Chesnara Plc · LSE:CSN
Chesnara — Merger or Acquisition (July 2025)
22 slides from Chesnara's merger presentation, Jul 3, 2025
Slide 1: Chesnara Acquires HSBC Life (UK) and Launches £140M Rights Issue
CHESNARA ACQUIRES HSBC LIFE (UK) AND LAUNCHES £140M RIGHTS ISSUE
Slide 2: Important notice and disclaimer
THIS PRESENTATION (AS DEFINED BELOW) IS CONFIDENTIAL AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN AND THE REPUBLIC OF SOUTH AFRICA (EACH A "RESTRICTED JURISDICTION") OR ANY JURISDICTIO
Slide 3: Acquisition Accelerates Chesnara's Strategy
ACQUISITION ACCELERATES CHESNARA’S STRATEGY Chesnara has the capacity, capability HSBC Life (UK) is a Chesnara has Chesnara retains Multiple value and reputation to high-quality significant balance sheet levers including acquire and business acquired experience in all of strength and expense efficie
Slide 4: A Compelling Value-Accretive Transaction
A COMPELLING VALUE-ACCRETIVE TRANSACTION Increased cash ➢ Expected incremental lifetime cash generation of >£800m(1), >3x consideration of £260m(2) generation ➢ Solvency II ratio to remain above normal range of 140% - 160% Maintain balance sheet strength and resilience ➢ Leverage ratio in line with
Slide 5: HSBC Life (UK) Is an Attractive Business Offering Highly Complementary Products
HSBC LIFE (UK) IS AN ATTRACTIVE BUSINESS OFFERING HIGHLY COMPLEMENTARY PRODUCTS HSBC Life (UK) is a specialist investment bond and life protection provider in the UK OVERVIEW OF HSBC LIFE (UK) HSBC LIFE (UK) KEY METRICS (Dec 2024) NUMBER OF POLICIES BY PRODUCT TYPE £314m Eligible Own Funds(3) 5% ➢ C
Slide 6: HSBC Life (UK) Will Drive Increased Cash Generation and Value Creation Supporting a Step-Up in Dividend
HSBC LIFE (UK) WILL DRIVE INCREASED CASH GENERATION AND VALUE CREATION SUPPORTING A STEP-UP IN DIVIDEND A B C ROBUST BALANCE SHEET FUTURE VALUE INCREASED CASH GENERATION(1) OPTIMISED THROUGH CREATION BY FINANCING MIX MULTIPLE LEVERS Cash Generation from acquisition £260m Expense and capital synergie
Slide 7: Increased Cash Generation
A INCREASED CASH GENERATION NEXT 5 YEARS CASH GENERATION OVERVIEW TRANSACTION IMPACT ➢ HSBC Life (UK) is expected to add in excess of £800 million of lifetime cash generation(1) >£140m(1) – Achieved through delivery of future profits and run off of capital requirements – Materially increases the gro
Slide 8: Financing Structure Retains Balance Sheet Strength
B FINANCING STRUCTURE RETAINS BALANCE SHEET STRENGTH Financing structure consistent with existing framework and provides firepower for further M&A FINANCING STRUCTURE FINANCIAL CONSIDERATIONS Existing cash - £55m Drawdown on RCF - £65m Solvency Remain above Solvency II operating range ➢ £55m existin
Slide 9: Robust Balance Sheet Maintained
B ROBUST BALANCE SHEET MAINTAINED SOLVENCY LEVERAGE(8) ➢ Estimated Group solvency coverage of 169% (Dec-24 pro-forma) ➢ Above our Group’s operating range of 140% - 160% ➢ Estimated Group leverage of 29% (Dec-24 pro-forma) ➢ Robust capital position expected to remain above the range with no ➢ Leverag
Slide 10: Future Value Creation Through Multiple Levers
C FUTURE VALUE CREATION THROUGH MULTIPLE LEVERS 1 2 3 TARGET OPERATING MODEL MANAGEMENT ACTIONS AND NEW BUSINESS AND EXPENSE SAVINGS CAPITAL SYNERGIES DRIVING ADDITIONAL VALUATION CREATION ➢ Further value enhancing ➢ Potential for additional value ➢ Transfer to a more efficient management actions e.
Slide 11: Anticipated Step-Up in Dividend Trajectory From 2025
D ANTICIPATED STEP-UP IN DIVIDEND TRAJECTORY FROM 2025 OVERVIEW DIVIDEND PER SHARE POST-TRANSACTION Interim dividend paid in September of the same financial year Chart Title Final dividend paid in May in the following financial year 0 2 o 20-year track record of uninterrupted dividend growth with re
Slide 12: Overview of Proposed Rights Issue and Next Steps
OVERVIEW OF PROPOSED RIGHTS ISSUE AND NEXT STEPS SUMMARY OF RIGHTS ISSUE EXPECTED TIMELINE o Gross proceeds to be raised of c.£140m Rights Issue: o Transaction fully underwritten by RBC and ABN AMRO o Transaction Announcement and Publication of Prospectus: 3 July 2025 o Fully pre-emptive, all shareh
Slide 13: HSBC Life (UK) Is a Compelling Opportunity for Chesnara
HSBC LIFE (UK) IS A COMPELLING OPPORTUNITY FOR CHESNARA Maintains Chesnara’s balance Reinforces our Expected to be Transformational sheet strength and position as one of Supports a step-up eligible for transaction resilience the leading life and enhanced inclusion in FTSE- enhancing cash and pension
Slide 14: Questions
QUESTIONS
Slide 15: Appendix
APPENDIX
Slide 16: Track Record of Successfully Executing Transactions With Large Financial Institutions
TRACK RECORD OF SUCCESSFULLY EXECUTING TRANSACTIONS WITH LARGE FINANCIAL INSTITUTIONS City of Westminster Assurance Save & Prosper Funds Life assurance and pensions Direct Line Life Insurance, Pension and life assurance solutions provider from Irish focused on non-linked products, provider for £63.5
Slide 17: Strengthening Our Existing Business
STRENGTHENING OUR EXISTING BUSINESS Chesnara HSBC Life (UK) Pro-Forma Chesnara Dec-24 Dec-24 Dec-24 AUA BY GEOGRAPHY 21% 16% UK Increases scale in 42% the UK Sweden £14bn £4bn £18bn 55% 29% Netherlands 37% 100% AUA BY PRODUCTS 14% 6% 11% Maintains our focus on Unit-linked (13) £18bn £14bn £4bn manag
Slide 18: We Remain Flexible to Execute Future M&A Using Existing Cash, External Debt and Equity Raise
WE REMAIN FLEXIBLE TO EXECUTE FUTURE M&A USING EXISTING CASH, EXTERNAL DEBT AND EQUITY RAISE FINANCIAL CONSIDERATIONS Solvency Leverage Operating range Maintain our investment A B of 140% to 160% grade rating Investment grade rating important Equity financing from shareholders, for accessing debt ca
Slide 19: Overview of the Impact of the Rights Issue for Shareholders and Per Share Metrics
OVERVIEW OF THE IMPACT OF THE RIGHTS ISSUE FOR SHAREHOLDERS AND PER SHARE METRICS NOTES BONUS FACTOR METHODOLOGY Metric Value Key Calculation FY24 weighted average number of shares (WAV) 151m A - Shares outstanding pre-Rights Issue 151m B - o Reported FY24 DPS of 24.7p Share price (2 July 2025) 293.
Slide 20: Footnotes
FOOTNOTES SUMMARY OF FOOTNOTES USED THROUGHOUT THE PRESENTATION (1) Incremental cash generation arising from the acquisition of HSBC Life (UK) is calculated using Chesnara’s assumptions and reporting bases on an undiscounted basis (2) Consideration before customary closing adjustments (3) Eligible S
Slide 21: Glossary
GLOSSARY TERM DEFINITION AuA Assets under Administration This represents the operational cash that has been generated in the period. The cash generating capacity of the Group is largely a function of the movement in the solvency position of the insurance subsidiaries within the Group and takes accou
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