Chesnara PLC · LSE:CSN
Chesnara — Merger or Acquisition (November 2016)
32 slides from Chesnara's merger presentation, November 2016
Slide 1: Proposed acquisition of Legal & General Nederland and Fund raising
Proposed acquisition of Legal & General Nederland and Fund raising lo Chesnara plc November 2016
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION HAS BEEN PREPARED AND ISSUED BY AND IS THE SOLE RESPONSIBILITY OF CHESNARA PLC (THE "COMPANY") IN RELATION TO THE PROPOSED ACQUISITION (THE "ACQUISITION") BY CHESNARA HOLDINGS B.V., OF ALL OF THE SHARES IN LEGAL & GENERAL NEDERLAND LEVENSVERZEKERING MAATSCHAPPIJ N.V. (TH
Slide 3: Agenda
Agenda 1. INTRODUCTION 2. OVERVIEW OF LEGAL & GENERAL NEDERLAND 3. THE INVESTMENT CASE 4. DEAL STRUCTURE AND FUNDING 5. CONCLUSION 6. APPENDICES APPENDIX 1 – Overview of Chesnara plc APPENDIX II – Financial information APPENDIX III – Debt terms CHESNARA | PROPOSED ACQUISITION OF “LEGAL & GENERAL NED
Slide 4: 1. Introduction
1. Introduction CHESNARA | PROPOSED ACQUISITION OF “LEGAL & GENERAL NEDERLAND”
Slide 5: Introduction: Summary of the acquisition opportunity
1. INTRODUCTION: SUMMARY Chesnara has identified and negotiated an attractive acquisition opportunity within the Dutch life assurance market ― Legal & General Nederland Levensverzekering Maatschappij NV (“Legal & General Nederland”) Acquisition Target ― Wholly owned subsidiary of Legal & General Gro
Slide 6: The acquisition in the context of Chesnara's strategy
1. INTRODUCTION: THE ACQUISITION IN THE CONTEXT OF CHESNARA’S STRATEGY Chesnara has a clear aim to provide a consistent and dependable dividend flow for our shareholders through the acquisition, restructuring, management and development of financial services companies domiciled in Western Europe The
Slide 7: Track record of identifying, completing and integrating acquisitions
1. INTRODUCTION: STRONG TRACK RECORD OF IDENTIFYING, COMPLETING AND INTEGRATING VALUE ACCRETIVE ACQUISITIONS Group Value (previously EEV, now EcV ) Development History '15 JUN '16 '14 £460M '10 '13 £455M £417M Post Brexit vote £355M '11 '12 £376M Chesnara and including '09 £295M £311M Chesnara The l
Slide 8: 2. Overview of Legal & General Nederland
2. Overview of Legal & General Nederland CHESNARA | PROPOSED ACQUISITION OF “LEGAL & GENERAL NEDERLAND”
Slide 9: Business Overview of Legal & General Nederland
2. OVERVIEW OF LEGAL & GENERAL NEDERLAND: BUSINESS OVERVIEW Business Overview Policy count1 New Business Premium (APE)1 Long-established specialist insurer in the Netherlands with protection unit-linked and pension new business offering: – IFA-led distribution (c.1,800 relationships) – Focused on hi
Slide 10: 3. The Investment Case
3. The Investment Case CHESNARA | PROPOSED ACQUISITION OF “LEGAL & GENERAL NEDERLAND”
Slide 11: Key assessment criteria
3. THE INVESTMENT CASE: KEY ASSESSMENT CRITERIA The rationale for acquiring Legal & General Nederland is underpinned by our four key assessment pillars Legal & General Nederland represents an attractive, value-enhancing prospect and a strong strategic fit with Waard, our existing Dutch platform Coll
Slide 12: Cash generation
3. THE INVESTMENT CASE: CASH GENERATION The potential for phased, orderly capital extraction of excess capital is a key attraction of the acquisition Capital resources and surplus over minimum requirements 30 June 2016 (€m) ― Significant cash generation is expected from the business on an ongoing ba
Slide 13: Value enhancement
3. THE INVESTMENT CASE: VALUE ENHANCEMENT ― Legal & General Nederland is to be acquired for a cash consideration of €160m (£145m)1 Attractive Price ― A 27.2% discount to reported Owns Funds at H12016 ― A 33% discount to our estimate of EcV at H12016 ― Cash consideration funded from combination of eq
Slide 14: Pro forma group impact of acquisition
3. THE INVESTMENT CASE: PRO FORMA GROUP IMPACT OF ACQUISITION Pre-acquisition1 Pro forma1 32% Total assets 39% 43% under £5.12bn £6.94bn 53% management (£bn) 4% 29% UK Netherlands Sweden UK Netherlands Sweden UK Sweden Netherlands Other Debt2 Total Economic Value Pre-acquisition 230.3 183.1 81.1 17.
Slide 15: Customer outcomes
3. THE INVESTMENT CASE: CUSTOMER OUTCOMES ― Chesnara will apply its customer model and product governance to Legal & General Nederland, supporting the strong local management team ― Legal & General Nederland will continue to benefit from robust corporate Clear Benefits governance with a 2-tier indep
Slide 16: Risk profile
3. THE INVESTMENT CASE: RISK PROFILE Attractive risk profile aligned to our risk appetite ― A thorough DD process supported by PWC, Deloitte and Baker & McKenzie has identified that the Legal & General Nederland business generally sits within Chesnara’s risk appetite ― The risks associated with Lega
Slide 17: 4. Deal Structure and Funding
4. Deal Structure and Funding CHESNARA | PROPOSED ACQUISITION OF “LEGAL & GENERAL NEDERLAND”
Slide 18: Deal structure and funding
4. DEAL STRUCTURE AND FUNDING Deal structure Post-transaction group structure Legal & General Nederland to be acquired by Chesnara plc via Chesnara Holdings B.V. in the Holding Chesnara company (plc) Netherlands Funding1 Chesnara Consideration of €160.0m2 (c.£145m2,3) to be Countrywide Movestic Assu
Slide 19: 5. Conclusion
5. Conclusion CHESNARA | PROPOSED ACQUISITION OF “LEGAL & GENERAL NEDERLAND”
Slide 20: Summary and conclusion
5. CONCLUSION : SUMMARY AND CONCLUSION Chesnara has a proven track record of purchasing and integrating insurance companies, and converting these into strong returns to our shareholders Strong alignment with Chesnara’s strategic objective to acquire life and pensions businesses within our target mar
Slide 21: Appendix I: Overview of Chesnara plc
Appendix I: Overview of Chesnara plc CHESNARA | PROPOSED ACQUISITION OF “LEGAL & GENERAL NEDERLAND”
Slide 22: Strategic delivery
APPENDIX 1: STRATEGIC DELIVERY Chesnara is primarily a Life and Pensions closed book consolidator managing closed life UK and Dutch books and writing profitable new business in Scandinavia. The Group operates according to three core strategic objectives: MAXIMISE VALUE FROM EXISTING ACQUIRE LIFE AND
Slide 23: Track record of identifying, completing and integrating acquisitions
APPENDIX 1: TRACK RECORD OF IDENTIFYING, COMPLETING AND INTEGRATING ACQUISITIONS Chesnara targets UK and Western European opportunities EcV Cash enhancement generation Typically opportunities are sought with an acquisition value of between £50m and £200m Acquisition criteria Opportunities are assess
Slide 24: Our businesses
APPENDIX 1: OUR BUSINESSES CHESNARA PLC UK | COUNTRYWIDE ASSURED – Our original source of in-force value consisting of a We focus on delivering value to shareholders primarily portfolio of closed UK life and pensions books. through dividend streams arising from strong cash – Solvency II Ratio 137%|
Slide 25: UK | Countrywide Assured
APPENDIX 1: UK | COUNTRYWIDE ASSURED – Countrywide Assured was the original business when Chesnara plc was formed in 2004. The in-force book has grown throughout our history as the books of City of Westminster Assurance, Save & Prosper and Direct Line Life have been acquired and consolidated into th
Slide 26: Netherlands | Waard Group
APPENDIX 1: NETHERLANDS | WAARD GROUP – The Waard Group is a relatively small Life and Pension business comprising three insurance entities (Waard Leven, Waard Schade, Hollands Welvaren Leven) and a servicing company (Tadas Verzekeringen) – Closed to new business – A stand alone subsidiary of Chesna
Slide 27: Sweden | Movestic
APPENDIX 1: SWEDEN | MOVESTIC – Two insurance entities (Movestic Livförsäkring AB and Modernac S.A. (associate company)) and an asset management company (Movestic Kapitalförvaltning AB) – Operates as a challenger brand in the Swedish life insurance market – A stand alone subsidiary of Chesnara with
Slide 28: Appendix II: Financial Information
Appendix II: Financial Information CHESNARA | PROPOSED ACQUISITION OF “LEGAL & GENERAL NEDERLAND”
Slide 29: Legal & General financial information (IFRS)
APPENDIX II: LEGAL & GENERAL FINANCIAL INFORMATION (IFRS) Commentary ― Reported IFRS profits have been volatile over the period disclosed due primarily to the differing IFRS accounting treatments of actuarial liabilities and assets ― IFRS profits display sensitivity to economic conditions, especiall
Slide 30: Chesnara value movement: EEV to EcV in H1 16
APPENDIX II: CHESNARA – VALUE MOVEMENT: EEV to EcV in H1 2016 The total value of Chesnara has increased during the period after recognising the payment of the 2015 final dividend. – The movement in value includes 25.6 (15.6) £m the impact of the transition from European Embedded Value (EEV) reportin
Slide 31: Appendix III: New Debt Terms
Appendix III: New Debt Terms CHESNARA | PROPOSED ACQUISITION OF “LEGAL & GENERAL NEDERLAND”
Slide 32: New debt terms
APPENDIX III: NEW DEBT TERMS ― Chesnara Group's Existing Debt Facilities of £52.8 million are to be replaced by New Debt Facilities of approximately £104.51 million, comprising both a Sterling and Euro tranche, and will result in £51.7 million of incremental debt ― The New Debt Facilities will be di