23rd Dec 2024 09:48
(Alliance News) - Chesnara PLC on Monday announced the acquisition of Canada Life UK's unit-linked bonds and legacy pensions business for GBP2 million.
The transaction follows the previous acquisition of an individual onshore protection business from Canada Life in 2023.
The Preston, England-based insurance company and pension consolidator said the acquired business had 7,000 policies and total assets under management of GBP1.5 billion as at the end of 2023.
The policies are expected to transfer to Chesnara's UK subsidiary, Countrywide Assured PLC at the end of 2025.
Chesnara will fund the deal from existing cash resources. It expects the transaction to provide an uplift in the group's economic value of at least GBP8 million and contribute GBP8 million of cash generation over a five-year period.
Chesnara sees a small initial reduction to the solvency II ratio of around two percentage points.
Chief Executive Steve Murray said the agreement, the sixth deal implemented in the past three years, will add "additional scale to our UK business which now looks after over 300,000 policies, and provides an attractive return on investment for our shareholders".
"We continue to see a range of M&A opportunities and are highly confident in our ability to finance and execute such transactions on attractive terms for vendors, customers and our shareholders."
RBC Capital Markets said: "Overall, we see this as an attractive bolt-on for Chesnara, with solid accretion to key financials and clear strategic rational. In addition, the small size of the deal and its low execution risk should not distract from more transformative opportunities."
Shares in Chesnara were 0.7% lower at 256.10 pence each in London on Monday morning.
By Jeremy Cutler, Alliance News reporter
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