurance and term finance.
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 measured at fair value with
reference to market interest rates at the balance sheet date. The term
finance's fair value is not materially different to its carrying value.
There were no transfers between Levels 1, 2 and 3 during the period. The Group
holds no Level 3 liabilities as at the balance sheet date.
11 Insurance and reinsurance contracts
(a) Composition of the balance sheet
(i) Composition of the balance sheet as at 30 June 2025
Unaudited Scildon
Movestic Waard Group
UK Group
£m £m £m £m £m
Insurance contracts
Insurance contract liabilities 1,283.9 176.0 729.3 1,924.4 4,113.6
Insurance contract assets - - - - -
Net insurance contract liabilities 1,283.9 176.0 729.3 1,924.4 4,113.6
Reinsurance contracts
Reinsurance contract assets 149.8 10.6 2.4 - 162.8
Reinsurance contract liabilities (3.2) - - (9.7) (12.9)
Net reinsurance contract liabilities 146.6 10.6 2.4 (9.7) 149.9
(ii) Composition of the balance sheet as at 31 December
2024
Scildon
Movestic Waard Group
UK Group
£m £m £m £m £m
Insurance contracts
Insurance contract liabilities 1,308.5 174.1 720.4 1,896.1 4,099.1
Insurance contract assets (1.8) - - - (1.8)
Net 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)
Net reinsurance contract liabilities 152.8 12.4 2.7 (14.6) 153.3
(iii) Composition of the balance sheet as at 30 June 2024
(restated)
Unaudited Scildon
Movestic Waard Group
UK Group
£m £m £m £m £m
Insurance contracts
Insurance contract liabilities 1,368.3 176.7 740.7 1,893.7 4,179.4
Insurance contract assets (2.4) - - - (2.4)
Net insurance contract liabilities 1,365.9 176.7 740.7 1,893.7 4,177.0
Reinsurance contracts
Reinsurance contract assets 163.4 13.1 3.3 - 179.8
Reinsurance contract liabilities (2.1) - - (12.3) (14.4)
Net reinsurance contract liabilities 161.3 13.1 3.3 (12.3) 165.4
(b) Movements in insurance contract balances - Analysis by
remaining coverage and incurred claims
(i) Movements in insurance contract balances for the
period 1 January 2025 to 30 June 2025
Liabilities for Remaining Coverage Liabilities for Incurred Claims
Contracts under PAA
Unaudited Excluding Loss Component Loss component For contracts not under PAA Total
PV of future cash flows Risk adjustment
£m £m £m £m £m £m
Net insurance contract liabilities as at 1 January 2025 3,866.4 102.2 98.5 28.5 1.7 4,097.3
Changes in the statement of profit and loss
Insurance revenue
Contracts measured under the fair value approach (32.1) - - - - (32.1)
Contracts measured under the full retrospective approach (103.9) - - - - (103.9)
Insurance revenue total (136.0) - - - - (136.0)
Insurance service expenses - (38.8) 120.9 4.2 - 86.3
Incurred claims and other directly attributable expenses
Adjustments to liabilities for incurred claims - - - (3.5) (0.1) (3.6)
Losses and reversals of losses on onerous contracts - 52.4 - - - 52.4
Amortisation of insurance acquisition cash flows 1.6 - - - - 1.6
Insurance service expense total 1.6 13.6 120.9 0.7 (0.1) 136.7
Insurance service result (134.4) 13.6 120.9 0.7 (0.1) 0.7
Net finance expenses from insurance contracts 17.3 0.4 - 0.7 - 18.4
Effect of movements in exchange rates 98.2 3.3 1.7 1.7 0.1 105.0
Total amounts recognised in comprehensive income (18.9) 17.3 122.6 3.1 - 124.1
Investment components (150.7) - 150.7 - - -
Cash flows
Premiums received 147.0 - 1.6 - - 148.6
Claims and other directly attributable expenses paid - - (249.4) (4.1) - (253.5)
Insurance acquisition cash flows (2.9) - - - - (2.9)
Total cash flows 144.1 - (247.8) (4.1) - (107.8)
Net insurance contract liabilities as at 30 June 2025 3,840.9 119.5 124.0 27.5 1.7 4,113.6
(ii) Movements in insurance contract balances for the
period 1 January 2024 to 30 June 2024 (restated)
Liabilities for Remaining Coverage Liabilities for Incurred Claims
Contracts under PAA
Unaudited Excluding Loss Component Loss component For contracts not under PAA Total
PV of future cash flows Risk adjustment
£m £m £m £m £m £m
Net Insurance contract liabilities as at 1 January 2024 3,958.1 89.4 113.4 36.9 1.2 4,199.0
Changes in the statement of profit and loss
Insurance revenue
Contracts measured under the fair value approach (29.6) - - - - (29.6)
Contracts measured under the full retrospective approach (106.4) - - - - (106.4)
Insurance revenue total (136.0) - - - - (136.0)
Insurance service expenses - (25.3) 118.1 4.6 - 97.4
Incurred claims and other directly attributable expenses
Adjustments to liabilities for incurred claims - - - (2.1) (0.1) (2.2)
Losses and reversals of losses on onerous contracts - 41.1 - - - 41.1
Amortisation of insurance acquisition cash flows 1.9 - - - - 1.9
Insurance service expense total 1.9 15.8 118.1 2.5 (0.1) 138.2
Insurance service result 134.2 15.8 118.1 2.5 (0.1) 2.1
Net finance expenses from insurance contracts 174.2 0.4 - - - 174.6
Effect of movements in exchange rates (60.7) (1.8) (1.1) (1.5) - (65.1)
Total amounts recognised in comprehensive income (20.7) 14.4 117.0 1.0 (0.1) 111.6
Investment components (167.4) - 167.8 - - 0.4
Cash flows
Premiums received 151.5 - - - - 151.5
Claims and other directly attributable expenses paid - - (279.0) (4.1) - (283.1)
Insurance acquisition cash flows (2.5) - - - - (2.5)
Total cash flows 149.0 - (279.0) (4.1) - (134.1)
Net insurance contract liabilities as at 30 June 2024 3,919.1 103.8 119.2 33.8 1.1 4,177.0
(c) Movements in insurance contract balances - Analysis by
measurement component - contracts not measured under the PAA
(i) Movements in insurance contract balances for the
period 1 January 2025 to 30 June 2025
Unaudited Risk Adjustment CSM (contracts measured under FVA) Total
Present value of future cash flows CSM (new contracts and contracts measured under FRA)
£m £m £m £m £m
Net insurance contract liabilities as at 1 January 2025 3,826.5 30.1 167.9 40.8 4,056.3
Changes that relate to current service
CSM recognised for services provided - - (10.7) (2.0) (12.7)
Change in risk adjustment for non-financial risk for risk expired - (1.4) - - (1.4)
Experience adjustments (33.4) (0.9) - - (33.4)
Total changes that relate to current service (33.4) (1.4) (10.7) (2.0) (47.5)
(14.4) 3.8 12.7 - 2.1
Changes that relate to future service
Contracts initially recognised in the period
Changes in estimates that adjust the CSM (5.1) (0.7) 1.1 4.7 -
Changes in estimates that result in losses or reversals of losses on onerous 51.0 (0.5) - - 50.5
underlying contracts
Total changes that relate to future service 31.5 2.6 13.8 4.7 52.6
Insurance service result (1.9) 1.2 3.1 2.7 5.1
Net finance expenses from insurance contracts 15.7 (0.2) 1.8 0.5 17.8
Effect of movements in exchange rates 95.4 0.9 6.1 0.4 102.8
Total amounts recognised in comprehensive income 109.2 1.9 11.0 3.6 125.7
Cash flows
Premiums received 143.0 - - - 143.0
Claims and other directly attributable expenses paid (248.4) - - - (248.4)
Insurance acquisition cash flows (2.6) - - - (2.6)
Total cash flows (108.0) - - - (108.0)
Net insurance contract liabilities as at 30 June 2025 3,827.7 32.0 178.9 44.4 4,083.0
(ii) Movements in insurance contract balances for the
period 1 January 2024 to 30 June 2024 (restated)
Unaudited Risk Adjustment CSM (contracts measured under FVA) Total
Present value of future cash flows CSM (new contracts and contracts measured under FRA)
£m £m £m £m £m
Net insurance contract liabilities as at 1 January 2024 3,918.7 51.6 161.0 27.5 4,158.8
Changes that relate to current service
CSM recognised for services provided - - (8.8) (1.8) (10.6)
Change in risk adjustment for non-financial risk for risk expired - (3.2) - - (3.2)
Experience adjustments (22.9) - - - (22.9)
Total changes that relate to current service (22.9) (3.2) (8.8) (1.8) (36.7)
Changes that relate to future service (4.3) 0.3 5.5 - 1.5
Contracts initially recognised in the period
Changes in estimates that adjust the CSM (7.0) 1.8 0.8 4.4 -
Changes in estimates that result in losses or reversals of losses on onerous 39.0 0.8 - - 39.8
underlying contracts
Total changes that relate to future service 27.7 2.9 6.3 4.4 41.3
Insurance service result 4.8 (0.3) (2.5) 2.6 4.6
Net finance expenses from insurance contracts 173.2 (0.7) 1.8 0.3 174.6
Effect of movements in exchange rates (58.9) (0.9) (3.5) (0.2) (63.5)
Total amounts recognised in comprehensive income 119.1 (1.9) (4.2) 2.7 115.7
Cash flows
Premiums received 146.8 - - - 146.8
Claims and other directly attributable expenses paid (279.0) - - - (279.0)
Insurance acquisition cash flows (2.3) - - - (2.3)
Total cash flows (134.5) - - - (134.5)
Net insurance contract liabilities as at 30 June 2024 3,903.3 49.7 156.8 30.2 4,140.0
(d) Movements in reinsurance contract balances - Analysis
by remaining coverage and incurred claims
(i) Movements in reinsurance contract balances for the
period 1 January 2025 to 30 June 2025
Assets for Remaining Coverage Liabilities for Incurred Claims
Contracts under PAA
Unaudited Loss-Recovery component For contracts not under PAA Total
Excluding Loss-Recovery Component
Future cash flows Risk adjustment
£m £m £m £m £m £m
Net reinsurance contract assets as at 1 January 2025 120.6 5.1 15.9 11.6 0.1 153.3
Does this
Reinsurance expenses - allocation of reinsurance (29.1) - - - - (29.1)
Amounts recoverable from reinsurers: - - 27.1 1.0 - 28.1
Recoveries of incurred claims and other directly attributable expenses
Changes in the expected recoveries for past claims - - 5.4 (1.3) - 4.1
Changes in the loss recovery component - (0.1) - - - (0.1)
Net (expenses)/income from reinsurance contracts held (29.1) (0.1) 32.5 (0.3) - 3.0
Net finance expenses from reinsurance contracts 4.3 - - 0.3 - 4.6
Effect of movements in exchange rates (0.6) 0.2 0.1 0.7 - 0.4
Total amounts recognised in comprehensive income (25.4) 0.1 32.6 0.7 - 8.0
Investment components (1.4) - 1.4 - - -
Cash flows
Premiums paid net of ceding commission 17.6 - - - - 17.6
Recoveries from reinsurance contracts held - - (28.0) (1.0) - (29.0)
Total cash flows 17.6 - (28.0) (1.0) - (11.4)
Net reinsurance contract assets as at 30 June 2025 111.4 5.2 21.9 11.3 0.1 149.9
(ii) Movements in reinsurance contract balances for the
period 1 January 2024 to 30 June 2024 (restated)
Assets for Remaining Coverage Liabilities for Incurred Claims
Contracts under PAA
Unaudited Loss-Recovery component For contracts not under PAA Total
Excluding Loss-Recovery Component
Future cash flows Risk adjustment
£m £m £m £m £m £m
Net reinsurance contract assets as at 1 January 2024 124.0 6.2 23.3 14.9 0.2 168.9
Reinsurance expenses - allocation of reinsurance (27.3) - - - - (27.3)
Amounts recoverable from reinsurers: - - 25.8 1.2 - 27.0
Recoveries of incurred claims and other directly attributable expenses
Changes in the expected recoveries for past claims - - - (0.8) - (0.8)
Changes in the loss recovery component - (0.1) - - - (0.1)
Net (expenses)/income from reinsurance contracts held (27.3) (0.1) 25.8 0.4 - (1.2)
Net finance expenses from reinsurance contracts 2.5 - - - - 2.5
Effect of movements in exchange rates 0.5 (0.1) (0.2) (0.6) - (0.4)
Total amounts recognised in comprehensive income (24.3) (0.2) 25.6 (0.2) - 0.9
Investment components (1.0) - 1.0 - - -
Cash flows
Premiums paid net of ceding commission 27.0 - - - - 27.0
Recoveries from reinsurance contracts held - - (30.0) (1.1) - (31.1)
Total cash flows 27.0 - (30.0) (1.1) - (4.1)
Net reinsurance contract assets as at 30 June 2024 125.7 6.0 19.9 13.6 0.2 165.4
(e) Movements in reinsurance contract balances - Analysis
by measurement component - contracts not measured under the PAA
(i) Movements in reinsurance contract balances for the
period 1 January 2025 to 30 June 2025
Unaudited Risk Adjustment CSM (contracts measured under FVA) Total
Present value of future cash flows CSM (new contracts and contracts measured under FRA)
£m £m £m £m £m
Net reinsurance contract assets as at 1 January 2025 97.6 10.2 28.6 4.5 140.9
Changes that relate to current service
CSM recognised for services received - - (1.6) 0.2 (1.4)
Change in risk adjustment for non-financial risk for risk expired - (0.5) - - (0.5)
Experience adjustments 6.8 - - - 6.8
Total changes that relate to current service 6.8 (0.5) (1.6) 0.2 4.9
(5.1) 2.2 2.9 - -
Changes that relate to future service
Contracts initially recognised in the period
Changes in estimates that adjust the CSM 4.5 (0.3) (5.9) (3.4) (5.1)
CSM adjustment for income on initial recognition of onerous underlying - - 0.2 - 0.2
contracts
Changes in recoveries of losses on onerous underlying contracts that adjust - - 4.8 - 4.8
the CSM
Total changes that relate to future service (0.6) 1.9 2.0 (3.4) (0.1)
Net (expense)/income from reinsurance contracts held 6.2 1.4 0.4 (3.2) 4.8
Net finance income from reinsurance contracts held 4.1 - 0.2 - 4.3
Effect of movements in exchange rates (1.7) 0.3 1.1 - (0.3)
Total amounts recognised in comprehensive income 8.6 1.7 1.7 (3.2) 8.8
Cash flows
Premiums paid net of ceding commission 17.6 - - - 17.6
Recoveries from reinsurance contracts held (28.0) - - - (28.0)
Total cash flows (10.4) - - - (10.4)
Net reinsurance contract assets as at 30 June 2025 95.8 11.9 30.3 1.3 139.3
(ii) Movements in reinsurance contract balances for the
period 1 January 2024 to 30 June 2024 (restated)
Unaudited Risk Adjustment CSM (contracts measured under FVA) Total
Present value of future cash flows CSM (new contracts and contracts measured under FRA)
£m £m £m £m £m
Net 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 - - (1.4) (0.2) (1.6)
Change in risk adjustment for non-financial risk for risk expired - (1.1) - - (1.1)
Experience adjustments 2.4 - - - 2.4
Total changes that relate to current service 2,4 (1.1) (1.4) (0.2) (0.3)
(2.6) 0.1 2.5 - -
Changes that relate to future service
Contracts initially recognised in the period
Changes in estimates that adjust the CSM 0.4 2.0 (1.0) (1.3) 0.1
CSM adjustment for income on initial recognition of onerous underlying - - 0.1 - 0.1
contracts
Total changes that relate to future service (2.2) 2.1 1.6 (1.3) 0.2
Net (expense)/income from reinsurance contracts held 0.2 1.0 0.2 (1.5) (0.1)
Net finance income from reinsurance contracts held 2.7 (0.4) 0.2 - 2.5
Effect of movements in exchange rates 0.9 (0.1) (0.5) - 0.3
Total amounts recognised in comprehensive income 3.8 0.5 (0.1) (1.5) 2.7
Cash flows
Premiums paid net of ceding commission 25.6 - - - 25.6
Recoveries from reinsurance contracts held (30.0) - - - (30.0)
Total cash flows (4.4) - - - (4.4)
Net reinsurance contract assets as at 30 June 2024 106.3 15.7 26.3 4.1 152.4
12 Borrowings
Unaudited 31 Dec
30 Jun
2025 2024
£m £m
Tier 2 Debt 201.0 200.8
Amount due in relation to financial reinsurance 1.6 2.4
Term finance 1.2 1.6
Total 203.8 204.8
The fair value of amounts due in relation to Tier 2 debt at 30 June 2025 was
£170.7m (31 December 2024: £166.1m).
The fair value of amounts due in relation to financial reinsurance at 30 June
2025 was £1.6m (31 December 2024: £2.3m).
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.
13 Approval of interim financial statements for the six
months ended 30 June 2025
This condensed set of consolidated financial statements has been approved by
the board of directors on 27 August 2025. A copy of this 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
14 Subsequent events
On 3 July 2025, Chesnara plc announced an agreement to acquire the entire
share capital of HSBC Life (UK) Limited from HSBC Bank plc for a total
consideration of £260.0m. Completion of the acquisition is subject to
regulatory approvals and is expected to occur in early 2026.
A rights issue was launched on 3 July 2025, as part of the financing for the
acquisition. The transaction raised £140.0m of cash and increased equity by
£136.0m, with the difference being due to transaction costs.
As a result of the successful rights issue and the proposed HSBC Life (UK)
acquisition, Chesnara plc has been admitted to the FTSE 250 Index, effective
from Monday 18th August.
£150.0m of restricted Tier 1 convertible notes with a coupon rate of 8.5%
were issued by Chesnara plc on 1 August 2025. The notes are listed on the
Global Exchange Market of Euronext Dublin. The transaction raised £150.0m of
cash and increased equity by £147.9m, with the difference being due to
transaction costs.
FINANCIAL CALENDAR
28 August 2025
Results for the six months ended 30 June 2025 announced
4 September 2025
Interim ex-dividend date
5 September 2025
Interim dividend record date
26 September 2025
Last date for dividend reinvestment plan elections
17 October 2025
Interim 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
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
Teneo
The Carter Building
11 Pilgrim Street
London
EC4V 6RN
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. Further information can be found throughout the
financial review.
APM What is it? Why do we use it?
Cash Generation Cash Generation is used by the Group as a measure of assessing how much Cash Generation provides stakeholders with enhanced insight into cash
dividend potential has been generated, subject to ensuring other constraints generation, drawing out components of the result relating to technical
Note - this measure was previously referred to as 'Commercial Cash are managed. complexities or exceptional items. The result is deemed to better reflect the
Generation'. There has been no change to the basis of calculation.
Group's view of commercial performance, showing key drivers within that.
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 (see above) that is generated from the EcV Operating Earnings provide an indication of the underlying value generated
company's ongoing core business operations, excluding any profit earned from by the business. This measure can identify profitable activities and also
investment market conditions in the period and any economic assumption changes inefficient processes and potential management actions.
in the future.
EcV Economic Earnings This is the element of EcV Earnings (see above) that is derived from EcV Economic Earnings are important in order to measure the additional value
investment market conditions in the period and any economic assumption changes generated from investment market factors.
in the future.
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
of return, over and above risk-free, and exclusion of the incremental risk peers, improving market consistency.
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
and administers on behalf of customers.
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.
Cash Generation Base 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 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 Measure - 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 Note 5 of 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' - Sanlam Life & Pensions (UK) Limited which was acquired 28
April 2022. CASLP was dissolved by court order on 14 January 2025; and
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 which represents the functions performed by the Parent
Company, Chesnara plc. Also included in this segment are consolidation
adjustments.
Registered and head office
Building Four, West Strand Business Park
West Strand Road, Preston, Lancashire, PR1 8UY
T +44(0)1772 972050
www.chesnara.co.uk
Registered number: 04947166
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 contain, 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.
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