Slide 1: 2022 Interim Results
Acquisition momentum, cash generation and strong solvency support 3% growth in interim dividend 2022 INTERIM RESULTS 31 August 2022
Slide 2: Agenda for 2022 HY Presentation
AGENDA FOR 2022 HY PRESENTATION OVERVIEW OF STRATEGIC DELIVERY STEVE MURRAY, GROUP CHIEF EXECUTIVE OFFICER FINANCIAL OUTCOMES DAVID RIMMINGTON, GROUP FINANCE DIRECTOR AREAS OF FOCUS, OUTLOOK AND SUMMARY STEVE MURRAY, GROUP CHIEF EXECUTIVE OFFICER PRESENTERS Steve Murray David Rimmington Group Chief
Slide 3: Overview of Strategic Delivery
OVERVIEW OF STRATEGIC DELIVERY Steve Murray Group Chief Executive Officer 2
Slide 4: Chesnara Has a Renewed Strategy to Deliver Growth
CHESNARA HAS A RENEWED STRATEGY TO DELIVER GROWTH 1 Line of sight to future sources of Economic Value growth, supporting sustainable long-term cash generation and shareholder dividends 2 Strong Solvency II position with high resilience to market volatility Disciplined yet flexible M&A framework with
Slide 5: Business Highlights for 2022 HY
BUSINESS HIGHLIGHTS FOR 2022 HY COMPLETION OF SANLAM UK AND ROBEIN LEVEN ACQUISITIONS M&A ACQUISITION OF THE INSURANCE PORTFOLIO OF CONSERVATRIX ANNOUNCED IN JULY – OUR THIRD DEAL OVER THE PAST YEAR DIVISIONAL COMMERCIAL CASH GENERATION(1) OF £18.6M STRONG SOLVENCY AT 195%, ABOVE USUAL OPERATING RAN
Slide 6: Conservatrix Is Chesnara's Third Acquisition Over the Past Year
CONSERVATRIX IS CHESNARA’S THIRD ACQUISITION OVER THE PAST YEAR WAARD POLICIES • Customers to benefit from becoming part of a well 165k capitalised group with strong levels of customer c.70% service 95k • Capital contribution of £35 million to support the business, utilising Tier 2 proceeds WAARD AS
Slide 7: Financial Outcomes
FINANCIAL OUTCOMES David Rimmington Group Finance Director 6
Slide 8: Market Context & Financial Highlights
FINANCIAL OUTCOMES MARKET CONTEXT & FINANCIAL HIGHLIGHTS CASH GENERATION SOLVENCY GROWTH CHESNARA | 2022 INTERIM RESULTS PRESENTATION 7
Slide 9: Market Context in 2022 HY
MARKET CONTEXT IN 2022 HY EQUITY MARKETS INTEREST RATES (10 YEAR GOVERNMENT BONDS) FTSE SWEDISH OMX NETHERLANDS AEX 2.75% ALL SHARE ALL SHARE ALL SHARE UK Sweden Dutch 2.25% 2.31% 31 Dec 2021: 4,208 31 Dec 2021: 1,037 31 Dec 2021: 1,111 1.74% 1.75% 1.69% 1.25% 0.75% -6% -29% -19% 0.25% -0.25% Q4 202
Slide 10: Financial Highlights
FINANCIAL HIGHLIGHTS HY FY HY Financial performance 2022 2021 2021 Dividends Dividends per share (1) 8.12p 22.60p 7.88p Divisional(3) £60.1m £31.1m £11.5m Base Cash Group £21.9m £20.3m £5.4m generation(4) Divisional(3) £18.6m £58.5m Not available(2) Commercial Group £(3.0)m £53.0m Not available(2) I
Slide 11: Cash Generation
FINANCIAL OUTCOMES MARKET CONTEXT & FINANCIAL HIGHLIGHTS CASH GENERATION SOLVENCY GROWTH CHESNARA | 2022 INTERIM RESULTS PRESENTATION 10
Slide 12: Cash Generation Summary
CASH GENERATION SUMMARY Base cash Commercial cash (includes symmetric adjustment and restricted fund release) (excludes symmetric adjustment and restricted fund release) Divisional base cash of £60.1m (1)(4) Divisional commercial cash of £18.6m (1)(2)(5) 2.2 CA and SLP 12.4 Movestic 31.2 Scildon Waa
Slide 13: Cash Reserves
CASH RESERVES *The closing cash balance includes a dividend payment made by Scildon to a group holding subsidiary representing total cash available at holding companies Chesnara has firepower of over £100m to fund future acquisitions CHESNARA | 2022 INTERIM RESULTS PRESENTATION 12
Slide 14: Strong Visibility on Sources of Future Cash
STRONG VISIBILITY ON SOURCES OF FUTURE CASH Sources of future cash generation composition (5 year estimate) We expect new business to generate cash over the longer term, but remain broadly neutral in the 5 year outlook. Potential total Acquisitions(2) future cash generation Management Base cash acti
Slide 15: Solvency
FINANCIAL OUTCOMES MARKET CONTEXT & FINANCIAL HIGHLIGHTS CASH GENERATION SOLVENCY GROWTH CHESNARA | 2022 INTERIM RESULTS PRESENTATION 14
Slide 16: Change in Solvency II Position in 2022 HY
CHANGE IN SOLVENCY II POSITION IN 2022 HY Between 2021 YE, and 2022 HY, the solvency ratio has increased from 152% to 195%, which is the result of several key items, as shown in the waterfall diagram below: Solvency ratio and surplus 1 1 160% Normal operating solvency range 140% 158% 155% 156% 152%
Slide 17: Growth
FINANCIAL OUTCOMES MARKET CONTEXT & FINANCIAL HIGHLIGHTS CASH GENERATION SOLVENCY GROWTH CHESNARA | 2022 INTERIM RESULTS PRESENTATION 16
Slide 18: Change in Economic Value in 2022 HY
CHANGE IN ECONOMIC VALUE IN 2022 HY • Operating result includes: • £8m of non-recurring developmental investment • An expected but vastly reduced transfer out loss in Sweden; by the end of the period, transfer out rates had recovered to the long term base assumption • The acquisitions completed in t
Slide 19: Chesnara Value Drivers
CHESNARA VALUE DRIVERS Chesnara's reported Economic Value does not recognise a number of further areas of potential future growth Chesnara Fan (not drawn to scale) Risk margin The categories of potential upside (which are not shown to scale) will emerge over time Economic Value Total Potential (Illu
Slide 20: Chesnara Value Drivers 2022 HY Performance
CHESNARA VALUE DRIVERS 2022 HY PERFORMANCE VALUE CREATED VALUE DRIVER VALUE INSIGHT DURING 2022 HY 1) Risk margin run off £14.6m Normal run off of risk margin inherent within EcV Total economic loss in 2022 HY due to investment 2) Real world returns £(91.1)m market performance Acquisitions in th
Slide 21: Areas of Focus, Outlook and Summary
AREAS OF FOCUS, OUTLOOK AND SUMMARY Steve Murray Group Chief Executive Officer 20 20
Slide 22: Chesnara Has Strong Fundamentals on Which to Build
CHESNARA HAS STRONG FUNDAMENTALS ON WHICH TO BUILD 01 • 1 million group customers as at 2022 HY following Sanlam and Robein Leven acquisitions MAXIMISE THE and announced acquisition of Conservatrix, allowing Chesnara to benefit from VALUE FROM economies of scale EXISTING • Focus on management action
Slide 23: M&A Outlook
M&A OUTLOOK M&A pipeline: market opportunity by Strategic priorities Our key strengths geography Back-book FUM by geography(1) Deal size and financing UK listing and high standards of governance • Chesnara has been in a strong position to derive value from Positive and long-standing £90bn opport
Slide 24: A Sustainable Chesnara
A SUSTAINABLE CHESNARA • Each of our divisions has sustainability as a fundamental principle of its operations and we are taking real- world positive actions: CA Movestic Scildon Waard Active engagement with our Offering innovative Has in place an exclusions Announced the completion asset manager, S
Slide 25: Strong Cash Generation, Robust Solvency and Growth
STRONG CASH GENERATION, ROBUST SOLVENCY AND GROWTH Clear line of sight to future Strong divisional commercial cash generation more than cash generation of £18.6m and covering potential future 3% increase in interim dividend dividend and interest payments Strong and resilient solvency at Further valu
Slide 26: Questions
QUESTIONS 25
Slide 27: Appendices
APPENDICES 26
Slide 28: Appendix 1: Dividend Growth
APPENDIX 1: DIVIDEND GROWTH Dividend History (pence per share) 22.6 21.9 21.3 14.7 20.7 14.3 20.1 13.9 19.5 18.9 13.5 18.4 13.1 17.9 12.7 17.4 12.3 16.9 12.0 16.4 11.6 16.0 11.3 15.6 10.9 15.1 10.6 10.3 10.1 9.9 13.1 12.5 11.9 8.1 7.6 7.1 7.9 8.1 7.4 7.7 7.0 7.2 6.6 6.8 6.1 6.3 6.4 5.7 5.8 6.0 5.3 5
Slide 29: Appendix 2: An Introduction to Chesnara
APPENDIX 2: AN INTRODUCTION TO CHESNARA WHO WE ARE FINANCIAL KEY METRICS THREE CORE STRATEGIC OBJECTIVES 30 June 2022 • Chesnara plc was formed in 2004 and is listed on the London Stock Exchange UK NETHERLANDS SWEDEN 01 MAXIMISE THE VALUE FROM • The group is a European life and pensions EXISTING BUS
Slide 30: Appendix 3: Commercial Cash
APPENDIX 3: COMMERCIAL CASH DIVISIONAL BASE CASH DIVISIONAL BASE CASH COMMERCIAL CASH COMMERCIAL CASH GENERATION: £21.9m GENERATION: £60.1m GENERATION: £(3.0)m GENERATION: £18.6m NETHERLANDS NETHERLANDS DIVISIONAL GROUP UK SWEDEN TOTAL WAARD SCILDON TOTAL ADJ Base cash generation 31.3 14.2 2.2 12.4
Slide 31: Appendix 4: Summary of Headline Solvency Numbers
APPENDIX 4: SUMMARY OF HEADLINE SOLVENCY NUMBERS £m 30 June 2022 31 December 2021 195% • Increase to 195% driven largely by Tier 2 debt 152% • Impact of acquisitions of Sanlam Life and Pensions UK 314 191 Limited and Robein Leven estimated at -15% • Our normal solvency operating range remains betwee
Slide 32: Appendix 5: IFRS Pre Tax Profit & Total Comprehensive Income
APPENDIX 5: IFRS PRE TAX PROFIT & TOTAL COMPREHENSIVE INCOME HY 2022 HY 2021 IFRS result breakdown Pre-tax losses reported in each territory with economic conditions £m £m underpinning the results. Operating activities (10.4) 28.3 Economic activities (105.1) (7.4) The loss on economic driven by vari
Slide 33: Appendix 6: Asset Analysis
APPENDIX 6: ASSET ANALYSIS BREAKDOWN OF INVESTMENT PORTFOLIO BY ASSET CLASS CREDIT QUALITY OF NON-LINKED & SHAREHOLDER DEBT SECURITIES Total non linked assets of £875m at the end of H1 2022 Non rated: 1% AAA: 3% BBB: 18% AA: 15% £m Government issued Corporate issued 417 458 Total value of non- linke
Slide 34: Appendix 7: Sensitivities (1 of 2)
APPENDIX 7: SENSITIVITIES (1 of 2) The charts below provide some insight into the potential range of impacts of certain sensitivities that the group is exposed to, covering surplus and economic value Whilst cash generation has not been shown in the diagrams below, the impact of these sensitivities o
Slide 35: Appendix 7: Sensitivities (2 of 2)
APPENDIX 7: SENSITIVITIES (2 of 2) Explanatory notes on the sensitivities on the previous slide are provided below: EcV tends to take the “full force” of adverse conditions whereas solvency surplus is often protected in the short term due to compensating 1 impacts on our required capital. 20% sterli
Slide 36: Disclaimer
Disclaimer This presentation has been issued by Chesnara plc (“Chesnara” or the “Company”) and is being made only to and directed at: (a) persons who have professional experience in matters relating to investments falling within Article 19 of the Financial Services and Markets Act 2000 (Financial Pr
Slide 37: Chesnara | 2019 Final Results Presentation
CHESNARA | 2019 FINAL RESULTS PRESENTATION 36