Chesnara expects its purchase of HSBC Life (UK) to be “transformational” and generate more than £140m in cash during the first five years and in-excess of £800m over its lifetime.
If reached, this ultimate total would be three times the purchase price of £260m agreed in July for the bank’s life insurance and offshore bond business.
The figures were included in Chesnara’s results for the first half of 2025 where it highlighted further details and the scale of the transaction.
However, the overall Chesnara Group reported a loss after tax of £10.8m for the six-month period, compared to a profit of £400,000 in H1 2024 and a £3.9m profit for the whole of 2024.
In the results, Chesnara noted the acquisition is expected to generate more than £800m in incremental lifetime cash generation, with more than £140m anticipated within the first five years post-completion.
“Supported by the strong financial profile of the acquisition, the group expects to accelerate its dividend growth,” it said.
“The final FY25 and interim FY26 dividends, adjusted for the rights issue, are anticipated to increase by 6%, doubling the recent annual growth rate of 3%.
“Subject to regulatory approvals, completion of the acquisition of HSBC Life (UK) Ltd is expected in early 2026,” it added.
Integration top priority
The firm has still not confirmed if HSBC Life will remain open to new business, although Health & Protection understands it is considering the possibilities of doing so.
And integration to the group was also highlighted as top priority for the UK operation.
“This includes ensuring that all pre-completion activities are delivered,” it said.
“This will ensure that the acquisition completes on time and that the group is ready to deliver the planned activities post completion, which include the planned migration to our strategic platform hosted by SS&C during 2026.”
Chesnara CEO Steve Murray added: “On 3 July, we announced an agreement to acquire HSBC Life (UK) Limited for a total consideration of £260m.
“This transaction represents a significant strategic milestone for Chesnara which would materially expand our presence in the UK life insurance market.”
The UK division manages around 270,000 policies across linked pension business, life insurance, endowments, annuities and some with-profit business.
As at 31 December 2024, HSBC Life (UK) Ltd had £314m in eligible own funds, £4bn of assets under administration and more than 450,000 policyholders, of which approximately 432,000 are protection plans.
‘Further flexibility to grow’
In July, Chesnara raised £140m as part of a rights issue to help fund the HSBC Life acquisition, with 88% of shareholders taking up their rights to the issue of new shares.
It added that later in July, Chesnara received “significant further support from debt investors” through a £150m restricted tier 1 bond at an interest rate of 8.5%.
“This provides us with additional financial flexibility to grow in the future,” it added.
Earlier in August the firm was admitted to the FTSE 250 Index, effective from 18 August.