Chesnara Plc · LSE:CSN
Chesnara — Debt Investor Presentation (January 2022)
39 slides from Chesnara's debt investor presentation, January 2022
Slide 1: Tier 2 GBP Bond Offering
Tier 2 GBP Bond Offering January 2022 Long-term cash flow underpinned by resilient business model
Slide 2: Disclaimer
Disclaimer NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES IMPORTANT: You must read the following before continuing. The attached presentation is in summary form and relates to an offering of securities as currently contemplated and has been prepared solely for information purposes and on the basi
Slide 3: Table of Contents
TABLE OF CONTENTS 1 INTRODUCTION TO CHESNARA & TRANSACTION OVERVIEW 2 KEY CREDIT STRENGTHS 3 PROPOSED TIER 2 ISSUANCE 4 CONCLUSION 5 APPENDICES CHESNARA | TIER 2 GBP BOND OFFERING 2
Slide 4: 1. Introduction to Chesnara & Transaction Overview
1. INTRODUCTION TO CHESNARA & TRANSACTION OVERVIEW 3
Slide 5: Key Strengths of the Chesnara Credit Story
KEY STRENGTHS OF THE CHESNARA CREDIT STORY Track Record of Building Economic Value, Supporting Sustainable, Long-Term Cash Generation • Long history of stable growth in Economic Value and cash flow over time 1 • Clear trajectory of future cash flow emergence from all busines units • Meaningful upsid
Slide 6: An Introduction to Chesnara
AN INTRODUCTION TO CHESNARA WHO WE ARE KEY FINANCIAL METRICS THREE CORE STRATEGIC OBJECTIVES UK As at H1 2021 • Chesnara plc was formed in 2004 and is listed on the NETHERLANDS London Stock Exchange. • The group is a life assurance and pensions consolidator, having successfully completed nine SWEDEN
Slide 7: Diversification Is at the Heart of Chesnara's Business Model
DIVERSIFICATION IS AT THE HEART OF CHESNARA’S BUSINESS MODEL Key Operating Divisions(1) Division UK NETHERLANDS SWEDEN Operating Company COUNTRYWIDE ASSURED WAARD GROUP SCILDON MOVESTIC Group Strategic Objectives 01 02 01 02 01 03 01 03 Acquisitions to Date(2) 4 6 1 Closed Book(3) Open Book
Slide 8: Strong Track Record of Acquisitions and Integration Since Foundation
STRONG TRACK RECORD OF ACQUISITIONS AND INTEGRATION SINCE FOUNDATION Completion of Completion of First acquisition. LGN acquisition, the acquisition Nov-21: City of Expansion into renamed Scildon, of 44,000 policies Announcement of Westminster Save and Prosper the Netherlands. at a 32% discount from
Slide 9: Overview of Proposed Transaction
OVERVIEW OF PROPOSED TRANSACTION • Inaugural debt capital markets transaction from Chesnara plc • Envisaged transaction size of £200MM (WNG) Proposed Transaction • GBP denominated Tier 2 Notes • 10.5-year Bullet format, including a 6-month par call prior to maturity • Further improve and optimise th
Slide 10: 2. Key Credit Strengths
2. KEY CREDIT STRENGTHS 9
Slide 11: Long-Term Growth in Economic Value and Cash Flow Generation
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team LONG-TERM GROWTH IN ECONOMIC VALUE AND CASH FLOW GENERATION Economic Value Growth and Cumulative Dividends(1) £MM Economic Value CAGR Economic Value 267 of 10% since resilient durin
Slide 12: Diverse Engines of Surplus & Cash Flow Generation Across the Group
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team DIVERSE ENGINES OF SURPLUS & CASH FLOW GENERATION ACROSS THE GROUP Sources of Cash Generation by Operating Division Sources of Future Cash(3) (5.5 years to 30 June 2021)(1) Split by
Slide 13: Approach to New Business Focused on Profitability and Future Cash Flow
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team CHESNARA’S APPROACH TO NEW BUSINESS IS FOCUSED ON PROFITABILITY AND FUTURE CASH FLOW Our aim is to write profitable new business which supports the growth of the company in the foll
Slide 14: Overview of Chesnara's ESG Strategy
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team OVERVIEW OF CHESNARA’S ESG STRATEGY Our ESG policy aims to further embed environmental, social and governance considerations in the way we conduct business, treat customers and mana
Slide 15: Balance Sheet Stability Underpinned by Conservative Capital Management
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team BALANCE SHEET STABILITY UNDERPINNED BY CONSERVATIVE APPROACH TO CAPITAL MANAGEMENT 1 2 Low risk liability profile, backed by conservative investment Strong capital position with rel
Slide 16: Low Risk Liability Profile, Backed by Conservative Investment Allocation
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team 1 LOW RISK LIABILITY PROFILE, BACKED BY CONSERVATIVE INVESTMENT ALLOCATION Breakdown of Investment Portfolio by Asset Class Credit Quality of Non-Linked & Shareholder Debt Securitie
Slide 17: Strong Capital Position with Relatively Low Sensitivity to Market Movements
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team 2 STRONG CAPITAL POSITION WITH RELATIVELY LOW SENSITIVITY TO MARKET MOVEMENTS Overview of Group Capital Position Breakdown of Solvency Capital Requirement(2) Health Operational Grou
Slide 18: Prudent Approach to Capital Management, Actions Available to Mitigate Downside Risk
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team 3 PRUDENT APPROACH TO CAPITAL MANAGEMENT, WITH ACTIONS AVAILABLE TO MITIGATE DOWNSIDE RISK Group Capital Management Policy Group Capital Position, £MM (1H21) 574 Solvency II Ratio >
Slide 19: Conservative Debt Management Framework Pre and Post Proposed Issuance
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team 4 CONSERVATIVE DEBT MANAGEMENT FRAMEWORK PRE AND POST PROPOSED ISSUANCE Overview of Leverage Position Debt Management Policy PF for PF for • Chesnara takes a prudent approach to deb
Slide 20: Significant M&A Opportunity in Core Markets
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team SIGNIFICANT M&A OPPORTUNITY IN CORE MARKETS WILL SUPPLEMENT LONG-TERM CASH GENERATION M&A Pipeline: Market Opportunity by Target M&A Pipeline: Market Opportunity by Geography Strate
Slide 21: Chesnara's M&A Approach Is Well-Established
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team CHESNARA’S M&A APPROACH IS WELL-ESTABLISHED AND FOCUSES ON FINANCIAL AND CUSTOMER OUTCOMES Key Steps within Chesnara’s M&A Process M&A Assessment Criteria Regulatory Assessment Crit
Slide 22: M&A Framework Supports Emergence of Commercial Value and Cash Flow
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team M&A FRAMEWORK SUPPORTS EMERGENCE OF COMMERCIAL VALUE AND CASH FLOW OVER MEDIUM-TERM Chesnara’s approach to M&A often results in day 1 value creation via the acquisition of companies
Slide 23: Experienced and Hands On Leadership Team
1: Long-Term Value Creation 2: Strong Solvency II Position 3: Disciplined M&A Framework 4: High Quality Mangement Team EXPERIENCED AND HANDS ON LEADERSHIP TEAM Steve Murray David Rimmington Group Chief Executive Officer Group Finance Director >20 >25 Jane Dale Luke Savage Senior Independent, Indepen
Slide 24: 3. Proposed Tier 2 Issuance
3. PROPOSED TIER 2 ISSUANCE 4 4 44
Slide 25: Overview of Proposed Transaction
OVERVIEW OF PROPOSED TRANSACTION • Inaugural debt capital markets transaction from Chesnara plc • Envisaged transaction size of £200MM (WNG) Proposed Transaction • GBP denominated Tier 2 Notes • 10.5-year Bullet format, including a 6-month par call prior to maturity • Further improve and optimise th
Slide 26: Summary of Terms & Conditions
SUMMARY OF TERMS & CONDITIONS Issuer • Chesnara plc Format • £200,000,000 [•] per cent. Subordinated Tier 2 Notes due 2032 Issuer Rating • [•] by Fitch Instrument Rating • Expected [•] by Fitch Maturity Date • [•] [July] 2032 • Subject to regulatory consent and certain pre-conditions, the Issuer may
Slide 27: Structural Comparison with Selected Tier 2 Transactions
STRUCTURAL COMPARISON WITH SELECTED TIER 2 TRANSACTIONS Notes Tier 2 Notes Tier 2 Notes Tier 2 Notes Tier 2 Notes Tier 2 Notes Issue Date [January] 2022 08-Sep-21 21-Oct-20 28-Apr-20 2-Oct-19 Size GBP 200m (WNG) GBP 400m GBP 400m GBP 500m GBP 125m IDR (Fitch) [•] BBB+ A A+ A Issue Rating (Fitch) [•]
Slide 28: 4. Conclusion
4. CONCLUSION 4 9 49
Slide 29: Key Strengths of the Chesnara Credit Story
KEY STRENGTHS OF THE CHESNARA CREDIT STORY Track Record of Building Economic Value, Supporting Sustainable, Long-Term Cash Generation • Long history of stable growth in Economic Value and cash flow over time 1 • Clear trajectory of future cash flow emergence from all busines units • Meaningful upsid
Slide 30: Appendices
APPENDICES 4 4 44
Slide 31: Business & Operational Model Suited to Meeting Strategic Objectives
BUSINESS & OPERATIONAL MODEL IS WELL-SUITED TO MEETING STRATEGIC OBJECTIVES Chesnara Division UK NETHERLANDS SWEDEN Operating Company COUNTRYWIDE ASSURED WAARD GROUP SCILDON MOVESTIC Strategic Objectives 01 02 01 02 01 03 01 03 Closed Book Open Book Mainly term life; Key Products Uni
Slide 32: The Group Has Continued to Evolve Its Operating Model Since Foundation
THE GROUP HAS CONTINUED TO EVOLVE ITS OPERATING MODEL SINCE FOUNDATION Chesnara UK NETHERLANDS SWEDEN • Chesnara created via acquisition of Countrywide 2004 to Assured • Entry into Sweden in 2009 2010 • Outsourcing of CA’s back-office functions • n/a • Initial preparation for Solvency II implementat
Slide 33: Recent Developments in Second Half of 2021
RECENT DEVELOPMENTS IN SECOND HALF OF 2021 WILL SUPPORT LONG-TERM CASH FLOW Since H1 results, Chesnara has announced two further acquisitions – Sanlam Life & Pensions UK Limited and Robein Leven N.V. Sanlam Life & Pensions UK Limited Robein Leven N.V. • Acquisition of specialist provider of insuranc
Slide 34: Well-Positioned to Deal with Ongoing Regulatory Changes
CHESNARA IS WELL-POSITIONED TO DEAL WITH ONGOING REGULATORY CHANGES Chesnara • All territories are governed to the same Solvency II regime which creates good consistency across the Group • Brexit is expected to create only modest and immaterial divergence between how Solvency II is applied in the UK
Slide 35: Recent Financial Performance: KPIs & Highlights
RECENT FINANCIAL PERFORMANCE: KPIs & HIGHLIGHTS Financial performance 1H21 1H20 2020 Dividends Dividends per share (1) 7.88p (3) 7.65p (3) 21.94p (3) Cash Group cash generation £5.4m £12.9m £27.7m Economic value Economic value earnings (2) £38.5m (£74.1m) (£37.6m) IFRS Profit before tax £20.8m (£9.1
Slide 36: Measuring Chesnara's Financial Performance
MEASURING CHESNARA’S FINANCIAL PERFORMANCE Throughout the presentation, we use measures to assess FINANCIAL and report our performance. ADDITIONAL METRICS STATEMENTS The range of measures is broad and includes many that are not based on IFRS. Solvency II valuation I IFRS net assets Capital requireme
Slide 37: Further Information on Solvency II Sensitivities
FURTHER INFORMATION ON SOLVENCY II SENSITIVITIES A material sterling appreciation would be expected to reduce the value of solvency surplus in the Group’s overseas divisions and hence have an 20% GBP appreciation immediate impact on Group solvency surplus. It also is expected to reduce the value of
Slide 38: Group Corporate Structure
GROUP CORPORATE STRUCTURE Our corporate structure is shown below. Chesnara plc is limited by shares; the majority of which are owned by private and institutional investors. Shareholders in Chesnara plc Chesnara plc United Kingdom Countrywide Assured Life Holdings Limited Movestic Livförsäkring AB Ch
Slide 39: Chesnara | 2019 Final Results Presentation
CHESNARA | 2019 FINAL RESULTS PRESENTATION 38