Chesnara, a life and pensions consolidator in the UK and Europe, has announced its agreement to acquire the onshore individual protection line of business from Canada Life Limited (Canada Life UK).
The transaction involves the transfer of life insurance and critical illness policies for nearly 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 transfer to Countrywide Assured in 2024, pending approval from the court for a Part VII transfer.
In the interim period, Canada Life UK will reinsure the portfolio to Countrywide Assured, with the reinsurance agreement taking effect from December 31, 2022.
The consideration for this reinsurance arrangement amounts to £9 million, financed internally by the Chesnara Group.
The acquisition of Canada Life UK’s individual protection line is projected to enhance the Group’s Economic Value by approximately £7 million and generate additional cash flows of around £16 million over the next five years.
The impact on Chesnara’s Solvency II ratio is anticipated to be largely neutral, reflecting the company’s commitment to maintaining a robust financial position.
“We are delighted to be welcoming these 47,000 protection customers to Chesnara, 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 look forward to working with the team going forward,” Steve Murray, Group Chief Executive, commented.
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 UK business and deliver favorable returns on investment for its shareholders.
“We continue to see a range of M&A opportunities and are highly confident in our ability to finance and execute such transactions on attractive terms for both vendors and our shareholders,” Murray added.
Chesnara received legal advice from Burness Paull, while Herbert Smith Freehills advised Canada Life throughout the acquisition process.
