Slide 1: Chesnara FY 2022 Results
CHESNARA FY 2022 RESULTS 30 March 2023 Increased acquisition momentum with strong cash generation, supporting a 3% increase in dividend
Slide 2: Agenda for 2022 Results Presentation
AGENDA FOR 2022 RESULTS 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 C
Slide 3: Overview of Strategic Delivery
OVERVIEW OF STRATEGIC DELIVERY Steve Murray Group Chief Executive Officer 2
Slide 4: Chesnara is successfully executing its renewed strategy to deliver growth
CHESNARA IS SUCCESSFULLY EXECUTING ITS 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 fle
Slide 5: Increased M&A momentum with strong cash generation
INCREASED M&A MOMENTUM WITH STRONG CASH GENERATION COMPLETION OF THE ACQUISITION OF CONSERVATRIX IN THE NETHERLANDS ON 1 JANUARY 2023(1) M&A COMPLETED THE INTEGRATION OF ROBEIN LEVEN INTO WAARD AND THE SANLAM INTEGRATION INTO COUNTRYWIDE ASSURED REMAINS ON TRACK GROUP BASE CASH GENERATION OF £83M GR
Slide 6: More active approach on capital & sustainability actions
MORE ACTIVE APPROACH ON CAPITAL & SUSTAINABILITY ACTIONS ACTIONS CAPITAL RAISED £200M OF TIER 2 DEBT TO SUPPORT THE GROUP’S M&A STRATEGY REDUCED EXPOSURE TO FX VOLATILITY THROUGH EXECUTION OF AN FX HEDGE AS PART OF OUR ONGOING TREASURY MANAGEMENT ACTIVITY WE SET OUR LONG TERM SUSTAINABILITY TARGETS:
Slide 7: Integrations well advanced with capacity to undertake further deals
INTEGRATIONS WELL ADVANCED WITH CAPACITY TO UNDERTAKE FURTHER DEALS SANLAM LIFE & PENSIONS ROBEIN LEVEN NV CONSERVATRIX UK LIMITED (CASLP) Date of completion April 2022 April 2022 January 2023 £6m (initially reported as £21m(1) (initially reported as Day 1 EcV gain £15m £1m) £18m) Discount to EcV(2)
Slide 8: Financial Outcomes
FINANCIAL OUTCOMES David Rimmington Group Finance Director 7
Slide 9: Financial Outcomes: Market Context & Financial Highlights
FINANCIAL OUTCOMES MARKET CONTEXT & FINANCIAL HIGHLIGHTS CASH GENERATION SOLVENCY GROWTH IFRS 17 CHESNARA | 2022 RESULTS PRESENTATION 8
Slide 10: Extraordinary market environment in 2022
EXTRAORDINARY MARKET ENVIRONMENT IN 2022 EQUITY MARKETS INTEREST RATES (10 YEAR) FTSE FTSE SWEDISH OMX NETHERLANDS 5.00% ALL SHARE ALL WORLD ALL SHARE AEX UK Sweden Dutch ALL SHARE 4.00% 3.78% 31 Dec 2021: 4,208 31 Dec 2021: 497 31 Dec 2021: 1,037 31 Dec 2021: 1,111 3.00% 2.91% 2.00% 2.39% 1.00% -3%
Slide 11: Macro economic impacts on the Group in line with sensitivities
MACRO ECONOMIC IMPACTS ON THE GROUP IN LINE WITH SENSITIVITIES Over the course of 2022, economic impacts significantly affected the results, the main movements of which are explained in the table below: DIRECTION CASH IN LINE WITH MACRO ECV OVER 2022 GENERATION SENSITIVITIES?(1) With SA(2): Without
Slide 12: Financial Highlights
FINANCIAL HIGHLIGHTS FY FY Financial performance 2022 2021 Dividends Dividends per share 23.28p 22.60p Divisional £61.9m £31.1m Base Group £82.7m £20.3m Cash generation(1) Divisional £25.9m £58.5m Commercial Group £46.6m £53.0m IFRS Profit before tax £(146.9)m £28.8m New business Commercial new busi
Slide 13: Financial Outcomes: Cash Generation
FINANCIAL OUTCOMES MARKET CONTEXT & FINANCIAL HIGHLIGHTS CASH GENERATION SOLVENCY GROWTH IFRS 17 CHESNARA | 2022 RESULTS PRESENTATION 12
Slide 14: Strong base and commercial cash generation delivered in the year
STRONG BASE AND COMMERCIAL CASH GENERATION DELIVERED IN THE YEAR Base cash Commercial cash (includes symmetric adjustment and restricted fund release) (excludes symmetric adjustment and restricted fund release) Divisional base cash of £61.9m (1)(4) Divisional commercial cash of £25.9m (1)(2)(5) £m £
Slide 15: Significant cash reserves to fund future M&A
SIGNIFICANT CASH RESERVES TO FUND FUTURE M&A Movement in Chesnara cash reserves (£m) The first 3 items relate to acquisition and financing activity, totalling £116m. Note: total capital injection into Conservatrix of £35m, with £21.5m from group and the remainder from Waard. Expectation of cashflows
Slide 16: Strong visibility on sources of future cash
STRONG VISIBILITY ON SOURCES OF FUTURE CASH Sources of future cash generation composition (5 year estimate) Potential total Acquisitions(2) future cash generation Management Base cash actions(1) generation Real world investment returns over & above risk Five year free rates dividend and As an exampl
Slide 17: Financial Outcomes: Solvency
FINANCIAL OUTCOMES MARKET CONTEXT & FINANCIAL HIGHLIGHTS CASH GENERATION SOLVENCY GROWTH IFRS 17 CHESNARA | 2022 RESULTS PRESENTATION 16
Slide 18: Solvency materially above normal operating range post Conservatrix
SOLVENCY MATERIALLY ABOVE NORMAL OPERATING RANGE POST CONSERVATRIX Between 2021 YE, and 2022 YE, the solvency ratio has increased from 152% to 197%, which is Solvency ratio and surplus the result of several key items, as shown in the waterfall diagram below: 160% Normal operating solvency range 140%
Slide 19: Financial Outcomes: Growth
FINANCIAL OUTCOMES MARKET CONTEXT & FINANCIAL HIGHLIGHTS CASH GENERATION SOLVENCY GROWTH IFRS 17 CHESNARA | 2022 RESULTS PRESENTATION 18
Slide 20: Extraordinary market impacts had an adverse impact on value
EXTRAORDINARY MARKET IMPACTS HAD AN ADVERSE IMPACT ON VALUE Movement in Group EcV (£m) Estimated split of economics Equities Spreads Yields Other The equity loss component assumes no market recovery. The EcV result is sensitive to investment market conditions, primarily equities and credit spreads.
Slide 21: Economic value does not recognise further areas of potential growth
ECONOMIC VALUE DOES NOT RECOGNISE FURTHER AREAS OF POTENTIAL GROWTH Chesnara Fan (not drawn to scale) Value created Value driver Impact during 2022 1) Risk margin P £20m run off 2) Real world O £(109)m returns 3) Synergies* P >£10m 4) New The categories of potential upside P £8m business (which are
Slide 22: New business profits remain steady despite tough market conditions
NEW BUSINESS PROFITS REMAIN STEADY DESPITE TOUGH MARKET CONDITIONS New business is one of the Group’s 3 strategic pillars and is a contributor to EcV growth. Group VNB (£m) MOVESTIC • Occupational market share increased to 4.1% Total: 9.6 Total: 9.5 • Custodian market share of 9.5%(1) • Unit linked
Slide 23: Financial Outcomes: IFRS 17
FINANCIAL OUTCOMES MARKET CONTEXT & FINANCIAL HIGHLIGHTS CASH GENERATION SOLVENCY GROWTH IFRS 17 CHESNARA | 2022 RESULTS PRESENTATION 22
Slide 24: IFRS 17 Update (Unaudited)
IFRS 17 UPDATE (UNAUDITED) IMPACT IFRS 4 V IFRS 17 (INC IFRS 9) – 1 JAN 2022 POSITION Reconciliation of movement in equity The transition to IFRS 17 results in: • No change to solvency ratio or cash generation • No change to group EcV • No change to dividend expectation • No change to our group acqu
Slide 25: Areas of Focus, Outlook and Summary
AREAS OF FOCUS, OUTLOOK AND SUMMARY Steve Murray Group Chief Executive Officer 24
Slide 26: Chesnara has strong fundamentals on which to build
CHESNARA HAS STRONG FUNDAMENTALS ON WHICH TO BUILD MAXIMISE THE VALUE ACQUIRE LIFE AND ENHANCE VALUE FROM EXISTING PENSION THROUGH PROFITABLE BUSINESS BUSINESSES NEW BUSINESS • 1 million policies post • 3 transactions completed in • Swedish transfer rates completion of Conservatrix the past 12 month
Slide 27: Scope of M&A opportunities is increased, driven by portfolio transactions
SCOPE OF M&A OPPORTUNITIES IS INCREASED, DRIVEN BY PORTFOLIO TRANSACTIONS WIDER RANGE OF POTENTIAL TRANSACTION STRUCTURES HAS EXPANDED CHESNARA’S POTENTIAL M&A MARKET Focus on • M&A transactions have developed from historical focus on specific sale of legal entities or entire legacy books geographie
Slide 28: Chesnara is well positioned to execute further M&A transactions
CHESNARA IS WELL POSITIONED TO EXECUTE FURTHER M&A TRANSACTIONS FINANCING CAPACITY OFFERS ABILITY TO OUR KEY STRENGTHS FUND LARGE, TRANSFORMATIONAL DEALS OUR KEY CRITERIA FOR M&A • UK listing and high standards of • Existing cash resources of over £100m governance • Further debt capacity includes £1
Slide 29: Sustainability Update
SUSTAINABILITY UPDATE During 2022, we set our groupwide commitments and long term sustainability targets. OUR COMMITMENTS OUR LONG TERM TARGETS 1. We commit to supporting a 1. A net zero emitter: net zero sustainable future financed emissions by 2050 and net zero controllable operational emissions b
Slide 30: Strong cash generation, robust solvency and growth
STRONG CASH GENERATION, ROBUST SOLVENCY AND GROWTH Strong cash generation of New business profits of £9.5m £83m and 3% increase in full despite tough market year dividend conditions over the year Clear line of sight to future cash generation which more than covers potential future Multiple levers av
Slide 31: Questions
QUESTIONS 30
Slide 32: Appendices
APPENDICES 31
Slide 33: Appendix 1: An Introduction to Chesnara
APPENDIX 1: AN INTRODUCTION TO CHESNARA WHO WE ARE FINANCIAL KEY METRICS THREE CORE STRATEGIC OBJECTIVES 31 December 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 EXISTIN
Slide 34: Appendix 2: Dividend Growth
APPENDIX 2: DIVIDEND GROWTH Dividend History (pence per share) 23.3 22.6 21.9 15.2 21.3 14.7 20.7 20.1 14.3 19.5 13.9 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 13.1 9.9 12.5 11.9 8.1 7.6 7.1 7.9 8.1 7.4 7.7 7.0 7.2 6.4 6.6 6.8 6.0 6.1 6.3 5.5
Slide 35: Appendix 3: Commercial Cash
APPENDIX 3: COMMERCIAL CASH DIVISIONAL BASE CASH DIVISIONAL BASE CASH COMMERCIAL CASH COMMERCIAL CASH GENERATION: £82.7m GENERATION: £61.9m GENERATION: £46.6m GENERATION: £25.9m NETHERLANDS DIVISIONAL GROUP £m UK SWEDEN TOTAL TOTAL ADJUSTMENTS WAARD SCILDON Base cash generation 40.8 16.1 8.4 (3.4) 6
Slide 36: Appendix 4: Summary of Headline Solvency Numbers
APPENDIX 4: SUMMARY OF HEADLINE SOLVENCY NUMBERS £m 31 December 2022 31 December 2021 197% • Increase to 197% driven largely by tier 2 debt 152% • Our normal solvency operating range remains 191 298 between 140% and 160% • The group does not utilise transitionals in its results. 605 558 • Closing so
Slide 37: Appendix 5: IFRS Pre Tax Profit & Total Comprehensive Income
APPENDIX 5: IFRS PRE TAX PROFIT & TOTAL COMPREHENSIVE INCOME • Pre-tax loss of £146.9m with economic conditions underpinning the FY 2022 FY 2021 results. IFRS result breakdown £m £m Operating activities (10.5) 40.7 • The economic loss in the year, largely reflects adverse investment market factors,
Slide 38: 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 £852m at the end of 2022 Non rated: 2% BBB: 15% AAA: 19% £m Government issued Corporate issued 437 415 A: 32% AA: 32% CORPORATE ISSUED - S
Slide 39: 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 40: Appendix 7: Sensitivities (2 of 2)
APPENDIX 7: SENSITIVITIES (2 of 2) Explanatory notes on the sensitivities on the previous slide are provided below: 20% sterling appreciation/depreciation: A sterling appreciation reduces the value of surplus in our overseas divisions and any overseas investments 1 in our UK entities, however this i
Slide 41: 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 42: Chesnara | 2019 Final Results Presentation
CHESNARA | 2019 FINAL RESULTS PRESENTATION 41