19th May 2015 09:37
LONDON (Alliance News) - Chesnara PLC Tuesday reported embedded value growth of GBP19.5 million in the first quarter of 2015, citing new business profits in Sweden, although annual premium equivalent new business was down to GBP14.9 million, from GBP16.9 million in the corresponding period of the prior year.
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.
In a statement, Chesnara said a shift towards savings contracts with guaranteed returns from unit-linked savings in Sweden continued in the first three months of 2015.
"Indeed the attractiveness of the guaranteed returns has increased as Swedish government bond yields have become negative. This has had a dampening effect on total new business volumes in the unit-linked market, particularly higher margin single premium transfer-in business," Chesnara aid.
The company said its Movestic business in Sweden is being disciplined it its pricing and "will not compromise its long term profit margins".
"We remain of the view that the level of guarantees being offered in the traditional market is not sustainable and recent guarantee reductions support this view," Chesnara said.
"We do however expect the unit-linked total market to remain somewhat suppressed throughout the rest of 2015," Chesnara said.
Overall, Chesnara said its business performed "broadly in line with the underlying assumptions" in the first quarter.
Chesnara shares were up 0.2% at 327.75 pence Tuesday morning.
By Samuel Agini; [email protected]; @samuelagini
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