31st Mar 2015 10:15
LONDON (Alliance News) - Chesnara PLC Tuesday said that pretax profit more than halved in 2014 as its UK businesses were hit by low government bond yields, more than offsetting an improved result for its Swedish operations.
Chesnara owns UK closed life business Countrywide Assured PLC, which includes the Protection Life acquisition bought from Direct Line Insurance Group PLC. It also owns Movestic Livförsäkringar AB, which writes new business in Sweden, and is a new entrant into the Dutch market with the acquisition of Waard Group for EUR67.8 million in December.
The group's expansion strategy shows no sign of letting up, with opportunities in the GBP50 million to GBP200 million range still under consideration in the UK and Western Europe.
The company said it made a GBP28.8 million pretax profit in 2014, compared with GBP60.6 million in 2013. The drop was primarily due to S&P, the part of Countrywide Assured acquired in 2010, which swung to a pretax loss of GBP9.9 million from a pretax profit of GBP35.7 million, as lower bond yields meant the segment had to increase reserves held for policies with options and guarantees.
The pretax loss reported by S&P was partly offset as the original business of Countrywide Assured, which Chesnara said provided an expected hedge against lower bond yields, said its pretax profit increased to GBP39.0 million from GBP22.8 million and Protection Life's pretax profit increased to GBP3.1 million from GBP25,000.
In Sweden, Movestic's pretax profit was flat at GBP4.3 million but a tax credit helped the segment's profit after tax to improve to GBP5.3 million from GBP3.9 million, while the UK - CA, S&P, PL - reported that profit after tax fell to GBP27.1 million from GBP46.9 million.
"In particular, a significant reduction in government bond yields during 2014 has had a material effect on the IFRS pretax profit in the year. Equity and property markets in the UK have been broadly flat during 2014, but had a more marked impact on the 2013 results, following strong performance in that year," Chesnara said.
Chesnara increased its dividend for the year to 18.40 pence per share from 17.8p.
Chesnara shares were down 1.6% at 349.25 pence on Tuesday morning.
By Samuel Agini; [email protected]; @samuelagini
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