Chesnara profit rises on growth in Swedish life insurance business
Aug 29 (Reuters) - Chesnara Plc, an insurance-focused takeover specialist, reported a 26 percent rise in pretax profit, helped by growth in its Swedish open life insurance business.
Chesnara, which mainly buys life insurance funds closed to new customers, said IFRS pretax profit rose to 27.4 million pounds ($45.5 million) in the six months ended June 30, from 21.8 million pounds a year earlier.
Chesnara shares rose as much as 3 percent on Friday morning.
Funds under management increased 14 percent during the period in its Swedish open life insurance business, Movestic. They now stand above 20 billion Swedish crown ($2.87 billion).
New business contribution from Movestic rose to 5.8 million pounds on an EEV basis during the period from 2.3 million pounds a year earlier.
EEV, or European Embedded Value, is a metric adopted by European insurance companies to make their results more meaningfully comparable and provides a longer-term measure of value generated during a period.
The company, which bought Direct Line Insurance Group's domestic closed life insurance business last November, said it continued to consider acquisition opportunities in UK and Western Europe with an acquisition value of 50 million to 200 million pounds.
"Chesnara is well positioned in the closed life book industry to capture smaller-sized deals with the FCA review a catalyst for more sales. We think a future acquisition could be part-funded by equity issuance," Canaccord Genuity said in a note.
The brokerage raised its full-year IFRS earnings estimate for the company by 38 percent to reflect the strong first-half results. They also raised their price target on the stock to 335 pence from 320 pence.
Chesnara raised its interim dividend to 6.42 pence per share from 6.25 pence a year earlier.
Shares in the company were up 1 percent at 328.63 pence at 0748 GMT on the London Stock Exchange. (1 US dollar = 0.6024 British pound) (1 US dollar = 6.9694 Swedish crown) (Reporting by Roshni Menon in Bangalore; Editing by Gopakumar Warrier)