Life insurance firm swoops in £25m deal for Dutch portfolio
Chesnara, the Preston-based life insurance firm, has agreed to acquire a portfolio of life insurance business in run-off from the Dutch brand of Belgian-owned Argenta Bank-en Verzekeringsgroep in a cash deal worth around £25m.
The deal is through Chesnara’s existing Netherlands-based closed book operation, the Waard Group.
The transaction will see the transfer of a portfolio of approximately 44,000 term and savings policies.
Chesnara says the consideration represents a discount of 17% to the acquired portfolio’s Solvency II own funds, calculated on a Chesnara-consistent basis, and a 22% discount to Chesnara’s estimate of Economic Value (EcV) as at June 30, 2019.
On completion, the business will be integrated within Waard.
As at June 30, the acquired portfolio had gross assets of around £326m. For the year ended December 31, 2018, it generated profits before tax of approximately £3.2m.
The Transaction is expected to be both earnings and EcV accretive on completion.
Chesnara estimates that the company’s EcV gain on completion will be about £6.9m, and that the acquired portfolio will have a positive cumulative cash generation profile over its remaining life.
The deal follows last month’s acquisition and successful integration by Waard of a term life and endowment portfolio of about 6,500 policies from Monuta Insurance, also in the Netherlands.
It is strongly aligned with Chesnara’s strategic objective of acquiring and integrating life and pensions companies and books of business within its target and value range, while supporting the company’s ongoing dividends.
The proposed transaction is subject to customary approvals from the National Bank of Belgium and from the Dutch Central Bank for the change of control.
Antitrust clearance from the Netherlands Authority for Consumers and Markets is also required. It is expected to complete in Summer 2020.
John Deane, Chesnara chief executive, said: “This is a very pleasing acquisition for Chesnara. It will create material operating synergies with the existing Dutch business and, after the Monuta portfolio, it is the second deal that will be integrated into, and add value to, our Dutch closed-book platform Waard Group.
“The business is well capitalised, cash generative and profitable, while fulfilling our acquisition strategy of being economic value accretive, operating within our core target markets and offering a strong strategic fit at an attractive discount.”
He added: “We have a tried and tested track record of safely and efficiently transferring in and servicing books of business to the best interests of customers and policyholders and continue to seek out appropriate transaction opportunities on behalf of our loyal shareholders.”
