Chesnara, a UK and European life and pensions consolidator, has announced its agreement to acquire the onshore individual protection business line from Canada Life Limited (Canada Life UK).
The transaction involves the transfer of life insurance and critical illness policies for approximately 47,000 customers to Chesnara’s UK subsidiary, Countrywide Assured PLC (Countrywide Assured).
Following the closure of Canada Life UK’s individual protection line to new business in November 2022, Chesnara has emerged as the chosen custodian for these policyholders.
The policies are expected to be transferred to Countrywide Assured in 2024, pending approval from the court for the transfer to Part VII.
In the interim period, Canada Life UK will reinsure the portfolio to Countrywide Assured, with the reinsurance agreement commencing on December 31, 2022.
The consideration for this reinsurance arrangement amounts to £9 million, which is funded internally by the Chesnara Group.
The acquisition of Canada Life UK’s individual protection lines is expected to enhance the Group’s Economic Value by approximately £7 million and generate additional cash flow of approximately £16 million over the next five years. .
The impact on Chesnara’s Solvency II ratio is expected to be neutral, reflecting the company’s commitment to maintaining a strong financial position.
“We are pleased to welcome these 47,000 customers to Chesnara protection, and they can be confident that we will continue to provide high levels of customer service as part of a financially strong group. I am pleased that a company as highly regarded as Canada Life has placed its trust in us to support these customers and looks forward to working with the team going forward,” commented Steve Murray, Group Chief Executive.
This strategic transaction marks Chesnara’s fifth deal in the last two years, further consolidating the company’s presence in the UK market. The acquisition will contribute to the expansion of Chesnara’s business in the UK and provide a favorable return on investment for its shareholders.
“We continue to look at a range of M&A opportunities and are very confident in our ability to finance and execute such transactions on attractive terms for the sellers and our shareholders,” it added. Murray.
Chesnara received legal advice from Burness Paull, while Herbert Smith Freehills advised Canada Life throughout the acquisition process.