Chesnara Plc, a London-listed European life and pensions consolidator, is reportedly exploring a potential acquisition of HSBC Holdings Plc’s UK life insurance business, according to sources familiar with the matter. The deal, potentially valued at several hundred million dollars, would mark a significant expansion for Chesnara as it continues to consolidate legacy insurance portfolios and strengthen its UK market position.
Chesnara’s Strategic Move to Acquire HSBC’s UK Life Insurance Unit
Chesnara is among several potential suitors interested in acquiring HSBC’s UK life insurance operations, which primarily consist of closed books-insurance policies no longer open to new customers but still actively managed. The acquisition aligns with Chesnara’s core strategy of growing through purchasing closed life and pension portfolios, enhancing scale and cash generation.
Potential Deal Size and Strategic Fit
- The acquisition could be valued at several hundred million dollars, reflecting the size and value of HSBC’s UK life insurance business.
- Chesnara currently administers over one million policies and manages a growing portfolio of closed life and pensions books, making the HSBC unit a complementary addition.
- This deal would further consolidate Chesnara’s position as a leading consolidator in the UK life insurance market.
Chesnara’s Robust Financial Performance Supports Acquisition Ambitions
Chesnara reported strong financial results for 2024, underscoring its capacity to finance acquisitions and deliver shareholder value:
- Economic Value Earnings increased 17% to £69.1 million in 2024, up from £59.1 million in 2023.
- Cash generation rose to £60 million, providing strong dividend cover with a solvency ratio of 203%, well above the company’s target range of 140%-160%.
- IFRS pre-tax profits surged to £21 million from £2 million in 2023.
- The company declared a 3% dividend increase, marking its 20th consecutive year of dividend growth.
Steve Murray, Chesnara’s Group Chief Executive, highlighted recent acquisitions as key growth drivers:
“Our recent acquisition of a closed portfolio from Canada Life UK, comprising approximately 17,000 policies and £1.5 billion in assets under management, adds scale and value to our UK business. We remain confident in our ability to finance and execute further acquisitions on attractive terms.”
Recent Acquisitions and Portfolio Growth
In December 2024, Chesnara acquired a closed portfolio of unit-linked bonds and legacy pension business from Canada Life UK, expected to transfer to Chesnara’s UK subsidiary, Countrywide Assured plc, by the end of 2025. This portfolio adds approximately 17,000 policies and £1.5 billion in assets under management, further expanding Chesnara’s UK footprint to over 300,000 policies.
This acquisition follows Chesnara’s 2023 purchase of Canada Life’s individual onshore protection business, demonstrating a consistent growth trajectory through strategic portfolio consolidation.
HSBC’s Strategic Focus and Business Streamlining
HSBC Holdings Plc has been sharpening its strategic focus, recently reporting strong Q1 2025 growth and emphasizing core banking activities. The potential sale of its UK life insurance business fits into this broader strategy of simplifying operations and reallocating capital more efficiently.
The UK life insurance business is a closed book, meaning it no longer underwrites new policies but continues servicing existing customers. Divesting this unit allows HSBC to reduce operational complexity and focus on higher-priority areas.
Market Context: Consolidation in UK Life Insurance
The UK life insurance market has seen increased consolidation, with firms like Chesnara specializing in acquiring and efficiently managing closed books. This trend benefits vendors seeking to exit non-core businesses and offers policyholders focused management and financial stability.
Chesnara’s strong solvency and cash flow position enable it to pursue acquisitions that enhance scale and shareholder returns, reinforcing its leadership in the sector.
Summary and Outlook
Chesnara’s exploration of acquiring HSBC’s UK life insurance business highlights its ambition to consolidate the UK life and pensions market further. Supported by strong financial results and a proven acquisition track record, Chesnara is well-positioned to expand its portfolio and deliver value to shareholders and policyholders alike.
Meanwhile, HSBC continues to streamline its operations by divesting non-core assets, focusing on core banking and growth areas. The potential deal represents a strategic fit for both parties amid evolving market dynamics.
