Market drops hurt Chesnara

VOLATILITY in equity and bond markets battered European life insurance consolidator Chesnara in the first half of this year, cutting its profits to just £3.8m, it said yesterday.

Chesnara’s Swedish business Movestic was hit by low investment returns, while its newest acquisition, Save & Prosper, fell to a £1.2m operating loss due to lower interest rates.

Chesnara’s group pre-tax profit of £3.8m was 68 per cent down from the £12m profit seen in the first half of 2010 on a combination of shifts, such as much lower releases from prior year reserves this year and a £4.2m “with profits strain” from Save & Prosper.

But Chesnara chairman Peter Mason said its founding business, Countrywide Assured, delivered an £8m profit in line with expectations and Movestic’s £1.2m loss showed the business was gradually improving.

“Like many businesses, we have been affected by the ongoing turmoil in the equity and debt markets,” Mason said. “However, we remain strong financially and believe we are well-placed to deliver good ongoing returns to shareholders.”

“We believe the cash generation which supports the dividend will remain resilient at least into the medium term even if markets remain difficult,” said Panmure Gordon analyst Barrie Cornes.