Chesnara to acquire Dutch portfolio of term life and savings policies for €29.15 million
LONDON: Chesnara plc, through its existing Netherlands-based closed book operation, the Waard Group, has agreed to acquire a portfolio of life insurance business in run-off from the Dutch branch of Belgian-owned Argenta Bank-en Verzekeringsgroep N.V.
The Transaction will see the transfer of a portfolio of approximately 44,000 term and savings policies for a consideration of €29.15 million (approximately £25.0 million), to be paid in cash funded from existing reserves within Waard.
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 30 June 2019. On completion, the business will be integrated within Waard.
As at 30 June 2019, the acquired portfolio had gross assets of c.€380 million (c.£326 million). For the year ended 31 December 2018, it generated profits before tax of c.€3.7 million (c.£3.2 million).
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 c.€8.0 million (c.£6.9 million), and that the acquired portfolio will have a positive cumulative cash generation profile over its remaining life.
The Transaction follows last month's acquisition and successful integration by Waard of a term life and endowment portfolio of c.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 ("NBB") and from the Dutch Central Bank (DNB) for the change of control. Antitrust clearance from the Netherlands Authority for Consumers and Markets (ACM) is also required. It is expected to complete in summer 2020.
John Deane, Chief Executive, Chesnara stated: "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.
"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."