ANNUAL
REPORT
AND
ACCOUNTS
2024
WELCOME
WELCOME TO THE
CHESNARA ANNUAL
REPORT & ACCOUNTS
FOR YEAR ENDED
31 DECEMBER 2024
OVERVIEW
06 An introduction to Chesnara
09 Delivering our strategy
12 2024 financial highlights
14 Chair’s Statement
16 Chief Executive Officer’s Report
19 Chief Financial Officer’s Report
STRATEGIC REPORT
26 Our strategy, business model
and culture & values
28 Our strategy
30 Our culture & values
32 Section 172 reporting
40 Business review
46 Capital management
49 Financial review
55 Financial management
57 Risk management
68 Corporate and social responsibility
ADDITIONAL INFORMATION
252 Financial calendar
252 Key contacts
253 Notice of Annual General Meeting
255 Explanatory notes to the Notice
of Annual General Meeting
259 Appendix to AGM Notice
260 Alternative Performance Measures
262 Operational and other
performance measures
263 Reconciliation of metrics
265 Glossary
266 Note on terminology
267 Cautionary and forward-looking
statements
267 MSCI disclaimer
CORPORATE GOVERNANCE
94 Board profile and Board of Directors
96 Governance overview from the Chair
98 Corporate Governance Report
104 Nomination & Governance
Committee Report
110 Directors’ Remuneration Report
127 Audit & Risk Committee Report
135 Directors’ Report
139 Directors’ Responsibilities Statement
IFRS FINANCIAL STATEMENTS
142 Independent Auditor’s Report to the
members of Chesnara plc
148 Consolidated Statement of
Comprehensive Income
149 Consolidated Balance Sheet
150 Consolidated Statement of Cash Flows
151 Consolidated Statement of Changes
in Equity
152 Notes to the Consolidated
Financial Statements
244 Parent Company Financial Statements
247 Notes to the Parent Company
Financial Statements
CONTENTS
OVERVIEW
4
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
06
An introduction to Chesnara
09
Delivering our strategy
12
2024 financial highlights
14
Chair’s Statement
16
Chief Executive Officer’s Report
19
Chief Financial Officer’s Report
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
5
AN INTRODUCTION TO CHESNARA
OUR STRATEGIC OBJECTIVES
CHESNARA PLC IS A EUROPEAN LIFE AND PENSIONS CONSOLIDATOR, LISTED
ON THE LONDON STOCK EXCHANGE SINCE 2004. WE ADMINISTER JUST UNDER
ONE MILLION POLICIES ACROSS THE GROUP WHICH OPERATES AS COUNTRYWIDE
ASSURED IN THE UK, AS THE WAARD GROUP AND SCILDON IN THE NETHERLANDS
AND AS MOVESTIC IN SWEDEN.
At Chesnara, with customers at the forefront of all we do, we focus on three things:
This focus has enabled us to deliver strong levels of cash generation, a growing dividend and a robust and
stable solvency position over the last 20 years. And we look forward with confidence in our ability to continue
this delivery in the future.
MAXIMISE VALUE
FROM EXISTING
BUSINESS
The efficient management
of life assurance and
pension policies.
1
ACQUIRE LIFE
AND PENSIONS
BUSINESSES
Creating value through
acquiring new companies
or books of business.
2
ENHANCE VALUE
THROUGH PROFITABLE
NEW BUSINESS
Writing new business where
we are confident that conditions
will ensure the products are value
adding, meet our required hurdle
rates and ultimately support
longer-term cash generation.
3
OVERVIEW
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
6
For shareholders
– Surpluses emerge from the existing books of business through
efficient management of the policy base and good capital
management practices. This enables dividends to be paid from
the subsidiaries to Chesnara, which in turn can fund M&A and
an attractive shareholder dividend which has grown each year
since our listing in 2004.
– Growth from both our proven acquisition model and from
writing profitable new business has a positive impact on the
Own Funds† of the business and supports longer-term cash
generation†. Market returns above a risk-free rate of return are
a further potential area of positive value growth. The diagram
below illustrates the primary sources of growth that then
ultimately contribute towards surplus emergence.
How we create value
For customers
– We deliver an effective customer experience with good
standards of service operations, clear communication and
competitive fund performance. We also offer customers
the ability to invest in sustainable funds.
– Product reviews across the Group help to ensure good
customer outcomes and, in the UK, have been updated
to be aligned to the new Consumer Duty requirements.
– Customers can also be confident in the security of their
policies through the robust solvency levels we operate our
businesses to.
Who we are and where we came from
The Group initially consisted of Countrywide Assured (CA),
a closed life and pensions book demerged from Countrywide
plc, a large estate agency group, over 20 years ago.
The Group today comprises both open-book and closed-
book operations having grown through:
– the acquisitions of predominantly closed UK businesses
(into CA);
– the purchase of an open life and pensions business in
Sweden, now known as Movestic;
– acquisitions of both a closed-book acquisitive group
(Waard Group) and an open life and pensions business
in the Netherlands (Scildon); and
– writing new business in Movestic (mainly pensions and
custody accounts), Scildon (mainly term insurance) and more
recently in CA (mainly onshore bonds).
See pages 7 to 11 for further detail on our history
and businesses.
Looking forward, we are committed to transitioning to be
a sustainable and net zero group across our operational and
financed emissions (by 2050) and this commitment is a key
factor in our corporate decision making.
What we do
We help protect customers and their dependants
through the provision of life, health and disability cover
and enable policyholders to meet their financial needs
in the future by providing savings and pensions products.
† Alternative Performance Measure (APM) used to enhance understanding
of financial performance. Further information on APMs can be found in
the additional information section of this Annual Report and Accounts.
Own Funds
Total potential Commercial
Value (illustrative)
Future acquisitions
New business
Synergies
Real-world returns
Risk margin
The categories of potential upside (which are
not shown to scale) will emerge over time
7
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
How we operate
– Chesnara has a centrally defined governance and Risk
Management Framework operating across the Group and
all its divisions.
– This framework aligns to our strategy and enables us to
grow the business and deliver strong financial results while
remaining within the Board’s stated risk appetite.
– Our management teams have clear responsibilities and
are accountable for the delivery of set objectives and the
identification and management of risks and opportunities,
including those arising from climate change.
– We are committed to transitioning to be a sustainable
and net zero group (across our operational and financed
emissions) and this commitment is a key factor in our
corporate decision making.
– Our team has significant experience and a proven track record
in governing, acquiring and successfully integrating life and
pension businesses.
– Acquisitions form a key part of our strategy and are assessed
against stringent financial criteria, adopting a robust risk-based
due diligence process.
– We write new business where we are confident that conditions
will ensure the products are both value adding and will support
the Group’s cash generation in the long term.
– We maintain robust solvency and liquidity levels as part of
our wider Capital Management Framework.
– In the UK, we adopt a largely outsourced operating model,
whereas our overseas divisions use outsourced services
on a more selective basis.
UK
SWEDEN
NETHERLANDS
CHESNARA
GROUP
ASSETS UNDER
ADMINISTRATION†
£6bn
Δ
£5bn
£3bn
£14bn
OWN FUNDS
£177m
£186m
£222m
£643m
IFRS CAPITAL
BASE†
£151m
£99m
£280m
£449m
POLICIES†
c290k
Δ
c280k
c370k
c940k
Δ
AN INTRODUCTION TO CHESNARA
†Alternative Performance Measure (APM) used to enhance understanding of financial performance.
Further information on APMs can be found in the additional information section of this Annual Report and Accounts.
ΔIncludes impact of Canada Life portfolio acquisition, expected to Part VII and migrate during 2025.
8
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
14 SUCCESSFUL
ACQUISITIONS
ACROSS 3
TERRITORIES
SINCE 2004
DELIVERING OUR STRATEGY
Focusing on our three strategic objectives
has enabled us to deliver sustainable
growth in cash generation over the
long term supported by:
14 successful acquisitions across 3
territories since 2004, 5 of which have
taken place since 2022.
We have a range of deal structures with flexible
financing options including:
– Value-enhancing ‘bolt-on’ deals to more
transformative acquisitions
– Capability to find value in the UK,
Netherlands and beyond
– Flexible and efficient deal funding solutions
– Ability to find expedient solutions to de-risk
where required.
A well-established and robust Capital-
Allocation Framework to assess M&A,
ensuring that deals:
– Enhance cash generation in the medium term
– Deliver positive impact on the Group’s Own
Funds per share in the medium term
– Are within the Group’s risk appetite
– Have been subject to appropriate due diligence
– Deliver positive customer outcomes.
In the last three years, we have deployed
c£100m of capital resources and delivered
c£60m of incremental Economic Value,
including our most recently announced
deal with Canada Life UK in December
2024. And we are confident we can
continue to deliver further value upside
from acquisitions in the future.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
9
20 SUCCESSIVE YEARS OF FULL YEAR DIVIDEND GROWTH
We recognise the importance of providing stable and attractive dividends to our shareholders. A proposed full year 2024 dividend of 24.69p
per share represents an increase of 3% on the prior year. This is our twentieth successive year of dividend growth; an unbroken track record
since entry to the FTSE in May 2004, with growth consistently above underlying medium-term UK inflation rates*. During our 20-year history,
we have paid cumulative dividends of £502m.
– Close to one million customers trust us to manage their pensions, life assurance or other
savings and investments policies.
– Customers and their advisors can be confident that they hold policies with a well-capitalised
Group where financial stability is central to our culture and values.
– We carry out regular reviews across the Group to ensure that our customers’ investment
returns remain competitive.
– Our overriding philosophy of ‘putting the customer first’ and breadth of product offering
ensures a rewarding financial future for our customers and supports the delivery of a
service that meets their needs.
DELIVERING STRONG CUSTOMER OUTCOMES IS CENTRAL TO OUR PURPOSE
Dividend per share history
Pence per share
TOTAL DIVIDEND PER SHARE MORE THAN DOUBLED
11.85p
2004
24.69p
2024
A proposed full
year dividend of
24.69p per share
represents an
increase of 3%
on the prior year.
10
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
Commercial Cash Generation is defined as the movement
in the Group’s Solvency II surplus above its Board-approved
internal capital requirements, excluding the impact of certain
cyclical items such as the symmetric adjustment. It is the
surplus available to service dividends and debt costs and
to reinvest in the business, including through acquisitions.
In 2024, the Group’s Commercial Cash Generation of
£60m represents 1.60x coverage of the 2024 dividend and
cumulative Commercial Cash Generation of £240m has
provided 1.37x coverage of the dividend over 2020 to 2024.
The Group generates long-term Economic Value (EcV)† growth1
from the efficient management of existing policies and, to a
more material extent, by growing the portfolio through M&A
activity and new business profits. EcV growth also arises over
time as investment returns exceed risk-free returns. Since
listing, the Group has generated incremental EcV, pre-dividends
of £502m, of £906m, supporting its strong cash generation
profile. This includes a contribution of £69m delivered in 2024
(pre-dividend and FX impact).
Our new performance measure, IFRS Capital Base†, grew
by 10% to £528m during 2024, before allowance for FX and
dividends, while Group IFRS Pre-Tax Profit also increased
year on year, rising to £21m (2023: £2m). This growth means
that we have an increased store of future value available from
our insurance business. IFRS Capital Base is deemed a better
measure of the value of our business than IFRS Net Equity,
as it takes into account the store of deferred profits held in
the balance sheet, including those as yet unrecognised profits
from writing new business and acquisitions.
Year-on-year Commercial
Cash Generation† growth
of 14% to £60m with
continued strong dividend
coverage of 160%
Over 655% of
pre-dividend
Economic Value†
growth since
listing in 2004
*Further information on the Group’s shareholder dividend policy can be found in the Directors’ Report
on page 136.
1EcV growth is shown net of new equity in relation to prior corporate acquisitions (£148m) and excluding
cumulative dividends paid (£502m).
†Alternative Performance Measure (APM) used to enhance understanding of financial performance. Further
information on APMs can be found in the additional information section of this Annual Report and Accounts.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
11
2024
FINANCIAL
HIGHLIGHTS
ECONOMIC VALUE3
£531M
31 DECEMBER 2023: £525M
Financial review p50
COMMERCIAL CASH GENERATION1
£60M
2023: £52M
Financial review p49
Notes:
Items 1 to 5 below are Alternative Performance Measures (APMs) used by the Group to supplement
the required statutory disclosures under IFRS and Solvency II, providing additional information to
enhance the understanding of financial performance. Further information on these APMs can be
found throughout the Financial Review and in the APM appendix on pages 260 to 261.
1. Cash generation is calculated as the movement in the Group’s surplus Own Funds above the Group’s
internally required capital, as determined by applying the Group’s prudent Capital Management Policy,
which has Solvency II rules at its heart. Commercial Cash Generation is used as a measure of assessing
how much dividend potential has been generated, subject to ensuring other constraints are managed.
It excludes the impact of technical adjustments and modelling changes; representing the Group’s view
of the Commercial Cash generated by the business. The 2023 comparator is shown as inclusive of day one
acquisition impacts.
2 Assets Under Administration (AuA) represents the sum of all financial assets on the IFRS balance sheet.
Note – This measure was previously referred to as ‘Funds under Management’ (FuM). There has been no
change to the basis of calculation.
3. Economic Value (EcV) is a financial metric derived from Solvency II. It provides a market consistent assessment
of the value of existing insurance businesses, plus adjusted net asset value of the non-insurance business
within the Group.
4. Economic Value Earnings are a measure of the value generated in the period, recognising the longer-term nature
of the Group’s insurance and investment contracts.
5. New Business Contribution represents the best estimate of cash flows expected to emerge from new business
written in the period. It is deemed to be a more commercially relevant and market consistent measurement of
the value generated through the writing of new business, in comparison to the restrictions imposed under the
Solvency II regime. Note – This measure was previously referred to as ‘commercial new business’.
There has been no change to the basis of calculation.
6. Solvency is a fundamental financial measure which is of paramount importance to investors and policyholders.
It represents the relationship between the value of the business as measured on a Solvency II basis and the
capital the business is required to hold – the Solvency Capital Requirement (SCR). Solvency can be reported as
an absolute surplus value or as a ratio.
ΔIncludes impact of Canada Life portfolio acquisition, expected to Part VII and migrate during 2025.
*On 31 December 2024 the PRA’s restatement of Solvency II assimilated law came into force. Throughout the
document we refer to the new regime as Solvency II, in line with the name of the prudential regime in PRA
policy material.
**The IFRS prior year comparatives have been restated following a change in the accounting methodology
applied to the portfolio transfer into the UK from Canada Life Ltd. Further details are set out in the Note A2
in the ‘IFRS Financial Statements’.
OVERVIEW
12
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
SOLVENCY COVERAGE RATIO6*
203%
31 DECEMBER 2023: 205%
Capital management p46
ASSETS UNDER ADMINISTRATION (AuA)2
£14BN
Δ
31 DECEMBER 2023: £11BN
Financial statements p149
IFRS PRE-TAX PROFIT
£21M
2023: £2M**
Financial review p53
ECONOMIC VALUE EARNINGS4
£69M
2023: £59M
Financial review p51
NEW BUSINESS CONTRIBUTION5
£9M
2023: £10M
Business review pages 40 to 45
IFRS CAPITAL BASE
£449M
2023: £479M
Financial review p53
13
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
14
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CHAIR’S
STATEMENT
The Group has delivered
strong Commercial Cash
Generation and value
growth, including through
a further UK acquisition,
supporting a proposed
3% increase in our full
year dividend, our 20th
year of consecutive
dividend increases.
LUKE SAVAGE, CHAIR
Increase in the full year dividend by 3%
I am pleased to report that we are proposing that our
shareholders will receive a total dividend of 24.69p per share,
an increase of 3% on the prior year, and the 20th consecutive
year that we have increased the full year dividend.
Cash generation and financial strength
Our proposed dividend is underpinned by strong levels of
cash generation and financial stability again in 2024, despite
a continued backdrop of volatile geopolitical and macro-
economic factors.
Each of our operating divisions contributed to the Group’s
Commercial Cash Generation of £60m, an increase of 14%
compared to the same period in 2023 and against a total
dividend cost of £37m.
Our Solvency II Coverage Ratio of 203% remained stable
throughout 2024 and remains significantly above our normal
operating range of 140%-160%. The Group’s diversified business
model and our risk-based approach to financial management is
fundamental to providing financial security to our customers.
Our strong and resilient balance sheet continues to provide us
with considerable strategic flexibility to invest in our businesses
and pursue further M&A opportunities as they arise.
Operational delivery
Across the Group, our operating divisions continue to perform
strongly in support of the Group’s key strategic priorities.
In the UK, we announced our second portfolio acquisition from
Canada Life UK – a closed portfolio of onshore bond and pensions
products. We are pleased to continue our relationship with
Canada Life following our acquisition of their UK life insurance
policies and this latest transaction illustrates our ability to add
scale and provide attractive returns to our UK business.
The transfer of the earlier Canada Life UK Life insurance portfolio
acquisition to our new outsource partner, SS&C, completed
successfully in February 2025, marking a significant milestone
for this programme.
The operational activities to transfer existing UK insurance
portfolios to SS&C are also progressing, with plans to migrate
the remaining in-scope books within its portfolio over the next
18 to 24 months, including the recently announced deal with
Canada Life.
In the Netherlands, we announced our intention to merge our
Scildon and Waard businesses (subject to approval by De
Nederlandsche Bank). The proposed legal merger is expected to
take place in mid-2025 with further integration significantly
simplifying our operating model in the Netherlands, alongside
ongoing initiatives to upgrade the IT estate and improve customer
and broker experiences.
In Sweden, we have seen strong growth in our custodian
business as we continue to build new partnerships and
further diversify our distribution model. Overall new business
sales momentum remains strong, benefitting from ongoing
enhancements to our product offerings and the digitisation
of our service offerings.
It has been another year of significant delivery across the
Group and, as ever, I want to thank staff for their continued
efforts and dedication.
Our people
Over 2024, we maintained our focus on ensuring that the Group
benefits from a broad range of skills and expertise on our Boards.
In April, we appointed Tom Howard as our Group CFO and
Executive Director on the Chesnara Board and, at the same time,
we announced that Mark Hesketh was stepping off the Chesnara
Board to allow his appointment as Chair of our UK life company,
Countrywide Assured plc.
We also confirmed that as Jane Dale will have served her third
successive three-year term, she will not be seeking re-election
at our Annual General Meeting in May 2025, in line with UK
Corporate Governance Code for listed companies. Jane, who
has also been Chair of the Audit & Risk Committee, will have
served nine years as a non-executive director of the Group and
has made an immense contribution to Chesnara’s success over
this period. On behalf of the Board, I want to thank Jane for her
dedication to Chesnara and she leaves with our best wishes for
the future.
At the same time, I am delighted to announce that we have
appointed Gail Tucker to the Chesnara Board. Gail brings a wealth
of experience to Chesnara, particularly in the UK and European
listed life insurance sector and I want to welcome her to Chesnara
and very much look forward to working with her. Gail will chair
the Chesnara Audit & Risk Committee and, subject to regulatory
approval, will also join the CA Board where she will also chair
their Audit & Risk Committee.
Purpose
At Chesnara, we help to protect customers and their dependants
by providing life, health, and disability cover or savings and
pensions solutions to meet future financial needs. These are very
often customers that have come to us through acquisition, and
we are committed to ensuring that they remain positively
supported by us.
We have always managed our business in a responsible way and
have a strong sense of acting in a fair manner, giving full regard to
the relative interests of all stakeholders.
Maintaining our strong capital position and delivering strong and
sustainable financial returns will always remain of key importance.
It underpins our desire to offer compelling returns to our
shareholders, to meet our debt investor coupon payments and
importantly, to ensure our customers can be confident in the
ongoing financial strength of our business.
As a purpose-driven organisation, we continue to balance our
responsibilities across the 3Ps – Profit, People and Planet.
Sustainability is a key part of the strategy of the Group and we
are progressing well against our objectives. Sustainability is a key
input into decision making across the Group and all of our people
completed mandatory sustainability training in 2024. Ongoing
delivery of this training is now a key part of our people’s broader
learning journeys and professional development.
A key pillar of our commitments is to deliver a just transition to
become a net zero group. During 2024, we announced our initial
interim 2030 emission reduction target. By 2030, our target is
to reduce the scope 1 and 2 emissions of the in-scope assets by
50% from a baseline of 2023. In-scope assets are corporate
bonds and listed equity, which we can control or influence. All
assets, alongside our operational activities, remain in scope of our
2050 net zero target. During 2024, we have seen a reduction of
13% in the calculated normalised emissions for our full portfolio
against our 2023 baseline, together with a 25% reduction in our
operational emissions, meaning we are on track to achieve our
target. Absolute scope 3 emissions from our investments have
increased during the year though and so we also continued to
engage with our key asset managers and partners in our value
chain to be able to understand their own net zero journeys and
identify areas of focus.
As a recent signatory to the Principles for Responsible
Investment, and as a member of bodies such as the United
Nations Global Compact, UK Sustainable Investment and Finance
Association and the Institutional Investors Group on Climate
Change, we continue to engage on initiatives that create solid
foundations for longer-term change together with shorter-term
actions that will begin to make a real-world positive impact.
Our Annual Sustainability Report (available on the Chesnara plc
website) provides further details of our sustainability
commitments, long-term targets and the activities underpinning
our sustainability strategy.
Outlook
Our financial results in 2024 demonstrate that our diversified
business model continues to deliver strong levels of cash
generation, value growth and positive shareholder returns.
Our outlook for M&A remains positive and we have a strong
capital base and ambition to support further acquisitions.
Luke Savage
Chair
26 March 2025
15
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
CHIEF EXECUTIVE
OFFICER’S REPORT
Our strong financial
performance and
additional UK acquisition
in 2024 underpin our
positive outlook for
2025 and beyond.
STEVE MURRAY, CEO
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
16
We have again remained disciplined in driving delivery against
our three areas of strategic focus, namely:
1. Running our in-force insurance and pensions books
efficiently and effectively;
2. Seeking out and delivering value-enhancing M&A
opportunities; and
3. Writing focused, profitable new business where we are
satisfied an appropriate return can be made.
We have just under 1 million policies across the Group and our
people take pride in the responsibility that comes with delivering
for our policyholders every single day.
This focus helped us deliver a strong financial result for the year
with Commercial Cash Generation of £60m, continued strong
solvency of 203% and incremental EcV of £69m. And as Luke
highlighted, this has supported us proposing an increase in the
full year dividend of 3% to 24.69 pence per share.
Operational delivery has continued
We have continued to make positive progress delivering the
ambitious change agenda we set ourselves and that will help
ensure we have modern and sustainable operating platforms
right across the Group.
In the UK, work on our transition and transformation (T&T)
programme, which will lead to the transfer of our various UK
books of business to SS&C’s more modern policy administration
system, continues to progress well. Our first migration was
successfully completed in February 2025. And we successfully
met the UK Consumer Duty deadline for closed books in July
2024 and are making positive progress implementing our fully
funded plan. As part of this activity, we have made further
positive changes for a number of our UK customers and there
has been no material financial impact on the Group from any of
the changes we are making here. It was also pleasing to secure
our second transaction with Canada Life UK in December 2024.
The Part VII transfer of policies from our first deal with Canada
Life completed in Q1 2025.
In the Netherlands, our teams have been working hard on the
new DORA (Digital Operational Resilience Act) regulation and
associated work required to meet this new standard. We have
also begun the preparation work to bring our two Dutch
businesses together to create bigger scale and more sustainable
business. This merger, which is planned for July 2025 and
remains subject to local regulatory approvals, should also enable
us to drive further synergies above and beyond some of the
local restructuring work that was completed in December 2024.
Regulatory submissions have now been completed and we have
consolidated our teams based in Hilversum into one single
location in December 2024.
And in Sweden, our team’s also worked hard on implementing the
new DORA regulations, in advance of the January 2025 deadline.
Further work has been completed to enable us to more effectively
promote and sell our risk product offerings as well as enabling
better integration with broker firms. The leadership team has also
been strengthened in the year with joiners in our custodian
business, operations and IT.
Creating a more sustainable Chesnara
We continue to make progress against our three sustainability
commitments on our journey to transition to become a
sustainable Chesnara. We strongly believe we have a
responsibility to consider the needs of all our stakeholders,
balancing people, planet and profit over the long term.
We actively review our sustainability strategy and priorities
to ensure that we are working to address the needs of our
stakeholders and managing the risks and opportunities
presented by a changing world.
Our targets and key aspects of progress are:
– Net zero emissions by 2050 – in 2024, we published our initial
interim 2030 decarbonisation target for a 50% intensity reduction
from our 2023 baseline figures in the scope 1 and 2 emissions
for our listed equity and corporate fixed income investments
which we are able to influence or control. During 2024, we saw
a 13% reduction in the calculated normalised scope 1 and 2
emissions from our investments and a 25% reduction in our
absolute operational emissions, which are very positive
movements. Absolute emissions from our investments did
increase, however, driven by an increase in scope 3 emissions,
which is partly due to increased Assets Under Administration
(AuA). Visibility of the causes of these movements is still limited
but we are taking positive actions to reduce emissions and further
detail on these is provided in our Annual Sustainability Report.
– Investments in nature and social impact solutions – during the
year, we increased our investments in positive solutions and
held £135m at the end of 2024, representing an increase of
approximately 65% compared to 2023.
– A business where everyone feels welcome – we have continued
to commit time and resource to ensuring the Group is an inclusive
organisation. Activities including volunteering, internships,
enhancing customer care, and focusing on employee wellbeing
have been supplemented by delivering sustainability-related
training to all employees in the Group.
M&A continues alongside other
management actions
We have proactively and diligently assessed a number of M&A
opportunities across 2024. This has included our participation
in multiple due diligence processes, primarily on a bilateral basis,
as well as work on legal documentation. We announced another
UK acquisition on 23 December and our second portfolio deal
with Canada Life. Our latest deal involves the acquisition of a
portfolio of c17k onshore bond and personal pensions. We expect
an uplift in Economic Value of around £11m from the deal against
the £2m of consideration paid. The first step of the deal has been
executed by way of a reinsurance agreement between both
parties.
We retain significant fire power for future acquisitions and can
immediately deploy around £200m in support of deals. We have
additional financing options available as well, should we have the
opportunity to execute a larger value-enhancing opportunity.
Alongside the extensive activity this year on M&A, we have
continued to seek out other management actions to enhance
cash generation and/or value. We extended the Group’s FX hedge
during the year and also extended the mass lapse reinsurance
arrangements we have in the UK, both of which have reduced
SCR and enhanced cash generation.
Continued
strategic delivery
driving growth in
cash generation,
future value
and dividends.
17
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
Positive sales momentum in Sweden
and the UK, with discipline maintained
in the Netherlands
Overall, New Business Contribution remained broadly flat this
year at £9m vs £10m in 2023.
Movestic has continued to see strong sales in both our Group
pension and custodian business where total sales are at their
highest level for five years. We have continued to see transfers
out at a higher level than our longer-term assumption (albeit in line
with the short-term provision we made in the balance sheet in
2024). Overall, it has been a stronger year than 2023, being the
first full year under Sara Lindberg’s leadership, and we see further
opportunities to expand our partnerships in 2025.
It was a tougher market in the Netherlands for our main term life
product with overall new business materially lower compared to
the same period in 2023. However, it has been pleasing to see
the team maintain their disciplined approach to pricing against this
more challenging market backdrop.
In the UK, we have continued to see positive flows into our
intermediated onshore bond proposition and we have been
engaging positively with other platforms in the market with
a view to potentially expanding our distribution of this product.
Continued work to strengthen our team
Luke highlighted the additional talent that has joined the Chesnara
Board, including Tom Howard who joined us from Aviva in April.
As a reminder, Tom has held a variety of senior roles within Aviva
plc, including Director of Mergers & Acquisitions for Aviva Group
and CFO for Aviva’s Life and General Insurance business in
Ireland. Tom brings with him an extensive European actuarial and
financial reporting background. He has made a positive start to life
at Chesnara and is focused on improving our capital allocation
discipline as well as helping to drive further M&A momentum.
We also announced Edwin Bekkering’s appointment to the
position of CFRO (Chief Financial & Risk Officer) in Scildon,
following the appointment of Pauline Derkman as our new
CEO 18 months ago. Edwin has extensive experience in senior
finance roles in major financial institutions including at Athora,
Vivat, SNS Reaal and ABN AMRO. Pauline and Edwin are also
proposed as the CEO and CFRO of the planned merged
business in the Netherlands.
CHIEF EXECUTIVE OFFICER’S REPORT
Outlook
It has been pleasing to see continued strong cash and economic
earnings generation in 2025. Whilst the volatile geopolitical and
macro-economic backdrop persists, and will continue to be a
material factor in all our markets, we remain confident that the
Chesnara business model will continue to generate cash across
a wide variety of market conditions, as it has done this year and
over its history.
We also remain positive on the outlook for further M&A, where
we remain very active and continue to see a positive pipeline of
opportunities. We believe we are well placed to execute further
value accretive deals for shareholders.
Our people have continued to deliver across a number of
material operational programmes and for our customers in the
period. I thank them again for their efforts.
As I highlighted in the interim results, we celebrated our 20th
anniversary as a listed Company in May 2024. Chesnara has
delivered 20 years of positive returns for shareholders and
I look forward to continuing to deliver for our investors going
forward. And the excellent work of our teams again this year
further supports my belief that there is a lot to look forward
to here at Chesnara.
Steve Murray
Chief Executive Officer
26 March 2025
18
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
CHIEF FINANCIAL
OFFICER’S REPORT
2024 has been another
year of growth for
Chesnara. Our diversified
business model continues
to deliver strong and
resilient financial
performance, supporting
increased returns to
our shareholders.
TOM HOWARD, CFO
OVERVIEW
19
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CHIEF FINANCIAL OFFICER’S REPORT
Overview
UNITED KINGDOM
SWEDEN
NETHERLANDS
I am delighted to have joined Chesnara at this exciting stage of
the Company’s development. I have been incredibly impressed
by the drive and commitment of the team and want to express
my thanks to colleagues for the warm welcome they have given
me since joining the Group in April 2024.
I am pleased to say that 2024 was another year of strong
and resilient cash generation for the Group, with £60m of
Commercial Cash generated, an increase of 14% compared
to 2023. Each of our operating divisions contributed positively
to this result, supporting strong coverage of the dividend and
our debt servicing costs.
The Solvency Coverage Ratio of 203% remains comfortably
above our operating range of 140%-160% and continues to
be resilient to a wide range of financial scenarios and provides
the Group with significant scope to pursue M&A and other
investment opportunities as they arise.
The Group continues to grow, with AuA increasing to £14bn
(2023: £11bn), benefitting from positive investment returns
on existing business, the addition of the Canada Life portfolio
acquisition and value generated from new business written.
The Economic Value of the Group grew from £525m to £531m
with positive contributions from operating activities, acquisitions
and market conditions, partially offset by stronger expense and
demographic assumptions.
This strong set of financial results underpins the Board’s
recommendation to increase the full year dividend by 3%
to 24.69p per share.
Own Funds increased by £29m (2023: £51m) and SCR reduced
by £5m (2023: increase of £2m), resulting in a pre-dividend
Solvency Coverage Ratio of 182% (2023: 179%). The growth in
Own Funds arose primarily from the impact of positive economic
conditions on the in-force book, the second acquisition from
Canada Life and the writing of profitable new business over
the period. The extension of existing mass-lapse reinsurance
arrangements, alongside existing book run-off, supported the
reduction in SCR. The UK division held a Solvency II surplus
(before foreseeable dividends) of £60m above its Board’s risk
appetite level (2023: £60m) and made remittances of £35m to
Group Centre over 2024. IFRS Pre-Tax Profits of £28m (2023:
£3m) arose from strong investment returns, albeit lower than prior
year, and a much-improved positive insurance result in the year,
with the combined effect of these broadly netting off. The prior
year pre-tax profits were suppressed by a £21m impairment of
AVIF (Acquired Value of In Force) related to the CASLP book.
Solvency surplus generation of £10m arose from an increase in
Own Funds of £15m (2023: £10m) offsetting an increase in SCR
of £5m (2023: £13m), with a closing Solvency Coverage Ratio
(before foreseeable dividends) of 153% (2023: 153%). The
increase in Own Funds and SCR were both largely driven by
positive market movements, alongside an adverse consolidation
impact on surplus due to depreciation of SEK against the pound
and elevated levels of short-term persistency experience. The
business unit held a pre-dividend Solvency II surplus of £40m
above its Board’s risk appetite level (2023: £39m) and made
remittances of £3m to Group Centre. IFRS Pre-Tax Profit of
£10m (2023: £5m) arose from higher AuA generating higher
fee income and fund rebates. A positive contribution from the
risk business also meant that the insurance result was much
improved compared to the prior year.
Solvency surplus generation of £3m arose from a reduction in
Own Funds of £4m (2023: £32m) and a reduction in SCR of £7m
(2023: £19m), with a closing Solvency Coverage Ratio (before
foreseeable dividends) of 237% (2023: 230%), noting the 2023
comparators included the day one impact of the Conservatrix
acquisition. Own Funds benefitted from the impact of cost
management actions in Scildon, but were more than offset by
the impact of foreign exchange movements on consolidation.
The reduction in SCR was driven primarily by lower expense risk
with partial offset from higher market risk due to a lower interest
rate environment. The Group’s Dutch entities held a Solvency II
surplus of £68m above its Board’s risk appetite levels and made
remittances of £7m to Group Centre (2023: £4m). IFRS Pre-Tax
Profit of £5m (2023: £23m) with the reduction primarily being
driven by a positive but less favourable investment return in the
year compared to 2023, whilst the 2023 result also included
a £7m day one gain from the Conservatrix acquisition.
Business performance
CASH RESULT
CAPITAL POSITION
FUTURE VALUE GENERATION
Commercial Cash Generation
£60m
FY 23: £52m
Dividend cover
1.60x
FY 23: 1.45x
Solvency II Ratio
203%
FY 23: 205%
IFRS leverage
31%
FY 23: 30%
EcV
£531m
FY 23: £525m
AuA
£14bn
FY 23: £11bn
IFRS Capital Base
£449m
FY 23: £479m
Full year dividend 24.69p per share, up 3% YoY
20
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
Capital & cash management
Solvency II capital position
At 31 December 2024, Group Solvency II surplus was £327m and the Group’s Solvency II Coverage
Ratio was 203% (2022: £351m and 205% respectively).
The change in surplus since 31 December 2023 is driven by the positive impacts of capital generation
from the Group’s operating activities and market conditions, in addition to management actions taken
in the year offset by dividend payments, the application of Tier 2/3 valuation restrictions and foreign
exchange impacts. The Solvency Capital Requirement of £316m includes a £93m benefit from Group
diversification and the benefits of the Group’s foreign exchange hedging arrangements.
The Group regularly assesses the resilience of the Solvency II Coverage Ratio against a range
of scenarios as part of its internal risk management processes.
Market risks largely arise from foreign exchange rate movements, changes in equity valuations
and movements in interest rates and inflation. Solvency surplus is most sensitive to the effect
of equity movements on the value of the Group’s AuA and the consequent impact on future
earnings from charges levied on these AuA.
The Group reviews the matching profile of its liabilities relative to their matching assets on an
ongoing basis. As a result, the impact on solvency surplus of interest rate movements is not
significant. The inflation stress measures a permanent increase in inflation in all future years.
This significantly increases the Group’s exposure to future costs and reduces solvency surplus
accordingly. It is worth noting that the sensitivities make no allowance for recovery management
actions that the Group would apply in case of a prolonged stress event. These potential actions
are regularly reviewed as part of the Group’s ongoing risk management processes.
Demographic risks mainly comprise lapse risk from early surrenders and mortality risk on our
protection and investment books. The Group manages lapse risk through a combination of
active customer engagement, high levels of customer service and mass-lapse reinsurance
arrangements. The Group manages mortality and longevity risk through its reinsurance
arrangements and reviews the overall reinsurance programme on a regular basis.
Cash generation
£39.6m
£16.2m
£10.6m
UK
Sweden
Netherlands
The contribution from the operating divisions of £66m (2023: £73m) benefitted from
favourable market conditions across our operating territories, robust new business
performance and stronger operating performance relative to 2023. Group Centre
surplus usage reflected Group Centre and debt servicing costs, partially offset by
capital benefits from Group diversification and foreign exchange hedging facilities.
Commercial Cash Generation represents 1.60x coverage of the total 2024 dividend,
demonstrating that the Group has ample resources to finance ongoing debt and
dividend commitments whist maintaining a strong Solvency Coverage Ratio.
Commercial Cash Generation
of £60m (2023: £52m)
comprised contributions
of £66m from the operating
divisions, partially offset by
net surplus usage at Group
Centre to fund M&A activities,
debt financing costs and
central overheads.
Centre liquidity
Group Centre held liquid resources of £109m at FY 2024, and this is expected to increase to £130m by half year 2025 following the receipt of planned Dividend Remittances from our operating divisions,
net of Group Centre costs over the same period. This illustrates that we are continuing to generate sufficient cash from our operating divisions to fund our dividends, debt and Group Centre costs without
impacting the Solvency Coverage Ratio.
Sensitivities
Each individual bar in the diagram illustrates the estimated impact range (£m) of the respective sensitivities and whether that impact is positive (green) or negative (red).
Impact range £m
20% sterling appreciation
20% sterling depreciation
25% equity fall
25% equity rise
10% equity fall
10% equity rise
1% interest rate rise
1% interest rate fall
50 bps credit spread rise
25 bps swap rate fall
10% mass lapse
1% inflation
5% mortality increase
33.6%
(12.3)%
6.4%
(4.6)%
2.6%
(1.9)%
6.1%
(8.4)%
(3.6)%
(4.7)%
(0.2)%
(9.9)%
(3.6)%
(80)
(60)
(40)
(20)
-
20
40
60
80
SOLVENCY
SURPLUS
SOLVENCY
RATIO
SII ratio
FY 2023
Capital
generation
Management
actions
Acquisitions
SII
adjustments
Dividend
payments
SII ratio
FY 2024
16%
(12%)
203%
205%
4%
(3%)
(7%)
Our normal operating solvency range: 140%-160%
21
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
CHIEF FINANCIAL OFFICER’S REPORT
IFRS insurance result
The insurance service result comprises the revenue and expenses
from providing insurance services to policyholders and excludes
economic impacts. Assumption changes only apply to the
insurance service result to the extent that they relate to groups
of onerous contracts in a ‘loss component’ position.
The insurance service result of £8.6m (2023: loss of £5.2m)
comprises a relatively stable and positive contribution from
the release of the CSM and the Risk Adjustment of £22.2m
(2023: £23.0m). This is offset by some adverse experience
primarily in the Netherlands and assumption changes on lines
of onerous contracts also in the Netherlands, with these impacts
being much more significant in the prior year, resulting in the
overall loss.
IFRS investment result
The investment result comprises the economic result from
all the Group’s assets together with the impacts to its insurance
and investment contract liabilities.
The positive investment result of £52.7m (2023: £71.7m) reflects
the strong market performance in the year, although the
investment returns from equities and fixed income securities
did not reach the levels seen in 2023.
Fees, commission and other operating income
Fee, commission and other operating income mainly comprises
the fee income generated in the UK and Sweden from unit-linked
contracts measured under IFRS 9.
The income generated in the year after removing the effects
of Swedish policyholder yield tax, which has an equal and
opposite offset within ‘Other Operating Expenses’, was £73.4m
(2023: £71.5m) with equity market returns in the UK and Sweden
being the largest contributory factors to the result.
Other operating expenses and financing costs
Other operating expenses comprises those costs incurred by the
Group that are not incurred from servicing insurance contracts,
with such costs being reported within the insurance result.
After stripping out the impact of the policyholder yield tax noted
above, the total other operating expenses and finance costs
in the year was £113.9m (2023: £143.0m), with the prior year
amount also being impacted by an impairment of AVIF in the
UK segment of £21.0m.
IFRS Capital Base
Before allowing for the 2024 dividend, the IFRS Capital Base
of £449.1m increased by £6.2m over 2024 as a result of the
positive IFRS profit after tax of £3.9m, the increase in CSM
net of tax of £15.2m and negative impacts going through
‘other comprehensive income’ or directly to shareholder
equity of (£12.8m), these being mainly in respect of foreign
exchange impacts.
In December 2024, the Group announced that agreement had
been reached with Canada Life to transfer an in-force portfolio
to Chesnara’s UK division. This acquisition contributed £0.7m
to the increase in CSM gross of tax, however this amount
reflects the profits to be earned in the reinsurance phase only,
during which it will be accounted for at the reinsurance contract
level under IFRS 17. Following the legal transfer of the underlying
policies, IFRS 9 will then apply, as the policies are investment
contracts and profits will therefore be recognised as the fee
income is earned.
A further £6.8m of CSM gross of tax arose from new business
in Scildon, offset by £18.9m released to the income statement.
The closing CSM on the balance sheet will be earned over
the coverage period of the policies to which it relates, and the
expected earnings pattern is such that after 10 years more than
40% will remain to be earned.
Leverage
Leverage of 31% remained broadly unchanged as the impact of
the increased CSM largely offset the decrease in IFRS equity.
Our leverage ratio remains in line with our long-term preference
of 30% or less and we continue to see opportunities to manage
leverage in line with or below our preferred level into the longer term.
IFRS
Capital management actions
Management actions are an important component of our strategy
to maximise value from existing business. In 2024, we renewed
the Group’s foreign exchange derivative instrument, further
reducing capital requirements relating to the risk of extreme
foreign exchange movements. In our UK division, mass-lapse
reinsurance arrangements were extended to provide the Group
with further capital relief against the risk of extreme lapse events.
Taken in aggregate, these actions increased the Group’s Solvency
Ratio by 5%.
IFRS Pre-Tax Profit
Group IFRS Pre-Tax Profit of £20.8m is £19.1m
higher than 2023 (£1.7m) with an improved
insurance service result, a positive but lower
investment result and an improvement in fee
income net of expenses.
FY23 Capital
Base
CSM
movement
Pre-Tax
Profit
Other
adjustments
FY24
Capital Base
Pre-Tax, FX
& dividends
FX
Tax
Shareholder
dividends
FY24
Capital Base
26
21
449
479
528
2
(22)
(21)
(37)
Insurance service result
9
Net investment result
53
Other income and expenses
(40)
Pre-Tax Profit
21
22
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
EcV Economic Earnings
Positive global equity market movements contributed strongly to
the growth in the value of AuA† over 2024, increasing the store of
future value available from investment-linked portfolios. This was
partially offset by the impact of foreign exchange movements,
primarily from the strengthening of Sterling against the Euro and
the Swedish Krona.
EcV Operating Earnings
EcV Operating Earnings of £10m (2023: £6m) were supported by
strong contributions from the Group’s Dutch businesses, and a
small year-on-year increase in contribution from new business.
The contribution from the in-force portfolio and new business
was partially offset by a strengthening of short-term lapse
assumptions in the Group’s Swedish division, mortality
assumptions in the Netherlands and expense assumptions
in the UK. Whilst these effects had the impact of reducing
EcV Operating Earnings by £8m, this is less marked than the
prior year (2023: (£15m)), reflecting cost-containment and
risk-management actions taken throughout 2024.
Other EcV Earnings
The acquisition of the Canada Life portfolio results in an up-front
EcV gain of c£11m. Other non-operating items include the
positive impact or risk margin releases (£23m), offsetting central
financing costs (including Tier 2 coupon payments) of £11m.
Economic Value as at 31 December 2024
Before allowing for dividends of £37m, the Economic Value
of the Group grew to £568m (2023: £525m).
Economic Value Earnings
†Alternative Performance Measure (APM) used to enhance understanding of financial performance.
Further information on APMs can be found in the additional information section of this Annual Report and Accounts.
The Economic Value of the Group
represents the present value of future
profits from existing business, plus the
adjusted net asset value of non-insurance
business within the Group. Group EcV
Earnings of £69m increased by £10m
(2023: £59m) with economic earnings
being the largest component of Economic
Value Earnings, reflecting favourable
market conditions throughout 2024.
Dividend
Our continued strong performance along with our strong and
resilient solvency position has supported the directors’ decision
to recommend a 3% increase in the total dividend to 24.69p per
share (2023: 23.97p).
Outlook
Chesnara has now delivered 20 years of consecutive dividend
increases to our shareholders. Looking forward, we continue
to have a strong line of sight to future cash generation over
the medium and longer term. We have opportunities to further
optimise future value generation from our existing portfolio
through continued capital and investment management actions.
Our capital and liquidity resources remain strong and resilient to
market movements and position us strongly to generate further
sources of future value through acquisitions and investment in
our operating divisions.
Tom Howard
Chief Financial Officer
26 March 2025
EcV at
FY 2023
Economic
earnings:
real-world
returns
Operating
earnings
New
business
Acquisitions
Other
central and
one off
items
EcV at
FY 2024
pre FX &
dividends
FX
Paid
dividends
EcV at
FY 2024
50
(2)
594
(26)
(37)
531
525
5
5
11
23
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
STRATEGIC
REPORT
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
24
26 Our strategy, business model
and culture & values
28 Our strategy
30 Our culture & values
32 Section 172 reporting
40 Business review
46 Capital management
49 Financial review
55 Financial management
57 Risk management
68 Corporate and social responsibility
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
25
Our strategy focuses on delivering value to customers and shareholders, mindful of the interests of other stakeholders,
through our three strategic objectives, executed across our three territories.
OUR STRATEGY, BUSINESS MODEL AND CULTURE & VALUES
OUR STRATEGY
HOW WE ORGANISE OURSELVES
MAXIMISE VALUE FROM
EXISTING BUSINESS
Managing our existing customers efficiently,
whilst delivering good outcomes, is core to
delivering our overall strategic aims.
KPIs
Cash generation
EcV Earnings
Customer outcomes
IFRS Pre-Tax Profit
IFRS Capital Base
1
ACQUIRE LIFE AND
PENSIONS BUSINESSES
Acquiring and integrating companies into
our business model is key to continuing
our growth journey.
KPIs
Cash generation
EcV growth
Customer outcomes
Risk appetite
IFRS Pre-Tax Profit
IFRS Capital Base
2
ENHANCE VALUE THROUGH
PROFITABLE NEW BUSINESS
Writing profitable new business supports
the growth of our Group and helps mitigate
the natural run-off of our book.
KPIs
EcV growth
Customer outcomes
IFRS Pre-Tax Profit
IFRS Capital Base
3
Read more on p28
STRATEGIC OBJECTIVES
BECOMING A SUSTAINABLE CHESNARA
UK
NETHERLANDS
SWEDEN
DIVISION
COUNTRYWIDE
ASSURED
Read more on p40
WAARD
GROUP
Read more on p44
SCILDON
Read more on p44
MOVESTIC
Read more on p42
OPERATING
COMPANY
Linked pension business;
life insurance, covering both
index-linked and unit-linked;
endowments; whole of life;
annuities and some with
profit business.
Mainly term life policies,
with some unit-linked and
non-life policies.
Protection, individual
savings and group
pensions contracts.
Predominantly unit-linked pensions
and savings. Also provides life
and health product offerings
as well as custodian business.
KEY
PRODUCTS
c290k
c128k
c240k
c280k
NUMBER OF
POLICIES
Onshore bond sold through
Investment platforms.
n/a
Sold through
a broker network.
Largely through a network of
brokers and partners, although
some is directly to customers.
DISTRIBUTION
METHOD
UNDERPINNED BY A ROBUST RISK MANAGEMENT AND GOVERNANCE FRAMEWORK
26
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
OUR BUSINESS MODEL
OUR CULTURE AND VALUES
Responsible risk-based
management for the
benefit of all our
stakeholders
Fair treatment
of customers
Maintain adequate
financial resources
Provide a competitive
return to our investors
Robust regulatory
compliance
A just transition to
a sustainable group
STAKEHOLDERS
– Shareholders
– Debtholders
– Staff
– Suppliers and partners
– Natural environment
– Customers
– Customers
– Customers
– Regulators
– Staff
– Shareholders
– Debtholders
– Shareholders
– Debtholders
– Customers
– Regulators
– Natural environment
– All stakeholders
including the planet
INVESTORS
CUSTOMERS
REGULATORS
STAFF
SUPPLIERS AND
PARTNERS
THE PLANET
& NATURAL
ENVIRONMENT
Competitive returns through
attractive dividends and
share price growth for
shareholders and a
dependable coupon
payment for debtholders
Good outcomes
Financial stability and
regulatory compliance
Attract, promote and
retain quality staff
Job satisfaction
and motivation
Long-term reliable
relationships
Progress to being
a sustainable group
Cash generation†
EcV† growth
Solvency Coverage
Ratio
Good outcomes
Investment return
Good outcomes
Solvency Coverage Ratio
Staff survey results
Staff retention rates
Quality of service
Tracking expenditure
Openness of relationship
Operational emissions
Financed emissions
Energy usage
Investment in
positive solutions
STAKEHOLDERS
OBJECTIVES
KPIs
† Alternative Performance Measure (APM) used to enhance understanding of financial performance. Further information on APMs can be found in the additional information section of this Annual Report and Accounts.
27
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
OUR STRATEGY
STRATEGIC
OBJECTIVE
WHY THIS MATTERS
The Group financial model supports
incremental value generation through
writing profitable new business.
New business activity supplements
the growth delivered from the
management of our in-force portfolio
and periodic acquisitions.
– In the UK, new business is primarily sold via advisors who provide new customers with access
to our onshore bond product via a selection of investment platforms.
– In Sweden, we primarily focus on unit-linked pensions and savings business, distributed largely
through brokers, and custodian business distributed by partners, albeit with an ambition to grow
our risk protection business.
– In the Netherlands, we sell protection products and, individual savings contracts via a broker-led
distribution model.
– New business terms are regularly reviewed to ensure that they remain competitive in their respective
markets whilst maintaining profitable returns to the Group.
Delivering on the commitments we
have made to customers is fundamental
to the success of the Group. Existing
books of policies are the principal source
of the Group’s cash generation† and
Economic Value† and are at the heart of
the investment case for our shareholders
and debtholders. If we do not do a good
job for our customers then we will not
have the right to execute against our
other two strategic objectives.
A centralised governance oversight and corporate management team ensures robust and consistent
governance across the Group. Operational execution is devolved to our divisions to ensure the
Group benefits from strong divisional management teams and reflects the need to ensure
that processes are fit for purpose locally. The core operations of our UK division follow a largely
outsourced business model. The core operating activities of our businesses in Sweden and the
Netherlands are predominately managed internally.
We create value and generate cash through:
– running our in-force books of business efficiently and effectively;
– executing management actions that create long-term value and/or generate cash;
– optimising the risk/reward balance in how we invest our assets and generate future returns;
– accessing broader Group diversification synergies; and
– ensuring our customer processes deliver good outcomes (recognising Consumer Duty requirements
for UK customers) and remain robust and in line with customer expectations, which in turn supports
stronger persistency.
Bringing value enhancing acquisitions
into the Group maintains and potentially
enhances the efficiency of the operating
model, creates a source of ongoing
value enhancement and sustains the
longer-term cash generation potential
of the Group.
– Identify potential deals through an effective network of our own relationships, supplemented by
advisors and industry associates.
– Assess deals by applying well established criteria which consider the impact on cash generation,
Economic Value and solvency under the best estimate and stressed scenarios and the impact of the
deal on the enlarged Group’s risk profile.
– Minimise transaction risk through stringent risk-based due diligence procedures and the senior
management team’s acquisition experience and positive track record.
– Finance deals with debt, equity and/or cash depending on the size and cash flows of
each opportunity.
– Work cooperatively with regulators.
HOW WE DELIVER
OUR BUSINESS MODEL
Our strategy focuses on three areas: the efficient management of our existing business, the creation of value through acquisitions and writing
profitable new business.
1
MAXIMISE VALUE FROM
EXISTING BUSINESS
2
ACQUIRE LIFE AND
PENSIONS BUSINESSES
3
ENHANCE VALUE
THROUGH PROFITABLE
NEW BUSINESS
28
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
HOW WE MEASURE DELIVERY
UPDATE
– PR8 The attractiveness of products can be influenced
by economic conditions, politics and the media.
– PR6 PR8 PR9 New business volumes are sensitive
to the quality of service to intermediaries and the
end customer.
– PR8 In Sweden, new business remains relatively
concentrated towards several large brokers and
private banks.
– PR8 A competitive market puts pressure on new
sales margins.
– PR10 Inaccurate assumptions modelling resulting
in writing unprofitable new business.
– In the UK, looking to expand the platforms that we work with.
– In Sweden, continuing to extend the breadth of broker
support and develop more digital and automation capabilities.
– Ensuring good quality of service to existing network
of intermediaries.
– Focusing on other margin drivers beyond product pricing,
such as the fund management operation.
– Enhancing business processes and product offering to be
attractive to brokers and consumers.
Financial outcomes
New business activity must meet the hurdle-rate
financial returns and deliver an acceptable level
of New Business Contribution to the Group.
Customer outcomes
New business activity must ensure we protect,
or ideally enhance, customer interests.
RISKS: WHAT CAN STOP US MEETING
THIS OBJECTIVE?
RISKS: WHAT CAN WE DO
ABOUT THIS?
– Active investment management to deliver competitive investment
returns for policyholders, within agreed risk appetite levels.
– Outsourcer service level arrangements that ensure strong
customer service standards.
– Strong expense management to ensure that the cost base is
efficient, well controlled, predictable and within direct
management influence.
– Close monitoring of persistency levels and strong customer
service standards help manage lapse rates and ensure customers
do not unknowingly exit when it is not in their interest to do so.
– Implementation of efficient reinsurance and hedging strategies.
– Strong model controls including do/check/review and adherence
to Technical Actuarial Standards, plus independent internal and
external review and sign off.
– Strengthening controls and documentation around financial
reporting and decision making models, and improving the
independent testing of those controls through the operational
resilience programmes and in preparation for the new Corporate
Governance code.
Customer outcomes
This is measured through monitoring:
– customer service metrics;
– policyholder fund performance against industry
and market expectations;
– customer complaint levels; and
– our compliance with regards to regulatory
conduct matters.
Financial outcomes
Cash generation is the surplus generated by
the Group over its capital requirements, as set
by the Board.
Economic Value is a prudent estimate of the
potential future store of cash generation available
to the Group from the efficient management of the
in-force portfolio and so is an important measure
of the long-term performance of the Group.
– PR3 A lack of value adding acquisition opportunities
come to market, the investment case for the Group
diminishes over time.
– PR3 PR9 There is the risk that we make an
inappropriate acquisition that adversely impacts the
financial strength of the Group.
– PR10 Inaccurate model outputs during due diligence
stage could potentially lead to overestimating the
value of acquisitions, resulting in over payment.
– Operating in three territories increases our options thereby
reducing the risk that no further value adding deals are done.
– Additional investment has been made in resources that
support our M&A efforts.
– A broader target market also increases the potential for deals
that meet our strategic objectives.
– Each acquisition is supported by a financial deal assessment
model which includes high quality financial analysis. This is
reviewed and challenged by management and the Board.
Financial outcomes
Acquisitions must meet the hurdle-rate financial
returns required by our capital allocation policies and
must be attractive relative to alternative uses of the
Group’s capital resources.
Customer outcomes
Acquisitions must ensure we protect, or ideally
enhance, customer interests.
Risk appetite
Acquisitions should normally align with the Group’s
documented risk appetite. If a deal is deemed to sit
outside our risk appetite, the financial returns must
be suitably compelling.
RISKS: FOR FURTHER INFORMATION ON PRINCIPAL RISKS LISTED
PLEASE SEE THE RELEVANT CODES ON PAGES 61-67
– PR1 Adverse investment market conditions can result
in lower assets under management and hence lower
fee income from unit-linked business. For products
with guarantees, this can increase the cost of fulfilling
the guarantees.
– PR4 Increased lapses on cash generative/value
enhancing products.
– PR4 PR6 Loss of key brokers, or aggressive
competitor pricing, can result in increases in the level
of customers moving to competitors.
– PR2 Regulatory change can potentially impact the
cash flows arising from the existing business.
– PR5 Expenditure levels could exceed those assumed.
– PR1 Foreign currency fluctuations can impact the
sterling value emerging from overseas operations.
– PR10 Weakness in modelling results may lead to
poor decisions regarding strategic, operational
or investment matters.
† Alternative Performance Measure (APM) used to enhance
understanding of financial performance. Further information
on APMs can be found in the additional information section
of this Annual Report and Accounts.
UK
Pages 40-41
SWEDEN
Pages 42-43
NETHERLANDS
Pages 44-45
UK
Pages 40-41
SWEDEN
Pages 42-43
NETHERLANDS
Pages 44-45
UK
Pages 40-41
SWEDEN
Pages 42-43
NETHERLANDS
Pages 44-45
29
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Our values and culture are strongly influenced by our responsibility to a range of key stakeholders including customers, regulators, wider society and
our investors. They underpin the delivery of our core strategic objectives.
OUR CULTURE & VALUES
RESPONSIBLE RISK-BASED MANAGEMENT FOR THE
BENEFIT OF ALL OF OUR STAKEHOLDERS
PROVIDE A COMPETITIVE RETURN TO OUR INVESTORS
WHY IS IT IMPORTANT?
WHAT WE HAVE DONE
– Continued our impressive track record of increasing our dividend for the last 20 years, even during turbulent
investment market conditions.
– Delivered strong cash generation with all divisions contributing to provide coverage of 160% against the
shareholder dividend.
– Maintained a robust solvency position in all divisions and at Group level, supporting the continued dividend
growth and providing substantial headroom for future acquisitions.
FAIR TREATMENT OF CUSTOMERS
The fair treatment of customers across the Group is our primary responsibility.
It is also important to our business strategy as it promotes stronger relationships
with our customers, distributors and regulators. When applying the terms of our
customer contracts, coupled with guidance and requirements set out by our local
regulators, we place a high priority on ensuring good outcomes for our customers.
– UK: Continued to deliver good levels of service to our customers, meeting the high standards expected by
our regulators, including work to deliver the ongoing operational resilience programme (which is on track for
the 31 March 2025 deadline) and formation of a fully-funded plan in compliance with the Consumer Duty
rules for the closed-book business (completed in line with the regulatory deadline of 31 July 2024). The UK
division has also continued to proactively maintain contact with long-standing customers and to reunite
customers with unclaimed assets.
– Sweden: Continued to enhance our digital offering to customers, having updated the division’s digital
service to allow both those nearing retirement and those customers with a longer time-horizon, to simulate
retirement and plan their decumulation strategy. The division has also focused on broader ways it can support
our customers, including individually adapted pension plans and sustainable investments. The offering within
the life and health insurance business segment has been further developed and re-launched during the year.
ROBUST REGULATORY COMPLIANCE
MAINTAINING ADEQUATE LIQUIDITY
Working constructively with our regulators and complying with regulatory
requirements and guidance is imperative to the delivery of our objectives.
Regulators’ desire for robust and responsible governance is very much part
of our culture and a principal priority for the Chesnara Board.
Ensuring we have liquidity to meet our ongoing financial obligations requirements
is fundamental to the sound financial management of the business.
– Maintained robust solvency levels across the Group and all divisions, above regulatory requirements.
– Continued to place a high priority on compliance, maintaining an open dialogue with our regulators.
– Continued to monitor forthcoming non-financial reporting frameworks to ensure we implement them in line
with their effective date.
– We use the business plan to project cash flows over the forthcoming five-year period.
– We assess the liquidity of the Group on a regular basis, working to an internal buffer and this is also
considered as part of all acquisition processes to ensure we finance the deals in the most efficient way whilst
also maintaining an adequate level of liquidity to meet the ongoing financial obligations of the business.
In managing the business, it is essential that our decision making assesses the risk
impact of any decision. We achieve this by understanding the key risk drivers of the
business plan and strategy, as well as by making sure we monitor the potential
impact of these risks across our whole range of stakeholders.
As a public company, we seek to offer an attractive investment proposition for
investors. As most of our shareholders hold our shares through income-focused
investment funds, we are conscious of the importance of delivering an attractive
and sustainable dividend to our investors. Debt-holders also want confidence in
our ability to service our debt costs. We also recognise the benefit of an investment
that offers clarity and consistency of performance.
– The ORSA (Own Risk and Solvency Assessment) process is fully embedded across the Group. It provides a
clear articulation of our risk appetite, ensures that strong risk oversight applies on an ongoing basis, and acts
as a key input to inform risk-based decision making.
– We have enhanced the Group’s Cyber Response Framework and performed simulation testing.
– Delivered our continuous improvement regime regarding how we manage risk across the Group, supported
by our annual systems of governance review.
A JUST TRANSITION TO A SUSTAINABLE GROUP
Whilst we recognise the urgency for change and the opportunities that can arise from
transitioning to a low-carbon economy and environmentally sustainable society, our work will
be guided by key principles of a just transition, ensuring the most vulnerable are not left behind.
Further information on what we are doing and the outcomes are included on pages 74 to 91 and in our
Annual Sustainability Report.
30
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
THE OUTCOMES
– Netherlands: Waard launched its digital customer portal in the year, making
it easier for customers to access documents. Scildon simplified its product
portfolio and further digitalised its customer and advisor portals. In 2025,
the Group intends to merge our two Dutch entities, and will ensure that
customers continue to receive high quality service over this change period,
and into the future as part of a larger, more sustainable combined business.
– Where customer complaints arise, we have continued to manage them
in accordance with the appropriate regulatory practice.
– We have closely monitored any regulatory developments to ensure
we continue to treat our customers fairly in accordance with changing
regulatory requirements.
– Remained active in the M&A market and completed one further value adding
UK acquisition in 2024.
– Monitored our leverage ratio, ensuring it remains in line with our ambition
of 30% over the medium to longer term.
– Generally, a low level of complaints across the Group
has continued.
– Transparent customer communications, supporting better
customer outcomes.
– Good ongoing service levels over the course of the year,
with a high level of customer satisfaction.
– More individually adapted communication and services,
leading to higher customer engagement.
– Delivered positive investment returns for customers.
– Ongoing constructive relationships with UK, Swedish
and Dutch regulators.
– Continued adherence to internal governance policies
and principles.
– Continued oversight of the Group’s sustainability agenda
and targets.
– The UK division met the 31 July 2024 deadline for the
closed-book operations to comply with the FCA’s
Consumer Duty regulation. The division is also on
track to meet the 31 March 2025 deadline for the
FCA’s Operational Resilience regulation.
– Strong closing Group Centre liquidity holdings at the end
of 2024 of £109m, significantly exceeding our internal
buffer. Pro forma Group Centre liquidity of £130m forecast
30 June 2025, after allowing for the expected receipt
of further divisional cash remittances, net of certain
Group Centre costs.
– Dividend growth track record continues, with 3% dividend
per share growth in 2024.
– Completed a further acquisition during 2024, adding
additional value and cash flow to the Group.
– TSR of 17.4% delivered for 2022-24 (2021-23: 14.7%).
– Robust solvency coverage over the course of the year.
– Ongoing constructive dialogue with regulators across the
different territories in which the Group operates.
– Strong results from the annual review of the systems of
governance across the business.
Risk management is at the heart of what we do and embedded within our robust Governance Framework.
– Materially compliant with DORA requirements in Sweden
and the Netherlands by the January 2025 deadline, with
further activity during 2025 to fully embed into operations.
– Reviewed compliance with the guidance of the FCA’s
anti-greenwashing rule, as part of the Sustainability
Disclosure Requirements and investment labels.
– Progressed our implementation of the Corporate Sustainability
Reporting Directive in our Dutch entities and continued to
review the timeline of other frameworks. We are considering
the impact of the EU Omnibus proposals announced in
February 2025, which would mean we would no longer
have to implement CSRD across the Group.
31
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Section 172 statement
The directors of Chesnara believe that they have acted in a way that they consider, in good faith,
would be most likely to promote the success of the Company for the benefit of its members as
a whole, and in doing so have had regard (amongst other matters) to:
a) the likely consequences of any decision in the long term;
b) the interests of the Company’s employees;
c) the need to foster the Company’s business relationships with suppliers, customers and others;
d) the impact of the Company’s operations on the community and the environment;
e) the desirability of the Company to maintain a reputation for high standards of business conduct; and
f) the need to act fairly between members of the Company.
The following disclosures provide further insight supporting the above statement over the course
of 2024. The disclosures have been split into three key sections:
The Board’s approach
The overall approach taken by the Board in ensuring that the requirements of Section 172 are met.
Key stakeholders
This covers the key stakeholders that the Board considers are important to the long-term success
of the Company; how the Company depends on these stakeholders; how key stakeholders are
impacted by the decisions of the Company; and how we engage with those stakeholders.
Significant decisions
This covers the significant decisions made by the Board during the year and how the directors
have considered key stakeholders and discharged their responsibilities under Section 172 in
making these decisions.
The Board’s approach
Role of the Chair
As described on page 99 within the Corporate Governance Report, it is the role of the Chair to lead
the Board in the determination of the Group’s strategy; to ensure that the Board is furnished with
sufficient information in order to support its decision making; and to ensure that relevant stakeholders
have been taken into account when making decisions.
Business planning
The principal process supporting the longer-term decision making of the Board is the Group business
planning process. This is a three-stage process that takes place throughout the course of the year,
as follows:
Our Section 172 reporting seeks to communicate the Board’s approach to decision making, an overview of our key stakeholders and how stakeholders
are considered by the Board when making decisions.
This section of the Annual Report and Accounts is therefore designed to provide insight into how the directors of Chesnara have discharged their
responsibilities under Section 172 of the Companies Act, and having had regard to the matters set out in Section 172 (1) (a) to (f) when performing
their duties.
SECTION 172 • THE BOARD’S APPROACH
STAGE 3
DETAILED BUSINESS PLANS SUPPORTED
BY FINANCIAL PROJECTIONS
Final business plans are then produced at both a divisional and Group level. These include
the agreed operational deliverables for the short to medium term and their associated risks
and opportunities, alongside the associated financial projections.
STAGE 1
STRATEGIC PLANNING
The preliminary stage of the business planning process allows the Board to review
and challenge the strategy of the Group.
STAGE 2
REVIEW AND CHALLENGE OF DIVISIONAL
AND GROUP OPERATIONAL PLANS
Following completion of the strategic planning, including any associated feedback to the
operating business units, operational plans are developed by the respective management
teams and reviewed by the Group Senior Leadership Team. The key objectives of these
operational plans are explicitly linked to the strategic objectives of the Group, ensuring that
the key management actions support the delivery of the Group strategy.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
32
STRATEGIC REPORT
The business planning process for 2024 confirmed that the Board continues to support the Group’s
strategic objectives:
The strategy of the Group has regard for the following core culture and value principles:
– Fair treatment of customers
– Responsible risk-based management for the benefit of all of our stakeholders
– Providing a competitive return to our investors
– Robust regulatory compliance
– Maintaining adequate financial resources
– A just transition to a sustainable group.
These are described in more detail on pages 26 to 31.
Each key objective within the Group business plan is supported by relevant information to support
the review and challenge process by the Board, having regard to the factors required by Section 172
(1) (a) to (f).
Further information on how the Board considers each key stakeholder group is provided on
pages 34 to 36.
The projected financial and non-financial outcomes of the business plan process allows the Board
to consider both the shorter-term and longer-term consequences of the plan in the context of all
our stakeholders. The key financial items/metrics that the Board considers are shown below.
Key financial metrics in the business planning process:
CASH GENERATION†
RETURN ON CAPITAL
SOLVENCY COVERAGE
SHAREHOLDER DIVIDENDS
ECONOMIC VALUE†
DIVISIONAL CASH REMITTANCES
IFRS PROFITS
EXPENSES
IFRS CAPITAL BASE & GROUP LEVERAGE
NEW BUSINESS CONTRIBUTION†
RETURN ON IFRS EQUITY
† Alternative Performance Measure (APM) used to enhance understanding of financial performance.
Further information on APMs can be found in the additional information section of this Annual Report and Accounts.
1
MAXIMISE VALUE FROM EXISTING BUSINESS
Managing our existing customers efficiently whilst delivering good outcomes is core
to delivering our overall strategic aims.
2
ACQUIRE LIFE AND PENSIONS BUSINESSES
Acquiring and integrating companies into our business model is key to continuing
our growth journey.
3
ENHANCE VALUE THROUGH PROFITABLE NEW BUSINESS
Writing profitable new business supports the growth of our Group and helps mitigate the
natural run-off of our book.
Governance Framework and Board reporting
Long-term decision making of the Board is supported by the Group’s Governance Framework,
which is set out in the Corporate Governance Report.
Regular Board meetings and robust reporting requirements (underpinned by a schedule of matters
reserved for the Board) allow the Board to operate effectively, fulfil its responsibilities (including
in relation to Section 172 (1) (a) to (f) of the Companies Act 2006) and provide valuable oversight.
One of the key additional sources of reporting to the Board is the Group’s quarterly management
information (MI) pack. This is designed to be a ‘one stop’ holistic view of the Group as a whole and
covers, amongst other things, the following items of relevance to the requirements of Section 172:
– Divisional updates, including financial results, business plan progress, key customer initiatives,
regulatory interactions, operational performance (including updates on key outsourcer, supplier and
employee matters);
– Matters pertaining to investor relations;
– Consolidated financial results;
– Investment performance analysis, covering both customer and shareholder returns;
– Progress updates on key objectives within the business plan and projects;
– Risk matters affecting the Group; and
– Sustainability updates.
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CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
The following table identifies the key stakeholders that the Board considers are important to the long-term success of the Company. It provides
insight into how the Company engages with these stakeholders and how they are considered when making strategic decisions. Matters arising in
relation to each stakeholder group are communicated by management to the Board in a management information (MI) pack at each Board meeting.
SECTION 172 • KEY STAKEHOLDERS
The support of our debt
investors facilitates the
pursuit of our long-term
strategy, including the
potential for raising new
capital for acquisition
purposes.
Any business decision that is made that affects
the Group’s long-term sustainability may be of
significant interest to our debt investors, and any
decision that could reduce capacity is likely to
reduce confidence in the Group.
Having a strong and stable
shareholder base is critical
for the long-term success
of the Group. It allows us
to pursue our long-term
strategy, including the
potential for raising new
capital for acquisition
purposes.
Any business decision that is made that affects
either the future dividend payments of the
Group or its long-term sustainability may be
of significant interest to our investors. If either
of those elements are put under pressure, it
could reduce confidence in the Group, and could
lead to a reduction in shareholder returns.
We primarily engage with debt investors through the following key channels:
– Formal public financial reporting, which we produce every six months.
– Meetings with debt investors, including as part of investor roadshows after
formal results and at investor conferences.
Debt investor feedback
Fitch Long-Term Issuer
Default Rating
Gearing ratio
Price of listed debt
instruments
Cash generation and
Solvency Coverage Ratio
Net zero targets
We primarily engage with investors through the following key channels:
– Formal public financial reporting, which we produce every six months.
– Meetings with current and potential investors during the year, including as
part of investor roadshows after formal results and at investor conferences.
– Our Annual General Meeting.
– Periodically, we hold ‘investor days’ with our shareholders and other market
related stakeholders, which are designed to provide further insight into
our business and give investors an opportunity to meet a wider range
of Chesnara senior management.
– We will periodically contact investors for feedback in advance of formal
publication of matters, such as material changes to our Remuneration
Policy. If we seek to raise additional debt or equity, our investors are actively
engaged at the appropriate point in the process.
Dividend growth
Share price
TSR
Significant investor
purchases/sales
Cash generation
Solvency Coverage Ratio
Economic Value
IFRS Capital Base &
Leverage
IFRS Pre-Tax Profit
Investor feedback
Net zero targets
Our customers are key to
the long-term success of
the Group, both in terms
of retaining existing
customers and attracting
new ones to our open
books of business. Without
our customers, the Group
would cease to exist.
Our primary concern is ensuring that our
customers receive consistently strong outcome
from a well-capitalised and financially secure
company. Our financial management and culture
& values statements demonstrate that this is
embedded across the Group. We closely manage
all aspects of the customer journey, covering
customer experience, communications,
policyholder expectations, product value for
money, and our solvency coverage levels.
Our primary engagement with customers comes from a combination of
outward communication, coupled with customer contact, be it through
policy changes, queries or claims.
From an outwards communication perspective, our aim is to ensure we
provide transparent and understandable information to our customers,
be it in the form of regular written letters/booklets, information available
on our website or through any other material made available to customers.
From the perspective of responding to customer contact, we seek to make
our processes as helpful to the customer as possible, mindful of different
customer group preferences. This involves ensuring that our customer
contact staff are well trained for telephony or email correspondence and
making other technology available where feasible (such as the use of apps).
We obtain feedback on the way we engage with our customers through
periodic market research or customer focus groups.
Policy lapses
Complaints
Service levels
Customer survey scores
Policyholder investment
returns
Customer engagement
CUSTOMERS
EQUITY INVESTORS
DEBT INVESTORS
IMPACT OF BUSINESS
ON THE STAKEHOLDER
DEPENDENCIES OF
BUSINESS ON THE
STAKEHOLDER
HOW WE ENGAGE
WITH THE STAKEHOLDER
KPIs MONITORED
RELATING TO THE
STAKEHOLDER
† Alternative Performance Measure (APM) used to enhance understanding of financial performance. Further information on APMs can be found in the additional information section of this Annual Report and Accounts.
34
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
It is worth noting that not all stakeholders have the same interests and whilst there is considerable overlap, they can at times conflict. The Board’s role
is to weigh these factors up when setting the strategy and operational plans of the business.
IMPACT OF BUSINESS
ON THE STAKEHOLDER
DEPENDENCIES OF
BUSINESS ON THE
STAKEHOLDER
HOW WE ENGAGE
WITH THE STAKEHOLDER
KPIs MONITORED
RELATING TO THE
STAKEHOLDER
Key suppliers and partners include
our banks, outsourcers, intermediaries
and professional services providers.
We depend on them for various aspects
of our business model.
Banks: Access to ongoing short-term
lending to support our business.
Outsourcers: Supporting the day-to-day
policy administration, customer contact
and associated accounting of our
business, primarily in the UK, together
with the decarbonisation of their
operations to support our own net
zero plans.
Intermediaries and partners: Distributing
our products in the UK, Sweden and
the Netherlands.
Suppliers: Support and advice from
our key suppliers, including professional
services, together with the
decarbonisation of their operations
to support our own net zero plans.
Derivative counterparties: Provision
of financial instruments to enable us
to manage our risk profile in line with
our tolerances.
Rating agency: Fitch has assigned an
investment grade credit rating for the
Group’s subordinated debt, which
supports the Group in raising capital
at attractive rates of interest.
Asset managers: Support the delivery
of positive investment outcomes for
customers through the management
of certain assets on behalf of the Group
and its divisions and in the transition
of our investment portfolio to net zero.
Our various suppliers and partners are
impacted by the Group as follows.
Banks: Our banking partners earn a return
on the facilities they provide and take
a keen interest in ensuring we manage
our finances and strategy in a way that
minimises their risk of loss.
Outsourcers: Our outsourcers have an
opportunity to share in the growth of the
Group through further acquisitions or
portfolio transfers. Our outsourcers rely on
the ongoing financial stability of the Group
to ensure that the services they provide
continue to be paid for by the Group.
Intermediaries and partners: Selling our
products is a source of immediate and
ongoing revenue for our intermediaries.
When dealing with the end customer,
intermediaries and partners rely on quality
information being provided by us in a
timely manner.
Suppliers: For key suppliers of the Group,
we are likely to be an important source
of revenue, and therefore the Group’s
ongoing success in terms of delivering its
growth plans and remaining financially
stable will be of interest to our suppliers.
Derivative counterparties: They manage
their own risk exposures through the
derivative instruments or make a return
as market makers for the trades.
Rating agencies: Any business decision
that affects the Group’s long-term
sustainability may be of significant
interest to Fitch and could impact the
credit rating assigned.
Asset managers: Our asset management
partners earn fees on the assets they
manage and have an opportunity to share
in the success of the Group through
additional assets brought into the Group
through new business and acquisitions.
Banks: Our regular engagement with our banks takes the form of quarterly covenant
compliance reporting, which is required for our existing Revolving Credit Facility
(RCF) debt arrangement. On an ad-hoc basis, we engage with our banks in the
event of a change in our business or to seek new funding, say to support an
acquisition. In the event of an acquisition where we would like to secure more
short-term debt funding, we work with banks and other advisors to ensure that we
are providing relevant information to support the banks’ decision making process.
Outsourcers: We view having strong, open and honest relationships with our
outsourcers as key to the long-term success of our business. We engage with our
outsourcers through various scheduled meetings, focusing on a combination of
specific function-driven relationship meetings and wider meetings focusing on the
overall relationship. It is important that our outsource partners are suitably informed
regarding business developments in the Group, and that the Group is aware of
any relevant business changes in our outsourcers. This ongoing communication
enhances the relationships and works towards maintaining the longer-term success
of the Group. We are also working with our outsourcers to ensure they support the
delivery of our emission targets.
Intermediaries and partners: We strive to work closely with our intermediaries,
engaging in a variety of ways. In both Movestic and Scildon, all intermediaries have
access to a partner website, where they can administer customer processes and
obtain information as required. The Swedish division also hosts annual meetings
to engage with intermediaries, facilitating two-way discussion around products,
services and market developments. Other areas of engagement include frequent
meetings with intermediaries and partners, on an individual basis.
Suppliers: A number of the Group’s suppliers take the form of the provision of
a service or advice as opposed to the supply of goods. For these suppliers, our
engagement focuses on ensuring that the service or advice is fit for purpose and
meets the intended scope. This typically involves up-front interaction in scoping
the work, coupled with close monitoring of progress throughout the duration
of the services. The Group ensures that it adheres to supplier payment terms.
We are also engaging with our key suppliers to understand how they will be able
to support the delivery of our sustainability targets and goals.
Derivative counterparties: Once a risk exposure has been identified that we want to
manage, we engage with the derivative counterparty about the structures available
to mitigate that risk. This engagement process continues through to execution of the
trade and on an ongoing basis via regular reporting during the life of the instrument.
Rating agencies: In addition to the annual ratings review process, we regularly
engage with Fitch to discuss the strategy, operational and financial performance
of the Group. We also liaise with Fitch on an ad-hoc basis in advance of any key
events, such as acquisitions or other key corporate activity.
Asset managers: Regular meetings are held with our main asset management
partners to review the investment mandates in place with significant focus on
the underlying performance of the investments and their fit with our sustainability
objectives.
Leverage ratio†
EcV position†
Solvency levels
IFRS Return on Equity
Service levels
Adherence to timescales
Cost efficiency
Quality of service
Credit rating applied
to Chesnara plc and
its subsidiaries
Investment performance
Financed and
operational emissions
of key third parties
SUPPLIERS AND PARTNERS
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CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
SECTION 172 • KEY STAKEHOLDERS
Compliance with regulatory
requirements is fundamental
to the success of the Group.
Without it, we would not
be able to maintain our
existing status as a life
and pensions provider.
Our business relies on
natural capital and the
environment, both for our
operations and our
investments. Changes in the
natural environment and the
effects of climate change
can potentially affect the
way we operate our
businesses, and the returns
to our customers and
shareholders. We are
committed to applying
sustainability-based decision
making across the Group.
The manner in which the Group manages itself,
both from a prudential and conduct perspective,
will dramatically affect how regulators view and
interact with Chesnara and its subsidiaries. The
higher risk that the Group is deemed to be to the
regulator, the more focus that Chesnara and its
subsidiaries are deemed to require. In addition,
through being a member of the ABI, the Group
also has the potential opportunity to respond to
and shape future regulatory change in the UK.
Our main impact is from the assets in which
we and our policyholders invest and their carbon
and wider impact on nature. For our own
operations, the main category of emissions are
those arising from goods and services purchased
from suppliers. The impact of our investment
decisions and the investment choices made by
our customers are wide-ranging and will continue
to be a key focus area as we transition to become
a sustainable group and work towards our net
zero targets.
Our engagement with regulators generally takes the following forms:
– Regulators across the Group typically have regular routines and practices
in place to support the delivery of their oversight objectives. This typically
takes the form of periodic meetings with management, and involves the
Group furnishing regulators with relevant information, such as quarterly
and annual financial risk reporting. The Group fully supports this process.
– The Group management will also typically engage with regulators as and
when required should there be a business update that would warrant this;
for example at the appropriate point during an acquisition process.
– Annual regulatory college meeting where a number of the Group’s
regulators meet with the Group CEO and CRO.
We impact the planet and natural environment through the business
decisions that we and our policyholders make. Ensuring that sustainability
is at the heart of our decision making is critical to ensuring that we consider
the planet and natural environment.
Our business units are working closely with their respective fund managers
to fully embed sustainability within our own investment decision making
criteria. For policyholders who choose where they wish to invest, we
provide access to a range of sustainability-focused funds, and we continue
to provide relevant material so that they can make informed decisions.
In regard to our own operations, our business units are taking practical steps
to reduce our emissions and minimise the impact that we have
on the environment, as described on pages 74 to 91.
Climate change risk is monitored as part of our risk identification and
assessment processes (see pages 60 to 67 and 74 to 91).
Relationship with
supervisory team
Formal feedback
from regulators
CO₂e financed and
operational emissions
Climate Value at Risk
Energy consumption
ESG risk scores
Value of assets invested
within our definition of
positive solutions
REGULATORS
THE PLANET AND NATURAL ENVIRONMENT
Our people are a key asset
and drive the development
and deliver the strategy of
the Group. We recognise
that to be able to meet the
expectations that we have
set ourselves, we need to
ensure that we continue to
attract, promote and retain
high quality candidates.
Without high performing
and motivated staff, the
Group would not be
able to deliver against its
strategic aims.
We aim to provide a place of work that supports
and develops the Group’s employees, and we
recognise that the Group’s day-to-day culture and
its overall remuneration and benefits package also
have a significant effect on employees.
Chesnara and its subsidiaries have various mechanisms in place to ensure
appropriate levels of engagement exist with employees. This involves:
– Completing staff feedback surveys.
– Holding regular update briefings covering matters such as business
performance, policy updates or any other matters that are relevant
to employees.
– Holding regular employee forums to discuss any employee-related matters.
– Having an appointed non-executive director (NED) who is responsible
for employee-related matters and engages with local HR directors and
employee forums.
– Ensuring that we have relevant employee policies in place and that these
are available to our employees.
– Having robust whistleblowing policies in place. Our corporate and social
responsibility statement on pages 71 to 91 provides further information.
Staff surveys
Feedback from employee
forums
Feedback from
appointed NED
Staff turnover
Diversity information
STAFF
IMPACT OF BUSINESS
ON THE STAKEHOLDER
DEPENDENCIES OF
BUSINESS ON THE
STAKEHOLDER
HOW WE ENGAGE
WITH THE STAKEHOLDER
KPIs MONITORED
RELATING TO THE
STAKEHOLDER
36
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
The principal process that the Board uses to make shorter and longer-term decisions is the Group business planning process. Key decisions also arise
outside of the business planning process depending on how the business develops during the year and the challenges and opportunities that it faces.
The table below lists the key decisions made by the Board during 2024 and how the directors have considered the factors required by Section 172 in
making these decisions, including their regard for matters set out in Section 172(1)(a) to (f).
SECTION 172 • SIGNIFICANT DECISIONS
SIGNIFICANT
DECISION
OTHER STAKEHOLDER
CONSIDERATIONS
PROPOSED
MERGER OF
SCILDON
AND WAARD
OVERVIEW
During the year, the Board approved the potential merger of the two Dutch subsidiaries, Scildon and Waard, and submission of the
required documents to local regulators for approval. The merger is expected to complete in July 2025. The emergent Dutch division
will trade under the Scildon brand.
KEY CONSIDERATIONS
a) Customers’ interests will continue to be protected or enhanced.
b) The proposed merger will enhance the long-term prospects of the business from efficiencies that scale will bring.
c) The interests of employees within the two entities was a significant consideration during the process, as the merger will result in
organisational restructuring. Management engaged with employees through the Works Council in Scildon following the decision
and a positive opinion was received from their independent considerations. In addition, the Nomination & Governance Committee
considered the proposals for the senior roles.
d) A key part of the implementation plan will be ensuring the merger brings no detriment to customers.
e) The merged entity will trade under the Scildon brand which has a strong reputation in the Netherlands for high standards of
business conduct.
PRIMARY BENEFICIARIES
Customers: The proposed merger should create a larger, more sustainable organisation that can even better support the needs
of current and future customers.
Shareholders: The merger is expected to improve the Solvency Coverage Ratio, cash generation and EcV Earnings of the Group
in the short and longer term.
Staff: The merger will impact the
day-to-day work for employees of
Scildon and Waard. Implementation
plans are being put in place with steps
included to make this transition run as
smoothly as possible.
Customers: Throughout the transitionary
period of the merger, ensuring that it
does not detrimentally affect customers
and continuing to foster the relationship
with our customers is a priority.
Regulators: The Dutch regulator,
De Nederlandsche Bank (DNB), will
be interested in ensuring that the
merger does not cause any prudential
or conduct issues.
ACQUISITION
ANNOUNCED
IN THE YEAR
OVERVIEW
The Board is required to approve any acquisitions that the Group enters into. In addition to this, the Board reviews and approves any
‘firm’ material acquisition offers.
In December 2024, the UK division reached agreement with Canada Life UK to acquire a closed portfolio of unit-linked bonds and
legacy pension business with total AuM of £1.5bn. The deal was initially executed via a reinsurance agreement, with the policies
expected to transfer to Countrywide Assured through a Part VII insurance business transfer process once court approval is obtained.
KEY CONSIDERATIONS
a) The UK division is largely closed to new business; therefore, acquisitions are the primary source of growth for the business. As such,
this decision improves the long-term prospects of the division which benefits multiple shareholders including staff, our UK suppliers
and partners.
b) The impact on employees of completing the acquisition was considered through the process and in discussion with the seller.
c) Ensuring that customers would not be adversely affected by the acquisition and continue to receive good outcomes was fundamental
to the decision making process. We consulted with our regulators in advance of completing the acquisition.
d) Our due diligence process in assessing potential acquisitions includes an initial and ongoing assessment of sustainability criteria
against our goals and commitments.
e) The Board considered how the acquisition would impact the business’ reputation for high standards of business conduct.
PRIMARY BENEFICIARIES
Customers: The customers of the acquired portfolio will wish that their policies continue to be administered in line with expectations,
and that they continue to be prudently managed. As part of the Part VII process, we ensure all policyholders continue to receive the
same benefits in their existing policies with the same level of security after the transfer.
Shareholders: The acquisition resulted in a day 1 EcV gain of £11m (in excess of the expected day 1 gain as quoted in the
announcement of £8m).
Staff: The decision is of interest to the
staff of our existing Group given it
supports our growth ambitions which
provides greater financial stability and
development opportunities.
Regulators: The FCA and PRA are
responsible for approving elements of the
Part VII documents and ensuring that the
Company continues to remain compliant
with regulations during the reinsurance
period and after the Part VII.
Suppliers: Our outsource partner, SS&C,
will be administering the policies once
the Part VII is complete, and therefore
has an interest in the acquisition. Our
ratings agencies were engaged in
advance of the completion of the
acquisition.
IFAs: Financial advisors who
recommended these products to the
impacted customers will want to feel
confident that the products will continue
to be supported.
37
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
SIGNIFICANT
DECISION
OTHER STAKEHOLDER
CONSIDERATIONS
STAFF AND
REMUNERATION
DECISIONS
OVERVIEW
Over the course of the year, there were a number of significant staff and remuneration related decisions, the most notable of which are:
– Tom Howard was appointed as a director of Chesnara plc. He joined as Group CFO in April 2024.
– Dave Rimmington stood down as a director and as Group Finance Director.
– Stefan Klohammar was appointed as CEO of the subsidiary Movestic Fonder AB in September 2024.
– Pauline Derkman and Edwin Bekkering are proposed as the CEO and CFRO of the future merged business in the Netherlands, subject to regulatory approval.
– UK staff were invited to a 2024 issuance of the approved save as you earn (SAYE) scheme.
– Salary increases across the UK as part of the annual review.
KEY CONSIDERATIONS
Each decision was discussed by the Board giving consideration as to the relevant merits of each item and whether the cost was appropriate given
the current economic climate. For each of the decisions, the impact, the benefits and the position in the market and relative to competitors were
considered (where appropriate).
a) The Board considered the long-term impact of their choice of leadership and remuneration.
b) The impact of expanding employees’ benefits packages on employees was considered by the Board.
c) The Board considered the impact the Group’s leadership has on the Group’s reputation for high standards of business conduct.
PRIMARY BENEFICIARIES
The appointment of appropriately skilled and experienced Board members and senior leaders is in the interest of all our stakeholders.
Staff: The primary stakeholder affected by the SAYE decision is the UK workforce, as this directly affects their benefits packages.
Shareholder: Investment
in staff provides a
sustainable environment
and workforce, which in
turn is expected to have
a positive impact on the
business. Both in advance
of the 2024 AGM and
following shareholders’
votes on the 2023
Directors’ Remuneration
Report, the Chair of the
Remuneration Committee
engaged with major
shareholders and a
number of changes and
clarifications were made
as a result.
GOVERNANCE
CHANGES
OVERVIEW
Mindful of non-executive director tenures, during the year we commenced the search for a new independent non-executive member of the Chesnara Board.
In January 2025, Gail Tucker was appointed as a NED and a member of the Audit & Risk Committee, and the Nomination & Governance Committee.
Gail also joins the Board of Chesnara’s UK subsidiary, Countrywide Assured plc as a Non-Executive Director and it is intended will chair its Audit &
Risk Committee subject to regulatory approval.
Jane Dale, Non-Executive Director, will stand down at the AGM having completed her 9-year term. At the same time, Gail Tucker will be appointed
as Chair of the Audit & Risk Committee.
In addition, there have been a number of other changes: Karin Bergstein stood down as a Non-Executive Director of the Movestic Board, and Mark
Hesketh stood down as a Non-Executive Director of the Chesnara Board and was appointed as the Chair of the CA Board.
KEY CONSIDERATIONS
Governance Code guidance, as well as skills, experience, geographical knowledge & capability, diversity, segregation and adequate oversight were
all taken into account by the Nominations & Governance Committee in its deliberations. So too was the broader skills matrix of the Board as a whole.
PRIMARY BENEFICIARIES
Strong governance and a breadth of knowledge, experience and capability in the Board and its committees puts the Company in the best possible
position to drive positive outcomes for all our stakeholders.
APPLICATION
OF CAPITAL
MANAGEMENT
AND DIVIDEND
POLICIES
OVERVIEW
Every year, the Board is required to consider what level of dividends are appropriate for shareholders, whilst also ensuring that it continues to adhere
to its own Capital Management Policy. Dividend proposals are subject to Board approval, with proposed final dividends being included in a resolution
voted for at the Annual General Meeting.
During 2024, the Board approved the year end 2023 final dividend, amounting to 15.61p per share, and the interim 2024 dividend of 8.61p per share.
KEY CONSIDERATIONS
The Directors’ Report on page 135 provides information on the key considerations made by the Board when approving dividends. The aim is to
satisfy investor expectations by delivering an attractive dividend, with steady growth where possible. This dividend cannot and will not be delivered
at the expense of financial security, be it to solvency or liquidity. In the process of approving a dividend, the Board is presented with a paper by
management which considers the various aspects of the dividend decision, including cash generation, solvency, leverage, the Group’s acquisition
strategy and investor expectations.
a) The Board ensures that the payment of a dividend does not jeopardise the long-term prospects of the Group.
b) The AGM allows Chesnara to engage with shareholders, ensuring fair consideration across all members, and informs dividend and capital
management decisions.
PRIMARY BENEFICIARIES
Shareholders are the primary beneficiaries of dividends.
Banks: Our bankers are
considered in terms of the
impact of distributions on
our liquidity and solvency
position.
Regulators and
customers: These
stakeholders are
considered in the context
of ensuring that the
solvency position of the
Group remains robust.
SECTION 172 • SIGNIFICANT DECISIONS
38
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
SIGNIFICANT
DECISION
OTHER STAKEHOLDER
CONSIDERATIONS
DECISIONS
UNDERPINNING
REGULATORY
ACTIVITIES
OVERVIEW
Over the course of the year, a number of key regulatory projects were progressed or completed. The most material were:
– Consumer Duty in the UK – with a deadline of 31 July 2024 to comply for closed books.
– EU DORA regulations which entered into force 17 January 2025.
KEY CONSIDERATIONS
Consumer Duty – The CA Board were responsible for setting clear objectives for consumer outcomes and ensuring these were aligned with the
overall business strategy. The CA Board received appropriate MI on the relevant customer segments to effectively assess customer outcomes.
Material decisions were put to the relevant Board or committee for approval.
DORA – The local Boards were responsible for setting and approving the digital operational resilience strategy and ensuring this aligns to the overall
business objectives. This involved determining the Governance Frameworks for risk identification and mitigation, incident reporting and the criteria
for identifying critical ICT suppliers.
PRIMARY BENEFICIARIES
Customers, as any changes made to processes or policies are likely to impact them.
Regulators have a
vested interest to
ensure compliance.
EMBEDDING
SUSTAINABILITY
INTO OUR
BUSINESS
OVERVIEW
We have continued to embed sustainability into our processes and decision making across the Group. This is in line with our commitment to become
a sustainable Chesnara, including being a net zero Group by 2050.
In reaching its decision to continue with our sustainability strategy, the Board considered the rationale for investing time and expenses in becoming
a sustainable Chesnara. The Board, supported by the oversight and direction provided by the Group Sustainability Committee, has considered the
importance of managing the transition to net zero of the investments we hold, being an organisation where all stakeholders feel welcome and
decarbonising our own operations and supply chain. The strategic importance of these activities, together with their potential to provide risk
mitigation for issues such as climate change, continued to be assessed by the Board.
Notable areas of focus during 2024:
– Determining our interim financed emissions reduction target, as detailed in our 2023 Annual Report and Accounts;
– In addition to our existing training schedule, providing sustainability training for all employees across the Group to ensure that all colleagues have
a foundation of knowledge of key issues such as climate change, biodiversity loss, equality, diversity and inclusion and key governance principles;
– Embedding sustainability as a key consideration in the acquisition process for potential businesses and portfolios;
– Enhancing our climate risk assessment to further understand the resilience of our investment portfolio to climate change;
– Developing our initial transition plan, for publication later this year, which will detail the steps we will take to start the transition to net zero; and
– Engaging with our key asset managers and partners in our supply chain to understand their own plans and priorities.
KEY CONSIDERATIONS
a) Being a sustainable group helps to ensure our long-term success and therefore provides more certainty over long-term returns for shareholders.
b) The decision takes due account of the welfare of our colleagues, valuing the diverse needs and perspectives of this group of stakeholders.
It raises awareness of the relevance of sustainability in our day-to-day operations, providing opportunities to work in an organisation making positive
contributions to society and the planet.
c) Embedding sustainability provides customers with the confidence that we continue to do the right thing, alongside developing our sustainable
product offerings for policyholders looking for sustainable investment opportunities, and improves the sustainability of investment returns where
we are responsible for investment decisions. It also gives customers the benefit of more accessible and inclusive services.
d) A just transition to being a net zero organisation, and one which directs capital to positive solutions, delivers positive outcomes for the planet and environment.
e) Our sustainability practices confirm our commitment to meet our regulatory obligations and comply with disclosure requirements, in line with our
reputation for good business conduct.
PRIMARY BENEFICIARIES
All shareholders are impacted by the Group being a sustainable business.
Asset managers:
Our asset managers
are fundamental to the
transition to net zero for
financed emissions and
sustainability criteria forms
part of our selection and
oversight processes. We
will continue to have active
engagement to ensure
that our targets are met.
Suppliers and
outsourcers: Sustainability
criteria forms part of our
supplier selection and
oversight processes.
39
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
BUSINESS REVIEW UK
The UK division manages
c290k policies covering linked
pension business, life
insurance, endowments,
annuities and some with-profit
business. The division is largely
closed to new business,
generating future value
through small levels of new
business, investment returns
on unit-linked policies,
increments to existing policies
and periodic acquisitions.
MAXIMISE VALUE FROM
EXISTING BUSINESS
Capital & value management
The division has continued the programme of migrating the existing books
of business to SS&C Technologies as part of the long-term strategic
partnership entered into in 2023. This now includes the migration and
integration of the Canada Life acquisitions. In December, the UK division
extended the scope of its existing mass-lapse reinsurance arrangements,
further reducing its associated capital requirements.
Customer outcomes
The division met the 31 July 2024 deadline for the closed-book operations
to comply with the FCA’s Consumer Duty regulation. This regulation sets
high standards for consumer protection and focuses on ensuring firms act
in a way to deliver good outcomes for customers. The division is also on
track to meet the 31 March 2025 deadline for the FCA’s Operational
Resilience regulation.
Governance
The insurance business of CASLP was transferred to Countrywide Assured
on 31 December 2023. CASLP Limited was de-authorised in Q3 2024, and
the remaining assets were subsequently transferred to Countrywide
Assured. The Company was dissolved in January 2025. The division has
supported the wider Group’s sustainability programme over the course of
the year and rolled out training for staff across the business to help embed
sustainability into day-to-day decision making.
KPIs
Commercial Cash Generation:
£40m
(2023: £49m)
SII ratio (pre dividend):
182%
(2023: 183%)
SII ratio (post dividend):
135%
(2023: 149%)
EcV Earnings:
£20m
(2023: £38m)
IFRS Pre-Tax Profit:
£28m
(2023: £3m noting the 2023 result
included a one off impairment charge
of £21m).
Dividend remittances
in 2024:
£35m
Analysis of the segmental movements
are available on pages 47 and 49 to 54.
FUTURE PRIORITIES
– Continued migration of the majority of the existing and the acquired
books of business to SS&C.
– Implementation of identified potential capital management actions.
– Finalisation of the operational resilience programme to ensure the
regulatory deadline of 31 March 2025 is met.
– Continued focus on delivering good customer outcomes and maintaining
strong customer service performance.
– Continued engagement with our asset managers on progress towards
net zero and investing in positive solutions and wider support of the
groupwide sustainability programme including focus on operations,
social purpose and reporting.
40
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
ENHANCE VALUE THROUGH
PROFITABLE NEW BUSINESS
The division generated positive new business profits, through significantly
increased volumes of the on-platform onshore bond. This resulted in a
New Business Contribution of £2m.
Increased demand for the onshore bond is being driven in part by changes
to personal tax allowances. The Autumn Budget 2024 strengthened the
attractiveness of the product due to changes in capital gains tax and
inheritance tax.
The division has developed a suite of advisor-facing technical product
documents and a tax tool which will go live in early 2025 and continues
to work on opportunities to improve the advisor and customer proposition
with platform partners.
ACQUIRE LIFE AND
PENSIONS BUSINESSES
In December 2024, the UK division reached agreement with Canada Life
UK to acquire a closed portfolio of unit-linked bonds and legacy pension
business with a total AuA of £1.5bn. This transaction is being initially
executed via a reinsurance agreement, with the policies expected
to transfer to the Group through a Part VII insurance business transfer
process following court approval.
During 2024, work progressed on the Part VII transfer of the Canada Life
individual protection business acquired in May 2023 under a reinsurance
agreement. The transfer completed on 24 February 2025 following
court approval.
KPIs
APE:
£13m
(2023: £7m)
New Business Contribution:
£2m
(2023: £2m)
KPIs
Acquisitions in the year
have added:
– Day 1 OF: £10m
– Day 1 EcV: £11m
(£3m in excess of the expected
day 1 gain as quoted in the
announcement of £8m)
– AuM: £1.5bn
– Policies: 17,000
In the last three years,
acquisitions have added
£39m of EcV at group level.
FUTURE PRIORITIES
– Continue to enhance the customer and advisor proposition.
– Expand distribution of the onshore bond with existing and new
platform partners.
– Work with our strategic outsource partner to leverage technology to
generate administrative efficiencies.
FUTURE PRIORITIES
– Support the Group in identifying and delivering UK acquisitions.
– Continue to deliver strong financial outcomes from past acquisitions.
41
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
BUSINESS REVIEW
SWEDEN
Our Swedish division consists
of Movestic, a life and pensions
business which is open to
new business. It offers
personalised unit-linked
pension and savings solutions
through brokers, together
with custodian products
via private banking partners
and is well regarded within
both communities.
MAXIMISE VALUE FROM
EXISTING BUSINESS
Capital & value management
Over 2024, the division saw growth in AuA driven by positive total net client
cash flows and favourable investment markets. High transfer activity within
the Swedish occupational pension segment has continued, affecting both
inward and outward transfer flows. Inflows within both the unit-linked and
the custodian lines grew compared to the prior year, generating a positive
net client cash flow.
Customer outcomes
During 2024, Movestic released an updated version of its digital service
which helps customers to plan their retirement, start withdrawing and
change how they receive their occupational pension. To enable increased
individual adaptation, more flexible terms for pension withdrawals were
launched during the year. An additional digital service within salary sacrifice
savings was launched during the year, and more customers than ever signed
up for individual pension advice within the ‘Movestic Freedom’ concept.
Governance
Movestic’s sustainability programme is aligned to the Group’s strategy and
commitments, forming the basis of Movestic’s own sustainability work and
targets. The EU commission adopted a new regulatory framework, Digital
Operational Resilience Act (DORA), and over 2024, work progressed on this
project to ensure compliance when it came into force. Work in the year also
concluded that Movestic is outside the scope of the EU-adopted Corporate
Sustainability Reporting Directive and the Global Minimum Tax regulations
which were implemented in Swedish law in 2024.
KPIs
Commercial Cash Generation:
£11m
(2023: £nil)
SII ratio (pre dividend):
153%
(2023: 153%)
SII ratio (post dividend):
151%
(2023: 147%)
EcV Earnings:
£31m
(2023: £7m)
IFRS Pre-Tax Profit:
£10m
(2023: £5m)
Dividend remittances
in 2024:
£7m
(payment in Q4 2024 and Q1 2025)
Analysis of the segmental movements
are available on pages 47 and 49 to 54.
FUTURE PRIORITIES
– Continue building solid and long-term sustainable value creation for
customers and investor stakeholders through a diversified business model.
– Continue offering modern and individually adapted high-quality solutions
within pension, savings and health insurance, and expand customer-
focused digital services.
– Increase the use of automation, streamline processes, and improve
administrative efficiency and control.
– Ensure group sustainability reporting processes are embedded into
everyday operations.
– Monitor developments in the regulatory landscape.
42
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
ENHANCE VALUE THROUGH
PROFITABLE NEW BUSINESS
New Business Contribution of £5m over 2024 which is an increase on the
prior year result of £3m.
The division expanded its custodian distribution network in 2024, two new
partner collaborations were launched in 2024 and a project to onboard
another new partner in custodian sales is ongoing, the launch is planned
for early 2025.
To improve distribution and sales within the life and health insurance
segment, the division launched a new, updated risk insurance offering, as
well as new technical integrations for brokers and partners during the year.
A new partnership for the distribution of the digital life insurance product
has also been entered into over the course of the year.
ACQUIRE LIFE AND
PENSIONS BUSINESSES
We have been engaging with other market participants and investment
bank advisors in order to better understand potential opportunities for
inorganic growth in the market.
FUTURE PRIORITIES
– Continue to build customer value and loyalty through further enhancement
of the division’s offering, consisting of individually adapted pension and
savings and life and health products, and associated digital services.
Focus on both growing new business and retention activities.
– Continued development and enhancement of partnerships with our
intermediaries within both the unit-linked and custodian business.
– Continued focus on growing the life and health insurance business
to diversify and offer our customers a broader selection.
FUTURE PRIORITIES
– Seek out opportunities to bring in additional scale through M&A.
KPIs
APE:
£100m
(2023: £65m)
New Business Contribution:
£5m
(2023: £3m)
Occupational pension
market share:
4.4%
(2023: 4.4%)
Custodian accounts
market share:
12.2%
(2023: 7.7%)
43
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
BUSINESS REVIEW
NETHERLANDS
Our Dutch businesses deliver
growth through our acquisitive
closed-book business, Waard,
and our open-book business,
Scildon, which seeks to write
profitable term, investments
and annuity business.
MAXIMISE VALUE FROM
EXISTING BUSINESS
Capital & value management
Scildon’s enhancement of its IT infrastructure completed in 2024, generating
operating and cost efficiencies. Scildon also conducted asset reviews to
provide more efficient interest rate hedges, replaced short-duration
government bonds with investments in money market funds to improve its
overall return profile and is increasing its investment in mortgage funds to
improve its asset/liability matching positions. Waard also made changes to
its asset mix to improve longer-term expected returns. The proposed merger
of the two Dutch businesses will result in a division stronger than the sum of
its parts, through scale and synergies.
Customer outcomes
Scildon has continued to make improvements to its customer offering
through new products and digitalisation options. Waard launched its digital
customer portal, making it easier for customers to access their documents
in digital format.
Governance
During 2024, the businesses progressed the implementation of the
requirements of the Digital Operational Resilience Act (DORA), becoming
compliant by the January 2025 implementation date. Work progressed
over the year in respect of the implementation of the Corporate Sustainability
Reporting Directive (CSRD), with both companies completing their double
materiality assessments and gap analyses in 2024. We are considering the
impact of the EU Omnibus proposals announced in February 2025, which
would mean we would no longer have to implement CSRD across the Group.
In January 2024, Chesnara Holdings BV was dissolved resulting in Scildon,
Waard Leven and Waard Schade becoming directly owned by Chesnara plc.
Chesnara Holdings BV was de-registered in April 2024. During the year,
the division prepared all of the required documents relating to the
potential merger and submitted these to the local regulator for approval
in January 2025.
KPIs
Commercial Cash Generation:
£16m
(2023: £24m)
SII ratio (pre dividend):
Waard 350%
Scildon 205%
(2023: 377% Waard
and 184% Scildon)
SII ratio (post dividend):
Waard 324%
Scildon 205%
(2023: 353% Waard
and 184% Scildon)
EcV Earnings:
£21m
(2023: £41m of which £21m related
to the day 1 gain from Conservatrix)
IFRS Pre-Tax Profit:
£5m
(2023: £23m)
Dividend remittances
in 2024:
£7m
Analysis of the segmental movements
are available on pages 47 and 49 to 54.
FUTURE PRIORITIES
– Complete the proposed merger of the Waard and Scildon businesses
(subject to regulatory approvals), enhancing the scale, efficiency and
longer-term sustainability of the Group’s Netherlands division.
– Identify potential capital management actions, focusing on those that
generate the appropriate balance of value and cash generation.
– Ensure customers continue to receive high-quality service throughout the
change period of the merger.
– Regular engagement with customers to improve service quality, as well as
enhance existing processes, infrastructure, and customer experiences.
– Consider the impact of the EU Omnibus proposals announced in February
2025 on the business’s requirements under the Corporate Sustainability
Reporting Directive (CSRD).
– Prepare the roadmap for investments to become net zero in 2050.
44
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
ENHANCE VALUE THROUGH
PROFITABLE NEW BUSINESS
Scildon generated a New Business Contribution of £2m (2023: £5m),
against a backdrop of continued suppressed term market volumes and
pressure on pricing. Scildon has maintained a disciplined approach
to pricing, albeit at lower volumes.
In April 2024, Scildon launched a Stop Smoking lifestyle proposition on
new business, reflecting its focus on expanding offerings to customers.
The initiative won an award in the Customer Interest category of the Adfiz
Performance Survey 2025.
ACQUIRE LIFE AND
PENSIONS BUSINESSES
The division has continued to support the Group’s acquisition strategy
by assessing M&A opportunities and processes, including due diligence
activity, as appropriate.
KPIs
New Business Contribution:
£2m
(2023: £5m)
Term assurance market share:
10.6%
(2023: 11.2%)
FUTURE PRIORITIES
– Simple focused product portfolio offering primarily sold through IFAs
with digital options where preferred by customers.
– Look to offer more sustainable solutions for our unit-linked proposition.
FUTURE PRIORITIES
– Continue to remain active in seeking acquisitions and have actively
examined opportunities during the year.
– Will continue to engage with possible vendors during 2025
on opportunities.
45
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
The Group’s Solvency Coverage Ratio is significantly above the upper end of our operating range of 140% to 160%.
CAPITAL MANAGEMENT • SOLVENCY II
CONTINUED ROBUST
SOLVENCY COVERAGE
OF 203%
GROUP SOLVENCY
Solvency position
Group Solvency II surplus is £327m (2023: £351m) with a Solvency Coverage Ratio of 203% (2023:
205%), which includes the proposed final 2024 dividend of £24m and payment of the interim 2024
dividend of £13m.
Own Funds include the impact of a £32m rise in the Tier 2/3 restriction and a £10m day 1 gain from
the acquisition of the policy portfolio from Canada Life. The SCR reduced in 2024, mainly due to a
general fall in market and life underwriting risk, with a rise in LACDT in UK and Dutch businesses.
Note:
1. SII adjustments includes change in the fair value of the T2 asset and the Symmetric Adjustment,
included associated movements in T2/T3 restrictions.
KEY
Own Funds (Post Div)
SCR
Surplus
Solvency coverage movement
31 Dec 2023
684
333
351
205%
205%
16%
4%
(3%)
(7%)
(12%)
203%
SII ratio
31 Dec 2023
Capital
generation
Management
actions
Acquisitions
SII
adjustments1
Dividend
payments
SII ratio
31 Dec 2024
Operating solvency range: 140% to 160%
31 Dec 2024
643
316
327
203%
46
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
UK
The rise in surplus (pre-foreseeable dividend of
£45m) to £60m (2023: £29m) includes growth
in Own Funds and an SCR reduction during 2024.
Key drivers of the increase in Own Funds included
the portfolio acquisition from Canada Life UK,
new business profits and economic returns
(rising equities and bond income).
SWEDEN
Surplus growth of £11m (pre-foreseeable dividend
of £2.5m) was underpinned by economic factors,
with unit-linked equity returns driving the increase
in Own Funds, offsetting adverse lapse experience.
A smaller rise in SCR was also largely attributable
to the impact of positive market conditions on the
equity risk component of the SCR.
NETHERLANDS – WAARD GROUP
The reduction in Solvency II surplus (£10m) includes
the Own Funds impact of a foreseeable dividend
(£7m) and a transfer of capital to the Group,
following liquidation of Chesnara BV. The reduction
in SCR was primarily due a fall in life underwriting
risks and an increase in LACDT, offsetting a rise in
market risks.
NETHERLANDS – SCILDON
Growth in Solvency II surplus arose from higher
Own Funds with a broadly flat SCR over the period.
Growth was driven by positive operating variances,
and operating assumption changes from cost
management actions. An increase in LACDT
outweighed rises in expense and lapse risks,
resulting in a small reduction in SCR (£1m).
108
22
29
159
31 Dec 2023
147%
122
24
37
184
31 Dec 2024
151%
KEY
Own Funds (Post Div)
SCR
Buffer
Surplus
KEY
Own Funds (Post Div)
SCR
Buffer
Surplus
KEY
Own Funds (Post Div)
SCR
Buffer
Surplus
KEY
Own Funds (Post Div)
SCR
Buffer
Surplus
68
69
51
52
20
6
140
127
31 Dec 2024
31 Dec 2023
205%
184%
25
27
9
9
48
58
82
94
31 Dec 2024
31 Dec 2023
324%
353%
DIVISIONAL SOLVENCY
Solvency position
103
21
29
152
31 Dec 2023
149%
96
19
15
130
31 Dec 2024
135%
The graphs on this page present the divisional view of the solvency position which may differ to the position
of the individual insurance company(ies) within the consolidated numbers. Note that year end 2023 figures
have been restated using 31 December 2024 exchange rates in order to aid comparison at a divisional level.
47
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
The Group’s solvency position remains strong and we proactively evaluate the main factors that can affect our solvency.
CAPITAL MANAGEMENT • SENSITIVITIES
The diagram below provides some insight into the immediate impact of certain sensitivities on the
Group’s Solvency Coverage Ratio and solvency surplus.
Foreign exchange: Appreciation of sterling relative to our overseas currencies reduces the value
of overseas surplus with partial mitigation from the Group currency hedge.
Equity valuations: Lower equity valuations reduce the Group’s AuA. In turn, this decreases the
value of Own Funds and the associated SCR as the value of the funds exposed to market risk reduce.
The reduction in SCR is limited by the impact of the Solvency II symmetrical adjustment.
Interest rates: An interest rate fall has a more adverse effect on surplus than an interest rate rise.
Group solvency is less exposed to rising interest rates, as a rise in rates causes capital requirements
to fall, increasing solvency.
Credit spreads: Higher spreads reduce surplus, as the rise in spreads decreases the value of
Own Funds.
Swap rates: A reduction in the swap discount rate profile reduces the Group’s surplus by increasing
the time-value of the projected future liabilities associated with the in-force book. This sensitivity
assumes that this change applies with no change in the value of the assets backing the liabilities.
Mass lapse: A 10% mass-lapse event drives an immediate reduction in the Group’s projection
of future surpluses, largely offset by the reduction in the associated SCR.
Inflation: A permanent increase in inflation for all future years increases the Group’s future
expense profile, reducing Own Funds and surplus.
Mortality rates: A 5% increase in mortality rates across the Group will reduce the future
surplus projections from the in-force book, leading to lower Own Funds and a reduction in the
Group’s surplus.
Impact range £m
20% sterling appreciation
20% sterling depreciation
25% equity fall
25% equity rise
10% equity fall
10% equity rise
1% interest rate rise
1% interest rate fall
50 bps credit spread rise
25 bps swap rate fall
10% mass lapse
1% inflation
5% mortality increase
33.6%
(12.3)%
6.4%
(4.6)%
2.6%
(1.9)%
6.1%
(8.4)%
(3.6)%
(4.7)%
(0.2)%
(9.9)%
(3.6)%
(80)
(60)
(40)
(20)
-
20
40
60
80
SOLVENCY
SURPLUS
SOLVENCY
RATIO
Each individual bar in the diagram illustrates the estimated impact range (£m) of the respective sensitivities and whether that impact is positive (green) or negative (red).
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
48
STRATEGIC REPORT
Continued strong cash generation was reported in 2024, with total Commercial Cash of £59.6m, benefitting from surplus generation from operating
activities and positive market conditions. Cash generation is the increases in the Group’s Solvency II surplus, after allowing for ‘prudent management
buffers’, as defined by the Group’s Capital Management Policy.
FINANCIAL REVIEW • CASH GENERATION
£51.6M 2023 £31.9m
BASE CASH GENERATION
£59.6M 2023 £52.4m
COMMERCIAL CASH GENERATION
UK
SWEDEN
NETHERLANDS
WAARD
NETHERLANDS
SCILDON
DIVISIONAL
TOTAL
GROUP ADJ
ACQUISITIONS
TOTAL
Commercial Cash Generation
39.6
10.6
1.6
14.6
66.4
0.9
(7.7)
59.6
Symmetric adjustment
(2.8)
(2.4)
(0.1)
(0.5)
(5.8)
(0.7)
–
(6.5)
WP restriction look through
(1.5)
–
–
–
(1.5)
–
–
(1.5)
Base Cash Generation
35.3
8.2
1.4
14.1
59.1
0.2
(7.7)
51.6
GROUP
The Group Centre component of cash generation includes Tier 2 debt coupon payments
(c£10m) and other central costs.
UK
The UK reported another strong year of cash generation, contributing £39.6m in 2024
(2023: £48.5m). This was delivered through both Own Funds growth and a reduction in
capital requirements. Economic conditions (mainly the positive impact of rising yields)
supported both the growth in Own Funds and the reduction in SCR, predominantly lapse
risk (resulting from management action on mass lapse reinsurance).
NETHERLANDS – WAARD
Waard recorded modest cash generation of £1.6m (2023: £15.8m), with positive movements
in both Own Funds and SCR. Own Funds growth, delivered through operating profits, was
restricted due to economic losses (mainly the negative impact on bond holdings of interest
rates). An increase in LACDT offset a rise in market risk, owing partly to the purchase of
government bonds (with longer duration increasing interest rate SCR) and proactive re-risking
through an increase in corporate bond holdings (increasing spread SCR). The divisional result
also includes a material FX loss on consolidation owing to sterling appreciation versus the euro.
NETHERLANDS – SCILDON
Scildon generated an increased cash return of £14.6m for the period (2023: £8.2m).
Operating profits, including management actions on cost efficiencies, were the primary
driver of Own Funds growth. This action also had a positive effect on capital requirements,
driving a reduction in SCR, offsetting the adverse impact of economic conditions and
lower interest rates.
SWEDEN
In Movestic, cash generation of £10.6m (2023: £0.3m) was stronger, with economic returns
on the division’s unit-linked business the primary factor in Own Funds growth, exceeding
a rise in SCR and underpinning the cash result. The rise in SCR was also attributable to the
equity market-driven growth, with an increase in market-risk related capital requirements.
† Alternative Performance Measure (APM) used to enhance understanding of financial performance. Further
information on APMs can be found in the additional information section of this Annual Report and Accounts.
49
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
EcV Earnings: EcV profits of £59m have been driven primarily by positive market conditions
during 2024, supported by operating profits. Further detail can be found on page 51.
Acquisitions: The Group completed the acquisition of a closed portfolio from Canada Life,
the transaction delivering a day 1 EcV gain of £11m.
Foreign exchange: The closing EcV of the Group reflects a foreign exchange loss in the
period, which is a consequence of sterling appreciation against both the Swedish krona and
also the euro.
Dividends: Under EcV, dividends are recognised in the period in which they are paid. Dividends
of £37m were paid during the year, representing the final dividend from 2023 and interim
dividend for 2024.
The Economic Value of the Group represents the present value of future profits of the existing insurance business, plus the adjusted net asset value
of the non-insurance businesses within the Group.
FINANCIAL REVIEW • EcV
The above chart shows that the EcV of the Group remains diversified across its different
geographical markets.
EcV is based on a Solvency II assessment of the value of the business but adjusted for certain items
where it is deemed that Solvency II does not reflect the commercial value of the business. The above
waterfall shows the key difference between EcV and SII, with explanations for each item below.
Risk margin: Solvency II rules applying to our European businesses require a significant ‘risk margin’
which is held on the Solvency II balance sheet as a liability, and this is considered to be materially
above a realistic cost. We therefore reduce this margin for risk for EcV valuation purposes from being
based on a 6% (UK: 4%) cost of capital to a 3.25% cost of capital, risk tapering is subsequently
applied in line with the parameters and approach used in the calculation of the risk margin under
Solvency II in the UK.
Contract boundaries: Solvency II rules do not allow for the recognition of future cash flows on
certain in-force contracts, despite the high probability of receipt. We therefore make an adjustment
to reflect the realistic value of the cash flows under EcV.
Ring-fenced fund restrictions: Solvency II rules require a restriction to be placed on the value
of surpluses that exist within certain ring-fenced funds. These restrictions are reversed for EcV
valuation purposes as they are deemed to be temporary in nature.
Dividends: The proposed final dividend of £24.3m is recognised for SII regulatory reporting
purposes. It is not recognised within EcV until it is actually paid.
Tier 2: The Tier 2 debt is treated as ‘quasi equity’ for Solvency II purposes. For EcV, consistent
with IFRS, we continue to report this as debt. Under SII, this debt is recognised at fair value,
while for EcV, this remains at book value.
Tier 3: Under Solvency II, the eligibility of Tier 3 Own Funds is restricted in accordance with
regulatory rules. For EcV, the Tier 3 Own Funds are recognised at a deemed realistic value.
£531.0M 2023: £524.7m
ECONOMIC VALUE (EcV)
Value movement: 1 Jan 2024 to 31 Dec 2024 £m
UK
189
Sweden
199
Netherlands
252
Other group
activities
(110)
EcV by segment at 31 Dec 2024 £m
EcV to Solvency II £m
EcV
31 Dec
2023
EcV
Earnings
before
acquisitions
Acquisitions
Forex
EcV
31 Dec
2024
(pre-div)
Dividends
EcV
31 Dec
2024
58
(37)
531
525
11
(26)
567
EcV
31 Dec
2024
Risk
margin
Contract
boundaries
Tier 2
debt
RFF &
Tier 2/3
restrictions
Dividends
Deferred
tax asset
adj
SII Own
Funds
31 Dec
2024
(42)
(24)
531
643
4
200
(34)
7
50
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Continued strong EcV Earnings have been delivered through economic profits, new business gains and delivery of our acquisition strategy.
FINANCIAL REVIEW • EcV EARNINGS
Total Operating Earnings: Operating earnings of £10.4m were
reported in 2024, driven by positive results in our Dutch and
Swedish businesses, offsetting an operating loss in the UK.
Total Economic Earnings: The economic result continues
to be the largest component of the total EcV Earnings, with
a profit of £50.3m in the year. The result is in line with our
reported sensitivities and is driven by the following key
market movements:
Equity indices:
– FTSE All Share index increased by 5.6% (year ended
31 December 2023: increased by 3.7%).
– Swedish OMX all share index increased by 5.6%
(year ended 31 December 2023: increased by 15.6%).
– The Netherlands AEX all share index increased by 7.5%
(year ended 31 December 2023: increased by 13.4%).
Credit spreads:
– UK AA corporate bond yields decreased to 0.68%
(31 December 2023: decreased to 0.71%).
– European AA credit spreads decreased to 0.56%
(31 December 2023: increased to 0.63%).
Yields:
– 10-year UK gilt yields increased to 4.64% (31 December 2023:
decreased to 3.64%).
– 10-year euro swap yield decreased to 2.37% (31 December 2023:
decreased to 2.49%).
Other costs: The result also includes Group Centre, primarily
associated with the M&A strategy and development of the
Group, and other non-operating items, including the release
of risk margin and financing costs, such as Tier 2 debt servicing.
£69.2M 2023 £59.1m
EcV EARNINGS
Analysis of the EcV Earnings by source of value:
£m
31 Dec
2024
31 Dec
2023*
Expected movement in period
15.0
14.9
New business
5.2
4.4
Operating experience variances
(9.1)
14.9
Operating assumption changes
9.0
(25.9)
Other operating variances
(9.7)
(1.9)
Total Operating Earnings†
10.4
6.4
Total Economic Earnings†
50.3
42.9
Other non-operating variances
(11.3)
(11.9)
Central costs
(11.8)
(14.1)
Risk margin movement
22.8
1.1
Tax
(1.8)
6.3
EcV Earnings
58.6
30.7
Acquisitions
10.5
28.4
EcV Earnings inc. acquisitions
69.2
59.1
Analysis of the EcV result by business segment:
£m
31 Dec
2024
31 Dec
2023
UK
19.6
31.4
Sweden
30.9
6.8
Netherlands
21.4
19.5
Group and Group adjustments
(13.3)
(27.0)
Acquisitions
10.5
28.4
EcV Earnings inc. acquisitions
69.2
59.1
UK: The UK’s result of £19.6m was driven primarily by favourable
market conditions, predominantly the long-term impact of rising
yields and equities with an offset from non-recurring costs of
investment in outsourcing arrangements and the business
acquisitions. The result was also supported by higher year on
year new business earnings.
Sweden: The Movestic result of £30.9m benefitted from
favourable market conditions in Sweden and Europe. New
business volumes contributed further earnings of £2.3m
(on an EcV basis). The operating result was partially offset
by the impact of transfers out.
Netherlands: The Dutch businesses reported combined growth
of £21.4m, with positive operating profits offsetting economic
losses, primarily due to the impact of rising interest rates on
the value of bond holdings. Scildon generated EcV growth of
£14.0m, driven by positive operating variances, including the
impact of management actions driving cost efficiencies. New
business profits were muted, due to market pricing pressures
and a smaller term market. In Waard, the negative impact of
economic conditions on the bond portfolio was offset by positive
operating earnings and release of risk margin, delivering overall
growth of £7.0m.
Group: This component includes Group Centre personnel costs;
the cost of funding the Group’s acquisition strategy; debt
financing costs and investment returns on Group Centre assets.
† Alternative Performance Measure (APM) used to enhance understanding of financial performance. Further
information on APMs can be found in the additional information section of this Annual Report and Accounts.
* Prior year comparators have been restated following a reallocation of components, with total EcV Earnings remaining
unchanged.
51
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
The CSM represents future profits that are expected to be released to the income statement over
the lifetime of the portfolio. The CSM (net of reinsurance and gross of tax) has increased by £18.9m
from £156.9m to £175.8m during 2024.
Positive experience and assumption changes across the Group have added £32.0m of CSM. New
business in Scildon and the portfolio acquisition in the UK have also added £7.5m of CSM, reflecting
the future profits arising on profitable new business added in the period. These additions are offset
by the £18.9m release to profit in the period, as the insurance services have been provided with
other smaller net negative movements including the impact of foreign exchange and the interest
accretion totalling £1.7m making up the total movement.
The CSM values are shown net of reinsurance but gross of tax. When calculating the IFRS Capital
Base† a net of reinsurance and net of tax figure is used. The equivalent net of reinsurance and tax
movement of CSM during 2024 is an increase of £15.2m.
HOW DOES IFRS COMPARE TO ECV AND SOLVENCY II?
EcV and IFRS share common principles. However, for investment contracts, expected future profits
on existing policies are not recognised in the IFRS balance sheet, with-profits being reported as they
arise. This differs to the approach in EcV, where these future profits are fully recognised on the
balance sheet, subject to contract boundaries.
LEVERAGE
Applying the Fitch gearing definition of debt divided by debt plus equity, with the equity denominator
adding back the net of tax CSM liability, the leverage of the Group as at 31 December 2024 was
30.9% (31 December 2023 restated: 29.5%).
The transition to IFRS 17 is now fully embedded in the reporting of the Group’s IFRS results and balance sheet. As at 31 December 2024, total net equity
is £314.4m, and the CSM, which represents unearned future profits from insurance contracts, is £175.8m (net of reinsurance and gross of tax).
FINANCIAL REVIEW • IFRS BALANCE SHEET
HOW THE CSM HAS MOVED IN THE PERIOD
† Alternative Performance Measure (APM) used to enhance understanding of financial performance.
Further information on APMs can be found in the additional information section of this Annual Report and Accounts.
CSM
(gross of tax)
31 Dec 2023
CSM
(gross of tax)
31 Dec 2024
157
176
£m
Experience &
assumption
changes
New
business
Interest
accreted
Other
FX
impact
CSM
release
32
(7)
7
4
2
(19)
STRATEGIC REPORT
52
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
FINANCIAL REVIEW • IFRS INCOME STATEMENT
£20.8M 2023 restated: £1.7m
IFRS PRE-TAX PROFIT
£(11.0)M 2023 restated: £10.2m
TOTAL COMPREHENSIVE INCOME
Analysis of IFRS result:
31 Dec 2024
£m
Restated
31 Dec 2023
£m
Net insurance service result
8.6
(5.2)
Net investment result
52.7
71.7
Fee, commission and other operating income
104.2
89.4
Other operating expenses
(133.6)
(149.9)
Financing costs
(11.1)
(11.0)
Profit arising on business combinations and portfolio
acquisitions
–
6.7
Profit before income taxes
20.8
1.7
Income tax (charge)/credit
(16.9)
16.9
Profit for the period after tax
3.9
18.6
Foreign exchange (loss)/gain
(15.3)
(7.8)
Other comprehensive income
0.4
(0.6)
Total comprehensive income
(11.0)
10.2
Movement in IFRS Capital Base†
Opening IFRS Capital Base
479.4
469.2
Movement in CSM (net of reinsurance and tax)
15.2
34.5
Total comprehensive income
(11.0)
10.2
Other adjustments made directly to shareholders’ equity
2.1
0.9
Dividends
(36.5)
(35.4)
Closing IFRS Capital Base
449.1
479.4
Net insurance service result
The net insurance service result comprises the revenue and expenses from providing insurance
services to policyholders and ceding insurance business to reinsurers and is in respect of current
and past service only.
Assumption changes, relating to future service, are excluded from the insurance result (as they
adjust the CSM), unless the CSM for a given portfolio of contracts falls below zero; thereby in a
‘loss component’ position. Economic impacts are also excluded from the insurance service result.
The net insurance service result of £8.6m is broken down into the following elements:
– gains from the release of risk adjustment and CSM of £22.2m (2023 restated: £23.2m).
These gains represent a consistent source of future profits for the Group.
– losses of £13.6m (2023 restated: £28.5m loss) caused by experience impacts and loss component
effects where portfolios of contracts with no CSM have suffered adverse impacts that would
otherwise be offset in the balance sheet if the CSM for those portfolios were positive.
Net investment result
The net investment result contains the investment return earned on all assets together with the
financial impacts of movements in insurance and investment contract liabilities. The investment
results include policyholder tax impacts in the UK of £13.9m (2023: £14.2m) and the impact of effect
of locked-in discount rates has contributed a further £4.3m (2023: £12.8m), largely in respect of
groups of contracts in a loss component position and therefore partly offsetting the losses noted
above in the insurance service result.
Fee, commission and other operating income
The most significant item in this line is the fee income that is charged to policyholders in respect
of the asset management services provided for investment contracts. There is no income in respect
of insurance contracts in this line, as this is all now reported in the insurance result.
Total fee, commission and operating income in the year was £104.2m (2023: £89.4m) and was
£73.4m net of Swedish policyholder yield tax (2023: £71.5m). The year on year values are
comparable with equity market returns in the UK and Sweden, with the retention of pension
business in Sweden being the largest contributory factor.
Other operating expenses
Other operating expenses consist of costs relating to the management of the Group’s investment
contracts, non-attributable costs relating to the Group’s insurance contracts and other certain
one-off costs such as project costs.
Other items of note are the impairment and amortisation of intangible assets in respect of
investment business and the payment of yield tax relating to policyholder investment funds
in Movestic, for which there is a corresponding offset within the fee income line.
After removing the impacts of policyholder yield tax (£30.8m in 2024 and £17.9m in 2023) and
the impact of the AVIF impairment (£21.0m) from the prior year, the other operating expenses
in the year are £102.8m (2023: £111.0m).
Group IFRS Pre-Tax Profit of £20.8m represents a £19.1m year on year increase versus 2023.
53
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
FINANCIAL REVIEW • IFRS INCOME STATEMENT
Financing costs
This predominantly relates to the cost of servicing our Tier 2 corporate debt notes which were issued
in early 2022. Further details can be found in Note C5 of the financial statements.
Profit arising on business combinations and portfolio acquisitions
The portfolio acquisition of unit-linked bond and pension business from Canada Life in December
2024 is not classed as a business combination under IFRS accounting and has therefore been
accounted for as an ‘asset and liability’ transfer at cost, with no day 1 gain. The acquisition of the
Conservatrix insurance portfolio in 2023 did meet the requirements of a business combination and
the resulting day 1 gain is reported within the 2023 income statement.
Foreign exchange
The IFRS consolidated result of the Group reflects a foreign exchange loss of £15.3m in the period, a
consequence of sterling appreciation, against both the euro and the Swedish krona. The loss is partly
offset by a £4.0m gain from foreign exchange rate hedges, reported within the investment result.
Other comprehensive income
This represents the impact of movements in the valuation of land and buildings held in our
Dutch division.
Income tax
Income tax consists of both current and deferred taxes.
The income tax expense of £16.9m in 2024 predominately arises from a UK deferred tax charge,
driven by the investment returns on assets backing policyholder liabilities. Under current UK tax
legislation, these investment returns are taxed over a seven-year period, leading to the deferred
tax impact.
Although current tax charges are being offset by carried-forward tax losses (Excess Expenses) from
prior periods, these losses had already been fully recognised as a deferred tax asset by year end
2023. As a result, their utilisation in 2024 does not reduce tax expense but instead triggers a deferred
tax charge.
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CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
The following diagram illustrates the aims, approach and outcomes from the Financial Management Framework:
FINANCIAL MANAGEMENT
Further detail on capital structure
The Group is funded by a combination of share capital, retained earnings and debt finance. Debt
leverage was 30.9% at 31 December 2024 (29.5% at 31 December 2023). The level of debt that the
Board is prepared to take on is driven by the Group’s Debt and Leverage Policy which incorporates
the Board’s risk appetite and has a long-term ambition to maintain IFRS leverage at 30% or less.
Over time, the Group’s debt leverage will change, and is a function of the funding requirements for
future acquisitions and the repayment of existing debt. During 2022, the Company announced the
successful pricing of its inaugural debt capital markets issuance of £200m Tier 2 Subordinated Notes.
The net proceeds of the notes has been partially used for corporate purposes, including the funding
of the CASLP acquisition in 2022 and the partial funding of the Conservatrix acquisition in 2023.
The balance is held as investments.
Acquisitions are funded through a combination of debt, equity and internal cash resources. The ratios
of these three funding methods vary on a deal-by-deal basis and are driven by a number of factors
including, but not limited, to the size of the acquisition; current cash resources of the Group; solvency
levels, the current gearing ratio and the Board’s risk tolerance limits for additional debt; the expected
cash generation profile and funding requirements of the existing subsidiaries and potential
acquisition; future financial commitments; and regulatory rules. In addition to the above, in the
past, Movestic used a financial reinsurance arrangement to fund its new business operation.
1. Solvency
Group solvency ratio: 203%
(2023: 205%)
2. Investor returns
2022-2024 TSR 17.4%
(2021-2023: 14.7%)
2024 dividend yield 9.6%
(2023: 8.7%)
Based on average 2024 share
price and full year 2024 dividend
of 24.69p.
3. Capital structure
Leverage ratio of 30.9%
(2023: 29.6%)
4. Liquidity and
policyholder returns
Policyholders’ reasonable
expectations maintained.
Asset Liability Matching
Framework operated
effectively in the year.
Sufficient liquidity in the
Group holding company.
5. Maintain the Group
as a going concern
Group remains
a going concern.
(see page 56)
OBJECTIVES
The Group’s Financial Management Framework is designed to provide security for all stakeholders, while having regard for the expectations of
policyholders, investors and regulators. Accordingly we aim to:
HOW WE DELIVER OUR OBJECTIVES
In order to meet our obligations we employ and undertake a number of methods. These are centred on:
OUTCOMES
Key outcomes from our financial management process, in terms of meeting our objectives, are set out below:
1. Monitor and control risk
& solvency
2. Longer-term projections
3. Responsible investment
management
4. Management actions
Maintain solvency in
or above our normal
operating range of
140-160%
Provide an attractive
return to investors
Optimise the gearing ratio
to ensure an efficient
capital base
Ensure there is sufficient
liquidity to meet
obligations to
policyholders, debt
financiers and creditors
Maintain the Group
as a going concern
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CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Outcomes from implementing our financial management objectives
1. Maintain the Group as a going concern
After making appropriate enquiries, the directors confirm that they are satisfied that the Company
and the Group have adequate resources to continue in business for a period of twelve months from
the date of this report. Accordingly, they continue to adopt the going concern basis in the preparation
of the financial statements.
In performing this work, the Board has considered the current solvency and cash position of the
Group and Company, coupled with the Group’s and Company’s projected solvency and cash position
as highlighted in the most recent business plan and Own Risk and Solvency Assessment (ORSA)
process. These processes consider the financial projections of the Group and its subsidiaries on
both a base case and a range of stressed scenarios, covering projected solvency, liquidity, and
IFRS positions. These projections assess the cash generation of the life insurance divisions and
how these flow up into the Group Centre Company balance sheet and support the Group’s debt
repayments, shareholder dividends and the head office function of the Parent Company. Further
insight into the immediate and longer-term impact of certain scenarios, covering solvency,
cash generation, can be found on page 48 under the section headed ‘Capital Management
Sensitivities’. The directors believe these scenarios encompass the potential future impact of
the prevailing economic uncertainty on the Group. The following key assumptions underpin the
sensitivity analyses:
– Economic assumptions: long-term investment returns reflecting current investment portfolio mix.
– Operating assumptions: based on most recent actuarial assumptions for mortality and morbidity,
lapses and expenses.
– New business volumes: future sales and margins in line with the Board-approved business plan.
– Acquisitions: the Group does not engage in future M&A activity.
As set out in pages 46 to 48, the Group’s capital position is resilient to a wide range of adverse
economic and operating scenarios.
The Group also holds cash significantly in excess of requirements to meet its debt obligations as
they fall due and does not rely on the renewal or extension of bank facilities to continue trading.
This position was further enhanced in early 2022, when the Company announced the successful
pricing of its inaugural debt capital markets issuance of £200m Tier 2 Subordinated Notes, the net
proceeds of which have been used for corporate purposes, including investments and acquisitions.
The Group’s subsidiaries rely on cash flows from the maturity or sale of fixed interest securities
which match certain obligations to policyholders, which brings with it the risk of bond default.
To manage this risk, we ensure that our bond portfolio is actively monitored and well-diversified.
Other significant counterparty default risk relates to our principal reinsurers. We monitor their
financial position and are satisfied that any associated credit default risk is within acceptable
risk-appetite levels.
2. Assessment of viability
The Board’s assessment of the viability of the Group is performed in conjunction with its going
concern assessment and considers both the time horizons required for going concern, and the
slightly longer-term timelines for assessing viability. The assessment for viability also considers
the same key financial metrics as for assessing going concern, being solvency, cash, EcV and IFRS,
both on base case and stressed scenarios.
3. Viability Statement
Based on the results of the analysis above, the directors have a reasonable expectation that the
Company will be able to continue in operation and meet its liabilities as they fall due over the
three-year period of their assessment. Although we produce business plans and other financial
projections over longer time horizons, the selection of a three-year viability assessment recognises
that the level of operating, regulatory and market certainty reduces towards the later years of the
projection time-frames. The three-year period also aligns with executive director LTIP performance
time frames.
4. Assessment of prospects
Our longer-term prospects are primarily assessed through the Group’s quarterly business forecasting
cycles and the annual business planning process. The Group’s performance projections include
underlying operational deliverables, an assessment of the business model and the financial
consequences of following those plans. We also consider the principal risks and uncertainties
that the Group faces (see pages 61 to 67) and how these might affect our prospects.
An assessment of our prospects is shown below and is structured around our three strategic
objectives:
Value from in-force book: The Group has c1m policies in force at 31 December 2024. These are
generally long-term policies, and the associated cash flows can, at an overall portfolio level, be
reasonably well predicted on base case and stressed scenarios. The Group is well capitalised at
both a Group and divisional level and we have high quality assets backing our insurance liabilities.
During the year, we have seen a rise in yields in the UK and Sweden and a small reduction in
euro-denominated yields. Coupled with rising equity indices, this has contributed positively overall
to the Group’s solvency coverage. We are mindful that in uncertain economic times, this situation
can reverse, leading to sustained depressed equity market values and an adverse impact on
fee-related income streams. Similarly, adverse movements in yields would adversely impact
our prospects, potentially increasing the value of the Group’s liabilities and associated capital
requirements. Temporary market volatility is a natural feature of investment markets, and the
Group is well positioned to withstand adverse economic scenarios without creating any permanent
harm to the longer-term profitability prospects.
Acquisition strategy: The outlook and prospects of continuing to deliver against this strategic
objective are covered on pages 40 to 45. We see no reason to expect that periods of economic
uncertainty will have a long-term impact on the availability of acquisition opportunities. Indeed, we
have proactively assessed a number of acquisition opportunities across 2024. This has included our
participation in multiple due diligence processes, primarily on a bilateral basis, as well as work
on legal documentation. We announced another UK acquisition on 23 December and our second
portfolio deal with Canada Life. Our latest acquisition involves the acquisition of a portfolio of c17k
onshore bond and personal pensions. We expect an uplift in Economic Value of around £11m from
the deal against the £2m of consideration paid. The first step of the deal has been executed by way
of a reinsurance agreement between both parties.
We retain significant fire power for future acquisitions and can immediately deploy around £200m
in support of deals. We have additional financing options available as well, should we have the
opportunity to execute a larger value enhancing opportunity.
Value from new business: The Group’s prospects are not significantly reliant on sustained new
business volumes. New business levels have contributed positively to the Own Funds of the Group
throughout 2024.
Our business fundamentals such as Assets Under Administration (AuA), policy volumes, new
business market shares and expenses have all proven resilient to the impact of economic uncertainty.
This, together with the positive assessment of our core strategic objectives and a line of sight to
positive management actions over the planning period, leaves us well positioned to deliver ongoing
positive outcomes for all stakeholders.
FINANCIAL MANAGEMENT
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CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
RISK
MANAGEMENT
We continue to monitor the
volatile global economic and
geopolitical backdrop that
appears to have become the new
normal. Our solvency position
remains strong, and our financial
sensitivities remain well within
the Board’s risk appetite.
GAVIN HUGHES, CHIEF RISK OFFICER
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
57
RISK MANAGEMENT
Managing risk is a key part of our business model. We achieve this by understanding the current and emerging risks to the business,
mitigating them where appropriate and ensuring they are appropriately monitored and managed.
The Group adopts the ‘three lines of defence’ model,
with a single set of risk and governance principles
applied consistently across the business.
In all divisions, we maintain processes for identifying,
evaluating and managing all material risks faced by the
Group, which are regularly reviewed by the divisional
and Group Senior Leadership Teams and Audit & Risk
Committees. Our risk assessment processes have regard
to the significance of risks, the likelihood of their occurrence
and take account of the controls in place to manage them.
The processes are designed to manage the risk profile within
the Board’s approved risk appetite.
Group and divisional risk management processes are
enhanced by stress and scenario testing, which evaluates
the impact of certain adverse events occurring separately
or in combination. The results, conclusions and any
recommended actions are included within divisional and
Group ORSA Reports to the relevant Boards. There is a
strong correlation between these adverse events and the
risks identified in ‘Principal risks and uncertainties’ (pages
61 to 67). The outcome of this testing provides context
against which the Group and divisions can assess whether
any changes to its risk appetite or to its management
processes are required.
REPORTING
The risk management reports deliver information on the material risks faced by the business and evidence
that principal risks are actively monitored and analysed and managed against risk appetite.
PROCESSES
The risk management processes ensure that risks are identified, measured/assessed,
monitored and reported to support decision making.
POLICIES
The risk management policies implement the risk management strategy and provide a set of principles
(and mandated activities) for control mechanisms that take into account the materiality of risks.
STRATEGY
The risk management strategy contains the objectives and principles of risk management, the risk appetite,
risk preferences and risk tolerance limits.
RISK MANAGEMENT SYSTEM REVIEW
AND DEVELOPMENT
CLEAR ACCOUNTABILITIES
AND RESPONSIBILITIES
RISK MANAGEMENT SYSTEM
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STRATEGIC REPORT
The Group Board is responsible for monitoring the Group Risk Management System and carrying out a review of its effectiveness on an annual basis.
RISK MANAGEMENT • ROLE OF THE BOARD
RISK STRATEGY
AND RISK APPETITE
RISK IDENTIFICATION
OWN RISK AND SOLVENCY
ASSESSMENT (ORSA)
RISK MANAGEMENT
SYSTEM EFFECTIVENESS
RISK AND CONTROL
POLICIES
The Group and its divisions have a defined risk strategy and supporting Risk Appetite Framework to embed an effective Risk
Management Framework, with culture and processes at its heart, and to create a holistic, transparent and focused approach to risk
identification, assessment, management, monitoring and reporting.
On the recommendation of the Audit & Risk Committee, the Chesnara Board approves a set of risk preferences which articulate,
in simple terms, the desire to increase, maintain, or reduce the level of risk taking for each main category of risk. The risk position
of the business is monitored against these preferences using risk tolerance limits, where appropriate, and they are taken into
account by the management teams across the Group when taking strategic or operational decisions.
The Group maintains a Risk Register of risks which are specific to its activity and reports these, along with the principal risks
of each business unit, to the Group A&RC on at least a quarterly basis.
On an annual basis the Board approves, on the recommendation of the Audit & Risk Committee, the materiality criteria to be
applied in the risk scoring and in the determination of what is considered to be a principal risk. At least quarterly, the principal
and emerging risks are reported to the relevant Boards, assessing their proximity, probability and potential impact.
On an annual basis, or more frequently if required, the Group produces a Group ORSA Report which aggregates the divisional
ORSA findings and supplements these with an assessment specific to Group activities. The Group and divisional ORSA policies
outline the key processes and contents of these reports.
The Chesnara Board is responsible for approving the ORSA, including steering in advance how the assessment is performed and
challenging the results.
The primary objective of the ORSA is to support the Company’s strategic decision making, by providing insights into the Company’s
risk profile over the business planning horizon. Effective ORSA reporting supports the Board, in its role of protecting the viability
and reputation of the Company, reviewing and challenging management’s strategic decisions and recommendations.
The Group and its divisions undertake a formal annual review of and attestation to the effectiveness of the Risk Management
System. The assessment considers the extent to which the Risk Management System is embedded.
The Chesnara Board is responsible for monitoring the Risk Management System and its effectiveness across the Group.
The outcome of the annual review is reported to the Group Board which makes decisions regarding its further development.
The Group has a set of Risk and Control Policies that set out the key policies, processes and controls to be applied. Senior
management is responsible for the day-to-day implementation of the Risk and Control Board Policies. Subject to the materiality
of changes, the Chesnara Board approves the review, updates and attestation of these policies at least annually.
The Board is considering the provisions of the new UK Corporate Governance Code, including the arrangements to implement
and report on Provision 29 (effective for accounting periods beginning on or after 1 January 2026) in relation to the effectiveness
of internal controls.
STRATEGIC REPORT
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
59
On a regular basis, the senior management teams scan the horizon to identify potential risk events (e.g. political; economic; technological;
environmental, legislative & social), assessing potential outcomes in terms of threats and opportunities. This section provides details on some
of the emerging risks that have been kept under close watch during 2024.
RISK MANAGEMENT • EMERGING RISKS
GEOPOLITICAL RISK
Geopolitical risk continues to create a greater level of uncertainty across the Group risk profile,
for example market volatility and investment performance. To name some examples, the ongoing
conflict between Ukraine and Russia, unrest in the Middle East and growing tensions between
China and Taiwan all continue to be areas of emerging risk for the Group, in the sense that these
are evolving situations which have potential implications for the Group’s principal risks.
During 2024, more than 40 countries, accounting for over 40 percent of the world, held national
elections, making it the largest year for global democracy. Against a backdrop of geopolitical tensions
and economic instability, significant political change is happening:
– The UK’s Conservative Party was heavily defeated after 14 years in power. Labour’s first Budget
announced significant changes impacting business owners and employers, with an anticipated
inflationary impact.
– In the US, former president Donald Trump was re-elected with a decisive victory. Pledges made
around tariffs and trade wars could impact inflation, global markets and economic growth.
The long-term effects of his policies are unpredictable but could bring significant turbulence.
MACROECONOMIC VOLATILITY
Global economic growth is experiencing fluctuations due to various factors, including geopolitical
tensions, supply chain disruptions, and changes in consumer behaviour. It was anticipated that 2024
would see a number of interest rate cuts but inflation proved persistent, meaning central banks have
been reluctant to ease interest rates too quickly. The future path of inflation remains difficult to
predict, with most commentators forecasting a continuation of disinflation but with potential for
smaller shocks or further persistence in some areas.
Economic uncertainty remains a prominent emerging risk for the Group, with inflation driven expense
risk and future market risk exposures being the potential key areas with greatest potential impact.
– Many of the Group’s material supplier contracts, as well as a majority of the Group’s internal costs,
are directly linked to wage/price inflation measures.
– Changes in market conditions can affect the Group’s capital position, future growth and long-term
investment performance.
ARTIFICIAL INTELLIGENCE (AI)
Developments in the field of AI mean companies are looking towards both self-developed and
externally acquired AI applications, often with the aim to automate or optimise existing processes
and sub-processes. As a result, financial services organisations are entering the AI space, with many
looking at incorporating it into their long-term strategies.
The Group is exploring the use of Artificial Intelligence, including the risks and opportunities arising
from developments in the field of AI.
The EU Artificial Intelligence Act officially came into force in August 2024. The regulations are
designed to ensure that AI systems are safe, transparent, and respect fundamental rights while
promoting innovation within the EU.
In 2024, the UK has continued to develop its approach to AI regulation with a focus on balancing
innovation and security. The UK government has adopted a principles-based, cross-sector framework
for AI regulation. Various regulators, including the FCA and the Information Commissioner’s Office
(ICO) have been updating their strategic approaches to AI.
SUSTAINABILITY
Sustainability and the response to the challenges and opportunities presented continues to be a
key focus in the UK and Europe and is an evolving area of potential risk for the business. The 2030
Agenda for Sustainable Development, adopted by all United Nations Member States in 2015,
however, in early 2025, the United States of America withdrew from the United Nations Sustainable
Development Goals. The agenda provides a shared blueprint for peace and prosperity for people and
the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs),
which are an urgent call for action by all countries – developed and developing – in a global
partnership. The SDGs and the potential risks they look to address cover areas including poverty,
inequality, climate change, environmental degradation, peace, and justice.
Of these, a prominent area of focus across the UK and the EU is the financial risks of climate change.
2024 was the hottest year on record and the first calendar year to exceed the 1.5°C warming
threshold of the Paris Agreement, with the global average at 1.6°C, and an understanding of the
potential impacts on businesses is developing.
The need for organisations, businesses and wider society to take action is clear and to support this,
the Group has published its sustainability strategy together with its initial targets. This is an integral
part of the Company’s overall strategy and will look to address current and forthcoming sustainability-
related risks.
The risk information on the following pages includes specific commentary, where
appropriate, on the impact of emerging events on our principal risks.
KEY
HEIGHTENED
NO MATERIAL CHANGE
LESSENED
The following tables outline the principal risks and uncertainties of the Group and the controls in place to mitigate
or manage their impact. It has been drawn together following regular assessment, performed by the Audit & Risk
Committee, of the principal risks facing the Group, including those that would threaten its business model, future
performance, solvency or liquidity. The impacts are not quantified in the tables. However, by virtue of the risks being
defined as principal, the impacts are potentially significant. Those risks with potential for a material financial impact
are covered within the sensitivities on page 48.
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STRATEGIC REPORT
RISK MANAGEMENT • PRINCIPAL RISKS AND UNCERTAINTIES
INVESTMENT AND LIQUIDITY RISK
PR1
Exposure to financial losses or value reduction
arising from adverse movements in currency,
investment markets, counterparty defaults,
or through inadequate asset liability matching.
RISK APPETITE
The Group accepts this risk but has controls in place
to prevent any increase or decrease in the risk
exposure beyond set levels. These controls will result
in early intervention if the amount of risk approaches
those limits.
POTENTIAL IMPACT
Market risk results from fluctuations in asset values, foreign exchange rates and interest rates and has the potential to affect the
Group’s ability to fund its commitments to customers and other creditors, as well as pay a return to shareholders.
Chesnara and each of its subsidiaries have obligations to make future payments, which are not always known with certainty in terms
of timing or amounts, prior to the payment date. This includes primarily the payment of policyholder claims, reinsurance premiums,
debt repayments and dividends. The uncertainty of timing and amounts to be paid gives rise to potential liquidity risk, should the
funds not be available to make payment.
Other liquidity issues could arise from counterparty failures/credit defaults, a large spike in the level of claims or other significant
unexpected expenses.
Worldwide developments in environmental, social, and governance (ESG) responsibilities and reporting have the potential to
influence market risk in particular, for example the risks arising from transition to a carbon neutral industry, with corresponding
changes in consumer preferences and behaviour.
KEY CONTROLS
– Regular monitoring of exposures and performance;
– Asset liability matching;
– Maintaining a well-diversified asset portfolio;
– Holding a significant amount of surplus in highly liquid ‘Tier 1’ assets such as cash and gilts;
– Utilising a range of investment funds and managers to avoid significant concentrations of risk;
– Having an established investment Governance Framework to provide review and oversight of external fund managers;
– Regular liquidity forecasts;
– Considering the cost/benefit of hedging when appropriate;
– Actively optimising the risk/return trade-off between yield on fixed interest assets compared with the associated
balance sheet volatility and potential for defaults or downgrades; and
– Giving due regular consideration (and discussing appropriate strategies (with fund managers)) to longer-term global
changes that may affect investment markets, such as climate change.
RECENT CHANGE/OUTLOOK
There remains a high level of uncertainty in the external operating environment
with a varied outlook globally.
Uncertainty around geopolitics and monetary policy may bring continued market
volatility and potential for shocks. Escalating tariffs could impact inflation, equity
and credit markets.
With greater global emphasis being placed on environmental and social factors
when selecting investment strategies, the Group has an emerging exposure to
‘transition risk’ arising from changing preference and influence of, in particular,
institutional investors. This has the potential to result in adverse investment
returns on any assets that perform poorly as a result of ‘ESG transition’.
Work is ongoing to embed sustainability into the wider strategy of the Group.
Ongoing global conflict brings additional economic uncertainty and volatility
to financial markets. This creates additional risk of poor mid-term performance
on shareholder and policyholder assets.
REGULATORY CHANGE RISK
PR2
The risk of adverse changes in industry
practice/regulation, or inconsistent application
of regulation across territories.
RISK APPETITE
The Group aims to minimise any exposure to this
risk, to the extent possible, but acknowledges that
it may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT
The Group currently operates in three main regulatory domains and is therefore exposed to potential for inconsistent application
of regulatory standards across divisions, such as the imposition of higher capital buffers over and above regulatory minimum
requirements. Potential consequences of this risk for the Group are the constraining of efficient and fluid use of capital within
the Group or creating a non-level playing field with respect to future new business/acquisitions.
Regulatory developments continue to drive a high level of change activity across the Group, with items such as operational
resilience, climate change, Consumer Duty and ESG reporting being particularly high profile. Such regulatory initiatives carry
the risk of expense overruns should it not be possible to adhere to them in a manner that is proportionate to the nature and scale
of the Group’s businesses. The Group is therefore exposed to the risk of:
– incurring one-off costs of addressing regulatory change as well as any permanent increases in the cost base to meet enhanced
ongoing standards;
– erosion in value arising from pressure or enforcement to reduce future policy charges;
– erosion in value arising from pressure or enforcement to financially compensate for past practice; and
– regulatory fines or censure in the event that it is considered to have breached standards or fails to deliver changes to the required
regulatory standards on a timely basis.
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RISK MANAGEMENT • PRINCIPAL RISKS AND UNCERTAINTIES
REGULATORY CHANGE RISK CONTINUED
PR2
KEY CONTROLS
The Group seeks to limit any potential impacts of regulatory
change on the business by:
– Having processes in place for monitoring changes, to enable
timely actions to be taken, as appropriate;
– Maintaining strong open relationships with all regulators,
and proactively discussing their initiatives to encourage
a proportional approach;
– Being a member of the ABI and equivalent overseas organisations
and utilising other means of joint industry representation;
– Performing regular internal reviews of compliance with
regulations; and
– Utilising external specialist advice and assurance,
when appropriate.
Regulatory risk is monitored and scenario tests are performed
to understand the potential impacts of adverse political, regulatory
or legal changes, along with consideration of actions that may be
taken to minimise the impact, should they arise.
RECENT CHANGE/OUTLOOK
There continues to be active regulatory agendas across the territories in which we operate.
The UK Treasury and EIOPA have both been undertaking a review of SII rules implementation. In the UK, this resulted in a reduction
in the SII Risk Margin and similar is expected for the overseas entities from the EIOPA review. The European Parliament approved
the final text of the Solvency II review in 2024 with the Solvency II Directive amended on 5 November 2024. It is expected once
fully entered into force Member States will have two years to transpose it.
There is also potential for divergence of regulatory approaches amongst European regulators, with potential implications for
the Group’s capital, regulatory supervision and structure.
The Group is subject to evolving regimes governing the recovery, resolution or restructuring of insurance companies. As part of the
global regulatory response to the risk that systemically important financial institutions could fail, banks, and more recently insurance
companies, have been the focus of new recovery and resolution planning requirements developed by regulators and policy makers
nationally and internationally. The PRA is expected to publish a policy statement in the near future following CP2/24 Solvent exit
planning for insurers. UK Insurers will be required to prepare a Solvent Exit Analysis (SEA) as part of BAU activities.
In July 2022, the FCA published final rules for a new Consumer Duty and response to feedback to CP21/36 – A New Consumer Duty.
The Consumer Duty regulations set higher and clearer standards of consumer protection across financial services and require firms
to act to deliver good outcomes for customers. The first key regulatory deadline of 31 July 2023 required implementation for new
business, whilst all products including closed books must be compliant by 31 July 2024. Our UK business established a Consumer
Duty project which delivered all requirements across its businesses within the FCA deadline.
The Group has also been progressing activity to implement major regulatory driven operational resilience programmes including UK
Operational Resilience, UK Third Party Risk Management and EU Digital Operational Resilience Act.
ACQUISITION RISK
PR3
The risk of failure to source acquisitions that meet the Group’s criteria
or the execution of acquisitions with subsequent unexpected financial
losses or value reduction.
RISK APPETITE
The Group has a patient approach to acquisition and generally expects
acquisitions to enhance EcV and expected cash generation in the medium
term (net of external financing), though each opportunity will be assessed
on its own merits.
POTENTIAL IMPACT
The acquisition element of the Group’s growth strategy is dependent on the availability of attractive
future acquisition opportunities. Hence, the business is exposed to the risk of a reduction in the
availability of suitable acquisition opportunities within the Group’s current target markets, for
example arising as a result of a change in competition in the consolidation market or from regulatory
change influencing the extent of life company strategic restructuring.
Through the execution of acquisitions, the Group is also exposed to the risk of erosion of value or
financial losses arising from risks inherent within businesses or funds acquired which are not
adequately priced for or mitigated as part of the transaction.
KEY CONTROLS
The Group’s financial strength, strong relationships and reputation as a ‘safe hands acquirer’
via regular contact with regulators, banks and target companies enables the Company to adopt
a patient and risk-based approach to assessing acquisition opportunities. Operating in multi-
territories provides some diversification against the risk of changing market circumstances
in one of the territories. Consideration of additional territories within Western Europe remains
on the agenda, if the circumstances of entry meet the Group’s stated criteria.
The Group seeks to limit any potential unexpected adverse impacts of acquisitions by:
– Applying a structured Board approved risk-based Acquisition Policy including CRO involvement
in the due diligence process and deal refinement processes;
– Having a management team with significant and proven experience in mergers and acquisitions;
and
– Adopting an appropriate risk appetite and pricing approach.
RECENT CHANGE/OUTLOOK
During 2024, the Group announced a second portfolio acquisition from Canada Life which will
see a closed portfolio of unit-linked bonds and legacy pension business transfer to Chesnara’s
UK subsidiary.
There remains a positive pipeline of activity in relation to acquisitions, with the Group also looking
at whether further M&A is possible in Sweden.
The successful Tier 2 debt raise in 2022, in addition to diversifying the Group’s capital structure,
has provided additional flexibility in terms of funding the Group’s future growth strategy.
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STRATEGIC REPORT
DEMOGRAPHIC EXPERIENCE RISK
PR4
Risk of adverse demographic experience
compared with assumptions (such as rates
of mortality, morbidity, persistency etc.).
RISK APPETITE
The Group accepts this risk but restricts its exposure,
to the extent preferred, through the use of reinsurance
and other controls. Early warning trigger monitoring is
in place to track any increase or decrease in the risk
exposure beyond a set level, with action taken to
address any impact as necessary.
POTENTIAL IMPACT
If demographic experience (rates of mortality, morbidity, persistency etc.) deviates from the assumptions underlying product pricing
and subsequent reserving, more or less profit will accrue to the Group.
The effect of recognising any changes in future demographic assumptions at a point in time would be to crystallise any expected
future gain or loss on the balance sheet.
If mortality or morbidity experience is higher than that assumed in pricing contracts (i.e. more death and sickness claims are made
than expected), this will typically result in less profit accruing to the Group.
If persistency is significantly lower than that assumed in product pricing and subsequent reserving, this will typically lead to reduced
Group profitability in the medium to long term, as a result of a reduction in future income arising from charges on those products.
The effects of this could be more severe in the case of a one-off event resulting in multiple withdrawals over a short period of time
(a ‘mass lapse’ event).
KEY CONTROLS
The Group performs close monitoring of persistency levels across all groups of business to support
best estimate assumptions and identify trends. There is also partial risk diversification in that the
Group has a portfolio of annuity contracts where the benefits cease on death.
The Group seeks to limit the impacts of adverse demographic experience by:
– Aiming to deliver good customer service and fair customer outcomes;
– Having effective underwriting techniques and reinsurance programmes, including the application
of ‘Mass Lapse reinsurance’, where appropriate;
– Carrying out regular investigations, and industry analysis, to support best estimate assumptions
and identify trends;
– Active investment management to ensure competitive policyholder investment funds; and
– Maintaining good relationships with brokers, which is independently measured via yearly external
surveys that consider brokers’ attitudes towards different insurers.
RECENT CHANGE/OUTLOOK
Continued cost of living pressures could give rise to higher surrenders and lapses should
customers face personal finance pressures and not be able to afford premiums or need to
access savings. The Group continues to monitor closely and respond appropriately.
Since 2020, we have seen mortality experience in the Netherlands in excess of expectations
due to the direct and indirect consequences of the COVID-19 pandemic. This is reflected in the
shorter-term assumptions but anticipated to fade away in the longer-term assumptions, in line
with industry practice/standard tables.
Any prolonged stagnation of the property market could reduce protection business sales
compared to plan, particularly in the Netherlands.
Following the introduction of new legislation in 2022 making it easier for customers to transfer
insurance policies in Sweden, the transfer market remains very active. This risk continues to be
actively monitored.
EXPENSE RISK
PR5
Risk of expense overruns and unsustainable
unit cost growth.
RISK APPETITE
The Group aims to minimise its exposure to this risk,
to the extent possible, but acknowledges that it
may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT
The Group is exposed to expenses being higher than expected as a result of one-off increases in the underlying cost of performing
key functions, or through higher inflation of variable expenses.
A key underlying source of potential increases in regular expense is the additional regulatory expectations on the sector.
For the closed funds, the Group is exposed to the impact on profitability of fixed and semi-fixed expenses, in conjunction with
a diminishing policy base.
For the companies open to new businesses, the Group is exposed to the impact of expense levels varying adversely from those
assumed in product pricing. Similarly, for acquisitions, there is a risk that the assumed costs of running the acquired business
allowed for in pricing are not achieved in practice, or any assumed cost synergies with existing businesses are not achieved.
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RISK MANAGEMENT • PRINCIPAL RISKS AND UNCERTAINTIES
EXPENSE RISK CONTINUED
PR5
KEY CONTROLS
For all subsidiaries, the Group maintains a regime of budgetary control.
– Movestic and Scildon assume growth through new business such that the general unit
cost trend is positive;
– The Waard Group pursues a low cost-base strategy using a designated service company.
The cost base is supported by service income from third party customers;
– Countrywide Assured pursues a strategy of outsourcing functions with charging structures
such that the policy administration cost is more aligned to the book’s run off profile; and
– With an increased current level of operational and strategic change within the business,
a policy of strict project budget accounting discipline is being upheld by the Group for all
material projects.
RECENT CHANGE/OUTLOOK
The Group has an ongoing expense management programme and various strategic projects aimed at
controlling expenses and seeking opportunities to exploit efficiencies/synergies, whilst ensuring we have
the capabilities and capacity to support our growth ambitions, whilst continuing to keep tight cost control.
Acquisitions also present opportunities for unit cost reduction and the UK business announced a
long-term strategic partnership with Fin Tech market leader SS&C Technologies (‘SS&C’) in May 2023,
to provide policy administration services to the Group’s UK division.
The merger of our businesses in the Netherlands is anticipated to create a more sustainable business
with the potential for further synergies.
Through its exposures to investments in real asset classes, both direct and indirect, Chesnara has an
indirect hedge against the effects of inflation and will consider more direct inflation hedging options
should circumstances determine that to be appropriate.
OPERATIONAL RISK
PR6
Significant operational failure/business
continuity event.
RISK APPETITE
The Group aims to minimise its exposure to this risk,
to the extent possible, but acknowledges that it
may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT
The Group and its subsidiaries are exposed to operational risks which arise through daily activities and running of the business.
Operational risks may, for example, arise due to technical or human errors, failed internal processes, insufficient personnel
resources or fraud caused by internal or external persons. As a result, the Group may suffer financial losses, poor customer
outcomes, reputational damage, regulatory intervention or business plan failure.
Part of the Group’s operating model is to outsource support activities to specialist service providers. Consequently, a significant
element of the operational risk arises within its outsourced providers.
KEY CONTROLS
The Group perceives operational risk as an inherent part of the day-to-day running of the
business and understands that it can’t be completely eliminated. However, the Company’s
objective is to always control or mitigate operational risks, and to minimise the exposure
when it’s possible to do so in a convenient and cost-effective way.
The Group seeks to reduce the impact and likelihood of operational risk by:
– Monitoring of key performance indicators and comprehensive management
information flows;
– Effective governance of outsourced service providers, in line with SS2/21
Outsourcing and Third Party Risk Management, including a regular financial
assessment. Appropriate contractual terms contain various remedies dependent
on the adverse circumstances which may arise;
– Regular testing of business continuity plans;
– Regular staff training and development;
– Employee Performance Management Frameworks;
– Promoting the sharing of knowledge and expertise; and
– Complementing internal expertise with established relationships with external
specialist partners.
RECENT CHANGE/OUTLOOK
Significant operational change is underway across the Group particularly from the merger in the
Netherlands and through the transition and transformation programme in the UK. This may bring
additional operational risk in the shorter term but is anticipated to significantly reduce the risk in the
longer term.
In addition, advancements in operational risk management and control continue to be made as a result
of major regulatory driven operational resilience programmes across the Group, as described below.
Operational resilience remains a key focus for the business and high on the regulatory agenda following
the regulatory changes published by the BoE, PRA and FCA. The Group continues to progress activity
under the UK operational resilience project. The next key regulatory deadline is 31 March 2025; the
deadline by which all firms should have sound, effective, and comprehensive strategies, processes, and
systems that enable them to address risks to their ability to remain within their impact tolerance for each
important business service (IBS) in the event of a severe but plausible disruption. To support this, the
project is currently in the process of running a schedule of ‘real life severe but plausible’ scenario testing.
The Digital Operational Resilience Act (DORA) entered into force in January 2023 and applied from
January 2025. It aims at strengthening the IT security of financial entities such as banks, insurance
companies and investment firms and making sure that the financial sector in Europe is able to stay
resilient in the event of a severe operational disruption. Movestic, Scildon and Waard are considered to
be materially compliant with the new regulations, taking account of their size and overall risk profile, as
well as the nature, scale and complexity of their services, activities and operations. Through 2025, there
will be further activity to fully embed DORA into business as usual operations, closing any residual gaps
and completing the first round of regulatory reporting.
Each division continues to carry out assurance activities through local business continuity programmes
to ensure robust plans are in place to limit business disruption in a range of severe but plausible events.
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IT/DATA SECURITY & CYBER RISK
PR7
Risk of IT/ data security failures or impacts of
malicious cyber-crime (including ransomware)
on continued operational stability.
RISK APPETITE
The Group aims to minimise its exposure to this risk,
to the extent possible, but acknowledges that it
may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT
Cyber risk is a growing risk affecting all companies, particularly those who are custodians of customer data. The most pertinent
risk exposure relates to information security (i.e. protecting business sensitive and personal data) and can arise from failure
of internal processes and standards, but increasingly companies are becoming exposed to potential malicious cyber-attacks,
organisation-specific malware designed to exploit vulnerabilities, phishing and ransomware attacks etc. The extent of the
Group’s exposure to such threats also includes third party service providers.
The potential impact of this risk includes financial losses, inability to perform critical functions, disruption to policyholder services,
loss of sensitive data and corresponding reputational damage or fines.
KEY CONTROLS
The Group seeks to limit the exposure and potential impacts from IT/data security failures or cyber-crime by:
– Embedding the Information Security Policy and Group Cyber Response Framework in all key operations and development processes;
– Seeking ongoing specialist external advice, modifications to IT infrastructure and updates as appropriate;
– Delivering regular staff training and attestation to the Information Security Policy;
– Regular employee phishing tests and awareness sessions;
– Ensuring that the Board maintains appropriate information technology and security knowledge;
– Conducting penetration and vulnerability testing, including third party service providers;
– Executive Committee and Board level responsibility for the risk, including dedicated IT Security Committees with executive membership;
– Having established Group and supplier disaster recovery and business continuity plans which are regularly monitored and tested;
– Ensuring the Group’s outsourced IT service provider maintains relevant information security standard accreditation (ISO27001);
– Monitoring network and system security including firewall protection, antivirus and software updates; and
– The Group has cyber insurance in place which covers all of the UK operations including head office. Elsewhere in the Group, where
cyber insurance is not in place, we are able to access support and resources (e.g. forensic analysis) through existing contracts with
third parties.
In addition, a designated steering group provides oversight of the IT estate and information security environment including:
– Changes and developments to the IT estate;
– Performance and security monitoring;
– Oversight of information security incident management;
– Information security awareness and training;
– Development of business continuity plans and testing; and
– Overseeing compliance with the Information Security Policy.
RECENT CHANGE/OUTLOOK
The Group continues to invest in the incremental
strengthening of its cyber risk resilience and response options.
During 2024, there have been no reports of any material
data breaches.
The risk of cyber-crime campaigns particularly originating
from state sponsored attacks remains heightened as a result
of the ongoing geopolitical unrest.
During 2024, the Group has continued to test and seek
assurance of the resilience to cyber risks, this has included:
– Completing a ransomware scenario test, which involved
one business unit, group crisis management team and
Group Board. A lessons learned session has been held
with relevant actions identified;
– Regular phishing testing and training campaigns;
– Board training and awareness; and
– Ongoing penetration testing and vulnerability management.
Enhancements to the IT control environment have also been
made as a result of implementation of EU Digital Operational
Resilience Act in our overseas business units, which came
into effect on 17 January 2025.
NEW BUSINESS RISK
PR8
Adverse new business performance compared
with projected value.
RISK APPETITE
The Group does not wish to write new business that
does not generate positive new business value (on a
commercial basis) over the business planning horizon.
POTENTIAL IMPACT
If new business performance is significantly lower than the projected value, this will typically lead to reduced value growth in the
medium to long term. A sustained low-level performance may lead to insufficient new business profits to justify remaining open
to new business.
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RISK MANAGEMENT • PRINCIPAL RISKS AND UNCERTAINTIES
NEW BUSINESS RISK CONTINUED
PR8
KEY CONTROLS
The Group seeks to limit any potential unexpected adverse impacts to new business by:
– Monitoring quarterly new business profit performance;
– Investing in brand and marketing;
– Maintaining good relationships with brokers;
– Offering attractive products that suit customer needs;
– Monitoring market position and competitor pricing, adjusting as appropriate;
– Maintaining appropriate customer service levels and experience; and
– Monitoring market and pricing movements.
RECENT CHANGE/OUTLOOK
Increased expenses and price pressure remains a risk for the ongoing viability of writing profitable new
business across the Group and the Swedish transfer market remains active following regulatory changes
which give greater transfer freedom.
Market share is currently being maintained in the Netherlands with activity to look at some broader
wealth products.
In Sweden, action is being taken to diversify distribution partners whilst expanding product offering
across unit-linked, custodian and life & health markets.
The UK continues to write new business primarily through the onshore bond wrapper acquired as part of
Sanlam Life & Pensions UK.
REPUTATIONAL RISK
PR9
Poor or inconsistent reputation with customers,
advisors, regulators, investors, staff or other key
stakeholders/counterparties.
RISK APPETITE
The Group aims to minimise its exposure to this risk,
to the extent possible, but acknowledges that it
may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT
The Group is exposed to the risk that litigation, employee misconduct, operational failures, the outcome of regulatory investigations,
press speculation and negative publicity, disclosure of confidential client information (including the loss or theft of customer data),
IT failures or disruption, cyber security breaches and/or inadequate services, amongst others, whether true or not, could impact
its brand or reputation. The Group’s brand and reputation could also be affected if products or services recommended by it (or any
of its intermediaries) do not perform as expected (whether or not the expectations are realistic) or in line with the customers’
expectations for the product range.
Any damage to the Group’s brand or reputation could cause existing customers or partners to withdraw their business from the
Group, and potential customers or partners to elect not to do business with the Group and could make it more difficult for the
Group to attract and retain qualified employees.
KEY CONTROLS
The Group seeks to limit any potential reputational damage by:
– Regulatory publication reviews and analysis;
– Timely response to regulatory requests;
– Open and honest communications;
– HR policies and procedures;
– Fit & Proper procedures;
RECENT CHANGE/OUTLOOK
The Group is exposed to strategic and reputational risks arising from its action
or inaction as part of its sustainability strategy. This includes the risks
associated with not meeting our published targets and there are regulatory
and reputational risks arising from our public disclosures on the matter through
the potential of unintentional greenwashing.
The Group has a published sustainability strategy which aims to provide clear
and honest disclosure of the actions being taken, the rationale for those actions
and areas of uncertainty.
MODEL RISK
PR10
Adverse consequences from decisions based
on incorrect or misused model outputs, or fines
or reputational impacts from disclosure of
materially incorrect or misleading information.
RISK APPETITE
The Group aims to minimise its exposure to this risk,
to the extent possible, but acknowledges that it
may need to accept some risk as a result of carrying
out business.
POTENTIAL IMPACT
The Group and each of its subsidiaries apply statistical, economic and financial techniques and assumptions to process input data
into quantitative estimates. Inaccurate model results may lead to unexpected losses arising from inaccurate data, assumptions,
judgements, programming errors, technical errors, and misinterpretation of outputs.
Potential risk impacts of inaccurate model results include:
– Poor decisions, for example regarding business strategy, operational decisions, investment choices, dividend payments
or acquisitions;
– Potentially overestimating the value of acquisitions resulting in over payment;
– Misstatement of financial performance or solvency, resulting in misleading key shareholders or fines; and
– Provision of inaccurate information to the Board on business performance resulting in poorly informed or delayed decisions.
– Operational and IT Data Security Frameworks;
– Product Governance and Remediation Frameworks;
– Appropriate due diligence and oversight of outsourcers
and third parties; and
– Proactive stakeholder engagement with inclusivity
for all stakeholders.
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MODEL RISK CONTINUED
PR10
KEY CONTROLS
– Robust model Governance Framework and independent
standards of ‘do-check-review’;
– Independent model validation & internal audit review;
– Monitoring and reporting of risk appetite limits;
– Documented processes and policies;
– Ongoing and regular data quality assessment checks;
– Model version control and user access restrictions;
– Robust due diligence processes on acquisitions including
external support on model development/review; and
– Intra-Group financial reporting planning, monitoring and
delivery management.
RECENT CHANGE/OUTLOOK
Model risk management is becoming an increased area of focus of the regulators, particularly in the UK banking industry, with PS6/23 and
SS1/23 becoming effective for bank and building societies on 17 May 2024, and an expectation that further guidance will follow for insurers.
The Group is in the process of embedding a new aggregation model (Tagetik) that provides greater access control for Group consolidation on
both IFRS and SII bases.
Many insurers, including Chesnara, are exploring the use of artificial intelligence, including the risks and opportunities arising. While this
increases the opportunity to benefit from expense synergies, it also has the potential to introduce additional model risk. Conversely though,
there are also opportunities to reduce model risk by applying machine learning techniques to validation and sense checking of results.
As part of the Group’s operational resilience programme, the Group is undertaking a review of the operational resilience of its financial
reporting and modelling processes. This includes resilience scenario testing of the processes, and is expected to improve efficiency and
model risk mitigation.
CLIMATE CHANGE RISK
PR11
Exposure to adverse consequences
of the physical or transitional risks
arising from climate change.
RISK APPETITE
The Group aims to restrict its exposure
to climate change risk, such that it can
continue to operate within the existing
risk tolerance limits for the associated
risks and potential impacts. The risk
impacts below can have a direct impact
on the operations of the Group and, more
significantly, to the businesses within the
Group’s investment universe.
POTENTIAL IMPACT
Physical risks impacts
– Extreme weather events such as floods, hurricanes, and wildfires can damage physical assets leading to direct business interruption as well as
indirect consequences due to the impact on the supply chain.
– Sustained but gradual changes in the weather can also lead to both direct and indirect disruption of business operations, affecting everything
from third parties to data centres.
Transitional risks impacts
– New regulations aimed at reducing carbon emissions may impact the profitability of certain investments, particularly in carbon-intensive industries.
– As the economy transitions to greener technologies, there may be shifts in market demand, affecting the value of investments in traditional
energy sectors.
– Inflationary impacts from global climate policy failure, including on energy prices.
– Reputational damage if we are seen to be failing to manage the effects of climate change or to deliver on our targets/commitments.
– Litigation risk if we are considered not to have published enough information or to have made unsubstantiated claims leading to ‘greenwashing’.
KEY CONTROLS
– Quantitative analysis of the potential impact of
climate change on our business;
– Working towards embedding climate change risk
into investment and operational decision making
across the business;
– Providing clear and honest disclosure on our
targets and commitments and where there are
areas of challenge and uncertainty for those targets;
– Robust Risk and Governance Frameworks;
– Monitoring of associated KPIs;
– Using external data providers to provide groupwide
ESG data on our asset portfolio;
– Factoring an assessment of climate commitments
into the selection of prospective partners; and
– Factoring sustainability-related risk analysis into the
due diligence completed on potential acquisitions.
RECENT CHANGE/OUTLOOK
To manage the risks associated with climate change, financial institutions are increasingly adopting advanced data and modelling techniques.
Additionally, regulatory bodies require financial institutions to perform climate scenario analyses to test their resilience to emerging climate-related
financial risks. COP 29 emphasised the crucial role of non-party stakeholders such as businesses, investors and society, in driving global climate
action. The outcomes reflected the ongoing efforts to enhance global climate action and cooperation although it was made clear more ambition
and concrete plans are needed to meet the 1.5°C target.
In early 2025, the United States of America implemented a number of actions and executive orders that have potentially wide reaching implications
for climate change and global action plans.
The Group has aligned its targets with the Paris Climate Agreement and aims to be net zero for all emissions by 2050. Our climate transition plan is
being developed using the IIGCC’s Net Zero Investment Framework 2.0 and is due to be published later this year.
A Chesnara Group Climate Risk Report was produced for the first time in 2024 and was presented to the Board. The report includes an estimated impact
on Own Funds from climate risk, demonstrating the potentially significant impact of climate change, and the mitigating actions that are being taken.
Whilst we consider climate change to be a cross-cutting risk, that manifests through other Principal risks (e.g. equity, credit, regulatory etc), the
Group has recently enhanced its climate change risk modelling by utilising MSCI data, and this has increased our assessment of the potential
materiality of potential impacts in the longer term. It is a significant step forward in terms of coverage, granularity and robustness of Chesnara’s
climate risk analysis compared to our previous approach and, as a result, climate change risk has been included as an explicit principal risk, to make
more explicit the exposure to potential adverse consequences of the physical and transitional risks that could arise from climate change.
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CORPORATE
& SOCIAL
RESPONSIBILITY
We are committed to transitioning to become
a sustainable group and manage our business
for the long-term benefit of all stakeholders,
including our customers, investors, employees,
regulators, suppliers and partners, local
communities, and the planet.
Transitioning to a sustainable group
We have a clear corporate and social purpose. As a business,
we help protect our customers and their families from the
economic impact of an early death through our product offering,
and help support them during retirement through pension and
investment savings. We believe that stakeholder value creation
is best delivered through the embedded consideration of
environmental, social and governance issues. In this regard,
among our key considerations are the following strategic aims:
– Care for our customers, helping them create financial security
now and for the future;
– Investments focusing on long-term sustainability and strong
financial solvency for the Company;
– Assessing and managing our impact on the planet and natural
environment, including managing climate-related and wider
sustainability-related risks; and
– Maintaining a long-term sustainable working environment for
our staff, suppliers and partners and local communities.
Our Annual Sustainability Report (www.chesnara.co.uk/
sustainability) provides detail on the work we are doing to
become a sustainable Chesnara, including setting out our
sustainability vision and targets. We want sustainability at the
heart of decision making at all levels across the business and
are basing our work on the mantra of ‘Do no harm. Do good.
Act now for later’. Our commitments are:
1. Supporting a sustainable future, including our net zero
transition plans.
2. Making a positive impact, including our plans to invest in
positive solutions.
3. Creating a fairer world, ensuring our Group is an inclusive
environment for all employees, customers and stakeholders.
These commitments have been developed with consideration of
the UN Sustainable Development Goals. These 17 goals are an
urgent call to action to promote peace and prosperity for people
and the planet, now and into the future. We’ll focus our activities
on those goals where we feel we can have the greatest impact;
however, we will support all of the goals wherever possible.
Embedding sustainability
Embedding sustainability into decision making at all levels
across the Group is a fundamental part of what we are working
to achieve. This is vitally important as sustainability needs to be
part of every strategic conversation. Our Annual Sustainability
Report (ASR) gives more detail on what we are going to do to
achieve this.
As described on pages 59 and 93 to 103, a key part of this
work includes the annual review of the effectiveness of our Risk
Management System and the system of governance to ensure
that we can achieve our business objectives and safeguard the
interests of our stakeholders. The overall conclusion from the
review conducted in 2022 was that the Group has a stable and
well understood risk profile, controlled by an effective and
embedded system of governance.
We believe that sustainability is not solely for our Board and
leadership teams, and we have taken and will continue to take
steps to educate, involve and support our workforce and other
stakeholders, including our suppliers, in the delivery of our
sustainability strategy. In 2024, we delivered our groupwide
Sustainability and Skills Development Programme for all staff.
In addition, the Group and divisional directors received training
on transition planning, delivered by the Institutional Investors
Group on Climate Change (IIGCC). Each of our businesses
has also incorporated sustainability into its Investment Policy,
Investment Committee Terms of Reference and investment
decision making. We are expanding this to capture all
policies across the business to ensure that sustainability
is a key consideration.
The sustainable management of our Assets Under Administration
(AuA) is a critical component of our sustainability journey.
In all three of our territories, we work with fund managers
that are committed to the UN SDGs and the UN’s Principles
of Responsible Investment (UNPRI). Both Chesnara and
Movestic Livförsäkring are signatories to the UNPRI. As well
as this, we are signatories to the UN Global Compact and will
submit an annual Communication on Progress report setting
out specific actions taken with regard to the four designated
categories covering human rights, labour, environment and
anti-corruption. Chesnara is also a signatory of the Finance
for Biodiversity Pledge.
Our TCFD report on pages 74 to 91 describes our assessment
of climate change risks and opportunities under four pillars –
Governance; Strategy; Risk Management; and Metrics and
Targets. Further regulatory and disclosure requirements around
sustainability are forthcoming and we will take measures
to ensure that we give full and appropriate disclosure of our
progress as these standards are issued.
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DO NO HARM.
DO GOOD.
ACT NOW FOR LATER.
OUR MANTRA
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CORPORATE & SOCIAL RESPONSIBILITY •
OUR CUSTOMERS
Customer care
Our actions are always underpinned by our focus on delivering good outcomes to customers.
We understand that every customer is different, yet everyone deserves good service. We are taking
action across the Group to continue to identify potential enhancements including some that can
improve our customers’ experiences. A key part of this work in 2024 has been complying with
the requirements of the UK Consumer Duty, including a review of our customer journeys and
communications and completing fair value assessments of the products our customers have with us.
Our products and services
We offer and manage life and health insurance and pension products for our customers to help them
meet their financial goals. We achieve this by paying attention to and understanding the customer’s
point of view, by regularly asking for feedback and by investigating any complaints thoroughly and
promptly. Lessons learned from our interactions with customers are used to train and develop our
staff, make our processes more efficient and to take further steps to ensure our policyholders are
treated fairly. Our aim is to consistently exceed industry service standards.
Reuniting customers with their policies
We appreciate that customers can lose touch with their policies due to business acquisitions, house
moves, name changes and the passage of time, so we actively try to trace and recontact customers
wherever possible.
Digitalisation
Advancements in technology and data usage are having a significant impact on how business is
conducted, and the way regular communication is taking place. We have continued to invest in digital
technology and applications so that we can meet the expectations of our business partners and
customers, whilst maintaining the traditional contact methods for customers that are more
comfortable using that option.
Regulatory compliance
We maintain an open and constructive relationship with the regulators in the jurisdictions we operate
in. Understanding and implementing regulatory requirements is a key part of management
responsibility, including the timely and accurate submission of information requested by the regulator.
None of the business entities were subject to any regulatory intervention during 2024 and no
penalties were imposed.
Health, safety and welfare at work
As a responsible business, we place primary importance on the health, safety and welfare of our
employees. We operate a hybrid working model across all of our geographies, taking into account
individual circumstances where necessary so that appropriate support can be provided.
Our colleagues have access to a range of initiatives that benefit their physical and mental wellbeing,
including comprehensive health insurance, annual health checks and Employee Assistance
Programmes. All staff are made aware of these benefits through contracts of employment, policies
and staff briefings.
Employees are supported by policies that promote a healthy work/life balance, including flexible
working, compressed hours, summertime hours, remote working, enhanced maternity and paternity
leave, and paid sickness, bereavement and carers’ leave. They are also reminded of their duty to act
responsibly and do everything possible to prevent injury to themselves and others. Management
teams across the Group monitor the level of sick leave and absence and, where necessary, they
take appropriate action to address any issues identified.
Relevant policies and procedures are reviewed on a regular basis so as to ensure that they meet
appropriate standards. Any hazards or material risks are removed or reduced to minimise or, where
possible, exclude the possibility of accident or injury to employees or visitors.
Equal opportunities and diversity
The Group always aims to attract, promote and retain high quality candidates suitable for the roles
within all its operations. Our approach is to be open, entrepreneurial, transparent and inclusive in
how we select and manage our employees.
We are committed to providing equal opportunities in employment and will continue to treat all
applicants and employees fairly regardless of race, age, gender, marital status, ethnic origin, religious
beliefs, sexual orientation or disability. The Group has policies in place to ensure that no employee
suffers discrimination, harassment or intimidation and to effectively address any issues that do come
to light.
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Gender diversity forms an important part of Chesnara’s selection and appointment process
at Group level. Our gender disclosure workings include ‘non-binary’, ‘other’ and ‘prefer not to say’
as further categories of gender to ensure our categories of gender are fully inclusive for all staff.
We define executive management as: non-executive and executive directors, Group senior
leaders and business unit CEOs.
The executive management data presented in the table is based on collected data. Other employees
of the Group are based on observational data, which we acknowledge as an area for improvement.
We are working on collecting this data more formally from our Group where possible and enhancing
the granularity of our data, noting there are limitations on what we can reasonably collect from our
staff, and in particular in differing jurisdictions. The Corporate Governance Report contains further
analysis of diversity on our Board and wider executive management.
Employees with a disability
The Group endeavours to provide employment for people with a disability wherever the requirements
of the business allow and if applications for employment are received from suitable applicants.
Where an existing member of staff becomes disabled, every reasonable effort is made to achieve
continuity of employment by making reasonable adjustments to give the staff member as much
access to any training, promotion opportunities and employee benefits that would otherwise be
available to any non-disabled employee.
Staff training and development
Our employees are a key asset of the Chesnara business and we invest in our staff through
individual and Group training and development plans. All staff are encouraged and supported
to acquire relevant knowledge and build their skills and competence. Financial support is provided
to staff who wish to achieve recognised qualifications that are appropriate for specific roles and the
needs of the business.
Fair pay
We are a Living Wage employer, paying the real living wage in the UK. We also engage with our
suppliers to raise the profile of paying a wage that enables people to meet their everyday needs.
All UK employees, subject to a minimum service requirement, have access to our SAYE scheme,
improving employee engagement with company performance and directly linking a proportion of
employee benefits to our performance.
As we have done in previous years, the Remuneration Committee consulted with employees on the
alignment of directors’ pay with UK employees ahead of the 2024 year. The same engagement has
since taken place in late 2024 for the 2025 calendar year.
Details of our staff pay and benefits, and in relation to executive pay, are set out in the corporate
governance section as part of our Remuneration Report.
2024
2023
Year end headcount
Male
Female
Total
Male
Female
Total
Directors of Chesnara plc
4
3
7
5
3
8
Group senior leaders
4
4
8
4
4
8
Executive management total
8
7
15
9
7
16
Executive management gender split %
53.3
46.7
56.3
43.8
Employees of the Group
190
181
371
175
175
350
Total
198
188
386
184
182
366
Total gender split %
51.3
48.7
50.3
49.7
Note:
The number of staff reported in the table above is based on the number of employees employed at the year end.
This differs to the employee note, which is calculated based on average FTEs during the course of the year.
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Employee engagement
Across our businesses, we provide high quality jobs with competitive remuneration along with
requisite training and good working conditions. Regular contact with employees and keeping them
updated on business strategy, priorities and achievements is a key part of management responsibility
at Chesnara. Frequent employee engagement has become even more important over the last few
years given the shift to more remote working. Each of our businesses has a multi-channel approach
for effective employee communication such as regular updates from the CEO, monthly team and
departmental meetings, Company briefings, discussions via Employee Forums, and the use of
employee surveys to highlight issues and drive any necessary change.
As the Workforce Engagement NED appointed by the Chesnara Board, Carol Hagh’s liaison with the
CEOs, HR teams and Employee Forum representatives has been invaluable in terms of independent
engagement with staff and also for the ongoing assessment of our culture and embedding of our
values across our UK, Swedish and Dutch divisions.
Within the UK division, the Employee Forum has continued to meet on a monthly basis. This forum
comprises staff members who represent each functional area, rotated from time to time, for the
purposes of discussing any matters of concern or areas of interest for the staff and management.
Our operations in Sweden and the Netherlands make similar use of Employee Forums, staff surveys,
formal and informal employee engagement both at the individual, team and whole Company level.
In the Scildon business, this is formalised through the operation of a Works Council and, in Sweden,
staff representation is via a Working Environment Committee and a trade union.
The Group’s aim is to continue to grow via acquisition of life assurance businesses and our due
diligence plan incorporates an assessment of all relevant workforce matters which are reported
to the Board to assist its deliberations on any potential acquisition opportunities.
Whistleblowing
At Chesnara, we strongly encourage all employees, suppliers, customers, and other contracted
parties experiencing concerns about any aspect of the Company’s work to come forward and
report them. Our policies make sure anyone can voice concerns without fear of reprisal, and we
strive to maintain effective mechanisms throughout our Group to ensure any concerns are
appropriately remedied. Each of our divisions make use of stringent policies and procedures to
ensure that the highest standards are met across the Group. These policies are made in accordance
with the relevant laws and regulations of the respective jurisdictions and are available in local
languages. Policies are reviewed on an annual basis and any changes made are communicated
to individuals throughout the Company.
In the UK, the Audit & Risk Committee Chair is appointed as a Whistleblowing Champion, whose
responsibilities are aligned to the prescribed requirements set out in the PRA’s Senior Managers
Certification Regime. The policy is shared with all new joiners and whenever it is updated it is
provided to all existing employees. Similar arrangements are in place within our overseas divisions
with the policies being available in employees’ local languages. Confirmation was also received
that each material outsource service provider (OSP) has a Whistleblowing Policy in place which
is provided to all employees.
Our suppliers and business partners
At Chesnara, we believe in developing mutually respectful and sustainable relationships with our
suppliers and business partners. Our preference is to establish long-term relationships where they
remain commercially competitive and operationally viable. This is achieved through a structured
due diligence process before selection, followed by clear agreement of the business objectives,
consistent implementation of regulatory requirements and relevant policies, and effective attention
to resolving issues fully. We require our suppliers and business partners to apply high standards
of ethical conduct in all their dealings with us and their other stakeholders.
We are conscious that through our outsourcing arrangements we indirectly utilise the services
of a much larger workforce and we seek to ensure that our suppliers are similarly adopting
appropriate arrangements for proper engagement with their own workforces.
As part of our work to decarbonise our operations, in 2024 we have engaged a defined set of
suppliers to understand how they are taking action on climate change. This is the first step in
creating a long-term supplier engagement initiative.
CORPORATE & SOCIAL RESPONSIBILITY • OUR CUSTOMERS
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Human Rights and the Modern Slavery Act 2015
Human rights are the basic rights and freedoms that belong to all human beings regardless
of nationality, gender, race, age, religion, language, physical or mental ability or any other
political, economic or social status. Such rights are protected by the rule of law through legal
mechanisms designed to prevent abuse by those in positions of power.
Modern slavery is just one such form of human rights abuse. In addition to the freedom
of expression, human rights includes:
– the right to life;
– prohibition on torture;
– the right to a fair trial; and
– the right to fair and just working conditions.
The Group has zero-tolerance to the abuse of human rights and modern slavery and is committed
to acting ethically and with integrity in all of its business dealings and relationships. We seek to
avoid causing or contributing to adverse human rights impacts by operating and enforcing effective
systems and controls to ensure human rights abuse and modern slavery are not taking place
anywhere in the Group or its supply chains.
The Modern Slavery Act (2015) requires a commercial organisation over a certain size to publish
a slavery and human trafficking statement for each financial year.
The Modern Slavery Act does not apply to our European divisions, but instead they adhere to the
European Convention on Human Rights (ECHR) treaty which is similarly designed to protect people’s
human rights and basic freedoms.
In the UK, our Human Rights & Modern Anti-Slavery Policy is made available to our entire workforce
and is also available at www.chesnara.co.uk/sustainability/modern-anti-slavery-statement
There have not been any breaches of human rights or the Modern Slavery Act during the
reporting period.
Anti-bribery and corruption
In addition to other financial control policies, Chesnara has groupwide Anti-Money Laundering and
Anti-Bribery & Corruption policies in place which are reviewed at least annually. Their scope includes
all directors, employees and third-parties operating on behalf of the Group.
We have zero tolerance to financial crime, including money laundering and bribery and corruption.
Our Internal Control Framework includes the maintenance and review of a Gifts & Hospitality
Register, the disallowance of any political contributions or inducements and careful consideration
of any charitable donations. These controls act as a monitoring and prevention system. Policies are
made available to all staff and they are required to attest that they have read and understood their
importance and application. There were no instances of money laundering or bribery or corruption
in the period.
Taxation
We strive to ensure that we pay our fair share of tax across the Group and that we do so in a
transparent manner. We adopt a responsible and open approach to taxation and, consequently,
pay the appropriate taxes due throughout the Group, details of which are set out in the respective
Annual Report and Accounts for each of our operating entities.
Our communities
Chesnara’s management and staff support local community initiatives to the extent deemed
appropriate given our financial responsibilities as a public limited company. Chesnara supports
charitable causes both locally and internationally, donating £9k across the Group during 2024
(2023: £36k).
We have provided financial and non-financial assistance to charitable organisations including UNICEF,
Sherpa, Justdiggit and Safenet. UK colleagues also can donate through a Give as You Earn scheme,
supported by the Charities Aid Foundation.
Our people across the UK and Netherlands can take two days’ paid leave each year to volunteer.
The planet
We know that we have a commitment to do all we can to protect the planet and all of its inhabitants.
Our work to tackle the climate and nature emergencies, including our net zero targets, is detailed in
our Annual Sustainability Report.
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CORPORATE & SOCIAL RESPONSIBILITY • CLIMATE-RELATED FINANCIAL DISCLOSURES
This report is in support of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD). The relevant TCFD
recommendations have been referenced throughout the disclosures to show where they have been addressed.
Our compliance with TCFD
All disclosures in respect of the TCFD Recommendations and Recommended disclosures are on pages 74-91 with additional information such as illustrations and case studies included in the
Annual Sustainability Report which is cross referenced where applicable throughout this section.
Our Annual Sustainability Report
Alongside the financial statements, the Group has published its 2024 Annual Sustainability Report
(www.chesnara.co.uk/sustainability) and provides further detail on a number of items noted
in this report which are referenced as appropriate.
Steps to address climate-related risks during 2024
Development of our climate transition plan
using the IIGCC’s Net Zero Investment
Framework 2.0 underway
Complied with the Energy
Savings Opportunities
Scheme Regulations 2014
Updated our UK Expense Policy
to encourage sustainable travel
Embedded
sustainability into the
acquisition process
Delivered
sustainability training
to all employees
across the Group
Joined UK Sustainable Investment
and Finance Association, Finance
for Biodiversity Foundation and
became a signatory to the
Principles for Responsible
Investment
Enhanced our climate risk modelling,
including assessing our Climate Value
at Risk (CvaR)
Engaged with our largest
suppliers and asset managers
on their climate strategy
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The chart below sets out the Group reporting structure and how the Board has delegated climate-related risk and opportunity oversight to its various committees.
GOVERNANCE
The Chesnara Board sets the values and culture of how the business operates and the Group invests time and resources to ensure that the governance
structures in place remain appropriate for the evolving business and regulatory landscape. Further information on the Group’s governance is provided in
the corporate governance section.
The business units, with their own local governance structures and Boards, feed climate-related matters into the Group governance structure via GSC reporting,
quarterly business reviews, risk reporting and annual local business plans (note this list is not exhaustive) where applicable.
Sustainability is being embedded into succession planning and recruitment on a role-by-role basis, and forms part of the overall skills matrix for the Chesnara Board
in order to ensure the Board and committees have appropriate knowledge and competency to be able to oversee climate-related matters.
CHESNARA GROUP BOARD
Meets at least quarterly
The Board defines the Group’s strategic aims, ensures that the necessary resources and structures are in place and sets the targets to review
management performance. The Board benefits from regular sustainability reporting covering environmental, social and governance matters.
GROUP AUDIT & RISK COMMITTEE (GA&RC)
Meets at least quarterly
The role of the GA&RC includes reviewing and
monitoring the current and potential risk
exposures, including the monitoring of
climate-related risk exposures across the Group
and how such risks are treated. The GA&RC
reviews external reporting, including with regards
to climate-related risks and opportunities.
NOMINATION & GOVERNANCE COMMITTEE
Meets a minimum of three times a year
The Nomination & Governance Committee plays a key role
in ensuring that the composition of the Board and its
subsidiaries is appropriate and that members have the
necessary skills, knowledge and experience to discharge
their duties effectively, including with regards to climate
change. It is also responsible for reviewing the Group’s
governance practices and procedures to ensure they
remain appropriate and reflect best practice.
GROUP REMUNERATION COMMITTEE
Meets a minimum of three times a year
The role of the Remuneration Committee is to
ensure that the Remuneration Policy promotes,
encourages and drives long-term growth of
shareholder value of which climate change is a key
consideration. In 2024, a 20%/15% weighting of the
Group CEO and CFO strategic objectives were
linked to sustainability actions.
GROUP SUSTAINABILITY COMMITTEE (GSC)1
Meets at least quarterly
The GSC interacts with the Board and the committees above and below in the following ways: with the Board on the sustainability strategy and embedding it into the
overall group strategy; with the GA&RC on ESG risks and external disclosures, including TCFD; with the Nomination & Governance Committee on matters regarding
Board composition and sustainability-related skills, knowledge and experience of the Board and Board committees; with the Remuneration Committee on trends in which
management is and should be incentivised on ESG factors; with the GIC on investment-related matters, including the transition plan to net zero; and with the SLT and
divisional Executive Committees to facilitate all of the above.
Board
Board committees
Group Sustainability Committee
Group Executive Committees
1 The GSC is not a Board committee but operates across the Group, interfacing with the Board and working
with its Board committees and Group Executive Committees.
GROUP CEO
SENIOR LEADERSHIP TEAM (SLT)
Meets monthly
The SLT is in place to challenge and support the Group CEO. It supports the
identification and review of risks impacting the Group, including any material
variations in the impact of climate change upon the Group, as well as the
monitoring of risk appetite compliance. It also supports oversight of the
sustainability programme.
GROUP INVESTMENT COMMITTEE (GIC)
Meets twice a quarter
The GIC is in place to challenge and support the Group CEO. The GIC
Terms of Reference specifically include consideration of ESG factors,
including overseeing the asset managers’ approach to ESG and climate
change related matters.
a) Board oversight of climate-related risks and opportunities
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How climate-related risks and opportunities are
identified and considered
The divisions are responsible for identifying their own climate-related risks and opportunities through
assessing potential matters that may impact the business. These risks and opportunities, together
with those areas that may impact the Parent Company or Group as a whole, are reviewed by the
Group Head of Sustainability and the Group Chief Risk Officer & Chief Actuary, to form an
assessment of the risks and opportunities for the Group. The risks and opportunities are reassessed
regularly so that, if a material risk was to arise, we would add it to the risk and opportunity register to
ensure that it is are evaluated according to the Risk Management Framework and evolving climate-
related matters.
Who is assigned responsibility?
Management responsibility for matters related to climate change is assigned to the Group Chief
Executive at Group level and the respective CEOs at business unit level. All divisions and business
units are responsible to the relevant divisional Chief Executive who has dual reporting lines to
the divisional Board and the Group Chief Executive. Sustainability forms part of the executive
management variable remuneration, and the ratio allocated to sustainability will continue to be
assessed on an ongoing basis.
How management and Board members are informed of and monitor
climate-related risks and opportunities
Group Board: receives regular reporting on sustainability, including climate change. This includes
consideration of the Group climate change risk assessment (through the GA&RC), and the overall
vision and approach of the Group in regards to sustainability and groupwide climate change-related
scenario analysis. Specific training on transition plans and their key elements was delivered to
executive and non-executive directors across the Group during 2024.
Group Sustainability Committee: chaired by Jane Dale, the Group’s Senior Independent Non-
Executive Director. Its membership consists of the executive management across the Group
and its divisions. This committee is the key focal point for the review of climate-related risks and
opportunities and links in with the other Group governance committees. The GSC annual agenda
planner determines which topics are covered at each meeting and those meetings, together with
the GIC and SLT, will determine the items to be escalated to the Board. The interactions of the
GSC with the different committees and the Board are detailed on the previous page. Jane’s tenure
as a Non-Executive Director of the Group is ending in May 2025 and therefore steps to appoint
a replacement chair are ongoing.
Senior Leadership Team: regularly discusses climate-related risks and opportunities and how they
factor into business planning, strategy and risk management.
Group and local Investment Committees: working with the GSC, the Group Investment
Committee (GIC) focuses on the just transition of the Group’s asset portfolio in line with its net zero
targets. The GIC and GSC also work together to identify potential further areas of impact investing.
The local Investment Committees are fundamental to the transition by providing oversight of the
asset managers across the Group. They also approve and oversee the application of investment
policies which incorporate climate and sustainability related considerations.
Sustainability workstream working groups: these groups consist of our key sustainability leaders
across all divisions for investments, operations and reporting. Progress is reported directly into the
GSC. In addition, we have established a Transition Plan Steering Group to oversee and direct the
production of our transition plan and delivery of the actions that will be identified.
Acquisitions: as part of the due diligence process, for potential acquisitions of entities, we assess
the target company’s approach to climate-related risks and consider the emissions of their operations
and underlying assets. For potential acquisitions of books of business, we assess the Climate Value
at Risk and financed emissions of the assets.
b) Management’s role in assessing and managing climate-related risks and opportunities
CORPORATE & SOCIAL RESPONSIBILITY • CLIMATE-RELATED FINANCIAL DISCLOSURES
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As highlighted above, we are already taking steps to embed sustainability, including the Group’s approach to climate risk and decarbonisation, as
a fundamental part of our strategy. Changes in the environment and the impacts of global warming could potentially affect how we achieve our
strategic objectives either through the way we operate our businesses or through the returns to our customers and shareholders. We are committed
to continuing to develop sustainability-informed investment and operational decision making across the Group.
Climate-related risks and opportunities
We have identified and assessed the impact of climate-related risks and opportunities on the Group’s business, strategy and financial planning over short-, medium- and long-term time
horizons. This process is based on the below framework, considering the materiality, time horizons and types of risk.
TIME HORIZON
MATERIALITY
TYPES OF RISK
Short term
up to 12 months – in line with budget setting process
Medium term
2 to 5 years – in line with our business planning and Own
Risk and Solvency Assessment (ORSA) projection period
Longer term
6+ years – post business plan horizon
During the setting of the time horizon profile, we considered
the useful life of the Group’s assets and believe our definition
takes this into account. The average duration of the wider
Group’s assets is between 5-10 years, but the Group is
acquisitive and writes longer-term business for our insurance
liabilities so the risk assessment needs to consider a longer
time horizon also. The short-term period of 12 months aligns
with the risk basis that underpins SII, and the medium term
is aligned to our business planning period.
Our definition of materiality is as follows:
EcV
Cash generation
>£20m
>£3.5m
Reputational
Nationally publicised reputational event
Regulatory
Action involving penalty imposition (£0 threshold) and/or requirement
for remediation leading to a restriction of activity
Other
For example, safety – high potential for an injury to an individual or
several individuals.
The materiality levels of the Group are approved by the Board annually as part
of the Principal Risk Definition report and consider a number of factors that
are broader than purely financial indicators. Whilst this is largely risk focused,
we have chosen to apply this materiality definition to opportunities as well.
This is deemed to be an appropriate limit and is predicated on the Group risk
assessment thresholds that are discussed and approved by the Board annually.
We believe this is a reasonable disclosure level and would enable a user to
appropriately assess our exposure to climate-related risks and opportunities.
Physical risks
Arise due to the direct impact of events
such as heatwaves, flood, wildfire, storms,
increased weather variability, and rising
mean temperatures and sea levels.
Transition risks
Emerge from the process of change
towards a low carbon economy such as:
climate-related developments in policy
and regulation; technological change
(e.g. electric vehicles); a shift in consumer
sentiment and social attitudes; and
climate-related litigation against firms
that fail to mitigate, adapt or disclose
climate-related financial risks.
Likelihood
Likelihood is determined as low,
medium or high.
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term
b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning
Impact of climate-related risks and opportunities in the Group business strategy and financial planning
We produce a five year Group business plan on an annual basis, and our climate and wider
sustainability strategy is included into both operational and financial plans to reflect our
immediate priorities, risks and longer-term ambition. This includes consideration of our products,
investments, and our value chain in order to manage our climate risks and opportunities and meet
our commitments. Sensitivities are also performed to assess the impacts of negative exposures
to our assets. Becoming a sustainable Chesnara is a key part of the Group’s strategy and our
goal is for it to be considered and embedded in all areas of the business.
We are also currently developing our first climate transition plan, which will be published later
this year. Using the NZIF 2.0 framework to structure our actions, it will outline our initial plans
on how we will tackle and report on the net zero transition. Delivering against our plans, targets
and commitments will become a fundamental part of our business. We acknowledge that further
plans will be required as more information, data and methodology becomes available.
STRATEGY
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As part of our ongoing risk assessment, we monitor climate-related risks, and of those, four are deemed to be material. In 2024, we have consolidated
the reputational risks we had in our 2023 disclosures into a broader risk around not meeting our stakeholder expectations which we believe presents
a more holistic view of the risk that we are managing.
RISK
1. Not being able to fully assess and manage the climate risk exposure of our investment
portfolio, as a result of data limitations, uncertainty and impacts from the current geopolitical
situation; limited control or influence over investment decision making; insufficient resource
or knowledge.
Climate change risk is identified as a principal risk, with the risk also being captured as
a principal risk under investment and liquidity risk
Time horizon:
Medium term 2-5 years
Likelihood:
Medium
Potential impact (linking to financial statements)
Investment decision making impacts which could lead to a reduction in value of policyholder and shareholder
assets held by the Group, directly impacting the balance sheet, Economic Value and solvency, as well as
investment return or the fees generated on the management of those assets. This reduction in value could
lead to stranded assets being held by the Group, further impacting valuation.
Inability to execute the Board’s chosen strategy for climate change effectively or transitional risks occurring
where exposures were not understood or where there is insufficient control or influence over the investment
decision making.
How is the risk being managed, mitigated and addressed?
Utilising MSCI to provide groupwide ESG data analysis on our asset portfolio.
Engaging with our asset managers to understand their own plans and pathways.
Producing our transition plan which will outline our steps to decarbonise, including targets
and actions.
Associated targets and metrics:
The % coverage of our asset look through data which is shown in our financed emissions data.
Physical or transition risk: Transition
Territory: Groupwide
2. Not meeting changing and evolving stakeholder expectations in relation to climate change.
For example, through failure to meet our targets and commitments.
Climate change risk is identified as a principal risk, with this risk also being captured as
a principal risk under operational and reputational risk
Time horizon:
Medium term 2-5 years in respect of our 2030 financed
emissions interim target and longer-term 6+ years in respect
of our 2050 net zero target
Likelihood:
Medium
Potential impact (linking to financial statements)
Loss of customers, major suppliers and investors if we fail to meet our commitments and targets or provide
inadequate disclosure around progress against them.
Reduction of the liquidity of our shares and impact to the market capitalisation of the Group.
How is the risk being managed, mitigated and addressed?
Engaging with stakeholders and providing clear and honest disclosure on our targets and
commitments and where there are areas of challenge and uncertainty for those targets.
Committing time and resources to complete and publish a transition plan in 2025 which
will outline our steps to decarbonise.
Associated targets and metrics:
Our net zero and interim targets, and associated metrics for our operational and financed emissions.
Physical or transition risk: Transition
Territory: Groupwide
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For the first time, a separate climate risk report assessing the CVaR of our asset portfolio was
presented to the Board and the conclusions were also included in the 2024 ORSA report. There are
a number of risks that are not featured in the table above that one may consider to be potentially
material for an insurer. For example, climate effects on morbidity or mortality. Climate scenario stress
testing performed for the Group (detailed in the resilience section) concluded that climate effects
on morbidity or mortality do not give rise to a material impact.
We have also considered climate-related physical risks; however, as we lease the majority of our
office buildings and most of our staff would be able to work from home if workplaces were affected,
we do not believe physical risks present a material impact to the operations of the Group.
3. Not adequately anticipating the cost implications associated on our business, value chain and
wider society of both:
– Taking action to address the risk of climate change including decarbonising and policy change;
– Transition and physical risks resulting from a disorderly transition.
Climate change risk is identified as a principal risk, with this risk also being captured as
a principal risk under expense and market risk
Time horizon:
Medium term 2-5 years
Likelihood:
High
Potential impact (linking to financial statements)
Negative financial impact on the expense base and cost assumptions.
Costs of disorderly transitioning could have an indirect impact to the valuation of our unit-linked assets
i.e., through the fall of future charges, and a direct impact for non-linked assets.
How is the risk being managed, mitigated and addressed?
Active monitoring of costs, upcoming regulations and performing sensitivities
to manage our future cash flows.
Conducting detailed scenario analysis to assess the financial impact of
a disorderly transition.
Publishing our first transition plan in 2025 which will outline our steps to decarbonise.
Associated targets and metrics:
Our net zero targets and associated metrics for our operational and financed emissions.
Physical or transition risk: Transition and physical
Territory: Groupwide
4. Litigation risk if we are seen not to have published enough information or taken enough action;
are considered to have made unsubstantiated claims leading to a claim of ‘greenwashing’;
or are seen to have taken too much action relative to stakeholder expectations.
Climate change risk is identified as a principal risk, with this risk also being captured as
a principal risk under reputational and regulatory risk
Time horizon:
Medium term 2-5 years
Likelihood:
Medium
Potential impact (linking to financial statements)
Litigation may lead to potential fines and payouts increasing the Group’s liabilities and potentially damaging
the Group’s reputation.
How is the risk being managed, mitigated and addressed?
Providing clear and honest disclosure on our work and areas of challenge and uncertainty.
Proactive consideration of what we are reporting in our sustainability disclosures,
ensuring the use of clear and consistent sustainability language.
Detailed consideration of upcoming regulatory requirements.
Associated targets and metrics:
Number of complaints and threatened litigation regarding sustainability matters.
Physical or transition risk: Transition
Territory: Groupwide
From the conclusion of our scenario analysis work, we have also expanded our previous inflationary risk to consider the wider cost uncertainty around
transitioning and responding to climate change. More detail is provided below, considering the likely time horizon in which we expect the risk to
manifest and how the risk is being managed, mitigated and addressed.
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Using the same approach as for the risks, we have identified climate-related opportunities for the Group. The table below focuses on those that are
deemed to be material as per the definition of materiality referenced earlier in the report.
OPPORTUNITIES
1. Investments: target enhanced returns and climate resilience of our investment portfolio through
increased investment in aligned assets.
Time horizon:
Longer term 6+ years
Likelihood:
Medium
Potential impact (linking to financial statements)
Increase in key metrics: cash generation and Economic Value.
How is the opportunity being managed and implemented?
Performing analysis of the Climate Value at Risk of our investment portfolio to factor into
investment decision making.
Monitoring performance of our investment portfolio including aligned assets.
Working with our asset managers to understand their transition to net zero.
Developing our approach to positive solutions impact investment, including investing in
climate solutions. At the end of 2024, we had £135m of assets invested in funds which
meet our definition of positive solutions.
Associated targets and metrics:
Amount invested in our Positive Solutions Framework (£m) and performance of our investment portfolio.
2. Financing: attract a wider pool of debt and equity investors by demonstrating our commitment
to climate change.
Time horizon:
Medium term 2-5 years
Likelihood:
High
Potential impact (linking to financial statements)
Positive share price movements through access to increased options and potential for lower borrowing costs.
How is the opportunity being managed, mitigated and addressed?
Publicly disclosing our targets, commitments and progress against the plans and
engaging with external stakeholders to provide details.
Engaging with and joining industry bodies to collectively engage and support action
to address climate change.
Ensuring sustainability is a high priority by embedding it into decision making at all levels.
Associated targets and metrics:
Our sustainability strategy and three commitments, including net zero targets and associated metrics.
3. People: attract and retain the best talent through providing opportunities for people to make
a big impact in a smaller organisation.
Time horizon:
Medium term 2-5 years
Likelihood:
Medium
Potential impact (linking to financial statements)
Our people are the Group’s biggest value creator, which translates into cash generation
and Economic Value for the business.
How is the opportunity being managed, mitigated and addressed?
Clearly defining and demonstrating our commitment to sustainability
and helping to address climate change.
Disclosing our training and development opportunities.
Associated targets and metrics:
Employee retention rate and survey feedback.
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Our approach to decarbonisation
We understand that our best strategy to mitigate our climate risks and realise the opportunities
is to actively manage our transition to become a net zero business. We frame this transition in line
with the UN Sustainable Development Goals (SDGs), including goal 13: Climate Action.
To support the understanding of our approach, in line with the United Nations, we define net zero as
cutting carbon emissions to a small amount of residual emissions that can be absorbed and durably
stored by nature and other carbon dioxide removal measures, leaving zero in the atmosphere.
The emissions from our investment portfolio, captured as part of scope 3, category 15 reporting
under the Greenhouse Gas (GHG) Protocol, represent the significant majority of our carbon
footprint. We have currently set two targets for financed emissions:
1. Net zero for all emissions by 2050.
2. 50% intensity reduction by 2030 from our 2023 baseline figures in the scope 1 and 2 emissions for
our listed equity and corporate fixed income investments which we are able to influence or control.
We will set further interim targets covering additional asset classes and time periods up to 2050.
For our targets, we have followed the Institutional Investors Group on Climate Change’s (IIGCC)
Net Zero Investment Framework (NZIF) and the Intergovernmental Panel on Climate Change
(IPCC) Special Report on Global Warming of 1.5°C (SR1.5), which states that in mitigation
pathways with no or limited overshoot of 1.5°C, global net carbon emissions need to decline
by between 41% and 58% from 2010 levels by 2030, reaching net zero around 2050.
As an asset owner, to reduce these emissions it is necessary to work with our asset managers to
understand their own decarbonisation plans. We will also be working with partners and customers
for those assets where we have less control or influence, for example those where policyholders
self-select their own investments. We remain strongly committed to net zero by 2050 for all our
financed emissions and so our targets will expand over time to include all asset classes.
There are a number of significant headwinds largely out of our control which will affect our ability
to meet our targets, such as policyholder choices and asset manager progress. Therefore, as
our transition plans are developed and refined and baseline data is further understood, we may
naturally look to refine our targets at a later date to better reflect the position of the Group and the
market. Our initial transition plan which will be published later this year, will include further detail
on the steps we will take to meet our targets as well as challenges which may affect the Group’s
ability to implement the plan. Additional governance has been put in place to provide oversight for
the development of the transition plan, including a cross-group steering committee to ensure there
are appropriate review and approvals.
We have started to engage with some of our key asset managers, who collectively manage c60%
of our assets under management. Initially, this is to gain an understanding of their own net zero
plans and how our portfolios of assets fit in with those plans. During 2025, we will be further
engaging and collaborating to assess if their strategy aligns with our decarbonisation pathway.
1 Decarbonise our investment portfolio
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97% of our operational emissions arise from scope 3 emissions;
specifically purchased goods and services, which represent 77%.
Methodology to calculate these emissions currently relies heavily
on estimates and industry averages and so we have been working
with Greenly, as our carbon accounting data provider, to enhance
the accuracy of this data by bringing in supplier specific data
where possible. This has lead to a reduction of our scope 3.1
emissions. As this methodology evolves, we hope to see
a reduction in intensity for those suppliers who are transitioning.
As with our asset managers, we have started conversations
with our key suppliers, to understand their decarbonisation
plans. We will be continuing to engage with our supply chain
during 2025.
The UK business has also enhanced its supplier onboarding due
diligence and annual attestation processes, bringing the Supplier
Code of Conduct in line with the key principles of the United
Nations Global Compact to ensure our suppliers uphold the
same values, standards and commitments that we do.
Investing in ‘positive solutions’ means investing in assets, industries and organisations that will generate specific, measurable, social and/or environmental benefits in addition to financial returns.
At the end of 2024, our Group held approximately £135m of investments in positive solutions, which we are looking to continue to increase in 2025.
Overview
During 2024, Chesnara completed an assessment to understand the resilience of our investment
portfolio to climate risk. This was previously considered as part of the ORSA process, but a stand-
alone assessment was performed this year to enhance our understanding of the risk faced by climate
change. This analysis is also a key consideration in the development of the Group transition plan,
as this document will begin to consider how we mitigate the risks we, as a business, are facing as a
result of climate change. The focus of our assessment was the Climate Value at Risk (CVaR) metric,
which is a forward-looking measure of the potential impact of climate on Chesnara’s portfolio of
invested assets. CVaR includes an assessment of the following in relation to the companies
in which we invest:
– Physical risks: This captures the risk of asset damage or business interruption as a direct
consequence of extreme weather events or from sustained gradual changes in the weather.
The physical risk assessment is dependent on the location in which the Company operates and
the scenario under consideration
– Transition risks: This estimates the cost of achieving the required reduction in emissions in the
scenario under consideration. Transitional risk is dependent on the sector and location in which
the Company operates and the scenario under consideration.
Scenario analysis
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios
3 Invest in positive solutions
Scope 3
97%
3,592 tCO2e
Scope 1
1%
62 tCO2e
Scope 2
2%
64 tCO2e
77%
Purchased goods and services
2,907
2%
Capital goods
66
1%
Fuel- and energy-related
activities
28
4%
Upstream transportation and
distribution
147
2%
Waste generated in operations
81
4%
Business travel
122
5%
Employee commuting
192
2%
Upstream leased assets
49
tCO2e
Chesnara’s carbon footprint
3,718
tCO2e
(2023 4,961 tCO2e)
The second element of our decarbonisation journey relates to our operations.
Though these emissions represent a small number in comparison to our financed emissions, they remain a priority and we remain committed to leading by example. The target section of the report explains
further our planned approach, with further detail of our net zero targets to be communicated in our transition plan.
2 Decarbonise our operations and supply chain
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– Transition opportunities: This estimates the potential benefits arising from the switch to low-
carbon technologies. Transitional risk is dependent on company specific data and the scenario
under consideration.
For this assessment, we have changed our approach to modelling climate risk from using the PRA’s
2019 UK Insurance stress test scenarios to using a climate risk model provided by MSCI which uses
data from the Network for Greening the Financial System (NGFS) scenarios. We made the decision
to change our approach as the MSCI methodology is a significant step forward in terms of coverage,
granularity and robustness of Chesnara’s climate risk analysis compared to our previous approach.
Both the methodology and data will continue to evolve over time reflecting the fact that the industry
approach to modelling climate change is in its infancy and is continuing to develop.
Our climate risk assessment is based on the invested assets under management. The impact arising
from non-invested assets and the liabilities are less material for Chesnara and hence have not been
considered to date.
Climate-related scenarios and key assumptions
The climate-related scenarios considered, and the key assumptions embedded within these scenarios, are summarised below:
Timelines
The modelling of climate risk associated with bond holdings is based on the maturity date of the
bond (i.e. it is assumed that the bond is held to maturity). The transitional risks and opportunities
associated with equity holdings are modelled until 2050 with physical risks modelled until 2100.
It is noted that this exceeds the duration of Chesnara’s liabilities and hence Chesnara will realise
the equity prior to this date. MSCI discounts the estimated impacts over the above timelines to
produce a shock factor which is then applied to our portfolio of invested assets.
Limitations
As noted above, climate scenario analysis is still an evolving field and as such there are limitations
in our approach. The key limitations are listed below and are common throughout the industry.
– It is assumed that the market has not already priced the effects of climate risks into market values
of assets. In practice, it is likely that the market will have priced in an element of climate risk but
the uncertainty in quantifying this means that this has not been allowed for.
– The analysis does not take into account future management actions in respect of the transition
to net zero, i.e. it is based on the current assets held and it does not reflect any future switches
to low carbon assets.
– The modelling of physical risk only considers the direct physical risks (i.e. the direct physical
damage to a company’s assets because of climate change or the costs associated with
interruption to business operations as a direct consequence of an extreme weather event or
from long-term gradual changes in the weather). The wider impacts of indirect physical risks
(i.e. the impacts on the supply chain of a company as a result of climate change) are not
currently considered.
– The impacts of tipping points are not currently considered. These are thresholds which, once
crossed, will trigger irreversible changes such as loss of ice sheets, glaciers and rainforest. Given
the considerable uncertainty around when a tipping point may be crossed and the consequences
of crossing tipping points, the impacts of these are not included in the physical risk modelling.
Key findings
The key findings observed from the scenario analysis are summarised below:
– 1.5°C scenarios: In the two 1.5’ scenarios the estimated impact of physical risk is the same,
reflecting the same assumed level of warming in both scenarios. Transitional risks are higher in the
disorderly scenario reflecting the delayed or divergent implementation of low carbon policies. The
transitional risks are partially offset by the transitional opportunities which are expected to emerge
as a result of increased low-carbon technologies.
– 2.0°C and 3.0°C scenarios: In these scenarios the expected physical risk increases as expected.
However, we note that whilst physical risk is thought to be underestimated in all scenarios the
degree of underestimation is expected to be higher in these scenarios. Transitional risks and
opportunities are significantly lower in these scenarios reflecting the introduction of fewer low-
carbon policies.
Summary
Climate risk is a material financial risk factor and as such we have made commitments to transition
to net zero by 2050. The new approach has a larger Own Funds stress impact than in previous years,
and therefore the impact is potentially greater in the longer term than has previously been assessed.
We are currently developing our first transition plan and its implementation will be fundamental to
helping us to mitigate climate-related risks. The transition plan will map the journey, and thereafter
monitor progress, against the net zero commitments, whilst acknowledging the areas of uncertainty.
Furthermore, we are taking steps to embed climate risk into business as usual and as part of key
decision making processes, in particular in the investment decision making process. Our climate
scenario analysis will continue to be developed and enhanced to monitor our climate-related
exposure and to identify management actions to mitigate against these.
MSCI scenario name
Underlying NGFS
scenario
Physical risk – policy
ambition
Transition risk
Technology change
Carbon dioxide removal
Regional Policy variation
1.5°C Orderly
Net Zero 2050
1.4°C
Immediate and smooth
Fast change
Medium-high use
Medium variation
1.5°C Disorderly
Divergent Net Zero
1.4°C
Immediate but divergent
across sectors
Fast change
Low-medium use
Medium variation
2.0°C Orderly
Below 2°C
1.6°C
Immediate and smooth
Fast change
Low-medium use
Medium variation
3.0°C NDC
NDC
2.6°C
NDC’s
Slow change
Low use
Low variation
NDC = Nationally Determined Contributions
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RISK MANAGEMENT
Risk and solvency management are at the heart of Chesnara’s robust Governance Framework.
PROCESSES FOR IDENTIFYING, ASSESSING AND MANAGING CLIMATE-RELATED RISKS
A high-level summary of Chesnara’s Risk Management Framework is below:
In addition, Chesnara’s Investment Policy contains investment criteria which are monitored by the
Investment Committee.
The Group Chief Risk Officer is responsible for maintaining the overall Risk Management Framework.
The CEOs for each business unit are required to ensure that the framework is fully integrated into the
business model and decision making processes. Each of our divisions is required to apply the Risk
Management Policy and operate within the limits set by the risk appetite. Each business unit is
responsible for identifying risks which might create, enhance, accelerate, prevent, hinder, degrade or
delay the achievement of the Group’s objectives, together with the sources of risks, areas of impact,
events, and their causes and potential consequences. These risks are recorded in the risk register
and evaluated based on the likelihood of occurrence and severity of impact. Depending upon the
nature and impact of the risk, the risk is either accepted, avoided, managed or transferred. Climate-
related risks and opportunities are identified and evaluated according to this framework by the
respective management teams in our business units.
Management teams keep up to date through the monitoring and assessment of emerging risks,
reviewed by the executive teams on a quarterly basis.
Climate change risk has been included as its own principal risk (PR11) for the first time to reflect
the exposure to adverse consequences of the physical and transitional risks arising from climate
change. We also consider climate change to be a cross-cutting risk, that manifests through other
existing risk types, which includes equity and credit etc (PR1 – Investment and liquidity risk) and also
regulatory risk (PR2 – Regulatory change risk) given the level of ongoing change. The Group is also
exposed to strategic and reputational risks (PR9 – Reputational risk) arising from its action or inaction
in response to climate change.
With regards to the sector specific guidance, we believe the impact of: physical risks from changing
frequencies and intensities of weather-related perils; transition risks resulting from a reduction in
insurable interest due to a decline in value and transition risks of changing energy costs would not
be material and therefore not disclosed within the TCFD report as material risks. Chesnara has
developed an environmental, social and governance (ESG) Policy Statement for the Group, in which it
recognises the importance of understanding climate change risk in its operations and its investments
and continued monitoring of associated risks.
Chesnara believes its businesses that hold investments (insurance companies and investment
companies) should consider sustainability and implications for climate change in their investment
policies. It expects each company to consider the implications of these for its business and
investments and document its position. Chesnara’s businesses have adopted, either directly or via
their respective fund managers, the six UN Principles of Responsible Investment with the aim to
continue to invest responsibly with sustainability considerations in mind and to provide a choice of
sustainable funds to customers, e.g. green investments which aim to solve climate issues, or which
primarily focus on companies that invest in improving health.
The 2024 approach to modelling climate risk has changed using the PRA stress tests as part
of the ORSA process to using a climate risk model provided by MSCI. This is considered to be a
significant step forward in terms of the coverage, granularity and robustness of Chesnara’s climate
risk analysis: however, it is still subject to a number of limitations which will evolve over time.
a) Describe the organisation’s processes for identifying and assessing climate-related risks and
b) Describe the organisation’s processes for managing climate-related risks
RISK MANAGEMENT
POLICY
Chesnara’s Risk Management Policy
which sets out the framework of principles
and practices, policies and strategies for
the Group’s Risk Management System.
RISK MANAGEMENT
SYSTEM
The Risk Management System
supports the identification,
assessment and reporting of risks.
GROUP RISK MANAGEMENT
FRAMEWORK
The Group Risk Management Framework is designed
to embed effective risk control systems with a holistic and
transparent approach to risk identification, assessment,
management, monitoring and reporting. The definition and
scope of each principal risk category is based on a set of
strategic and operating principles/tolerance limits.
GROUP’S RISK
APPETITE
The Group’s risk appetite reflects the
Chesnara Board’s view on the amount of
risk the Group is willing to take and sets
boundaries to determine when there is
too much or too little risk.
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Integration of processes for identifying, assessing and managing climate-related risks
An integral part of Chesnara’s governance and Risk Management Framework is compliance with the
Prudential Solvency II Regulations to perform the ORSA on an annual basis. The Chesnara Board is
responsible for the overall design of the ORSA process including its annual review. Climate-related
risks are considered within the ORSA process and the impact of material risks upon the solvency
and resilience of the business is documented. The views of the Actuarial function holder and any
recommendations or prior feedback from the regulator are considered when conducting the
assessment at business unit level. Conclusions drawn from the risk and solvency assessment are
reported to the respective regulators by each of our businesses every year. The Group Sustainability
Committee also review the climate-related risk and opportunities and climate scenario analysis, with
overall responsibility for overseeing the programme of work across the group.
Each business unit provides a forward-looking perspective on risks that are emerging quarterly to
its own Audit & Risk Committee, the Group Audit & Risk Committee and monthly to the SLT.
A summary of principal risks and emerging risks is also provided quarterly to the Chesnara Board.
From a climate change perspective this incorporates consideration of the content of relevant
publications and guidance, in the context of the Chesnara risk landscape, such as the reports
published by the IPCC on the physical climate change risks to the environment. Similarly, our
management teams evaluate the possible effects of transition risk by keeping abreast of relevant
policy and legal developments, technological advancements, changes in market risk due to demand
shifts and any legal and reputational risk exposure. Amongst other matters, business performance
and risk management are discussed at the Senior Leadership Team monthly meeting.
Chesnara’s approach to assessing financial risk is to identify and assess factors that could potentially
threaten the continued successful delivery of the anticipated stakeholder outcomes over a three-year
time horizon, including risks to the business model and strategy. The Chesnara Board requires the
management teams to ensure a good understanding of the solvency position at any point in time.
In Q2 2024 a series of stress and scenario tests were selected for the ORSA with the requirement
to follow the testing principles set out in the Group Risk Management System Policy. As well as
current known risks, the stresses and scenarios took account of forward looking and emerging risks.
These selected stresses and scenarios along with the rationale were reviewed and approved by
the Chesnara Board. The tests conducted covered equity asset values, yields and credit spreads,
expense inflation, mass lapse and adverse operational experience. The ORSA also included the
output of the climate risk report, and it will be determined how this will be incorporated going
forwards. Performance against the business plans as well as known and emerging risks and
opportunities are discussed at quarterly business review meetings at entity and group level.
Climate-related risk impacts and opportunities are considered at these meetings.
More detail on Chesnara’s Risk Management Framework is set out in this section of the Annual
Report and Accounts.
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management
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To meet our commitments, we will report on the following metrics to monitor performance against our targets:
METRICS AND TARGETS
The metrics and targets section also addresses the requirements within the Streamlined Energy & Carbon Reporting (SECR) Framework including
reporting on energy usage, GHG emissions, methodology used to make the calculations, intensity ratios and a description of the efforts taken to
improve the Group’s energy efficiency during the financial year. To support the understanding of our approach, we define net zero as cutting carbon
emissions to a small amount of residual emissions that can be absorbed and durably stored by nature and other carbon dioxide removal measures,
leaving zero in the atmosphere.
Financed emissions
We have published our initial interim and long-term net zero targets for our financed emissions which represent the most significant part of our carbon footprint. We baselined our emissions using 2023 data
and as further data becomes available and methodology develops, we will continue to assess our baselines and our targets.
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process
b) Disclose scope 1, scope 2 and, if appropriate, scope 3 greenhouse gas (GHG) emissions, and the related risks
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets
TARGETS
We are committed to decarbonising
our investment portfolio and have
set the following climate targets
to achieve this:
2030
50% intensity reduction
in the scope 1 and 2 emissions for our listed equity and
corporate fixed income investments which we are able
to influence or control
2050
Net zero all emissions
1.
Total financed carbon
emissions (absolute emissions)
(tCO2e)
This shows our absolute greenhouse gas emissions
(GHG) and allows us to establish the emissions
baseline of our portfolio by measuring financed
scope 1, 2 and 3 emissions.
2.
Financed carbon emissions
(absolute emissions normalised
by $M invested) (tCO2e)
This shows the total carbon financed emissions
of a portfolio normalised by the market value
of the portfolio. The metric enables us to compare
the emissions of different portfolios.
3.
Weighted Average
Carbon Intensity (WACI)
a) WACI Corporate
This shows our exposure to carbon intensive
companies (tCO2e by $M sales).
b) WACI Sovereign
This shows our exposure to a country’s transitional
risks and physical and economic vulnerability to
climate change (tCO2e by $M GDP nominal).
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2024 performance
The below tables summarise our 2024 performance against our baseline financed emissions.
Our 2024 calculations, which are based on the data at the end of September 2024, show we made
good progress against our targets. For the assets classes for which emissions can be calculated, we
saw the scope 1 and 2 normalised emissions1 of our total portfolio reduce by 13%. The investments
included in our 2030 targets represent a majority of the assets within this total and so we are on
track to achieve our target. Our scope 3 normalised emissions also dropped by 1% and whilst we
saw progress in reducing our absolute2 scope 1 & 2 emissions by 3%, we did increase our scope 3
emissions by 10%. The difference between these two metrics is partly explained by the increase of
our in-scope assets under management by circa 5% as a result of acquisition activity meaning that
we have more assets for which we are reporting emissions.
Our WACI corporate3 exposure to carbon intensive companies decreased by 5% (scope 1 & 2) and
1% (scope 3); however, our WACI sovereign exposure4 has increased by 7%. It is however important
to note that data coverage is very low for our sovereign bond investments (9%) which is likely to lead
to an increase in the period-on-period volatility of our results for this asset class. We expect this data
coverage to increase over time which will help address this volatility.
When opportunities have arisen to rebalance our portfolios, we have been careful to integrate our
financed emissions objectives into our decision making process. Analysis shows that redemptions
within our portfolios have also contributed to the change in our financed emissions figures. Of
course, changes in data coverage and any updates that our investee companies have made in the
reporting of their own financed emissions have all played a part in the changes we see.
Our climate data comes from an external provider and just as we baseline and monitor our financed
emissions figures, we do the same for data coverage. Except for WACI sovereign, the data coverage
has improved across all our measures this year. We are eager that this continues to improve and so
we are working with our external data provider to identify any assets that are not covered to help
ensure that they are added to coverage within expected timeframes. This will allow us to increase
the accuracy of our financed emissions and exposures.
FINANCED EMISSIONS (tCO2e)
Scope 1 and 2
Scope 3
2024
2023 baseline
Movement
2024
2023 baseline
Movement
Total financed carbon emissions
(absolute emissions)
515,298
533,073
(3%)
4,764,459
4,345,991
10%
Financed carbon emissions
(normalised by $M invested)
34
39
(13%)
313
316
(1%)
% coverage
59%
58%
1%
59%
56%
3%
WEIGHTED AVERAGE CARBON INTENSITY (WACI)
Corporate Constituents
(tCO2e/$M sales)
Sovereign Constituents
(tCO2e/$M GBP nominal)
Scope 1 and 2
Scope 3
GHG intensity
2024
2023 baseline
Movement
2024
2023 baseline
Movement
2024
2023 baseline
Movement
Chesnara Group
69
72
(5%)
645
654
(1%)
221
207
7%
% coverage
63%
62%
1%
63%
59%
4%
9%
12%
(2%)
1. The absolute greenhouse gas emissions associated with an asset class or portfolio divided by the loan and investment volume (expressed in tCO2e/ $M invested).
2. The absolute greenhouse gas emissions associated with an asset class or portfolio (expressed in tCO2e).
3. Exposure to carbon intensive companies (expressed in tCO2e/$M sales).
4. A country’s exposure to transitional risk and physical and economic vulnerability to climate change (expressed in tCO2e/$M GDP nominal) to be provided for above text.
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Positive solutions
As explained in the strategy section, we will continue to commit to assessing and investing in
positive solutions, by intentionally directing capital into activities that deliver or enable the
achievement of the UN Sustainable Development Goals. We report annually on our progress against
this commitment, detailing the level of investments held. These activities will be monitored by the
GSC and reported annually to the Board.
Targets and metrics: the amount of investments (£m) we currently invest in our Positive Solutions
Framework is the key metric we currently report and monitor, and at the end of 2024 we had £135m
(2023: £80m). We are looking to set medium-term targets for our positive solution investments, and
include additional metrics to monitor the impact of the investments.
Operational emissions
Since setting our initial 2028 target in March 2022, we have spent time collating and analysing our
data, broadening the emissions captured by our calculations and reporting, engaging with key
suppliers and working with members across the Group to gain valuable insights to inform our actions.
From this work and the fact that the operational emissions within our control represent a materially
insignificant amount of our total emissions, we recognise the need to adjust the Group’s operational
net zero ambitions. This does not mean we are scaling back our efforts; instead, we are revising our
focus to make sure we have the biggest impact we can with the control we have. We want our goals
to be ambitious, meaningful and reflect the urgency of the climate crisis, yet we must do it in a way
that doesn’t negatively impact livelihoods, wellbeing or inclusion.
Later this year, we will publish our first transition plan and in it we will communicate how and when
we plan to be operational net zero for all of our emissions.
Other metrics we report and monitor include the Group’s energy consumption and water usage,
which is detailed on page 90.
1
Absolute emissions tCO2e
(scope 1,2 and 3)
2
Operational emissions
per FTE tCO2e (including
and excluding scope 3.1)
To monitor our performance against our targets and intensity, we report on the
following metrics:
1
Absolute emissions tCO2e
(scope 1, 2 and 3)
2
Operational emissions
per FTE tCO2e (including
and excluding scope 3.1)
To monitor our performance, we report on the following metrics:
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88
OPERATIONAL EMISSIONS (tCO2e)
2024
2023 baseline
UK &
Offshore
Global
(excl UK &
Offshore)
Total
UK &
Offshore
Global
(excl UK &
Offshore)
Total
Scope 1
Combustion of fuel and operation of facilities
2
60
62
18
65
83
Scope 2
Electricity, heat, steam and cooling purchased for own use (location based)
9
55
64
10
87
97
Electricity, heat, steam and cooling purchased for own use (market based)
2
55
57
–
–
–
Scope 1 and 2 emissions (location based)
11
115
126
28
152
180
Scope 3
Purchased goods and services
1,165
1,742
2,907
1,906
2,129
4,035
Capital goods
29
37
66
28
69
97
Fuel- and energy-related activities not included in scope 1 or scope 2
3
25
28
9
45
54
Upstream transportation and distribution
32
115
147
9
215
224
Waste generated in operations
73
8
81
24
8
32
Emissions from business travel
72
50
122
52
131
183
Emissions from commuting
45
147
192
26
83
109
Upstream leased assets
40
9
49
8
40
48
Total scope 1, 2 and 3 emissions (location based)
1,470
2,248
3,718
2,090
2,871
4,961
Carbon offset
(305)
(506)
(811)
(184)
(742)
(926)
Total net emissions
1,165
1,742
2,907
1,906
2,129
4,035
Company’s chosen intensity measurement:
tCO2e per FTE*
14.2073
8.2344
10.4772
19.2982
10.3692
12.8660
tCO2 per FTE* (less scope 3.1 emissions)
3.7195
1.8534
2.2845
1.6990
2.6595
2.3909
*The Group FTE number used in this measurement is disclosed in note I1 of the Annual Report and Accounts.
2024 performance
The below table summarises our 2024 performance against our baseline operational emissions.
The 2024 results show a 25% reduction to our 2023 baseline. This is a movement in the right
direction. Whilst this movement is in part down to data and methodology changes, we are pleased
to be able to able to point to actions we have taken across the Group to reduce our emissions:
– We have reduced our gas heating consumption (scope 1.1), through both moving our Bristol
colleagues to a smaller office and closing off parts of Scildon’s office which are not occupied
during certain days of the week.
– The Group has also been focusing on digitalisation, particularly Waard through its online customer
portal ‘Mijn Waard’, as an endeavour to reduce postal emissions (scope 3.4).
– We have been making a conscious effort to reduce unnecessary travel, and choosing sustainable
options where available, leading to a reduction in the number of domestic flights and car usage
since 2023.
The reduction in purchased goods and services (scope 3.1) emissions is due to an enhancement of
the data used in the calculations. Through our carbon accounting partner’s database, we have been
able to use an increased number of emission factors specific to suppliers to calculate the associated
emissions instead of industry averages.
Not all types of emissions have reduced. For example, we have seen emissions from commuting
increase during the year, as a result of higher office attendance across our businesses. This
demonstrates some of the challenges we have with reducing emissions but we continue to consider
methods of encouraging and incentivising sustainable travel, including our employee electric vehicle
salary sacrifice scheme in the UK.
89
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Intensity measurements
Our operational emission intensity measurements are ratios of operational emissions against the
number of FTE staff, calculated as:
1. Operational emissions per FTE = total non-financed emissions (scope 1, 2 & 3.1-3.8 tCO2e)/number
of average FTE staff in the year.
2. Operational emissions (less scope 3.1 emissions) per FTE = non-financed emissions as defined
above (less scope 3.1 emissions)/number of average FTE staff in the year.
We believe these are appropriate measures, given a large proportion of the GHG emission
categories are employee-related including commuting, business travel and waste. As supplier
purchases (scope 3.1) are not directly correlated with the number of employees we have also chosen
to disclose the FTE ratio without these emissions to reduce the impact of increased spend on goods
and services.
Carbon offsetting
We remain focused on reducing the carbon emissions associated with our operations and
investments. We also continue to consider the important yet complex role offsetting can play in the
global transition to net zero.
For 2024, we have again offset our operational emissions, excluding scope 3.1 purchased goods and
services, of 811 tCO2e by supporting several verified projects in alternative energy and water safety,
as well as planting 811 trees in the UK. These are high quality carbon reduction projects that comply
with international verification standards and are amongst Carbon Footprint Ltd’s offset projections
portfolio. We will continue to assess our approach to offsetting, including considering partnerships
with organisations supporting nature-based solutions.
Energy usage
Energy consumption in the Group is reported on an actual basis where the records are kept in the
business (scope 2 – office use and scope 3.6 – business travel) with employee survey responses
used to obtain information for home working and commuting data. These are then converted to
emission measures using standard conversion factors based on Greenly’s assumptions and
calculation engine which is in line with the GHG protocol methodology. Our energy and water
consumption over the last two years is shown in the following table:
The Group encourages all employees to take reasonable steps to reduce waste, and to re-use and
recycle office materials, and our sustainability statement reiterates our commitment to becoming
a sustainable group. In addition to this, we use a mixture of renewable energy across the business,
including a 100% renewable energy contract in the Preston office.
With regard to the sector specific guidance requiring insurance companies to provide aggregated
risk exposure to weather-related catastrophes of their property business by relevant jurisdiction; the
extent to which their insurance underwriting activities are aligned with a well below 2°C scenario;
and also indicate which insurance underwriting activities are included – this has been considered and
the impact is either immaterial or not applicable to the business, and therefore, no disclosure has
been made.
To increase energy efficiency, management in each of our business units takes practical steps to
minimise the effect of our operations on the environment and our workforce is encouraged to
conserve energy, avoid unnecessary travel, use video conferencing, and minimise waste. In 2024,
we delivered sustainability training to all employees to raise awareness of the impact we have on
climate change, and how energy usage contributes to this. We also finalised our UK Expense Policy
which outlines the need to consider the business need to travel and the most sustainable option to
do this. Overseas, one of our Dutch entities has been focusing on closing parts of the office that are
not in use on certain days.
Chesnara is fully committed to complying with the Energy Saving Opportunity Scheme Regulations
2014 (ESOS). The UK’s energy consumption in the form of lighting, heating and fuel usage is
assessed by an independent company every four years, with the latest assessment completed in
2024. An action plan has been created and submitted based on the recommendations provided.
There are three (2023: five) Company-leased vehicles in total across the Group which are used
primarily for commuting and not business-related activities; this is in addition to eight Company-
owned vehicles. All of the eleven vehicles are either hybrid or electric.
UK &
Offshore
Global
(exc UK & Offshore)
Total
2024
Energy consumption (KwH ’000)
360
1,298
1,658
Water usage (m³)*
289
1,815
2,104
2023
Energy consumption (KwH ’000)
382
1,301
1,684
Water usage (m³)*
163
1,526
1,689
*Excludes Waard since water usage is incorporated in the office service charge. The increase in water usage is due
to higher office attendance in 2024.
METHODOLOGY, DATA & ASSUMPTIONS
Operational emissions: Greenly has detailed methodology for each category and
we can interrogate the Group’s accounting data to generate the results. Greenly has
integrated thousands of emission factors from Government publications and Life
Cycle Assessment (LCA) dashboards as reliable sources of data. No further data
and assumptions have been included for the calculation of non-financed emissions
outside of the use of the Greenly platform. For further informations on Greenly
and its methodology, please visit www.greenly.earth/en-gb.
Financed emissions: For more information on the MSCI methodology, please visit
www.msci.com. Due to the timing of the publication of the accounts, we have used
data as at 30/9/2024 to calculate our 2024 financed emissions and therefore there is
a three month lag to our reporting. We acknowledge that this is not in line with PCAF
guidance, however, we believe this will not result in a material difference to the results
and allows us to perform and publish more in depth analysis of change each year.
A separate climate-related financial disclosure report which included the basis of
preparation of each scope and the method of calculation has been published
separately on the website at www.chesnara.co.uk.
The performance of climate-related disclosures requires the application of a number
of key judgements, assumptions and estimates to be made, in particular, for the
calculation of emissions and forming an assessment of the climate scenario analysis.
The methodology relies on the quality of the underlying data used, which is constantly
evolving and changing and therefore is an inherent limitation. As a result, we expect
that certain disclosures are likely to be amended in the future and should be treated
with caution.
CORPORATE & SOCIAL RESPONSIBILITY • CLIMATE-RELATED FINANCIAL DISCLOSURES
90
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Non-Financial and Sustainability Information Statement
This section of the Annual Report constitutes Chesnara’s Non-Financial and Sustainability
Information Statement, produced to comply with sections 414CA and 414CB of the Companies
Act 2006. The following table sets out where, within our Annual Report, we provide further
details on the matters required to be disclosed under the section listed above. In particular, it
covers the impact we have on the environment, our employees, social matters, human rights,
anti-corruption and anti-bribery matters, policies pursued and the outcome of those policies,
and principal risks that may arise from the Company’s operations and how we manage those
risks, to the extent necessary for understanding of the Company’s development, performance
and position and the impact of its activity.
Reporting requirement
Section(s)
Page(s)
Anti-corruption and anti-bribery
Corporate & Social Responsibility
73
Business model
Overview of our Business Model,
Strategy and Culture & Values
26-27
Employees
Corporate & Social Responsibility
S172
70-72
36-38
Environmental matters
Corporate & Social Responsibility
S172 Statement
74-91
32
Non-financial key performance indicators
S172 Key Stakeholders
Business Reviews
34-36
40-45
Principal risks
Risk Management –
Principal Risks and Uncertainties
61-67
Respect for human rights
Corporate & Social Responsibility
73
Social matters
Corporate & Social Responsibility
73
We have also determined appropriate intensity measures for financed emissions (scope 3.15),
as explained in detail on page 86, being:
1. Total financed carbon emissions (absolute emissions) tCO2e – This shows our absolute
greenhouse gas emissions (GHG) and allows us to establish the emissions baseline of our portfolio
by measuring financed emissions.
2. Financed carbon emissions (absolute tCO2e emissions normalised by $M invested) –
This enables us to compare the emissions of different portfolios. This shows the total carbon
financed emissions of a portfolio normalised by the market value of the portfolio.
3. Weighted Average Carbon Intensity (WACI) tCO2e/$M revenue – This enables us to understand
our exposure to carbon intensive companies within our portfolio:
– WACI Sovereign – a country’s exposure to transitional risk and physical and economic vulnerability
to climate change (tCO2e by $M GDP nominal).
– WACI Corporate – our exposure to carbon intensive companies (tCO2e by $M sales).
We hope that this combination of metrics will show the relative and absolute performance of our
decarbonisation activities.
91
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
CORPORATE
GOVERNANCE
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
92
94 Board profile and Board of Directors
96 Governance overview from the Chair
98 Corporate Governance Report
104 Nomination & Governance
Committee Report
110 Directors’ Remuneration Report
127 Audit & Risk Committee Report
135 Directors’ Report
139 Directors’ Responsibilities Statement
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
93
The role for the Chesnara Board of Directors is to establish the purpose, values and strategy of the Group and provide leadership to maintain
high standards of corporate governance and behaviour throughout all levels of the organisation.
The diversity of skills, knowledge and experience of our Board members ensures that we continue to deliver against our strategic objectives.
The Board knowledge, skills and experience summary below indicates the core competencies that have been identified as being key
to the Board discharging its responsibilities and shows the collective score of the current Board.
The matrix below shows the specific areas of specialism each Board member provides. Where a Board member has a competency in dark blue,
this indicates a primary specialism. A purple colour indicates that this competency is a secondary specialism for that Board member.
BOARD PROFILE AND BOARD OF DIRECTORS
THE BOARD
LUKE SAVAGE
CHAIR
Non-executive Chair of the Board, Luke is responsible for the leadership of the Board, setting
the agenda and ensuring the Board’s effectiveness in all aspects of its role.
Appointment to the Board: Appointed to the Board and as Chair in February 2020.
Committee membership: Nomination & Governance (Chair to 31 December 2021) and
a member of the Remuneration Committee (from February 2020). Attends the Audit & Risk
Committee by invitation.
Current directorships/business interests:
– Numis Corporation Ltd
– Numis Securities Ltd
– Liontrust Asset Management plc, Chair
STEVE MURRAY
GROUP CHIEF EXECUTIVE
Appointment to the Board: Appointed as a director of Chesnara on 2 August 2021 and as Group
Chief Executive on 19 October 2021.
Career, skills and experience: Steve joined Chesnara from Royal London where, as part of their
Group Executive Committee, he was Chief Commercial Officer with groupwide accountability for
M&A and Strategy, Transformation and Analytics & Insight, as well as accountability for its legacy
business and the take to market activity across the UK insurance and savings business. He was
also a director of Royal London Asset Management. Prior to that he spent 15 years at Standard
Life across a variety of roles, seeing it through demutualisation and IPO before leading Group M&A
and strategy. He then worked in Standard Life’s UK & European insurance business initially as CEO
of 1825 financial planning before becoming MD Commercial & Strategy. After leading the first
phase of the separation of the UK & European insurance business to Phoenix, he was appointed
as Deputy Head of the Private Market division in Aberdeen Standard Investments. Steve started
his career with EY.
Current directorships/business interests:
– Countrywide Assured Services Ltd
– CASFS Ltd
– Countrywide Assured Life Holdings Limited
– Movestic Livförsäkring AB
– Scildon NV Supervisory Board
– Waard Group Supervisory Board
– Cattanach – a private charity (Chair)
BOARD KNOWLEDGE AND SKILLS SUMMARY
Industry knowledge – UK
P
P
P
P
P
P
P
Industry knowledge – Sweden/Netherlands
P
P
P
P
P
P
S
Governance – actuarial
P
P
P
P
S
S
S
S
Governance – financial/audit
P
P
P
P
P
P
P
S
Risk management
P
P
P
P
P
P
P
S
Investment management
P
P
P
P
S
S
M&A and business development
P
P
P
P
P
S
S
S
Commercial management
P
P
P
P
P
P
S
Change management
P
P
P
P
S
S
S
Ensuring good customer service and outcomes
P
P
P
S
S
S
Information Technology/Cyber
P
P
P
S
S
S
S
Sustainability including ESG
P
P
S
S
S
S
S
S
People & Reward
P
P
S
S
S
Regulatory
P
P
P
P
S
S
S
KEY
P Primary specialism
S Secondary specialism
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CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
JANE DALE
SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR AND
CHAIR OF THE AUDIT & RISK COMMITTEE
Appointment to the Board: Appointed to the Chesnara Board in May 2016 and as Chair of
the Audit & Risk Committee in December 2016. Appointed as the Board’s Senior Independent
Non-Executive Director in October 2018. After a nine-year tenure, Jane intends to stand down at
the conclusion of the next AGM, due to be held on 13 May 2025.
Committee membership: Audit & Risk (Chair) and Nomination & Governance.
Current directorships/business interests:
– Countrywide Assured plc, Chair of the Audit & Risk Committee
– Covea Insurance plc and Covea Life Limited, NED and Chair of the Audit Committee
– Novia Financial plc, NED and Chair of the Audit Committee; and The Quanta Group (Holdings)
Limited, NED
– Brown & Brown (Europe) Holdco Limited, NED and Chair of the Risk & Compliance Committee
and Brown & Brown Insurance Brokers (UK) Limited, NED
TOM HOWARD
GROUP CHIEF
FINANCIAL OFFICER
Appointment to the Board: Appointed to the Chesnara Board on 15 April 2024.
Career, skills and experience: Tom joined Chesnara from Aviva plc where he was CFO and
Executive Director of Aviva Investors, with oversight of the asset manager’s financial, capital
management and corporate development functions. He also held executive responsibility for Aviva
Investors’ North American operations and was a member of Aviva Group’s Finance Leadership Team.
He held a variety of senior leadership roles over a 14-year period in Aviva, including CFO of Aviva’s
Life and General Insurance businesses in Ireland and Director of Mergers and Acquisitions for Aviva
Group. Tom is a fellow of the Institute and Faculty of Actuaries.
KARIN BERGSTEIN
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointment to the Board: Appointed to the Chesnara Board on 14 February 2022.
Committee membership: Nomination & Governance and Audit & Risk.
Current directorships/business interests:
– Van Lanschot Kempen N.V., NED
– Bank Nederlandse Gemeenten N.V., NED
– University Medical Center Groningen, NED
– Bergstein Advies B.V., General Manager
– Foundation for Continuity of NN Group, NED
– Foundation for Preference Shares Wereldhaven, NED
EAMONN FLANAGAN
INDEPENDENT NON-EXECUTIVE DIRECTOR AND
CHAIR OF THE REMUNERATION COMMITTEE
Appointment to the Board: Appointed to the Chesnara Board in July 2020 and
as Chair of the Remuneration Committee in January 2022.
Committee membership: Audit & Risk and Remuneration (Chair).
Current directorships/business interests:
– Movestic Livförsäkring AB, Chair of the company and member of the Audit & Risk Committee
– AJ Bell, NED and Chair of the Audit and Disclosure committees
CAROL HAGH
INDEPENDENT NON-EXECUTIVE DIRECTOR, CHAIR OF THE NOMINATION
& GOVERNANCE COMMITTEE AND DESIGNATED WORKFORCE NED
Appointment to the Board: Appointed to the Chesnara Board on 14 February 2022.
Committee membership: Nomination & Governance (Chair) and Remuneration.
Current directorships/business interests:
– Countrywide Assured plc, NED
– Old Game New Rules Ltd, Director and Founder
– Direct Line Insurance Group plc, NED
– UK Insurance Ltd and Churchill Insurance Company Ltd (part of Direct Line Insurance Group)
GAIL TUCKER
INDEPENDENT NON-EXECUTIVE
DIRECTOR
Appointment to the Board: Appointed to the Chesnara Board on 29 January 2025.
Committee membership: Audit & Risk and Nomination & Governance.
Current directorships/business interests:
– Countrywide Assured plc
– Breast Cancer Now (Trustee)
– ICAEW Financial Services Board (Member)
95
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
GOVERNANCE
OVERVIEW
FROM THE CHAIR
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
96
Dear Shareholder
On behalf of the Chesnara Board, I am pleased to present
our Corporate Governance Report for the year ended
31 December 2024.
Chesnara’s Corporate Governance Framework underpins the
delivery of sustainable value to our customers and shareholders
through effective deployment of our staff and technology, and
constructive engagement with our suppliers, partners and
regulators. The Board drives the Group’s culture and values
by assigning clear roles and responsibilities and setting high
expectations of business performance and ethical conduct.
Our robust Governance Framework enables us to effectively
manage risks and opportunities, as well as to take appropriate
steps to deliver our sustainability agenda.
This section of the Annual Report and Accounts sets
out our governance policies and practices and includes
details of how the Company has applied the principles
and complied with the provisions of the UK Corporate
Governance Code 2018 (the ‘Code’) during 2024.
The Board recognises that sustainability and stewardship
is central to a Company’s ability to operate responsibly.
The Board is also mindful of the critical importance of the
interests of its employees, customers and suppliers for the
purposes of delivering sustainable performance, whilst engaging
constructively with regulators and shareholders to understand
and meet their expectations. Details of how we have engaged
with key stakeholders and performed our duties under s172 of
the Companies Act 2006 are set out on pages 32 to 39 within the
Strategic Report.
The Board agenda appropriately balances governance, strategy,
risk, financial performance and emerging matters in order to
promote the success of the Company. Each member significantly
contributes to Board discussions and devotes sufficient time to
the Board and the effective operation of its committees. There
were a number of additional meetings required over the course
of 2024 and I am grateful to my fellow Board members for making
themselves available as and when required.
Following the completion of a nine-year tenure, Jane Dale will
not seek re-election at the Company’s Annual General Meeting
(‘AGM’) in May 2025 and will step down as Senior Independent
Director and as a director of the Company at the conclusion of
that meeting. I would like to thank Jane for her significant
contributions to the Group as a non-executive director and in
particular as Chair of our Audit & Risk Committee. The Group has
changed much over her time with us and Jane has overseen
several key acquisitions and ensured timely reporting of strong
financial results irrespective of these and external changes to
reporting regimes.
Gail Tucker joined the Board on 29 January 2025 and will chair
the Audit & Risk Committee upon Jane standing down. She
brings with her a wealth of reporting expertise including from her
time as IFRS 17 Global Technical Lead for PwC. She has advised
insurance audit teams around the world and has sat on a number
of technical committees. We are delighted to have attracted such
talent into the Group.
No NED chairs the Board as well as a Board committee
nor does any NED chair more than one Chesnara Board
Committee. The principles and policies that support the
Governance Framework outlined in the Group Corporate
Governance Framework are designed to encourage high
standards of ethical and business conduct and consideration
of matters such as diversity. Each of the businesses within the
Group has continued to make further progress in ensuring that
the governance arrangements remain effective, whilst also
integrating environmental and social factors within their risk
assessment system.
This report summarises the steps the Board and its committees
have taken to fulfil their governance responsibilities.
I look forward to having the opportunity to engage with our
shareholders at our AGM on 13 May 2025 as set out in our
Notice of AGM on page 253 of this report.
Luke Savage, Chair
26 March 2025
Current balance of executive and
non-executive directors
Current gender diversity of the Board
Board tenure
Current ethnic diversity of the Board
Chesnara Board composition
1
2
5
4
4
7
1
1
7
Non-executive
Executive
Chair
Male
Female
0-6 years
Over 6 years
White
Ethnic minority
Our robust Governance Framework enables us to effectively manage risks and opportunities,
as well as to take appropriate steps to address relevant environmental and social issues in
a proportionate manner.
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CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
The Group’s Governance Framework has continued to operate effectively in 2024, allowing the Company to respond to the needs of its stakeholders
and the evolving market conditions in which it operates.
The following statement, together with the Directors’ Remuneration Report on pages 110 to 126, the Nomination & Governance Committee Report on
pages 104 to 107, and the Audit & Risk Committee Report on pages 127 to 134 describes how the principles set out in the UK Corporate Governance
Code 2018 (the ‘Code’) have been applied by the Company and details the Company’s compliance with the Code’s provisions for the year ended 31
December 2024.
CORPORATE GOVERNANCE REPORT
Compliance with the Code
The Company has applied the principles and complied throughout the year with all of the relevant
provisions of the Code. The UK Corporate Governance Code is available at www.frc.org.uk.
The table below provides an overview of the Company’s compliance with each of the five sections
of the Code.
Code section
Question
Board Leadership & Company Purpose
Details of how the opportunities and risks to the future success of the business have been considered and addressed and the
sustainability of the Company’s business model are set out in the Strategic Report (pages 26 to 91).
Details of stakeholder engagement (including engagement with major investors and details of how investors’ interests
are considered in Board discussions and decision making are set out on pages 32 to 39 of the Strategic Report.
Details of how our Board monitors culture through our Workforce Engagement NED and details of our Whistleblowing Policy
are set out on page 72 of the Strategic Report.
Details of how potential conflicts of interest are managed are included on page 101 of this Corporate Governance Report.
Division of Responsibilities
The division of responsibilities on the Board and details of directors’ independence are set out on page 100 of this Corporate
Governance Report.
Time commitments of the Board and 2024 Board and committee meeting attendance is set out on page 102 of this
Corporate Governance Report.
Composition, Succession and Evaluation
The composition and skills, experience and knowledge of the Board is detailed on page 94 of this Corporate Governance report.
Details of the annual evaluation of the performance of the Board, its committees, the Chair and individual directors are set out on
page 101 of this Corporate Governance Report.
The composition, roles and responsibilities and activities of the Nomination & Governance Committee are set out on pages 104 to 107
of the Nomination & Governance Committee Report.
Audit, Risk & Internal Control
The composition, roles and responsibilities and activities of the Audit & Risk Committee are set out on pages 127 to 134 of the Audit &
Risk Committee Report.
The Board confirms that it has completed a robust assessment of the Company’s emerging and principal risks. Details of the Board’s
assessment of the Company’s principal risks are set out on pages 61 to 67 of the Strategic Report and details of the Board’s assessment
of the Company’s risk management and internal control system are set out on page 103 of this Corporate Governance Report.
Please also see the Directors’ Report (including the Going Concern statement) (pages 135 to 138) and the Viability Statement
(page 56) for details of the Board’s assessment of the Company’s position, business model, strategy, prospects.
Remuneration
The composition, roles and responsibilities and activities of the Remuneration Committee are set out on page 111 of the Directors’
Remuneration Report.
Pages 110 to 126 of the Directors’ Remuneration Report sets out details of the Remuneration Policy as presented to shareholders at the
2023 AGM and how the policy has been applied in determining director and senior management remuneration.
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CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
The Board
At 31 December 2024, the Board comprised of an independent non-executive Chair, four further
independent non-executive directors and two executive directors.
Biographical details of current directors are given on pages 94 and 95 and a Board profile, which assesses
the core competencies required to meet the Group’s strategic objectives, is provided on page 94.
The Board reviewed and updated the core competencies matrix, adding People & Reward and Regulatory
competencies as key requirements. The Board, which plans to meet at least seven times over the course
of 2025, has a schedule of matters reserved for its consideration and approval. These matters include:
– implementation of the corporate strategy and business plan;
– major acquisitions, investments and capital expenditure;
– financial reporting and controls;
– Dividend Policy;
– capital structure;
– Board and Board committee composition and appointments;
– appointments to the Board and Board committee membership;
– appointment or removal of the Company Secretary; and
– of the Remuneration Policy for Board directors and senior executives.
To support effective escalation from the Company’s major regulated subsidiary Boards, members of the
Company’s Board also serve on key subsidiary Boards and committees across Chesnara’s business
divisions. Specifically:
(i) three directors of the Company were also directors of Countrywide Assured plc during the year, those
being Jane Dale, Mark Hesketh (until 09 April) and Carol Hagh;
(ii) three directors of the Company were also directors of CASLP Ltd during the year, until CASLP Ltd was
dissolved on 16 January 2025, those being Jane Dale, Mark Hesketh (until 9 April) and Carol Hagh;
(iii) four directors of the Company, being Karin Bergstein (until 5 December), Eamonn Flanagan, Steve Murray
and David Rimmington (until 16 May 2025), were also directors of Movestic Livförsäkring AB in 2024; and
(iv) Steve Murray was also a director of the Scildon and Waard Supervisory Boards throughout the year.
Under local legislation or regulation for all divisions of the Group, the directors have responsibility for
maintenance and projections of solvency and for assessment of capital requirements, based on risk
assessments, and for establishing the level of long-term business provisions, including
the adoption of appropriate assumptions. The Prudential Regulation Authority is the Group supervisor
and maintains oversight of all divisions of the Group through the college of supervisors.
The responsibilities that the Board has delegated to the respective executive management teams
of the UK, Dutch and Swedish businesses include: the implementation of the strategies and policies
of the Group as determined by the Board; monitoring of operational and financial results against plans
and budget; prioritising the allocation of capital, technical and human resources and developing and
managing Risk Management Systems.
The roles of the Chair and Group Chief Executive
The division of responsibilities between the Chair of the Board and the Group Chief Executive is
clearly defined and has been approved by the Board. The Chair leads the Board in the determination
of its strategy and in the achievement of its objectives and is responsible for organising the business
of the Board and availability of timely information, ensuring its effectiveness, encouraging challenge
from non-executive directors and setting its agenda. The Chair has no day-to-day involvement in the
management of the Group. The Group Chief Executive has direct charge of the Group on a day-to-day
basis and is accountable to the Board for the strategic, financial and operational performance of
the Group.
Senior Independent Director
Jane Dale, who has been a non-executive Board member since May 2016, was appointed as the Senior
Independent Director in October 2018. The Senior Independent Director supports the Chair in both the
delivery of the Board’s objectives and in ensuring that the views of all shareholders and stakeholders
are conveyed to the Board. Jane is available to meet shareholders on request and to ensure that the
Board is aware of shareholder concerns not resolved through the existing mechanisms for shareholder
communication. The Senior Independent Director also meets with the non-executive directors, without
the Chair present, at least annually, and conducts the annual appraisal of the Chair’s performance and
provides feedback to the Chair and the Board on the outputs of that appraisal.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
99
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
Directors and directors’ independence
During 2024 a review was conducted to assess the independence of the Board as a whole when set
against a matrix of key measures set out in the Code. The table below shows the results of that
review under the Code Provisions 11, 12 and 17 and Principle G.
The table below shows the results of that review:
Questions: Has the non-executive director...
LS
JD
EF
GT
CH
KB
1.
Been an employee of the Company or Group within the last five years?
No
No
No
No
No
No
2a.
Had within the last three years, a material business relationship with the Company: Directly?
No
No
No
No
No
No
2b.
Had within the last three years, a material business relationship with the Company: As a partner, shareholder, director or senior employee of a body
that has such a relationship with the Company?
No
No
No
No
No
No
3.
Received additional remuneration from the Company apart from a director’s fee?
No
No
No
No
No
No
4.
Participated in the Company’s share option or performance-related pay scheme?
No
No
No
No
No
No
5.
Been a member of the Company’s pension scheme?
No
No
No
No
No
No
6.
Got close family ties with any of the Company’s advisors, directors or senior employees?
No
No
No
No
No
No
7.
Held cross-directorships or had significant links with other directors through involvement in other companies or bodies?
No
No
No
No
No
No
8.
Represented a significant shareholder?
No
No
No
No
No
No
9.
Served on the Board for more than nine years from the date of their first appointment?
No
No
No
No
No
No
The review went further and, based on Code Provision 10, assessed each NED against a list
of ten Yes/No questions, where, for each, a ‘No’ is determined to be a positive assessment
of independence.
Code consideration
Question
Provision 11 & 12
1. Are at least half the Board, excluding the Chair, NEDs whom the Board considers to be independent?
2. Has the Board appointed one of the independent NEDs to be the senior independent director (SID) to provide a sounding board for the Chair and
serve as an intermediary for the other directors and shareholders?
YES
YES
Principle-G
3. Does the Board include an appropriate combination of executive and non-executive (and, in particular, independent non-executive) directors,
such that no one individual or small group of individuals dominates the Board’s decision making?
4. Is there a clear division of responsibilities between the leadership of the Board and the executive leadership of the Company’s business?
YES
YES
Provision 17
5. Has the Board established a Nomination Committee to lead the process for appointments, ensure plans are in place for orderly
succession to both the Board and senior management positions, and oversee the development of a diverse pipeline for succession?
6. Are a majority of members of the Nomination Committee independent NEDs?
7. Is the Nomination Committee chaired by an individual other than the Chair of the Board when it is dealing with the appointment of their successor?
YES
YES
YES
100 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
As a result of this review, the Board considers that all non-executive directors were independent
during the year under review. The Board notes that Jane Dale will have served almost nine years
on the Board by the date of the AGM, and as outlined on page 107, Ms Dale will not seek re-
election as a director of the Company at the 2025 AGM, concluding her tenure on the Board.
The Board has no familial relationship with any other member of the Board or senior
management team.
Other than their fees, and reimbursement of taxable expenses, which are disclosed on page 113,
the non-executive directors received no remuneration from the Company during the year.
The directors are given access to independent professional advice, at the Company’s expense,
when the directors deem it necessary in order for them to carry out their responsibilities.
Independent professional advice of this nature was drawn upon with regard remuneration matters.
This has been disclosed on page 111 in the Remuneration Report.
The Board is satisfied that its overall balance continues to provide significant independence of mind
and judgement and further considers that, taking the Board as a whole, the independent directors are
of sufficient calibre, knowledge and number that they are able to challenge the executive directors,
their views carry significant weight in the Company’s decision making and bring diverse cultural and
territory insight and skills.
Professional development
The directors were advised, on their appointment, of their legal and other duties and obligations as
directors of a listed Company. This has been supplemented by the circulation to each director of their
responsibilities and duties as contained within the Group’s Corporate Governance & Responsibilities
Map. Throughout their period in office, the directors have, through the conduct of business at
scheduled board meetings and training, been updated on the Group’s business and on the competitive
and regulatory environments in which it operates. The directors are committed to their own ongoing
professional development and the Chair discusses training with each non-executive director at
least annually. All directors are encouraged to suggest training topics of interest. In 2024, specific
board awareness and deep-dive sessions took place on inside information and share dealing, tax
considerations of Part VIIs, M&A and company structure, Artificial Intelligence, sustainability, and
key jurisdictional market trends. Each member of the Board, except the Chair and the Group Chief
Financial Officer, served on one or more subsidiary Board during the period under review, through
which they have considerable knowledge and experience of the divisional businesses across the
Group. The Chair regularly attends committee and subsidiary Board meetings by invitation.
Information
Regular reports and information are circulated to the directors in a timely manner in preparation for
Board and committee meetings.
As stated above, the Company’s directors are also members of various Boards of key subsidiaries
within the UK, Dutch and Swedish divisions. These Boards hold scheduled meetings, at least
quarterly, which are serviced by regular reports and information, covering all of the key areas
relevant to the direction and operation of those subsidiary entities, including business development,
key projects, financial performance and position, actuarial assumptions setting and results analysis,
compliance, investments, information technology and cyber security, operations, customer
care and communication, internal audit, all aspects of the Risk function and own risk and
solvency assessment.
Key divisional subsidiaries monitor risk management procedures, including the identification,
measurement and control of risks through the auspices of a Risk Committee. These committees
are accountable to and report to their Boards on a quarterly basis.
Annual reports are produced which cover an assessment of the capital requirements of the life
assurance subsidiaries, their financial condition and a review of risk management and internal
control systems.
Furthermore, the divisions are required to submit a quarterly risk report and an annual report on risk
management and internal control systems.
In addition to these structured processes, the papers are supplemented by information which the
directors require from time to time in connection with major events and developments, where critical
views and judgements are required of Board members outside the normal reporting cycle.
Board effectiveness and performance evaluation
As part of the annual performance, an internal effectiveness evaluation of the Board and each of its
committees was undertaken in the latter part of 2024.
This was through directors completing an anonymous questionnaire followed by individual meetings
between the Chair and each director to obtain their views on what was working well and what could
be improved. Individual director performance and time commitment to the Board was considered as
part of these meetings.
The questionnaire covered wide-ranging matters, including how well the Board operates, the process
of decision making, the balance between the focus on risk, good customer outcomes and running
the business, the culture and dynamics of the Board ensuring its composition and that of its
committees are aligned. In addition, using similar methods to those described above, the non-
executive directors, led by Jane Dale as Senior Independent Director under a separate process,
contributed to a formal performance evaluation of the Chair.
The outcome of the reviews of the Board and its committees indicated that they continue to be
effective. The evaluation of directors’ performance concluded that each of the directors
demonstrates commitment to his or her role and dedicates sufficient time to effectively discharge
their responsibilities to the Company.
The review indicated that information provided to the Board is clear and focused and that the Board
operates in an open and constructive manner. Continuous progress on the Company’s long-term
strategy and ensuring appropriate time is allocated to this continues to be a focus for the Board in
2025. Similarly, having overseen a number of changes to the executive team in 2024 (detailed on
page 105 of the Nomination and Governance Report), talent and succession planning remains a focus
for 2025 in order to ensure the Group is well placed to meet its strategic ambitions.
The evaluation findings were presented back to each committee and formally approved on that basis
before each committee then confirmed to the Board that it continued to operate effectively.
Directors’ conflicts of interest
The Board has a policy and effective procedures in place for managing and, where appropriate,
approving conflicts or potential conflicts of interest. This is a recurring agenda item at all Board
meetings, giving directors the opportunity to raise any conflicts of interest they may have or to
update the Board on any changes to previously lodged interests. A director may be required to leave
a Board meeting whilst such matters are discussed.
The Company Secretary holds a register of interest, and a log of all potential conflicts raised is
maintained and updated. The Board is empowered to authorise potential conflicts and agree what
measures, if any, are required to mitigate or manage them. No material conflicts of interest were
noted in 2024.
Whenever a director takes on additional external responsibilities, the Chair considers any potential
conflicts that may arise and whether or not the director continues to have sufficient time to fulfil his
or her duties. There were considered to be no such concerns in 2024.
Customer/third-party conflicts of interest
The Board has a policy in place to manage customer and third-party conflicts of interest. This policy
sets out how the Company and its regulated subsidiaries manage conflicts of interest fairly, both
between the relevant Company and its customers, between groups of customers and between
customers, suppliers and shareholders.
No material conflicts of interest were noted in 2024.
101
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
Employee engagement
Hybrid working arrangements are in place across the Group to the extent appropriate to each territory
and business unit. This hybrid flexibility has enabled the Group to attract candidates to new roles that
otherwise might not have considered its main office locations.
The Board has a standard agenda item at each of its meetings to cover culture and stakeholder
engagement, including workforce engagement. This has helped highlight workforce and other
stakeholder matters as part of Board discussion and decision making. In addition, the designated
Workforce NED supports the Board’s ability to engage with the wider workforce as a two-way
communications channel.
A full description of our employee engagement and well-being is provided in our corporate and social
responsibility section on pages 70 to 72.
Customer/supplier engagement
The Board remains vigilant to ensure the importance of customer- and supplier- engagement remains
high on the Group’s agendas.
Relations with shareholders
The Group Chief Executive and the Group Chief Financial Officer meet with institutional shareholders
and are available for additional meetings when required. Should they consider it appropriate,
institutional shareholders are able to meet with the Chair, the Senior Independent Director and any
other director. The Chair is responsible for ensuring that appropriate channels of communication
are established with shareholders through the Group Chief Executive and the Group Chief Financial
Officer and, with support from the Senior Independent Director as appropriate, is responsible for
ensuring that the views of shareholders are known to the Board. This includes twice yearly feedback
prepared by the Company’s brokers on meetings that the executive directors have held with
institutional shareholders.
The Company’s full year and interim results presentations are available as a webcast for all
shareholders and provides opportunities for investors to ask questions directly to senior management.
The Company also has a programme of meetings with its larger shareholders as managed by the
Head of Strategic Development & Investor Relations, which provides an opportunity to discuss the
progress of the business on the basis of publicly available information. This investor relations
programme continued during 2024, with meetings held both in person and virtually, as well as
engagement with prospective new investors and private client wealth managers. The Company
also meets with existing and prospective debt investors. These include specific meetings for the
debt investor community as well as ad hoc meetings arranged either directly or through investor
conferences. A significant proportion of the Company’s shareholders are retail investors and, in order
to ensure that they have access to relevant information, the Company maintains a detailed webpage
for investors which includes access to equity research. Management also undertake webinars on the
Company’s prospects that are publicly available to private investors.
Annual and interim reports are published and those reports, together with a wide range of
information of interest to existing and potential shareholders, are made available on the Company’s
website, www.chesnara.co.uk.
All shareholders are encouraged to attend the Annual General Meeting (‘AGM’) at which the results
are explained and an opportunity is provided to ask questions on each proposed resolution.
At our AGM on 14 May 2024, all resolutions were passed, with votes for ranging from 92.74%
to 99.99% (votes against ranging from 0.01% to 7.26%). The lowest support (92.74%) was for
Resolution 17, which authorises the directors to disapply pre-emption rights on share issuances
relating to acquisition or other capital investments. Although there are currently no plans or intentions
to issue shares in relation to acquisitions or other capital investments, the Board considers the
resolution to seek such authority common market practice and it offers the Company flexibility
should the authority be required.
Our next AGM is to be held on 13 May 2025 and details of the resolutions to be proposed can be
found in the Notice of the Meeting on pages 253 to 259. It is intended that the meeting be held in
person, with the chairs of the Board and its committees available to answer such questions as
appropriate. Shareholders are nonetheless encouraged to submit in advance any questions that they
may have in order that the Chairs of the Board committees can answer them on the day.
Sustainability governance
Our third report covering the broad range of climate-related information to be disclosed under the
four overarching pillars (Governance, Strategy, Risk Management and Metrics & Targets) of the
Taskforce for Climate-Related Financial Disclosure (TCFD) is contained on pages 68 to 91. This details
the governance information required in accordance with recommendations of TCFD.
The Group Chief Executive Officer takes overall accountability for sustainability at group level, with
the support of divisional CEOs, other executive management and a Group Sustainability Committee,
currently chaired by the Company’s senior independent NED. The Board sets the overall vision and
approach of the Group in regards to sustainability and has approved its sustainability commitments
and targets. The Board receives regular reporting on sustainability, including with regards to progress
towards our targets and consideration of the Group climate change risk assessment (with support
from the Audit & Risk Committee). Further details of how we are embedding sustainability into our
Governance Framework are included in our Annual Sustainability Report.
Company Secretary
The directors had access to the advice and services of the Company Secretary throughout the year.
The Company Secretary is responsible for advising the Board on all governance matters.
Remuneration Committee
Full details of the composition and work of the Remuneration Committee are provided on page 111.
Audit & Risk Committee
Full details of the composition and work of the Audit & Risk Committee are provided on pages
127 to 134.
Nomination & Governance Committee
Full details of the composition and work of the Nomination & Governance Committee are provided
on pages 105 to 107.
The attendance record of each of the directors at scheduled board and committee meetings for the
period under review is:
Scheduled
Board1
Nomination &
Governance
Committee
Remuneration
Committee
Audit & Risk
Committee
Luke Savage Non-Executive Chair
11
(11)
4
(4)
5
(5)
n/a
Steve Murray Executive Director
11
(11)
n/a
n/a
n/a
David Rimmington Executive
Director
3
(3)
n/a
n/a
n/a
Jane Dale Non-Executive Director
11
(11)
4
(4)
n/a
6
(6)
Mark Hesketh Non-Executive
Director
2
(2)
1
(1)
n/a
2
(2)
Eamonn Flanagan Non-Executive
Director
11
(11)
n/a
5
(5)
6
(6)
Karin Bergstein Non-Executive
Director
11
(11)
4
(4)
n/a
6
(6)
Carol Hagh Non-Executive
Director
11
(11)
4
(4)
5
(5)
n/a
Tom Howard Executive Director
9
(9)
n/a
n/a
n/a
Gail Tucker non-executive director
–
(–)
–
(–)
n/a
–
(–)
The figures in brackets indicate the maximum number of scheduled meetings in the period during which the
individual was a Board or committee member.
Note:
1. The number of scheduled Board meetings includes 3 meetings that were called at short notice to discuss ad hoc/
subject specific matters.
102 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Internal control
The Board is ultimately responsible for the Group’s system of internal control and for reviewing its
effectiveness. In establishing the system of internal control, the directors have regard to the
significance of relevant risks, the likelihood of risks occurring and the methods and costs of mitigating
risks. It is, therefore, designed to manage rather than eliminate the risks, which might prevent the
Company meeting its objectives and, accordingly, only provides reasonable, but not absolute,
assurance against the risk of material misstatement or loss.
In accordance with the FRC’s guidance on Risk Management, Internal Control and Related Financial
and Business Reporting, the Board confirms that there is an on-going process for identifying,
evaluating and managing the significant risks faced by the Group. This process has been in place
for the year under review and up to the date of approval of the Annual Report and Accounts.
The process is regularly reviewed by the Board and accords with the guidance.
In accordance with the regulatory requirements of the PRA, local regulators and SII, the relevant
business divisions have maintained and enhanced their risk and responsibility regime. This ensures
that the identification, assessment and control of risk are firmly embedded within the organisation
and that there are procedures for monitoring and update of the same. The Audit & Risk Committee
regularly reviews and reports quarterly on risks to the Board.
The Group also maintains a principal risk register, which ensures identification, assessment and
control of the significant risks subsisting within the Company and its business units CA, Waard
Group, Movestic and Scildon. The principal risks and uncertainties of the Group can be found on
pages 61 to 67.
The maintenance of principal risk registers is the responsibility of senior management, who report
on them quarterly to the respective divisional Audit & Risk Committees and to each Chesnara Audit
& Risk Committee meeting.
The divisions maintain a risk and responsibility regime, which ensures that:
– the Boards and Group Chief Executive have responsibility for ensuring that the organisation and
management of the operation are characterised by sound internal control, which is responsive to
internal and external risks and to changes in them;
– the Boards have responsibility for the satisfactory management and control of risks through the
specification of internal procedures;
– there is an explicit Risk function, which is supported by compliance; and
– the Internal Audit functions provide independent assurance that the risk management, governance
and internal control processes are operating effectively.
At least quarterly principal and emerging risks are reported to the Board, assessing their proximity,
probability and potential impact. This has enabled the Board to carry out a robust assessment of
the Company’s emerging and principal risks.
As an integral part of this regime, detailed risk registers are maintained to identify, monitor and
assess risk under appropriate classifications. It includes climate change risk.
With regards to Countrywide Assured plc, Waard Group, Scildon and Movestic, the Group ensures
that effective oversight is maintained, by way of the membership of Chesnara directors on their local
Boards and quarterly reporting to the Chesnara plc Audit & Risk Committee.
In addition, the Chesnara Board confirms that it has undertaken a formal annual review of the
effectiveness of the system of internal control for the year ended 31 December 2024, and that it has
considered material developments between that date and the date of approval of the Annual Report
and Accounts. The Board confirms that these reviews took account of the findings by the Internal
Audit and Compliance functions on the operation of controls, internal financial controls, as well as
management assurance on the maintenance of controls, and reports from the external auditor on
matters identified in the course of statutory audit work. Conclusions of the Audit & Risk Committee’s
annual review of effectiveness of the Group’s risk management and internal control systems are
reported in more detail in the Audit & Risk Committee Report as set out on pages 127 to 134.
The Board is satisfied that the overall internal control framework has remained effective during the
year, that the group has responded appropriately to any risks or issues which have arisen, and that
any control deficiencies identified are being appropriately addressed. Additionally, there are a number
of live change programmes that exist across the Group. These include the planned migrations for
the majority of the UK’s outsourced operations to SS&C and potential merger of our Dutch businesses.
There are also planned advancements in IT, operational risk management and controls being made
as a result of major regulatory driven operational resilience programmes across the Group. This includes
UK Operational Resilience, UK Third Party Risk Management and DORA.
Financial reporting
Management is responsible for establishing and maintaining adequate internal controls over financial
reporting. These controls are designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external reporting purposes.
The Group has comprehensive planning, budgeting, forecasting and reporting processes in place.
A summary of the Group’s financial results supported by commentary and performance measures
is provided to the Board on a quarterly basis.
In relation to the preparation of the Group financial statements, the controls in place include:
– reviewing new developments in reporting requirements and standards to ensure that these are
reflected in group accounting policies; and
– developing the Group’s financial control processes and procedures which are implemented across
the Group.
The reporting process is supported by transactional and consolidation finance software. Reviews
of the application of controls for external reporting purposes are carried out by senior finance
management. The results of these reviews are considered by the Board as part of its monitoring
of the performance of controls around financial reporting. The Audit & Risk Committee reviews
the application of financial reporting standards and any significant accounting judgements made
by management.
Going Concern and Viability Statement
The Statement on Going Concern is included in the Directors’ Report on page 138 and the
Long-Term Viability Statement is set out on page 56.
Financial crime and whistleblowing
Amongst others, the Company operates policies for anti-bribery & corruption as well as anti-fraud
in order to manage risks such as financial crime, money laundering, fraud, corruption and terrorist
financing. Related to this, a Whistleblowing Policy is also operated to facilitate the communication
of wrongdoing or suspected wrongdoing with clear communication lines highlighted to enable
individuals to advise of their concerns in a safe and confidential manner; in this regard, an external
whistleblowing line was established during the year. No instances of whistleblowing or financial
crime were noted during the year. These policies are all reviewed annually and staff are asked to attest
to their embedding and understanding. A Gifts & Hospitality Register is maintained and no breaches
were recorded during the year.
103
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
NOMINATION &
GOVERNANCE
COMMITTEE REPORT
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
104
The Nomination & Governance Committee considers the mix of skills and experience
that the Board requires to be effective and reviews talent development and succession
planning across the Group.
Nomination & Governance Committee
During the period under review, the committee comprised Carol Hagh, who also served as Chair
of the committee from 9 April, Jane Dale, Luke Savage, and Karin Bergstein. Mark Hesketh served
as Chair of the committee until his resignation on 9 April 2024 to become Chair of our UK business
unit, Countrywide Assured. No individual participated in discussion or decision making when the
matter under consideration related to themselves.
The committee Chair reports material findings and recommendations from each meeting at the
next Board meeting.
The Terms of Reference for the committee can be found on the Company website
www.chesnara.co.uk
The role of the Nomination & Governance Committee is to:
– keep under review the balance, structure, size, diversity and composition of the Board and its
committees, ensuring that they remain appropriate;
– assess the independence of each NED and any circumstances that are likely to impair, or could
impair, their independence;
– be responsible for overseeing the Board’s succession planning requirements including the
identification and assessment of potential Board candidates and making recommendations
to the Board for its approval;
– scrutinise and hold to account the performance of the executive directors against agreed
performance objectives and advise the Remuneration Committee of their assessments;
– keep under review the leadership needs of, and succession planning for, the Group in relation
to both its executive directors and other senior management;
– identify and nominate, for the approval of the Board, candidates to fill Board vacancies as and
when they arise;
– oversee the search process for new directors, recommending appointments to the Board; and
– evaluate the balance of skills, knowledge, experience and diversity of the Board.
This includes consideration of recommendations made by the Group Chief Executive for changes
to the executive membership of the Board.
During the period, the committee met four times and attendance at those meetings is shown
on page 102. By invitation, the Group CEO and Group Chief of Staff & Company Secretary attend
the Nomination & Governance Committee but neither were present when matters relating to
their own performance were discussed.
The composition of the Board
The committee has continued to focus on succession planning, with a view to maintaining an
appropriate composition for the Board and its committees to support the continued development
of the Group. The review also identified areas where the Board should evolve to meet any expected
future business and strategic direction of the Group.
During 2024 the committee finalised the process that led to Tom Howard’s appointment as the
Group’s Chief Financial Officer and as a director of the Company. It also determined the approach
to allocating Company Secretary responsibilities upon the resignation of the Group General Counsel
& Company Secretary.
The committee approved the appointment of Pauline Derkman as Chief Executive Officer and Edwin
Bekkering as Chief Financial & Risk Officer, of what will become the combined Scildon & Waard
business, subject to regulatory approval.
The development of talent below Board level is vital. The Company continues to build an internal
leadership pipeline for senior roles to ensure that the necessary skills and experience exist within
the business.
Board appointment process
The committee adopts a formal and transparent procedure for the appointment of new directors
to the Board.
The Board’s typical process may include the use of independent external search firms for appointing
directors. As part of the appointment process, these external advisors would be asked to provide
candidates from a diverse range of backgrounds, from which we select a short list of candidates
who best meet the selection criteria. Interviews are conducted by a selection of Board members and
executive management, as relevant to the role, with a recommendation to the committee as to the
preferred candidate. Any candidate deemed suitable for appointment will provide references and,
if necessary, undergo the fit and proper assessment process as outlined in the FCA Senior Managers
& Certification Regime (SMCR) prior to appointment.
The Board engaged the services of Teneo in its appointment of Tom Howard as a director of the
Company on 15 April 2024 and as Chief Financial Officer following the 2024 AGM.
Jane Dale will step down as a director of Chesnara at the conclusion of the 2025 AGM after nine
years on the Board. On behalf of the Board, we thank Jane for her extensive and invaluable
contribution to the Company during her tenure. We are delighted to have announced Gail Tucker as
a new appointee to the Board and she brings a wealth of experience to the Group from her previous
role at PwC. The Board engaged the independent services of executive search firm, Lygon Group,
in Gail’s appointment.
105
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
NOMINATION & GOVERNANCE COMMITTEE REPORT
a) Gender reporting table
b) Ethnicity reporting table
Gender
Number of
Board
members
% of
Board
Number of senior
positions on the Board
(CEO, CFO, SID or Chair)
Number in
executive
management
% of
executive
management
Men (including those self-identifying as men)
4
57.1%
3
2
100%
Women (including those self-identifying as women)
3
42.9%
1
n/a
n/a
Non-binary
n/a
n/a
n/a
n/a
n/a
Not-specific/prefer not to say
n/a
n/a
n/a
n/a
n/a
ONS ethnicity
category
Number of
Board
members
% of
Board
Number of senior
positions on the Board
(CEO, CFO, SID or Chair)
Number in
executive
management
% of
executive
management
White British or White Other
6
86%
4
2
100%
Mixed/Multiple Ethnic Groups
n/a
n/a
n/a
n/a
n/a
Asian/Asian British
1
14%
n/a
n/a
n/a
Black/African/Caribbean/Black British
n/a
n/a
n/a
n/a
n/a
Not specified/prefer not to say
n/a
n/a
n/a
n/a
n/a
Diversity
The committee is mindful of the corporate governance developments in the areas of diversity
and gender balance, including the requirements under the Disclosure and Transparency Rules.
In accordance with Listing Rule 6.6.6R(10), the following tables set out numerical data on the sex
and ethnic background of the Board and executive management as at 31 December 2024, with the
data collected from the individuals.
106 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Review of effectiveness
The Board and its committees undertook annual effectiveness
reviews and the respective chairs discussed the findings in each
forum. Other standard processes were also undertaken, including
Fit & Proper assessments, Board Diversity Policy review, NED
succession planning and the review of the effectiveness of the
Chair. The evaluations did not identify any additional changes
needed to Board composition over and above those that had
been initiated.
Areas where increased focus and/or action was considered to
be of potential value have either been addressed in 2024 or will
be taken into account in 2025. The 2024 Board effectiveness
reviews were internally facilitated having been last led by an
external third party (Nasdaq Governance Solutions) in 2022.
Succession planning
Succession planning is an important element of good governance,
ensuring that Chesnara is fully prepared for planned or sudden
departures from key positions throughout the Group. The
committee, in the year, has reviewed the succession plans
for the Board and senior executives across the Group.
Mindful of the need for effectiveness and engagement, the
committee through its ongoing review of Board and committee
memberships determined that a number of changes were
appropriate as noted above. And the committee will continue
to also have efficiency and value in mind when determining
board membership and giving optionality for its longer-term
composition as the Group continues to change and succession
plans are effected.
Non-executive director engagement
It is important to the Board that non-executive directors are
provided with training and development both within the
business and at a group level. The Board believes that on-going
training is essential to maintaining an effective and knowledgeable
board. The Company Secretary supports the Chair in ensuring
that all new directors receive a tailored and comprehensive
induction programme on joining the Board. Continuing education
and development opportunities are made available to all board
members throughout the year. In 2024, a number of development
initiatives have continued, these included one-to-one sessions
with key members of the senior management team and training
sessions given by external providers.
Directors standing for re-election
Jane Dale will stand down as a director at the Company’s AGM
on 13 May 2025, at which time Gail Tucker will be put forward for
election. In accordance with the Code, all other directors will
offer themselves for re-election at that time. Following the annual
Board effectiveness reviews of individual directors, as applicable
and subject to re-election/election, the Chair considers that
each director:
– continues to operate as an effective member of the Board;
– has the necessary skills, knowledge and experience to enable
them to discharge their duties and contribute to the continued
effectiveness of the Board; and
– has sufficient time available to fulfil their duties.
The Board, on the advice of the Nomination & Governance
Committee, recommends the election- or re-election of each
director so proposed at the 2025 AGM. The full 2025 AGM
Notice can be found on page 253.
Carol Hagh
Chair of the Nomination & Governance Committee
26 March 2025
The Board recognises the benefits of having diversity across all
areas of the Group – please see the equal opportunities section
on page 70 for further detail. When considering the make-up of
the Board, the benefits of diversity are reviewed and balanced
where possible and appropriate, along with the breadth of skills,
sector experience, gender, race, disability, age, nationality and
other contributions that individuals may make. In identifying
suitable candidates, the committee seeks individuals from a range
of backgrounds, with the final decision being based on merit
against the role criteria set. Through its Board Diversity Policy,
the Board maintains its practice of embracing diversity and
operates a measurable gender-based target of having at least
40% representation of both male and female membership
on the Board by 31 December 2025 in recognition of the
recommendations of the FTSE Women Leaders Review. We are
pleased to report that during 2024 we met this target and, in
addition, have met the requirements under Listing Rule 9.8.6R
of having at least 40% female directors and we remain committed
to continuous review and improvement of diversifying the Board,
senior management and the wider workforce. Since April 2024
and throughout the majority of the financial year, the Board
comprised 42.9% female: 57.1% males in line with the Hampton-
Alexander Review target of 33% for FTSE 100 companies though
a voluntary target for FTSE 350 organisations. In addition, the
Company will target having a female appointee to at least one of
the key senior roles of Chair; Senior Independent Non-Executive
Director; Group CEO or Group CFO by 31 December 2025 and
has met this target for a number of years. Actual levels of gender
diversity will be monitored and be reported in the Annual Report
and Accounts. The Board currently comprises four men and four
women with the role of Senior Independent Non-Executive
Director held by Jane Dale. It will comprise four men and three
women upon Jane Dale standing down after the 2025 AGM.
Further details of our board’s diversity, including our approach
to collecting data, can be found on page 71 of the Strategic
Report.
Further, Chesnara has determined that it will ensure that it
continues to meet the measurable target of having at least one
director from an ethnic minority on the Board in line with the
Parker Review. In consideration of the longer term, the Board
has discussed increasing its range of knowledge and experience
from outside financial services and also a broader geographical
experience base but is satisfied with its current composition.
The business operates to principles for other roles and is mindful
that it has a small workforce and therefore considers that it needs
to take associated staff turnover expectations into account. The
diversity of the Senior Leadership Team is reported on page 106.
107
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
We seek to achieve
strong alignment
between the interests
of stakeholders and
executive directors.
EAMONN FLANAGAN, CHAIR
REMUNERATION
COMMITTEE
ANNUAL STATEMENT
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
108
Dear Investor
On behalf of the Board and its Remuneration Committee (‘committee’), I am pleased to present
the Directors’ Remuneration Report for the year ended 31 December 2024, for which we seek
shareholder support at our forthcoming Annual General Meeting.
Summary of the year
Chesnara has a very clear strategic focus across three key areas:
1. Maximising value from our existing business;
2. Acquiring life and pension businesses that meet the strategic criteria of the Company; and
3. Enhancing value through profitable new business generation.
These three strategic objectives are underpinned by the culture, values and risk appetite of the
Group, which looks to deliver positive investment returns and value for money for our customers.
From a remuneration perspective, we seek to achieve strong alignment between the interests
of stakeholders and executive directors and continue to operate two executive incentive schemes:
the Short-Term Incentive Scheme (STIS) and Long-Term Incentive Plan (LTIP).
As covered in the financial report, we have seen further excellent delivery on our key performance
metrics in the year:
1. Commercial Cash Generation† of £60m, showing that the Group continues to deliver cash
generation through a wide variety of market conditions.
2. EcV† increased by £43m before the impact of dividend distributions of £37m, demonstrating
that the Group continues to generate sources of long-term future value.
3. Strong solvency ratio of 203%, significantly above our usual operating range, leaving us
well placed to execute M&A as opportunities are created or emerge.
4. New Business Contribution of £9m, further supplementing the Group’s EcV and
demonstrating a recurring and sustainable source of value to the Group.
5. Acquisition strategy saw the completion of the second Canada Life transaction in
December 2024.
6. An increase in dividend of 3% retaining our track record of growing the full year dividend
every year for the last 20 years.
Executive performance in 2024
Executive director remuneration outcomes for 2024
In light of the performance of the executive team relative to the financial targets and strategic
objectives set at the start of the year, the Remuneration Committee is satisfied that the reward
outcomes are appropriate and that our Remuneration Policy worked as intended. Additional details,
including a full description of targets and performance outcomes, can be found on page 114 for the
STIS and on page 117 for the 2022 LTIP awards.
The impact of acquisitions is excluded from the cash generation and EcV results for STIS award
purposes given that their funding can have a distorting impact on short-term results. Although the
acquisition strategy created £11m of incremental Economic Value during the year, the committee has
applied no discretion in its assessment of the STIS outcome.
The committee has reviewed the position of the 2022 LTIP ahead of vesting and is satisfied that no
windfall gains have occurred and that no adjustment is required on vesting. Further, the committee
reviewed underlying financial, operational and risk performance of the business over the relevant
performance periods and was satisfied that outcomes were a fair reflection of performance achieved
and therefore applied no further adjustment to the formulaic outcomes.
New Group Chief Financial Officer (‘Group CFO’)
In December 2023, we announced that David Rimmington had agreed with the Board that he would
not seek re-election at the Company’s Annual General Meeting (‘AGM’) in 2024 and that he would
step down as Group Finance Director and as a director of Chesnara plc at the conclusion of that
meeting. David oversaw the 2023 year end reporting process and supported an orderly transition to
incoming Group Chief Financial Officer Tom Howard.
As set out in last year’s Directors’ Remuneration Report, David has been treated as a good leaver in
line with the definitions set out in our Remuneration Policy and was not eligible for a salary increase
or to receive an LTIP award in 2024. His 2024 STIS and inflight LTIP awards have been pro-rated for
the period of the year David worked. Awards will continue to be subject to the original performance
targets and there will be no acceleration of vesting.
Tom Howard joined as an Executive Director on Monday 15 April 2024 as Group Chief Financial
Officer designate subject to regulatory approval and was elected by shareholders at the subsequent
AGM. The structure of Tom’s remuneration is the same as that provided to his predecessor, with an
STIS and LTIP opportunity of 100% of salary each.
As set out in last year’s Directors’ Remuneration Report, we agreed to compensate Tom for awards
which he forfeited on leaving Aviva Investors to join Chesnara. These are in line with the typical
approach of companies in this scenario and further details are disclosed in the report and are in
compliance with Listing Rules 9.3.2.
†Alternative Performance Measure (APM) used to enhance understanding of financial performance. Further
information on APMs can be found in the additional information section of this Annual Report and Accounts.
109
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Implementation of pay in 2025
In line with our Remuneration Policy, it is our normal practice to award executive directors,
and indeed all employees, an annual salary increase broadly in line with inflation. In 2025, UK
employees below executive level received an average salary increase of 2.5%. The Group CEO
was awarded a 2.1% increase and the Group Chief Financial Officer a 2.0% increase.
It is intended that the grants be made in the STIS and LTIP schemes and that quantums and
performance measures remain unchanged from those of 2024. In line with the approved
Remuneration Policy, the CEO and CFO will be eligible for an STIS opportunity of 100% of salary.
The metrics (cash generation, EcV and personal strategic measures) and weightings will be
unchanged from 2024, with the committee of the view that the metrics remain well aligned
to Chesnara’s key strategic aims. Similarly, the LTIP too will remain consistent with that of 2024
and the Group CEO will be awarded a 125% of salary grant and the Group CFO a 100% grant.
The executive directors’ remuneration for 2025 can be found on page 123.
Non-executive director fees
In line with policy, Chair and NED fees are periodically reviewed. The Board took into account
individual NEDs’ updated responsibilities and wider benchmarks for NED pay when determining
increases to their fees. The Chair’s fee was raised by 2.5% as with the general staff award, and
the Chair’s positioning remains around the lower quartile of the companies in the FTSE Small Cap.
The fees for other NEDs increased by 2.5% on average. Directors’ fees are set out on page 124.
Employee engagement
The management teams in each of the businesses are responsible for ensuring that employees
are kept informed and their views are considered on key subject matters. The committee engaged
with staff sitting in both Chesnara plc and our UK business unit on the components of the Group’s
remuneration offering and the alignment of directors’ pay with that of UK employees. Specifically,
we held a meeting between myself and the Group CEO alongside our UK CEO and UK HR Director
with representatives from across the UK team.
Shareholder engagement
The Directors’ Remuneration Report for the year ended 31 December 2024 comprises my Annual
Statement as Chair of the Remuneration Committee and our Annual Remuneration Report, which
together are subject to an advisory shareholder vote at the AGM in May 2025.
The voting outcome at the 2024 AGM in respect of the Directors’ Remuneration Report for the year
ended 31 December 2023 and the Remuneration Policy is set out on page 126 and reflects the
support of both private and institutional shareholders. The committee will continue to be mindful
to the interests of shareholders.
I hope that my annual statement, together with our Remuneration Report, provides a clear
account of the operation of the Remuneration Committee during 2024 and how we have put our
Remuneration Policy into practice. As Chair of the Remuneration Committee, I look forward to
engaging with you on our activities and decisions. As this year progresses, we will commence
our review of our Remuneration Policy ahead of our requirement to submit a policy for shareholder
approval at the 2026 AGM. This will provide me with an additional chance to engage with
shareholders, as we consult on any material changes that we determine to be appropriate.
Eamonn Flanagan
Chair of the Remuneration Committee
26 March 2025
DIRECTORS’ REMUNERATION REPORT •
REMUNERATION COMMITTEE CHAIR’S ANNUAL STATEMENT
110 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
This section sets out how the Remuneration Committee has implemented its Remuneration Policy for executive directors during 2024.
Other than the single total figure of remuneration for each director tables on page 112, statement of directors’ shareholding and share interests
on page 119, the information contained within this report has not been subject to audit.
Composition and activities of the Remuneration Committee
In accordance with its Terms of Reference, which can be viewed on the Company’s website, the Remuneration Committee considered matters relating to directors’ remuneration and that of other
senior managers at each of its meetings in 2024. Members of the Remuneration Committee during the course of the year were:
The committee appointed PricewaterhouseCoopers LLP (‘PwC’) as its independent advisor from 10 October 2022 following a competitive tender process. During 2024, the committee incurred external
advisor fees totalling £111,915 excluding VAT. PwC is a member of the Remuneration Consultants Group and a signatory to its Code of Conduct and the committee is therefore satisfied that the advice
PwC provided was objective and independent.
Highlights 2024
In 2024, the committee met five times and dealt with the following matters:
Notes.
1. By invitation, the Group CEO and Group Chief of Staff attended the Remuneration Committee, as under their
role did the Group General Counsel & Company Secretary but none were present when matters relating to
their own remuneration were discussed.
2. Eamonn Flanagan joined the committee in July 2020, and was appointed Chair on 15 January 2022.
Area of focus
Matter considered
Executive director
remuneration
and reward
Assessed and recommended to the Board, approval of the outcome of awards made in 2023 under the STIS and in 2022 under the LTIP having given due consideration to the risk
report provided by the Audit & Risk Committee. The committee also approved the outcomes of buyout awards made to Steve Murray as Group CEO on appointment.
Approved the targets and the grant of awards to executives in 2024 under the STIS and LTIP and undertook a half-year evaluation. Also considered whether the share price at the
time of making the LTIP award was likely to give rise to a ‘windfall’ for directors and determined that this was not the case.
Approved the final terms offered to the incoming Group CFO for awards to compensate him for inflight benefits otherwise to be forfeited upon leaving his previous employer.
All employee and
executive remuneration
Reviewed the UK employee general salary increase of 2.5%, mindful of economic considerations, staff turnover and the ability to attract new talent in a competitive recruitment market.
Approved LTIP grants to a broader participation group of targeted senior leaders and key talent who are able to materially influence the delivery of group strategy, ensuring that this
critical group of executives are aligned to our long-term goals.
Terms of Reference
The committee’s Terms of Reference were reviewed. A number of minor modifications were made in consultations with our advisors, PwC, but no material revisions were made to
the scope of committee duties as they were felt to continue to be appropriate and provide adequate scope to cater for the expectations set by the Code.
Review of the
Remuneration Policy
The Remuneration Policy, most recently presented to and approved by shareholders at the AGM in May 2023 with 96.25% support, was again reviewed for continued
appropriateness. No changes were considered necessary ahead of the triennial review in 2025 and vote in the 2026 AGM.
Committee evaluation
An evaluation of the committee’s performance by way of an internal questionnaire suggested that the committee continued to operate well.
Annual salary review
The committee reviewed the salaries of the executive directors and senior management and made changes in line with its Remuneration Policy and with due reference to staff
salaries and economic conditions generally.
Directors’ Remuneration
Reporting
The committee reviewed the draft Directors’ Remuneration Report for the 2023 Report and Accounts and recommended its approval by the Chesnara Board.
Performance against
strategic objectives
The committee reviewed the executive directors’ performance against objectives set.
Shareholder
engagement
The committee Chair wrote to shareholders in Spring 2024 setting out updates in the proposed approach to remuneration, reflecting feedback which had been received following
the 2023 AGM.
Employee engagement
The committee engaged with staff on the alignment of directors’ pay with UK employees through a meeting held between the committee Chair, the Group CEO and a cross
section of the UK workforce.
Chair’s fees
The committee reviewed the level of fees payable to the Board chair.
Remuneration principles
The committee reviewed the Group Remuneration Principles, which guide the remuneration policies throughout the Group.
Committee
members1
Role on the
committee
Committee
member since
Attendance
in 2024
Maximum possible
meetings in 2024
Luke Savage
Committee member
February 2020
5
5
Eamonn Flanagan2
Committee Chair
July 2020
5
5
Carol Hagh
Committee member
February 2022
5
5
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CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
Single total figure of remuneration for each director (audited information)
The remuneration of the executive directors for the years ended 31 December 2024 and 31 December 2023 is made up as follows:
Executive directors’ remuneration as a single figure – year ended 31 December 2024
Executive directors’ remuneration as a single figure – year ended 31 December 2023
Notes:
1. Includes amounts paid in lieu of accrued dividends and interest arising upon the exercise of share options under
the 2014 STIS.
2. Includes amounts paid in lieu of accrued dividends and interest arising upon the exercise of share options under
the 2014 LTIP.
3. The pension component in the single figure table represents employer contributions. No directors were members
of a defined benefit scheme. The executives can participate in a defined contribution pension scheme at the same
level as all employees with employer contributions currently being 9.5% of basic salary. If pension limits are
reached, the executive may elect to receive the balance of the contribution as cash.
4. No portion of the LTIP single figure value in relation to the 2022 LTIP award is attributable to share price growth.
5. This vesting outcome of the 2022 LTIP award has been applied to the average share price between 1 October
2024 and 31 December 2024 (255.5p) to produce the estimated LTIP figures shown for 2024 above. There will
be a true-up based on the actual share price on the day of vesting which will be shown in the 2025 Annual Report
and Accounts.
6. Tom Howard joined as an executive director on 15 April.
7. David Rimmington stood down as a director on 14 May 2024.
8. The buy-out awards were granted to Tom Howard, to compensate him for the schemes that he held with his
previous employer and which he forfeited upon accepting his new role with Chesnara.
Name of director
Salary
and fees
£000
Pension3
£000
All taxable
benefits1
£000
Non-taxable
benefits
£000
STIS
£000
LTIP2+4
£000
Buy-out
awards8
Total for
2023
£000
Fixed
£000
Variable
£000
Steve Murray5
458
39
21
8
439
217
–
1,182
526
656
Tom Howard6
–
–
–
–
–
–
–
–
–
–
David Rimmington7
315
30
41
8
299
102
–
795
394
401
Total
773
69
62
16
738
319
–
1,977
920
1,057
Name of director
Salary
and fees
£000
Pension3
£000
All taxable
benefits1
£000
Non-taxable
benefits
£000
STIS
£000
LTIP2+4
£000
Buy-out
awards8
Total for
2024
£000
Fixed
£000
Variable
£000
Steve Murray5
525
45
21
5
501
280
–
1,377
596
781
Tom Howard6
253
19
1
1
238
–
665
1,177
274
903
David Rimmington7
118
11
20
2
111
–
–
262
151
111
Total
896
75
42
8
850
280
665
2,816
1,021
1,795
112
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Name of director
Fees
£000
2024
Benefits
£000
Total
£000
Fees
£000
2023
Benefits
£000
Total
£000
Luke Savage
Eamonn Flanagan
Jane Dale
Mark Hesketh1
Carol Hagh
Karin Bergstein
147
75
83
19
74
67
–
–
–
–
–
–
147
75
83
19
74
67
135
70
75
70
65
65
–
–
–
–
–
–
135
70
75
70
65
65
Total
465
–
465
480
–
480
The remuneration of the non-executive directors for the years ended 31 December 2024 and 31 December 2023 is made up as follows, with the fee element being fixed and the benefits
being variable in nature:
Salary and fees
The Remuneration Committee usually reviews basic salaries annually. Assessments are made
giving full regard to external factors such as earnings inflation and industry benchmarks and
to internal factors such as changes to the role by way of either structural reorganisations or
enlargement of the Group. In addition, basic pay levels reflect levels of experience. The single
earnings figures demonstrate the application of this assessment process.
The Remuneration Policy for the executive directors is designed with regard to the policy for
employees across the Group as a whole. Our ability to meet our growth expectations and
compete effectively is dependent on the skills, experience and performance of all our employees.
Our employment policies, remuneration and benefit packages for employees are regularly
reviewed. There are some differences in the structure of the Remuneration Policy for the executive
directors and senior management team compared to other employees, reflecting their differing
responsibilities, with the principal difference being the increased emphasis on performance
related pay for the more senior employees within the organisation.
Non-executive directors’ remuneration as a single figure – year ended 31 December 2024 and 2023
UK employee share ownership is encouraged and facilitated through participation in the
SAYE Scheme.
The committee engaged directly with employees on the alignment of directors’ pay with UK
employees, including with regard to the proposed 2025 salary increase.
Taxable benefits
The taxable benefits for executive directors relate to the provision of a car, fuel allowance and
medical insurance. For non-executive directors, the taxable benefits represent the reimbursement
of travelling expenses incurred in attending board meetings at the Preston head office. These
amounts also include an amount to compensate for the personal tax burden incurred.
Notes.
1. Mark Hesketh stood down as a director on 9 April 2024.
113
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Threshold
performance
Percentage
award for
threshold
performance
On target
performance
Percentage
award for
on target
performance
Maximum
performance
Percentage
award for
maximum
performance
Actual
result
Actual
percentage
total award
Actual
percentage
award, as
percentage
of salary
Total
award (£)
Steve Murray
Cash generation1
Total EcV Earnings2
Group strategic
objectives
£15.6m
£14.5m
75%
0%
0%
0%
£19.5m1
£20.8m
100%
25.0%
25.0%
15.0%
£25.4m
£31.2m
125%
35.0%
35.0%
30.0%
£66.4m1
£82.4m
85.0%
of max
35.0%
35.0%
25.5%
35.0%
35.0%
25.5%
183,750
183,750
133,696
Total
65.0%
100.0%
95.5%
95.50%
501,196
Tom Howard3
Cash generation1&3
Total EcV Earnings2&3
Group strategic
objectives
£15.6m
£14.5m
75%
0%
0%
0%
£19.5m1
£20.8m
100%
25.0%
25.0%
15.0%
£25.4m
£31.2m
125%
35.0%
35.0%
30.0%
£66.4m1
£82.4m
87.3%
of max
35.0%
35.0%
26.2%
35.0%
35.0%
26.2%
86,771
86,771
64,820
Total
65.0%
100.0%
96.2%
96.2%
238,362
David Rimmington4
Cash generation1&4
Total EcV Earnings2&4
Group strategic
objectives
£15.6m
£14.5m
75%
0%
0%
0%
£19.5m¹
£20.8m
100%
25.0%
25.0%
15.0%
£25.4m
£31.2m
125%
35.0%
35.0%
30.0%
£66.4m¹
£82.4m
80.5%
of max
35.0%
35.0%
24.1%
35.0%
35.0%
24.1%
45,984
45,984
31,672
Total
65.0%
100.0%
94.1%
94.1%
123,640
For results between the performance thresholds, a straight-line basis applies.
Notes:
1. This is stated after certain adjustments, such as consolidation adjustments. The actual results are also adjusted
in the same manner.
2. The total EcV Earnings before exceptional items on page 51 has been adjusted in line with the basis of the target.
3. The award is pro-rata to the number of months in the role from the date of appointment on 15 April 2024.
4. The award is pro-rata to the number of months in the role up to the date of termination on 31 May 2024.
†Alternative Performance Measure (APM) used to enhance understanding of financial performance. Further
information on APMs can be found in the additional information section of this Annual Report and Accounts.
Short-Term Incentive Scheme
The amounts reported as STIS in 2024 derive from awards made under the 2023 STIS. The amounts awarded to the executive directors under this scheme are based on performance against
three core measures; cash generation†, total EcV Earnings† and group strategic objectives. The table below shows the outcome of each measure, the target set and the resulting award.
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
114 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
The following table details the requirements for delivery of the strategic objectives for 2024 and actual outcomes:
Objectives area
Objectives and performance
Outcome
Steve Murray
Customer & operational
delivery (25%)
Set clear direction for, and ensure efficient delivery
by, business units across Chesnara.
UK Consumer Duty July deadline met with fully-funded plan in place. Regulatory relationships remain positive
with additional engagement on M&A and other projects.
Netherland merger progressed with local Management Boards and Supervisory Boards signing off relevant
regulatory submissions.
Delivery of requirements for DORA was significant across the European divisions plus Operational Resilience
in the UK.
Positive Canada Life migration oversight.
Movestic strategy execution with sales performance the strongest since COVID-19.
Communication
and culture (10%)
Improve external and internal communications
with key stakeholders.
Further simplification of investor presentation including more focus on smaller range of metrics with positive
feedback from investors.
Significant number of investors meetings above previous year levels including European and North American
‘roadshows’ and continued focus outside our main shareholder base with private client groups plus new
relationships with Berenberg leading to further analyst coverage.
Sessions held with wider Group SLT and various groups of employees.
M&A pipeline reporting to each Board meeting and more formally in the business planning document. Further
improvement in executive reporting at plc level.
Set the tone across the Group on greater transparency and a growth mindset.
Strategic activity inc
M&A (35%)
Proactively identify and execute value
enhancing M&A.
A busy year of opportunity assessment and further development of relationships with potential partners.
View of pipeline across the next 3 years now established and discussed with the Chesnara Board and local LTs
and Boards.
Proactive mapping of potential connections to make this happen.
No material acquisitions in the year despite significant effort.
More engagement with local parties across the territories.
Proactive approach on management actions with UK mass lapse delivered, re-risking of part of Waard asset portfolio
and extension of FX hedge.
People (10%)
Development of direct reports and improve
the talent pool across Chesnara.
Further action taken across the wider Group SLT including responding to leavers. New Group CFO onboarded and
well established. Appointments for potential merged Dutch entities also made, subject to regulatory approvals.
Well established BUs successions plans.
CEO forum established. Cross group HR forum also established. Local CEOs now regular attendees at the Chesnara
Board, when appropriate.
All parts of the Group have staff survey results including eNPS.
ESG (20%)
Continued development of appropriate
environmental/climate, people and sustainability
policies and practices, for the benefit of our
customers, shareholders, staff, suppliers and other
stakeholders, which respond to regulatory and
non-regulatory guidance and industry practice.
ISS governance score improved materially. Further work conducted to improve wider sustainability ratings.
Targets published and CEO sustainability group formed with transition plans tabled for 2025. On track to meet
external targets.
ESG assessment formally part of M&A process with MSCI tooling used.
115
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
Short-Term Incentive Scheme continued
The following table details the requirements for delivery of the strategic objectives for 2024 and actual outcomes:
Objectives area
Objectives and performance
Outcome
Tom Howard
Transition of Group FD
responsibilities to Group
CFO (15%)
Complete a smooth and measured transition
of Group FD responsibilities.
Successful handover and a smooth transition into the Chesnara Group CFO.
Onboarding plan met in full with meetings held with individual SLT members, divisional ExCo members, Board,
AR&C members and external audit partners.
Developed understanding of Group strategy and broader operational issues quickly and effectively.
Business planning &
performance and 2024
interim reporting (30%)
Planning and leading delivery of 2025 business
plan and the HY 2024 year end across Group
and divisions including associated investor
communication.
2024 H1 results delivered in line with planned timelines.
Improvement in the timeliness of the HY reporting process versus 2023.
Improved the clarity of messaging at HY with positive feedback from Board, banks and some investors.
IFRS 17 projections fully embedded in the Plan process and signed off by the Board in December.
Balance sheet (20%)
Proactive management of the Group’s balance
sheet including in support of M&A.
Proactive approach to capital management across the BUs, mainly through the inclusion of management actions
within the Plan process.
Planned 2024 management actions were executed across the Group with further actions available (but unused).
People (20%)
Review finance Target Operating Model and
improve ways of working with divisions.
Improved ways of working across the Group Finance team and successful separation of the Group Financial
Controller and UK CFO roles.
Separation of the UK and Group Centre Finance teams, giving colleagues clearer role profiles and responsibilities
within the broader Chesnara Group Finance function.
Improved collaboration between the BUs and Group Centre and role-modelled a collaborative and transparent
approach with the BUs and Board.
ESG (15%)
Support the continued development of appropriate
environmental/climate, people and sustainability
policies and practices, for the benefit of our
customers, shareholders, staff, suppliers and other
stakeholders, which respond to regulatory and
non-regulatory guidance and industry practice.
ESG requirements included within M&A assessments and TCFD reporting requirements.
Investment considerations included with the Group Investment Committee TORs.
ESG reporting requirements embedded withing TCFD processes.
David Rimmington
Transition of Group FD
responsibilities (20%)
Proactively support a smooth and measured
transition of GFD responsibilities.
Helped support transition of CFO responsibilities in a timely manner including facilitation of meetings with
appropriate team members and wider stakeholders.
Full, effective and appropriate engagement with team through transition.
2024 financial year end
(40%)
Planning and leading delivery of 2024 year end
including associated investor communication.
FY 2023 results delivered in line with plans.
Strong support provided for investor roadshow.
Balance sheet (15%)
Proactive management of the Group’s balance
sheet including in support of M&A.
Supported early year work on management actions which has ultimately led to FX hedge and mass lapse in the UK
being implemented.
Supported financial assessment of transactions including on balance sheet impacts and financing options.
People (10%)
Enhance the Finance function talent pool.
Supported retention of key finance talent.
ESG (15%)
Support the continued development of appropriate
environmental/climate, people and sustainability
policies and practices, for the benefit of our
customers, shareholders, staff, suppliers and other
stakeholders, which respond to regulatory and
non-regulatory guidance and industry practice.
Annual Sustainability Report delivered to a high standard.
Good progress made regarding disclosure with a strong continuous improvement philosophy adopted.
116
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Name of
director
Salary on which award is based
£
Maximum potential award
as % of salary
Actual award
as % of salary
Total value of award
£
Steve Murray
Tom Howard
David Rimmington
525,000
247,906
131,378
100.00%
100.00%
100.00%
95.47%
96.15%
94.11%
501,196
238,362
123,640
Total
863,198
In converting performance against the measures assessed for 2024 set out in the previous tables, the directors’ STIS awards are specified below.
The committee did not apply discretion in determining the final outcome:
35% of the above awards are granted as deferred share awards that will vest at the end of a three-year deferred period.
Long-Term Incentive Plan awards
The following table sets out the amounts that are due to vest on 28 April 2025 under the 2014 LTIP, for which performance conditions were satisfied during the year. In aggregate, the LTIP awards vested
at 38.2% of maximum for both executive directors.
Individual
Measure
Weight
Ranges and targets
Actual outcome
Threshold
Maximum
Performance
achieved
% of award
vesting
Value of
award £
Steve Murray
Award 1
Award 2
Award 2
Personal performance
TSR
EcV†
100%
50%
50%
n/a
0.0%
£639.3m
n/a
23.0%
£656.0m
n/a
17.4%
£531.0m
100.0%
38.2%
0.0%
83,054
144,284
nil
David Rimmington
TSR
EcV†
50%
50%
0.0%
£639.3m
23.0%
£656.0m
17.4%
£531.0m
38.2%
0.0%
100,299
nil
†Alternative Performance Measure (APM) used to enhance understanding of financial performance. Further
information on APMs can be found in the additional information section of this Annual Report and Accounts.
117
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
The table below sets out potential LTIP interests that have accrued during the year, and each directors’ interest in that scheme:
Name of
executive director
Name of scheme
Date award
was granted
Amount of
options awarded1
Face value on the
date of grant2
(based on share price)
% of award
vesting for minimum
performance
Length of vesting
period – 3 years
Date of vesting
Steve Murray
2023 LTIP
02 April 2024
249,525
£525,000 (263.00p)
10.4%
02 April 20273
2023 LTIP
06 July 2023
210,386
£457,800 (272.00p)
10.4%
06 July 20263
2014 LTIP
28 April 2022
147,627
£420,000 (284.50p)
10.4%
28 April 20253
Tom Howard
2023 LTIP
16 April 2024
135,135
£350,000 (259.00p)
10.4%
16 April 20273
Buy-out
15 May 2025
75,397
£188,493 (250.00p)
nil
15 May 2027
Buy-out
15 May 2025
99,206
£248,015 (250.00p)
nil
15 May 2026
Buy-out
15 May 2025
188,492
£471,230 (250.00p)
nil
15 May 2025
David
Rimmington
2014 LTIP
06 July 2023
115,927
£315,321 (272.00p)
8.3%
06 July 20263
2014 LTIP
28 April 2022
105,556
£300,306 (284.50p)
10.0%
28 April 20253
2014 LTIP
28 April 2021
94,502
£259,882 (275.00p)
10.0%
28 April 20243
2014 LTIP
28 April 2020
81,213
£259,882 (320.00p)
10.0%
28 April 20233
2014 LTIP
28 April 2019
71,070
£254,785 (358.50p)
10.0%
28 April 20223
2014 LTIP
28 April 2018
60,805
£249,300 (410.00p)
10.0%
28 April 2021
2014 LTIP
28 April 2017
61,996
£237,600 (383.25p)
12.5%
28 April 2020
2014 LTIP
28 April 2016
71,259
£222,328 (312.00p)
12.5%
28 April 2019
Notes.
1. No awards are made if performance is below the minimum criteria.
2. The face value is reported as an estimate of the maximum potential value
on vesting.
3. LTIP awards from 2019 onwards are subject to a two-year holding period
in addition to the three-year performance period.
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
Basis of awards and summary of performance measures
and targets 2014 LTIP and 2023 LTIP:
Share options awarded are based on the share price at close of
business on date of award and a percentage of basic salary, that
being Steve Murray 100% in 2022 and 125% in both 2023 and 2024;
and David Rimmington 75% in 2014 and 2015, 90% in 2016 to 2021
and 100% in 2022 and 2023. Options have a nil exercise price.
Total Shareholder Return
Awards granted under the 2014 LTIP: 50% of the awards will
vest subject to the TSR target being in a certain range, with the
range being the ranking of the TSR of Chesnara against the TSR
of the individual companies in the FTSE 350 Higher Yield Index.
The award will be made on a sliding scale from nil if the Chesnara
TSR is below the median to full if the Chesnara TSR is in the
upper quartile.
Awards granted under the 2023 LTIP: 33.3% will vest at
maximum for TSR performance 6% per annum higher than the
median Company in the comparator group over the performance
period with this calibration aiming to ensure that a maximum
pay-out is achieved for performance comparable to the upper
quartile of life insurance peer companies. The calibration of
threshold is unchanged such that Chesnara must perform as
a minimum at the median of the comparator group for any payout
to be achieved subject to the TSR target being in a certain range,
with the range being the ranking of the TSR of Chesnara against
the TSR of the individual companies in the FTSE 350 Higher Yield
Index at the start of the performance period. The award will be
made on a sliding scale from nil if the Chesnara TSR is below the
median to full if the Chesnara TSR is in the upper quartile.
EcV growth target
Awards granted under the 2014 LTIP: 50% of the award
will vest subject to the EcV outcome being within a certain
range of its target.
Awards granted under the 2023 LTIP: 33.3% of the award
will vest subject to the EcV outcome being within a certain range
of its target.
Commercial Cash Generation
2023 Awards granted under the 2023 LTIP: 33.3% of the
award will vest subject to the Commercial Cash outcome
being within a certain range of its target.
118
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
† Alternative Performance Measure (APM) used to enhance understanding
of financial performance. Further information on APMs can be found in
the additional information section of this Annual Report and Accounts.
Remuneration type
Amount (£000)
Salary and fees
195
Pension
17
Taxable benefits
9
Non-taxable benefits
4
Annual bonus
13
2022 LTIP award
125
Total payments for loss of office
363
Core Surplus Emergence
2024 Awards granted under the 2023 LTIP: 33.3% of the
award will vest subject to Core Surplus Emergence outcome
being within a certain range of its target. Core Surplus Emergence
is defined as the absolute surplus movement of the divisions
including Chesnara entity but adjustments will be made for the
impact of items such as FX, T2/T3 restrictions, acquisition
impacts and shareholder dividends as deemed appropriate.
Payments for loss of office (audited information)
The following payments were made to Dave Rimmington during
the year for loss of office:
Payments to past directors (audited information)
No payments were made during the year to past directors.
Statement of directors’ shareholding and share interests
(audited information)
The Remuneration Policy requires executive directors to
build up a shareholding through the retention of shares. For
executives who joined Chesnara before 1 May 2021 (i.e. David
Rimmington), their minimum is 100% of basic salary but with
a 200% of salary shareholding requirement (including a provision
for this to be held for the full 2 years in a post-employment
scenario) applying to all future awards granted from 2023 onward.
For executives joining from 1 May 2021 (i.e. Steve Murray and
Tom Howard) the minimum is 200% of salary. Steve Murray who
joined on 2 August 2021 has not yet met this requirement albeit
has continued to acquire shares in 2024 outside the LTIP
programme. Similarly, nor has Tom Howard who joined Chesnara
Shares held
Options
Name of
director
1 January
2024
31 December
2024
With
performance
measures
Without
performance
measures1
Vested but
unexercised
Exercised
during
the year
Percentage of
shareholding
target held2
Steve Murray
147,248
219,946
607,538
106,603
29,525
80,420
146.5%
Tom Howard
–
10,000
498,230
9,084
–
–
14.4%
David
Rimmington
140,919
167,754
221,483
99,249
–
51,737
186.5%
Luke Savage
30,000
30,000
–
–
–
–
–
Jane Dale
3,333
3,333
–
–
–
–
–
Eamonn
Flanagan
30,000
30,000
–
–
–
–
–
Carol Hagh
10,000
30,000
–
–
–
–
–
Karin
Bergstein3
–
–
–
–
–
–
–
Gail Tucker4
–
–
–
–
–
–
–
Total
361,500
491,033
1,327,251
214,936
29,525
132,157
–
Notes.
1. The ‘options without performance measures’ column in the table does
not include the share options that will be awarded as part of the
mandatory deferral rules under the 2023 STIS in respect of awards made
in relation to the 2023 financial year, which equate to 35% of the cash
award under this scheme. The timetable for the administration of the
scheme means that these will be reported in the 2025 Annual Report
and Accounts.
2. Calculated using the share price of 264.50p at 31 December 2024.
3. As a Netherlands national, Karin Bergstein is not permitted by the Dutch
Central Bank (‘De Nederlandsche Bank’) to hold shares in a Company
of which she is a director.
4. Gail Tucker became a director on 29 January 2025.
Notes.
1. No awards are made if performance is below the minimum criteria.
2. The face value is reported as an estimate of the maximum potential
value on vesting.
3. LTIP awards from 2019 onwards are subject to a two-year holding period
in addition to the three-year performance period.
For all of the above items of remuneration, with the exception
of the LTIP award, the figures represent the amounts paid to
Dave Rimmington from the point he stood down as a director
(14 May 2024) to his final termination date (5 December 2024).
The amount awarded under the 2022 LTIP is based upon Dave
Rimmington being classed as a ‘good leaver’ under the rules of
the scheme and is pro-rated based upon the percentage of the
performance period in which Dave held the office of director.
This includes the period from 1 January 2022 to 14 May 2024,
the date upon which he stood down as acting director.
on 15 April 2024. When the minimum holding level has not been
achieved, directors may only dispose of shares where funds are
required to discharge any income tax and National Insurance
liabilities arising from awards received from a Chesnara incentive
plan. The Chair and non-executive directors are encouraged to
hold shares in the Company but are not subject to a formal
shareholding guideline.
The following table shows, in relation to each director, the total
number of share interests with and without performance
conditions, the total number of share options with and without
performance measures, those vested but unexercised and those
exercised at 31 December 2024 or the date of resignation.
No changes took place in the interests of the directors between
31 December 2024 and 26 March 2025.
119
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Name of
executive
director
Scheme
Grant
date
Exercise
price (p)
Number of
shares
under
option at
1 January
2024
Number
granted
during
year
Number
exercised
during
year
Number
waived/
lapsed
during
year
Number of
shares under
option and
unexercised at
31 December
2024
End of
performance
period
Vesting date
Performance
period
Date of
expiry of
option
Steve Murray
2023 LTIP
(2024 award)
2023 LTIP
(2023 award)
2014 LTIP
(2022 award)
2014 LTIP
(2021 award)
2014 LTIP
(2021 award)
2023 STIS
(2024 award)
2023 STIS
(2023 award)
2014 STIS
(2022 award)
Share save
02/04/24
06/07/23
28/04/22
26/11/21
26/11/21
02/04/24
31/05/23
28/04/22
01/12/22
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
220.40
–
210,386
147,627
140,105
33,625
–
39,953
29,525
8,166
249,525
–
–
–
–
58,484
–
–
–
–
–
–
(46,795)
(33,625)
–
–
–
–
–
–
–
(93,310)
–
–
–
–
–
249,525
210,386
147,627
–
–
58,484
39,953
29,525
8,166
31/12/26
31/12/25
31/12/24
31/12/23
31/12/23
n/a
n/a
n/a
n/a
02/04/27
06/07/26
28/04/25
28/04/24
30/06/24
02/04/27
31/05/26
28/04/25
01/12/25
3 Years
3 Years
3 Years
3 Years
3 Years
n/a
n/a
n/a
n/a
02/04/34
06/07/33
28/04/32
26/11/31
26/11/31
02/04/34
31/05/33
28/04/32
01/06/26
609,387
308,009
(80,420)
(93,310)
743,666
Tom Howard
2023 LTIP
(2024 award)
Buy-out plan
Buy-out plan
Buy-out plan
Share save
16/04/24
15/05/24
15/05/24
15/05/24
25/10/24
Nil
Nil
Nil
Nil
204.20
–
–
–
–
–
135,135
75,397
99,206
188,492
9,084
–
–
–
–
–
–
–
–
–
–
135,135
75,397
99,206
188,492
9,084
31/12/26
15/05/27
15/05/26
15/05/25
n/a
16/04/27
15/05/27
15/05/26
15/05/25
01/12/27
3 Years
3 Years
2 Years
1 Years
n/a
16/04/34
15/05/34
15/05/34
15/05/34
01/06/28
–
507,314
–
–
507,314
David Rimmington
2023 LTIP
(2023 award)
2014 LTIP
(2022 award)
2014 LTIP
(2021 award)
2023 STIS
(2024 award)
2023 STIS
(2023 award)
2014 STIS
(2022 award)
2014 STIS
(2021 award)
06/07/23
28/04/22
28/04/21
02/04/24
31/05/23
28/04/22
28/04/21
Nil
Nil
Nil
Nil
Nil
Nil
Nil
115,927
105,556
94,502
–
28,115
31,327
18,803
–
–
–
39,807
–
–
–
–
–
(32,934)
–
–
–
(18,803)
(41,863)
(2,933)
(61,568)
–
–
–
–
74,064
102,623
–
39,807
28,115
31,327
–
31/12/25
31/12/24
31/12/23
n/a
n/a
n/a
n/a
06/07/26
28/04/25
28/04/24
02/04/27
31/05/26
28/04/25
28/04/24
3 Years
3 Years
3 Years
n/a
n/a
n/a
n/a
06/07/33
28/04/32
28/04/31
02/04/34
31/05/33
28/04/32
28/04/31
394,230
39,807
(51,737)
(106,364)
(275,936)
Outstanding share options and share awards
Below are details of outstanding share options and awards for the current executive directors, Steve Murray and Tom Howard. For completeness, we have also included those in relation to David
Rimmington, who stood down as Group Finance Director in the year.
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
120 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Notes.
1. Steve Murray joined Chesnara on 2 August 2021 and was appointed
Group CEO on 19 October 2021.
2. John Deane was appointed Group CEO on 1 January 2015 and stood
down on 18 October 2021.
3. During 2022, Steve Murray had two LTIP awards that vested, one
at 100% and the other at 33.40%. The figure reported above is a
combined percentage, based upon the total number of shares vesting
under both grants.
4. During 2023, Steve Murray had two LTIP awards that vested, with one
vesting at 100% and the other vesting at 43.65%. The figure reported
above is a combined percentage, based upon the total number of shares
vesting under both grants.
5. During 2024, Steve Murray had two LTIP awards that vested, with one
vesting at 100% and the other vesting at 38.25%. The figure reported
above is a combined percentage, based upon the total number of shares
vesting under both grants.
The table sets out the details for the director undertaking the role of Group CEO:
Year
Individual performing
Group CEO role
Group CEO single figure
of total remuneration
£000
STIS pay-out
against maximum
Long-term incentive
vesting rates against
maximum opportunity
Note
2024
Steve Murray
1,377
95.47%
49.71 %
5
2023
Steve Murray
1,182
96.00%
52.01%
1 & 4
2022
Steve Murray
1,094
76.37%
60.42%
1 & 3
2021
Steve Murray
721
57.00%
58.42%
1
2021
John Deane
978
95.57%
–
2
2020
John Deane
782
53.38%
–
2
2019
John Deane
1,111
98.79%
19.93%
2
2018
John Deane
965
31.08%
67.99%
2
2017
John Deane
1,142
86.96%
80.95%
2
2016
John Deane
902
98.33%
–
2
2015
John Deane
596
81.96%
–
2
Performance graph and CEO
remuneration table
The following graph shows the
Company’s performance compared
with the performance of the FTSE
350 Higher Yield Index and the
FTSE UK Life Insurance Index.
The FTSE 350 Higher Yield Index
has been selected since 2014 as
a comparison because it is the
index used by the Company for
the performance criterion for
its LTIP, and the FTSE UK Life
Insurance Index has been selected
due to Chesnara’s inclusion within
this Index.
TSR Index
Chesnara – Total Shareholder Return, rebased
FTSE 350 Higher Yield – Total Return Index, rebased
FTSE UK Life Insurance – Total Return Index, rebased
Dec
2014
Dec
2015
Dec
2016
Dec
2017
Dec
2018
Dec
2019
Dec
2022
Dec
2021
Dec
2020
Dec
2024
120
100
80
60
40
20
0
-20
-40
-50
Dec
2023
121
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Rolling 5-year percentage change in remuneration for the executive and non-executive directors and group employees
The table below shows the percentage change in remuneration for the executive and non-executive directors and the Company’s employees as a whole between the years 2024 and 2020. In future years,
this analysis will be repeated on a rolling 5-year comparison basis.
Percentage change
in remuneration
Group
CEO
%
David
Rimmington
(Group FD)
%
Tom
Howard
(Group CFO)2
%
Luke
Savage
%
Jane
Dale
%
Eamonn
Flanagan
%
Mark
Hesketh
%
Carol
Hagh
%
Karin
Bergstein
%
Group
employees
%
2024 compared with 2023
Salary and fees
14.7
–
n/a
8.9
10.7
7.1
n/a
4.9
3.1
6.0
All taxable benefits
–
(29.3)1
n/a
–
–
–
–
–
–
–
STIS
15.2
(58.5)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1.2
2023 compared with 2022
Salary and fees
9.0
5.0
n/a
5.9
5.8
6.1
6.1
4.9
4.9
6.0
All taxable benefits
–
173.41
n/a
–
–
–
–
–
–
(5.2)
STIS
37.0
32.5
n/a
n/a
n/a
n/a
n/a
n/a
n/a
42.0
2022 compared with 2021
Salary and fees
–
4.0
n/a
3.7
6.8
7.4
7.4
n/a
n/a
4.0
All taxable benefits
162.51
(75.0)
n/a
–
–
–
–
n/a
n/a
6.6
STIS
33.7
(11.4)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
(22.8)
2021 compared with 2020
Salary and fees
–
–
n/a
–
–
–
–
n/a
n/a
–
All taxable benefits
–
300.01
n/a
–
–
–
–
n/a
n/a
(1.1)
STIS
80.0
72.4
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2.9
2020 compared with 2019
Salary and fees
2.0
2.0
n/a
n/a
–
n/a
–
n/a
n/a
2.0
All taxable benefits
(39.1)1
20.31
n/a
n/a
n/a
n/a
n/a
n/a
n/a
13.3
STIS
(44.9)
(41.0)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Notes
1. All taxable benefits include amounts paid in lieu of accrued dividends and interest arising upon the exercise
of share options under the 2014 and 2023 STIS for the Group CEO and Group FD/CFO. For the non-executive
directors, these relate to expenses grossed up for income tax, which is settled by the Company for travel to
Chesnara’s head office in Preston, which, for tax purposes, is deemed to be the non-executive director’s normal
place of work.
2. The title Group Finance Director was updated to the title of Group Chief Financial Officer with the appointment
of Tom Howard in 2024. The title has been retrospectively updated for prior years to aid comparison.
Comparison of total remuneration for the Group CEO and UK employees
We set out here our analysis on CEO pay ratio reporting as required by The Companies
(Miscellaneous Reporting) Regulations 2018. This analysis has been conducted using
‘Option A’ as set out in the Regulations, consistent with prior years, and has consisted of:
– Determining the total FTE remuneration of all UK employees for the 2024 financial year;
– Ranking all those employees based on their total FTE remuneration from low to high; and
– Identifying the employees whose remuneration places them at the 25th, 50th (median) and
75th percentile points of this ranking.
The analysis is then presented to show the ratio of the Group CEO’s 2024 single total figure
of remuneration to the:
– Median (i.e. 50th percentile) FTE remuneration of our UK employees;
– 25th percentile FTE remuneration of our UK employees; and
– 75th percentile FTE remuneration of our UK employees.
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
122 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Comparison
of total
remuneration
Group CEO
25th percentile
pay ratio (FTE UK
employees total
remuneration)
Median pay ratio
(FTE UK
employees total
remuneration)
75th percentile pay
ratio (FTE UK
employees total
remuneration)
£
£
Ratio
£
Ratio
£
Ratio
2024
1,377,000
76,950
17.9 : 1
106,881
12.9 : 1
169,659
8.1 : 1
2023
15.7 : 1
10.2 : 1
7.1 : 1
2022
14.5 : 1
10.4 : 1
6.4 : 1
2021
13.7 : 1
9.7 : 1
5.4 : 1
2020
11.3 : 1
8.2 : 1
4.8 : 1
2019
15.7 : 1
11.8 : 1
6.6 : 1
The Remuneration Committee considers that the ratio is consistent with our Remuneration Policy
and that no actions arise from this analysis.
Base salaries of all employees, including our executive directors, are set with reference to a range
of factors including market practice, experience and performance in role.
Over the longer term, the Group CEO pay ratios have moved broadly in line with the Group CEO’s
single figure of remuneration. The committee notes that the pay ratios for 2024 reflect the nature of
the Group CEO’s package being more heavily weighted towards variable pay compared to more
junior colleagues (consistent with our reward policies), and this means the ratio is likely to fluctuate
depending on the performance of the business and associated outcomes of incentive plans and
historically buy-out awards in each year.
Furthermore, the committee is satisfied that our pay and broader people policies drive the right
behaviours and reinforce the Group’s values which in turn drive our culture. For these reasons, the
committee believes that the ratios are consistent with these policies.
Relative importance of spend on pay
The following graph shows the actual expenditure of the Group and change between the current and
previous years.
The graph shows a comparison of total employee pay and shareholder dividends with the Group’s
total acquisition and maintenance expenditure (which consists of administration expenses and costs
associated with the acquisition of new business). This has been chosen as a comparator to give an
indication of the employee pay relative to the overall cost base. As can be seen, the total employee
pay is a relatively small component.
Statement of Implementation of Remuneration Policy in the following financial year
The following states how remuneration will be implemented for the executive and non-executive
directors in 2025.
Salaries and fees
Will be set in accordance with the Company’s policy.
Executive directors
Steve Murray (Group CEO) received a 2.1%. Tom Howard received a 2.0% uplift. UK employees
below executive level received an average salary increase of 2.5%.
Non-executive directors
The Chair’s fee has been increased by 2.5%, with positioning remaining around the lower quartile
of the FTSE Small Cap and as decided by the other non-executive directors. The fee level for other
non-executive directors reflects an unchanged base fee and then role-specific uplifts and have been
set by the Chair in discussion with the Group CEO and increased by different levels in parallel with
a review of individual responsibilities. Individual non-executives have received fee increases of
between 2.3%-2.5% other than Eamonn Flanagan whose fee was increased by 2.8% in recognition
of his responsibilities as the Chair of the Remuneration Committee as well as his appointment to
Chair the Movestic Livförsäkring AB board from May 2024.
Dividends
Business acquisition and
maintenance expenditure
Total employee pay
2024
2023
+3%
+7%
+4%
36.9
174.6
162.5
37.3
36.1
35.4
123
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
The table below sets out the anticipated payments for 2025:
Fees
£000
Benefits1
£000
Total
£000
Luke Savage
Eamonn Flanagan
Jane Dale2
Carol Hagh
Karin Bergstein
Gail Tucker
150.7
77.5
31.9
75.6
69.0
73.0
1.0
1.0
0.5
1.0
10.0
1.0
151.7
78.5
32.4
76.6
79.0
74.0
Total
477.7
14.5
492.2
Notes
1. Benefits shown here mainly relate to expenses grossed up for income tax, which is settled by the Company for
travel to Chesnara’s head office in Preston, which, for tax purposes, is deemed to be the non-executive director’s
normal place of work. The figure for Karin Bergstein represents amounts payable to the Dutch tax authorities by
the Company, under Dutch social security legislation to otherwise avoid Karin incurring double taxation.
2. Jane Dale’s fee is shown proportionately to the point she stands down as a director at the 2025 AGM.
2025 award under the 2023 Short-Term Incentive Scheme
The Remuneration Committee proposes to grant awards to the executive directors under the 2023 Short-Term Incentive Scheme.
The table below and accompanying notes set out the performance measures, weightings and the potential outcomes for achieving minimum, on-target and maximum performance. The actual targets for
each measure are deemed to be commercially sensitive and whilst they are not disclosed at this stage, they will be disclosed in next year’s Directors’ Remuneration Report together with the performance
outcome relative to these targets.
Individual
Measures
Weighting
Ranges and targets
Potential outcomes in terms of % of basic salary
Minimum
achievement (as
% of target)
Target
achievement
(as % of target)
Maximum
achievement (as %
of target)
Minimum
achievement
Target
achievement
Maximum
achievement
Steve Murray &
Tom Howard
Cash generation
EcV Earnings
Strategic Scorecard Activity
of which ESG is 5%
35.0%
35.0%
30.0%
70.0%
70.0%
75.0%
100.0%
100.0%
100.0%
130.0%
150.0%
125.0%
nil
nil
nil
25.0%
25.0%
15.0%
35.0%
35.0%
30.0%
The STIS will be implemented and operated by the Remuneration Committee as set out within
the policy.
Measures
Following review by the Remuneration Committee, changes were approved for 2019 onwards
to remove the IFRS component used in prior years and base performance assessment on cash
generation and EcV† earnings metrics both with appropriate adjustments and group strategic
objectives. The two financial measures were deemed to be complementary when operated together,
to encourage sensible executive behaviour and better reflect an overall assessment of Company
financial performance. For 2023, group strategic objectives remained weighted 30% of the total to
ensure that a sufficient proportion of the bonus potential was attributed to good strategic outcomes,
including 55 in relation to ESG. Our assessment measures continued to ensure there was a balance
between aligning executive director remuneration to shareholder returns whilst also recognising
measures over which the directors can exercise more immediate and direct influence. The financial
measures are recognised outputs from the audited year end financial statements, although it should
be noted that the Remuneration Committee is, in accordance with the policy, able to make
discretionary adjustments if deemed necessary. As agreed in advance by the Remuneration
Committee, the financial results for the year are adjusted to look through any impact of the symmetric
adjustment and WP transfers/restrictions, be they negative or positive. Successful acquisitions are
rewarded primarily through the LTIP scheme.
The objectives assigned to each executive director are relevant to their roles and include major
regulatory or business development initiatives that the committee considers key to delivery of
the Company’s business plan. Each individual development objective is assigned a ‘significance
weighting’ influenced by factors such as business criticality, scale, complexity and level of executive
director influence. Developments with a higher significance are weighted more heavily when
establishing the overall performance target.
Targets
The cash generation and EcV Earnings targets are initially based on the latest budget which is
produced annually as part of the Group business planning process. The Group business plan is
subject to rigorous Chesnara Board scrutiny and approval. The Remuneration Committee can make
discretionary adjustments to either the targets or to the actual results for the year if it considers
this to be appropriate, in accordance with the scheme rules.
Malus and clawback
The 2023 Scheme includes malus and clawback provisions covering a material misstatement of the
Company’s results, regulatory breach, gross misconduct on the part of the participant, reputational
damage to the Company, a material failure of risk management, insolvency or corporate failure if this
arises within two years of an award vesting and it is a precondition that the executive accepts such
provisions at the time of the award.
† Alternative Performance Measure (APM) used to enhance understanding of financial performance.
Further information on APMs can be found in the additional information section of this Annual Report and Accounts.
124 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
2025 award made under the 2023 LTIP
In 2025, the Remuneration Committee proposes to grant awards to the executive directors under the Chesnara 2023 Long-Term Incentive Plan. The table below and accompanying notes set out the
performance measures, weightings and the potential outcomes relative to achieving minimum, on-target and maximum performance for the executive directors.
Individual
Share award
Measures
Weighting
Ranges and targets
Vesting rates in terms of % of basic salary
% of basic
salary
Minimum
achievement
(as % of target)
Target
achievement
Maximum
achievement
(as % of target)
Minimum
achievement
Target
achievement
Maximum
achievement
Steve
Murray
125%
TSR
EcV
Core Surplus
Emergence
33.3%
33.3%
33.3%
10 yrs
Total
flows arising from:
£m
£m
£m
£m
£m
£m
£m
£m
£m
Insurance contract liabilities
4,099.1
704.4
301.8
264.3
245.6
249.9
813.0
1,322.1
3,901.1
Reinsurance contract liabilities
16.6
3.5
3.6
3.3
3.0
2.8
14.7
22.2
53.1
Total insurance and reinsurance contract liabilities (discounted)
4,115.7
707.9
305.4
267.6
248.6
252.7
827.7
1,344.3
3,954.2
Investment contract liabilities
6,116.7
6,070.3
4.6
5.4
4.4
5.0
21.2
5.8
6,116.7
Liabilities relating to policyholder’s fund held by the Group
1,825.5
1,825.5
–
–
–
–
–
–
1,825.5
Lease contract liabilities
0.6
0.6
–
–
–
–
–
–
0.6
Borrowings
204.8
1.4
0.5
0.2
0.2
0.2
201.6
–
204.1
Derivative financial instruments
0.6
0.6
–
–
–
–
–
–
0.6
Other current liabilities
129.7
116.8
–
–
–
–
–
–
116.8
Bank overdrafts
0.8
0.8
–
–
–
–
–
–
0.8
Total financial liabilities (undiscounted)
8,278.7
8,016.0
5.1
5.6
4.6
5.2
222.8
5.8
8,265.1
Total
12,394.4
8,723.9
310.5
273.2
253.2
257.9
1,050.5
1,350.1
12,219.3
31 December 2023 – restated
Contractual cash flows
Carrying values and cash
Carrying value
<1 yr
1-2 yrs
2-3 yrs
3-4 yrs
4-5 yrs
5-10 yrs
>10 yrs
Total
flows arising from:
£m
£m
£m
£m
£m
£m
£m
£m
£m
Insurance contract liabilities
4,203.0
651.2
332.8
294.4
277.8
267.2
872.9
1,222.6
3,918.9
Reinsurance contract liabilities
17.1
3.2
3.6
3.5
3.2
2.9
15.1
24.7
56.2
Total insurance and reinsurance contract liabilities (discounted)
4,220.1
654.4
336.4
297.9
281.0
270.1
888.0
1,247.3
3,975.1
Investment contract liabilities
5,872.3
5,414.0
40.3
38.0
40.2
47.7
131.0
69.6
5,780.8
Liabilities relating to policyholder’s fund held by the Group
1,281.8
1,281.8
–
–
–
–
–
–
1,281.8
Lease contract liabilities
1.2
1.0
0.2
–
–
–
–
–
1.2
Borrowings
207.9
3.6
1.7
0.7
0.3
0.2
0.9
200.6
208.0
Derivative financial instruments
4.4
4.4
–
–
–
–
–
–
4.4
Other current liabilities
131.7
131.7
–
–
–
–
–
–
131.7
Bank overdrafts
0.2
0.2
–
–
–
–
–
–
0.2
Total financial liabilities (undiscounted)
7,499.5
7,037.3
42.2
38.7
40.5
47.9
131.9
69.6
7,408.1
Total
11,719.6
7,691.7
378.6
336.6
321.5
318.0
1,019.9
1,316.9
11,383.2
The values reported for insurance contract liabilities and reinsurance contract liabilities exclude the risk adjustment and contractual service margin as these are not considered to be financial liabilities subject
to liquidity risk. The carrying values in the table above are the balance sheet values.
The maturity analysis for unit-linked investment contracts presents all the liabilities as due in the earliest period in the table because they are repayable or transferable on demand, with no notice period.
179
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ii) Maturity analysis (continued)
The table that follows shows the amounts from insurance contract assets and liabilities that are
payable on demand. In most cases the non-distinct investment component is considered to be
appropriate as a proxy for the amount payable on demand. As per the maturity analysis table, the
amounts presented exclude the risk adjustment and contractual service margin. The carrying
amount is the full balance sheet value.
31 December
Restated
Type of contracts
2024
2024
2023
2023
Payable on
Carrying Payable on
Carrying
demand
amount
demand
amount
£m
£m
£m
£m
Immediate annuities
2.7
306.4
2.4
327.9
Term assurance and other non-linked
130.1
385.9
150.3
419.8
Unit-linked/Index-linked/With-profits – GMM
822.2
908.1
882.0
999.0
Unit-linked/Index-linked/With-profits – VFA
2,161.5
2,464.9
2,132.5
2,412.1
Short-term protection
29.1
32.0
36.9
40.3
Total
3,145.6
4,097.3
3,204.1
4,199.1
B4 Capital management
(a) Regulatory context
Solvency II
On 31 December 2024 the PRA’s restatement of Solvency II assimilated law came into force.
Throughout the document we refer to the new regime as Solvency II, in line with the name of the
prudential regime in PRA policy material.
The Group is required to comply with the ‘Solvency II’ regime. Solvency II includes rules over the
quantity and quality of capital (known as ‘Own Funds’) that insurance companies and groups need
in order to meet the required level of capital (known as the ‘Solvency Capital Requirement‘).
The Group operates exclusively within the UK and the EU and as a result, the Solvency II regime is
applied to the Group and all regulated insurance companies within the Group in the financial year.
The Solvency II regime has specific rules regarding how Own Funds are recognised and valued.
In a number of cases, the IFRS and Solvency II value of an asset and liability are the same, but in
some cases there are differences. In particular, liabilities for insurance and investment contracts
are valued differently, with insurance contracts valued according to IFRS 17 and therefore including
a contractual service margin and investment contracts valued as per unit value under IFRS 9. In
addition, Solvency II has differing treatments for certain intangible assets. A high-level reconciliation
between the IFRS net assets and Solvency II Own Funds of the Group and its subsidiaries has
been provided in section (c)(ii) of this Note.
Regarding the Solvency Capital Requirement (SCR) of the Group and its subsidiaries, the Group has
elected to use the ‘standard formula’ approach for its calculation, which means we are applying the
formulae as included in the Solvency II framework. The calculations within the standard formula have
been designed such that, on the basis that an insurance company holds Own Funds that are at
least equal to its SCR, it will be able to withstand a 1 in 200 year event. An alternative would have
been to use an ‘internal model’ but this was not deemed appropriate for the size and complexity
of the Group.
The UK Treasury and EIOPA have both undertaken a review of Solvency II rules implementation.
In the UK this resulted in a reduction in the Risk Margin from 31 December 2023 and similar is
expected for the overseas entities from the EIOPA review.
Company law
As well as complying with the Solvency II regime, each company within the Group is required
to comply with relevant company law capital and distribution rules.
(b) Objectives, policies and processes for managing capital
(i) Objectives
To manage compliance with the externally imposed capital requirements, the Group and its
subsidiaries have established capital management policies in place. The objectives of these
policies are:
– to ensure that capital is managed in a way that is consistent with the business strategy of the Group
and its subsidiaries, in that they:
– promote fair customer outcomes through protecting policyholders;
– provide protection to shareholders through ensuring that the business is adequately protected
against stress events; and
– provide a framework to support the decision making process for returns to shareholders
via dividends.
– to ensure that capital of the Group and its subsidiaries is managed in accordance with the Board’s
risk appetite, in particular each Board’s aversion for Own Funds to fall below the SCR.
(ii) Policies
In light of the objectives for the Group’s and its subsidiaries’ capital management policies, the
following quantitative limits for managing Own Funds are applied across the Group:
Region
Waard
UK Movestic
Group
Scildon
Group
Dividend paying limit:
Own Funds stated as % of SCR
120%
120%
135%
175%
140%
Management actions limit:
Own Funds stated as % of SCR
110%
110%
135%
175%
110%
Dividend paying limit: This is the point at which a dividend would cease to be paid, until at such
time the solvency position was restored above this point. This limit is set by the relevant Board in
each division with reference to its respective risk appetite, as articulated in each division’s Capital
Management Policy.
Management actions limit: This is the point at which, should Own Funds fall below this level,
additional management actions would be considered to restore Own Funds back above this level.
In essence this represents an internal ‘ladder of intervention limit’ that is set by the Group and
divisional Boards.
To put the above table and definitions in context, and taking Group as an example, this means that
the Group will not pay a dividend should the payment of the dividend take the Group Own Funds
to below 140% of its SCR. Should Own Funds fall below 110% of SCR additional management actions
will be taken.
180 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION B – RISK AND CAPITAL MANAGEMENT
B4 Capital management (continued)
(b) Objectives, policies and processes for managing capita (continued)
(iii) Process for management of capital
The following key processes and procedures are in place across the Group to manage adherence
to the capital management policies in place:
– Internal solvency reporting: A number of internal reports are produced that focus on the solvency
position of the Group/Company. These include the Own Risk & Solvency Assessment (ORSA)
Report, a quarterly actuarial report and a quarterly finance report. All of these are presented to and
approved by the Board.
– Production of projections: On at least an annual basis, solvency projections are produced for the
Group and its subsidiaries. These projections are included in both the business plans and the ORSA
Report and show how management anticipates the solvency position to develop over time. The
projections process includes assessing the impact of a number of different stress scenarios to ensure
that the sensitivities of the business are understood. Both the ORSA and the business plans are
presented to and approved by the Board.
– Regular review of internal limits in place: On at least an annual basis, the limits described in
section (b)(ii) of this Note are reviewed and assessed, having regard to the developments of
the business and any other changes that may have affected the Group’s/divisions’ risk appetite.
– Recovery management protocol: A protocol for management actions has been designed which, in
effect, represents an internally set ‘ladder of intervention’. The protocol includes items such as
solvency monitoring frequency, what level of escalations are required and what management actions
need to be considered.
– Monthly solvency monitoring: Full solvency calculations are performed on a quarterly basis. For
intra-quarter months, a monthly solvency estimate is produced. Where full estimation routines are
not practical intra-valuation solvency can be monitored through trigger monitoring and sensitivity
analysis. In addition to the Group level indicators, the Chesnara Board will remain close to any
indications of divisional solvency movements by means of divisional MI and quarterly business reviews.
On at least a monthly basis, specific key risk indicators are monitored against pre-defined trigger
points. The trigger points are set having regard for the sensitivity of the Group to certain scenarios.
Trigger points and the list of risk indicators being monitored are assessed at least annually.
(iv) Compliance during year
The Group, and all insurance companies within the Group, held Own Funds above their respective
Solvency Capital Requirements at all times during the year.
(c) Quantitative analysis
(i) Group solvency position
The unaudited solvency position of the Group and its divisions at 31 December 2024, and at 31 December 2023, has been shown in the tables below. They present a view of the solvency position which may
differ to the position of the individual insurance company(ies) within that division.
31 December 2024 (unaudited)
Other
Region
Group and
consolidation
UK
Movestic
Waard Group
Scildon
adjustments
Group
£m
£m
£m
£m
£m
£m
Own Funds (pre dividends)
175.4
186.0
88.3
139.8
76.7
666.2
Proposed dividend
(45.0 )
(2.5 )
(6.6 )
–
30.6
(23.5 )
Own Funds (post dividends)
130.4
183.5
81.7
139.8
107.3
642.7
SCR
96.5
121.9
25.2
68.3
4.0
315.9
Solvency surplus
33.9
61.6
56.5
71.5
n/a
326.8
Solvency ratio
135%
151%
324%
205%
n/a
203%
Dividend paying limit (% of SCR)
120%
120%
135%
175%
n/a
140%
Dividend paying limit (£)
115.8
146.3
34.0
119.5
n/a
442.2
Surplus over dividend paying limit
14.6
37.2
47.7
20.3
n/a
200.4
181
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 December 2023 (unaudited)
Other
Region
Group and
consolidation
UK
Movestic
Waard Group
Scildon
adjustments
Group
£m
£m
£m
£m
£m
£m
Own Funds (pre dividends)
187.5
178.7
105.3
133.7
102.0
707.2
Proposed dividend
(35.0 )
(7.8 )
(6.9 )
–
26.2
(23.5 )
Own Funds (post dividends)
152.5
170.9
98.4
133.7
128.2
683.7
SCR
102.6
116.7
27.9
72.8
12.7
332.7
Solvency surplus
49.9
54.2
70.5
60.9
n/a
351.0
Solvency ratio
149%
147%
353%
184%
n/a
205%
Dividend paying limit (% of SCR)
120%
120%
135%
175%
n/a
140%
Dividend paying limit (£)
123.1
140.0
37.7
127.4
n/a
465.8
Surplus over dividend paying limit
29.4
30.9
60.7
6.2
n/a
217.9
(ii) Reconciliation between Solvency II Own Funds and IFRS net assets (unaudited)
The tables below show the key differences between the Solvency II Own Funds reported in section (c)(i) of this Note and the Group’s IFRS net assets.
31 December 2024 (unaudited)
Other
Region
Group and
consolidation
UK
Movestic
Waard Group
Scildon
adjustments
Group
£m
£m
£m
£m
£m
£m
Solvency II Own Funds (post dividends)
130.4
183.5
81.7
139.8
107.3
642.7
Add Back: Ring-fenced fund surplus restrictions
1.9
–
–
–
–
1.9
Add Back: Intangible assets
20.4
66.8
–
–
–
87.2
Add Back: Tier 2 debt and restriction
–
–
16.4
–
(184.8 )
(168.4 )
Add Back: Foreseeable dividends
45.0
2.5
6.6
–
30.6
23.5
Add Back: Difference in valuation of technical provisions
(66.8 )
(162.1 )
(60.4 )
(33.2 )
34.5
(288.0 )
Add Back: Difference in deferred tax
(3.2 )
–
14.5
9.2
(8.4 )
12.1
Add Back: Other valuation differences
(1.1 )
1.2
3.9
(0.8 )
0.2
2.7
IFRS net assets
126.6
91.9
62.7
115.0
(81.8 )
314.4
31 December 2023 (unaudited)
Other
Region
Group and
consolidation
UK
Movestic
Waard Group
Scildon
adjustments
Group
£m
£m
£m
£m
£m
£m
Solvency II Own Funds (post dividends)
152.5
171.0
98.4
133.7
128.1
683.7
Add Back: Ring-fenced fund surplus restrictions
0.5
–
–
–
–
0.5
Add Back: Intangible assets
22.1
72.8
–
–
–
94.9
Add Back: Tier 2 debt and restriction
–
–
13.7
–
(214.3 )
(200.6 )
Add Back: Foreseeable dividends
35.0
7.8
6.9
–
(26.2 )
23.5
Add Back: Difference in valuation of technical provisions
(49.2 )
(153.4 )
(27.7 )
(25.6 )
40.3
(215.4 )
Add Back: Difference in deferred tax
(4.7 )
–
16.5
6.5
(10.2 )
8.1
Add Back: Other valuation differences
(5.7 )
(1.0 )
(28.0 )
(0.2 )
0.1
(34.8 )
IFRS net assets
150.5
97.2
79.8
114.4
(82.2 )
359.9
Further information on how the Group uses Solvency II, and metrics derived from Solvency II, as Alternative Performance Measures can be found in the additional information section of the Annual Report
and Accounts on page 261.
182 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
Scildon: This segment represents the Group’s open Dutch life insurance business. Scildon’s policy
base is predominantly made up of individual protection and savings contracts. It is open to
new business and sells protection, individual savings and group pension contracts via a broker-led
distribution model.
The planned integration of the Waard and Scildon businesses, as referred to in the risk
management section of the Strategic Report has not been applied in the segmental reporting
in these financial statements.
Other Group activities: The functions performed by the Parent Company, Chesnara plc, are
defined under the operating segment analysis as other Group activities. Also included therein are
consolidation and elimination adjustments.
The accounting policies of the segments are the same as those for the Group as a whole.
Any transactions between the business segments are on normal commercial terms in normal
market conditions. The Group evaluates performance of operating segments on the basis of the
profit before tax attributable to shareholders of the reporting segments and the Group as a whole.
There were no changes to the measurement basis for segment profit during the year ended
31 December 2024.
C1 Composition of operating segments
The Group considers that it has no product or distribution-based business segments. It reports
segmental information on the same basis as reported internally to the chief operating decision maker,
which is the Board of Directors of Chesnara plc.
The segments of the Group as at 31 December 2024 comprise:
UK: This segment comprises the UK’s life insurance and pensions business within Countrywide
Assured plc (CA), the Group’s principal UK operating subsidiary, and Sanlam Life & Pensions UK (SLP),
acquired by the Group on 28 April 2022 and subsequently renamed to CASLP Limited (CASLP).
The majority of the assets and liabilities of CASLP were transferred to CA in 2023 under a Part VII
business transfer. CASLP was dissolved on 14 January 2025.
During the year, the Group reached an agreement to acquire the unit-linked bond and pension
business of Canada Life Limited with the transaction initially in the form of a reinsurance agreement
accepted by CA. See Note I7 for further details.
Movestic: This segment comprises the Group’s Swedish life and pensions business, Movestic
Livförsäkring AB (Movestic) and its subsidiary company Movestic Fonder AB (investment fund
management company). Movestic is open to new business and primarily comprises unit-linked
pension business and also providing some life and health product offerings.
Waard Group: This segment represents the Group’s closed Dutch life insurance business and
comprises a number of acquisitions of closed insurance books of business since the acquisition
of the original Waard entities into the Group in 2015. The Waard Group comprises a mixture of
long-term savings and protection business and also contains some non-life business.
SECTION C – SEGMENTAL INFORMATION
183
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
C2 Segmental performance and net assets
(a) Segmental income statement for the year ended 31 December 2024
Movestic
Waard Group
Scildon
Other Group
UK
(Sweden )
(Netherlands )
(Netherlands )
activities (UK )
Total
£m
£m
£m
£m
£m
£m
Insurance revenue
71.3
10.2
29.8
150.6
–
261.9
Insurance service expense
(64.9 )
(2.6 )
(31.4 )
(145.2 )
–
(244.1 )
Net expenses from reinsurance contracts held
(0.9 )
(1.8 )
(2.0 )
(4.5 )
–
(9.2 )
Segmental insurance service result
5.5
5.8
(3.6 )
0.9
–
8.6
Net investment return
380.7
666.6
28.1
201.4
9.3
1,286.1
Net finance (expenses)/income from insurance contracts issued
(98.4 )
(23.6 )
(23.2 )
(189.6 )
–
(334.8 )
Net finance expenses from reinsurance contracts held
3.1
0.3
–
(0.8 )
–
2.6
Net change in investment contract liabilities
(260.0 )
(479.6 )
(0.8 )
–
–
(740.4 )
Change in liabilities relating to policyholders’ funds held by the Group
–
(160.8 )
–
–
–
(160.8 )
Segmental investment result
25.4
2.9
4.1
11.0
9.3
52.7
Fee, commission and other operating income
37.4
65.5
0.3
–
1.0
104.2
Segmental revenue, net of investment result
68.3
74.2
0.8
11.9
10.3
165.5
Other operating expenses
(39.7 )
(54.9 )
(3.3 )
(4.3 )
(22.0 )
(124.2 )
Financing costs
(0.2 )
(0.4 )
–
–
(10.5 )
(11.1 )
Profit/(loss) before tax and consolidation adjustments
28.4
18.9
(2.5 )
7.6
(22.2 )
30.2
Other operating expenses:
Amortisation and impairment of intangible assets
(0.1 )
(9.3 )
–
–
–
(9.4 )
Segmental income less expenses
28.3
9.6
(2.5 )
7.6
(22.2 )
20.8
Post completion gain on portfolio acquisition
–
–
–
–
–
–
(Loss)/profit before tax
28.3
9.6
(2.5 )
7.6
(22.2 )
20.8
Income tax credit/(charge)
(17.0 )
(0.5 )
0.8
(2.0 )
1.8
(16.9 )
(Loss)/profit after tax
11.3
9.1
(1.7 )
5.6
(20.4 )
3.9
(b) Segmental balance sheet as at 31 December 2024
Movestic
Waard Group
Scildon
Other Group
UK
(Sweden )
(Netherlands )
(Netherlands )
activities (UK )
Total
£m
£m
£m
£m
£m
£m
Total assets
4,473.8
5,269.7
851.9
2,035.7
124.0
12,755.1
Total liabilities
(4,347.2 )
(5,177.8 )
(789.2 )
(1,920.7 )
(205.8 )
(12,440.7 )
Net assets
126.6
91.9
62.7
115.0
(81.8 )
314.4
Investment in associates
–
–
–
–
–
–
Additions to non-current assets
–
–
–
–
–
–
184 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
C2 Segmental performance and net assets (continued)
(c) Segmental income statement for the year ended 31 December 2023
Restated
Movestic
Waard Group
Scildon
Other Group
UK
(Sweden )
(Netherlands )
(Netherlands )
activities (UK )
Total
£m
£m
£m
£m
£m
£m
Insurance revenue
65.8
11.1
36.1
115.0
–
228.0
Insurance service expense
(65.7 )
(7.4 )
(37.8 )
(113.9 )
–
(224.8 )
Net expenses from reinsurance contracts held
(5.5 )
(0.6 )
0.4
(2.7 )
–
(8.4 )
Segmental insurance service result
(5.4 )
3.1
(1.3 )
(1.6 )
–
(5.2 )
Net investment return
339.3
432.5
63.2
181.2
7.3
1,023.5
Net finance (expenses)/income from insurance contracts issued
(86.4 )
(16.0 )
(49.3 )
(163.2 )
–
(314.9 )
Net finance expenses from reinsurance contracts held
9.3
0.7
0.1
(3.4 )
–
6.7
Net change in investment contract liabilities
(226.4 )
(299.6 )
(3.6 )
–
–
(529.6 )
Change in liabilities relating to policyholders’ funds held by the Group
–
(114.0 )
–
–
–
(114.0 )
Segmental investment result
35.8
3.6
10.4
14.6
7.3
71.7
Fee, commission and other operating income
39.8
50.3
2.9
–
(3.6 )
89.4
Segmental revenue, net of investment result
70.2
57.0
12.0
13.0
3.7
155.9
Other operating expenses
(39.9 )
(40.0 )
(3.5 )
(5.5 )
(23.1 )
(112.0 )
Financing costs
(0.2 )
(0.5 )
–
–
(10.3 )
(11.0 )
Profit/(loss) before tax and consolidation adjustments
30.1
16.5
8.5
7.5
(29.7 )
32.9
Other operating expenses:
Amortisation and impairment of intangible assets
(26.7 )
(11.2 )
–
–
–
(37.9 )
Segmental income less expenses
3.4
5.3
8.5
7.5
(29.7 )
(5.0 )
Post completion gain on portfolio acquisition
–
–
6.7
–
–
6.7
(Loss)/profit before tax
3.4
5.3
15.2
7.5
(29.7 )
1.7
Income tax credit/(charge)
20.5
–
(1.6 )
(1.9 )
(0.1 )
16.9
(Loss)/profit after tax
23.9
5.3
13.6
5.6
(29.8 )
18.6
(d) Segmental balance sheet as at 31 December 2023
Restated
Movestic
Waard Group
Scildon
Other Group
UK
(Sweden )
(Netherlands )
(Netherlands )
activities (UK )
Total
£m
£m
£m
£m
£m
£m
Total assets
4,527.1
4,519.4
946.8
2,009.1
127.3
12,129.8
Total liabilities
(4,376.6 )
(4,422.2 )
(867.0 )
(1,894.6 )
(209.5 )
(11,769.9 )
Net assets
150.5
97.2
79.8
114.5
(82.2 )
359.9
Investment in associates
–
–
–
–
–
–
Additions to non-current assets
–
–
–
–
–
–
SECTION C – SEGMENTAL INFORMATION
185
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SECTION D – PERFORMANCE IN THE YEAR
D1 Insurance result
Year ended 31 December 2024
Movestic
Waard Group
Scildon
Insurance revenue
UK
(Sweden )
(Netherlands )
(Netherlands )
Total
£m
£m
£m
£m
£m
Contracts not measured under the PAA:
Amounts relating to changes in the liability for remaining coverage:
Expected incurred claims and other directly attributable expenses
65.6
0.3
22.1
133.7
221.7
Change in risk adjustment for non-financial risk for the risk expired
1.8
0.1
0.7
2.3
4.9
CSM recognised for the services provided
3.9
0.5
7.0
11.0
22.4
Insurance acquisition cash flows recovery
–
–
–
3.6
3.6
Insurance revenue for contracts not measured under the PAA
71.3
0.9
29.8
150.6
252.6
Insurance revenue for contracts measured under the PAA
–
9.3
–
–
9.3
Total insurance revenue
71.3
10.2
29.8
150.6
261.9
Insurance service expenses
Incurred claims and other directly attributable expenses
(60.5 )
(8.9 )
(28.6 )
(108.8 )
(206.8 )
Changes that relate to past service – changes in the FCF relating to the LIC
–
6.3
–
–
6.3
Losses on onerous contracts and reversals of those losses
(4.4 )
–
(2.8 )
(32.8 )
(40.0 )
Insurance acquisition cash flows amortisation
–
–
–
(3.6 )
(3.6 )
Total insurance service expenses
(64.9 )
(2.6 )
(31.4 )
(145.2 )
(244.1 )
Net income/(expenses) from reinsurance contracts held
Reinsurance expenses (allocation of reinsurance premiums paid) – contracts not measured under the PAA
Amounts relating to changes in the remaining coverage:
Expected amount recoverable for claims and other insurance service expenses
(22.9 )
–
(4.3 )
(18.7 )
(45.9 )
Change in risk adjustment for non-financial risk for the risk expired
(0.6 )
–
(0.1 )
(0.9 )
(1.6 )
CSM recognised for the services received
(0.4 )
–
–
(3.1 )
(3.5 )
Reinsurance expenses (allocation of reinsurance premiums paid) – contracts not measured under the PAA
(23.9 )
–
(4.4 )
(22.7 )
(51.0 )
Reinsurance expenses (allocation of reinsurance premiums paid) – contracts measured under the PAA
–
(1.3 )
–
–
(1.3 )
Amounts recoverable for incurred claims and other incurred insurance service expenses
23.0
2.0
2.4
19.0
46.4
Changes in amounts recoverable that relate to past service – adjustments to incurred claims
–
(2.5 )
–
–
(2.5 )
Recoveries of loss on recognition of onerous underlying contracts
–
–
–
0.5
0.5
Recoveries of losses on onerous underlying contracts and reversals of such losses
–
–
–
(1.3 )
(1.3 )
Total net expenses from reinsurance contracts held
(0.9 )
(1.8 )
(2.0 )
(4.5 )
(9.2 )
Total insurance service result
5.5
5.8
(3.6 )
0.9
8.6
186 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
D1 Insurance result (continued)
Year ended 31 December 2023
Restated
Movestic
Waard Group
Scildon
Insurance revenue
UK
(Sweden )
(Netherlands )
(Netherlands )
Total
£m
£m
£m
£m
£m
Contracts not measured under the PAA:
Amounts relating to changes in the liability for remaining coverage:
Expected incurred claims and other directly attributable expenses
59.3
0.3
28.2
100.1
187.7
Change in risk adjustment for non-financial risk for the risk expired
1.9
0.1
0.9
2.4
5.3
CSM recognised for the services provided
4.6
0.3
7.0
9.0
20.9
Insurance acquisition cash flows recovery
–
–
–
3.5
3.5
Insurance revenue for contracts not measured under the PAA
65.8
0.7
36.1
115.0
217.6
Insurance revenue for contracts measured under the PAA
–
10.4
–
–
10.4
Total insurance revenue
65.8
11.1
36.1
115.0
228.0
Insurance service expenses
Incurred claims and other directly attributable expenses
(50.8 )
(11.0 )
(30.4 )
(75.1 )
(167.3 )
Changes that relate to past service – changes in the FCF relating to the LIC
–
3.6
–
–
3.6
Losses on onerous contracts and reversals of those losses
(14.9 )
–
(7.4 )
(35.4 )
(57.7 )
Insurance acquisition cash flows amortisation
–
–
–
(3.4 )
(3.4 )
Total insurance service expenses
(65.7 )
(7.4 )
(37.8 )
(113.9 )
(224.8 )
Net income/(expenses) from reinsurance contracts held
Reinsurance expenses (allocation of reinsurance premiums paid) – contracts not measured under the PAA
Amounts relating to changes in the remaining coverage:
Expected amount recoverable for claims and other insurance service expenses
(23.8 )
–
(5.0 )
(17.7 )
(46.5 )
Change in risk adjustment for non-financial risk for the risk expired
(0.7 )
–
(0.2 )
(1.3 )
(2.2 )
CSM recognised for the services received
(0.5 )
–
2.2
(2.7 )
(1.0 )
Reinsurance expenses (allocation of reinsurance premiums paid) – contracts not measured under the PAA
(25.0 )
–
(3.0 )
(21.7 )
(49.7 )
Reinsurance expenses (allocation of reinsurance premiums paid) – contracts measured under the PAA
–
(2.5 )
–
–
(2.5 )
Amounts recoverable for incurred claims and other incurred insurance service expenses
19.5
3.2
3.4
17.3
43.4
Changes in amounts recoverable that relate to past service – adjustments to incurred claims
–
(1.3 )
–
–
(1.3 )
Recoveries of loss on recognition of onerous underlying contracts
–
–
–
0.5
0.5
Recoveries of losses on onerous underlying contracts and reversals of such losses
–
–
–
1.2
1.2
Total net expenses from reinsurance contracts held
(5.5 )
(0.6 )
0.4
(2.7 )
(8.4 )
Total insurance service result
(5.4 )
3.1
(1.3 )
(1.6 )
(5.2 )
SECTION D – PERFORMANCE IN THE YEAR
187
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D2 Investment result
In the tables that follow the investment return on surplus shareholder assets is included in the insurance contracts column. Net fair value gains and losses in respect of holdings in collective investment schemes
are included in the line that is most appropriate taking into account the nature of the underlying investments.
Year ended 31 December 2024
Investment
Net Investment return
Insurance contracts
contracts
UK
Movestic
Waard
Scildon
(without DPFs )
Chesnara plc
Total
£m
£m
£m
£m
£m
£m
£m
Interest revenue from financial assets not measured at FVTPL
–
0.5
0.7
–
–
–
1.2
Net gains on financial investments mandatorily measured as FVTPL
90.2
25.6
16.2
169.1
739.6
7.5
1,408.2
Net gains on financial investments designated as FVTPL
16.6
0.1
11.2
32.5
160.8
1.8
223.0
Net gains from fair value adjustments to investment properties
13.9
–
–
(0.2 )
–
–
13.7
Total net investment return
120.7
26.2
28.1
201.4
900.4
9.3
1,286.1
Finance income/(expenses) from insurance contracts issued
Change in fair value of underlying assets of contracts measured under the VFA
(99.8 )
(22.8 )
(5.8 )
(170.6 )
–
–
(299.0 )
Interest accreted
(19.5 )
(1.0 )
(30.0 )
(19.8 )
–
–
(70.3 )
Effect of changes in interest rates and other financial assumptions
20.2
0.2
7.8
1.5
–
–
29.7
Effect of changes in fulfilment cash flows at current rates when CSM is
unlocked at locked in rates
0.5
–
4.8
(0.5 )
–
–
4.8
Total finance income from insurance contracts issued
(98.6 )
(23.6 )
(23.2 )
(189.4 )
–
–
(334.8 )
Finance income from reinsurance contracts held
Interest accreted
8.6
0.4
–
(1.1 )
–
–
7.9
Effect of changes in interest rates and other financial assumptions
(4.6 )
(0.1 )
–
(0.1 )
–
–
(4.8 )
Effect of changes in fulfilment cash flows at current rates when CSM is
unlocked at locked in rates
(0.9 )
–
–
0.4
–
–
(0.5 )
Total finance expenses from reinsurance contracts held
3.1
0.3
–
(0.8 )
–
–
2.6
Net insurance finance expenses
(95.5 )
(23.3 )
(23.2 )
(190.2 )
–
–
(332.2 )
Net gains/losses on investment contract liabilities
–
–
–
–
(740.4 )
–
(740.4 )
Net gains/losses on liabilities relating to policyholder funds held by the Group
–
–
–
–
(160.8 )
–
(160.8 )
Net investment result
25.2
2.9
4.9
11.2
(0.8 )
9.3
52.7
188 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION D – PERFORMANCE IN THE YEAR
D2 Investment result (continued)
Year ended 31 December 2023
Investment
Net Investment return
Insurance contracts
contracts
UK
Movestic
Waard
Scildon
(without DPFs )
Chesnara plc
Total
£m
£m
£m
£m
£m
£m
£m
Interest revenue from financial assets not measured at FVTPL
6.8
0.9
0.5
–
–
0.9
9.1
Net gains on financial investments mandatorily measured as FVTPL
63.0
18.1
21.4
129.6
527.7
6.3
766.1
Net gains on financial investments designated as FVTPL
41.9
–
37.6
51.7
115.8
–
247.0
Net gains from fair value adjustments to investment properties
1.2
–
–
–
–
–
1.2
Total net investment return
112.9
19.0
59.5
181.3
643.5
7.2
1,023.4
Finance income/(expenses) from insurance contracts issued
Change in fair value of underlying assets of contracts measured under the VFA
(75.4 )
–
(5.1 )
(132.6 )
–
–
(213.1 )
Interest accreted
(18.2 )
–
(30.0 )
(19.1 )
–
–
(67.3 )
Effect of changes in interest rates and other financial assumptions
2.4
(16.0 )
(21.2 )
(14.2 )
–
–
(49.0 )
Effect of changes in fulfilment cash flows at current rates when CSM is
unlocked at locked in rates
4.7
–
6.9
2.9
–
–
14.5
Total finance income from insurance contracts issued
(86.5 )
(16.0 )
(49.4 )
(163.0 )
–
–
(314.9 )
Finance income from reinsurance contracts held
Interest accreted
8.8
–
0.1
(1.1 )
–
–
7.8
Effect of changes in interest rates and other financial assumptions
1.5
0.7
–
(1.6 )
–
–
0.6
Effect of changes in fulfilment cash flows at current rates when CSM is
unlocked at locked in rates
(1.0 )
–
–
(0.7 )
–
–
(1.7 )
Total finance expenses from reinsurance contracts held
9.3
0.7
0.1
(3.4 )
–
–
6.7
Net insurance finance expenses
(77.2 )
(15.3 )
(49.3 )
(166.4 )
–
–
(308.2 )
Net gains/(losses) on investment contract liabilities
–
–
–
–
(529.6 )
–
(529.6 )
Net gains/(losses) on liabilities relating to policyholder funds held by the Group
–
–
–
–
(113.9 )
–
(113.9 )
Net investment result
35.7
3.7
10.2
14.9
–
7.2
71.7
Fund management-based fees recognised under IFRS 15 has been disaggregated based on the
geographical region as follows:
Year ended 31 December
2024
2023
£m
£m
UK
33.9
35.0
Sweden
10.2
10.5
Total fund management-based fees recognised under IFRS 15
44.1
45.5
D3 Fees, commission and other operating income
Year ended 31 December
2024
2023
£m
£m
Policy-based fees
2.9
3.2
Fund management-based fees recognised under IFRS 15
44.1
45.5
Change in deferred income – gross
0.2
0.6
Commission income from investment contracts
22.4
20.4
Fee income from investment managers
1.3
1.3
Charges to policyholder funds for yield tax
30.8
17.9
Other types of operating income
2.5
0.5
Total fee, commission and other operating income
104.2
89.4
189
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D4 Expenses by nature
Year ended 31 December 2024
Insurance
Other
Other
acquisition
attributable
operating
cash flows
expenses
expenses
Total
Note
£m
£m
£m
£m
Administrative expenses
Personnel-related costs
I1
2.7
13.6
26.8
43.1
Investment management fees
–
2.4
1.3
3.7
Costs paid to third-party administrators
–
10.6
2.4
13.0
Other goods and services
4.0
14.0
23.4
41.4
Depreciation charge on property and equipment
0.1
0.5
0.3
0.9
Depreciation of right-of-use assets
–
–
0.8
0.8
Amortisation charge on software assets
–
–
2.7
2.7
Sub-total
6.8
41.1
57.7
105.6
Commission, new business and renewal costs
Insurance contracts
–
3.8
–
3.8
Investment contracts
–
–
32.6
32.6
Sub-total
–
3.8
32.6
36.4
Amortisation and Impairment of intangible assets
Acquired value of in-force business
–
–
4.8
4.8
Deferred acquisition costs
–
–
7.7
7.7
Sub-total
–
–
12.5
12.5
Other expenses
Payment of yield tax relating to policyholders funds
–
–
30.8
30.8
Other
–
2.2
–
2.2
Sub-total
–
2.2
30.8
33.0
Total
6.8
47.1
133.6
187.5
Expenses classed as ‘insurance acquisition cash flows’ in the table above are offset against the CSM on initial recognition. The ‘other attributable expenses’ are reported in the ‘Insurance service expense’ line
in the income statement.
190 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
D4 Expenses by nature (continued)
Year ended 31 December 2023 – restated
Insurance
Other
Other
acquisition
attributable
operating
cash flows
expenses
expenses
Total
Note
£m
£m
£m
£m
Administrative expenses
Personnel-related costs
I1
2.2
13.6
25.4
41.2
Investment management fees
–
2.3
1.3
3.6
Costs paid to third-party administrators
–
9.5
3.9
13.4
Other goods and services
3.3
13.0
28.9
45.2
Depreciation charge on property and equipment
0.1
0.5
0.2
0.8
Depreciation of right-of-use assets
–
–
0.4
0.4
Amortisation charge on software assets
–
–
2.0
2.0
Sub-total
5.6
38.9
62.1
106.6
Commission, new business and renewal costs
Insurance contracts
–
3.8
–
3.8
Investment contracts
–
–
29.4
29.4
Sub-total
–
3.8
29.4
33.2
Amortisation and Impairment of intangible assets
Acquired value of in-force business
–
–
28.6
28.6
Deferred acquisition costs
–
–
7.6
7.6
Sub-total
–
–
36.2
36.2
Other expenses
Payment of yield tax relating to policyholders funds
–
–
17.9
17.9
Other
–
2.9
4.3
7.2
Sub-total
–
2.9
22.2
25.1
Total
5.6
45.5
149.9
201.1
Included in other goods and services above are the following amounts payable to the auditor and its associates, exclusive of VAT.
SECTION D – PERFORMANCE IN THE YEAR
191
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 31 December
2024
2023
£m
£m
Fees payable to the Company’s auditor for the audit of the Company’s
financial statements
0.7
0.6
Fees payable to the Company’s auditor and its associates for
other services to the Group:
The audit of the Company’s subsidiaries pursuant to legislation*
2.4
1.9
Audit-related assurance services**
0.2
2.0
Non-audit services
–
0.1
Total
3.3
4.6
*Includes £1.0m (2023: £1.6m) audit fees in respect of the Movestic, Waard and Scildon audit in the
year performed by EY.
**Includes £0.1m (2023: £0.1m) fees related to assurance services in respect of Waard and Scildon in
the year performed by EY, £0.2m (2023: £0.2m) fees related to assurance services in respect of
CASFS performed by Deloitte and £0.1m (2023: £0.1m) fees related to assurance services in respect
of Chesnara parent company performed by Deloitte.
D5 Financing costs
Year ended 31 December
2024
2023
£m
£m
Interest expense on bank borrowings
1.0
0.7
Interest expense on financial reinsurance
0.4
0.5
Interest expense on Tier 2 debt
9.7
9.8
Total financing costs
11.1
11.0
Interest expense on bank borrowings and Tier 2 debt is calculated using the effective interest rate
method and is the total interest expense for financial liabilities that are not designated at fair value
through profit or loss.
D6 Income tax
Total income tax comprises
2024
2023
Year ended 31 December
£m
£m
CA and other Group activities – net credit
(15.2 )
20.4
Movestic
(0.5 )
–
Waard Group – net expense/credit
0.8
(1.6 )
Scildon – net (expense)/credit
(2.0 )
(1.9 )
Total net credit
(16.9 )
16.9
UK business
CA and other Group activities
2024
2023
Year ended 31 December
£m
£m
Current tax
Current year expense
0.1
–
Overseas tax
–
(0.3 )
Net expense
0.1
(0.3 )
Deferred tax
Origination and reversal of temporary differences
(17.4 )
20.7
Adjustment to prior years
2.1
–
Total income tax credit (expense)/credit
(15.2 )
20.4
Reconciliation of effective tax rate on profit before tax
2024
2023
Year ended 31 December
£m
£m
Profit/(loss) before tax
2.1
(26.3 )
Income tax using the domestic corporation tax rate of 25.0% (2023: 23.5%)
(0.5 )
6.2
Non-taxable profit on acquisition of subsidiary
(0.2 )
–
Impact of small companies rate
–
(1.5 )
Other permanent differences
–
(0.6 )
Effect of UK tax bases on insurance profits
(15.8 )
(7.5 )
Offset of franked investment income
2.6
1.2
Variation in rate of tax on amortisation of acquired in-force value
1.5
13.3
Foreign tax
–
(0.3 )
Effect of deferred tax not recognised
(4.8 )
10.1
Effect of change in tax rate
–
(0.2 )
Other
2.0
(0.3 )
Total income tax credit (expense)/credit
(15.2 )
20.4
The Finance Act 2021 increased the rate of corporation tax from 19% to 25% from 1 April 2023.
192 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION D – PERFORMANCE IN THE YEAR
D6 Income tax (continued)
Movestic
Movestic
2024
2023
Year ended 31 December
£m
£m
Current tax
Current year expense
(0.5 )
–
Net expenses
(0.5 )
–
Deferred tax
Origination and reversal of temporary differences
–
–
Total income tax expense
(0.5 )
–
Reconciliation of effective tax rate on profit before tax
2024
2023
Year ended 31 December
£m
£m
Profit before tax
10.4
5.4
Income tax using the domestic corporation tax rate of 20.6% (20.6%)
(2.1 )
(1.1 )
Non-taxable income in relation to unit-linked business
1.2
1.2
Unrecognised tax recoverable
0.8
(0.3 )
Non-deductible expenses
0.1
0.2
Under/(over) provided in prior years
(0.5 )
–
Total income tax credit/(expense)
(0.5 )
–
Waard Group
Waard Group
2024
2023
Year ended 31 December
£m
£m
Current tax
Current year expense
(0.9 )
(1.7 )
Adjustment to prior years
0.6
4.7
Net expenses
(0.3 )
3.0
Deferred tax
Origination and reversal of temporary differences
1.1
(4.6 )
Total income tax credit/(expense)
0.8
(1.6 )
Reconciliation of effective tax rate on profit before tax
2024
2023
Year ended 31 December
£m
£m
(Loss)/profit before tax
(2.5 )
14.7
Income tax using the domestic corporation tax rate of 25.8% (2023: 25%)
0.7
(3.8 )
Non-taxable fair value adjustment
–
1.7
Temporary differences
0.1
1.0
Reversal of temporary difference
–
(0.5 )
Total income tax credit/(expense)
0.8
(1.6 )
Scildon
Scildon
2024
2023
Year ended 31 December
£m
£m
Current tax
–
4.8
Adjustments for prior year
–
–
Net expense
–
4.8
Deferred tax
Origination and reversal of temporary differences
(2.0 )
(6.7 )
Total income tax credit/(expense)
(2.0 )
(1.9 )
Reconciliation of effective tax rate on profit before tax
2024
2023
Year ended 31 December
£m
£m
Loss before tax
7.5
7.5
Income tax using the domestic corporation tax rate 25.8% (2023: 25%)
(1.9 )
(1.9 )
Permanent differences
0.1
0.1
Temporary differences
(0.1 )
(0.1 )
Total income tax credit/(expense)
(1.9 )
(1.9 )
193
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SECTION E – BALANCE SHEET ASSETS
E1 Intangible assets
Year ended 31 December 2024
Software
AVIF
AVCR
assets
Total
£m
£m
£m
£m
Cost:
Balance at 1 January
112.3
2.3
31.1
145.6
Additions
–
–
2.1
2.1
Foreign exchange translation difference
–
–
(2.4 )
(2.3 )
Balance at 31 December
112.3
2.3
30.8
145.4
Amortisation and impairment losses:
Balance at 1 January
76.1
2.1
21.7
99.9
Amortisation for the year
4.7
–
2.7
7.4
Impairment for the year
–
–
–
–
Foreign exchange translation difference
1.0
–
(1.7 )
(0.7 )
Balance at 31 December
81.8
2.1
22.7
106.6
Carrying amounts:
At 1 January
36.3
0.2
9.3
45.8
At 31 December
30.5
0.2
8.1
38.8
Year ended 31 December 2023
Software
AVIF
AVCR
assets
Total
£m
£m
£m
£m
Cost:
Balance at 1 January
113.9
2.3
29.5
145.7
Additions
–
–
2.3
2.3
Foreign exchange translation difference
(1.6 )
–
(0.7 )
(2.3 )
Balance at 31 December
112.3
2.3
31.1
145.7
Amortisation and impairment losses:
Balance at 1 January
48.5
2.1
20.2
70.8
Amortisation for the year
7.5
–
2.0
9.5
Impairment for the year
21.0
–
–
21.0
Foreign exchange translation difference
(0.9 )
–
(0.5 )
(1.4 )
Balance at 31 December
76.1
2.1
21.7
99.9
Carrying amounts:
At 1 January
65.4
0.2
9.3
74.9
At 31 December
36.3
0.2
9.3
45.8
Section A5 (i) provides further details of the significant judgements applied and the sensitivities to
those judgements in respect of the AVIF assets held in regard to CASLP within the UK segment of
£19.8m (31 December 2023: £22.9m) and also in Movestic of £10.7m (31 December 2023: £13.4m).
The AVCR asset and the software assets are held in respect of Movestic.
The amortisation charged to the Consolidated Statement of Comprehensive Income is recognised
in other operating expenses (see Note D4).
Deferred acquisition costs
Year ended 31 December
2024
2023
£m
£m
Balance at 1 January
50.6
51.2
Additions
9.2
8.3
Amortisation charged to income
(7.7 )
(7.6 )
Foreign exchange translation difference
(3.6 )
(1.3 )
Balance at 31 December
48.4
50.6
Current
6.3
11.1
Non-current
42.1
39.5
Total
48.4
50.6
The amortisation charged to income is recognised in other operating expenses (see Note D4).
E2 Property and equipment
31 December
2024
2023
£m
£m
Cost:
Balance at 1 January
20.6
19.0
Additions
0.8
1.9
Disposals
(1.7 )
(0.3 )
Revaluation
0.7
0.3
Foreign exchange translation difference
(0.8 )
(0.3 )
Balance at 31 December
19.6
20.6
Amortisation and impairment losses:
Balance at 1 January
12.2
11.1
Depreciation charge for the year
1.7
0.8
Disposals
(1.7 )
–
Foreign exchange translation difference
(0.4 )
0.3
Balance at 31 December
11.7
12.2
Carrying amounts at 31 December
7.9
8.4
The Group leases several assets including office buildings, office equipment, IT equipment and motor
vehicles. The average lease term is 3 years.
194 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION E – BALANCE SHEET ASSETS
E2 Property and equipment (continued)
Right-of-use assets
Non-investment
2024
property
Other
Total
£m
£m
£m
Carrying amounts at 1 January
1.1
0.2
1.3
Additions
0.1
–
0.1
Depreciation charge
(0.6 )
(0.2 )
(0.8 )
Carrying amounts at 31 December
0.6
–
0.6
Amounts recognised in profit or loss are not considered to be material.
Right-of-use assets
Non-investment
2023
property
Other
Total
£m
£m
£m
Carrying amounts at 1 January
1.2
0.1
1.3
Additions
–
0.8
0.8
Depreciation charge
(0.4 )
(0.4 )
(0.8 )
Foreign exchange translation difference
0.3
(0.3 )
–
Carrying amounts at 31 December
1.1
0.2
1.3
Amounts recognised in profit or loss are not considered to be material.
E3 Investment properties
31 December
2024
2023
£m
£m
Balance at 1 January
88.1
94.5
Additions
3.4
2.3
Disposals
(7.9 )
(6.0 )
Revaluation
8.1
(2.7 )
Balance at 31 December
91.7
88.1
Investment properties were bought for investment purposes in line with the investment strategy
of the Group. Detail on the property types and the frequency of valuations is provide in Note A4(k).
There is no observable input and therefore they are classed as Level 3 in the fair value hierarchy, see
Note E4(b).
The revaluation is disclosed within net investment return (see Note D2). Expenses incurred in the
operation and maintenance of investment properties are disclosed within other operating expenses
(see Note D4).
Rental income from investment properties was £6.9m for the year (2023: £6.8m). Operating expenses
incurred on investment properties was £0.6m for the year (2023: £1.0m).
E4 Financial investments
(a) Financial investments by classification
The carrying amounts of the financial investments and other financial assets and liabilities held by
the Group at the balance sheet date are as follows:
31 December 2024
Amortised
FVTPL –
FVTPL –
cost designated mandatory
Total
£m
£m
£m
£m
Financial investments
Equity securities
–
–
191.5
191.5
Holdings in collective investment schemes
–
–
8,661.6
8,661.6
Debt securities – government bonds
–
446.1
–
446.1
Debt securities – other
–
634.7
10.1
644.8
Policyholder funds help by the Group
–
1,825.8
–
1,825.8
Mortgage loan portfolio
–
346.9
–
346.9
Total
–
3,253.5
8,863.2
12,116.7
Derivatives and other financial assets
Amounts deposited with reinsurer
–
34.3
–
34.3
Derivative financial instruments
–
–
0.1
0.1
Other assets
68.7
–
–
68.7
Cash and cash equivalents
–
138.0
–
138.0
Total financial investments and financial assets
68.7
3,425.8
8,863.3
12,357.8
Financial liabilities
Investment contracts at fair value through
profit or loss
–
6,116.7
–
6,116.7
Liabilities relating to policyholder funds
help by the Group
–
1,825.5
–
1,825.5
Derivative financial instruments
–
–
0.6
0.6
Borrowings
204.8
–
–
204.8
Other current liabilities
129.7
–
–
129.7
Total financial liabilities
334.5
7,942.2
0.6
8,277.3
195
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 December 2023
Amortised
FVTPL –
FVTPL –
cost designated mandatory
Total
£m
£m
£m
£m
Financial investments
Equity securities
–
–
194.2
194.2
Holdings in collective investment schemes
–
–
8,376.2
8,376.2
Debt securities – government bonds
–
716.5
–
716.5
Debt securities – other
–
520.6
–
520.6
Policyholder funds help by the Group
–
1,281.8
–
1,281.8
Mortgage loan portfolio
–
366.8
–
366.8
Total
–
2,885.7
8,570.4
11,456.1
Derivatives and other financial assets
Amounts deposited with reinsurers
–
32.5
–
32.5
Derivative financial instruments
–
–
0.3
0.3
Other assets
57.7
–
–
57.7
Cash and cash equivalents
–
146.0
–
146.0
Total financial investments and financial assets
57.7
3,064.2
8,570.7
11,692.6
Financial liabilities
Investment contracts at fair value through
profit or loss
–
5,872.3
–
5,872.3
Liabilities relating to policyholder funds
help by the Group
–
1,281.8
–
1,281.8
Derivative financial instruments
–
–
4.4
4.4
Borrowings
207.9
–
–
207.9
Other current liabilities
131.7
–
–
131.7
Total financial liabilities
339.6
7,154.1
4.4
7,498.1
(b) Financial investment fair values
Fair value is the amount for which an asset or liability could be exchanged between willing parties
in an arm’s length transaction. The tables below show the determination of fair value according
to a three-level valuation hierarchy. Fair values are generally determined at prices quoted in active
markets (Level 1). However, where such information is not available, the Group applies valuation
techniques to measure such instruments. These valuation techniques make use of market-observable
data for all significant inputs where possible (Level 2), but in some cases it may be necessary to
estimate other than market-observable data within a valuation model for significant inputs (Level 3).
Fair value measurement at
Level 1
Level 2
Level 3
Total
31 December 2024
£m
£m
£m
£m
Investment properties
–
–
91.7
91.7
Financial assets
Equities – Listed
191.5
–
–
191.5
Holdings in collective investment schemes
8,454.1
38.9
168.6
8,661.6
Debt securities – government bonds
446.1
–
–
446.1
Debt securities – other debt securities
644.8
–
–
644.8
Policyholders’ funds held by the Group
1,781.6
–
44.2
1,825.8
Mortgage loan portfolio
–
346.9
–
346.9
Amounts deposited with reinsurers
–
34.3
–
34.3
Derivative financial instruments
–
0.1
–
0.1
Total
11,518.1
420.2
304.5
12,242.8
Financial liabilities
Investment contracts at fair value through
profit or loss
–
6,116.7
–
6,116.7
Liabilities related to policyholders’ funds
held by the Group
–
1,825.5
–
1,825.5
Derivative financial instruments
–
0.6
–
0.6
Total
–
7,942.8
–
7,942.8
Fair value measurement at
Level 1
Level 2
Level 3
Total
31 December 2023
£m
£m
£m
£m
Investment properties
–
–
88.1
88.1
Financial assets
Equities – Listed
194.2
–
–
194.2
Holdings in collective investment schemes
8,189.2
44.5
142.5
8,376.2
Debt securities – government bonds
716.5
–
–
716.5
Debt securities – other debt securities
520.6
–
–
520.6
Policyholders’ funds held by the Group
1,239.4
–
42.4
1,281.8
Mortgage loan portfolio
–
366.8
–
366.8
Amounts deposited with reinsurers
–
32.5
–
–
Derivative financial instruments
–
0.3
–
0.3
Total
10,859.9
444.1
273.0
11,577.0
Financial liabilities
Investment contracts at fair value through
profit or loss
–
5,872.3
–
5,872.3
Liabilities related to policyholders’ funds
held by the Group
1,281.8
–
–
1,281.8
Derivative financial instruments
–
4.4
–
4.4
Total
1,281.8
5,876.7
–
7,158.5
196 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION E – BALANCE SHEET ASSETS
E4 Financial investments (continued)
(b) Financial investment fair values (continued)
Investment properties
The investment properties are valued by external chartered surveyors using industry standard
techniques based on guidance from the Royal Institute of Chartered Surveyors. The valuation
methodology includes an assessment of general market conditions and sector level transactions
and takes account of expectations of occupancy rates, rental income and growth. Properties
undergo individual scrutiny using cash flow analysis to factor in the timing of rental reviews, capital
expenditure, lease incentives, dilapidation and operating expenses; these reviews utilise both
observable and unobservable inputs.
Holdings in collective investment schemes
The holdings classified as Level 3 £168.6m (Dec 2023: £142.5m) also relate to Scildon, and
represent investments held in a mortgage fund. These are classified as Level 3 as the fair
value is derived from valuation techniques that include inputs that are not based on observable
market data.
Policyholder funds held by the Group
There is also a small holding of assets classified as Level 3 £44.2m (Dec 2023: £42.4m) from
our Movestic operation which are unlisted. The valuation of the vast majority of these assets
is based on unobservable prices from trading on the over-the-counter market.
Debt securities
The debt securities classified as Level 2 at 2023 and 2024 are traded in active markets with less
depth or wider bid-ask spreads. This does not meet the classification as Level 1 inputs. The fair
values of debt securities not traded in active markets are determined using broker quotes or
valuation techniques with observable market inputs. Financial instruments valued using broker
quotes are classified at Level 2, only where there is a sufficient range of available quotes.
These assets were valued using counterparty or broker quotes and were periodically validated
against third-party models.
Derivative financial instruments
The derivatives financial instruments include a foreign currency hedge related to the Group.
This was obtained to manage the exposure to foreign exchange movements between sterling
and both the euro and Swedish krona.
It includes an uncapped collar which consists of two hedges:
– one hedge to protect against the downside (sterling strengthening) (starting at strike A), and one
to remove the upside (weakening) (strike B); with the strikes of these coordinated to result in
no upfront premium.
– the second hedge (strike B) creates an uncapped liquidity requirement when it bites.
The capped collar comes with an additional leg which creates value and liquidity when exchange
rates move beyond a certain point (strike C).
Within derivative financial instruments is a financial reinsurance embedded derivative related
to our Movestic operation. The Group has entered into a reinsurance contract with a third party
that has a section that is deemed to transfer significant insurance risk and a section that is
deemed not to transfer significant insurance risk. The element of the contract that does not
transfer significant insurance risk has two components and has been accounted for as a
financial liability at amortised cost and an embedded derivative asset at fair value.
The embedded derivative represents an option to repay the amounts due under the contract early
at a discount to the amortised cost, with its fair value being determined by reference to market
interest rate at the balance sheet date. It is, accordingly, determined at Level 2 in the three-level
fair value determination hierarchy set out above. Further detail can be found in Note E5.
Investment contract liabilities
The investment contract liabilities in Level 2 of the valuation hierarchy represent the fair value
of linked and non-linked liabilities valued using established actuarial techniques utilising market
observable data for all significant inputs, such as investment yields.
Significant unobservable inputs in Level 3 instruments valuations
The Level 3 instruments held in the Group are in relation to investments held in an Aegon managed
Dutch Mortgage Fund that contains mortgage-backed assets in the Netherlands. The fair value
of the mortgage fund is determined by the fund manager on a monthly basis using an in-house
valuation model. The valuation model relies on a number of unobservable inputs, the most
significant being the assumed conditional prepayment rate, the discount rate and the impairment
rate, all of which are applied to the anticipated modelled cash flows to derive the fair value of the
underlying asset.
The assumed Conditional Prepayment Rate (CPR) is used to calculate the projected prepayment
cash flow per individual loan and reflects the anticipated early repayment of mortgage balances.
The CPR is based on four variables:
– Contract age – The CPR for newly originated mortgage loans will initially be low, after which
it increases for a couple of years to its maximum expected value, and subsequently diminishes
over time.
– Interest rate differential – The difference between the contractual rates and current interest rates
are positively correlated with prepayments. When contractual rates are higher than interest rates
of newly originated mortgages, we observe more prepayments and the vice versa.
– Previous partial repayments – Borrowers who made a partial prepayment in the past, are more likely
to do so in the future.
– Burnout effect – Borrowers who have not made a prepayment in the past, while their option to prepay
was in the money, are less likely to prepay in the future.
The projected prepayment cash flows per loan are then combined to derive an average expected
lifetime CPR, which is then applied to the outstanding balance of the fund. The CPR used in the
valuation of the fund as at 31 December 2024 was 3.7% (31 December 2023: 3.2%).
The expected projected cash flows for each mortgage within the loan portfolio are discounted using
rates that are derived using a matrix involving the following three parameters:
– The remaining fixed rate term of the mortgage
– Indexed Loan to Value (LTV) of each mortgage
– Current (Aegon) mortgage rates
At 31 December 2024 this resulted in discounting the cash flows in each mortgage using a range
from 4.06% to 4.26% (31 December 2023: 4.67% to 4.68%).
An impairment percentage is applied to those loan cash flows which are in arrears, to reflect the
chance of the loan actually going into default. For those loans which are 1, 2 or 3 months in arrears,
an impairment percentage is applied to reflect the chance of default. This percentage ranges from
0.60% for 1 month in arrears to 13.70% for loans which are 3 months in arrears (31 December 2023:
0.60% for 1 month in arrears to 13.70% for loans which are 3 months in arrears). Loans which are
in default receive a 100% reduction in value.
The value of the fund has the potential to decrease or increase over time. This can be as a
consequence of a periodic reassessment of the conditional prepayment rate and/or the discount
rate used in the valuation model.
A 1 percent increase in the CPR would increase the value of the asset by £2.0m
(31 December 2023: £1.9m).
A 1 percent decrease in the CPR would reduce the value of the asset by £2.2m
(31 December 2023: £2.1m).
197
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A 1 percent increase in the discount rate would reduce the value of the asset by £15.3m
(31 December 2023: £11.4m).
A 1 percent decrease in the discount rate would increase the value of the asset by £17.5m
(31 December 2023: £13.3m).
Reconciliation of Level 3 fair value measurements of financial instruments
Level 3 movement
31 December 2024
Holdings in
collective Policyholder
Investment investment
funds held
properties
schemes
by Group
Total
£m
£m
£m
£m
At start of period
88.1
142.5
42.4
273.0
Additions – acquisition of subsidiary
–
–
–
–
Total gains and losses recognised in
the income statement
8.1
33.5
1.9
43.5
Purchases
3.4
–
17.0
20.4
Settlements
(7.9 )
–
(13.9 )
(21.8 )
Exchange rate adjustment
–
(7.4 )
(3.2 )
(10.6 )
At the end of period
91.7
168.6
44.2
304.5
31 December 2023
Holdings in
collective Policyholder
Investment investment
funds held
properties
schemes
by Group
Total
£m
£m
£m
£m
At start of period
93.3
145.4
35.1
273.8
Additions – acquisition of subsidiary
–
–
–
–
Total gains and losses recognised in
the income statement
(2.7 )
0.5
(6.4 )
(8.6 )
Purchases
2.3
–
20.5
22.8
Settlements
(4.8 )
–
(6.0 )
(10.8 )
Exchange rate adjustment
–
(3.4 )
(0.8 )
(4.2 )
At the end of period
88.1
142.5
42.4
273.0
31 December
Carrying amount
Fair value
2024
2023
2024
2023
£m
£m
£m
£m
Financial liabilities
Borrowings
200.8
200.6
166.1
148.4
Amounts due in relation to
financial reinsurance
2.4
5.3
2.3
5.1
Term finance
1.6
2.0
1.6
1.9
Total
204.8
207.9
170.0
155.4
The fair value of the Tier 2 debt is calculated using quoted prices in active markets and they are
classified as Level 1 in the fair value hierarchy. The amount due in relation to financial reinsurance
is fair valued with reference to market interest rates at the balance sheet date and is classed as
Level 2 in the fair value hierarchy.
There were no transfers between Levels 1, 2 and 3 during the year. The Group holds no Level 3
liabilities as at the balance sheet date.
E5 Derivative financial instruments
A currency hedge is held in the Parent Company in order to manage the exposure to foreign
exchange movements between sterling and both the euro and Swedish krona. The currency hedge
is classed as Level 2 (2023: Level 2) in the three-level fair value determination hierarchy set out in
Note E4(b).
There are also derivatives held within the unit-linked and with-profits funds, except for an option
to repay a financial reinsurance contract early, which comprises an embedded derivative.
31 December
2024
2023
Asset
Liability
Asset
Liability
£m
£m
£m
£m
Exchange-traded futures
–
(0.3 )
0.2
–
Foreign currency hedge
–
(0.3 )
–
(4.4 )
Financial reinsurance embedded derivative
0.1
–
0.1
–
Total
0.1
(0.6 )
0.3
(4.4 )
Current
0.1
(0.6 )
0.3
(4.4 )
Non-current
–
–
–
–
Total
0.1
(0.6 )
0.3
(4.4 )
Derivatives within unit-linked funds
As part of its investment management strategy, the Group purchases derivative financial instruments
as part of its investment portfolio for unit-linked investment funds, which match the liabilities arising
on its unit-linked insurance and investment business.
A variety of equity futures are part of the portfolio matching the unit-linked investment and
insurance liabilities. Derivatives are used to facilitate more efficient portfolio management allowing
changes in investment strategy to be reflected by futures transactions rather than a high volume
of transactions in the underlying assets.
All the contracts in the unit-linked funds are exchange-traded futures, with their fair value being the
bid price at the balance sheet date. They are, accordingly, determined at Level 1 in the three-level
fair value determination hierarchy set out in Note E4(b).
Exchange-traded futures
2024
2023
(by geographical investment market)
Asset
Liability
Asset
Liability
31 December
£m
£m
£m
£m
Japan
–
–
0.2
–
USA
–
(0.2 )
–
–
Total
–
(0.2 )
0.2
–
198 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION E – BALANCE SHEET ASSETS
E5 Derivative financial instruments (continued)
Financial reinsurance embedded derivative
In respect of Movestic, the Group has a reinsurance contract with a third party that has an element
that is deemed to transfer significant insurance risk and an element that is deemed not to transfer
significant insurance risk. This assessment has been determined by management based on the
contractual terms of the reinsurance agreement. The element of the contract that does not transfer
significant insurance risk has two components and has been accounted for as a financial liability
at amortised cost and an embedded derivative at fair value.
The embedded derivative represents an option to repay the amounts due under the contract early
at a discount to the amortised cost, with its fair value being determined by reference to market
interest rates at the balance sheet date. It is, accordingly, determined at Level 2 in the three-level
fair value determination hierarchy set out in Note E4(b).
Derivatives within CA (S&P with-profits funds)
As part of its investment management strategy, CA enters into a limited range of derivative
instruments to manage its exposure to various risks.
CA uses equity index futures in order to economically hedge equity market risk in the with-profit
funds’ investments.
The change in fair value of the futures contracts is intended to offset the change in fair value of the
underlying equities being hedged. CA settles the market value of the futures contracts on a daily
basis by paying or receiving a variation margin. The futures contracts are not discounted as this daily
settlement is equal to the change in fair value of the futures. As a result, there is no additional fair
value to recognise in relation to these derivatives on the balance sheet at the year end.
CA also purchases exchange rate futures to mitigate exchange rate risk within its with-profits funds.
These contracts are exchange-traded contracts in active markets with their fair value being the
bid price at the balance sheet date. They are, accordingly, determined at Level 1 in the three-level
fair value determination hierarchy set out in Note E4(b).
E6 Other assets
31 December
2024
2023
£m
£m
Receivables arising from investment contracts
Reinsurers share of accrued policyholder claims
1.9
1.9
Receivables from policyholders
6.3
3.5
Commission receivables
0.1
0.1
Sub-total
8.3
5.5
Other receivables
Accrued interest income
10.2
10.2
Receivables from fund management companies
3.4
3.3
Prepayments
12.5
13.7
Income tax balances
21.1
16.4
Other
13.1
8.6
Sub-total
60.3
52.2
Total
68.6
57.7
Current
66.5
54.9
Non-current
2.1
2.8
Total
68.6
57.7
E7 Cash and cash equivalents
31 December
2024
2023
£m
£m
Bank and cash balances
127.4
135.7
Call deposits due after 1 month
10.6
10.3
Total cash and cash equivalents
138.0
146.0
Bank overdrafts
(0.8 )
(0.2 )
Cash and cash equivalents in the statement of cash flows
137.2
145.8
Deposits are subject to a combination of fixed and variable interest rates, with an average maturity
of 95 days (2023: 95 days).
Included in cash and cash equivalents held by the Group are balances totalling £69.7m (2023: £52.6m)
held in unit-linked policyholders’ funds.
The following tables show the changes in liabilities arising from financing activities in the year.
These liabilities are measured at amortised cost.
31 December
Foreign
Financing
exchange
Other
1 Jan
cash translation
changes
31 Dec
2024
flows (i) differences
(ii)
2024
£m
£m
£m
£m
£m
Tier 2 debt
200.6
(9.5 )
–
9.7
200.8
Financial reinsurance
5.3
(2.6 )
(0.7 )
0.4
2.4
Lease liabilities
1.2
(0.3 )
(0.3 )
–
0.6
Total
207.1
(12.4 )
(1.0 )
10.1
203.8
31 December
Foreign
Financing
exchange
Other
1 Jan
cash translation
changes
31 Dec
2023
flows (i) differences
(ii)
2023
£m
£m
£m
£m
£m
Tier 2 debt
200.4
–
–
0.2
200.6
Financial reinsurance
9.6
(3.9 )
(0.4 )
–
5.3
Lease liabilities
1.2
(0.6 )
(0.1 )
0.7
1.2
Total
211.2
(4.5 )
(0.5 )
0.9
207.1
(i) The cash flows from bank loans and other borrowings make up the net amount of proceeds from
borrowings and repayments of borrowings in the cash flow statement.
(ii) Other changes include interest accruals.
199
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
F1 Insurance and reinsurance contracts
The following notes provide a quantitative analysis of the insurance and reinsurance contract
assets and liabilities and are disaggregated by the IFRS 8 operating segments. This disaggregation
has been chosen for the following notes because it is management’s view that together with the
information in the underwriting risk section, it provides the most relevant information for assessing
the effect that contracts within the scope of IFRS 17 have on the entity’s financial performance
and position.
(a) Composition of the balance sheet
The following tables show the breakdown of the insurance and reinsurance contract assets and
liabilities for each of the operating segments within Chesnara. Note A4(a)(i) provides details
regarding broad product groups and measurement models. Note B2 provides details for the values
of insurance and reinsurance contracts for the broad product groups within each segment.
31 December 2024
Waard
Movestic
Group
Scildon
(UK ) (Sweden ) (Netherlands ) (Netherlands )
Total
£m
£m
£m
£m
£m
Insurance contracts
Insurance contract liabilities
1,308.5
174.1
720.4
1,896.1
4,099.1
Insurance contract assets
(1.8 )
–
–
–
(1.8 )
Net insurance
contract liabilities
1,306.7
174.1
720.4
1,896.1
4,097.3
Reinsurance contracts
Reinsurance contract assets
154.8
12.4
2.7
–
169.9
Reinsurance contract liabilities
(2.0 )
–
–
(14.6 )
(16.6 )
Net reinsurance
contract assets
152.8
12.4
2.7
(14.6 )
153.3
Current
Non-current
Total
£m
£m
£m
Insurance contract liabilities
730.5
3,368.6
4,099.1
Insurance contract assets
(1.8 )
–
(1.8 )
Reinsurance contract assets
29.9
140.0
169.9
Reinsurance contract liabilities
0.5
(17.1 )
(16.6 )
31 December 2023 – restated
Waard
Movestic
Group
Scildon
(UK ) (Sweden ) (Netherlands ) (Netherlands )
Total
£m
£m
£m
£m
£m
Insurance contracts
Insurance contract liabilities
1,383.0
171.8
785.3
1,862.9
4,203.0
Insurance contract assets
(3.9 )
–
–
–
(3.9 )
Net insurance
contract liabilities
1,379.1
171.8
785.3
1,862.9
4,199.1
Reinsurance contracts
Reinsurance contract assets
166.8
14.5
4.4
–
185.7
Reinsurance contract liabilities
(2.2 )
–
–
(14.9 )
(17.1 )
Net reinsurance
contract assets
164.6
14.5
4.4
(14.9 )
168.6
Current
Non-current
Total
£m
£m
£m
Insurance contract liabilities
672.1
3,530.9
4,203.0
Insurance contract assets
–
(3.9 )
(3.9 )
Reinsurance contract assets
29.1
156.6
185.7
Reinsurance contract liabilities
2.1
(19.2 )
(17.1 )
The prior year non-current and current insurance liabilities have been restated in respect of Scildon.
(b) Fair value of underlying items
The following table shows the fair value of the underlying items of the Group’s direct participating
contracts for each reporting segment.
Waard
Movestic
Group
Scildon
(UK ) (Sweden ) (Netherlands ) (Netherlands )
Total
£m
£m
£m
£m
£m
Fair value of underlying items
as at 31 December 2024
711.0
142.4
54.9
1,322.8
2,231.1
Fair value of underlying items
as at 31 December 2023
816.9
132.3
65.2
1,238.7
2,253.1
Composition of underlying items
The majority of the fair value of underlying items across the Group are held in collective investment
schemes. A small proportion is held in equities, debt securities and in cash and deposits.
200 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F2 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – UK
(a) Insurance contract balances – analysis by remaining coverage and incurred claims
Liabilities for
remaining coverage
Excluding
Liabilities
loss
Loss
for incurred
component
component
claims
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2024
1,301.1
12.4
65.6
1,379.1
Changes in the statement of profit and loss
Insurance revenue
Contracts measured under the fair value approach
(58.1 )
–
–
(58.1 )
Contracts measured under the full retrospective approach
(13.2 )
–
–
(13.2 )
Insurance revenue total
(71.3 )
–
–
(71.3 )
Insurance service expenses
Incurred claims and other directly attributable expenses
–
(1.8 )
62.3
60.5
Losses and reversals of losses on onerous contracts
–
4.4
–
4.4
Insurance service expense total
–
2.6
62.3
64.9
Insurance service result
(71.3 )
2.6
62.3
(6.4 )
Net finance expenses from insurance contracts
98.5
0.1
–
98.6
Total amounts recognised in comprehensive income
27.2
2.7
62.3
92.2
Investment components
(135.7 )
–
135.7
–
Cash flows
Premiums received
35.3
–
–
35.3
Claims and other directly attributable expenses paid
–
–
(197.7 )
(197.7 )
Acquisitions
9.7
–
(11.9 )
(2.2 )
Total cash flows
45.0
–
(209.6 )
(164.6 )
Insurance contract liabilities as at 31 December 2024
1,237.6
15.1
54.0
1,306.7
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
201
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Restated
Liabilities for
remaining coverage
Excluding
Liabilities
loss
Loss
for incurred
component
component
claims
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2023
1,382.3
–
65.3
1,447.6
Changes in the statement of profit and loss
Insurance revenue
Contracts measured under the fair value approach
(57.5 )
–
–
(57.5 )
Contracts measured under the full retrospective approach
(8.3 )
–
–
(8.3 )
Insurance revenue total
(65.8 )
–
–
(65.8 )
Insurance service expenses
Incurred claims and other directly attributable expenses
0.2
(2.5 )
53.1
50.8
Losses and reversals of losses on onerous contracts
–
14.9
–
14.9
Insurance service expense total
0.2
12.4
53.1
65.7
Insurance service result
(65.6 )
12.4
53.1
(0.1 )
Net finance expenses from insurance contracts
86.5
–
–
86.5
Total amounts recognised in comprehensive income
20.9
12.4
53.1
86.4
Investment components
(131.0 )
–
131.0
–
Cash flows
Premiums received
37.9
–
–
37.9
Claims and other directly attributable expenses paid
–
–
(183.8 )
(183.8 )
Acquisitions
(9.0 )
–
–
(9.0 )
Total cash flows
28.9
–
(183.8 )
(154.9 )
Insurance contract liabilities as at 31 December 2023
1,301.1
12.4
65.6
1,379.1
There is no PAA business in the UK segment. Note A5(a) sets out the fair value methodology applied at transition that has been applied for the CA contracts in the UK.
202 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F2 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – UK (continued)
(b) Insurance contract balances – analysis by measurement component – contracts not measured under PAA
CSM (new
contracts and
CSM
Present value
contracts
(contracts
of future
Risk
measured
measured
cash flows
adjustment
under FRA )
under FVA )
Total
£m
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2024
1,340.9
12.5
3.2
22.5
1,379.1
Changes that relate to current service
CSM recognised for services provided
–
–
(0.1 )
(3.8 )
(3.9 )
Change in risk adjustment for non-financial risk for risk expired
–
(1.8 )
–
–
(1.8 )
Experience adjustments
(5.0 )
–
–
–
(5.0 )
Revenue recognised for incurred policyholder tax expenses
–
–
–
–
–
Total changes that relate to current service
(5.0 )
(1.8 )
(0.1 )
(3.8 )
(10.7 )
Changes that relate to future service
Contracts initially recognised in the period
(0.8 )
0.1
0.7
–
–
Changes in estimates that adjust the CSM
(6.2 )
(4.9 )
(2.8 )
13.9
–
Changes in estimates that result in losses or reversals of losses on onerous underlying contracts
4.3
–
–
–
4.3
Total changes that relate to future service
(2.7 )
(4.8 )
(2.1 )
13.9
4.3
Insurance service result
(7.7 )
(6.6 )
(2.2 )
10.1
(6.4 )
Net finance expenses from insurance contracts
96.6
1.1
0.3
0.6
98.6
Total amounts recognised in comprehensive income
88.9
(5.5 )
(1.9 )
10.7
92.2
Cash flows
Premiums received
35.3
–
–
–
35.3
Claims and other directly attributable expenses paid
(197.7 )
–
–
–
(197.7 )
Acquisitions
(2.2 )
–
–
–
(2.2 )
Total cash flows
(164.6 )
–
–
–
(164.6 )
Insurance contract liabilities as at 31 December 2024
1,265.2
7.0
1.3
33.2
1,306.7
The contracts initially recognised in the period relate to the acquisition of the unit-linked bond and pension portfolio from Canada Life.
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
203
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Restated
CSM (new
contracts and
CSM
Present value
contracts
(contracts
of future
Risk
measured
measured
cash flows
adjustment
under FRA )
under FVA )
Total
£m
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2023
1,397.1
13.2
1.1
36.2
1,447.6
Changes that relate to current service
CSM recognised for services provided
–
–
(1.5 )
(3.1 )
(4.6 )
Change in risk adjustment for non-financial risk for risk expired
–
(2.0 )
–
–
(2.0 )
Experience adjustments
(8.3 )
–
–
–
(8.3 )
Revenue recognised for incurred policyholder tax expenses
(0.1 )
–
–
–
(0.1 )
Total changes that relate to current service
(8.4 )
(2.0 )
(1.5 )
(3.1 )
(15.0 )
Changes that relate to future service
Contracts initially recognised in the period
(1.7 )
0.2
1.5
–
–
Changes in estimates that adjust the CSM
9.0
0.5
1.8
(11.3 )
–
Changes in estimates that result in losses or reversals of losses on onerous underlying contracts
14.9
–
–
–
14.9
Total changes that relate to future service
22.2
0.7
3.3
(11.3 )
14.9
Insurance service result
13.8
(1.3 )
1.8
(14.4 )
(0.1 )
Net finance expenses from insurance contracts
84.9
0.6
0.3
0.7
86.5
Total amounts recognised in comprehensive income
98.7
(0.7 )
2.1
(13.7 )
86.4
Cash flows
Premiums received
37.9
–
–
–
37.9
Claims and other directly attributable expenses paid
(183.8 )
–
–
–
(183.8 )
Acquisitions
(9.0 )
–
–
–
(9.0 )
Total cash flows
(154.9 )
–
–
–
(154.9 )
Insurance contract liabilities as at 31 December 2023
1,340.9
12.5
3.2
22.5
1,379.1
The contracts initially recognised in the period relate to the acquisition of the term assurance portfolio from Canada Life.
204 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F2 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – UK (continued)
(c) Reinsurance contract balances – analysis by remaining coverage and incurred claims
Assets for
Assets for
remaining
incurred
coverage
claims
Total
£m
£m
£m
Reinsurance contract assets as at 1 January 2024
150.8
13.8
164.6
Reinsurance expenses – allocation of reinsurance premiums paid
(23.9 )
–
(23.9 )
Amounts recoverable from reinsurers
Recoveries of incurred claims and other directly attributable expenses
–
23.0
23.0
Net (expenses)/income from reinsurance contracts held
(23.9 )
23.0
(0.9 )
Net finance expenses from reinsurance contracts
3.1
–
3.1
Total amounts recognised in comprehensive income
(20.8 )
23.0
2.2
Investment components
(2.8 )
2.8
–
Cash flows
Premiums paid
11.4
–
11.4
Recoveries from reinsurance contracts held
–
(25.4 )
(25.4 )
Total cash flows
11.4
(25.4 )
(14.0 )
Reinsurance contract assets as at 31 December 2024
138.6
14.2
152.8
Assets for
Assets for
remaining
incurred
coverage
claims
Total
£m
£m
£m
Reinsurance contract assets as at 1 January 2023
156.6
16.0
172.6
Reinsurance expenses – allocation of reinsurance premiums paid
(25.0 )
–
(25.0 )
Amounts recoverable from reinsurers
Recoveries of incurred claims and other directly attributable expenses
–
19.5
19.5
Net (expenses)/income from reinsurance contracts held
(25.0 )
19.5
(5.5 )
Net finance expenses from reinsurance contracts
9.3
–
9.3
Total amounts recognised in comprehensive income
(15.7 )
19.5
3.8
Investment components
(2.6 )
2.6
–
Cash flows
Premiums paid
12.5
–
12.5
Recoveries from reinsurance contracts held
–
(24.3 )
(24.3 )
Total cash flows
12.5
(24.3 )
(11.8 )
Reinsurance contract assets as at 31 December 2023
150.8
13.8
164.6
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
205
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(d) Reinsurance contract balances – analysis by measurement component – contracts not measured under PAA
CSM (new
contracts and
CSM
Present value
contracts
(contracts
of future
Risk
measured
measured
cash flows
adjustment
under FRA )
under FVA )
Total
£m
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2024
155.6
3.0
0.4
5.6
164.6
Changes that relate to current service
CSM recognised for services received
–
–
–
(0.3 )
(0.3 )
Change in risk adjustment for non-financial risk for risk expired
–
(0.6 )
–
–
(0.6 )
Experience adjustments
0.1
–
–
–
0.1
Total changes that relate to current service
0.1
(0.6 )
–
(0.3 )
(0.8 )
Changes that relate to future service
Changes in estimates that adjust the CSM
0.8
–
–
(0.9 )
(0.1 )
Total changes that relate to future service
0.8
–
–
(0.9 )
(0.1 )
Net (expense)/income from reinsurance contracts held
0.9
(0.6 )
–
(1.2 )
(0.9 )
Net finance income from reinsurance contracts held
3.0
–
–
0.1
3.1
Total amounts recognised in comprehensive income
3.9
(0.6 )
–
(1.1 )
2.2
Cash flows
Premiums paid
11.3
–
–
–
11.3
Recoveries from reinsurance contracts held
(25.3 )
–
–
–
(25.3 )
Total cash flows
(14.0 )
–
–
–
(14.0 )
Reinsurance contract assets as at 31 December 2024
145.5
2.4
0.4
4.5
152.8
206 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F2 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – UK (continued)
(d) Reinsurance contract balances – analysis by measurement component – contracts not measured under PAA (continued)
CSM (new
contracts and
CSM
Present value
contracts
(contracts
of future
Risk
measured
measured
cash flows
adjustment
under FRA )
under FVA )
Total
£m
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2023
161.1
3.1
0.5
7.9
172.6
Changes that relate to current service
CSM recognised for services received
–
–
–
(0.5 )
(0.5 )
Change in risk adjustment for non-financial risk for risk expired
–
(0.7 )
–
–
(0.7 )
Experience adjustments
(4.3 )
–
–
–
(4.3 )
Total changes that relate to current service
(4.3 )
(0.7 )
–
(0.5 )
(5.5 )
Changes that relate to future service
Changes in estimates that adjust the CSM
1.5
0.5
(0.1 )
(1.9 )
–
Total changes that relate to future service
1.5
0.5
(0.1 )
(1.9 )
–
Net (expense)/income from reinsurance contracts held
(2.8 )
(0.2 )
(0.1 )
(2.4 )
(5.5 )
Net finance income from reinsurance contracts held
9.1
0.1
–
0.1
9.3
Total amounts recognised in comprehensive income
6.3
(0.1 )
(0.1 )
(2.3 )
3.8
Cash flows
Premiums paid
12.5
–
–
–
12.5
Recoveries from reinsurance contracts held
(24.3 )
–
–
–
(24.3 )
Total cash flows
(11.8 )
–
–
–
(11.8 )
Reinsurance contract assets as at 31 December 2023
155.6
3.0
0.4
5.6
164.6
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
207
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(e) Insurance contracts recognised in the period
Restated
2024
2023
£m
£m
Estimates of the present value of future cash inflows
(12.5 )
(7.3 )
Estimates of the present value of future cash outflows
Claims and other insurance service expenses payable
11.7
5.6
Insurance acquisition cash flows
–
–
Total estimates of the present value of net future cash inflows/(outflows)
11.7
5.6
Risk adjustment for non-financial risk
0.1
0.2
CSM
0.7
1.5
Losses recognised on initial recognition
–
–
Insurance contracts recognised in the period relate to the acquisition of the unit-linked bond and
pension business from Canada Life in the current year and the term assurance portfolio from
Canada Life in the prior year. None of the acquired portfolios were onerous at initial recognition.
(f) Reinsurance contracts recognised in the period
There are no material new insurance contracts recognised in the period for the UK.
(g) Expected recognition of CSM
In the tables that follow the CSM accrues interest at the locked-in rate for GMM portfolios and at
current rates for VFA portfolios from the balance sheet date and is then amortised based on the
coverage units of the contract groups to give the timeline of the expected recognition.
31 December 2024
Insurance Reinsurance
contracts
contracts
£m
£m
Not later than one year
3.5
(0.3 )
Later than one year and not later than two years
2.5
(0.3 )
Later than two years and not later than three years
2.2
(0.3 )
Later than three years and not later than four years
2.0
(0.3 )
Later than four years and not later than five years
1.8
(0.3 )
Later than five years and not later than ten years
6.6
(1.3 )
Later than ten years
16.0
(1.9 )
Total
34.6
(4.7 )
31 December 2023 – restated
Insurance Reinsurance
contracts
contracts
£m
£m
Not later than one year
3.4
(0.5 )
Later than one year and not later than two years
1.9
(0.5 )
Later than two years and not later than three years
1.9
(0.5 )
Later than three years and not later than four years
1.7
(0.4 )
Later than four years and not later than five years
1.5
(0.4 )
Later than five years and not later than ten years
5.0
(1.6 )
Later than ten years
10.3
(2.1 )
Total
25.7
(6.0 )
208 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F3 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Movestic
(a) Insurance contract balances – analysis by remaining coverage and incurred claims
Liabilities for incurred claims
Contracts under PAA
Liabilities for
For contracts
PV of
remaining
not under
future
Risk
coverage
PAA
cash flows
adjustment
Total
£m
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2024
133.5
–
37.1
1.2
171.8
Changes in the statement of profit and loss
Insurance revenue
Contracts measured under the fair value approach
(0.9 )
–
–
–
(0.9 )
Contracts measured under the full retrospective approach
(9.3 )
–
–
–
(9.3 )
Insurance revenue total
(10.2 )
–
–
–
(10.2 )
Insurance service expenses
Incurred claims and other directly attributable expenses
–
0.6
8.2
0.1
8.9
Adjustments to liabilities for incurred claims
–
–
(6.0 )
(0.3 )
(6.3 )
Insurance service expense total
–
0.6
2.2
(0.2 )
2.6
Insurance service result
(10.2)
0.6
2.2
(0.2 )
(7.6 )
Net finance expenses from insurance contracts
22.8
–
–
0.8
23.6
Effect of movements in exchange rates
(10.1 )
–
(2.5 )
(0.1 )
(12.7 )
Total amounts recognised in comprehensive income
2.5
0.6
(0.3 )
0.5
3.3
Investment components
(9.4 )
9.4
–
–
–
Cash flows
Premiums received
17.4
–
–
–
17.4
Claims and other directly attributable expenses paid
–
(10.1 )
(8.3 )
–
(18.4 )
Total cash flows
17.4
(10.1 )
(8.3 )
–
(1.0 )
Insurance contract liabilities as at 31 December 2024
144.0
(0.1 )
28.5
1.7
174.1
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
209
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Liabilities for incurred claims
Contracts under PAA
Liabilities for
For contracts
PV of
remaining
not under
future
Risk
coverage
PAA
cash flows
adjustment
Total
£m
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2023
119.1
–
38.2
1.6
158.9
Changes in the statement of profit and loss
Insurance revenue
Contracts measured under the fair value approach
(0.7 )
–
–
–
(0.7 )
Contracts measured under the full retrospective approach
(10.4 )
–
–
–
(10.4 )
Insurance revenue total
(11.1 )
–
–
–
(11.1 )
Insurance service expenses
Incurred claims and other directly attributable expenses
–
0.6
10.3
0.1
11.0
Adjustments to liabilities for incurred claims
–
–
(3.4 )
(0.2 )
(3.6 )
Insurance service expense total
–
0.6
6.9
(0.1 )
7.4
Insurance service result
(11.1 )
0.6
6.9
(0.1 )
(3.7 )
Net finance expenses from insurance contracts
14.2
–
2.0
(0.2 )
16.0
Effect of movements in exchange rates
(2.8 )
–
(1.1 )
(0.1 )
(4.0 )
Total amounts recognised in comprehensive income
0.3
0.6
7.8
(0.4 )
8.3
Investment components
(6.1 )
6.1
–
–
–
Cash flows
Premiums received
20.2
–
–
–
20.2
Claims and other directly attributable expenses paid
–
(6.7 )
(8.9 )
–
(15.6 )
Total cash flows
20.2
(6.7 )
(8.9 )
–
4.6
Insurance contract liabilities as at 31 December 2023
133.5
–
37.1
1.2
171.8
The fair value approach was applied to all insurance contracts not measured under PAA in Movestic at transition. Note A5(a) provides further details relating to fair value methodology applied for contracts
in Movestic.
210 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F3 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Movestic (continued)
(b) Insurance contract balances – analysis by measurement component – contracts not measured under PAA
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2024
125.4
1.1
5.0
131.5
Changes that relate to current service
CSM recognised for services provided
–
–
(0.5 )
(0.5 )
Change in risk adjustment for non-financial risk for risk expired
–
(0.1 )
–
(0.1 )
Experience adjustments
0.3
–
–
0.3
Total changes that relate to current service
0.3
(0.1 )
(0.5 )
(0.3 )
Changes that relate to future service
Changes in estimates that adjust the CSM
(3.4 )
0.2
3.3
0.1
Total changes that relate to future service
(3.4 )
0.2
3.3
0.1
Insurance service result
(3.1 )
0.1
2.8
(0.2 )
Net finance expenses from insurance contracts
22.6
–
0.2
22.8
Effect of movements in exchange rates
(9.5 )
(0.1 )
(0.4 )
(10.0 )
Total amounts recognised in comprehensive income
10.0
–
2.6
12.6
Cash flows
Premiums received
8.1
–
–
8.1
Claims and other directly attributable expenses paid
(10.1 )
–
–
(10.1 )
Total cash flows
(2.0 )
–
–
(2.0 )
Insurance contract liabilities as at 31 December 2024
133.4
1.1
7.6
142.1
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
211
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2023
111.4
1.1
4.5
117.0
Changes that relate to current service
CSM recognised for services provided
–
–
(0.3 )
(0.3 )
Change in risk adjustment for non-financial risk for risk expired
–
(0.1 )
–
(0.1 )
Experience adjustments
0.3
–
–
0.3
Total changes that relate to current service
0.3
(0.1 )
(0.3 )
(0.1 )
Changes that relate to future service
Changes in estimates that adjust the CSM
(0.8 )
0.1
0.7
–
Total changes that relate to future service
(0.8 )
0.1
0.7
–
Insurance service result
(0.5 )
–
0.4
(0.1 )
Net finance expenses from insurance contracts
14.0
–
0.2
14.2
Effect of movements in exchange rates
(2.6 )
–
(0.1 )
(2.7 )
Total amounts recognised in comprehensive income
10.9
–
0.5
11.4
Cash flows
Premiums received
9.8
–
–
9.8
Claims and other directly attributable expenses paid
(6.7 )
–
–
(6.7 )
Total cash flows
3.1
–
–
3.1
Insurance contract liabilities as at 31 December 2023
125.4
1.1
5.0
131.5
212 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
F3 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Movestic (continued)
(c) Reinsurance contract balances – analysis by remaining coverage and incurred claims
Contracts under PAA
Assets for incurred claims
Assets for
PV of
remaining
future
Risk
coverage
cash flows
adjustment
Total
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2024
(0.6 )
14.9
0.2
14.5
Reinsurance expenses – allocation of reinsurance
(1.3 )
–
–
(1.3 )
Amounts recoverable from reinsurers
Recoveries of incurred claims and other directly attributable expenses
–
1.9
–
1.9
Changes in the expected recoveries for past claims
–
(2.3 )
(0.1 )
(2.4 )
Net (expenses)/income from reinsurance contracts held
(1.3 )
(0.4 )
(0.1 )
(1.8 )
Net finance expenses from reinsurance contracts
–
0.3
–
0.3
Effect of movements in exchange rates
–
(1.0 )
–
(1.0 )
Total amounts recognised in comprehensive income
(1.3 )
(1.1 )
(0.1 )
(2.5 )
Cash flows
Premiums paid net of ceding commission
2.6
–
–
2.6
Recoveries from reinsurance contacts held
–
(2.2 )
–
(2.2 )
Total cash flows
2.6
(2.2 )
–
0.4
Reinsurance contract assets as at 31 December 2024
0.7
11.6
0.1
12.4
213
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Contracts under PAA
Assets for incurred claims
Assets for
PV of
remaining
future
Risk
coverage
cash flows
adjustment
Total
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2023
0.3
15.2
0.3
15.8
Reinsurance expenses – allocation of reinsurance
(2.5 )
–
–
(2.5 )
Amounts recoverable from reinsurers
Recoveries of incurred claims and other directly attributable expenses
–
3.1
0.1
3.2
Changes in the expected recoveries for past claims
–
(1.2 )
(0.1 )
(1.3 )
Net (expenses)/income from reinsurance contracts held
(2.5 )
1.9
–
(0.6 )
Net finance expenses from reinsurance contracts
–
0.8
(0.1 )
0.7
Effect of movements in exchange rates
–
(0.4 )
–
(0.4 )
Total amounts recognised in comprehensive income
(2.5 )
2.3
(0.1 )
(0.3 )
Cash flows
Premiums paid net of ceding commission
1.6
–
–
1.6
Recoveries from reinsurance contacts held
–
(2.6 )
–
(2.6 )
Total cash flows
1.6
(2.6 )
–
(1.0 )
Reinsurance contract assets as at 31 December 2023
(0.6 )
14.9
0.2
14.5
(d) Reinsurance contract balances – analysis by measurement component –
contracts not measured under PAA
All Movestic reinsurance is measured as PAA, therefore no table is presented for analysis
of reinsurance contracts by measurement component.
(e) Insurance contracts recognised in the period
There are no material new insurance contracts recognised in the period for Movestic.
(f) Reinsurance contracts recognised in the period
There are no material new reinsurance contracts recognised in the period for Movestic.
(g) Expected recognition of CSM
In the tables that follow the CSM accrues interest at the locked-in rate for GMM portfolios and
at current rates for VFA portfolios from the balance sheet date and is then amortised based
on the coverage units of the contract groups to give the timeline of the expected recognition.
31 December 2024
Insurance Reinsurance
contracts
contracts
£m
£m
Not later than one year
0.3
–
Later than one year and not later than two years
0.3
–
Later than two years and not later than three years
0.3
–
Later than three years and not later than four years
0.3
–
Later than four years and not later than five years
0.3
–
Later than five years and not later than ten years
1.4
–
Later than ten years
4.6
–
Total
7.5
–
31 December 2023
Insurance Reinsurance
contracts
contracts
£m
£m
Not later than one year
0.1
–
Later than one year and not later than two years
0.2
–
Later than two years and not later than three years
0.2
–
Later than three years and not later than four years
0.2
–
Later than four years and not later than five years
0.2
–
Later than five years and not later than ten years
0.9
–
Later than ten years
3.2
–
Total
5.0
–
214 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F4 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Waard Group
(a) Insurance contract balances – analysis by remaining coverage and incurred claims
Liabilities for
remaining coverage
Excluding
Liabilities
loss
Loss
for incurred
component
component
claims
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2024
761.8
12.4
11.1
785.3
Changes in the statement of profit and loss
Insurance revenue total
(29.8 )
–
–
(29.8)
Insurance service expenses
Incurred claims and other directly attributable expenses
–
(1.3 )
29.9
28.6
Losses and reversals of losses on onerous contracts
–
2.8
–
2.8
Insurance service expense total
–
1.5
29.9
31.4
Insurance service result
(29.8 )
1.5
29.9
1.6
Net finance expenses from insurance contracts
23.1
0.1
–
23.2
Effect of movements in exchange rates
(34.6 )
(0.6 )
(0.5 )
(35.7 )
Total amounts recognised in comprehensive income
(41.3 )
1.0
29.4
(10.9 )
Investment components
(54.5 )
–
54.5
–
Cash flows
Premiums received
31.0
–
–
31.0
Claims and other directly attributable expenses paid
–
–
(85.0 )
(85.0 )
Total cash flows
31.0
–
(85.0 )
(54.0 )
Insurance contract liabilities as at 31 December 2024
697.0
13.4
10.0
720.4
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
215
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Liabilities for
remaining coverage
Excluding
Liabilities
loss
Loss
for incurred
component
component
claims
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2023
447.7
7.3
8.7
463.7
Changes in the statement of profit and loss
Insurance revenue total
(36.1 )
–
–
(36.1 )
Insurance service expenses
Incurred claims and other directly attributable expenses
–
(2.1 )
32.5
30.4
Losses and reversals of losses on onerous contracts
–
7.4
–
7.4
Insurance service expense total
–
5.3
32.5
37.8
Insurance service result
(36.1 )
5.3
32.5
1.7
Net finance expenses from insurance contracts
49.4
–
–
49.4
Effect of movements in exchange rates
(11.3 )
(0.2 )
(0.2 )
(11.7 )
Total amounts recognised in comprehensive income
2.0
5.1
32.3
39.4
Investment components
(62.1 )
–
62.1
–
Acquisitions – estimate of the present value of future cash inflows
346.6
–
–
346.6
Cash flows
Premiums received
27.6
–
–
27.6
Claims and other directly attributable expenses paid
–
–
(92.0 )
(92.0 )
Total cash flows
27.6
–
(92.0 )
(64.4 )
Insurance contract liabilities as at 31 December 2023
761.8
12.4
11.1
785.3
For the Waard Group, the full retrospective approach at transition has been applied to all insurance contracts.
216 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F4 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Waard Group (continued)
(b) Insurance contract balances – analysis by measurement component – contracts not measured under PAA
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2024
699.2
7.9
78.2
785.3
Changes that relate to current service
CSM recognised for services provided
–
–
(7.0 )
(7.0 )
Change in risk adjustment for non-financial risk for risk expired
–
(0.7 )
–
(0.7 )
Experience adjustments
6.5
–
–
6.5
Total changes that relate to current service
6.5
(0.7 )
(7.0 )
(1.2 )
Changes that relate to future service
Contracts initially recognised in the period
–
–
–
–
Changes in estimates that adjust the CSM
(0.8 )
(3.3 )
4.1
–
Changes in estimates that result in losses or reversals of losses on onerous underlying contracts
2.7
0.1
–
2.8
Total changes that relate to future service
1.9
(3.2 )
4.1
2.8
Insurance service result
8.4
(3.9 )
(2.9 )
1.6
Net finance expenses from insurance contracts
20.5
0.1
2.6
23.2
Effect of movements in exchange rates
(31.8 )
(0.3 )
(3.6 )
(35.7 )
Total amounts recognised in comprehensive income
(2.9 )
(4.1 )
(3.9 )
(10.9 )
Cash flows
Premiums received
31.0
–
–
31.0
Claims and other directly attributable expenses paid
(85.0 )
–
–
(85.0 )
Total cash flows
(54.0 )
–
–
(54.0 )
Insurance contract liabilities as at 31 December 2024
642.3
3.8
74.3
720.4
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
217
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2023
439.3
3.2
21.2
463.7
Changes that relate to current service
CSM recognised for services provided
–
–
(7.0 )
(7.0 )
Change in risk adjustment for non-financial risk for risk expired
–
(0.9 )
–
(0.9 )
Experience adjustments
2.3
–
–
2.3
Total changes that relate to current service
2.3
(0.9 )
(7.0 )
(5.6 )
Changes that relate to future service
Contracts initially recognised in the period
(52.6 )
6.4
46.2
–
Changes in estimates that adjust the CSM
(15.4 )
(2.2 )
17.6
–
Changes in estimates that result in losses or reversals of losses on onerous underlying contracts
6.7
0.6
–
7.3
Total changes that relate to future service
(61.3 )
4.8
63.8
7.3
Insurance service result
(59.0 )
3.9
56.8
1.7
Net finance expenses from insurance contracts
46.6
1.0
1.8
49.4
Effect of movements in exchange rates
(9.9 )
(0.2 )
(1.6 )
(11.7 )
Total amounts recognised in comprehensive income
(22.3 )
4.7
57.0
39.4
Acquisitions – estimate of the present value of future cash inflows
346.6
–
–
346.6
Cash flows
Premiums received
27.6
–
–
27.6
Claims and other directly attributable expenses paid
(92.0 )
–
–
(92.0 )
Total cash flows
(64.4 )
–
–
(64.4 )
Insurance contract liabilities as at 31 December 2023
699.2
7.9
78.2
785.3
The contracts initially recognised in the prior year relate to the acquisition of Conservatrix.
218 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F4 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Waard Group (continued)
(c) Reinsurance contract balances – analysis by remaining coverage and incurred claims
Assets for
Assets for
remaining
incurred
coverage
claims
Total
£m
£m
£m
Reinsurance contract assets as at 1 January 2024
2.8
1.6
4.4
Reinsurance expenses – allocation of reinsurance premiums paid
(4.4 )
–
(4.4 )
Amounts recoverable from reinsurers
Recoveries of incurred claims and other directly attributable expenses
–
2.4
2.4
Net (expenses)/income from reinsurance contracts held
(4.4 )
2.4
(2.0 )
Net finance expenses from reinsurance contracts
–
–
–
Effect of movements in exchange rates
(0.1 )
(0.1 )
(0.2 )
Total amounts recognised in comprehensive income
(4.5 )
2.3
(2.2 )
Cash flows
Premiums paid
3.5
–
3.5
Recoveries from reinsurance contracts held
–
(3.0 )
(3.0 )
Total cash flows
3.5
(3.0 )
0.5
Reinsurance contract assets as at 31 December 2024
1.8
0.9
2.7
Assets for
Assets for
remaining
incurred
coverage
claims
Total
£m
£m
£m
Reinsurance contract assets as at 1 January 2023
1.6
1.9
3.5
Reinsurance expenses – allocation of reinsurance premiums paid
(3.0 )
–
(3.0 )
Amounts recoverable from reinsurers
Recoveries of incurred claims and other directly attributable expenses
–
3.4
3.4
Net (expenses)/income from reinsurance contracts held
(3.0 )
3.4
0.4
Net finance expenses from reinsurance contracts
0.1
–
0.1
Total amounts recognised in comprehensive income
(2.9 )
3.4
0.5
Cash flows
Premiums paid
4.1
–
4.1
Recoveries from reinsurance contracts held
–
(3.7 )
(3.7 )
Total cash flows
4.1
(3.7 )
0.4
Reinsurance contract assets as at 31 December 2023
2.8
1.6
4.4
For the Waard Group, the full retrospective approach at transition has been applied to all reinsurance contracts.
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
219
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(d) Reinsurance contract balances – analysis by measurement component – contracts not measured under PAA
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2024
3.1
0.2
1.1
4.4
Changes that relate to current service
CSM recognised for services received
–
–
–
–
Change in risk adjustment for non-financial risk for risk expired
–
(0.1 )
–
(0.1 )
Experience adjustments
(1.4 )
–
–
(1.4 )
Total changes that relate to current service
(1.4 )
(0.1 )
–
(1.5 )
Changes that relate to future service
Changes in estimates that adjust the CSM
(0.2 )
0.1
(0.3 )
–
CSM adjustment for income on initial recognition of onerous underlying contracts
–
–
(0.5 )
(0.5 )
Total changes that relate to future service
0.2
0.1
(0.8 )
(0.5 )
Net (expense)/income from reinsurance contracts held
(1.2 )
–
(0.8 )
(2.0 )
Net finance income from reinsurance contracts held
–
–
–
–
Effect of movements in exchange rates
(0.2 )
–
–
(0.2 )
Total amounts recognised in comprehensive income
(1.4 )
–
(0.8 )
(2.2 )
Cash flows
Premiums paid
3.5
–
–
3.5
Recoveries from reinsurance contracts held
(3.0 )
–
–
(3.0 )
Total cash flows
0.5
–
–
0.5
Reinsurance contract assets as at 31 December 2024
2.2
0.2
0.3
2.7
220 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F4 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Waard Group (continued)
(d) Reinsurance contract balances – analysis by measurement component – contracts not measured under PAA (continued)
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2023
3.6
0.5
(0.6 )
3.5
Changes that relate to current service
CSM recognised for services received
–
–
2.2
2.2
Change in risk adjustment for non-financial risk for risk expired
–
(0.2 )
–
(0.2 )
Experience adjustments
(0.8 )
–
–
(0.8 )
Total changes that relate to current service
(0.8 )
(0.2 )
2.2
1.2
Changes that relate to future service
Changes in estimates that adjust the CSM
(0.2 )
(0.1 )
0.3
–
CSM adjustment for income on initial recognition of onerous underlying contracts
–
–
(0.8 )
(0.8 )
Total changes that relate to future service
(0.2 )
(0.1 )
(0.5 )
(0.8 )
Net (expense)/income from reinsurance contracts held
(1.0 )
(0.3 )
1.7
0.4
Net finance income from reinsurance contracts held
0.1
–
–
0.1
Total amounts recognised in comprehensive income
(0.9 )
(0.3 )
1.7
0.5
Cash flows
Premiums paid
4.1
–
–
4.1
Recoveries from reinsurance contracts held
(3.7 )
–
–
(3.7 )
Total cash flows
0.4
–
–
0.4
Reinsurance contract assets as at 31 December 2023
3.1
0.2
1.1
4.4
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
221
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(e) Insurance contracts recognised in the period
All insurance and reinsurance contracts recognised in 2023 are in respect of the Conservatrix
acquisition. There were no new contracts recognised in 2024.
Year Ended 31 December 2023
Non-onerous
Onerous
contracts contracts
Total
£m
£m
£m
Estimates of the present value of future cash inflows
(346.6 )
–
(346.6 )
Estimates of the present value of future cash outflows
Claims and other insurance service expenses payable
294.1
–
294.1
Total estimates of the present value of future net outflows
(52.5 )
–
(52.5 )
Risk adjustment for non-financial risk
6.3
–
6.3
CSM
46.2
–
46.2
Losses recognised on initial recognition
–
–
–
(f) Reinsurance contracts recognised in the period
There are no new reinsurance contracts recognised in the period for Waard.
(g) Expected recognition of CSM
In the tables that follow the CSM accrues interest at the locked-in rate for GMM portfolios and
at current rates for VFA portfolios from the balance sheet date and is then amortised based on the
coverage units of the contract groups to give the timeline of the expected recognition.
31 December 2024
Insurance Reinsurance
contracts
contracts
£m
£m
Not later than one year
4.1
(0.4 )
Later than one year and not later than two years
3.7
0.4
Later than two years and not later than three years
3.5
(0.1 )
Later than three years and not later than four years
3.2
(0.1 )
Later than four years and not later than five years
3.0
(0.1 )
Later than five years and not later than ten years
12.2
(0.2 )
Later than ten years
44.6
–
Total
74.3
(0.5 )
31 December 2023
Insurance Reinsurance
contracts
contracts
£m
£m
Not later than one year
4.9
(1.0 )
Later than one year and not later than two years
4.4
0.6
Later than two years and not later than three years
4.0
(0.2 )
Later than three years and not later than four years
3.7
(0.1 )
Later than four years and not later than five years
3.4
(0.1 )
Later than five years and not later than ten years
13.0
(0.3 )
Later than ten years
44.8
–
Total
78.2
(1.1 )
222 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F5 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Scildon
(a) Insurance contract balances – analysis by remaining coverage and incurred claims
Liabilities for
remaining coverage
Excluding
Liabilities
loss
Loss
for incurred
component
component
claims
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2023
1,761.7
64.6
36.6
1,862.9
Changes in the statement of profit and loss
Insurance revenue total
(150.6 )
–
–
(150.6)
Insurance service expenses
Incurred claims and other directly attributable expenses
–
(20.9 )
129.6
108.7
Losses and reversals of losses on onerous contracts
–
32.8
–
32.8
Amortisation of insurance acquisition cash flows
3.7
–
–
3.7
Insurance service expense total
3.7
11.9
129.6
145.2
Insurance service result
(146.9 )
11.9
129.6
(5.4)
Net finance expenses from insurance contracts
188.9
0.5
–
189.4
Effect of movements in exchange rates
(84.1 )
(3.3 )
(1.7 )
(89.1 )
Total amounts recognised in comprehensive income
(42.1 )
9.1
127.9
94.9
Investment components
(133.2 )
–
133.2
–
Cash flows
Premiums received
208.2
–
–
208.2
Claims and other directly attributable expenses paid
-
–
(263.1 )
(263.1 )
Insurance acquisition cash flows
(6.8 )
–
–
(6.8 )
Total cash flows
201.4
–
(263.1 )
(61.7 )
Insurance contract liabilities as at 31 December 2024
1,787.8
73.7
34.6
1,896.1
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
223
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Liabilities for
remaining coverage
Excluding
Liabilities
loss
Loss
for incurred
component
component
claims
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2023
1,633.1
76.3
42.0
1,751.4
Changes in the statement of profit and loss
Insurance revenue total
(115.0 )
–
–
(115.0 )
Insurance service expenses
Incurred claims and other directly attributable expenses
–
(45.8 )
120.9
75.1
Losses and reversals of losses on onerous contracts
–
35.4
–
35.4
Amortisation of insurance acquisition cash flows
3.4
–
–
3.4
Insurance service expense total
3.4
(10.4 )
120.9
113.9
Insurance service result
(111.6 )
(10.4 )
120.9
(1.1 )
Net finance expenses from insurance contracts
162.6
0.4
–
163.0
Effect of movements in exchange rates
(37.5 )
(1.7 )
(0.9 )
(40.1 )
Total amounts recognised in comprehensive income
13.5
(11.7 )
120.0
121.8
Investment components
(110.6 )
–
110.6
–
Cash flows
Premiums received
231.3
–
–
231.3
Claims and other directly attributable expenses paid
–
–
(236.0 )
(236.0 )
Insurance acquisition cash flows
(5.6 )
–
–
(5.6 )
Total cash flows
225.7
–
(236.0 )
(10.3 )
Insurance contract liabilities as at 31 December 2023
1,761.7
64.6
36.6
1,862.9
For Scildon, the full retrospective approach at transition has been applied to all insurance contracts.
224 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F5 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Scildon (continued)
(b) Insurance contract balances – analysis by measurement component – contracts not measured under PAA
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2024
1,753.1
30.2
79.6
1,862.9
Changes that relate to current service
CSM recognised for services provided
–
–
(11.0 )
(11.0)
Change in risk adjustment for non-financial risk for risk expired
–
(2.3 )
–
(2.3)
Experience adjustments
(24.8 )
–
–
(24.8)
Total changes that relate to current service
(24.8 )
(2.3 )
(11.0 )
(38.1 )
Changes that relate to future service
Contracts initially recognised in the period
(7.7 )
1.6
8.8
2.7
Changes in estimates that adjust the CSM
(7.2 )
(10.7 )
17.9
–
Changes in estimates that result in losses or reversals of losses on onerous underlying contracts
31.1
(1.1 )
–
30.0
Total changes that relate to future service
16.2
(10.2 )
26.7
32.7
Insurance service result
(8.6 )
(12.5 )
15.7
(5.4 )
Net finance expenses from insurance contracts
186.7
1.6
1.1
189.4
Effect of movements in exchange rates
(83.9 )
(1.1 )
(4.1 )
(89.1 )
Total amounts recognised in comprehensive income
94.2
(12.0 )
12.7
94.9
Cash flows
Premiums received
208.2
–
–
208.2
Claims and other directly attributable expenses paid
(263.1 )
–
–
(263.1 )
Insurance acquisition cash flows
(6.8 )
–
–
(6.8 )
Total cash flows
(61.7 )
–
–
(61.7 )
Insurance contract liabilities as at 31 December 2024
1,785.6
18.2
92.3
1,896.1
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
225
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Insurance contract liabilities as at 1 January 2023
1,639.5
28.5
83.4
1,751.4
Changes that relate to current service
CSM recognised for services provided
–
–
(9.0 )
(9.0 )
Change in risk adjustment for non-financial risk for risk expired
–
(3.5 )
–
(3.5 )
Experience adjustments
(24.0 )
–
–
(24.0 )
Total changes that relate to current service
(24.0 )
(3.5 )
(9.0 )
(36.5 )
Changes that relate to future service
Contracts initially recognised in the period
(11.2 )
2.6
11.5
2.9
Changes in estimates that adjust the CSM
3.6
1.7
(5.3 )
–
Changes in estimates that result in losses or reversals of losses on onerous underlying contracts
33.1
(0.6 )
–
32.5
Total changes that relate to future service
25.5
3.7
6.2
35.4
Insurance service result
1.5
0.2
(2.8 )
(1.1 )
Net finance expenses from insurance contracts
159.9
2.2
0.9
163.0
Effect of movements in exchange rates
(37.5 )
(0.7 )
(1.9 )
(40.1 )
Total amounts recognised in comprehensive income
123.9
1.7
(3.8 )
121.8
Cash flows
Premiums received
231.3
–
–
231.3
Claims and other directly attributable expenses paid
(236.0 )
–
–
(236.0 )
Insurance acquisition cash flows
(5.6 )
–
–
(5.6 )
Total cash flows
(10.3 )
–
–
(10.3 )
Insurance contract liabilities as at 31 December 2023
1,753.1
30.2
79.6
1,862.9
226 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F5 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Scildon (continued)
(c) Reinsurance contract balances – analysis by remaining coverage and incurred claims
Assets for
remaining coverage
Excluding
Loss-
Assets for
loss-recovery
recovery
incurred
component
component
claims
Total
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2024
(29.0 )
6.2
7.9
(14.9 )
Reinsurance expenses – allocation of reinsurance premiums paid
(22.7 )
–
–
(22.7 )
Amounts recoverable from reinsurers
Recoveries of incurred claims and other directly attributable expenses
–
–
19.0
19.0
Changes in the loss-recovery component
–
(0.8 )
–
(0.8 )
Net (expenses)/income from reinsurance contracts held
(22.7 )
(0.8 )
19.0
(4.5 )
Net finance expenses from reinsurance contracts
(0.8 )
–
–
(0.8 )
Effect of movements in exchange rates
1.2
(0.3 )
(0.2 )
0.7
Total amounts recognised in comprehensive income
(22.3 )
(1.1 )
18.8
(4.6 )
Cash flows
Premiums paid
30.8
–
–
30.8
Recoveries from reinsurance contracts held
–
–
(25.9 )
(25.9 )
Total cash flows
30.8
–
(25.9 )
4.7
Reinsurance contract assets as at 31 December 2024
(20.5 )
5.1
0.8
(14.6 )
Assets for
remaining coverage
Excluding
Loss-
Assets for
loss-recovery
recovery
incurred
component
component
claims
Total
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2023
(28.4 )
4.5
8.7
(15.2 )
Reinsurance expenses – allocation of reinsurance premiums paid
(21.8 )
–
–
(21.8 )
Amounts recoverable from reinsurers
Recoveries of incurred claims and other directly attributable expenses
–
–
17.3
17.3
Changes in the loss-recovery component
–
1.8
–
1.8
Net (expenses)/income from reinsurance contracts held
(21.8 )
1.8
17.3
(2.7 )
Net finance expenses from reinsurance contracts
(3.4 )
–
–
(3.4 )
Effect of movements in exchange rates
0.6
(0.1 )
(0.2 )
0.3
Total amounts recognised in comprehensive income
(24.6 )
1.7
17.1
(5.8 )
Cash flows
Premiums paid
24.0
–
–
24.0
Recoveries from reinsurance contracts held
–
–
(17.9 )
(17.9 )
Total cash flows
24.0
–
(17.9 )
6.1
Reinsurance contract assets as at 31 December 2023
(29.0 )
6.2
7.9
(14.9 )
For Scildon, the full retrospective approach at transition has been applied to all reinsurance contracts.
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
227
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(d) Reinsurance contract balances – analysis by measurement component – contracts not measured under PAA
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2024
(51.8 )
12.0
24.9
(14.9 )
Changes that relate to current service
CSM recognised for services received
–
–
(3.1 )
(3.1 )
Change in risk adjustment for non-financial risk for risk expired
–
(0.9 )
–
(0.9 )
Experience adjustments
(0.1 )
–
–
(0.1 )
Total changes that relate to current service
(0.1 )
(0.9 )
(3.1 )
(4.1 )
Changes that relate to future service
Contracts initially recognised in the period
(2.3 )
0.5
1.9
0.1
Changes in estimates that adjust the CSM
(1.4 )
(4.1 )
4.0
(1.5 )
CSM adjustment for income on initial recognition of onerous underlying contracts
–
–
0.5
0.5
Changes in recoveries of losses on onerous underlying contracts that adjust the CSM
–
–
0.5
0.5
Total changes that relate to future service
(3.7 )
(3.6 )
6.9
(0.4 )
Net (expense)/income from reinsurance contracts held
(3.8 )
(4.5 )
3.8
(4.5 )
Net finance income from reinsurance contracts held
(1.8 )
0.6
0.4
(0.8 )
Effect of movements in exchange rates
2.4
(0.5 )
(1.2 )
0.7
Total amounts recognised in comprehensive income
(3.2 )
(4.4 )
3.0
(4.6 )
Cash flows
Premiums paid
30.8
–
–
30.8
Recoveries from reinsurance contracts held
(25.9 )
–
–
(25.9 )
Total cash flows
4.9
–
–
4.9
Reinsurance contract assets as at 31 December 2024
(50.1 )
7.6
27.9
(14.6 )
228 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
F5 Insurance and reinsurance contracts – quantitative analysis of recognised amounts – Scildon (continued)
(d) Reinsurance contract balances – analysis by measurement component – contracts not measured under PAA (continued)
Present value
of future
Risk
cash flows
adjustment
CSM
Total
£m
£m
£m
£m
Reinsurance contract assets as at 1 January 2023
(52.1 )
10.7
26.2
(15.2 )
Changes that relate to current service
CSM recognised for services received
–
–
(2.7 )
(2.7 )
Change in risk adjustment for non-financial risk for risk expired
–
(1.3 )
–
(1.3 )
Experience adjustments
(1.0 )
–
–
(1.0 )
Total changes that relate to current service
(1.0 )
(1.3 )
(2.7 )
(5.0 )
Changes that relate to future service
Contracts initially recognised in the period
(3.1 )
0.9
2.2
–
Changes in estimates that adjust the CSM
1.5
1.3
(2.8 )
–
CSM adjustment for income on initial recognition of onerous underlying contracts
–
–
0.5
0.5
Changes in recoveries of losses on onerous underlying contracts that adjust the CSM
–
–
1.8
1.8
Total changes that relate to future service
(1.6 )
2.2
1.7
2.3
Net (expense)/income from reinsurance contracts held
(2.6 )
0.9
(1.0 )
(2.7 )
Net finance income from reinsurance contracts held
(4.3 )
0.6
0.3
(3.4 )
Effect of movements in exchange rates
1.1
(0.2 )
(0.6 )
0.3
Total amounts recognised in comprehensive income
(5.8 )
1.3
(1.3 )
(5.8 )
Cash flows
Premiums paid
24.0
–
–
24.0
Recoveries from reinsurance contracts held
(17.9 )
–
–
(17.9 )
Total cash flows
6.1
–
–
6.1
Reinsurance contract assets as at 31 December 2023
(51.8 )
12.0
24.9
(14.9 )
SECTION F – INSURANCE AND REINSURANCE CONTRACTS
229
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(e) Insurance contracts recognised in the period
Year Ended 31 December 2024
Non-onerous
Onerous
contracts contracts
Total
£m
£m
£m
Estimates of the present value of future cash inflows
(92.5 )
(40.1 )
(132.6 )
Estimates of the present value of future cash outflows
Claims and other insurance service expenses payable
1.2
1.0
2.2
Insurance acquisition cash flows
81.6
41.2
122.8
Total estimates of the present value of future cash outflows
82.8
42.2
125.0
Risk adjustment for non-financial risk
1.0
0.6
1.6
CSM
8.7
–
8.7
Losses recognised on initial recognition
–
2.7
2.7
Year Ended 31 December 2023
Non-onerous
Onerous
contracts contracts
Total
£m
£m
£m
Estimates of the present value of future cash inflows
(113.1 )
(46.2 )
(159.3 )
Estimates of the present value of future cash outflows
Claims and other insurance service expenses payable
98.3
47.3
145.6
Insurance acquisition cash flows
1.4
1.0
2.4
Total estimates of the present value of future cash outflows
99.7
48.3
148.0
Risk adjustment for non-financial risk
1.9
0.8
2.7
CSM
11.5
–
11.5
Losses recognised on initial recognition
–
2.9
2.9
All insurance contracts above are in respect of new business written.
(f) Reinsurance contracts recognised in the period
2024
2023
£m
£m
Estimates of the present value of future cash inflows
11.2
12.5
Estimates of the present value of future cash outflows
(13.6 )
(15.6 )
Risk adjustment for non-financial risk
0.5
0.9
CSM
1.9
2.2
Total value of reinsurance contracts recognised in the period
–
–
All reinsurance contracts above are in respect of new business written and all contract groups were
originally in a net cost position.
(g) Expected recognition of CSM
In the tables that follow the CSM accrues interest at the locked-in rate for GMM portfolios and at
current rates for VFA portfolios from the balance sheet date and is then amortised based on the
coverage units of the contract groups to give the timeline of the expected recognition.
31 December 2024
Insurance Reinsurance
contracts
contracts
£m
£m
Not later than one year
9.4
(2.6 )
Later than one year and not later than two years
8.6
(2.4 )
Later than two years and not later than three years
7.9
(2.2 )
Later than three years and not later than four years
7.2
(2.1 )
Later than four years and not later than five years
6.6
(1.9 )
Later than five years and not later than ten years
24.5
(7.7 )
Later than ten years
28.1
(9.0 )
Total
92.4
(27.9 )
31 December 2023
Insurance Reinsurance
contracts
contracts
£m
£m
Not later than one year
8.1
(2.3 )
Later than one year and not later than two years
7.5
(2.1 )
Later than two years and not later than three years
6.9
(2.0 )
Later than three years and not later than four years
6.3
(1.9 )
Later than four years and not later than five years
5.7
(1.7 )
Later than five years and not later than ten years
21.1
(6.9 )
Later than ten years
24.0
(8.0 )
Total
79.6
(24.9 )
230 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION G – BALANCE SHEET LIABILITIES
G1 Other provisions
2024
2023
£m
£m
Balance at I January
23.2
8.7
Additions – Arising on acquisition
–
12.3
Charge in the year
0.7
7.1
Amounts utilised during the year
(3.0 )
(4.8 )
Foreign exchange translation difference
(0.6 )
(0.1 )
Balance at 3I December
20.3
23.2
The other provisions balance includes the following significant items:
(i) Liabilities acquired as part of the Conservatrix acquisition
The contracts acquired in the acquisition of Conservatrix by Waard Leven in the prior year include
£12.5m as at 31 December 2024 (31 December 2023: £12.6m) of liabilities relating to obligations
to former employees of Conservatrix under a now closed defined benefit pension scheme.
The liabilities are valued under IAS 19.
The pension scheme is closed to new entrants with no further benefits accruing and as such the
exposure for Waard Leven is limited to the longevity risk of the contracts. Waard Leven is regulated
by De Nederlandsche Bank (DNB) and the Netherlands Authority for financial markets. As such,
there is no requirement to hold plan assets against these liabilities, instead the liabilities are assessed
as part of the SII requirements and as a result of this assessment there are considered to be
sufficient general account assets to meet the obligation related to these pension policies.
(ii) Provision established for the costs associated with outsourced UK administration services
During 2023, Chesnara initiated a Transition and Transformation (T&T) programme in respect of its
UK business. This programme includes activities and costs related to both (i) the integration of
the acquired CASLP and Canada Life businesses into the standard UK model and (ii) the restructure
of the administration outsourcing arrangements for the rest of the legacy UK business, including
the migration of the policies onto a new platform architecture with SS&C.
An ongoing assessment of the proposed project costs at 31 December 2024 has been conducted
in accordance with the requirements of IAS 37 and as a result of this assessment a provision of £2.9m
is held in the balance sheet (31 December 2023: £4.6m). The timing of the outflow of economic
benefits is subject to the phased delivery of the programme, however as the majority of the costs
provided for are in respect of contractual obligations with third parties, then the amount is not
expected to material change due to any required rephasing.
There are also provisions at the year end relating to the mis-selling of contracts in the UK £1.9m
(31 December 2023: £2.7m).
G2 Lease liabilities
The Group leases several assets including office buildings and an immaterial amount of office and
IT equipment and motor vehicles.
Maturity analysis
Carrying
31 December 2024
value
0-1 year
1-2 years
2-5 years
Total
£m
£m
£m
£m
£m
Non-investment property
0.6
0.3
0.1
0.2
0.6
Total
0.6
0.3
0.1
0.2
0.6
Current
0.3
Non-current
0.3
Total
0.6
Maturity analysis
Carrying
31 December 2023
value
0-1 year
1-2 years
2-5 years
Total
£m
£m
£m
£m
£m
Non-investment property
1.2
0.6
0.3
0.3
1.2
Total
1.2
0.6
0.3
0.3
1.2
Current
0.6
Non-current
0.6
Total
1.2
G3 Borrowings
Group
2024
2023
31 December
£m
£m
Tier 2 debt
200.8
200.6
Amount due in relation to financial reinsurance
2.4
5.3
Term finance
1.6
2.0
Total
204.8
207.9
Current
1.4
2.8
Non-current
203.4
205.1
Total
204.8
207.9
The fair value of amounts due in relation to Tier 2 debt at 31 December 2024 was £166.1m
(31 December 2023: £148.0m).
The fair value of amounts due in relation to financial reinsurance at 31 December 2024 was £2.3m
(31 December 2023: £5.1m).
Term finance comprises capital amounts outstanding on mortgage bonds taken out over properties
held in the unit-linked policyholder funds in the UK. The mortgage over each such property is
negotiated separately, varies in term from 5 to 20 years, and bears interest at fixed or floating rates
that are agreed at the time of inception of the mortgage. The fair value of the term finance is not
materially different to the carrying value shown above.
231
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
G4 Deferred tax assets and liabilities
Deferred tax assets and liabilities comprise:
31 December
2024
2023
Asset
Liability
Asset
Liability
£m
£m
£m
£m
Net deferred tax liabilities:
UK and other Group activities
1.6
(24.7 )
16.0
(24.3 )
Movestic
–
–
–
–
Waard Group
34.5
–
35.0
–
Scildon
2.8
–
3.6
–
Total
38.9
(24.7 )
54.6
(24.3 )
Current
–
–
–
–
Non-current
38.9
(24.7 )
54.6
(24.3 )
Total
38.9
(24.7 )
54.6
(24.3 )
(a) CA and other Group activities: Recognised deferred tax assets and liabilities
31 December
2023
Credit/ Recognised
2024
Assets /
(charge )
through
Assets /
(liabilities )
in year
equity (liabilities )
£m
£m
£m
£m
Deferred acquisition costs
1.0
(0.3 )
–
0.7
Deferred income
0.4
(0.1 )
–
0.3
Acquired value in-force
(14.0 )
2.3
–
(11.7 )
Property, plant and equipment
0.1
–
–
0.1
Tax losses on pensions business
1.1
0.4
–
1.5
Unrealised and deferred investment gains
(23.2 )
(10.3 )
–
(33.5 )
Excess expenses of management and
recognised trade losses
26.9
(6.5 )
–
20.4
Share-based payments
1.0
–
0.5
1.5
Tax losses
0.2
(0.2 )
–
–
IFRS 17 transitional adjustment
(1.8 )
(0.6 )
–
(2.4 )
Total
(8.3 )
(15.3 )
0.5
(23.1)
Comprising:
Net deferred tax liabilities
(8.3 )
(15.3 )
0.5
(23.1)
Total
(8.3 )
(15.3 )
0.5
(23.1)
31 December
2022
Credit/ Recognised
2023
Assets /
(charge )
through
Assets /
(liabilities )
in year
equity (liabilities )
£m
£m
£m
£m
Deferred acquisition costs
1.5
(0.5 )
–
1.0
Deferred income
0.5
(0.1 )
–
0.4
Acquired value in-force
(33.6 )
19.6
–
(14.0 )
Property, plant and equipment
0.1
–
–
0.1
Tax losses on pensions business
1.2
(0.1 )
–
1.1
Unrealised and deferred investment gains
(13.7 )
(9.5 )
–
(23.2 )
Excess expenses of management
12.5
14.4
–
26.9
Share-based payments
0.9
0.1
–
1.0
Right-of-use assets/lease liabilities
0.1
(0.1 )
–
–
Tax losses
4.7
(4.5 )
–
0.2
Difference in IFRS 4 and IFRS 17 reserves
(3.1 )
1.3
–
(1.8 )
Total
(28.9 )
20.6
–
(8.3 )
Comprising:
Net deferred tax liabilities
(28.9 )
20.6
–
(8.3 )
Total
(28.9 )
20.6
–
(8.3 )
On 31 December 2023, the long-term business of CASLP, along with the majority of the assets of
the Company were transferred into CA via a Business Transfer Scheme under Part VII of the Financial
Services and Markets Act 2000. Consequently, previously unrecognised losses (excess expenses
of management) of CA have been recognised as deferred tax assets at 31 December 2023. This has
resulted in a £11.9m additional deferred tax asset being recognised at the balance sheet date.
The 2024 IFRS 17 transitional adjustment liability is inclusive of a prior year adjustment of £0.4m
following refinement of this calculation on submission of the 2023 tax computation.
The Finance Act 2021 increased the rate of corporation tax from 19% to 25% from 1 April 2023.
The enacted tax rate of 25% has been used in the calculation of UK deferred tax assets and liabilities
where relevant, being the rate of corporation tax that is expected to apply when the majority of
those deferred tax balances reverse.
Deferred tax balances have been updated to reflect changes to equity on transition to IFRS 17.
The tax rate applied is that which is expected at the time of realisation.
The deferred tax (charge)/credit to the Consolidated Statement of Comprehensive Income for the
year is classified as follows:
Year ended 31 December
2024
2023
£m
£m
Income tax (charge)/credit
(15.3 )
20.7
(b) CA and other Group activities: Items for which no deferred tax asset is recognised
31 December
2024
2023
£m
£m
Tax losses on pensions business
12.8
20.7
Trade losses
53.5
28.7
Total
66.3
49.4
232 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION G – BALANCE SHEET LIABILITIES
G4 Deferred tax assets and liabilities (continued)
(b) CA and other group activities: Items for which no deferred tax asset is recognised (continued)
A deferred tax asset has not been recognised in respect of trading losses due to the uncertainty of future trading profits against which the losses could be offset.
There are no aggregate temporary differences arising on the acquisition of subsidiaries or associated undertakings, for which deferred tax has not been recognised.
(c) Movestic: Recognised deferred tax assets and liabilities
As at the balance sheet date, Movestic had a recognised deferred tax liability of £Nil (31 December 2023: £Nil), in respect of fair value adjustments arising upon acquisition. Unrecognised deferred tax assets
were £Nil at the balance sheet date in respect of corporation tax recoverable (31 December 2023: £Nil).
(d) Waard Group: Recognised deferred tax assets and liabilities
31 December
Foreign
2023
Credit /
exchange
2024
Assets /
Arising on
(charge )
translation
Assets /
(liabilities )
acquisition
in year
difference
(liabilities )
£m
£m
£m
£m
£m
Fair value adjustments on acquisition
27.1
–
(26.5 )
(0.6 )
–
Defined benefit scheme obligations
1.2
–
(0.1 )
(0.1 )
1.0
Valuation differences
1.0
–
10.2
(0.2 )
11.0
Valuation differences on investments
5.7
–
17.5
(0.7 )
22.5
Total
35.0
–
1.1
(1.6 )
34.5
Comprising:
Net deferred tax asset
40.0
–
(3.8 )
(1.7 )
34.5
Net deferred tax liabilities
(5.0 )
–
4.9
0.1
–
Total
35.0
–
1.1
(1.6 )
34.5
31 December
Foreign
2022
Credit /
exchange
2023
Assets /
Arising on
(charge )
translation
Assets /
(liabilities )
acquisition
in year
difference
(liabilities )
£m
£m
£m
£m
£m
Fair value adjustments on acquisition
2.1
28.9
(3.8 )
(0.1 )
27.1
Defined benefit scheme obligations
–
1.1
0.1
–
1.2
Valuation differences
2.0
–
(0.9 )
(0.1 )
1.0
Valuation differences on investments
–
5.8
(0.1 )
–
5.7
Total
4.1
35.8
(4.7 )
(0.2 )
35.0
Comprising:
Net deferred tax asset
4.1
35.8
0.1
–
40.0
Net deferred tax liabilities
–
–
(4.8 )
(0.2 )
(5.0 )
Total
4.1
35.8
(4.7 )
(0.2 )
35.0
233
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(e) Scildon: Recognised deferred tax assets and liabilities
31 December
Foreign
2023
(Charge) /
Recognised
exchange
2024
Assets /
credit
through
translation
Assets /
(liabilities )
in year
equity
difference
(liabilities )
£m
£m
£m
£m
£m
Deferred acquisition costs
6.1
–
–
(0.3 )
5.8
Revaluation of buildings and investment properties
(0.7 )
(0.1 )
–
–
(0.8 )
Valuation differences on technical provisions
(30.4 )
(0.3 )
–
1.4
(29.3 )
Valuation differences on investments at fair value through profit and loss
23.0
(5.9 )
–
(0.9 )
16.2
Non-compensable losses within fiscal unity
5.6
4.3
1.3
(0.4 )
10.8
Total
3.6
(2.0 )
1.3
(0.2 )
2.7
Comprising:
Net deferred tax assets
10.5
5.5
1.3
(0.6 )
16.7
Net deferred tax liabilities
(6.9 )
(7.5 )
–
0.5
13.9
Total
3.6
(2.0 )
1.3
(0.2 )
2.7
31 December
Foreign
2022
(Charge) /
Recognised
exchange
20243
Assets /
credit
through
translation
Assets /
(liabilities )
in year
equity
difference
(liabilities )
£m
£m
£m
£m
£m
Deferred acquisition costs
6.1
0.1
–
(0.1 )
6.1
LAT reserve
(1.8 )
1.8
–
–
–
Revaluation of buildings and investment properties
(0.8 )
(0.1 )
–
0.2
(0.7 )
Valuation differences on technical provisions
(35.5 )
4.3
–
0.8
(30.4 )
Valuation differences on investments at fair value through profit and loss
36.9
(13.0 )
–
(0.9 )
23.0
Non-compensable losses within fiscal unity
–
–
–
5.6
5.6
Total
4.9
(6.9 )
–
5.6
3.6
Comprising:
Net deferred tax assets
4.9
–
–
5.6
10.5
Net deferred tax liabilities
–
(6.9 )
–
–
(6.9 )
Total
4.9
(6.9 )
–
5.6
3.6
234 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
G6 Other current liabilities
31 December
Restated
2024
2023
£m
£m
Reinsurance payables
Payables in respect of investment contracts
0.6
0.9
Liabilities for assets withheld
40.0
45.5
Reinsurers share of deferred acquisition costs and claims deposits
0.1
0.1
Sub-total
40.7
46.5
Payables related to investment contracts
Accrued claims
21.0
19.9
Policyholder liabilities
3.7
2.6
Sub-total
24.7
22.5
Other payables
Accrued expenses
13.4
13.9
VAT
0.3
0.2
Employee tax
2.3
2.1
Other
21.8
27.7
Sub-total
37.8
43.9
Income taxes
26.5
18.8
Total
129.7
131.7
Current
74.5
131.7
Non-current
55.2
–
Total
129.7
131.7
The carrying value of other payables is a reasonable approximation of fair value.
G5 Deferred income
31 December
2024
2023
£m
£m
Balance at 1 January
2.8
3.5
Release to income
(0.2 )
(0.6 )
Settlements
(1.3 )
–
Foreign exchange translation difference
–
(0.1 )
Balance at 31 December
1.3
2.8
Current
0.2
0.2
Non-current
1.1
2.6
Total
1.3
2.8
The release to income is included in fees and commission income (see Note D3). These are
initial fees that relate to future provision of services that are deferred and amortised over the
anticipated period.
SECTION G – BALANCE SHEET LIABILITIES
235
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SECTION H – SHAREHOLDER EQUITY
H1 Share capital and share premium
Group
2024
2023
31 December
Number
Share
Number
Share
of shares
capital
of shares
capital
issued
£m
issued
£m
Share capital
150,991,019
7.5 150,849,587
7.5
Share
Share
premium
premium
£m
£m
142.5
142.5
Merger
Merger
reserve
reserve
£m
£m
36.3
36.3
The number of shares in issue at the balance sheet date included Nil shares held in treasury
(31 December 2023: Nil).
The merger reserve is for presentation purposes only in order to show the correct share capital
of Chesnara plc following the reverse acquisition in 2004.
H2 Other reserves
Group
2024
2023
31 December
£m
£m
Capital redemption reserve
0.1
0.1
Foreign exchange translation differences
(9.4 )
5.9
Other items of comprehensive income
0.9
0.5
Balance at 31 December
(8.4 )
6.5
The foreign exchange translation reserve represents the cumulative impact of exchange differences
arising on translation of the financial results of Movestic, Scildon and Waard to sterling, with these
exchange differences reported as other comprehensive income within each reporting period. The
movement in the year is due to the strengthening of sterling against the euro and Swedish krona.
H3 Retained earnings
Group
2023
2023
Year ended 31 December
£m
£m
Retained earnings attributable to equity holders
of the Parent Company comprise:
Balance at 1 January
167.0
183.1
Profit/(loss) for the year
3.9
18.6
Share-based payment
2.1
0.7
Dividends
Final approved and paid for 2022
–
(22.8 )
Interim approved and paid for 2023
–
(12.6 )
Final approved and paid for 2023
(23.5 )
–
Interim approved and paid for 2024
(13.0 )
–
Balance at 31 December
136.5
167.0
The interim dividend in respect of 2023, approved and paid in 2023, was paid at the rate of 8.36p
per share. The final dividend in respect of 2023, approved and paid in 2024, was paid at the rate
of 15.61p per share so that the total dividend paid to the equity shareholders of the Parent Company
in respect of the year ended 31 December 2023 was made at the rate of 23.97p per share.
The interim dividend in respect of 2024, approved and paid in 2024, was paid at the rate of 8.61p
per share to equity shareholders of the Parent Company registered at the close of business on
20 September 2024, the dividend record date.
A final dividend of 16.08p per share in respect of the year ended 31 December 2024 payable on
20 May 2025 to equity shareholders of the Parent Company registered at the close of business on
4 April 2025, the dividend record date, was approved by the directors after the balance sheet date.
The resulting total final dividend of £23.5m has not been provided for in these financial statements
and there are no income tax consequences.
The following summarises dividends per share in respect of the year ended 31 December 2023 and
31 December 2024:
Year ended 31 December
2024
2023
P
P
Interim – approved and paid
8.61
8.36
Final – proposed/paid
16.08
15.61
Total
24.69
23.97
236 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION I – ADDITIONAL DISCLOSURES
I1 Employee benefit expense, including directors
Year ended 31 December
Waard
Other Group
UK
Movestic
Group
Scildon
activities
2024
2023
£m
£m
£m
£m
£m
£m
£m
Wages and salaries
3.6
7.8
4.0
8.2
8.5
32.1
31.0
Social security costs
0.6
2.9
0.4
1.1
1.2
6.2
5.8
Pension costs-defined contribution plans
0.4
1.7
0.5
1.2
1.0
4.8
4.4
Total
4.6
12.4
4.9
10.5
10.7
43.1
41.2
Monthly average number of employees
Company
82
62
Subsidiaries
273
325
Total
355
387
Directors
The Directors’ Remuneration Report and Note I2 provides detail of compensation to directors of
the Company.
UK
UK-based employees are all employed by Chesnara plc.
At the end of May 2005, the Group allowed eligible employees to enter a pension scheme known as
the Chesnara plc Stakeholder Scheme, on a basis where employer contributions are made to the
Scheme at the same rate as would be payable had their membership of their predecessor scheme
continued, provided that employee contributions also continued to be made at the same rate. The
employee may opt to request the Company to pay employer contributions into a personal pension
plan, in which instance, employer contributions will be made on the same terms as for the
Chesnara plc Stakeholder Scheme.
The Group has, for the period covered by these financial statements, only made contributions to
defined contribution plans to provide pension benefits for employees upon retirement and, otherwise,
has no residual obligation or commitments in respect of any defined benefit scheme.
The Group has established frameworks for approved and unapproved discretionary share option
plans which may, at the discretion of the Remuneration Committee, be utilised for granting options
to executive directors and to other Group employees. Options have been granted to executive
directors in the period, in relation to the share-based payment components of the new executive
incentive schemes that was introduced under the 2014 terms. Further details can be found in the
Directors’ Remuneration Report section and in Note I2.
Waard
The Waard business participates in a defined contribution scheme. As a result of the Conservatrix
acquisition, Waard Leven assumed the obligations under a defined benefit pension scheme for
a small number of former Conservatrix employees. This scheme is closed to new entrants with no
further benefits accruing and as such the exposure for Waard Leven is limited to the longevity risk
of the contracts. The liability is valued under IAS 19 and reported under ‘Other provisions’ in the
balance sheet.
Scildon
Scildon operated a defined benefit pension scheme for the benefit of its present and past employees.
This scheme was closed during 2019 and transferred into a defined contribution scheme. From
1 October 2019, Scildon no longer bears any risks relating to the funding of the plan and all pension
assets were transferred to another administrator in 2020. Until that point, Scildon continued to
bear only the fund administration costs.
Under the Company’s new defined contribution scheme, Scildon pays a contribution to the
scheme and subsequently has no further financial obligations with respect to this part of the scheme.
This contribution is recognised as an expense when paid.
Movestic
The Swedish business participates in a combined defined benefit and defined contribution
scheme operated by Försäkringsbranschens Pensionskassa, ‘FPK’. (the Scheme). The Scheme is
a multi-employer scheme with participants including other Swedish insurance companies not
related to the Group. The Scheme provides, for those born in 1971 or earlier, benefits to employees
which are linked to their final salary and to the amount of time working for companies which
are members of the Scheme. For those employees born in 1972 or later, the Scheme operates
on a defined contribution basis.
Assets and liabilities are held on a pooled basis and are not allocated by the Trustee to any individual
company. Consequently, reliable information is not available to account for the Scheme as a
defined benefit scheme and therefore, in accordance with IAS 19 Employee Benefits, the Scheme
is accounted for as a defined contribution scheme.
Contributions to the Scheme are based on the funding recommendations of the independent
qualified actuary: the contributions paid to the Scheme subsequent to the acquisition of the Swedish
business on 23 July 2009 and up to 31 December 2023, totalled £5.4m (SEK 74.2m).
During 2024 further contributions of £0.4m were made.
The employers within the Scheme are collectively responsible for the funding of the Scheme as a
whole and therefore in the event that other employers exit from the Scheme, remaining employers
would be responsible for the ongoing funding. The collective nature of the Scheme results in all
participating entities sharing the actuarial risk associated with the Scheme.
Försäkringsbranschens Pensionskassa, ‘FPK’, issues an audited Annual Report (under Swedish
law-limited IFRS) each year. The last available published report was as at 31 December 2022.
The Annual Report states that the Scheme’s surplus is £260.1m (£339.3m as at 31 December 2023).
As at 31 December 2023, the fund had assets under management of £1.3bn (31 December 2022:
£1.3bn). During 2023 there were 97 (2022: 97) employer insurance companies participating in the
Scheme and 22,000 (31 December 2022: 22,000) insured individuals. From the available information,
it cannot be determined with certainty as to whether there would be a change in the required
employer funding rate, although there is currently no deficit in the Scheme.
237
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
I2 Share-based payments
The Group issues equity-settled share-based payments to the executive directors and members of
the senior management team based on the 2014 terms. Equity settled share-based payments are
measured at fair value at the date of the grant, and expensed on a straight-line over the vesting
period, based on the Group’s estimate of shares that will eventually vest. The bonus scheme consists
of two components:
(a) Short-Term Incentive Scheme (STIS)
(b) Long-Term Incentive Plan (LTIP)
The STIS is based upon a 1 year performance period measured against cash generation, EcV Earnings
and strategic Group objectives. In relation to 2024, upon meeting the necessary performance
targets, the Company granted an award in the form of a right to receive a cash amount of up to
100% of the gross salary. In the event that the gross cash payment due is greater than £20,000,
a mandatory 35% of the cash award was deferred into shares, which had a vesting period of 3 years.
Therefore the award was 65% settled in cash and 35% settled by a share option award, which
cannot be exercised for 3 years.
Under the LTIP, options are granted with a vesting period of 3 years. These awards are subject to
performance conditions tied to the Company’s financial performance in respect of growth in EcV,
Commercial Cash Generation and Total Shareholder Return (TSR).
For schemes with market performance criteria, the number of options expected to invest is adjusted
only for expectations of leavers prior to vesting. Fair value of the options is measured by use of
the Monte Carlo model at the issuing date.
The LTIP also contains a target of EcV growth and Commercial Cash Generation. As these are
non-market performance conditions, the number of options expected to vest is recalculated at each
balance sheet date based on expectations of performance against target. The movement in
cumulative expense since the previous balance sheet date is recognised in the income statement,
with a corresponding entry in reserves.
If the options remain unexercised after a period of 10 years from the date of grant, the options expire.
Furthermore, options are forfeited if the employee leaves the Group before options vest and is
deemed to be a ‘Bad Leaver’.
(a) 2024 award made under the Short-Term Incentive Scheme (STIS)
Details of the short-term incentive awards made in the year are as follows:
2024 Short-Term Incentive Scheme (STIS)
2024
2023
Awards made in year
£m
£m
Amount paid as cash bonus through the income statement (65%)
0.6
0.5
Amount deferred into shares for 3 years and subject to forfeiture (35%)
0.3
0.3
Total bonus award for the year
0.9
0.8
Amount of deferred expense recorded in the current year
0.1
0.1
The deferred share award will be made following the end of the performance period by the
Remuneration Committee. The deferred amount will be divided by the share price on the award
date and the number of share awards will be awarded. The share awards will be accounted for
per IFRS 2, under Equity Settled share-based payments.
(b) 2024 award made under the Long-Term Incentive Plan (LTIP)
In 2024, the Group granted 708,094 Nil priced share options with a vesting period of 3 years.
These awards were subject to performance conditions tied to the Company’s financial performance
in respect of growth in Economic Value, Commercial Cash Generation and Total Shareholder
Return (TSR).
The fair value of the non-market base condition was determined to be 150.26p, which was the average
weighted share price as at the grant date of the options.
Details of the share options outstanding during the year are as follows:
2024 Long-Term Incentive Plan (LTIP)
2024
Weighted
average
Options
exercise
number
price
000
£
Outstanding at the beginning of the year
–
–
Granted during the year
708,094
–
Lapsed during the year
–
–
Outstanding at the end of the year
708,094
–
The weighted average contractual life is 10 years.
The inputs into the Monte Carlo model are as follows:
Valuation method
Monte Carlo
Weighted average share price (pence)
266.50
Weighted average exercise price (pence)
Nil
Weighted average fair value of options granted (pence)
152.46
Expected volatility
28.19
Expected life
3 years
Risk-free rate
4.57%
Expected dividend yield
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share
price over the previous 10 years.
The Group recognised total expense of £334,219 related to equity-settled share-based payments
transactions in 2024.
(c) 2023 award made under the Short-Term Incentive Scheme (STIS)
The Group has recorded an expense of £60,825 (2023: £60,825) with regards to the 35% element
that has been deferred over the vesting period.
238 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION I – ADDITIONAL DISCLOSURES
(d) 2023 award made under the Long-Term Incentive Plan (LTIP)
In 2023, the Group granted 571,645 Nil priced share options with a vesting period of 3 years.
These awards were subject to performance conditions tied to the Company’s financial performance
in respect of growth in Economic Value, Commercial Cash Generation and Total Shareholder
Return (TSR).
The fair value of the non-market base condition was determined to be 154.53p, which was the
average weighted share price as at the grant date of the options.
Details of the share options outstanding during the year are as follows:
2023 Long-Term Incentive Plan (LTIP)
2024
2023
Weighted
Weighted
average
average
Options
exercise
Options
exercise
number
price
number
price
000
£
000
£
Outstanding at the beginning of the year
572
–
–
–
Granted during the year
–
–
572
–
Lapsed during the year
(42 )
–
–
–
Outstanding at the end of the year
530
–
572
–
The weighted average contractual life is 10 years.
The inputs into the Monte Carlo model are as follows:
Valuation method
Monte Carlo
Weighted average share price (pence)
268.00
Weighted average exercise price (pence)
Nil
Weighted average fair value of options granted (pence)
154.53
Expected volatility
29.39
Expected life
3 years
Risk-free rate
5.70%
Expected dividend yield
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share
price over the previous 10 years.
The Group recognised total expense of £335,807 (2023: £88,222) related to equity-settled
share-based payments transactions in 2024.
(e) 2022 award made under the Short-Term Incentive Scheme (STIS)
The Group has recorded an expense of £59,319 (2023: £59,319) with regards to the 35% element
that has been deferred over the vesting period.
(f) 2022 award made under the Long-Term Incentive Plan (LTIP)
In April 2022, the Group granted 253,000 Nil priced share options with a vesting period of 3 years.
These awards were subject to performance conditions tied to the Company’s financial performance
in respect of growth in Economic Value and Total Shareholder Return (TSR).
The fair value of the non-market base condition was determined to be 284.00p, which was the
share price as at 28 April 2022, the grant date of the options.
Details of the share options outstanding during the year are as follows:
2022 Long-Term Incentive Plan (LTIP)
2024
2023
Weighted
Weighted
average
average
Options
exercise
Options
exercise
number
price
number
price
000
£
000
£
Outstanding at the beginning of the year
253
–
253
–
Granted during the year
–
–
–
–
Lapsed during the year
(3 )
–
–
–
Outstanding at the end of the year
250
–
253
–
The weighted average contractual life is 10 years.
The inputs into the Monte Carlo model are as follows:
Valuation method
Monte Carlo
Weighted average share price (pence)
284.00
Weighted average exercise price (pence)
Nil
Weighted average fair value of options granted (pence)
162.50
Expected volatility
29.04
Expected life
3 years
Risk-free rate
2.24%
Expected dividend yield
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share
price over the previous 10 years.
The Group recognised total expense of £115,033 (2023: £55,714) related to equity-settled
share-based payments transactions in 2023.
(g) 2021 award made under the Short-Term Incentive Scheme (STIS)
The Group has recorded an expense of £76,913 (2023: £76,913) with regards to the 35% element
that has been deferred over the vesting period.
(h) 2021 award made under the Long-Term Incentive Plan (LTIP)
In April 2021, the Group granted 260,000 Nil priced share options with a vesting period of 3 years.
These awards were subject to performance conditions tied to the Company’s financial performance
in respect of growth in Economic Value and Total Shareholder Return (TSR).
The fair value of the non-market base condition was determined to be 278.50p, which was the share
price as at 28 April 2021, the grant date of the options.
Details of the share options outstanding during the year are as follows:
2021 Long-Term Incentive Plan (LTIP)
2024
2023
Weighted
Weighted
average
average
Options
exercise
Options
exercise
number
price
number
price
000
£
000
£
Outstanding at the beginning of the year
342
–
532
–
Exercised during the year
(113 )
2.54
(123 )
2.78
Lapsed during the year
(203 )
–
(67 )
–
Outstanding at the end of the year
26
–
342
–
The weighted average contractual life is 10 years.
239
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The inputs into the Monte Carlo model are as follows:
Valuation method
Monte Carlo
Weighted average share price (pence)
278.50
Weighted average exercise price (pence)
Nil
Weighted average fair value of options granted (pence)
160.56
Expected volatility
30.01
Expected life
3 years
Risk-free rate
0.48%
Expected dividend yield
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share
price over the previous 10 years.
The Group recognised total expense of £48,603 (2023: £45,085) related to equity-settled
share-based payments transactions in 2024.
(i) 2020 award made under the Short-Term Incentive Scheme (STIS)
The Group has recorded an expense of £14,775 (2023: £59,099) with regards to the 35% element
that has been deferred over the vesting period.
(j) 2020 award made under the Long-Term Incentive Plan (LTIP)
In April 2020, the Group granted 224,000 Nil priced share options with a vesting period of 3 years.
These awards were subject to performance conditions tied to the Company’s financial performance
in respect of growth in Economic Value and Total Shareholder Return (TSR).
The fair value of the non-market base condition was determined to be 323.50p, which was the share
price as at 28 April 2020, the grant date of the options.
Details of the share options outstanding during the year are as follows:
2020 Long-Term Incentive Plan (LTIP)
2024
2023
Weighted
Weighted
average
average
Options
exercise
Options
exercise
number
price
number
price
000
£
000
£
Outstanding at the beginning of the year
38
–
192
–
Exercised during the year
–
–
(28 )
2.82
Lapsed during the year
–
–
(126 )
–
Outstanding at the end of the year
38
–
38
–
The weighted average contractual life is 10 years.
The inputs into the Monte Carlo model are as follows:
Valuation method
Monte Carlo
Weighted average share price (pence)
323.50
Weighted average exercise price (pence)
Nil
Weighted average fair value of options granted (pence)
184.04
Expected volatility
28.51
Expected life
3 years
Risk-free rate
0.42%
Expected dividend yield
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share
price over the previous 10 years.
The Group recognised total expense of £nil (2023: £18,750) related to equity-settled share-based
payments transactions in 2023.
(k) 2019 award made under the Short-Term Incentive Scheme (STIS)
The Group has recorded an expense of £nil (2023: £14,289) with regards to the 35% element that
has been deferred over the vesting period.
(l) 2019 award made under the Long-Term Incentive Plan (LTIP)
In April 2019, the Group granted 196,000 Nil priced share options with a vesting period of 3 years.
These awards were subject to performance conditions tied to the Company’s financial performance
in respect of growth in Economic Value and Total Shareholder Return (TSR).
The fair value of the non-market base condition was determined to be 358.50p, which was the share
price as at 28 April 2019, the grant date of the options.
Details of the share options outstanding during the year are as follows:
2019 Long-Term Incentive Plan (LTIP)
2024
2023
Weighted
Weighted
average
average
Options
exercise
Options
exercise
number
price
number
price
000
£
000
£
Outstanding at the beginning of the year
–
–
–
–
Lapsed during the year
–
–
–
–
Outstanding at the end of the year
–
–
–
–
The weighted average contractual life is 10 years.
The inputs into the Monte Carlo model are as follows:
Valuation method
Monte Carlo
Weighted average share price (pence)
358.50
Weighted average exercise price (pence)
Nil
Weighted average fair value of options granted (pence)
202.74
Expected volatility
25.35
Expected life
3 years
Risk-free rate
1.110%
Expected dividend yield
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share
price over the previous 10 years.
The Group recognised no expense related to equity-settled share-based payments transactions
in 2024.
(m) 2018 award made under the Short-Term Incentive Scheme (STIS)
The Group has recorded no expense with regards to the 35% element that has been deferred over
the vesting period.
(n) 2018 award made under the Long-Term Incentive Plan (LTIP)
In April 2018, the Group granted 168,000 Nil priced share options with a vesting period of 3 years.
These awards were subject to performance conditions tied to the Company’s financial performance
in respect of growth in Economic Value and Total Shareholder Return (TSR).
The fair value of the non-market base condition was determined to be 410.00p, which was the share
price as at 28 April 2018, the grant date of the options.
240 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
I2 Share-based payments (continued)
(n) 2018 award made under the Long-Term Incentive Plan (LTIP) (continued)
Details of the share options outstanding during the year are as follows:
2019 Long-Term Incentive Plan (LTIP)
2024
2023
Weighted
Weighted
average
average
Options
exercise
Options
exercise
number
price
number
price
000
£
000
£
Outstanding at the beginning of the year
–
–
–
–
Lapsed during the year
–
–
–
–
Outstanding at the end of the year
–
–
–
–
The weighted average contractual life is 10 years.
The inputs into the Monte Carlo model are as follows:
Valuation method
Monte Carlo
Weighted average share price (pence)
410.00
Weighted average exercise price (pence)
Nil
Weighted average fair value of options granted (pence)
229.78
Expected volatility
25.77
Expected life
3 years
Risk-free rate
1.190%
Expected dividend yield
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share
price over the previous 10 years.
The Group recognised no expense related to equity-settled share-based payments transactions
in 2024.
(o) 2017 award made under the Long-Term Incentive Plan (LTIP)
In April 2017, the Group granted 174,000 Nil priced share options with a vesting period of 3 years.
These awards were subject to performance conditions tied to the Company’s financial performance
in respect of growth in Economic Value and Total Shareholder Return (TSR).
The fair value of the non-market base condition was determined to be 382.75p, which was the share
price as at 28 April 2017, the grant date of the options.
Details of the share options outstanding during the year are as follows:
2017 Long-Term Incentive Plan (LTIP)
2024
2023
Weighted
Weighted
average
average
Options
exercise
Options
exercise
number
price
number
price
000
£
000
£
Outstanding at the beginning of the year
–
–
26
–
Exercised during the year
–
–
(26 )
2.63
Outstanding at the end of the year
–
–
–
–
The weighted average contractual life is 10 years.
The inputs into the Monte Carlo model are as follows:
Valuation method
Monte Carlo
Weighted average share price (pence)
382.75
Weighted average exercise price (pence)
Nil
Weighted average fair value of options granted (pence)
211.73
Expected volatility
26.97
Expected life
3 years
Risk-free rate
0.70%
Expected dividend yield
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share
price over the previous 10 years.
The Group recognised no expense related to equity-settled share-based payments transactions in
2024 and 2023.
(p) 2016 award made under the Long-Term Incentive Plan (LTIP)
In April 2016, the Group granted 255,000 Nil priced share options with a vesting period of 3 years.
These awards were subject to performance conditions tied to the Company’s financial performance
in respect of growth in Economic Value and Total Shareholder Return (TSR).
The fair value of the non-market base condition was determined to be 312.00p, which was the share
price as at 28 April 2016, the grant date of the options.
Details of the share options outstanding during the year are as follows:
2016 Long-Term Incentive Plan (LTIP)
2024
2023
Weighted
Weighted
average
average
Options
exercise
Options
exercise
number
price
number
price
000
£
000
£
Outstanding at the beginning of the year
–
–
90
–
Exercised during the year
–
–
(90 )
2.63
Outstanding at the end of the year
–
–
–
–
The weighted average contractual life is 10 years.
The inputs into the Monte Carlo model are as follows:
Valuation method
Monte Carlo
Weighted average share price (pence)
312.00
Weighted average exercise price (pence)
Nil
Weighted average fair value of options granted (pence)
179.72
Expected volatility
28.07
Expected life
3 years
Risk-free rate
0.86%
Expected dividend yield
0%
Expected volatility was determined by calculating the historical volatility of the Company’s share
price over the previous 10 years.
The Group recognised no expense related to equity-settled share-based payments transactions in
2024 and 2023.
SECTION I – ADDITIONAL DISCLOSURES
241
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
I3 Earnings per share
Earnings per share are based on the following:
Year ended 31 December
Restated
2024
2023
(Loss)/profit for the year attributable to shareholders (£m)
3.9
18.7
Weighted average number of ordinary shares
150,938,024
150,528,597
Basic earnings per share
2.56 p
12.41 p
Diluted earnings per share
2.52 p
12.29 p
The weighted average number of ordinary shares in respect of the year ended 31 December 2024
is based upon 150,991,019 shares. No shares were held in treasury.
There were 2,330,118 share options outstanding at 31 December 2024 (2023: 1,537,582).
Accordingly, there is dilution of the average number of ordinary shares in issue in respect of 2024
and 2023.
I4 Capital commitments
There were no capital commitments as at 31 December 2024 or as at 31 December 2023.
I5 Related parties
(a) Identity of related parties
The shares of the Company were widely held and no single shareholder exercised significant
influence or control over the Company.
The Company has related party relationships with:
(i) key management personnel who comprise the directors (including non-executive directors)
of the Company;
(ii) its subsidiary companies;
(iii) other companies over which the directors have significant influence; and
(iv) transactions with persons related to key management personnel.
(b) Related party transactions
(i) Transactions with key management personnel.
Key management personnel comprise of the directors of the Company. This is on the basis that the
Group’s governance map requires all strategically significant decisions to be approved by the Group
Board. As such, they have the authority and responsibility for planning, directing and controlling the
activities of the Group.
Key management compensation is as follows:
2024
2023
£m
£m
Short-term employee benefits
3.1
2.1
Post-employment benefits
0.1
0.1
Share-based payments
1.5
0.6
Total
4.7
2.8
The share-based payments charge comprises £0.3m (2023: £0.3m) of Short-Term Incentive Scheme
(STIS), and £1.3m (2023: £0.2m) related to Long-Term Incentive Plan (LTIP), which is determined
in accordance with IFRS 2 ‘Share-based Payment’. Further details on the share-based payment are
disclosed in Note I2.
In addition to their salaries, the Company also provides non-cash benefits to directors and contributes
to a post-employment defined contribution pension plan on their behalf, or where regulatory
contribution limits are reached, pay an equivalent amount as an addition to base salary.
The following amounts were payable to directors in respect of bonuses and incentives:
2024
2023
£m
£m
Annual bonus scheme (included in the
short-term employee benefits above)
0.9
0.7
These amounts have been included in accrued expenses as disclosed in Note G6. The amounts
payable under the annual bonus scheme were payable within 1 year. The terms and conditions
attached to the annual bonus scheme can be found in the Remuneration section of the Corporate
Governance section of the Annual Report and Accounts.
(ii) Transactions with subsidiaries
The Company undertakes centralised administration functions, the costs of which it charges back
to its operating subsidiaries. The following amounts which effectively comprised a recovery of
expenses at no mark-up were credited to the Statement of Comprehensive Income of the Company
for the respective periods:
Year ended 31 December
2024
2023
£m
£m
Recovery of expenses
7.2
5.4
(iii) Transactions between subsidiaries
In the Netherlands, Scildon owns a commercial property that has been occupied by its fellow Dutch
subsidiary Waard since October 2022. The following amounts of rental income were received from
Waard by Scildon during the respective periods:
Year ended 31 December
2024
2023
£m
£m
Rental income
0.1
0.1
(iv) Transactions with persons related to key management personnel
During the year, there were no transactions with persons related to key management personnel
(31 December 2023: £Nil).
242 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
I6 Group entities
Control of the Group
The issued share capital of Chesnara plc, the Group Parent Company, is widely held, with no single party able to control 20% or more of such capital or of the rights which such ownership confers.
Group subsidiary companies
Country of
Ownership interest
Ownership interest
Functional
Name
incorporation
31 December 2024
31 December 2023
Currency
Countrywide Assured plc
United Kingdom
100% of all share capital (1)
100% of all share capital (1)
Sterling
Countrywide Assured Life Holdings Limited
United Kingdom
100% of all share capital
100% of all share capital
Sterling
Countrywide Assured Services Limited
United Kingdom
100% of all share capital (1)
100% of all share capital (1)
Sterling
Countrywide Assured Trustee Company Limited
United Kingdom
100% of all share capital (1)
100% of all share capital (1)
Sterling
CASLP Limited
United Kingdom
100% of all share capital
100% of all share capital
Sterling
CASFS Limited
United Kingdom
100% of all share capital (2)
100% of all share capital (2)
Sterling
CASLPTS Limited
United Kingdom
100% of all share capital (2)
100% of all share capital (2)
Sterling
Registered address
2nd Floor, Building 4, West Strand Business Park,
West Strand Road, Preston, Lancashire PR1 8UY
Movestic Livförsäkring AB
Sweden
100% of all share capital
100% of all share capital
Swedish krona
Movestic Fonder AB
Sweden
100% of all share capital (3)
100% of all share capital (3)
Swedish krona
Registered address
Box 7853, S-103 99 Stockholm, Sweden
Waard Leven N.V.
Netherlands
100% of all share capital
100% of all share capital
Euro
Waard Schade N.V.
Netherlands
100% of all share capital
100% of all share capital
Euro
Waard Verzekeringen B.V.
Netherlands
100% of all share capital (4)
100% of all share capital (4)
Euro
Robein Leven N.V.
Netherlands
100% of all share capital (4)
100% of all share capital (4)
Euro
Robein Effectendienstveriening N.V.
Netherlands
100% of all share capital (4)
100% of all share capital (4)
Euro
Registered address
Geert Scholtenslaan II 1687 CL Wognum, Netherlands
Scildon N.V
Netherlands
100% of all share capital
100% of all share capital
Euro
Registered address
Laapersveld 68 Hilversum, Netherlands
(1) Held indirectly through Countrywide Assured Life Holdings Limited.
(2) Held indirectly through Countrywide Assured plc.
(3) Held indirectly through Movestic Livförsäkring AB.
(4) Held indirectly through Waard Leven N.V.
CASLP Limited was dissolved on 14 January 2025.
CASFS Limited (registered number: 02354894) and CASLPTS Limited (registered number: 01489455) are exempt from the requirements of the Companies Act 2006 relating to the audit of individual financial
statements by virtue of s.479A of the Companies Act 2006.
SECTION I – ADDITIONAL DISCLOSURES
243
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
I7 Portfolio acquisition
On 23 December 2024, Chesnara announced it had reached an agreement to acquire the UK
unit-linked bond and pension business of Canada Life Limited, representing approximately 17,000
policies. The transaction is initially in the form of a reinsurance agreement with the non-unit cash
flows of the unit-linked policies ceded by Canada Life Limited and accepted by CA. The date of
recognition of the reinsurance contract under IFRS 17 is 23 December 2024, however under the
terms of the contract the economic impacts are backdated to 1 January 2024 and the cash flows
from this date are accordingly recognised as a receivable in the December 2024 balance sheet.
The initial commission paid by CA to Canada Life Limited for this reinsurance inwards transaction
was £2.2m and was funded from internal group resources. As no inputs and processes have
been transferred as part of the transaction it is not accounted for as a business combination, instead
it is recognised at cost. The CSM on initial recognition has been calculated as £0.7m as at
31 December 2024.
Customers’ policies are expected to transfer to CA in the future via a Part VII transfer, following
Court approval.
I8 Post balance sheet event
The directors are not aware of any significant post balance sheet events that require disclosure
in the financial statements.
244 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
COMPANY BALANCE SHEET
31 December
2024
2023
Note
£m
£m
Assets
Non-current assets
Investments in subsidiaries
J1
389.9
399.6
Deferred tax asset
1.5
0.9
Total non-current assets
391.4
400.5
Current assets
Financial investments
J2
104.0
114.6
Other assets
13.7
6.0
Cash and cash equivalents
J4
4.8
5.7
Total current assets
122.5
126.3
Total assets
513.9
526.8
Current liabilities
Lease contract liabilities
–
–
Derivative financial instruments
J3
0.3
4.4
Other current liabilities
J6
5.0
4.4
Total current liabilities
5.3
8.8
Non-current liabilities
Borrowings
J5
200.8
200.6
Total non-current liabilities
200.8
200.6
Total liabilities
206.1
209.4
Net assets
307.6
317.4
Shareholders’ equity
Share capital
J7
7.5
7.5
Share premium
J7
142.5
142.5
Other reserves
J8
0.1
0.1
Retained earnings
J9
157.5
167.3
Total shareholders’ equity
307.6
317.4
The Notes and information on pages 247 to 249 form part of these financial statements.
Approved by the Board of Directors and authorised for issue on 26 March 2025 and signed on its behalf by:
Luke Savage
Steve Murray
Chair
Chief Executive Officer
Company number: 04947166
In accordance with the exemption allowed by Section 408 of the Companies Act 2006, the Company has not presented its own income statement or statement of other comprehensive income.
The Company reported a profit of £24.7m (2023: £26.8m) during the year. The retained profits of the Company at 31 December 2024 was £157.5m (31 December 2023: £167.3m).
245
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
PARENT COMPANY FINANCIAL STATEMENTS
COMPANY STATEMENT OF CASH FLOWS
Year ended 31 December
2024
2023
£m
£m
Profit/(loss) for the year
24.7
26.8
Adjustments for:
Tax expense/(recovered)
(1.8 )
0.2
Interest expense
10.5
10.3
Share-based payment
2.1
0.7
Dividends receivable
(49.0 )
(71.3 )
Depreciation on right-of-use assets
0.1
0.1
Impairment on investment in subsidiary
4.0
14.4
Fair value (gains)/losses on financial assets
(9.3 )
(7.2 )
Adjustment total
(43.4 )
(52.8 )
Changes in operating assets and liabilities:
Increase in other assets
(4.6 )
(4.0 )
Decrease/(increase) in prepayments
–
–
Decrease/(increase) in financial assets
19.7
(1.0 )
Increase in other current liabilities
(1.6 )
9.4
Net cash utilised by operations
(5.2 )
(21.6 )
Income tax paid
–
–
Net cash utilised by operating activities
(5.2 )
(21.6 )
Cash flows from investing activities
Capital contribution received from subsidiary companies
5.8
–
Dividends received from subsidiary companies
45.3
71.3
Net cash generated by investing activities
51.1
71.3
Cash flows from financing activities
Net proceeds from the issue of share capital
–
0.2
Repayment of principal under lease liabilities
–
(0.1 )
Dividends paid
(36.5 )
(35.4 )
Interest paid
(10.3 )
(10.1 )
Net cash utilised by financing activities
(46.8 )
(45.4 )
Net (decrease)/increase in net cash and cash equivalents
(0.9 )
4.3
Net cash and cash equivalents at beginning of period
5.7
1.4
Net cash and cash equivalents at end of the period
4.8
5.7
Note. Net cash and cash equivalents includes overdrafts.
The Notes and information on pages 247 to 249 form part of these financial statements.
246 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2024
Share
Share
Other
Retained
capital
premium
reserves
earnings
Total
£m
£m
£m
£m
£m
Equity shareholders’ funds at 1 January 2024
7.5
142.5
0.1
167.3
317.4
Profit for the year and total comprehensive income
–
–
–
24.7
24.7
Dividends paid
–
–
–
(36.5 )
(36.5 )
Share-based payment
–
–
–
2.0
2.0
Equity shareholders’ funds at 31 December 2024
7.5
142.5
0.1
157.5
307.6
Year ended 31 December 2023
Share
Share
Other
Retained
capital
premium
reserves
earnings
Total
£m
£m
£m
£m
£m
Equity shareholders’ funds at 1 January 2023
7.5
142.3
0.1
175.2
325.1
Profit for the year and total comprehensive income
–
–
–
26.8
26.8
Issue of share premium
–
0.2
–
–
0.2
Dividends paid
–
–
–
(35.4 )
(35.4 )
Share-based payment
–
–
–
0.7
0.7
Equity shareholders’ funds at 31 December 2023
7.5
142.5
0.1
167.3
317.4
The Notes and information on pages 247 to 249 form part of these financial statements.
247
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
SECTION J – COMPANY NOTES TO THE FINANCIAL STATEMENTS
J1 Investment in subsidiary
Company
Year ended 31 December
2024
2023
£m
£m
Cost
Balance at 1 January
439.0
439.0
Disposals
(5.7 )
(4.8 )
Balance at 31 December
433.3
439.0
Impairment
Balance at 1 January
(39.4 )
(25.0 )
Impairment for the year
(4.0 )
(14.4 )
Balance at 31 December
(43.4 )
(39.4 )
Carrying amounts
At 1 January
399.6
414.0
At 31 December
389.9
399.6
During the year the Company carried out a review of the recoverable amount of its subsidiaries, with
EcV used as the basis to determine the recoverable amount and from this assessment it was
concluded that its investment in Countrywide Assured plc was impaired. As a result, an impairment
loss of £4.0m (31 December 2023: £14.4m) has been recognised in the year. The impairment, which
was expected, has primarily arisen as a result of Countrywide Assured plc’s policy of distributing its
surplus capital up to Chesnara plc as it becomes available over time. Further details regarding the
assessment are reported in Note A5(j).
J2 Financial investments
(a) Financial investments by classification
The carrying amounts of the financial investments and other financial assets and liabilities held by
the Group at the balance sheet date are as follows:
31 December 2024
Amortised
FVTPL –
FVTPL –
cost designated mandatory
Total
£m
£m
£m
£m
Financial investments
Holdings in collective investment schemes
–
–
93.9
93.9
Debt securities – non government bonds
–
–
10.1
10.1
Total
–
–
104.0
104.0
Derivatives and other financial assets
Other assets
13.7
–
–
13.7
Cash and cash equivalents
–
4.8
–
4.8
Total financial investments and financial assets
13.7
4.8
104.0
122.5
Financial liabilities
Borrowings
200.8
–
–
200.8
Derivative financial instruments
–
–
0.3
0.3
Other current liabilities
5.2
–
–
5.2
Total financial liabilities
206.0
–
0.3
206.3
31 December 2023
Amortised
FVTPL –
FVTPL –
cost designated mandatory
Total
£m
£m
£m
£m
Financial investments
Holdings in collective investment schemes
–
–
114.6
114.6
Debt securities – non government bonds
–
–
–
–
Total
–
–
114.6
114.6
Derivatives and other financial assets
Other assets
6.0
–
–
6.0
Cash and cash equivalents
–
5.7
–
5.7
Total financial investments and financial assets
6.0
5.7
114.6
126.3
Financial liabilities
Borrowings
200.6
–
–
200.6
Derivative financial instruments
–
–
4.4
4.4
Other current liabilities
4.4
–
–
4.4
Total financial liabilities
205.0
–
4.4
209.4
(b) Financial investment fair values
Fair value is the amount for which an asset or liability could be exchanged between willing parties
in an arm’s length transaction. The tables below show the determination of fair value according
to a three-level valuation hierarchy. Fair values are generally determined at prices quoted in active
markets (Level 1). However, where such information is not available, the Group applies valuation
techniques to measure such instruments. These valuation techniques make use of market-observable
data for all significant inputs where possible (Level 2), but in some cases it may be necessary to
estimate other than market-observable data within a valuation model for significant inputs (Level 3).
Fair value measurement at
Level 1
Level 2
Level 3
Total
31 December 2024
£m
£m
£m
£m
Financial assets
Holdings in collective investment schemes
93.9
–
–
93.9
Debt securities – non government bonds
10.1
–
–
10.1
Total
104.0
–
–
104.0
Current
104.0
–
–
104.0
Non-current
–
–
–
–
Total
104.0
–
–
104.0
Financial liabilities
Derivative financial instruments
–
0.3
–
0.3
Total
–
0.3
–
0.3
248 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION J – COMPANY NOTES TO THE FINANCIAL STATEMENTS
J2 Financial investments (continued)
(b) Financial investment fair values (continued)
Fair value measurement at
Level 1
Level 2
Level 3
Total
31 December 2023
£m
£m
£m
£m
Financial assets
Holdings in collective investment schemes
114.6
–
–
114.6
Debt securities – non government bonds
–
–
–
–
Total
114.6
–
–
114.6
Current
114.6
–
–
114.6
Non-current
–
–
–
–
Total
114.6
–
–
114.6
Financial liabilities
Derivative financial instruments
–
4.4
–
4.4
Total
–
4.4
–
4.4
J3 Derivative financial instruments
31 December
2024
2023
Asset
Liability
Asset
Liability
£m
£m
£m
£m
Foreign currency hedge
–
–
–
4.4
Exchange traded futures
–
0.3
–
–
Total
–
0.3
–
4.4
Current
–
0.3
–
4.4
Non-current
–
–
–
–
Total
–
0.3
–
4.4
Cash collateral of £2.4m is pledged in respect of the foreign currency hedge as at the balance sheet
date (31 December 2023: £4.4m).
J4 Cash and cash equivalents
31 December
2024
2023
£m
£m
Bank and cash balances
4.8
5.7
Total cash and cash equivalents
4.8
5.7
Cash and cash equivalents in the statement of cash flows
4.8
5.7
Short-term bank deposits are subject to a combination of fixed and variable interest rates, with
an average maturity of 1 day (31 December 2023: 1 day). All deposits included in cash and cash
equivalents were due to mature within 1 month of their acquisition. All balances are current and
available on demand.
J5 Borrowings
31 December
2024
2023
£m
£m
Tier 2 debt
200.8
200.6
Total
200.8
200.6
Current
–
–
Non-current
200.8
200.6
Total
200.8
200.6
In 2022, an existing bank loan was fully repaid and replaced by Tier 2 Subordinated Notes Debt.
The notes have a maturity date of 4 February 2032. The fair value of amounts due in relation
to Tier 2 debt at 31 December 2024 was £166.1m (31 December 2023: £148.4m) and is classified
as Level 1 in the fair value hierarchy.
J6 Other current liabilities
31 December
2024
2023
£m
£m
Other payables
Accrued expenses
5.0
4.4
Total
5.0
4.4
Current
5.0
4.4
Non-current
–
–
Total
5.0
4.4
The carrying value of other payables is a reasonable approximation of fair value.
J7 Share capital and share premium
31 December
2024
2023
Number
Share
Number
Share
of shares
capital
of shares
capital
issued
£m
issued
£m
Authorised
Ordinary shares of 5p each
201,000,000
10.1
201,000,000
10.1
Issued
Ordinary shares of 5p each
150,991,019
7.5
150,849,587
7.5
Share
Share
premium
premium
£m
£m
142.5
142.5
The number of shares in issue at the balance sheet date included Nil shares held in treasury
(31 December 2023: Nil).
249
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
J8 Other reserves
31 December
2024
2023
£m
£m
Capital redemption reserve
0.1
0.1
Balance at 31 December
0.1
0.1
J9 Retained earnings
Year ended 31 December
2024
2023
£m
£m
Retained earnings attributable to equity holders
of the Parent Company comprise:
Balance at 1 January
167.3
175.2
Profit/(loss) for the year
24.6
26.8
Share-based payment
2.1
0.7
Dividends
Final approved and paid for 2022
–
(22.8 )
Interim approved and paid for 2023
–
(12.6 )
Final approved and paid for 2023
(23.5 )
–
Interim approved and paid for 2024
(13.0 )
–
Balance at 31 December
157.5
167.3
250 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL
INFORMATION
251
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
252 Financial calendar
252 Key contacts
253 Notice of the Annual General Meeting
255 Explanatory notes to the Notice of the
Annual General Meeting
259 Appendix to AGM Notice
260 Alternative Performance Measures
262 Operational and other performance measures
263 Reconciliation of metrics
265 Glossary
266 Note on terminology
267 Cautionary and forward-looking statements
and MSCI disclaimer
Registered and head office
2nd Floor, Building 4
West Strand Business Park
West Strand Road
Preston
Lancashire
PR1 8UY
T +44 (0)1772 972050
www.chesnara.co.uk
Advisors
Burness Paull LLP
Exchange Plaza
50 Lothian Road
Edinburgh
EH3 9WJ
Auditor
Deloitte LLP
Statutory Auditor
1 City Square
Leeds
LS1 2AL
Registrars
MUFG Corporate Markets
(formerly Link Group)
Central Square
29 Wellington Street
Leeds
LS1 4DL
27 March 2025
Results for the year ended
31 December 2024 announced
3 April 2025
Ex-dividend date
4 April 2025
Dividend record date
22 April 2025
Last date for dividend reinvestment
plan elections
13 May 2025
Annual General Meeting
20 May 2025
Dividend payment date
Joint Stockbrokers and
Corporate Advisors
Panmure Liberum
25 Ropemaker Street
London
EC2Y 9LY
RBC Capital Markets
100 Bishopsgate
London
EC2N 4AA
Bankers
National Westminster Bank plc
135 Bishopsgate
London
EC2M 3UR
Lloyds Bank plc
3rd Floor, Black Horse House
Medway Wharf Road
Tonbridge
Kent
TN9 1QS
Public Relations Consultants
FWD
15 St Helen’s Place
London
EC3A 6DQ
FINANCIAL CALENDAR
KEY CONTACTS
ADDITIONAL INFORMATION
252 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
253
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
Company No. 4947166
Notice is given that the 2025 Annual General Meeting of Chesnara plc will be held at the offices
of Panmure Liberum, 25 Ropemaker Street, London, EC2Y 9LY on 13 May 2025 at 11am, for
the business set out below. Shareholders will be kept informed via the Regulatory News System
(RNS) should arrangements need to be changed for any reason.
Resolutions 1 to 14 inclusive and 18 will be proposed as ordinary resolutions and Resolutions 15
to 17 inclusive, 19 and 20 will be proposed as special resolutions.
1. To receive and adopt the audited accounts for the financial year ended 31 December 2024,
together with the reports of the directors and auditor thereon.
2. To approve the Directors’ Remuneration Report for the year ended 31 December 2024.
3. To declare a final dividend of 16.08 pence per ordinary share for the financial year ended
31 December 2024.
4. To re-appoint Steve Murray as a director.
5. To re-appoint Carol Hagh as a director.
6. To re-appoint Karin Bergstein as a director.
7. To re-appoint Luke Savage as a director.
8. To re-appoint Eamonn Flanagan as a director.
9. To re-appoint Tom Howard as a director.
10. To appoint Gail Tucker as a director.
11. To re-appoint Deloitte LLP as auditor of the Company to hold office until the conclusion of the next
general meeting of the Company at which accounts are laid before shareholders.
12. To authorise the directors to determine the auditor’s remuneration.
13. That, from the passing of this Resolution 13 until the earlier of the close of business on
30 June 2026 and the conclusion of the Company’s next Annual General Meeting, the Company
and all companies which are its subsidiaries at any time during such period are authorised:
(a) to make donations to political parties or independent election candidates;
(b) to make donations to political organisations other than political parties; and
(c) to incur political expenditure up to an aggregate total amount of £50,000,
with the individual amount authorised for each of (a) to (c) above being limited to £50,000. Any such
amounts may comprise sums paid or incurred in one or more currencies. Any sum paid or incurred
in a currency other than sterling shall be converted into sterling at such rate as the Board may decide
is appropriate. Terms used in this resolution have, where applicable, the meanings that they have
in Part 14 of the Companies Act 2006.
14. That, from the passing of this resolution until the earlier of the close of business on 30 June 2026
and the conclusion of the Company’s next Annual General Meeting, the directors be and are hereby
generally and unconditionally authorised in accordance with Section 551 of the Companies Act 2006
(the Act), to exercise all the powers of the Company, to allot shares in the Company and/or to grant
rights to subscribe for or to convert any security into shares in the Company (Allotment Rights):
(a) up to an aggregate nominal amount of £2,516,517 such amount to be reduced by the aggregate
nominal amount of any equity securities allotted pursuant to the authority in paragraph (b)
below in excess of £2,516,517; and
(b) up to an aggregate nominal amount of £5,033,034 (such amount to be reduced by the
aggregate nominal amount of any shares allotted or rights granted pursuant to the authority in
paragraph (a) above) in connection with an offer:
i) to holders of ordinary shares in proportion (as nearly as may be practicable) to their
respective holdings; and
ii) to holders of other equity securities as required by the rights of those securities or as the
directors otherwise consider necessary,
but subject to such exclusions or other arrangements as the directors may deem necessary or
expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical
problems in or under the laws of any territory or the requirements of any regulatory body or stock
exchange, provided that this authority shall, unless renewed, varied or revoked by the Company,
expire at the conclusion of the Company’s next Annual General Meeting (or, if earlier, at the close
of business on 30 June 2026) save that the Company may, before such expiry, make offers or
agreements which would or might require securities to be allotted or Allotment Rights to be granted
after such expiry and the directors may allot securities or grant Allotment Rights in pursuance of
such offer or agreement notwithstanding the expiry of the authority conferred by this resolution.
15. That, subject to the passing of Resolution 14 in this notice, the directors be and are hereby
empowered pursuant to Section 570 of the Companies Act 2006 (the Act) to allot equity securities
(as defined in Section 560 of the Act) for cash, pursuant to the authority conferred on them by
Resolution 14 of this notice or by way of a sale of treasury shares as if Section 561 of the Act did
not apply to any such allotment, provided that this power is limited to:
If you have sold or otherwise transferred all of your shares in Chesnara plc, please pass this
document as soon as possible to the purchaser or transferee, or to the person who arranged
the sale or transfer so they can pass these documents to the person who now holds the shares.
If you are in any doubt as to the action you should take, you should immediately consult your
stockbroker, bank manager, solicitor, accountant or other independent professional advisor
authorised under the Financial Services and Markets Act 2000 if you are resident in the United
Kingdom or, if you reside elsewhere, another appropriately authorised financial advisor.
This document is important and requires your immediate attention
Chesnara plc has a policy of not paying to have access to governance and sustainability analysts’ databases on which voting recommendations and reports are produced. We encourage
early, open and timely engagement to ensure the accuracy of the information contained in any analysis and reports issued in respect of Chesnara plc.
NOTICE OF THE ANNUAL GENERAL MEETING
254 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
NOTICE OF THE ANNUAL GENERAL MEETING
(a) the allotment of equity securities in connection with any rights issue or open offer (each as
referred to in the Financial Conduct Authority’s listing rules) or any other pre-emptive offer that
is open for acceptance for a period determined by the directors to the holders of ordinary
shares on the register on any fixed record date in proportion to their holdings of ordinary shares
(and, if applicable, to the holders of any other class of equity security in accordance with the
rights attached to such class), subject in each case to such exclusions or other arrangements
as the directors may deem necessary or appropriate in relation to fractions of such securities,
the use of more than one currency for making payments in respect of such offer, any such shares
or other securities being represented by depositary receipts, treasury shares, any legal or
practical problems in relation to any territory or the requirements of any regulatory body or any
stock exchange; and
(b) the allotment of equity securities (other than pursuant to paragraph (a) above) with an aggregate
nominal value of £754,955, and shall expire on the revocation or expiry (unless renewed) of the
authority conferred on the directors by Resolution 14 of this notice, save that, before the expiry
of this power, the Company may make any offer or agreement which would or might require
equity securities to be allotted after such expiry and the directors may allot equity securities
under any such offer or agreement as if the power had not expired.
16. That, subject to the passing of Resolution 14 of this notice and, in addition to the power contained in
Resolution 15 of this notice, the directors be and are hereby empowered pursuant to Section 570
of the Companies Act 2006 (the Act) to allot equity securities (as defined in Section 560 of the Act)
for cash, pursuant to the authority conferred on them by Resolution 14 of this notice or by way of
sale of treasury shares as if Section 561 of the Act did not apply to any such allotment, provided that
this power is:
(a) limited to the allotment of equity securities up to an aggregate nominal value of £754,955; and
(b) used only for the purposes of financing (or refinancing, if the power is to be exercised within
12 months after the date of the original transaction) a transaction which the directors determine
to be an acquisition or other capital investment of a kind contemplated by the Statement of
Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group
prior to the date of the notice of this meeting, and shall expire on the revocation or expiry
(unless renewed) of the authority conferred on the directors by Resolution 14 of this notice save
that, before the expiry of this power, the Company may make any offer or agreement which
would or might require equity securities to be allotted after such expiry and the directors may
allot equity securities under any such offer or agreement as if the power had not expired.
17. That the Company be and is hereby generally and unconditionally authorised for the purposes of
Section 701 of the Companies Act 2006 (the Act) to make one or more market purchases (as defined
in Section 693(4) of the Act) of ordinary shares in the capital of the Company, provided that:
(a) the maximum aggregate number of ordinary shares hereby authorised to be purchased
is £15,099,102;
(b) the minimum price (exclusive of expenses) which may be paid for such ordinary shares is its
nominal value;
(c) the maximum price (exclusive of expenses) which may be paid for such ordinary shares is the
maximum price permitted under the Financial Conduct Authority’s listing rules or, in the case
of a tender offer (as referred to in those rules), 5% above the average of the middle market
quotations for those shares (as derived from the Daily Official List of London Stock Exchange plc)
for the 5 business days immediately preceding the date on which the terms of the tender offer
are announced;
(d) the authority hereby conferred shall expire at the conclusion of the Company’s next Annual
General Meeting (or, if earlier, at the close of business on 30 June 2026); and
(e) the Company may enter into contracts or contracts to purchase ordinary shares under the
authority hereby conferred prior to the expiry of such authority which will or may be completed
wholly or partly after the expiry of such authority, and may make a purchase of ordinary shares
in pursuance of any such contract or contracts.
18. That, in addition to the authority granted pursuant to Resolution 14 (if passed), the directors
be and are hereby generally and unconditionally authorised in accordance with Section 551 of the
Companies Act 2006 (the Act), to exercise all the powers of the Company to allot shares in the
Company and/or grant rights to subscribe for or to convert any security into shares in the Company:
(a) up to an aggregate nominal value of £2,516,517 in relation to any issues of Restricted Tier 1 (RT1)
Instruments where the directors consider that such an issuance of RT1 Instruments would
be desirable, including in connection with, or for the purposes of, complying with or maintaining
compliance with the regulatory requirements or targets applicable to the Company and its
subsidiaries from time to time;
(b) subject to applicable law and regulation, at such allotment, subscription or conversion prices (or
such maximum or minimum allotment, subscription or conversion price methodologies) as
may be determined by the directors from time to time, and unless previously renewed, varied
or revoked by the Company, this authority shall apply in addition to all other authorities under
Section 551 of the Act until the conclusion of the Company’s next Annual General Meeting (or,
if earlier, at the close of business on 30 June 2026), save that the Company may, before such
expiry, make offers or agreements which would, or might, require securities to be allotted or rights
to be granted after such expiry and the directors may allot securities or grant such rights in
pursuance of such offer or agreement notwithstanding the expiry of the authority conferred by
this resolution.
19. That, subject to the passing of Resolution 18 in this notice, the directors be and are hereby generally
empowered, pursuant to Section 570 of the Companies Act 2006 (the Act), to allot equity securities
(as defined in Section 560 of the Act and is to be interpreted in accordance with Section 560(2) of
the Act) for cash, pursuant to the authority conferred on them by Resolution 18 of this notice up to
an aggregate nominal value of £2,516,517 in relation to any issues of RT1 Instruments, as if Section
561 of the Act did not apply to any such allotment, and shall expire on the revocation or expiry
(unless renewed) of the authority conferred on the director by Resolution 18 of this notice save that,
before the expiry of this power, the Company may make any offer or agreement which would or
might require equity securities to be allotted after such expiry and the directors may allot equity
securities under any such offer or agreement as if the power had not expired.
This authority is in addition to the authorities conferred by Resolutions 15 and 16 in this notice.
20. That a general meeting of the Company (other than an Annual General Meeting) may be called on
not less than 14 clear days’ notice.
By order of the Board
Alastair Lonie
Chief of Staff and Company Secretary
2nd Floor, Building 4
West Strand Business Park
West Strand Road
Preston
Lancashire
PR1 8UY
26 March 2025
255
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
1. Any member who is entitled to attend and vote at this Annual General Meeting is entitled to appoint
another person, or two or more persons in respect of different shares held by the shareholder,
as their proxy to exercise all or any of their rights to attend and to speak and to vote at the Annual
General Meeting. Members who wish to appoint a proxy are encouraged to appoint the Chair
of the meeting as their proxy and give your instructions on how you wish the Chair of the meeting
to vote on the proposed resolutions. Appointing the Chair as your proxy will not prevent you
from attending and voting in person at the AGM but will ensure that your vote is able to be cast in
accordance with your wishes should you (or any other person who you might otherwise choose
to appoint as your proxy) be unable to attend for any reason. Members are strongly encouraged to
vote electronically. Unless otherwise indicated on the Form of Proxy, CREST, Proxymity or any
other electronic voting instruction, the proxy will vote as they think fit or, at their discretion, withhold
from voting.
2. You will not receive a form of proxy for the AGM in the post. Instead, you will receive instructions
to enable you to vote electronically and how to register to do so. You may request a physical
copy proxy form directly from the registrars, MUFG Corporate Markets, PXS 1, Central Square,
29 Wellington Street, Leeds, LS1 4DL (email: shareholderenquiries@cm.mpms.mufg.com,
telephone number: 0371 664 0300. Calls are charged at the standard geographic rate and will vary
by provider. Calls outside the United Kingdom will be charged at the applicable international rate.
Lines are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and
Wales). If you request a physical copy proxy form, it must be completed in accordance with the
instructions that accompany it and then delivered (together with any power of attorney or other
authority under which it is signed, or a certified copy of such item) to MUFG Corporate Markets,
PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL so as to be received by 11am on
Friday 9 May 2025.
3. Any member wishing to vote at the Annual General Meeting without attending in person or (in the
case of a corporation) through its duly appointed representative, must appoint a proxy to do so.
A proxy need not be a member of the Company, but as noted above, members should appoint the
Chair of the meeting as their proxy to ensure that their vote is able to be cast in accordance with
their wishes should they (or any other persons who members might otherwise choose to appoint
as their proxy) be unable to attend for any reason. Members may appoint a proxy online by following
the instructions for the electronic appointment of a proxy at www.signalshares.com by entering
the Company name ‘Chesnara plc’ and following the on-screen instructions. To be a valid proxy
appointment, the member’s electronic message confirming the details of the appointment completed
in accordance with those instructions must be transmitted so as to be received by 11am on Friday
9 May 2025. Members who hold their shares in uncertificated form may also use the ‘CREST’ voting
service to appoint a proxy electronically, as explained below.
4. Proxymity voting – if you are an institutional investor you may also be able to appoint a proxy
electronically via the Proxymity platform, a process which has been agreed by the Company
and approved by the Registrar. For further information regarding Proxymity, please go to
www.proxymity.io. Your proxy must be lodged by 11am on Friday 9 May 2025 in order to be
considered valid or, if the meeting is adjourned, by the time which is 48 hours before the time of
the adjourned meeting. Before you can appoint a proxy via this process, you will need to have
agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully
as you will be bound by them and they will govern the electronic appointment of your proxy.
An electronic proxy appointment via the Proxymity platform may be revoked completely by sending
an authenticated message via the platform instructing the removal of your proxy vote.
5. CREST members who wish to appoint one or more proxies through the CREST system may do so
by using the procedures described in ‘the CREST voting service’ section of the CREST Manual.
CREST personal members or other CREST sponsored members, and those CREST members who
have appointed one or more voting service providers, should refer to their CREST sponsor or
voting service provider(s), who will be able to take the appropriate action on their behalf. In order for
a proxy appointment or a proxy instruction made using the CREST voting service to be valid, the
appropriate CREST message (a ‘CREST proxy appointment instruction’) must be properly authenticated
in accordance with the specifications of CREST’s operator, Euroclear UK & International Limited
(‘Euroclear’), and must contain all the relevant information required by the CREST Manual. To be valid,
the message (regardless of whether it constitutes the appointment of a proxy or is an amendment
to the instruction given to a previously appointed proxy) must be transmitted so as to be received
by MUFG Corporate Markets, (ID RA10), by 11am on Friday 9 May 2025, which is acting as the
Company’s ‘issuer’s agent’. After this time, any change of instruction to a proxy appointed through
the CREST system should be communicated to the appointee through other means. The time of the
message’s receipt will be taken to be when (as determined by the timestamp applied by the CREST
Applications Host) the issuer’s agent is first able to retrieve it by enquiry through the CREST system
in the prescribed manner. Euroclear does not make available special procedures in the CREST system
for transmitting any particular message. Normal system timings and limitations apply in relation
to the input of CREST proxy appointment instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member or a CREST sponsored
member or has appointed any voting service provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as is necessary to ensure that a message is transmitted
by means of the CREST system by any particular time. CREST members and, where applicable, their
CREST sponsors or voting service providers should take into account the provisions of the CREST
Manual concerning timings as well as its section on ‘Practical limitations of the system’. In certain
circumstances, the Company may, in accordance with the Uncertificated Securities Regulations
2001 or the CREST Manual, treat a CREST proxy appointment instruction as invalid.
EXPLANATORY NOTES TO THE NOTICE OF THE ANNUAL GENERAL MEETING
The Company is pleased to be able to invite members to attend the AGM in person in May where a presentation on business progress will be given. A results presentation will also be recorded
on 27 March 2025 and made available on the corporate website.
The Company continues to strongly encourage shareholders to vote electronically. Instructions on voting are attached to the Notice of AGM sent out to shareholders and can also be found on the
Company’s website. Shareholders may also wish to submit questions in advance via email to info@chesnara.co.uk. We will endeavour to respond to questions raised directly, or by publishing
responses on our website.
Arrangements for the 2025 AGM
256 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
6. Copies of (i) directors’ service contracts and letters of appointment; and (ii) a copy of the Company’s
Articles of Association are available for inspection at the registered office of the Company during
normal business hours each business day subject to prevailing public health measures. They will
also be available for inspection at the Annual General Meeting for at least 15 minutes prior to and
during the Annual General Meeting.
7. The time by which a person must be entered on the register of members in order to have the right
to vote at the Annual General Meeting (and for the purpose of the determination by the Company
of the votes they may cast) is close of business on Friday 9 May 2025. Changes to entries on the
register of members after that time will be disregarded in determining the right of any person to
attend or vote at the Annual General Meeting.
8. The right to appoint proxies does not apply to persons nominated to receive information rights under
Section 146 of the Companies Act 2006; as such rights can only be exercised by the member
concerned. Any person nominated to enjoy information rights under Section 146 of the Companies
Act 2006 who has been sent a copy of this notice of Annual General Meeting is hereby informed,
in accordance with Section 149(2) of the Companies Act 2006, that they may have a right under an
agreement with the registered member by whom they were nominated to be appointed, or to have
someone else appointed, as a proxy for this Annual General Meeting. If they have no such right, or
do not wish to exercise it, they may have a right under such an agreement to give instructions to
the member as to the exercise of voting rights. Nominated persons should contact the registered
member by whom they were nominated in respect of these arrangements.
9. As at 20 March 2025 (being the last practicable date prior to the publication of this document), the
Company’s issued share capital consisted of 150,991,019 ordinary shares, carrying one vote each.
No shares were held by the Company in treasury. Therefore, the total voting rights in the Company
as at 20 March 2025 (being the last practicable date prior to the publication of this document)
were 150,991,019.
10. Information regarding this Annual General Meeting, including information required by Section 311A
of the Companies Act 2006, is available at www.chesnara.co.uk. Any electronic address provided
either in this notice or any related documents may not be used to communicate with the Company
for any purposes other than those expressly stated.
11. In accordance with Section 319A of the Companies Act 2006, any member attending the Annual
General Meeting has the right to ask questions. The Company must cause to be answered any
such question relating to the business being dealt with at the Annual General Meeting, but no such
answer need be given if (a) to do so would interfere unduly with the preparations for the Annual
General Meeting or involve the disclosure of confidential information, (b) the answer has already been
given on a website in the form of an answer to a question or (c) it is undesirable in the interests
of the Company or the good order of the Annual General Meeting that the question be answered.
The Company encourages shareholders to submit their questions electronically in advance of the
meeting via info@chesnara.co.uk.
12. Under Section 527 of the Companies Act 2006, members meeting the threshold requirements set
out in that section have the right to require the Company to publish on a website a statement in
accordance with Section 528 of the Companies Act 2006 setting out any matter relating to (i) the
audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that
are to be laid before the Annual General Meeting or (ii) any circumstances connected with an auditor
of the Company ceasing to hold office since the previous meeting at which annual accounts and
reports were laid in accordance with Section 437 of the Companies Act 2006. The Company may not
require the members requesting any such website publication to pay its expenses in complying
with Sections 527 or 528 of the Companies Act 2006.
Where the Company is required to place a statement on a website under Section 527 of the
Companies Act 2006, it must forward the statement to the Company’s auditor not later than the
time when it makes the statement available on the website. The business which may be dealt
with at the Annual General Meeting includes any statement that the Company has been required
under Section 527 of the Companies Act 2006 to publish on a website.
13. Members meeting the threshold requirements in Sections 338 and 338A of the Companies Act
2006 have the right to require the Company (i) to give to members entitled to receive notice of the
meeting notice of a resolution which may properly be moved and is intended to be moved at the
meeting and/or (ii) to include in the business to be dealt with at the meeting any matter (other than
a proposed resolution) which may be properly included in the business. A resolution may properly
be moved or a matter may properly be included in the business unless (a) (in the case of a resolution
only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment
or the Company’s constitution or otherwise), (b) it is defamatory of any person, or (c) it is frivolous
or vexatious. Such a request may be in hard copy form or in electronic form, must identify the
resolution of which notice is to be given or (as applicable) the matter to be included in the business,
must be authenticated by the person or persons making it, must be received by the Company not
later than 11am on 1 April 2025, and (in the case of a matter to be included in the business only) must
be accompanied by a statement setting out the grounds for the request.
The notes on the following pages give an explanation of the proposed resolutions:
EXPLANATORY NOTES TO THE NOTICE OF THE ANNUAL GENERAL MEETING
257
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
Resolution 1
Report and Accounts
The Companies Act 2006 requires the directors of a public company to lay its Annual Report
and Accounts before the Company in general meeting, giving shareholders the opportunity to ask
questions on the contents. The Annual Report and Accounts comprise the audited financial
statements, the Auditor’s Report, the Directors’ Report, the Directors’ Remuneration Report, and
the Directors’ Strategic Report.
Resolution 2
Approval of the Directors’ Remuneration Report
In accordance with the Companies Act 2006, the Company proposes ordinary Resolution 2 to approve
the Directors’ Remuneration Report for the financial year ended 31 December 2024. The Directors’
Remuneration Report can be found on pages 110 to 126 of the 2024 Annual Report and Accounts and,
for the purposes of this resolution, does not include the parts of the Directors’ Remuneration
Report containing the Directors’ Remuneration Policy. The vote on this resolution is advisory only and
the directors’ entitlement to remuneration is not conditional on it being passed. The Companies
Act 2006 requires the Directors’ Remuneration Policy to be put to shareholders for approval annually
unless the approved policy remains unchanged, in which case it need only be put to shareholders
for approval at least every 3 years. The Company is not proposing any changes to the Directors’
Remuneration Policy approved at the Annual General Meeting in 2023.
Resolution 3
Final dividend
The declaration of the final dividend requires the approval of shareholders in general meeting. If the
2025 Annual General Meeting approves Resolution 3, the final dividend of 16.08 pence per share
will be paid on 20 May 2025 to ordinary shareholders who are on the register of members at the close
of business on 12 April 2025 in respect of each ordinary share.
Resolutions 4 – 10 inclusive
Appointment and re-appointment of directors
The Company’s Articles of Association provide that all directors retire at each Annual General Meeting
and that those wishing to continue to serve shall submit themselves for re-appointment or
appointment by the shareholders. In line with this, all directors will be retiring at this year’s AGM
and will be standing for re-appointment, with the exception of Jane Dale who will step down from
the Board at the end of the AGM. Gail Tucker will stand for appointment at this year’s AGM, following
her appointment as a director, subject to regulatory approval (announced to shareholders on
29 January 2025). The Board is satisfied that the performance of each of the directors proposed
continues to be effective and important to the Company’s long-term sustainable success and
demonstrates commitment to their responsibilities. This is supported by the annual performance
evaluation that was undertaken recently. The Board unanimously recommend that each of these
directors be appointed or re-appointed as a director of the Company.
In accordance with the Code, the Board has reviewed the independence of its non-executive directors
and has determined that they remain fully independent of management.
Resolutions 11 and 12
Re-appointment and remuneration of auditor
The Company is required to appoint an auditor, at each general meeting before which accounts
are laid, to hold office until the end of the next such meeting. The Board (through its Audit & Risk
Committee) has recommended the re-appointment of Deloitte LLP and has confirmed that such
recommendation is free from influence by a third party and that no restrictive contractual terms have
been imposed on the Company. Deloitte LLP has indicated that it is willing to continue to act as
the Company’s auditor.
Resolution 11, therefore, proposes Deloitte’s reappointment as auditor to hold office until the
next general meeting at which the Company’s accounts are laid before shareholders. Resolution 12
authorises the directors to determine the auditor’s remuneration.
Resolution 13
Political donations
It has always been the Company’s policy that it does not make political donations. This remains the
Company’s policy.
Part 14 of the Companies Act 2006 (the Act) imposes restrictions on companies making political
donations to any political party or other political organisation or to any independent election candidate
unless they have been authorised to make donations at a general meeting of the Company.
Whilst the Company has no intention of making such political donations, the Act includes broad
and ambiguous definitions of the terms ‘political donation’ and ‘political expenditure’ which may
apply to some normal business activities which would not generally be considered to be political
in nature.
The directors therefore consider that, as a purely precautionary measure, it would be prudent to
obtain the approval of the shareholders to make donations to political parties, political organisations
and independent election candidates and to incur political expenditure up to the specified limit.
The directors intend to seek renewal of this approval at future Annual General Meetings but wish to
emphasise that the proposed resolution is a precautionary measure for the above reason and
that they have no intention of making any political donations or entering into party political activities.
Resolution 14
Power to allot shares
The Companies Act 2006 provides that the directors may only allot shares if authorised by
shareholders to do so. The directors’ current allotment authority is due to lapse at the 2025 Annual
General Meeting. The Board is, therefore, seeking to renew its authority over shares having an
aggregate nominal amount of £2,516,517, representing approximately one-third of the issued ordinary
share capital of the Company (excluding treasury shares) as at 20 March 2025 (being the latest
practicable date prior to the publication of this document). The Board is also seeking authority to allot
shares having an aggregate nominal amount of £5,033,034, representing approximately two-thirds
of the issued share capital of the Company (excluding treasury shares) as at 20 March 2025 by way
of pre-emptive offer to existing shareholders.
The allotment authority sought is in line with the Share Capital Management guidelines issued by
the Investment Association. For the avoidance of doubt, the authority sought pursuant to this
resolution will give the directors the ability to allot shares (or grant rights to shares) up to a maximum
aggregate nominal amount of £5,033,034.
As at 20 March 2025, the Company held no treasury shares.
The authority will expire at the earlier of the conclusion of the Company’s next Annual General Meeting
and the close of business on 30 June 2026.
Passing Resolution 14 will ensure that the directors have flexibility to take advantage of any
appropriate opportunities that may arise in pursuit of the Company’s strategic objective of acquiring
life and pensions businesses.
Resolutions 15 and 16 (special resolution)
Disapplication of statutory pre-emption rights
If the directors wish to allot shares, or grant rights to subscribe for, or convert securities into,
shares, or sell treasury shares for cash (other than pursuant to an employee share scheme), they
must first offer them to existing shareholders in proportion to their existing shareholdings. In order
to give directors flexibility to finance business opportunities by allotting shares without making a
pre-emptive offer to existing shareholders and, in accordance with the updated Statement of
Principles (PEG Statement of Principles) published by the Pre-Emption Group in November 2022,
Resolutions 15 and 16 ask shareholders to grant a limited waiver of their pre-emption rights as
referenced below. If the directors elect to exercise powers granted under Resolutions 15 and 16 in
relation to a non-pre-emptive offer, they shall follow the shareholder protections in Part 2B of the
PEG Statement of Principles.
Resolutions 15 and 16 will be proposed as special resolutions.
258 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
Resolution 15, if passed, will allow the directors to (a) allot shares in the Company for cash in
connection with a rights issue or other pre-emptive offer; and (b) otherwise allot shares in the
Company for cash up to a maximum aggregate nominal value of £754,955, in each case as if the
pre-emption rights of Section 561 of the Companies Act 2006 did not apply. This aggregate
nominal amount equates to approximately 10% of the issued ordinary share capital of the Company
(excluding treasury shares) as at 20 March 2025 (being the latest practicable date prior to the
publication of this Notice of Annual General Meeting).
In line with the PEG Statement of Principles, the Company is seeking authority, under Resolution 16,
to issue up to an additional 10% of its issued ordinary share capital for cash without pre-emption
rights applying. In accordance with the Statement of Principles, the Company will only allot shares
under this additional authority in connection with an acquisition or specific capital investment
(within the meaning given in the Statement of Principles) which is announced contemporaneously
with the allotment, or which has taken place in the preceding 12 month period and is disclosed in
the announcement of the allotment.
The authority granted under Resolutions 15 and 16 will expire at the earlier of the conclusion of the
Company’s next Annual General Meeting and the close of business on 30 June 2026.
Resolution 17 (special resolution)
Authority to purchase own shares
This resolution, which will be proposed as a special resolution, seeks to renew the Company’s
authority to purchase its own shares. It specifies the maximum number of shares which may be
acquired as 10% of the Company’s issued ordinary share capital (excluding treasury shares) as
at 20 March 2025, being the latest practicable date prior to the publication of this document, and
specifies the minimum and maximum prices at which shares may be bought.
The directors will only use this authority if, in light of market conditions prevailing at the time,
they believe that the effect of such purchases will be (where such shares are to be purchased for
cancellation) to increase earnings per share, and that taking into account other investment
opportunities, purchases will be in the best interests of the shareholders generally. Any shares
purchased in accordance with this authority will be cancelled or held in treasury for subsequent
transfer to an employee share scheme. The directors have no present intention of exercising this
authority, which will expire at the earlier of the conclusion of the Company’s next Annual General
Meeting and the close of business on 30 June 2026.
The Company has options and awards outstanding under existing share schemes over an aggregate
of 1,531,582 ordinary 5p shares, representing 1.02% of the Company’s issued ordinary share capital
(excluding treasury shares) as at 20 March 2025 (the latest practicable date prior to the publication
of this document). This would represent approximately 1.13% of the Company’s issued share capital
(excluding treasury shares) if the proposed authority being sought at the Annual General Meeting
to buy back 15,099,102 ordinary shares was exercised in full (and all the repurchased ordinary
shares were cancelled).
Resolution 18
Authority to allot new ordinary shares in relation to an issue
of Restricted Tier 1 (RT1) Instruments
Resolution 18, will, if passed, grant authority to directors to allot ordinary shares in the Company
or grant rights to subscribe for, or to convert any security into, ordinary shares in the Company,
in accordance with Section 551 of the Companies Act 2006, up to an aggregate nominal amount
of £2,516,517 in connection with the issue of RT1 Instruments (as defined in the AGM Notice)
which is, in aggregate, equivalent to approximately one-third of the issued ordinary share capital
of the Company as at 20 March 2025 (being the latest practicable date prior to the publication of
this notice of Annual General Meeting).
The directors believe that it is in the best interests of the Company to have the flexibility to issue
RT1 Instruments from time to time and the authority sought in Resolution 18 may be used if, in
the opinion of the directors, at the relevant time, such an issuance of RT1 Instruments would be
desirable to improve the capital structure of the Company and its subsidiaries. However, the request
for authority in Resolution 18 should not be taken as an indication that the Company will or will not
issue any, or any given amount of, RT1 Instruments.
This authority is in addition to the authority proposed in Resolution 14, which is the usual authority
sought on an annual basis in line with the guidance issued by the Investment Association.
This authority will expire at the earlier of the conclusion of the Company’s next Annual General
Meeting and the close of business on 30 June 2026. The directors may seek a similar authority in
the future.
Resolution 19 (special resolution)
Disapplication of pre-emption rights in relation to an issue
of Restricted Tier 1 (RT1) Instruments
Resolution 19, which will be proposed as a special resolution, proposes that, in addition to any
authority conferred by Resolution 15, the directors be empowered to allot equity securities (as defined
in Section 560 of the Companies Act 2006) for cash up to a nominal value of £2,516,517 in relation
to the issue of RT1 Instruments, which is equivalent to one-third of the issued ordinary share capital
of the Company as at 20 March 2025 (being the latest practicable date prior to the publication of
this notice of Annual General Meeting), as if Section 561 of the Companies Act 2006 did not apply
to any such allotment.
Resolution 19, if passed, would permit the Company the flexibility necessary to allot equity securities
pursuant to any proposal to issue RT1 Instruments without the need to comply with the pre-emption
rights of Section 561 of the Companies Act 2006 did not apply. Resolution 18 is intended to provide
the directors with the continued flexibility to issue RT1 Instruments which may convert into
ordinary shares. This will enhance the Company’s ability to manage its capital. Further information
on the Restricted Tier 1 Instruments is given in the AGM Notice.
This authority will expire at the earlier of the conclusion of the Company’s next Annual General
Meeting and the close of business on 30 June 2026. The directors may seek a similar authority in
the future.
Any exercise of the authorities in Resolutions 14, 15 and 16 (if passed) would be separate from and
in addition to the exercise of any powers under Resolutions 18 and 19 and would also have a dilutive
effect on existing shareholdings.
Resolution 20 (special resolution)
Notice of general meetings
The Companies Act 2006 requires the notice period for general meetings of the Company to be at
least 21 days, but, as a result of a resolution which was passed by the Company’s shareholders
at last year’s Annual General Meeting, the Company is currently able to call general meetings (other
than an Annual General Meeting) on not less than 14 clear days’ notice. In order to preserve this
ability, shareholders must once again approve the calling of meetings on not less than 14 clear days’
notice. Resolution 20 seeks such approval. The approval will be effective until the Company’s next
Annual General Meeting, when it is intended that a similar resolution will be proposed. The Company
will also need to meet the statutory requirements for electronic voting before it can call a general
meeting on less than 21 days’ notice.
The shorter notice period would not be used as a matter of routine for general meetings, but only
where the flexibility is merited by the business of the meeting and is thought to be to the advantage
of shareholders as a whole.
Directors’ recommendation
The directors recommend all shareholders to vote in favour of all of the above resolutions, as the
directors intend to do in respect of their own shares (save in respect of those matters in which
they are interested), and consider that all resolutions are in the best interests of the Company and
its shareholders as a whole.
EXPLANATORY NOTES TO THE NOTICE OF THE ANNUAL GENERAL MEETING
259
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
Further information on Restricted Tier 1 Instruments
APPENDIX TO AGM NOTICE
How can the issue of Restricted Tier 1 Instruments provide
a more efficient capital structure?
The Group can satisfy its Tier 1 Capital requirements through, among other things, the issue of
ordinary shares, retention of profits and the issue of Restricted Tier 1 Instruments. Satisfying the
Group’s Tier 1 Capital requirements in part through the issue of Restricted Tier 1 Instruments could
be a cost-effective means of raising capital, therefore enabling the Group to reduce its overall cost
of capital. This would, in turn, be expected to be more beneficial for existing shareholders than if
the Group were to satisfy its Tier 1 Capital requirements through the issue of ordinary shares or the
retention of profits alone.
At what price will Restricted Tier 1 Instruments be converted
into or exchanged for ordinary shares?
The terms and conditions of any Restricted Tier 1 Instruments issued will specify a conversion price
or a mechanism for setting a conversion price, which is the rate at which the Restricted Tier 1
Instruments will be exchanged into ordinary shares. The resolutions enable the directors to set the
specific terms and conditions of the Restricted Tier 1 Instruments (including a conversion price or
mechanism for setting a conversion price) after considering market conditions at the time of issuance.
Given the nature of the Trigger Events and the implications on the Group’s business at the time any
Trigger Event occurs, the Group’s expectation is that the conversion price at the time of conversion
would exceed the market price of the ordinary shares at such time.
How have you calculated the size of the authorities you are seeking?
These authorities are set at a level which, based on the share price of the Group as at 20 March
2025 (being the latest practicable date prior to the publication of this document) corresponds
approximately to the Group’s regulatory headroom for Restricted Tier 1 Instruments as at the same
date (limited to 20% of Tier 1 Capital).
What are ‘Restricted Tier 1 Instruments’?
Solvency II-compliant Restricted Tier 1 Instruments, structured as contingent convertible securities,
the terms of which will provide that, upon the occurrence of certain trigger events, the securities
will be irrevocably converted into ordinary shares.
Why is the Company seeking authorities in connection with
the issuance of Restricted Tier 1 Instruments?
The Group is subject to the Solvency II regulatory framework which came into force on 1 January 2016
and which has been retained in the United Kingdom following the end of the Brexit implementation
period on 31 December 2020. Under Solvency II, the Group is required to hold sufficient capital to
absorb losses in periods of stress and to provide a buffer to increase resilience against unexpected
losses, thereby protecting the interests of policyholders. At least half of the Group’s overall capital
requirements may only be met with certain types of high-quality capital (referred to as ‘Tier 1
Capital’), including share capital, retained profits and, for up to 20% of Tier 1 Capital, instruments that
are written down, or, in the case of Restricted Tier 1 Instruments, instruments that are converted
into ordinary shares, in the event that the Group’s capital position falls below defined levels (referred
to as a ‘Trigger Event’). The Group may issue Restricted Tier 1 Instruments to satisfy part of its
Tier 1 Capital requirements. Any issue of Restricted Tier 1 Instruments would form part of the Group’s
overall strategy to maintain a strong Capital Base from which it can achieve its objectives.
What is a ‘Trigger Event’ and what will happen if a Trigger Event occurs?
A Trigger Event will occur if the Group determines, in consultation with the Prudential Regulation
Authority, that it has ceased to comply with its capital requirements under Solvency II in a significant
way. This may occur if the amount of capital held by the Group falls below 75% of its capital
requirements, if the Group fails to comply with its capital requirements for a continuous period of
3 months or more or if the Group fails to comply with other minimum capital requirements
applicable to it. Only if a Trigger Event occurs (and not under any other circumstances) will any
Restricted Tier 1 Instruments issued by the Group convert into new ordinary shares. The holders
of any Restricted Tier 1 Instruments will not have the option to require conversion of the Restricted
Tier 1 Instruments at their discretion. The Group may, if permitted by law and regulation and if
considered appropriate at the relevant time, issue Restricted Tier 1 Instruments that include in their
terms and conditions a mechanism through which the Group may elect to give existing shareholders
the opportunity to purchase the ordinary shares issued on conversion of the Restricted Tier 1
Instruments in proportion to their existing shareholdings in the Company (subject to legal, regulatory
or practical restrictions).
What steps can the Group take on or before a Trigger Event?
If the Group’s capital position were to deteriorate, a number of steps are available to the Group to
improve its capital position before the occurrence of a Trigger Event. These could include reducing
the Group’s liabilities or raising extra share capital from investors by way of a rights issue. If the
Company were, in the future, to launch a rights issue, the Company’s existing shareholders would be
offered the opportunity to acquire new ordinary shares in proportion to their existing shareholding.
260 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
ALTERNATIVE PERFORMANCE MEASURES
Throughout our Annual Report and Accounts, we use Alternative Performance Measures (APMs) to supplement the assessment and reporting of the
performance of the Group. These measures are those that are not defined by statutory reporting frameworks, such as IFRS or Solvency II.
The APMs aim to assess performance from the perspective of all stakeholders, providing additional insight into the financial position and performance
of the Group and should be considered in conjunction with the statutory reporting measures such as IFRS and Solvency II.
The following table identifies the key APMs used in this report, how each is defined and why we use them. Further information can be found throughout
the overview section, with detailed reference within the financial review on pages 49 to 54.
APM
WHAT IS IT?
WHY DO WE USE IT?
REF
Commercial Cash
Generation
Cash generation is used by the Group as a measure of assessing
how much dividend potential has been generated, subject to
ensuring other constraints are managed.
Commercial Cash Generation excludes the impact of technical
adjustments and modelling changes; representing the inherent
commercial cash generated by the business.
Commercial Cash Generation provides stakeholders with
enhanced insight into cash generation, drawing out components
of the result relating to technical complexities or exceptional
items. The result is deemed to better reflect the Group’s view of
commercial performance, showing key drivers within that.
See cash generation
on page 49
Base Cash
Generation
Base Cash Generation is used by the Group as a measure of
assessing how much dividend potential has been generated,
subject to ensuring other constraints are managed.
Base Cash Generation is calculated as the movement in
the Group’s surplus Own Funds above the Group’s internally
required capital, as determined by applying the Group’s
Capital Management Policy, which has Solvency II rules at
its heart.
Base Cash Generation is a key measure, because it is the net
cash flows to Chesnara from its life and pensions businesses which
support Chesnara’s dividend-paying capacity and acquisition
strategy. Cash generation can be a strong indicator of how we
are performing against our stated objective of ‘maximising
value from existing business’.
See cash generation
on page 49 and
reconciliation on
page 264
Divisional Cash
Generation
Divisional Cash Generation represents the movement in
surplus Own Funds above local capital management policies
within the three operating divisions of Chesnara. Divisional
Cash Generation is used as a measure of how much dividend
potential a division has generated, subject to ensuring other
constraints are managed.
It is an important indicator of the operating performance of the
business before the impact of Group level operations and
consolidation adjustments.
See cash generation
on page 49
Economic Value
(EcV)
EcV is a financial metric that is derived from Solvency II Own
Funds. It provides a market consistent assessment of the
value of existing insurance businesses, plus adjusted net asset
value of the non-insurance business within the Group.
We define EcV as Own Funds adjusted for contract boundaries,
risk margin and restricted with-profit surpluses. As such,
EcV and Own Funds have many common characteristics and
tend to be impacted by the same factors.
EcV reflects the market-related value of in-force business and
net assets of the non-insurance business and hence is an
important reference point by which to assess the Group’s value.
A life and pensions group may typically be characterised as
trading at a discount or premium to its Economic Value. Analysis
of EcV provides additional insight into the development of the
business over time. The EcV development of the Group over time
can be a strong indicator of how we have delivered to our
strategic objectives.
See EcV analysis
on page 50
Economic Value
(EcV) Earnings
The principal underlying components of the EcV Earnings are:
– The expected return from existing business (being
the effect of the unwind of the rates used to discount the
value in-force);
– Value added by the writing of new business;
– Variations in actual experience from that assumed in the
opening valuation;
– The impact of restating assumptions underlying the
determination of expected cash flows; and
– The impact of acquisitions.
By recognising the market-related value of in-force business
(in-force value), a different perspective is provided in the
performance of the Group and on the valuation of the business.
EcV Earnings are an important KPI as they provide a longer-term
measure of the value generated during a period. The EcV Earnings
of the Group can be a strong indicator of how we have delivered
against all three of our core strategic objectives.
See EcV Earnings
analysis on page 51
261
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
APM
WHAT IS IT?
WHY DO WE USE IT?
REF
EcV Operating
Earnings
This is the element of EcV Earnings that is generated from the
Company’s ongoing core business operations, excluding any
profit earned from investment market conditions in the period
and any economic assumption changes in the future.
EcV Operating Earnings provide an indication of the underlying
value generated by the business. This measure can identify
profitable activities and also inefficient processes and potential
management actions.
See EcV Earnings
analysis on page 51
EcV Economic
Earnings
This is the element of EcV Earnings that is derived from
investment market conditions in the period and any economic
assumption changes in the future.
EcV Economic Earnings are important in order to measure the
additional value generated from investment market factors.
See EcV Earnings
analysis on page 51
New Business Contribution
Note: This measure was previously
referred to as ‘commercial new
business’. There has been no change
to the basis of calculation.
A more commercially relevant measure of new business profit
than that recognised directly under the Solvency II regime,
allowing for a modest level of return, over and above risk-free,
and exclusion of the incremental risk margin Solvency II
assigns to new business.
This provides a fair commercial reflection of the value added by
new business operations and is more comparable with how new
business is reported by our peers, improving market consistency.
See business review
section on pages
40 to 45
Solvency
Solvency is a fundamental financial measure which is of paramount
importance to investors and policyholders. It represents the
relationship between the value of the business as measured on
a Solvency II basis and the capital the business is required to
hold – the Solvency Capital Requirement (SCR). Solvency can be
reported as an absolute surplus value or as a ratio.
Solvency gives policyholders comfort regarding the security
of their provider. This is also the case for investors, together with
giving them a sense of the level of potential surplus available
to invest in the business or distribute as dividends, subject to other
considerations and approvals.
See capital
management section
on pages 46 to 48
Assets Under
Administration (AuA)
Note: This measure was previously
referred to as ‘Funds under
Management’ (FuM). There has
been no change to the basis
of calculation.
AuA reflects the value of the financial assets that the business
manages, as reported in the IFRS Consolidated Balance Sheet.
AuA provides an indication of the scale of the business, and the
potential future returns that can be generated from the assets
that the Group manages and administers on behalf of customers.
See Consolidated
Balance Sheet on
page 149
Leverage
A financial measure that demonstrates the degree to which the
Company is funded by debt financing versus equity capital,
presented as a ratio. It is defined as debt divided by debt plus
equity, with the equity denominator adding back the net of
tax CSM liability, as measured under IFRS.
This measure indicates the overall level of indebtedness of
the Group and is also a key component of the bank covenant
arrangements held by Chesnara.
See IFRS balance
sheet on page 52
IFRS Capital Base
IFRS net equity plus the consolidated CSM net of reinsurance
and tax.
It is a more appropriate measure of the value of the business
than net equity as it allows for the store of deferred profits held
in the balance sheet, as represented by the CSM, including
those as yet unrecognised profits from writing new business
and acquisitions.
See IFRS income
statement on page 53
Policies/policy count
Policy count is the number of policies that the Group manages
on behalf of customers.
This is important to show the scale of the business, particularly to
provide context to the rate at which the closed-book business is
maturing. In our open businesses, the policy count shows the net
impact of new business versus policy attrition.
See Introduction to
Chesnara on page 8
262 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
KEY STAKEHOLDERS
Measure
Policyholder
Investor
Regulators
Business
partner*
What is it and why is it important?
Page
Customer
service levels
How well we service our customers is of paramount importance and so through various means we aim to assess
customer service levels. The business reviews within the Annual Report and Accounts refer to a number of indicators
of customer service levels.
40-45
Broker
satisfaction
Broker satisfaction is important because they sell our new policies, provide ongoing service to their customers and
influence book persistency. We include several measures within the Annual Report and Accounts, including direct
broker assessment ratings for Movestic and general assessment of how our brands fare in industry performance
awards in the Netherlands.
40-45
Policy investment
performance
This is a measure of how the assets are performing that underpin policyholder returns. It is important as it indicates
to the customer the returns that their contributions are generating, and options available to invest in funds that focus
on environmental, social and governance factors.
40-45
Industry performance
assessments
This is a comparative measure of how well our investments are performing against the rest of the industry, which
provides valuable context to our performance.
40-45
Emissions and
energy usage
Tracking our scope 1/2/3 emissions is a core part of our transition to be a net zero and sustainable Group.
87-90
Assets Under
Administration†
This shows the value of the investments that the business manages. This is important because scale influences
operational sustainability in run-off books and operational efficiency in growing books. Assets Under Administration
are also a strong indicator of fee income.
8
Policy count†
Policy count is the number of policies that the Group manages on behalf of customers. This is important to show
the scale of the business, particularly to provide context to the rate at which the closed-book business is maturing.
In our open businesses, the policy count shows the net impact of new business versus policy attrition.
8
Total Shareholder
Returns
This includes dividend growth and yield and shows the return that an investor is generating on the shares that they hold.
It is highly important as it shows the success of the business in translating its operations into a return for shareholders.
55
New business
profitability
This shows our ability to write profitable new business which increases the value of the Group. This is an important
indicator given one of our core objectives is to ‘enhance value through profitable new business’.
40-45
New business
market share
This shows our success at writing new business relative to the rest of the market and is important context for
considering our success at writing new business against our target market shares.
40-45
Leverage ratio
The leverage is a financial measure that demonstrates the degree to which the Company is funded by debt financing
versus equity capital, presented as a ratio. It is defined as debt divided by debt plus equity, with the equity denominator
adding back the net of tax CSM liability, as measured under IFRS.
52-56
Knowledge, skills
and experience of the
Board of Directors
This is a key measure given our view that the quality, balance and effectiveness of the Board of Directors has a direct
bearing on delivering positive outcomes to all stakeholders. This includes holding the management teams accountable
for the delivery of set objectives and the proper assessment of known and emerging risks and opportunities,
e.g. those arising from climate change.
94-95
KEY
Primary interest
Secondary interest
*For the purposes of this key performance indicator assessment, business partners refers to major suppliers and outsource partners.
†Alternative Performance Measure (APM) used to enhance understanding of financial performance. Further information on APMs
can be found in the additional information section of this Annual Report and Accounts.
In addition to financial performance measures, this Annual Report and Accounts includes measures that consider and assess the performance of all our key
stakeholder groups. The diagram below summarises the performance measures adopted throughout the Annual Report and Accounts.
OPERATIONAL AND OTHER PERFORMANCE MEASURES
263
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
RECONCILIATION OF METRICS
The diagram below shows the interaction between the IFRS metrics and the Alternative Performance Measures used by the Group.
The main differences between the two methodologies for calculating actuarial net liabilities are as follows:
– Under IFRS 9, the value of investment contracts is taken as the unit liability, whilst under Solvency II, a non-unit reserve and Risk Margin are required.
– Best estimate assumptions are used for both IFRS 17 and Solvency II; however, the former requires the CSM to be held for which there is no equivalent under Solvency II.
– Both bases require a margin for adverse deviation, respectively the Risk Adjustment and the Risk Margin, but whilst the approach used is very similar, the cost of capital applied is different.
– For the most part, the yield curves adopted for discounting under IFRS 17 are very similar to those used in Solvency II, the exception being that for certain Dutch ‘savings mortgage’ products the IFRS 17
liabilities use a yield curve derived from mortgage rates available in the market.
– The reserve for future expenses held in Chesnara plc under Solvency II is not permitted under IFRS.
– Other valuation differences relate to the definition of contract boundary and the allowability, or otherwise, of certain expenses such as investment management expenses on products where no investment
service is provided.
£m
31 Dec 2024
31 Dec 2023
Rationale
Group IFRS net assets
314.5
359.9
Removal of intangible assets; AVIF, DAC and DIL
(86.0)
(94.9)
Intangible assets that cannot be sold separately have no intrinsic value under Solvency II rules.
Removal of IFRS reserves, net of reinsurance
11,721.8
11,071.0
Net liabilities are calculated differently between the two methodologies and hence IFRS reserves are replaced
with Solvency II technical provisions. The main differences in methodology are discussed further below.
Inclusion of SII technical provisions, net of reinsurance
(11,468.0)
(10,853.3)
Other valuation differences
(4.4)
0.4
Other valuation differences.
Mortgage loan valuation difference
34.5
32.3
Valuation difference of the Mortgage debt between IFRS and SII.
Deferred tax valuation differences
(12.2)
(8.1)
These are the deferred tax impacts as a result of the adjustments above.
Foreseeable dividends
(24.3)
(23.5)
Under Solvency II rules, future ‘foreseeable dividends’ are required to be recognised within Own Funds. Under
IFRS rules, dividends are recognised when paid.
Tier 2 debt valuation differences
34.7
52.2
Valuation difference of Tier 2 debt between IFRS and SII.
Tier 2 debt under SII
166.1
148.4
Tier 2 capital plus the restriction placed on the subordinated debt within Own Funds under
Solvency II requirements.
Tier 2/3 restrictions
(32.1)
(0.3)
Ring-fenced surpluses
(1.9)
(0.5)
Solvency II requires that Own Funds are reduced by any surpluses that are restricted. For Chesnara, this relates to
surpluses within the two S&P with-profits funds, which are temporarily restricted. These restrictions are removed
through periodic capital transfers.
Group SII Own Funds
642.7
683.6
As shown above, the key interaction between our statutory reporting rules under IFRS and the Alternative Performance Measures is with the Solvency II valuation and the Own Funds balance. A reconciliation
from IFRS net assets to Solvency II Own Funds is shown below:
FINANCIAL STATEMENTS
ADDITIONAL METRICS
IFRS net assets
Absolute
Earnings
Divisional
Contribution
Percentage
Balance sheet
Group
EcV
Capital requirements
SCR plus
management buffer
Solvency Capital
Requirement
Solvency II valuation
(Own Funds)
I
R
Solvency
Economic Value
Cash generation
New business
IFRS profits
Stakeholder focus:
P Policyholders
B Business partners
I Investors
Key performance indicators
R Regulators
I
I
I
P
R
B
I
B
264 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
RECONCILIATION OF METRICS
Solvency II position
Solvency II is the solvency regime that applies to the Group. Over and above IFRS, Solvency II imposes
a capital requirement on the Group.
A summary of the solvency position of the Group at 31 December 2024 and 31 December 2023
is as follows:
£m
31 Dec 2024
31 Dec 2023
Group SII Own Funds (OF)
642.7
683.7
Solvency Capital Requirement (SCR)
315.8
332.7
Solvency surplus
326.8
351.0
Solvency ratio
203%
205%
Cash generation
Cash generation is used by the Group as a measure of assessing how much dividend potential has
been generated, subject to ensuring other constraints are managed. Group cash generation is
calculated as the movement in the Group’s surplus Own Funds above the Group’s internally required
capital, as determined by applying the Group’s Capital Management Policy, which has Solvency II
rules at its heart. For further information on cash generation please refer to page 260 and the financial
review section.
Cash generation can be derived from the opening and closing solvency positions as follows:
£m
Opening Solvency II surplus:
Own Funds – 31 Dec 2023
683.7
Remove Tier 2 debt at book value
(200.0 )
SCR – 31 Dec 2023
(332.7 )
Add back Own Funds Restriction
0.5
Additional capital to meet normal internal operating range (40% of SCR)
(133.1 )
Surplus available for distribution – 31 Dec 2023
18.4
Closing Solvency II surplus:
Own Funds – 31 Dec 2024
642.7
Remove Tier 2 debt at book value
(200.0 )
SCR – 31 Dec 2024
(315.8 )
Add back Own Funds Restriction
1.9
Additional capital to meet normal internal operating range (40% of SCR)
(126.3 )
Surplus available for distribution – 31 Dec 2024
2.5
The closing Solvency II position at 31 December 2024 reflects the payment of an interim dividend
of £13.0m paid during the year and reflects a foreseeable dividend of £24.3m due to be paid in 2025.
As these are distributions to shareholders, akin to IFRS profit reporting, these do not form part of
the cash generation metric and should be excluded. Consequently, Base Cash Generation can be
derived as follows:
£m
Closing surplus available for distribution less opening available
surplus for distribution
(15.9 )
Add back: Movement in Tier 3 asset and restrictions
30.2
Add back: Interim dividend paid
13.0
Add back: Foreseeable year end dividend
24.3
Base Cash Generation
51.6
Symmetric adjustment
6.5
WP restriction look through
1.5
Commercial Cash Generation
59.6
265
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
GLOSSARY
AGM
ALM
APE
Base Cash
Generation
BLAGAB
CA
CALH
CASLP
Commercial
Cash Generation
Core Surplus
Emergence
CSM
Divisional Cash
Generation
Dividend Cover
DNB
DORA
DPF
Dutch business
Economic profit
EcV
EcV Earnings
FCA
FI
Form of proxy
FSMA
GMM
Group
Group Centre
Group
Own Funds
Group SCR
Group solvency
HCL
IFRS
IFA
KPI
Annual General Meeting.
Asset Liability Management – management of risks that arise due to mismatches
between assets and liabilities.
Annual Premium Equivalent – an industry-wide measure that is used for measuring
the annual equivalent of regular and single premium policies.
This represents the cash that has been generated in the period. The cash generating
capacity of the Group is largely a function of the movement in the solvency position
of the insurance subsidiaries within the Group and takes account of the buffers that
management has set to hold over and above the solvency requirements imposed by
our regulators. Cash generation is reported at a Group level and also at an underlying
divisional level reflective of the collective performance of each of the divisions prior
to any Group level activity.
Basic life assurance and general annuity business.
Countrywide Assured plc.
Countrywide Assured Life Holdings Limited and its subsidiary companies.
Sanlam Life & Pensions UK.
Cash generation excluding the impact of technical adjustments, modelling changes and
exceptional corporate activity; the inherent commercial cash generated by the business.
Absolute surplus movement of the divisions including Chesnara entity but adjustments
will be made for the impact of items such as FX, T2/T3 restrictions, acquisition impacts
and shareholder dividends as deemed appropriate.
Note: Any adjustments will be subject to Board approval (and Remco (Remuneration
Committee) approval if they impact remuneration) and will be transparently reported.
Contractual Service Margin (CSM) represents the unearned profit that an entity expects
to earn on its insurance contracts as it provides services.
This represents the cash generated by the three operating divisions of Chesnara (UK,
Sweden and the Netherlands), exclusive of Group level activity.
Defined as Commercial Cash Generation divided by the total of the interim and final
proposed shareholder dividend for the financial year.
De Nederlandsche Bank is the central bank of the Netherlands and is the regulator of our
Dutch subsidiaries.
Digital Operational Resilience Act (European Union regulation).
Discretionary Participation Feature – a contractual right under an insurance contract to
receive, as a supplement to guaranteed benefits, additional benefits whose amount
or timing is contractually at the discretion of the issuer.
Scildon and the Waard Group, consisting of Waard Leven N.V., Waard Schade N.V. and
Waard Verzekeringen B.V.
A measure of pre-tax profit earned from investment market conditions in the period and
any economic assumption changes in the future (alternative performance measure – APM).
Economic Value is a financial metric that is derived from Solvency II Own Funds.
It provides a market consistent assessment of the value of existing insurance businesses,
plus adjusted net asset value of the non-insurance business within the Group.
Measure of the value generated by the Group in a period.
Financial Conduct Authority.
Finansinspektionen, being the Swedish Financial Supervisory Authority.
The form of proxy relating to the General Meeting being sent to shareholders with
this document.
The Financial Services and Markets Act 2000 of England and Wales, as amended.
General Measurement Model – the default measurement model which applies to
insurance contracts with limited or no pass-through of investment risks to policyholders.
Chesnara plc and its existing subsidiary undertakings.
Parent Company operations of Chesnara plc.
In accordance with the UK’s regulatory regime for insurers, it is the sum of the individual
capital resources for each of the regulated related undertakings less the book value
of investments by the Group in those capital resources.
In accordance with the UK’s regulatory regime for insurers, it is the sum of individual
capital resource requirements for the insurer and each of its regulated undertakings.
Group solvency is a measure of how much the value of the Company exceeds the level
of capital it is required to hold in accordance with Solvency II regulations.
HCL Insurance BPO Services Limited.
International Financial Reporting Standards.
Independent Financial Advisor.
Key performance indicator.
LACDT
Leverage
London Stock
Exchange
LTIP
Movestic
New business
Official List
Operating profit
Ordinary shares
ORSA
Own Funds
PAA
PRA
QRT
RA
RCF
Resolution
RMF
Robein Leven
Scildon
Shareholder(s)
Solvency II
Solvency
(absolute) surplus
Standard Formula
STIS
SCR
Swedish business
S&P
TCF
Tier 2
Transfer ratio
TSR
UK or
United Kingdom
UK business
VA
VFA
Waard
Loss Absorbing Capacity of Deferred Tax.
A financial measure that demonstrates the degree to which the Company is funded by
debt financing versus equity capital, usually presented as a ratio, defined as debt divided
by debt plus equity, with the equity denominator adding back the net of tax CSM
liability, as measured under IFRS.
London Stock Exchange plc.
Long-Term Incentive Plan – a reward system designed to incentivise executive directors’
long-term performance.
Movestic Livförsäkring AB.
The present value of the expected future cash inflows arising from business written
in the reporting period.
The Official List of the Financial Conduct Authority.
A measure of the pre-tax profit earned from a company’s ongoing core business operations,
excluding any profit earned from investment market conditions in the period and any
economic assumption changes in the future (alternative performance metric – APM).
Ordinary shares of 5 pence each in the capital of the Company.
Own Risk and Solvency Assessment.
In accordance with the UK’s regulatory regime for insurers, it is the sum of the
individual capital resources for each of the regulated related undertakings less the book-
value of investments by the Company in those capital resources.
Premium Allocation Approach – a simplified measurement model which can be applied
to short-term contracts.
Prudential Regulation Authority.
Quantitative Reporting Template.
Risk adjustment is the additional reserve held for non-financial risks.
3 year Revolving Credit Facility of £150m (currently unutilised) renewed in July 2024.
The resolution set out in the notice of General Meeting set out in this document.
Risk Management Framework.
Robein Leven N.V.
Scildon N.V.
Holder(s) of ordinary shares.
A fundamental review of the capital adequacy regime for the European insurance
industry. Solvency II aims to establish a set of EU-wide capital requirements and risk
management standards and has replaced the Solvency I requirements.
A measure of how much the value of the Company (Own Funds) exceeds the level of
capital it is required to hold.
The set of prescribed rules used to calculate the regulatory SCR where an internal
model is not being used.
Short-Term Incentive Scheme – a reward system designed to incentivise executive
directors’ short-term performance.
In accordance with the UK’s regulatory regime for insurers, it is the sum of individual
capital resource requirements for the insurer and each of its regulated undertakings.
Movestic and its subsidiaries and associated companies.
Save & Prosper Insurance Limited and Save & Prosper Pensions Limited.
Treating Customers Fairly – a central PRA principle that aims to ensure an efficient and
effective market and thereby help policyholders achieve fair outcomes.
Term debt capital (Tier 2 Subordinated Notes) issued in February 2022 with
a 10.5 year maturity and 4.75% coupon rate.
The proportion of new policies transferred into the business in relation to those
transferred out.
Total Shareholder Return, measured with reference to both dividends and capital growth.
The United Kingdom of Great Britain and Northern Ireland.
CA, S&P and CASLP.
The Volatility Adjustment is a measure to ensure the appropriate treatment of insurance
products with long-term guarantees under Solvency II. It represents an adjustment to the
rate used to discount liabilities to mitigate the effect of short-term volatility bond returns.
Variable Fee Approach – the measurement model that is applied to insurance contracts
with significant investment-related pass-through elements.
The Waard Group.
266 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
NOTE ON TERMINOLOGY
As explained in Note C to the IFRS Financial Statements, the principal reporting segments of the Group are:
CA
which comprises the original business of Countrywide Assured plc, the Group’s original UK operating subsidiary; City of Westminster Assurance Company Limited,
which was acquired by the Group in 2005, the long-term business of which was transferred to Countrywide Assured plc during 2006; S&P which was acquired
on 20 December 2010. This business was transferred from Save & Prosper Insurance Limited and Save & Prosper Pensions Limited to Countrywide Assured plc on
31 December; and Protection Life Company Limited which was acquired by the Group in 2013, the long-term business of which was transferred into Countrywide
Assured plc in 2014, as well as the portfolio of policies acquired from Canada Life on 16 May 2023 and reinsured into Countrywide Assured plc;
CASLP – ‘SLP’
Sanlam Life & Pensions UK which was acquired on 28 April 2022. CASLP was dissolved by court order on 14 January 2025;
Movestic
which was purchased on 23 July 2009 and comprises the Group’s Swedish business, Movestic Livförsäkring AB and its subsidiary and associated companies;
The Waard Group
which was acquired on 19 May 2015 and comprises two insurance companies; Waard Leven N.V. and Waard Schade N.V.; and a service company, Waard Verzekeringen;
Robein Leven N.V. acquired on 28 April 2022; and the insurance portfolio of Conservatrix acquired on 1 January 2023;
Scildon
which was acquired on 5 April 2017; and
Other Group activities
which represents the functions performed by the Parent Company, Chesnara plc. Also included in this segment are consolidation adjustments.
267
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
CAUTIONARY AND FORWARD-LOOKING STATEMENTS AND MSCI DISCLAIMER
Cautionary and forward-looking statements
This document has been prepared for the members of Chesnara plc and no one else. Chesnara plc,
its directors or agents do not accept or assume responsibility to any other person in connection
with this document and any such responsibility or liability is expressly disclaimed. Nothing in this
document should be construed as a profit forecast or estimate.
This document may contains, and we may make other statements (verbal or otherwise) containing,
forward-looking statements with respect to certain of the plans and current expectations relating
to the future financial condition, business performance, and results, strategy and/or objectives
(including without limitation, climate-related plans and goals) of Chesnara plc.
Statements containing the words ‘believes’, intends’, ‘will’, ‘expects’, plans’, ‘aims’, ‘seeks’, ‘targets’,
‘continues’ and ‘anticipates’ or other words of similar meaning are forward-looking.
By their nature, all forward-looking statements involve risk and uncertainty because they relate
to future events and circumstances that are beyond the control of Chesnara plc including, amongst
other things, UK domestic, Swedish domestic, Dutch domestic and global economic, political,
social, environmental and business conditions, market-related risks such as fluctuations in interest
rates, currency exchange rates, inflation, deflation, the impact of competition, changes in customer
preferences, delays in implementing proposals, the timing, impact and other uncertainties of future
acquisitions or other combinations within relevant industries, the policies and actions of regulatory
authorities, the impact of tax or other legislation and other regulations in the jurisdictions in which
Chesnara plc and its subsidiaries operate. As a result, Chesnara plc’s actual future condition,
business performance and results may differ materially from the plans, goals and expectations
expressed or implied in these forward-looking statements.
No representation is made with regard to forward-looking statements, including that any future
results will be achieved. As a result, you are cautioned not to place undue reliance on such
forward-looking statements contained in this document. Chesnara undertakes no obligation to
update any of the forward-looking statements contained within this document or any other
forward-looking statements we make. Forward-looking statements in this report are current only
as of the date on which such statements are made.
The climate metrics used in this document should be treated with special caution, as they are more
uncertain than, for example, historical financial information and given the wider uncertainty around
the evolution and impact of climate change. Climate metrics include estimates of historical emissions
and historical climate change and forward-looking climate metrics (such as ambitions, targets,
climate scenarios and climate projections and forecasts). Our understanding of climate change and
its impact continue to evolve. Accordingly, both historical and forward-looking climate metrics are
inherently uncertain and Chesnara expects that certain climate disclosures made in this document
are likely to be amended, updated, recalculated or restated in the future.
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268 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
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