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1. Company Snapshot

1.a. Company Description

Chesnara plc, together with its subsidiaries, engages in the life assurance and pension businesses primarily in the United Kingdom, the Netherlands, and Sweden.It operates through CA, Movestic, Waard Group, and Scildon segments.The company underwrites life risks, such as death, disability, health, and accident; and provides a portfolio of investment contracts for the savings and retirement needs of customers through asset management, as well as general insurance products.


It distributes its products principally through independent financial advisers.Chesnara plc was incorporated in 2003 and is headquartered in Preston, the United Kingdom.

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1.b. Last Insights on CSN

Chesnara's recent performance faces challenges due to intensifying competition in the insurance sector. The company's acquisition of Scottish Widows Europe for €110 million, funded through existing cash resources, marks its 16th acquisition in 20 years. This deal is expected to generate €250 million in lifetime cash, with approximately €100 million in the first five years. However, escalating costs associated with integrating the new business and potential risks related to entering the Luxembourg market may impact short-term financials.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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Chesnara, Itaconix, IXICO, MP Evans, Quadrise - Small Cap Week in Review

Mar -27

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Chesnara CEO on FY 25 results, deal integration, M&A and outlook

Mar -24

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Chesnara H2 Earnings Call Highlights

Mar -24

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Chesnara, Itaconix, Foresight Solar, Zephyr Energy, RC Fornax, Rome Resources - Small Cap Snapshot

Mar -24

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Chesnara, Seeing Machines, Seraphim Space Investment Trust, Valereum, Connecting Excellence

Feb -20

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Lloyds Exits Scottish Widows Europe As Core Banking Focus Sharpens

Feb -19

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Chesnara to enter Luxembourg with Scottish Widows Europe purchase

Feb -18

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Chesnara Pitches Scottish Widows Europe Deal: €250M Cash Boost, Funded in Cash, 173% Solvency Pro Forma

Feb -17

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

Movestic

Expected Growth: 4.5%

The Swedish life assurance market is driven by an aging population, increasing life expectancy, and a growing demand for pension products. Movestic's diverse product range and Chesnara's strategic acquisition will fuel growth.

United Kingdom

Expected Growth: 5.3%

The UK insurance market is driven by an aging population, increasing life expectancy, and a growing demand for protection products. Chesnara plc is well-positioned to capitalize on these trends, with a strong brand presence and diversified product offerings.

Scildon

Expected Growth: 4.5%

The UK life insurance market is driven by an aging population, increasing life expectancy, and a growing demand for protection products. Scildon's focus on in-force life insurance policies positions it for growth, leveraging Chesnara's expertise in acquiring and managing legacy portfolios.

Waard Group

Expected Growth: 5.5%

The European life insurance market is expected to grow driven by increasing demand for protection products, an aging population, and consolidation in the industry. Chesnara plc's acquisition of The Waard Group will expand its presence in the European market, capitalizing on these trends.

Other Group Activities

Expected Growth: 4.5%

The Other Group Activities segment of Chesnara plc is expected to grow steadily, driven by increasing corporate costs, reinsurance, and miscellaneous activities. The growth is also fueled by the company's diversification strategy and expansion into new markets.

7. Detailed Products

Life Assurance Policies

Chesnara plc offers a range of life assurance policies that provide financial protection to individuals and families in the event of death or terminal illness.

Pensions and Retirement Savings

Chesnara plc provides a variety of pension and retirement savings products that help individuals plan for their retirement and achieve their long-term financial goals.

Annuities

Chesnara plc offers annuity products that provide a guaranteed income stream for life in exchange for a lump sum payment.

Protection Policies

Chesnara plc provides protection policies that offer financial protection against unexpected events such as critical illness, accident, or unemployment.

Investment Products

Chesnara plc offers a range of investment products that allow individuals to grow their wealth over time.

8. Chesnara plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Chesnara plc operates in the life insurance and pensions industry, where there are few substitutes for its products and services. However, the company faces competition from other insurance providers, which could lead to a moderate threat of substitutes.

Bargaining Power Of Customers

Chesnara plc's customers have limited bargaining power due to the complexity of its products and services. The company's customers are largely individual policyholders and pension scheme members, who have limited ability to negotiate prices or terms.

Bargaining Power Of Suppliers

Chesnara plc has a diverse supply chain, and its suppliers have limited bargaining power. The company is not heavily reliant on a single supplier, and it has a strong negotiating position due to its size and scale.

Threat Of New Entrants

The life insurance and pensions industry has high barriers to entry, including regulatory requirements and capital adequacy requirements. This makes it difficult for new entrants to enter the market, reducing the threat of new entrants to Chesnara plc.

Intensity Of Rivalry

The life insurance and pensions industry is highly competitive, with many established players competing for market share. Chesnara plc faces intense competition from other insurance providers, which could lead to a high level of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 36.75%
Debt Cost 3.95%
Equity Weight 63.25%
Equity Cost 5.96%
WACC 5.22%
Leverage 58.10%

11. Quality Control: Chesnara plc passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.07$

Current Price

3.07$

Potential

-0.00%

Expected Cash-Flows