Slide 1: Chesnara HY 2024 Results
10 September 2024 CHESNARA HY 2024 RESULTS Strong cash generation and 20 years of uninterrupted dividend growth
Slide 2: Chesnara HY 2024 Results - Agenda
CHESNARA HY 2024 RESULTS - AGENDA 1. OVERVIEW OF STRATEGIC DELIVERY Steve Murray Group Chief Executive Officer 2. FINANCIAL OUTCOMES Tom Howard 3. AREAS OF FOCUS, OUTLOOK AND Group Chief Financial Officer SUMMARY All numbers in this pack are quoted in £m unless otherwise stated, and all footnotes ar
Slide 3: Overview of Strategic Delivery
Steve Murray Group Chief Executive Officer OVERVIEW OF STRATEGIC DELIVERY 2
Slide 4: Chesnara Continues Executing Its Renewed Strategy
CHESNARA CONTINUES EXECUTING ITS RENEWED STRATEGY 1 Multiple levers available to grow Economic Value, 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 proven
Slide 5: Strong Cash Generation and Organic ECV Growth
STRONG CASH GENERATION AND ORGANIC ECV GROWTH COMMERCIAL CASH GENERATION OF £29M ROBUST SOLVENCY AT 201%, WELL ABOVE NORMAL OPERATING RANGE OF 140 – 160% RESULTS ECV EARNINGS OF £20M COMMERCIAL NEW BUSINESS PROFITS OF £5M INTERIM DIVIDEND INCREASED BY 3% TO 8.61p | 2024 INTERIM RESULTS PRESENTATION
Slide 6: 20 Years of Uninterrupted Dividend Growth
20 YEARS OF UNINTERRUPTED DIVIDEND GROWTH UNRIVALLED IN UK & EUROPEAN INSURANCE(1) DIVIDEND HISTORY (PENCE PER SHARE) Interim Final 24.0 23.3 22.6 21.9 15.6 21.3 15.2 20.7 14.7 20.1 14.3 19.5 13.9 18.9 13.5 18.4 13.1 17.9 12.7 17.4 12.3 16.4 16.9 12.0 15.6 16.0 11.6 15.1 11.3 10.9 10.6 10.1 10.3 13.
Slide 7: Significant Operational Delivery Achieved in H1
SIGNIFICANT OPERATIONAL DELIVERY ACHIEVED IN H1 UK SWEDEN NETHERLANDS o Part VII transfer of Canada Life book on o Expansion of custodian offering o Further enhancements to processes track to complete Feb 2025 through new partnerships through digitalisation o Migration of the existing books of o Fur
Slide 8: Financial Outcomes
Tom Howard Group Chief Financial Officer FINANCIAL OUTCOMES 7
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS CAPITAL FUTURE CASH POSITION VALUE RESULT GENERATION Commercial cash generation Solvency II ratio EcV earnings(3) £29m 201% £20m FY 23: 205% HY 23: £33m HY 23: £22m IFRS leverage (2) IFRS capital base 30% £458m FY 23: £487m FY 23: 29% Interim dividend 8.61p per share, up 3% YoY
Slide 10: Strong Growth in Cash Generation Underpins Dividend Growth
STRONG GROWTH IN CASH GENERATION UNDERPINS DIVIDEND GROWTH COMMERCIAL CASH GENERATION OF £29M EXCEEDS THE INTERIM DIVIDEND AND OTHER CENTRAL COSTS 30 2 29 Sweden 27 Netherlands (3) UK Divisional Commercial FX Divisional Commercial Central items Group Cash Generation impacts Cash Generation & adjustm
Slide 11: Significant Cash Reserves to Fund Dividend and Future M&A
SIGNIFICANT CASH RESERVES TO FUND DIVIDEND AND FUTURE M&A INCREASE IN CENTRE LIQUIDITY5 FROM DIVISIONAL REMITTANCES, NET OF DIVIDENDS AND OTHER CENTRAL COSTS | 2024 INTERIM RESULTS PRESENTATION 10
Slide 12: Robust and Resilient Capital Position
ROBUST AND RESILIENT CAPITAL POSITION SIGNIFICANT SURPLUS CAPITAL AVAILABLE TO FUND M&A OPPORTUNITIES Our normal operating solvency range: 140% to 160% | 2024 INTERIM RESULTS PRESENTATION 11
Slide 13: Organic Economic Value Growth, Pre FX and Dividends
ORGANIC ECONOMIC VALUE GROWTH, PRE FX AND DIVIDENDS ECV EARNINGS(3) OF £20M DRIVEN PRIMARILY BY POSITIVE REAL WORLD RETURNS | 2024 INTERIM RESULTS PRESENTATION 12
Slide 14: Organic Growth in the IFRS Capital Base
ORGANIC GROWTH IN THE IFRS CAPITAL BASE, PRE FX AND DIVIDENDS IFRS PROFIT BEFORE TAX OF £13M; IFRS LEVERAGE OF 30% IFRS capital IFRS capital base: base: IFRS capital 487 3 13 493 10 base: 458 (9) (11) Net Net (11) CSM(9) : CSM: (24) Net 127 131 CSM: 128 Net equity: Net equity: Net 360 equity: 362 33
Slide 15: Good Visibility on Sources of Future Cash
GOOD VISIBILITY ON SOURCES OF FUTURE CASH RELIABLE SOURCES OF ORGANIC FUTURE CASH GENERATION, EXPECTED TO COVER LONG TERM DEBT COST AND DIVIDENDS; FURTHER UPSIDE FROM FUTURE M&A Acquisitions and Potential total Synergies(10) future cash generation Management Group base cash actions generation(12) Fi
Slide 16: Financial Highlights
FINANCIAL HIGHLIGHTS CAPITAL FUTURE CASH POSITION VALUE RESULT GENERATION Commercial cash generation Solvency II ratio EcV earnings(3) £29m 201% £20m FY 23: 205% HY 23: £33m HY 23: £22m IFRS leverage (2) IFRS capital base 30% £458m FY 23: £487m FY 23: 29% Interim dividend 8.61p per share, up 3% YoY
Slide 17: Areas of Focus, Outlook & Summary
Steve Murray Group Chief Executive Officer AREAS OF FOCUS, OUTLOOK & SUMMARY 16
Slide 18: Chesnara Has a Strong Base on Which to Grow
CHESNARA HAS A STRONG BASE ON WHICH TO GROW We have a track record of running insurance books of business at scale, for the benefit of customers, shareholders and our other stakeholders MAXIMISE THE ACQUIRE LIFE VALUE FROM AND PENSION EXISTING BUSINESS BUSINESSES BECOMING A SUSTAINABLE CHESNARA ENHA
Slide 19: Chesnara Actively Involved in M&A Processes Over First Half
CHESNARA HAS BEEN ACTIVELY INVOLVED IN M&A PROCESSES OVER THE FIRST HALF, AND PIPELINE REMAINS POSITIVE KEY DRIVERS FOR M&A ACTIVITY CHESNARA’S KEY STRENGTHS Strong record of customer service & governance Operational simplicity Comfortable managing wide range of books Disposals of non-core produ
Slide 20: Financing Capacity Offers Ability to Fund a Range of Deal Sizes
FINANCING CAPACITY OFFERS ABILITY TO FUND A RANGE OF DEAL SIZES Not drawn to scale FINANCING CONSIDERATIONS B Normal operating range of SOLVENCY 140% to 160% A Maintain our investment LEVERAGE grade rating >£200m Retain liquid resources to CASH cover the dividend, coupon RESERVES and working capital
Slide 21: Laying Foundations
LAYING FOUNDATIONS…. Started simplification of Enhanced financial investors story with an Strengthened firepower from the RCF increase in investor leadership team and Tier 2 debt engagement M&A hires, more proactive effort, LAYING THE leadership time and FOUNDATIONS Greater disclosure on More front-
Slide 22: Laying Foundations Has Delivered Results
LAYING FOUNDATIONS HAS DELIVERED RESULTS…. Strong cash £50m uplift to EcV Positive and Investment grade generation from four M&A broader pipeline rating from Fitch supporting transactions since supported by Ratings growth in THE RESULT 2022 financing capacity dividends Started simplification of Enha
Slide 23: Laying Foundations Has Delivered Results... With Much More to Come
LAYING FOUNDATIONS HAS DELIVERED RESULTS …WITH MUCH MORE TO COME CREATE MORE VALUE FROM M&A Our ambition for growth Proactive capital Our ambition for growth NEXT STEPS allocation and Drive more value Simplify our financial investment return from the group metrics optimisation Strong cash £50m uplif
Slide 24: Strong Cash Generation and Organic ECV Growth
STRONG CASH GENERATION AND ORGANIC ECV GROWTH COMMERCIAL CASH GENERATION OF £29M ROBUST SOLVENCY AT 201%, WELL ABOVE NORMAL OPERATING RANGE OF 140 – 160% RESULTS ECV EARNINGS OF £20M COMMERCIAL NEW BUSINESS PROFITS OF £5M INTERIM DIVIDEND INCREASED BY 3% TO 8.61p | 2024 INTERIM RESULTS PRESENTATION
Slide 25: Questions
QUESTIONS 24
Slide 26: Appendices
APPENDICES 25
Slide 27: An Introduction to Chesnara (1 of 4) - Background
AN INTRODUCTION TO CHESNARA (1 OF 4) - BACKGROUND WHO WE ARE KEY FINANCIAL METRICS OUR STRATEGIC PILLARS o Chesnara plc was formed in 2004 and is 30 June 2024 listed on the London Stock Exchange. 01 MAXIMISE THE VALUE FROM Group Solvency II Ratio: 201% EXISTING BUSINESS o The group is a European lif
Slide 28: An Introduction to Chesnara (2 of 4) – Product Split
AN INTRODUCTION TO CHESNARA (2 OF 4) – PRODUCT SPLIT SPLIT OF GROUP SII BEL(14) BY PRODUCT DIVISIONAL SPLIT 5% 4% Unit linked 2% 3% 3% Products with Countrywide guarantees 6% Assured Other 91% 0% Unit linked Sweden Other 100% Unit linked 5% 86% 8% Products with 4% guarantees Non-linked Savings 10% N
Slide 29: An Introduction to Chesnara (3 of 4) – FUM Split
AN INTRODUCTION TO CHESNARA (3 OF 4) – FUM SPLIT SPLIT OF OUR TOTAL GROUP FUM(15) OF £11.9BN DIVISIONAL SPLIT 13% Linked UK(16) Non-linked FUM: £4.2bn £1.8bn (15%) 87% 1% Linked Sweden Non-linked FUM: £4.9bn £10.1bn (85%) 99% 42% Linked Netherlands Non-linked FUM: £2.8bn Linked Non linked 58% | 2024
Slide 30: An Introduction to Chesnara (4 of 4) – Non-Linked Assets
AN INTRODUCTION TO CHESNARA (4 OF 4) – NON-LINKED ASSETS BREAKDOWN OF INVESTMENT PORTFOLIO CREDIT QUALITY OF OUR BONDS £bn % of total 1% 0.3 16% 19% 0.5 Total non-linked Total value of bonds assets of £1.8bn at (government & Government bonds the end of June corporate issued): AAA 0.5 2024 £1.0bn AAA
Slide 31: Macro Environment
MACRO ENVIRONMENT EQUITY MARKETS INTEREST RATES (1O YEAR) FTSE ALL SHARE SWEDISH OMX ALL SHARE 5.00% Reference is for the end of the quarter, therefore, Q2 2024 is the rate at 30 June 2024 etc. 4.43% 4,452 5% 975 8% 4.19% 4.00% 31 Dec 2023: 904 3.00% 31 Dec 2023: 4,232 2.74% 2.83% 2.52% 2.21% 2.00%
Slide 32: Strong and Resilient Balance Sheet
STRONG AND RESILIENT BALANCE SHEET STRONG AND RESILIENT SOLVENCY II RATIO WITH SIGNIFICANT SURPLUS CAPITAL TO FUND FUTURE M&A SII ratio: 205% SII ratio: 201% SII ratio: 197% T2 & T3: £166m T2 & T3: £163m T2 & T3: Absolute Absolute £153m surplus: surplus: Absolute £351m £330m surplus: £298m Available
Slide 33: New Business Continues to Deliver Profitable Value Growth
NEW BUSINESS CONTINUES TO DELIVER PROFITABLE VALUE GROWTH GROUP COMMERCIAL VNB (£M) INSIGHT The onshore bond remains open to Total: £6.3m new business via third party platform links and the financial advisors that CA 0.7 use them. New business profits have produced Total: £4.9m earnings of £1.0m, si
Slide 34: Sensitivities (1 of 2)
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 on the group’
Slide 35: Sensitivities (2 of 2)
SENSITIVITIES (2 OF 2) Explanatory notes on the sensitivities on the previous slide are provided below: 20% sterling appreciation: A material sterling appreciation reduces the value of surplus in our overseas divisions and any overseas investments in our 1 UK entities, however this is partially miti
Slide 36: We Are Committed to Becoming a Sustainable Chesnara
WE ARE COMMITTED TO BECOMING A SUSTAINABLE CHESNARA Our sustainability commitments: Our targets: Our 2024 plans: Continue the development of our transition plans, and implement our actions for a just transition to net zero 1 To support a sustainable future, including our net zero transition plans Co
Slide 37: Footnotes
FOOTNOTES SUMMARY OF FOOTNOTES USED THROUGHOUT THE PRESENTATION (1) Verified by RBC research (2) Leverage ratio is defined as ‘debt’ divided by ‘net equity + debt + net of tax CSM’ (3) EcV earnings are quoted pre-FX impacts and dividend payments, excluding day 1 acquisition impacts (4) Own funds eli
Slide 38: Chesnara | 2019 Final Results Presentation
CHESNARA | 2019 FINAL RESULTS PRESENTATION 37