Chesnara Plc · LSE:CSN
Chesnara — Corporate Update (March 2023)
17 slides from Chesnara's corporate update, March 2023
Slide 1: Chesnara IFRS 17 & IFRS 9 Update
CHESNARA IFRS 17 & IFRS 9 UPDATE March 2023 IFRS 17 and IFRS 9 result in no change to growth ambition, value or cash generation
Slide 2: No change to growth ambition, value or cash generation
NO CHANGE TO GROWTH AMBITION, VALUE OR CASH GENERATION MAXIMISE THE ACQUIRE LIFE & ENHANCE VALUE 1 VALUE FROM 2 PENSION 3 THROUGH PROFITABLE EXISTING BUSINESS BUSINESSES NEW BUSINESS • No change to solvency • No change to our • No change to the ratio or cash group acquisition expected profitability
Slide 3: Our split of insurance and investment liabilities
OUR SPLIT OF INSURANCE AND INVESTMENT LIABILITIES Insurance Investment liabilities liabilities 42% 58% (PAA <1%) Investment Insurance - PAA Insurance liabilities by division Insurance - GMM & VFA Investment liabilities by division *The split between insurance and investment liabilities is based on t
Slide 4: How IFRS 17 is different to IFRS 4
HOW IFRS 17 IS DIFFERENT TO IFRS 4 IFRS 4 IFRS 17 Contractual New business service margin profit (CSM) CSM reflects stock of future profits, released to P&L as the insurance services Risk adjustment are provided; whereas IFRS 4 recognises this on day one Premium Premium received / Insurance received
Slide 5: How our opening balance sheet will change
HOW OUR OPENING BALANCE SHEET WILL CHANGE EcV Solvency II IFRS 4 IFRS 17 & IFRS 9 nCSM: £93m £624m New KPI: £558m Group net net equity equity + CSM net £458m remains £435m of tax broadly in (nCSM) = line £528m Group EcV: Group SII IFRS 4: IFRS 17: 1 Jan 2022 own funds: shareholder equity shareholder
Slide 6: How IFRS 17 will impact opening net equity
HOW IFRS 17 WILL IMPACT OPENING NET EQUITY Expected value of future profit Existing insurance AVIF and DAC is derecognised as no longer allowed under IFRS17 Group net equity under IFRS 17 at the opening balance sheet is broadly in line with IFRS 4 Please note – the numbers shown are draft and curren
Slide 7: How CSM will move over time
HOW CSM WILL MOVE OVER TIME Acquiring profitable insurance business will increase CSM New business CSM Assumption & experience Interest variances accreted to CSM Release of profit Post acquisition closing CSM Opening Closing CSM CSM The boxes are not drawn to scale, and provide an indicative view on
Slide 8: CSM movement – what are the components
CSM MOVEMENT – WHAT ARE THE COMPONENTS Assumption & experience Interest accreted to CSM variances Interest will be added to the More changeable element underlying balance each year which contains the impacts based on investment return at arising from market movements the applicable locked-in rate fo
Slide 9: Summary of what the IFRS 17 income statement will look like
SUMMARY OF WHAT THE IFRS 17 INCOME STATEMENT WILL LOOK LIKE Simplified IFRS 17 Income Statement (illustrative) Insurance revenue Net insurance service result: new distinct insurance business result: comprises the net result from providing insurance services in respect of current Insurance service ex
Slide 10: How IFRS 9 will affect the group
HOW IFRS 9 WILL AFFECT THE GROUP IAS 39 IFRS 9 • Reduced number of classification and measurement models for financial instruments and Classification and applies a single classification approach to all types of financial assets measurement basis • Consistent with how they are currently measured, the
Slide 11: Conclusion and key messages
CONCLUSION AND KEY MESSAGES MAXIMISE THE ACQUIRE LIFE & ENHANCE VALUE 1 VALUE FROM 2 PENSION 3 THROUGH PROFITABLE EXISTING BUSINESS BUSINESSES NEW BUSINESS • No change to solvency • No change to our • No change to the ratio or cash group acquisition expected profitability generation strategy or capa
Slide 12: Appendices
Appendices
Slide 13: Appendix 1: Summary of our implementation choices
APPENDIX 1: SUMMARY OF OUR IMPLEMENTATION CHOICES UK Movestic Scildon Waard A combination of the A combination of the A combination of the The Premium Allocation General Measurement Model General Measurement Model General Measurement Model Measurement basis Approach is applied for all and the Variab
Slide 14: Appendix 2: Change in accounting treatment between IFRS 4 and IFRS 17
APPENDIX 2: CHANGE IN ACCOUNTING TREATMENT BETWEEN IFRS 4 AND IFRS 17 IFRS 4 IFRS 17 Explicit margin equal to future profit yet to be earned, CSM which is then amortised to P&L based on service provided to policyholders No equivalent: implicit margins are added and included within the insurance liab
Slide 15: Appendix 3: Glossary of terms
APPENDIX 3: GLOSSARY OF TERMS Term Explanation Insurance liabilities Financial obligations in respect of insurance contracts. Included within the scope of IFRS 17. Investment liabilities Financial obligations in respect of investment contracts. Outside of the scope of IFRS 17. Approach to measuring
Slide 16: 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 17: Chesnara | 2019 Final Results Presentation
CHESNARA | 2019 FINAL RESULTS PRESENTATION 16