Profits more than double at Preston life insurance business

John Deane

Preston-based life insurance firm Chesnara reported good growth in economic value, and pre-tax profits, for the six months to June 30, today.

Economic value, which recognises the impact of future profit expectations from existing business, rose from £626.1m to £645.1m, after £20.2m of dividend payments and a foreign exchange loss of £7.9m during the period.

Pre-tax profits of £66.6m soared from £26.5m the previous year, mainly from its Scildon business in the Netherlands, and its UK operations which, it said, benefited from improved investment market conditions.

Interim dividend payments rose 3% to 7.43p per share.

Chief executive John Deane said: “I am pleased to report that during the first half of 2019 we delivered good growth in economic value.

“The closing economic value of £645.1m is 3% higher than at the end of 2018, after payment of the 2018 final dividend of £20.2m, despite the negative impact of a weakening Swedish krona.

“Falls in interest rates, a recovering equity market and the impact, in Sweden and the UK, of the Solvency II symmetric adjustment, created generally adverse conditions for cash generation.

“However, our strong cash balance at group, along with the half year performance, supports the increase of our interim dividend.

“Operationally, the business continues to make progress. In Sweden, funds under management, which are the core source of income for Movestic, have increased by 15% during the first half of the year.

“At a total group level, despite the closed nature of the UK book, the total funds under management have also increased during the period. The robustness of the total funds is a strong indicator of the sustainability of the Chesnara business and financial model.”

He added: “The Scildon development programme work is beginning to have a positive impact with total acquisition costs being 18% lower compared to the first half of 2018, with stable new business levels. There is more to do but it is encouraging to see positive signs from the hard work being undertaken.”

And he reassured shareholders: “While Brexit is dominating the news headlines, we do not need to make any immediate changes to the structure of the company irrespective of the possible form of Brexit.

“Management will remain focused on the performance of the component businesses in our three territories, where their strong solvency provides security for our customers and investors and opportunity to continue the cash generation that supports the Chesnara dividend delivery.”

Chesnara shares rose 4.6% to 295p in London morning trading.

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