Chesnara (LON:CSN) used its full-year 2025 results presentation to highlight a year of strong operating performance alongside what management described as a “major period of strategic transformation,” including the completion of its largest-ever acquisition and continued growth in dividends.
Strategic milestones and recent transactions
Group Chief Executive Steve Murray said the company’s three-pillar strategy—focused on cash, capital and value—has continued to guide delivery as the pace and scale of activity increased. Over the past year, Chesnara restructured its Dutch business by merging its two main Dutch insurance entities and transferring its defined contribution pensions portfolio to Allianz.
The HSBC Life UK acquisition completed in January and the business has been rebranded as Chesnara Life. Management said the deal was completed “at an attractive discount to own funds” and is expected to add over £800 million of future lifetime cash flows. In February, the group announced a proposed acquisition of Scottish Widows Europe, a Luxembourg-based business. Chesnara is targeting completion “in and around the end of 2026,” and expects the transaction to add €250 million of additional lifetime cash flows and broaden its European footprint.
Murray added that, together, Chesnara Life and Scottish Widows Europe are expected to contribute around £1 billion of future lifetime cash flows to the group.
Cash generation, solvency, and profits
Chief Financial Officer Tom Howard said 2025 results did not include the day-one impacts of the Chesnara Life acquisition because it completed after the year-end. However, the company included pro forma figures in the presentation and updated its reporting framework to a smaller set of metrics tied to its “cash, capital and value” pillars.
On cash, Howard reported operating capital generation (OCG) of £94 million, up 19% year over year. Cash remittances from business units to the group center increased to £58 million from £45 million in 2024.
On capital, the group’s Solvency II coverage ratio increased to 257%, which Howard said was “materially higher than the upper end” of Chesnara’s operating range of 140%–160%. The company’s own funds rose 34% to £859 million, with Howard citing the impact of two capital raises in the second half and strong operating performance. He said non-operating variances were driven mainly by macro factors, including a weaker U.S. dollar affecting the value of Swedish customer asset holdings and yield curve movements in the U.K.
On value metrics, assets under administration increased to £15 billion, while adjusted operating profit rose 42% to £56 million. Howard also said the IFRS capital base increased to £694 million from £449 million at full-year 2024. Leverage declined by nine percentage points to 22%, which he said was comfortably within the group’s long-term ambition of 30% or less.
Following completion of the Chesnara Life acquisition, Howard said central liquidity stood at £266 million, which management described as comfortably above buffer levels and providing headroom for further M&A.
Dividends and shareholder returns
Chesnara announced a 6% increase in the final 2025 dividend to 14.8 pence per share. Murray said the company also expects the 2026 interim dividend to rise by a further 6%, describing this as a “one-off acceleration” in its historic dividend growth trajectory. Management also noted that total shareholder returns for 2025 were “materially higher.”
During Q&A, Murray reiterated the company’s long-standing dividend approach of growing payouts at a rate above longer-term inflation, pointing to a 21-year track record of consecutive dividend growth. Howard cautioned against extrapolating 2025’s 19% OCG growth rate, noting that reported OCG includes management actions and that, as a rule of thumb, underlying OCG might be around 80% of the reported figure in an average year.
Pro forma impacts and integration priorities
Howard said pro forma figures (excluding the proposed Scottish Widows Europe acquisition and excluding later-stage Chesnara Life integration synergies) show own funds rising to around £1 billion and the solvency coverage ratio remaining above the upper end of the operating range. Under IFRS, the capital base is expected to increase to over £800 million, including a contractual service margin expected to rise to around £200 million.
Murray said the group expects integration of Chesnara Life—specifically policy migrations to a U.K. target operating model—to complete by the end of 2026, with SS&C supporting delivery. He also said the company is already working on the change-of-control process for Scottish Widows Europe and planning for separation from Lloyds Banking Group, targeting approval “in and around the end of 2026.”
M&A pipeline, capital deployment, and operational updates
Management said it continues to see a positive M&A pipeline into 2026. Murray said the company is seeing opportunities in the U.K. and broader Benelux, with “slightly less” in the Nordics near-term, though he added there may be more possibilities over a 12–18 month horizon. He also said the average deal size in the pipeline appears larger than in earlier years, with opportunities at or above the scale of Scottish Widows Europe.
On macro volatility, Murray said Chesnara was not seeing a material impact on its part of the M&A market, adding that smaller-to-mid-sized processes often continue once underway. On share buybacks, he said the group evaluates buybacks against other uses of capital but has favored M&A given the returns available and the pipeline. He said buybacks would be considered if the company were no longer confident in the availability of attractive M&A.
Management also provided several operational updates:
- Chesnara Life “open” business: Murray said the group decided to keep and enhance the onshore bond franchise, but closed the protection business to new business after concluding required returns could not be achieved.
- Netherlands synergies: Murray said the legal merger is complete and further operational process integration remains, with potential for additional synergies and efficiency improvements into 2026, while noting that a significant portion of benefits is already expected to be reflected.
- FX hedging in the U.K.: Howard said a new hedge addresses GBP/USD volatility in policyholder unit-linked funds, reducing own funds volatility and also lowering the solvency capital requirement by reducing the FX stress component.
- AI use cases: Murray said the group is developing an AI-powered customer services assistant and is using AI in some migrations with SS&C, describing early results as positive in speed and accuracy, and suggesting potential for more efficient growth over time.
On solvency resilience, Howard said the company monitors equity markets, interest rates and credit spreads, and highlighted that under the standard formula the solvency ratio can rise in stressed equity markets due to the symmetric adjustment, even as surplus falls. He also referenced stress testing through the ORSA process, including combined stresses more extreme than current market moves, and said the group remains far from conditions that would cause concern based on current market levels.
Closing the presentation, Murray said Chesnara enters 2026 “in a strong position” with a robust balance sheet and continued opportunities for growth, while emphasizing the importance of executing current integration and change-of-control priorities alongside ongoing M&A discipline.
About Chesnara (LON:CSN)
Chesnara (CSN.L) is a European life and pensions consolidator listed on the London Stock Exchange. It administers approximately one million policies and operates as Countrywide Assured in the UK, as The Waard Group and Scildon in the Netherlands, and as Movestic in Sweden.
Following a three-pillar strategy, Chesnara’s primary responsibility is the efficient administration of its customers’ life and savings policies, ensuring good customer outcomes and providing a secure and compliant environment to protect policyholder interests.
