Chesnara is a life insurance company that was founded in 2004, specialising in the consolidation of closed life insurance books in the UK, the Netherlands and Sweden. It has a strong track record of acquiring "closed books" - books of life insurance business that are in run-off - at discounts to their intrinsic value and then managing these closed books efficiently, identifying ways to create value for shareholders.

The value that Chesnara adds will vary from period to period. Over time, Chesnara benefits from the investment returns it achieves, which tend to be in excess of the "risk free returns" that are assumed in their actuarial models. Chesnara also achieves value creation through operational efficiencies such as merger synergies, as they bolt-on a new book of business to an existing operating platform. In some instances, Chesnara has the capability to write new business, adding scale and thereby improving the sustainability of its financial model.

Chesnara has recently shown an acceleration in the pace of acquisitions, consummating two deals in the first half of 2023. In the Netherlands, Chesnara acquired the insurance portfolio of Conservatrix, increased the number of policies under administration by over 50%, which delivered a meaningful increase in cash generation. In the UK,

Chesnara acquired the individual protection business of Canada Life UK. This added 47,000 customers to Chesnara's existing UK business, Countrywide Assured, taking their total number of UK customers to 308,000.

While swings in investment markets can affect sentiment towards Chesnara's business in the short term, we believe that a period of risk aversion can play to Chesnara's strengths, creating acquisition opportunities at knock-down prices. This is because large insurance groups tend to shift towards a more focused and simplified strategy when times are tough, making them more inclined to sell off non-core assets, often at large discounts to their intrinsic value.