Chesnara CEO targets further deals after £1.7bn MetLife UK acquisition

as you say, uh four deals in the last two years. Uh there's been a material step up obviously in the in the acquisition cadence. So all of that we think shows that that we're certainly a uh sort of consolidation solution for for blue chip financial services companies.

Hello, you're watching Proactive. I'm joined by Steve Murray, the CEO of Chesnara. Steve, very good to speak with you. This is your fourth deal in two years. How does this strengthen Chesnara's position as a leading life and pensions consolidator?

Yeah, it's nice to speak to you as well, Stephen. So, um, look, we we feel it shows this continued momentum in in our M&A strategy, the the fact that we're dealing with yet another large global institution here in in terms of MetLife and and we've found a solution for uh this book of business that they have just adds very positively to the track record that we have of of deal execution and as you say, uh four deals in the last two years. Uh there's been a material step up obviously in the in the acquisition cadence. So all of that we think shows that that we're certainly a uh sort of consolidation solution for for blue chip financial services companies.

What attracted you to MetLife's UK closed book and how does it fit into your existing business?

Yeah, one of one of the things that was unique actually about this, uh, this business was um, the the back office and the policy administration, uh, is already looked after by SS&C who you might remember you and I have talked about before is a key strategic partner of ours in in the UK. Um so when we're looking at, you know, a relatively small portfolio here of around 18,000 customers, the fact that a key partner of ours was already managing the administration was uh was attractive. It's actually in a slightly older system than that that than ours, so we're going to move those policies onto our new system, uh and we'll we'll have some flexibility around the around the timing. So that that was interesting. Uh we obviously have a great track record of of running uh closed books as well as um new business and the the 1.7 billion uh of AUM of AUA add scale to the UK business. So when we looked at all those things together and and we were very clear uh with Met life about the sort of risk adjusted return that we would need and we were able to find a way forward on that basis. All of that came together and it just it just looked very attractive for us.

And Steve you mentioned the deal adds 1.7 billion in assets. It's expected to generate 90 million pounds in lifetime cash flows. What does it mean for shareholders?

Yeah, so I think for shareholders, we're we're again, I I think we're following through on the strategy that we've been speaking to them about for a for a while now. So, you know, that 90 million uh of cash flows for um what we're saying is not a material uh consideration. It doesn't sort of soak up any of the existing firepower that we have. again just adds to those future cash flows. It's very supportive of the the best dividend track record in in UK and European uh insurance that we have and the 45 million uplift in in own funds, we also expect our IFRS CSN to to go up by by around the same amount as well. All of that we just think is adding adding value to the uh to the company and and and should generate a really attractive return for our investors.

Steve, why are major financial institutions increasingly choosing Chesnara to to manage their closed books and how strong is your pipeline for further deals?

Yeah, so on on the pipeline, uh it remains really positive. We when we spoke to investors at the the half year, we continue to say that we're seeing opportunities across Europe, uh and the UK. Obviously today's announcement strong evidence of uh of the fact that uh that we're still seeing good opportunities to execute. When we look forward into into 2027 and beyond, uh we we still believe there'll be some really exciting opportunities for us to us to look at and that against the backdrop as you say that we're continuing to see these global um financial institutions, I think being a bit more definitive about what's core and what's not in their portfolio. So that I think that's one of the reasons we're seeing more of these things coming forward. And then as a counterparty, you know, we think the execution track record that we now have means that we should be more attractive for these organizations. Being candid as you get more practice around doing these things, you can be more innovative and find solutions for um for books like this and particularly uh carve out situations. We think we're getting a bit of expertise there. So um and finally, uh whilst I think Chesnar is a is a fantastic organization we're growing, um, you know, if you take Met life, they're a 65 billion dollar organization. There's no way in the world that they're going to see us as as competition. So I think that allows some of these big organizations to engage with us in a way that perhaps they wouldn't be able to with people that are perhaps competing more heavily with them in their market. So all of that again, we we think plays to us being, you know, a really interesting solution for for these large firms.

with further growth ahead, how will you balance acquisitions, operational efficiency and your 21 year record of dividend growth?

Yeah, so on the on the dividend, we we know how important that is for for investors. We're really proud of that track record, you know, that 21 years of of consecutive dividend growth has has protected investors from uh long-term inflation uh rates as well. So that, you know, that's been a real positive. and we think we've shown investors that, you know, that that dividend growth track track record combined with the growth from M&A is is really, really attractive. Um, one of the things that we've been doing over the last couple of years is investing in sort of the head count, the capability and the capacity that we have as a group. So it's allowing us to do more of these things more quickly and at the same time as you say, ensure that we're still really focused on operational efficiency and and balancing those things ultimately, you know, sits sits as my responsibility working with the senior team here and I and I I think the team are continuing to to do a great job on that. So, so for investors, look, um we we uh they adding cash flows to the group clearly should be positive for dividend support. Um, and we're still seeing growth opportunities for M&A and we've got the capability to to bring these businesses positively into the group. So we think all of that feels like it's in a very good place.

Steve, I hope you continue to give us updates with your progress. Thank you for your time today.

Thanks, Stephen.

That's Steve Murray, the CEO of Chesnara.