Half-year Report

28 August 2025

LEI Number: 213800VFRMBRTSZ3SJ06

Chesnara plc (CSN.L)

("Chesnara" or "the Company")

STRONG FINANCIAL PERFORMANCE AND MAJOR STRATEGIC PROGRESS

Chesnara reports its 2025 interim results. Key highlights are:

Strong financial performance

· Cash Generation¹ up 26% to £37m (HY 2024: £29m);

· Eligible Own Funds of £632m (FY 2024: £643m), with increased Solvency Coverage Ratio of 207% (FY 2024: 203%) providing significant headroom to allocate capital to M&A and other growth opportunities;

· IFRS Capital Base² of £441m (FY 2024: £449m), with growth in the Contractual Services Margin and Insurance Result before allowing for shareholder dividends;

· New Business Contribution³ of £5m (HY 2024: £5m);

· Group Leverage⁴ ratio unchanged at 31% (FY2024: 31%), with the proposed acquisition of HSBC Life (UK) and the Group's recent Restricted Tier 1 (RT1) issuance expected to reduce the Group's leverage ratio to 25%⁵;

· Economic value ('EcV') of £517m (FY 2024: £531m), with positive contribution from operating and economic variances; and

· 3% increase in the 2025 interim dividend to 7.70p⁶ per share.

Major strategic progress

· Transformational HSBC Life (UK) Ltd acquisition announced on 3 July 2025, expected to generate incremental lifetime Cash Generation of >£800m, >3x consideration of £260m⁷;

· Successful Rights Issue and Restricted Tier 1 (RT1) Issue completed in July which together raised £290m;

· Admission to the FTSE 250 Index, effective from 18 August 2025;

· Completion of the legal merger of the Group's Dutch businesses on 2 July 2025.

Commenting on the results, Steve Murray, Group CEO, said:

"Chesnara delivered strong financial results in the first half of 2025, with Cash Generation up 26%, an increase in our solvency ratio and a further 3% increase in the interim dividend. We have made significant progress against our strategy, announcing the acquisition of HSBC Life (UK). This is a transformational deal, supporting a planned one year step-up in the dividend and reinforcing sustainable long-term growth. Looking ahead, we are strongly positioned with the financial firepower and track record to execute on our active pipeline of opportunities."

Chesnara's interim results presentation is being held at 09:30am on 28 August 2025 - participants can register here.

STRONG CASH GENERATION AND MORE THAN 20 YEARS OF DIVIDEND GROWTH

· Group Cash Generation1, up 26% to £37m in HY 2025 (HY 2024: £29m), driven by organic capital generation and the implementation of management actions.

· 2025 interim dividend of 7.70p⁶ per share, a 3% increase compared to 2024, extending the period of uninterrupted dividend growth to more than 20 years.

· The Group's dividend growth track record is unrivalled across UK and European Listed insurers with Chesnara's business model delivering sustainable returns to shareholders.

FINANCIAL RESILIENCE AND FLEXIBILITY IN FINANCING FUTURE M&A

· Eligible Own Funds of £632m (FY 2024: £643m) with increased Solvency II Coverage Ratio of 207% (FY 2024: 203%), materially above the upper end of the Group's operating range of between 140 - 160%.

· Group Centre liquidity of £126m (FY 2024: £109m), with divisional remittances of £56m received during H1 2025.

· On 23 July, the Group successfully completed a £140m rights issue which forms part of the financing package for the HSBC Life (UK) acquisition, with strong support from existing shareholders.

· On 30 July, significant further support was received from debt investors with announcement of a £150m RT1 Bond issuance at a coupon of 8.5% (pre-tax), providing the Group with additional financial flexibility to grow in the future.

· Leverage ratio⁴ of 31% at HY 2025 (FY 2024: 31%), with the HSBC Life (UK) transaction and the RT1 Bond issuance expected to reduce the Group's leverage ratio to 25%⁵.

HSBC LIFE (UK) ACQUSITION DELIVERS LONG TERM VALUE

· Announcement of Group's proposed acquisition of HSBC Life (UK), adding approximately £4 billion in Assets under Administration (AuA) and around 454,000 policies, bringing the Group's total expected AuA to £18bn and policies to approximately 1.4 million⁷.

· Completion of the legal merger the Group's two Dutch businesses on 2 July 2025, generating cost savings and potential for future synergies.

· IFRS pre-tax loss of £5m (HY 2024 restated⁸: £13m profit), reflecting a stronger insurance result, offset by a lower investment result, with positive but less favourable market conditions compared to the prior year.

· IFRS Capital Base² of £441m at HY 2025 (FY 2024: £449m), with organic growth pre-FX, tax and dividends driven by CSM generation which grew by £11m over the period.

· EcV of £517m as at HY 2025 (FY 2024: £531m), with positive economic and operating earnings offset by central and one-off items, and the final dividend payment.

· Robust New Business Contribution³ of £5m over HY 2025 (HY 2024: £5m).

DIVIDEND DETAILS

· The interim dividend of 7.70p per share is expected to be paid on 17 October 2025. The ordinary shares will be quoted ex-dividend on the London Stock Exchange as of 4 September 2025. The record date for eligibility for payment will be 5 September 2025.

ANALYST AND INVESTOR PRESENTATION

· A presentation for analysts and investors will be held at 09:30am at the offices of Panmure Liberum, 25 Ropemaker Street, London, EC2Y 9LY, which will be available to join online and subsequently be posted to the corporate website at www.chesnara.co.uk.

· To join the webcast, please register using the following link here.

Investor Enquiries

Sam Perowne

Head of Strategic Development & Investor Relations

Chesnara plc

E - [email protected]

Media Enquiries

Misha Bayliss - +44 20 7427 5465

Oscar Burnett - +44 20 7427 5435

Teneo

E - [email protected]

Notes to Editors

Chesnara is a European life and pensions consolidator listed on the London Stock Exchange. It administers just under one million policies and operates as Countrywide Assured in the UK, as Scildon in the Netherlands and as Movestic in Sweden.

Following a three-pillar strategy, Chesnara's primary responsibility is the efficient administration of its customers' life and savings policies, ensuring good customer outcomes and providing a secure and compliant environment to protect policyholder interests. It also adds value by writing profitable new business in the UK, Sweden and the Netherlands and by undertaking value-adding acquisitions of either companies or portfolios.

Consistent delivery of the Company strategy has enabled Chesnara to increase its dividend for over 20 years in succession. Further details are available on the Company's website (www.chesnara.co.uk).

Notes

Note 1  Commercial Cash Generation (referred to as Cash Generation) represents the surplus cash that the group has generated in the period and is used as a measure of assessing how much dividend potential has been generated, subject to ensuring other constraints are managed. It is largely a function of the movement in the solvency position, excluding the impact of technical adjustments, representing the group's view of the commercial cash generated by the business.

Note 2 IFRS Capital Base is the sum of IFRS Net Equity and CSM (net of tax and reinsurance).

Note 3 New Business Contribution is a more commercially relevant measure of new business profit than that recognised directly under the Solvency II regime, allowing for a modest level of return, over and above risk-free, and exclusion of the incremental risk margin Solvency II assigns to new business. This provides a fair commercial reflection of the value added by new business operations.

Note 4 Leverage ratio is a financial measure that demonstrates the degree to which the company is funded by debt financing versus equity capital, presented as a ratio. It is defined as 'debt' divided by 'net equity plus debt plus net of tax and reinsurance CSM', as measured under IFRS.

Note 5  Leverage pro-forma ratio is based as at the FY 2024 position, and includes the proposed acquisition of HSBC Life (UK) and the expected impacts of the rights issue and RT1 Bond Issue.

Note 6 Dividend pence per share has been rebased to reflect the rights issue bonus factor of 1.1514x applied to historic dividend per share metrics.

Note 7 HSBC Life (UK) please refer to the RNS from 3rd July 2025 for all numbers quoted regarding the proposed acquisition of HSBC Life (UK).

Note 8 IFRS restatement The IFRS prior year comparatives have been restated following a change in the accounting methodology applied to the portfolio transfer into the UK from Canada Life Ltd.

The Board approved this statement on 27 August 2025.

CEO REVIEW

"The Group delivered very strong Cash Generation† of £37m in H1 with the Group's Solvency Coverage Ratio also increasing. The acquisition of HSBC Life (UK) Ltd, announced on 3 July, is a significant strategic milestone for the Group."

STEVE MURRAY, CEO

We have again remained disciplined in driving delivery against our three areas of strategic focus namely:

1. Running our in-force insurance and pensions books efficiently and effectively;

2. Seeking out and delivering value enhancing M&A opportunities; and

3. Writing focused, profitable new business where we are satisfied an appropriate return can be made.

This focus helped us deliver a strong financial result for the half year with Cash Generation of £37m and continued strong solvency coverage of 207%, leading to a proposed increase in the interim dividend of 3% to 7.70 Δ  pence per share.

On 3 July 2025, we announced an agreement to acquire HSBC Life (UK) Limited for a total consideration of £260m. This transaction represents a significant strategic milestone for Chesnara which would materially expand our presence in the UK life insurance market. As at 31 December 2024, HSBC Life (UK) Ltd had £314m in eligible Own Funds, £4bn of Assets under Administration (AuA) and over 450,000 policyholders. 

The acquisition is expected to generate over £800m in incremental lifetime Cash Generation, with more than £140m anticipated within the first five years post-completion. Supported by the strong financial profile of the acquisition, the Group expects to accelerate its dividend growth. The final FY25 and interim FY26 dividends, adjusted for the rights issue, are anticipated to increase by 6%, doubling the recent annual growth rate of 3%. Subject to regulatory approvals, completion of the acquisition of HSBC Life (UK) Ltd is expected in early 2026.

Over the course of July we announced the successful completion of our £140m rights issue which formed part of the financing package for the HSBC Life (UK) Ltd acquisition, with 88% of our shareholders taking up their rights to the issue of new shares. Later in July, we received significant further support from debt investors for the issuance of a £150m Restricted Tier 1 Bond at a coupon of 8.5%. This provides us with additional financial flexibility to grow in the future.

Following our successful rights issue and the proposed HSBC Life (UK) acquisition, Chesnara plc has been admitted to the FTSE 250 Index, effective from Monday 18th August which marks another significant milestone in the Company's growth following its listing in 2004.

Operational delivery continues

We have made positive progress delivering the ambitious change agenda we set ourselves and that will help ensure we have modern and sustainable operating platforms right across the Group.

The UK has continued to deliver on its Transition and Transformation (T&T) programme and has so far delivered three successful migrations to our new operating platform managed by SS&C Technologies (SS&C) including: our acquired book of protection business from Canada Life; our acquired ISA and GIA book from Sanlam; and the Sanlam unit pricing system.  

In Sweden, the team has expanded and developed its custodian distribution network. This includes a collaboration with a new partner, which consists of a savings platform, aimed at customers within the segment of digital only wealth builders. The partnerships continue to provide further diversification in distribution for the Company. 

And in the Netherlands, the team has been working on the plan to integrate our Dutch businesses and the associated legal merger of Scildon and Waard, which was completed at the start of July 2025. Key priorities going forward include aligning IT systems, harmonising product portfolios and streamlining governance and reporting structures in order to enhance the scale and efficiency of the division and realise synergies. The transfer of Scildon's group pension book to Allianz was announced to the market on 10 June 2025, with the transfer expected to complete later this year.

Transitioning to a net zero group by 2050

We will publish the Group's inaugural Climate Transition Plan next month. The plan details the steps we will take to continue our journey to become a net zero group by 2050, based on our three principles:

Do no harm. Do good. Act now for later.

To reflect the changes we are making to the way we work as we continue our journey to become a sustainable Chesnara, we have also updated our sustainability pillars. This is to highlight the importance of embedding sustainability into our business. 

Our sustainability pillars are:

1. Support a sustainable future

2. Help to create a fairer world

3. Build a sustainable Chesnara

We remain committed to 'making a positive impact' (previously identified as a standalone commitment), with current and planned activities associated with this, now integrated into our other sustainability commitments

We delivered on M&A and further management actions

The agreement to acquire HSBC Life (UK) is a clear further demonstration of our ability to execute on our M&A strategy. The £260m transaction will add approximately £4bn in AuA and around 454,000 policies, which would bring our total expected AuA to £18bn and increase the number of life and pension policies to approximately 1.4 million. It is expected to generate over £800m in incremental lifetime Cash Generation, with more than £140m anticipated within the first five years post-completion. This acquisition reinforces our track record of identifying opportunities that support both near-term financial performance and long-term strategic growth.

As well as the success we have had on M&A this year, we have continued to seek out other management actions to enhance Cash Generation and value. The UK extended existing mass lapse reinsurance to include the most recent Canada Life portfolio and implemented foreign exchange hedging arrangements, both of which have further optimised the Group's solvency position.

Robust new business

Positive sales momentum in Sweden and the UK, with discipline maintained in the Netherlands, saw New Business Contribution remaining robust with £5m over the first half of the year.

People changes

In May this year, it was announced that after three successful years with Chesnara, Karin Bergstein has stepped down as Independent Non-Executive Director of the Company, as a member of the Board, Nomination & Governance Committee and Audit & Risk Committee. I want to thank her for her support over the past three years and wish her all the best for the future. Samantha Tymms, has joined the Board as an experienced Non-Executive Director and advisor to global financial services businesses, bringing a wealth of knowledge to the business.

The planned departures of Lorens Kirchner and Maarten Simmons (formally the CEO and CFRO of Waard respectively) also happened in July. We wish them the very best for the future and look forward to working closely with Pauline Derkman (Scildon CEO) and Edwin Bekkering (Scildon CFRO) as they drive forward our combined business in the Netherlands.

Confident Outlook

The market backdrop has been volatile over the first half of the year, and the weakness of the US dollar against most European currencies continues to be a feature, as uncertainty persists around global trade tariffs and a more uncertain geopolitical environment. At Chesnara, we remain confident that the business model will continue to generate cash across a wide variety of market conditions, as it has done this year and over its history.

We also remain positive on the outlook for further M&A where we remain very active and continue to see a further pipeline of opportunities. We believe we are well placed to execute further value accretive deals for shareholders. After a busy period for the Group, there continues to be a lot to look forward to here at Chesnara.

Steve Murray,

Chief Executive Officer

27 August 2025

† Note - this measure was previously referred to as 'Commercial Cash Generation'. There has been no change to the basis of calculation. For further information, please see Alternative Performance Measures in the Additional Information section.

Δ Dividend per share has been rebased to reflect the rights issue bonus factor of 1.15x applied to historic dividend per share metrics.

CHIEF FINANCIAL OFFICER'S REPORT

"The Group has delivered strong first half results whilst maintaining a resilient capital position. We continue to increase returns to our shareholders and the ongoing delivery of our growth strategy underpins our confident outlook"

TOM HOWARD, CFO

Overview

The Group continues to perform strongly. Each of our operating divisions contributed positively to the increased Group Cash Generation result of £37m (HY24: £29m). The Solvency Coverage Ratio of 207% remains comfortably above our operating range of 140% to 160% and continues to be resilient to a wide range of scenarios, providing the Group with significant scope to pursue further M&A and other investment opportunities as they arise.

The proposed acquisition of HSBC Life (UK) significantly enhances the store of future value available to the Group and will transform the scale and financial profile of Chesnara's UK division. On a proforma basis†, the Group's Solvency Coverage Ratio, post transaction and Restricted Tier 1 bond issue remains above the upper-end of our operating range, at 198%.

This continued financial delivery underpins the Board's recommendation to increase the interim dividend by 3% to 7.70Δ pence per share.

Business performance

UNITED KINGDOM

Own Funds increased by £13m (HY24: £14m) whilst SCR reduced by £13m (HY24: decrease of £6m), resulting in a Solvency Coverage Ratio of 172% (HY24: 135%). The growth in Own Funds arose from both positive economic and operating results on the in-force book, supported by the writing of profitable new business over the period. The extension of mass-lapse reinsurance arrangements to include the Canada Life portfolio (acquired in 2024) and the implementation of a foreign currency hedge supported the reduction in SCR. The UK division held a Solvency II surplus of £43m above its Board's risk appetite level (HY24: £49m) and made remittances of £45m to Group Centre. IFRS pre-tax profits of £9m (HY24 restated: £23m) were driven mainly by positive investment experience, offset by a lower insurance result, primarily driven by adverse operational experience and the effect of loss components.

SWEDEN

Own Funds increased by £3m (HY24: increase of £6m) whilst SCR increased by £4m (HY24: increase of £8m). The Solvency Coverage Ratio reduced by 3 percentage points to 148% (2024: 151%). Own Funds and SCR were impacted by positive equity market movements, offset by the negative impact of the continued depreciation of the US dollar relative to the Swedish krona. The Swedish division held a Solvency II surplus of £36m above its Board's risk appetite level (HY24: £27m) and made remittances of £4m to Group Centre. IFRS pre-tax profits of £2m (HY24: £3m) arose primarily from positive operating contributions to the insurance result.

NETHERLANDS

Own Funds increased by £21m (HY24: £8m decrease) whilst SCR decreased by £1m (HY24: £2m decrease), with a closing Solvency Coverage Ratio of 264% (2024: 239%). Own Funds benefited from the impact of foreign exchange movements, positive operating earnings in Waard and positive economic experience in Scildon. The Group's Dutch divisions held a Solvency II surplus of £92m above its Board's risk appetite levels and made remittances of £7m to Group Centre (2024: £7m). Increased IFRS pre-tax profits of £12m, (HY24: £3.2m loss) benefited from lower loss component experience relative to HY24. † Proforma basis calculated using reported FY24 solvency values. Δ Dividend per share has been rebased to reflect the rights issue bonus factor of 1.15x applied to historic dividend per share metrics. Capital & Cash Generation

SOLVENCY II CAPITAL POSITION

The Group's Solvency II surplus remained consistent over the first half of 2025. The Solvency Coverage Ratio of 207% (FY24: 203%) represents a Solvency II surplus of £326m (FY24: £327m) The SCR decreased primarily due to a reduction in market and life underwriting risks, alongside capital management actions undertaken in the UK. The movement in Own Funds was influenced by capital generation and management actions, offset by the shareholder dividend payment and the application of Tier 2/3 valuation restrictions.

CASH GENERATION

Cash Generation of £37m (HY24: £29m) comprised contributions of £55m (pre-FX) from the operating divisions, offset by £18m relating to Group Centre costs, foreign exchange impacts and other one-off items, including the funding of M&A activities.

The Divisional Cash Generation of £55m (HY24: £30m) arose from positive operating experience, new business activity and selected capital optimisation management actions within the UK business. Group Centre surplus usage reflected central costs, development and M&A expenditure and debt servicing costs.

Cash Generation represents 1.42Δx (HY 24: 1.57x) dividend coverage, demonstrating that the Group continues to generate significant resources to finance ongoing debt and dividend commitments whist maintaining a strong Solvency Coverage Ratio.

Δ Defined as Cash Generation divided by 50% of the projected full year dividend cost

CENTRE LIQUIDITY

Group Centre held liquid resources of £126m at HY25, after allowing for the receipt of dividend remittances from our operating divisions totalling £56m, and payment of the final 2024 dividend of £24m.

LEVERAGE

Leverage* remained at 31% as the impact of the increased CSM largely offset the decrease in IFRS equity. Following the completion of the HSBC Life (UK) acquisition and the issuance of our Restricted Tier 1 bond, the Group's proforma leverage ratio† will reduce to 25%, comfortably meeting our long term target level of 30% or less.

CAPITAL MANAGEMENT ACTIONS

Management actions are an important component of our strategy to maximise value from existing business. In the first half of 2025, the UK division implemented a currency hedge, further optimising the capital requirements relating to the foreign exchange risk. The UK division also extended existing mass-lapse reinsurance arrangements to include the most recent Canada Life portfolio acquisition, providing the Group with further capital relief against the risk of extreme lapse events. Taken in aggregate, these actions increased the Group's Solvency Coverage Ratio by 4%.

IFRS

IFRS PRE-TAX PROFIT

The Group's IFRS pre-tax loss of £5m (HY24: £13m profit) was driven mainly by the impact of lower market returns within the investment result, partially offset by a higher insurance result from more favourable operating experience. The positive impact of foreign exchange movements over H1 also supported an increase in the IFRS Capital Base but are excluded from the IFRS pre-tax-profit measure and presented separately within Other Comprehensive Income.

IFRS INSURANCE RESULT

The insurance service result comprises the revenue and expenses from providing insurance services to policyholders and excludes economic impacts. Assumption changes apply to the insurance service result to the extent that they relate to groups of onerous contracts in a 'loss component' position. 

The insurance service result of £2m (HY24: loss of £3m) includes a positive contribution from the release of the CSM and the Risk Adjustment of £12m (HY24: £11m), partially offset by a reduced year-on-year adverse experience impact on portfolios of onerous contracts, primarily in the Netherlands and the UK .

IFRS INVESTMENT RESULT

The investment result comprises the economic result from the Group's assets together with the impacts to its insurance and investment contract liabilities.

The investment result of £16m (HY24: £40m) primarily reflects equity market growth over the first half of 2025 compared to the prior-year. and is also affected by a £8m loss on the Group FX hedge as sterling weakened against the euro and the Swedish krona during the year (though this was offset by a larger corresponding FX translation gain coming through other comprehensive income).

FEE, COMMISSION AND OTHER OPERATING INCOME

Fee, commission and other operating income mainly comprises the fee income generated in the UK and Sweden from unit-linked contracts measured under IFRS 9.

The income generated in the year after removing the effects of Swedish policyholder yield tax (which has an equal and opposite offset within 'Other Operating Expenses'), was £37m (HY24: £35m) with equity market returns in the UK and Sweden being the largest contributory factors to the result.

OTHER OPERATING EXPENSES AND FINANCING COSTS

Other operating expenses comprises those costs incurred by the Group that are not incurred from servicing insurance contracts, with such costs being reported within the insurance result.

After stripping out the impact of the policyholder yield tax noted above, the total other operating expenses and finance costs of £60m (HY24: £59m) was consistent with the prior year.

* Leverage is presented in line with the Fitch basis of calculation. For further information, please see Alternative Performance Measures in the Additional Information section.

† Proforma leverage ratio calculated using reported FY24 position as basis.

IFRS CAPITAL BASE 

Before allowing for foreign exchange impacts, taxation and the 2024 final dividend payment, the opening IFRS Capital Base of £449m increased by £8m over the first half of 2025 driven by growth in CSM.

After allowing for the release of the CSM to the IFRS income statement, the CSM increased by £11m with positive contributions from profitable new business activity, portfolio growth following the Part VII of the Canada Life protection portfolio and positive assumption changes.

Economic Value Earnings

The Economic Value of the Group represents the present value of future profits from existing business, plus the adjusted net asset value of non-insurance business within the Group. EcV losses of £11m (HY24: earnings of £20m) included adverse economic experience in Sweden, driven mainly by the impact of US dollar depreciation against the Swedish Krona and additional Group Centre expenses relating primarily to M&A activity.

EcV ECONOMIC EARNINGS

EcV Economic Earnings were largely driven by positive investment variances in the UK and the Netherlands, offsetting negative variances in Sweden. Whilst the Swedish OMX closed the period broadly in line with the FY24 position, the weakening of the US dollar against the Swedish krona had a negative impact on policyholder AuA and investment returns.

EcV OPERATING EARNINGS

EcV Operating Earnings of £13m (HY24: earnings of £1m) were driven by positive operating variances in the UK and Netherlands, partially offset by adverse mortality experience in Scildon and adverse persistency experience in Sweden.

OTHER CENTRAL AND ONE-OFF ITEMS

Other non-operating items include central financing costs (including Tier 2 coupon payments) of £5m and other central expenditure, including advisory fees to support M&A activity and other development activity.

Shareholder Dividends

The Group's continued strong financial delivery has supported the directors' decision to recommend a 3% increase in the interim dividend to 7.70p Δ per share (2024 interim rebased: 7.48p Δ).

Confident Outlook

Ongoing delivery of the Group's operational and strategic priorities continues to drive strong financial outcomes across the Group's key measures.

The proposed acquisition of HSBC Life (UK) will significantly enhance the long-term financial profile of the Group, generating significant levels of additional capital and liquid resources to further invest in future growth opportunities.

Additionally, the Group's successful equity and debt issuances in July 2025 further strengthen the Group's balance sheet against the backdrop of an active and attractive market for further M&A opportunities.

Tom Howard,

Chief Financial Officer

27 August 2025

Δ Dividend per share has been rebased to reflect the rights issue bonus factor of 1.15x applied to historic dividend per share metrics

BUSINESS REVIEW | UK

The UK division manages c270k policies across linked pension business, life insurance, endowments, annuities and some with-profit business. While largely closed to new business, the division continues to generate future value through our growing onshore bond business as well as investment returns on unit-linked policies, strong cost control, increments to existing policies and the active acquisition pipeline.

BUSINESS REVIEW | SWEDEN

Our Swedish division consists of Movestic, a life and pensions business which is open to new business. It offers personalised unit-linked pension and savings solutions through brokers, together with custodian products via private banking partners and is well regarded within both communities.

BUSINESS REVIEW | NETHERLANDS

Our businesses in the Netherlands deliver growth through our acquisitive closed-book business, Waard, and our open-book business, Scildon, which seeks to write profitable term, investments and annuity business.

FINANCIAL REVIEW | CASH GENERATION CASH GENERATION† £37M HY24: £29M

BASE CASH GENERATION £24M HY24: £20M

Continued strong Cash Generation was reported in the first half of 2025, with a total of £37m, benefitting from surplus generation from operating activities and positive market conditions. Cash generation is the increase in the Group's Solvency II surplus, after allowing for 'prudent management buffers', as defined by the Group's Capital Management Policy.

UK

- Cash Generation of £33m (HY24: £23m) from Own Funds growth and a reduction in Solvency Capital Requirements, with both components supported by the implementation of management actions, including the execution of further mass lapse reinsurance of the latest Canada Life portfolio acquisition and the implementation of an FX hedge.

SWEDEN

- Cash Generation pre-FX of £2m (HY24: £2m).Own Funds were adversely impacted by market conditions, primarily from the weakening of the US dollar against the Swedish krona, reducing policyholder AuA and investment returns. Market conditions also resulted in a reduction in SCR, partially offsetting the fall in Own Funds.

NETHERLANDS

- In Waard, Cash Generation pre-FX of £4m (HY24: £(3)m). Growth in Own Funds and lower Solvency Capital Requirements, driven by positive operating variances were partially offset by the impact of rising interest rates.

- In Scildon, Cash Generation pre-FX equalled £16m (HY24: £8m). An increase in Own Funds was underpinned by favourable economic and expense experience, and positive assumption changes, supported by a reduction in the SCR.

GROUP CENTRE

- The Group Centre result contains central financing costs, including £5m in Tier 2 coupon payments, and central expenditure relating to M&A activity in the first half of 2025, including fees associated with the HSBC Life (UK) Limited acquisition.

† Note - this measure was previously referred to as 'Commercial Cash Generation'. There has been no change to the basis of calculation. For further information, please see Alternative Performance Measures in the Additional Information section.

FINANCIAL REVIEW | SOLVENCY II

The Group's Solvency Coverage Ratio of 207% is significantly above our operating range of 140% to 160%.

GROUP SOLVENCY 207%

SOLVENCY POSITION

SOLVENCY COVERAGE MOVEMENT

Group Solvency II surplus is £326m (2024: £327m) with a Solvency Coverage Ratio of 207% (2024: 203%), which includes the impact of the proposed interim shareholder dividend (£13m) and payment of the final 2024 shareholder dividend (£24m).

The movement in Own Funds reflects the dividend impacts noted above and a £7m increase in the Tier 2/3 restriction, alongside the positive effects of favourable economic conditions and operational performance variances. The SCR reduced in 2025, mainly due to a general fall in life underwriting risk and capital management actions implemented in the UK.

The numbers that follow present the divisional view of the solvency position which may differ to the position of the individual insurance company(ies) within the consolidated numbers. 

UK

The rise in surplus to £43m (FY2024: £15m) includes growth in Own Funds and an SCR reduction during the first half of 2025. Own Funds rose by £13m, mainly due to rising bond values, driven by a decline in the yield curve at shorter durations and positive operational assumption changes. The SCR reduced by £13m, also benefitting from capital management actions, including mass lapse reinsurance and a new FX hedge.

SWEDEN

The surplus reduction of £1m reflected capital requirements increasing more than Own Funds, with the underlying movement being affected by the weakening of the US dollar and its impact on AuA during the first quarter of 2025. The effect of exchange rate movements has led to an overall increase to both Own Funds and SCR when translating the results to sterling.

NETHERLANDS

Waard's Solvency II surplus increase of £7m includes a rise in Own Funds, driven by positive operating earnings, whilst the SCR continued to be largely unchanged.

Scildon's Solvency II surplus rose by £17m, with Own Funds growth including expense related operating returns and economic returns benefitting from a steepening yield curve, offsetting adverse mortality experience. Capital requirements remained broadly stable.

FINANCIAL REVIEW | EcV

The Economic Value of the Group represents the present value of future profits of the existing insurance business, plus the adjusted net asset value of the non-insurance businesses within the Group†. 

ECONOMIC VALUE (EcV) £517M

FY24: £531M

Value movement: FY24 to HY25:

EcV Earnings: 

The EcV loss of £11m was impacted by adverse economic experience in Sweden (driven by depreciation of the US dollar against the Swedish krona) and additional Group Centre costs, which relate to M&A activity, offsetting positive earnings in the UK and Netherlands.

Foreign exchange: 

The closing EcV of the Group benefited from the depreciation of sterling relative to the euro and Swedish krona.

Dividends: 

Under EcV, dividends are recognised in the period in which they are paid. Dividends of £24m were paid during the period, representing the final shareholder dividend approved by the Board in March 2025.

EcV by segment

The above table shows that the EcV of the Group remains diversified across its different geographical markets.

†Further information on EcV and it's relationship with Solvency II can be found in the Additional Information section of this report.

FINANCIAL REVIEW | EcV EARNINGS

Operating Earnings in the UK and Netherlands offset adverse economic market movements in Sweden.

EcV EARNINGS £(11)M

HY24: £20M

Analysis of the EcV Earnings by source of value:

All amounts are now presented to the nearest £million. Comparative figures have been rounded accordingly for consistency (previously rounded 1 dp).

Analysis of the EcV result by business segment:

All amounts are now presented to the nearest £million. Comparative figures have been rounded accordingly for consistency (previously rounded 1 dp).

UK earnings of £15m, include the impact of management actions, new business profits and positive economic returns. Sweden's loss of £10m arose mainly from the adverse impact on policyholder's AuA of depreciation of the USD relative to the SEK. The Netherlands reported £10m of earnings, driven by operational cost efficiencies, positive economic returns, offset by adverse mortality experience. Group and Group adjustments includes Group Centre costs, costs associated with the Group's M&A activity, Risk Margin release, and Tier 2 debt servicing costs.

FINANCIAL REVIEW | IFRS BALANCE SHEET

IFRS Capital Base supported by growth in the Contractual Service Margin.

HOW THE CSM HAS MOVED IN THE PERIOD

The CSM represents future profits that are expected to be released to the income statement over the lifetime of the portfolio. The CSM (net of reinsurance and gross of tax) has increased by £16m from £176m to £192m during 2025.

Positive experience and assumption changes across the Group have added £10m of CSM. New business and the recognition of additional CSM following the Part VII of the Canada Life term assurance book has added a further £10m of CSM, reflecting the future profits arising on profitable new business added in the period. These additions are offset by the £11m release to profit in the period as the insurance services have been provided with other smaller net movements including the impact of foreign exchange and the interest accretion totalling £7m making up the total movement. 

The CSM values are shown net of reinsurance but gross of tax. When calculating the IFRS Capital Base a net of reinsurance and net of tax figure is used. The equivalent net of reinsurance and tax movement of CSM during 2025 is an increase of £13m. 

LEVERAGE 

The IFRS leverage of the Group as at HY25 was 31% (FY24: 31%). 

FINANCIAL REVIEW | IFRS INCOME STATEMENT

IFRS PRE-TAX PROFIT £(5)M 

HY24 restated: £13M 

TOTAL COMPREHENSIVE INCOME £2M 

HY24 restated: £(7)M 

Analysis of IFRS result

Net insurance service result

The net insurance service result comprises the revenue and expenses from providing insurance services to policyholders and ceding insurance business to reinsurers and is in respect of current and past service only.

Assumption changes, relating to future service, are excluded from the insurance result (as they adjust the CSM), unless the CSM for a given portfolio of contracts falls below zero; thereby in a 'loss component' position. Economic impacts are also excluded from the insurance service result.

The net insurance service result of £2m is broken down into the following elements:

- gains from the release of risk adjustment and CSM of £12m (six months to 30 June 2024: £11m). These gains represent a consistent source of future profits for the group.

- losses of £10m (six months to 30 June 2024: £14m loss) caused by experience impacts and loss component effects where portfolios of contracts with no CSM have suffered adverse impacts that would otherwise be offset in the balance sheet if the CSM for those portfolios were positive.

Net investment result

The net investment result contains the investment return earned on all assets, together with the financial impacts of movements in insurance and investment contract liabilities. The investment result also includes losses made on the Group's currency hedging arrangement of £8m (six months to 30 June 2024: gain of £5m).

Fee, commission and other operating income

The most significant item in this line is the fee income that is charged to policyholders in respect of the asset management services provided for investment contracts. There is no income in respect of insurance contracts in this line, as this is all now reported in the insurance result.

Total fee, commission and operating income in the six months to June 2025 was £60m (six months to 30 June 2024: £55m) and was £37m net of Swedish policyholder yield tax (six months to 30 June 2024: £35m).

Other operating expenses

Other operating expenses consist of costs relating to the management of the Group's investment contracts, non-attributable costs relating to the Group's insurance contracts and other certain one-off costs such as project costs. 

Other items of note are the amortisation of intangible assets in respect of investment business and the payment of yield tax relating to policyholder investment funds in Movestic, for which there is a corresponding offset within the fee income line.

After removing the impacts of policyholder yield tax the other operating expenses in the six months to June 2025 are £60m (six months to 30 June 2024: £59m).

Financing costs

This predominantly relates to the cost of servicing our Tier 2 corporate debt notes which were issued in early 2022.

Foreign exchange

The IFRS consolidated result of the Group reflects a foreign exchange gain of £12m in the period, a consequence of sterling weakening against both the euro and the Swedish krona. This gain is partly offset by a £8m loss from foreign exchange rate hedges, reported within the investment result.

Other comprehensive income

This represents the impact of movements in the valuation of land and buildings held in our Dutch division.

Income tax

Income tax consists of both current and deferred taxes.

The total IFRS tax charge of £6m mainly represents UK policyholder tax that is reflective of positive investment growth in the period (leading to an increase in deferred tax liabilities). The charge is offset by equal and opposite policyholder fund rebates primarily within the investment result.

RISK MANAGEMENT | PRINCIPAL RISKS

The Group's principal risks and uncertainties are detailed in this section, highlighting any change in risk exposure since the Group's 2024 Annual Report and Accounts, published in March 2025.

CURRENT RISK ENVIRONMENT

On a regular basis the senior management teams scan the horizon to identify potential risk events (e.g. political; economic; technological; environmental, legislative and social), assessing potential outcomes in terms of threats and opportunities. Some of the key areas include:

- Geopolitical risk continues to create a greater level of uncertainty across the Group risk profile, for example market volatility and investment performance.

- Economic uncertainty remains a prominent emerging risk for the Group, with inflation driven expense risk and future market risk exposures being the key areas with greatest potential impact. 

- Cyber risk is a growing risk affecting all companies, particularly those who are custodians of customer data, as a result the Group continues to invest in the incremental strengthening of its cyber risk resilience and response options.

- The Group is exploring the use of artificial intelligence (AI), including the risks and opportunities arising from developments in the field of AI.

- Sustainability (and the response to the challenges and opportunities presented) continues to be a key focus in the UK and Europe, and is an evolving area of potential risk for the business.

PRINCIPAL RISKS

The principal risks being faced by the Group remain in line with those detailed in the 2024 Annual Report and Accounts.

In July 2025 Chesnara announced an agreement to acquire HSBC Life (UK) and whilst the proposed acquisition will significantly increase the scale in the UK, currently it does not materially change the view of the Groups principal risks.

directors' responsibilities statement

We confirm that to the best of our knowledge:

- the condensed set of financial statements has been prepared in accordance with United Kingdom adopted IAS 34 'Interim Financial Reporting';

- the management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

- the management report includes a fair review of the information required by DTR 4.2.8R (disclosure of material transactions with related parties in the first six months of the year and changes to related parties transactions in the last annual report).

By order of the Board

Luke Savage Steve Murray

Chair Chief Executive Officer

27 August 2025 27 August 2025

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

CONSOLIDATED BALANCE SHEET (UNAUDITED)

Approved by the Board of Directors and authorised for issue on 27 August 2025 and signed on its behalf by:

Luke Savage Steve Murray

Chair Chief Executive Officer

consolidated statement of cash flows

consolidated statement of changes in equity

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 Basis of preparation

This condensed set of consolidated financial statements has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, this condensed set of consolidated financial statements has been prepared applying the accounting policies and presentation which were applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2024.

Any judgements and estimates applied in the condensed set of consolidated financial statements are consistent with those applied in the preparation of the Group's published consolidated financial statements for the year ended 31 December 2024.

The financial information shown in these interim financial statements is unaudited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The directors have elected to not obtain a review opinion over these interim financial statements by the Group's auditor, Deloitte.

The comparative figures for the financial year ended 31 December 2024 are not the Company's statutory accounts for that financial year. The results for the year ended and position as at 31 December 2024 have been taken from the Group's 2024 Annual Report and Accounts. Those accounts have been reported on by the Company's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Going concern

After making appropriate enquiries, including detailed consideration of the impact on the Group's operations and financial position and prospects, the directors confirm that they are satisfied that the Company and the Group have adequate resources to continue in business for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in the preparation of these interim financial statements.

Restatement

A prior year restatement has been applied in these interim financial statements in respect of the accounting treatment of the Canada Life portfolio acquired in 2023. The prior year restatement was also applied in the published consolidated financial statements for the year ended 31 December 2024.

In the interim financial statements for the period ended 30 June 2024, a long contract boundary was applied in valuing the future cash flows beyond the expected termination of the initial reinsurance contract. On further assessment, as there is no executable right under the reinsurance agreement itself to the underlying policies, then under IFRS 17 requirements a short contract boundary should have been applied. Therefore, the previously reported values in the 2024 interim financial statements for this business have been restated as at 31 December 2023. The reinsurance agreement terminated in February 2025 following the court approval of the Part VII application to legally transfer the policies into CA plc.

The total net assets reported at 30 June 2024 have therefore been restated to £329.5m from £330.2m, as previously reported.

The total comprehensive loss reported for the six months to 30 June 2024 at £6.7m has therefore been restated to £7.3m.

Basic earnings per share (based on profit or loss for the period) has been restated from 0.66p to 0.24p.

Diluted earnings per share (based on profit or loss for the period) has been restated from 0.65p to 0.24p.

The Part VII business transfer for the transaction received court approval on the 3 February 2025.

Standards and amendments issued but not yet effective

At the date of authorisation of these financial statements the following standards and interpretations, which are applicable to the Group, and which have not been applied in these financial statements, were in issue but not yet effective:

The directors do not expect that the adoption of the IFRS 9 / IFRS 7 amendments have a material impact on the financial statements of the Group in future periods. The directors expect that the adoption of IFRS 18 will have a material impact on the presentation of the primary statements in future periods.

2 Significant judgements and estimates

The critical accounting judgements and key sources of estimation and uncertainty remain largely unchanged from those described in Note A5 of the 2024 Annual Report and Accounts. The potential impact on the Group has been considered in the preparation of these interim financial statements, including management's evaluation of critical accounting judgements and estimates. Further information on discount rates applied in these financial statements is provided below.

Discount rates

Cash flows are discounted using currency-specific, risk-free yield curves adjusted for the characteristics of the cash flows and the liquidity of the insurance contracts. The Group applies a 'bottom-up' approach to determining discount rates and follows the methodology used by the PRA and EIOPA to determine risk-free yield curves and ultimate forward rates for regulatory solvency calculations. To reflect the liquidity or otherwise of the insurance contracts, the risk-free yield curves are adjusted by an illiquidity premium.

For certain Dutch 'savings mortgage' products, there is a direct connection to the policyholder's mortgage loan and the premiums to repay the loan in that the crediting rate is set such that the account value will be equal to the balance on the loan at maturity. For this product, the cash flows are discounted using the same curve used to value the corresponding mortgage assets which itself is derived from mortgage rates available in the market.

When the present value of future cash flows is estimated using stochastic modelling, the cash flows are discounted at scenario-specific rates calibrated, on average, to be the risk-free rates as adjusted for illiquidity.

Inflation rates mainly relate to expense inflation. The assumptions in respect of expense inflation reflect the Group's best estimate view incorporating market consistent data such as earnings indices and central bank inflation targets.

The yield curves that were used to discount the estimates of future cash flows that were modelled deterministically are shown in the following table:

3 Earnings per share

Earnings per share are based on the following:

The weighted average number of ordinary shares in respect of the six months ended 30 June 2025 is based upon 150,991,019 shares in issue at the beginning of the period and 151,124,742 at the end of the period. No shares were held in treasury.

The weighted average number of ordinary shares in respect of the six months ended 30 June 2024 is based upon 150,849,587 shares in issue at the beginning of the period, and 150,954,119 shares in issue at the end of the period. No shares were held in treasury. 

The weighted average number of ordinary shares in respect of the year ended 31 December 2024 is based upon 150,849,587 shares in issue at the beginning of the period and 150,991,019 shares in issue at the end of the period. No shares were held in treasury.

There were 2,456,598 share options outstanding at 30 June 2025 (30 June 2024: 2,456,598). Accordingly, there is dilution of the average number of ordinary shares in issue. There were 2,330,118 share options outstanding as at 31 December 2024.

4 Retained earnings

The interim dividend in respect of 2024, approved and paid in 2024 was paid at the rate of 8.61p per share. 

The final dividend in respect of 2024, approved and paid in 2025, was paid at the rate of 16.08p per share so that the total dividend paid to the equity shareholders of the Company in respect of the year ended 31 December 2024 was made at the rate of 24.69p per share.

An interim dividend of 7.70pΔ per share in respect of the six months ending 30th June 2025 is payable on 17 October 2025 to equity shareholders of the Company registered at the close of business on 5 September 2025, the dividend record date, was approved by the Directors after the balance sheet date. The resulting dividend of £13.4m (pre rights issue) has not been provided for in these financial statements and there are no income tax consequences.

The following table summarises dividends per share in respect of the six-month period ended 30 June 2025 and the year ended 31 December 2024:

Δ Dividend per share has been rebased to reflect the rights issue bonus factor of 1.15x applied to historic dividend per share metrics.

5 Operating segments

The Group considers that it has no product or distribution-based business segments. It reports segmental information on the same basis as reported internally to the chief operating decision maker, which is the board of directors of Chesnara plc.

The segments of the Group as at 30 June 2025 comprise:

UK: This segment comprises the UK's life insurance and pensions business within Countrywide Assured plc (CA), the Group's principal UK operating subsidiary. CA contains a mix of unit-linked, with-profits and non-linked products and represents the UK acquisition vehicle, recently acquiring the unit-linked bond and pension business of Canada Life Limited with the transaction initially in the form of a reinsurance agreement accepted by CA.

Movestic: This segment comprises the Group's Swedish life and pensions business, Movestic Livförsäkring AB ('Movestic') and its subsidiary company, Movestic Fonder AB (investment fund management company). Movestic is open to new business and primarily comprises unit-linked pension business and also provides some life and health product offerings.

Waard Group: This segment represents the Group's closed Dutch life insurance business and comprises a number of acquisitions of closed insurance books of business since the acquisition of the original Waard entities into the Group in 2015. The Waard Group comprises a mixture of long-term savings and protection business and also contains some non-life business.

Scildon: This segment represents the Group's open Dutch life insurance business. Scildon's policy base is predominantly made up of individual protection and savings contracts. It is open to new business and sells protection, individual savings and Group pension contracts via a broker-led distribution model.

The integration of the Waard and Scildon businesses, has been executed after the balance sheet date and therefore has not been applied in the segmental reporting in these financial statements.

Other Group activities: The functions performed by the parent Company, Chesnara plc, are defined under the operating segment analysis as 'Other Group activities'. Also included therein are consolidation and elimination adjustments.

The accounting policies of the segments are the same as those for the Group as a whole. Any transactions between the business segments are on normal commercial terms in normal market conditions. The Group evaluates performance of operating segments on the basis of the profit before tax attributable to shareholders of the reporting segments and the Group as a whole. There were no changes to the measurement basis for segment profit during the six months ended 30 June 2025.

(i) Segmental reporting for the six months ended 30 June 2025