Chesnara, a European life and pensions consolidator listed on the London Stock Exchange, has announced its agreement to acquire Scottish Widows Europe from Lloyds Banking Group for EUR 110 million. This strategic acquisition is expected to generate approximately EUR 250 million in lifetime cash flow, with around EUR 100 million expected in the first five years. The deal will be fully funded from available cash resources, including proceeds from the group’s RT1 issuance completed last year.
Scottish Widows Europe is a closed life and pensions business based in Luxembourg, managing assets worth approximately EUR 1.7 billion and serving around 46,000 policies. Chesnara anticipates that the acquisition will boost its cash flow profile by about 20% over the first five years and support its planned dividend progression, with a targeted 6% increase by FY2025/interim 2026.
On a pro forma basis, the acquisition is expected to increase Chesnara’s solvency coverage ratio to 173%, surpassing its operating range of 140-160%. The deal is also projected to be slightly accretive to leverage, with pro forma leverage expected to be significantly below the company’s long-term target of 30% or less.
Management highlighted the familiarity of the Scottish Widows Europe products to Chesnara, emphasizing the proven and scalable European administration platform and experienced local management team. Regulatory approvals are still pending, with closing targeted for around the end of the year, subject to Luxembourg regulatory requirements.
Chesnara sees Luxembourg as an attractive market due to its stability, AAA credit rating, and strong supervisory framework. The company views the acquisition as an opportunity to consolidate its presence in Luxembourg and wider continental Europe, leveraging its track record and expertise in the region.
The company plans to provide its next update at its full-year 2025 results presentation on March 24. Chesnara aims to ensure efficient administration of its customers’ life and savings policies, delivering good customer outcomes and maintaining a secure and compliant environment to protect policyholder interests.
Overall, the acquisition of Scottish Widows Europe represents a significant strategic move for Chesnara, positioning the company for growth and enhanced cash flow generation in the years to come.
