ANNUAL
REPORT
AND
ACCOUNTS
2024
WELCOME TO THE
CHESNARA ANNUAL
REPORT & ACCOUNTS
FOR YEAR ENDED
31 DECEMBER 2024
WELCOME
OVERVIEW
CORPORATE GOVERNANCE
ADDITIONAL INFORMATION
06 An introduction to Chesnara
94 Board profile and Board of Directors
252 Financial calendar
09 Delivering our strategy
96 Governance overview from the Chair
252 Key contacts
12 2024 financial highlights
98 Corporate Governance Report
253 Notice of Annual General Meeting
14 Chair’s Statement
104 Nomination & Governance
255 Explanatory notes to the Notice
Committee Report
of Annual General Meeting
16 Chief Executive Officer’s Report
110 Directors’ Remuneration Report
259 Appendix to AGM Notice
19 Chief Financial Officer’s Report
127 Audit & Risk Committee Report
260 Alternative Performance Measures
135 Directors’ Report
262 Operational and other
STRATEGIC REPORT
performance measures
139 Directors’ Responsibilities Statement
263 Reconciliation of metrics
26 Our strategy, business model
265 Glossary
and culture & values
IFRS FINANCIAL STATEMENTS
266 Note on terminology
28 Our strategy
267 Cautionary and forward-looking
30 Our culture & values
142 Independent Auditor’s Report to the
statements
members of Chesnara plc
32 Section 172 reporting
267 MSCI disclaimer
148 Consolidated Statement of
40 Business review
Comprehensive Income
46 Capital management
149 Consolidated Balance Sheet
49 Financial review
150 Consolidated Statement of Cash Flows
55 Financial management
151 Consolidated Statement of Changes
57 Risk management
in Equity
68 Corporate and social responsibility
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
OVERVIEW
AN INTRODUCTION TO CHESNARA
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:
OUR STRATEGIC OBJECTIVES
MAXIMISE VALUE
ACQUIRE LIFE
ENHANCE VALUE
FROM EXISTING
AND PENSIONS
THROUGH PROFITABLE
BUSINESS
BUSINESSES
NEW BUSINESS
The efficient management
Creating value through
Writing new business where
of life assurance and
acquiring new companies
we are confident that conditions
pension policies.
or books of business.
will ensure the products are value
adding, meet our required hurdle
rates and ultimately support
longer-term cash generation.
1
2
3
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.
6CHESNARAANNUALREPORTANDACCOUNTS2024
OVERVIEW
Who we are and where we came from
How we create value
The Group initially consisted of Countrywide Assured (CA),
For customers
For shareholders
a closed life and pensions book demerged from Countrywide
– We deliver an effective customer experience with good
– Surpluses emerge from the existing books of business through
plc, a large estate agency group, over 20 years ago.
standards of service operations, clear communication and
efficient management of the policy base and good capital
competitive fund performance. We also offer customers
management practices. This enables dividends to be paid from
The Group today comprises both open-book and closed-
the ability to invest in sustainable funds.
the subsidiaries to Chesnara, which in turn can fund M&A and
book operations having grown through:
an attractive shareholder dividend which has grown each year
– Product reviews across the Group help to ensure good
– the acquisitions of predominantly closed UK businesses
since our listing in 2004.
customer outcomes and, in the UK, have been updated
(into CA);
to be aligned to the new Consumer Duty requirements.
– Growth from both our proven acquisition model and from
– the purchase of an open life and pensions business in
writing profitable new business has a positive impact on the
– Customers can also be confident in the security of their
Sweden, now known as Movestic;
†
Own Funds
of the business and supports longer-term cash
policies through the robust solvency levels we operate our
†
– acquisitions of both a closed-book acquisitive group
generation
. Market returns above a risk-free rate of return are
businesses to.
(Waard Group) and an open life and pensions business
a further potential area of positive value growth. The diagram
in the Netherlands (Scildon); and
below illustrates the primary sources of growth that then
ultimately contribute towards surplus emergence.
– 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
Future acquisitions
and businesses.
Looking forward, we are committed to transitioning to be
New business
a sustainable and net zero group across our operational and
Synergies
financed emissions (by 2050) and this commitment is a key
factor in our corporate decision making.
Real-world returns
Risk margin
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.
Own Funds Total potential Commercial
The categories of potential upside (which are
not shown to scale) will emerge over time
Value (illustrative)
†
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.
CHESNARAANNUALREPORTANDACCOUNTS20247
OVERVIEW
AN INTRODUCTION TO CHESNARA
How we operate
– Chesnara has a centrally defined governance and Risk
– Our team has significant experience and a proven track record
Management Framework operating across the Group and
in governing, acquiring and successfully integrating life and
all its divisions.
pension businesses.
– This framework aligns to our strategy and enables us to
– Acquisitions form a key part of our strategy and are assessed
grow the business and deliver strong financial results while
against stringent financial criteria, adopting a robust risk-based
remaining within the Board’s stated risk appetite.
due diligence process.
– Our management teams have clear responsibilities and
– We write new business where we are confident that conditions
are accountable for the delivery of set objectives and the
will ensure the products are both value adding and will support
identification and management of risks and opportunities,
the Group’s cash generation in the long term.
including those arising from climate change.
– We maintain robust solvency and liquidity levels as part of
– We are committed to transitioning to be a sustainable
our wider Capital Management Framework.
and net zero group (across our operational and financed
– In the UK, we adopt a largely outsourced operating model,
emissions) and this commitment is a key factor in our
whereas our overseas divisions use outsourced services
corporate decision making.
on a more selective basis.
CHESNARA
UK SWEDEN NETHERLANDS
GROUP
ASSETS UNDER
Δ
£6bn
£5bn £3bn £14bn
†
ADMINISTRATION
OWN FUNDS
£177m £186m £222m £643m
IFRS CAPITAL
£151m £99m £280m £449m
BASE
†
Δ
Δ
POLICIES
c290k
c280k c370k c940k
†
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.
Δ
Includes impact of Canada Life portfolio acquisition, expected to Part VII and migrate during 2025.
8
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
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
14 SUCCESSFUL
transformative acquisitions
– Capability to find value in the UK,
Netherlands and beyond
– Flexible and efficient deal funding solutions
ACQUISITIONS
– Ability to find expedient solutions to de-risk
where required.
A well-established and robust Capital-
ACROSS 3
Allocation Framework to assess M&A,
ensuring that deals:
– Enhance cash generation in the medium term
TERRITORIES
– 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
SINCE 2004
– 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
9
OVERVIEW
DELIVERING STRONG CUSTOMER OUTCOMES IS CENTRAL TO OUR PURPOSE
– Close to one million customers trust us to manage their pensions, life assurance or other
– We carry out regular reviews across the Group to ensure that our customers’ investment
savings and investments policies.
returns remain competitive.
– Customers and their advisors can be confident that they hold policies with a well-capitalised
– Our overriding philosophy of ‘putting the customer first’ and breadth of product offering
Group where financial stability is central to our culture and values.
ensures a rewarding financial future for our customers and supports the delivery of a
service that meets their needs.
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.
A proposed full
year dividend of
24.69p
24.69p per share
Dividend per share history
Pence per share
represents an
increase of 3%
on the prior year.
11.85p
2024
2004
TOTAL DIVIDEND PER SHARE MORE THAN DOUBLED
10 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
Year-on-year Commercial
Over 655% of
†
Cash Generation
growth
pre-dividend
†
of 14% to £60m with
Economic Value
continued strong dividend
growth since
coverage of 160%
listing in 2004
†
1
Commercial Cash Generation is defined as the movement
The Group generates long-term Economic Value (EcV)
growth
in the Group’s Solvency II surplus above its Board-approved
from the efficient management of existing policies and, to a
internal capital requirements, excluding the impact of certain
more material extent, by growing the portfolio through M&A
cyclical items such as the symmetric adjustment. It is the
activity and new business profits. EcV growth also arises over
surplus available to service dividends and debt costs and
time as investment returns exceed risk-free returns. Since
to reinvest in the business, including through acquisitions.
listing, the Group has generated incremental EcV, pre-dividends
In 2024, the Group’s Commercial Cash Generation of
of £502m, of £906m, supporting its strong cash generation
£60m represents 1.60x coverage of the 2024 dividend and
profile. This includes a contribution of £69m delivered in 2024
cumulative Commercial Cash Generation of £240m has
(pre-dividend and FX impact).
provided 1.37x coverage of the dividend over 2020 to 2024.
†
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.
* Further information on the Group’s shareholder dividend policy can be found in the Directors’ Report
on page 136.
1
EcV 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
11
OVERVIEW
1
COMMERCIAL CASH GENERATION
£60M
2023: £52M
Financial review p49
2024
3
ECONOMIC VALUE
FINANCIAL
£531M
HIGHLIGHTS
31 DECEMBER 2023: £525M
Financial review p50
Notes:
4. Economic Value Earnings are a measure of the value generated in the period, recognising the longer-term nature
Items 1 to 5 below are Alternative Performance Measures (APMs) used by the Group to supplement
of the Group’s insurance and investment contracts.
the required statutory disclosures under IFRS and Solvency II, providing additional information to
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
enhance the understanding of financial performance. Further information on these APMs can be
the value generated through the writing of new business, in comparison to the restrictions imposed under the
found throughout the Financial Review and in the APM appendix on pages 260 to 261.
Solvency II regime. Note – This measure was previously referred to as ‘commercial new business’.
There has been no change to the basis of calculation.
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,
6. Solvency is a fundamental financial measure which is of paramount importance to investors and policyholders.
which has Solvency II rules at its heart. Commercial Cash Generation is used as a measure of assessing
It represents the relationship between the value of the business as measured on a Solvency II basis and the
how much dividend potential has been generated, subject to ensuring other constraints are managed.
capital the business is required to hold – the Solvency Capital Requirement (SCR). Solvency can be reported as
It excludes the impact of technical adjustments and modelling changes; representing the Group’s view
an absolute surplus value or as a ratio.
of the Commercial Cash generated by the business. The 2023 comparator is shown as inclusive of day one
acquisition impacts.
Δ
Includes 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
2 Assets Under Administration (AuA) represents the sum of all financial assets on the IFRS balance sheet.
document we refer to the new regime as Solvency II, in line with the name of the prudential regime in PRA
Note – This measure was previously referred to as ‘Funds under Management’ (FuM). There has been no
policy material.
change to the basis of calculation.
** The IFRS prior year comparatives have been restated following a change in the accounting methodology
3. Economic Value (EcV) is a financial metric derived from Solvency II. It provides a market consistent assessment
applied to the portfolio transfer into the UK from Canada Life Ltd. Further details are set out in the Note A2
of the value of existing insurance businesses, plus adjusted net asset value of the non-insurance business
in the ‘IFRS Financial Statements’.
within the Group.
12 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
6
2
SOLVENCY COVERAGE RATIO
*
ASSETS UNDER ADMINISTRATION AuA
203%
£14BN
31 DECEMBER 2023: 205%
31 DECEMBER 2023: £11BN
Capital management p46
Financial statements p149
4
5
ECONOMIC VALUE EARNINGS
NEW BUSINESS CONTRIBUTION
£69M
£9M
2023: £59M
2023: £10M
Financial review p51
Business review pages 40 to 45
IFRS PRETAX PROFIT
IFRS CAPITAL BASE
£21M
£449M
2023: £2M**
2023: £479M
Financial review p53
Financial review p53
CHESNARAANNUALREPORTANDACCOUNTS202413
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
CHAIR’S
STATEMENT
14 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
Increase in the full year dividend by 3%
sales momentum remains strong, benefitting from ongoing
Sustainability is a key part of the strategy of the Group and we
enhancements to our product offerings and the digitisation
are progressing well against our objectives. Sustainability is a key
I am pleased to report that we are proposing that our
of our service offerings.
input into decision making across the Group and all of our people
shareholders will receive a total dividend of 24.69p per share,
completed mandatory sustainability training in 2024. Ongoing
an increase of 3% on the prior year, and the 20th consecutive
It has been another year of significant delivery across the
delivery of this training is now a key part of our people’s broader
year that we have increased the full year dividend.
Group and, as ever, I want to thank staff for their continued
learning journeys and professional development.
efforts and dedication.
Cash generation and financial strength
A key pillar of our commitments is to deliver a just transition to
Our people
become a net zero group. During 2024, we announced our initial
Our proposed dividend is underpinned by strong levels of
interim 2030 emission reduction target. By 2030, our target is
cash generation and financial stability again in 2024, despite
Over 2024, we maintained our focus on ensuring that the Group
to reduce the scope 1 and 2 emissions of the in-scope assets by
a continued backdrop of volatile geopolitical and macro-
benefits from a broad range of skills and expertise on our Boards.
50% from a baseline of 2023. In-scope assets are corporate
economic factors.
In April, we appointed Tom Howard as our Group CFO and
bonds and listed equity, which we can control or influence. All
Each of our operating divisions contributed to the Group’s
Executive Director on the Chesnara Board and, at the same time,
assets, alongside our operational activities, remain in scope of our
Commercial Cash Generation of £60m, an increase of 14%
we announced that Mark Hesketh was stepping off the Chesnara
2050 net zero target. During 2024, we have seen a reduction of
compared to the same period in 2023 and against a total
Board to allow his appointment as Chair of our UK life company,
13% in the calculated normalised emissions for our full portfolio
dividend cost of £37m.
Countrywide Assured plc.
against our 2023 baseline, together with a 25% reduction in our
operational emissions, meaning we are on track to achieve our
Our Solvency II Coverage Ratio of 203% remained stable
We also confirmed that as Jane Dale will have served her third
target. Absolute scope 3 emissions from our investments have
throughout 2024 and remains significantly above our normal
successive three-year term, she will not be seeking re-election
increased during the year though and so we also continued to
operating range of 140%-160%. The Group’s diversified business
at our Annual General Meeting in May 2025, in line with UK
engage with our key asset managers and partners in our value
model and our risk-based approach to financial management is
Corporate Governance Code for listed companies. Jane, who
chain to be able to understand their own net zero journeys and
fundamental to providing financial security to our customers.
has also been Chair of the Audit & Risk Committee, will have
identify areas of focus.
Our strong and resilient balance sheet continues to provide us
served nine years as a non-executive director of the Group and
with considerable strategic flexibility to invest in our businesses
has made an immense contribution to Chesnara’s success over
As a recent signatory to the Principles for Responsible
and pursue further M&A opportunities as they arise.
this period. On behalf of the Board, I want to thank Jane for her
Investment, and as a member of bodies such as the United
dedication to Chesnara and she leaves with our best wishes for
Nations Global Compact, UK Sustainable Investment and Finance
Operational delivery
the future.
Association and the Institutional Investors Group on Climate
Change, we continue to engage on initiatives that create solid
Across the Group, our operating divisions continue to perform
At the same time, I am delighted to announce that we have
foundations for longer-term change together with shorter-term
strongly in support of the Group’s key strategic priorities.
appointed Gail Tucker to the Chesnara Board. Gail brings a wealth
actions that will begin to make a real-world positive impact.
of experience to Chesnara, particularly in the UK and European
In the UK, we announced our second portfolio acquisition from
listed life insurance sector and I want to welcome her to Chesnara
Our Annual Sustainability Report (available on the Chesnara plc
Canada Life UK – a closed portfolio of onshore bond and pensions
and very much look forward to working with her. Gail will chair
website) provides further details of our sustainability
products. We are pleased to continue our relationship with
the Chesnara Audit & Risk Committee and, subject to regulatory
commitments, long-term targets and the activities underpinning
Canada Life following our acquisition of their UK life insurance
approval, will also join the CA Board where she will also chair
our sustainability strategy.
policies and this latest transaction illustrates our ability to add
their Audit & Risk Committee.
scale and provide attractive returns to our UK business.
Outlook
Purpose
The transfer of the earlier Canada Life UK Life insurance portfolio
Our financial results in 2024 demonstrate that our diversified
acquisition to our new outsource partner, SS&C, completed
At Chesnara, we help to protect customers and their dependants
business model continues to deliver strong levels of cash
successfully in February 2025, marking a significant milestone
by providing life, health, and disability cover or savings and
generation, value growth and positive shareholder returns.
for this programme.
pensions solutions to meet future financial needs. These are very
Our outlook for M&A remains positive and we have a strong
often customers that have come to us through acquisition, and
The operational activities to transfer existing UK insurance
capital base and ambition to support further acquisitions.
we are committed to ensuring that they remain positively
portfolios to SS&C are also progressing, with plans to migrate
supported by us.
the remaining in-scope books within its portfolio over the next
18 to 24 months, including the recently announced deal with
We have always managed our business in a responsible way and
Canada Life.
have a strong sense of acting in a fair manner, giving full regard to
the relative interests of all stakeholders.
In the Netherlands, we announced our intention to merge our
Scildon and Waard businesses (subject to approval by De
Maintaining our strong capital position and delivering strong and
Nederlandsche Bank). The proposed legal merger is expected to
sustainable financial returns will always remain of key importance.
take place in mid-2025 with further integration significantly
It underpins our desire to offer compelling returns to our
simplifying our operating model in the Netherlands, alongside
shareholders, to meet our debt investor coupon payments and
Luke Savage
ongoing initiatives to upgrade the IT estate and improve customer
importantly, to ensure our customers can be confident in the
Chair
and broker experiences.
ongoing financial strength of our business.
26 March 2025
In Sweden, we have seen strong growth in our custodian
As a purpose-driven organisation, we continue to balance our
business as we continue to build new partnerships and
responsibilities across the 3Ps – Profit, People and Planet.
further diversify our distribution model. Overall new business
CHESNARAANNUALREPORTANDACCOUNTS202415
Our strong financial
performance and
additional UK acquisition
in 2024 underpin our
positive outlook for
2025 and beyond.
STEVE MURRAY, CEO
CHIEF EXECUTIVE
OFFICER’S REPORT
16CHESNARAANNUALREPORTANDACCOUNTS2024
OVERVIEW
We have again remained disciplined in driving delivery against
Operational delivery has continued
Our targets and key aspects of progress are:
our three areas of strategic focus, namely:
– Net zero emissions by 2050 – in 2024, we published our initial
We have continued to make positive progress delivering the
1. Running our in-force insurance and pensions books
interim 2030 decarbonisation target for a 50% intensity reduction
ambitious change agenda we set ourselves and that will help
efficiently and effectively;
from our 2023 baseline figures in the scope 1 and 2 emissions
ensure we have modern and sustainable operating platforms
for our listed equity and corporate fixed income investments
2. Seeking out and delivering value-enhancing M&A
right across the Group.
which we are able to influence or control. During 2024, we saw
opportunities; and
In the UK, work on our transition and transformation (T&T)
a 13% reduction in the calculated normalised scope 1 and 2
3. Writing focused, profitable new business where we are
programme, which will lead to the transfer of our various UK
emissions from our investments and a 25% reduction in our
satisfied an appropriate return can be made.
books of business to SS&C’s more modern policy administration
absolute operational emissions, which are very positive
We have just under 1 million policies across the Group and our
system, continues to progress well. Our first migration was
movements. Absolute emissions from our investments did
people take pride in the responsibility that comes with delivering
successfully completed in February 2025. And we successfully
increase, however, driven by an increase in scope 3 emissions,
for our policyholders every single day.
met the UK Consumer Duty deadline for closed books in July
which is partly due to increased Assets Under Administration
2024 and are making positive progress implementing our fully
(AuA). Visibility of the causes of these movements is still limited
This focus helped us deliver a strong financial result for the year
funded plan. As part of this activity, we have made further
but we are taking positive actions to reduce emissions and further
with Commercial Cash Generation of £60m, continued strong
positive changes for a number of our UK customers and there
detail on these is provided in our Annual Sustainability Report.
solvency of 203% and incremental EcV of £69m. And as Luke
has been no material financial impact on the Group from any of
– Investments in nature and social impact solutions – during the
highlighted, this has supported us proposing an increase in the
the changes we are making here. It was also pleasing to secure
year, we increased our investments in positive solutions and
full year dividend of 3% to 24.69 pence per share.
our second transaction with Canada Life UK in December 2024.
held £135m at the end of 2024, representing an increase of
The Part VII transfer of policies from our first deal with Canada
approximately 65% compared to 2023.
Life completed in Q1 2025.
– A business where everyone feels welcome – we have continued
In the Netherlands, our teams have been working hard on the
to commit time and resource to ensuring the Group is an inclusive
new DORA (Digital Operational Resilience Act) regulation and
organisation. Activities including volunteering, internships,
associated work required to meet this new standard. We have
enhancing customer care, and focusing on employee wellbeing
also begun the preparation work to bring our two Dutch
have been supplemented by delivering sustainability-related
businesses together to create bigger scale and more sustainable
training to all employees in the Group.
business. This merger, which is planned for July 2025 and
remains subject to local regulatory approvals, should also enable
M&A continues alongside other
us to drive further synergies above and beyond some of the
management actions
local restructuring work that was completed in December 2024.
We have proactively and diligently assessed a number of M&A
Regulatory submissions have now been completed and we have
opportunities across 2024. This has included our participation
consolidated our teams based in Hilversum into one single
in multiple due diligence processes, primarily on a bilateral basis,
location in December 2024.
as well as work on legal documentation. We announced another
And in Sweden, our team’s also worked hard on implementing the
UK acquisition on 23 December and our second portfolio deal
new DORA regulations, in advance of the January 2025 deadline.
with Canada Life. Our latest deal involves the acquisition of a
Further work has been completed to enable us to more effectively
portfolio of c17k onshore bond and personal pensions. We expect
promote and sell our risk product offerings as well as enabling
an uplift in Economic Value of around £11m from the deal against
better integration with broker firms. The leadership team has also
the £2m of consideration paid. The first step of the deal has been
been strengthened in the year with joiners in our custodian
Continued
executed by way of a reinsurance agreement between both
business, operations and IT.
parties.
strategic delivery
Creating a more sustainable Chesnara
We retain significant fire power for future acquisitions and can
immediately deploy around £200m in support of deals. We have
We continue to make progress against our three sustainability
additional financing options available as well, should we have the
driving growth in
commitments on our journey to transition to become a
opportunity to execute a larger value-enhancing opportunity.
sustainable Chesnara. We strongly believe we have a
cash generation,
responsibility to consider the needs of all our stakeholders,
Alongside the extensive activity this year on M&A, we have
balancing people, planet and profit over the long term.
continued to seek out other management actions to enhance
We actively review our sustainability strategy and priorities
cash generation and/or value. We extended the Group’s FX hedge
future value
to ensure that we are working to address the needs of our
during the year and also extended the mass lapse reinsurance
stakeholders and managing the risks and opportunities
arrangements we have in the UK, both of which have reduced
and dividends.
presented by a changing world.
SCR and enhanced cash generation.
CHESNARAANNUALREPORTANDACCOUNTS202417
OVERVIEW
CHIEF EXECUTIVE OFFICER’S REPORT
Positive sales momentum in Sweden
Outlook
and the UK, with discipline maintained
It has been pleasing to see continued strong cash and economic
in the Netherlands
earnings generation in 2025. Whilst the volatile geopolitical and
macro-economic backdrop persists, and will continue to be a
Overall, New Business Contribution remained broadly flat this
material factor in all our markets, we remain confident that the
year at £9m vs £10m in 2023.
Chesnara business model will continue to generate cash across
Movestic has continued to see strong sales in both our Group
a wide variety of market conditions, as it has done this year and
pension and custodian business where total sales are at their
over its history.
highest level for five years. We have continued to see transfers
We also remain positive on the outlook for further M&A, where
out at a higher level than our longer-term assumption (albeit in line
we remain very active and continue to see a positive pipeline of
with the short-term provision we made in the balance sheet in
opportunities. We believe we are well placed to execute further
2024). Overall, it has been a stronger year than 2023, being the
value accretive deals for shareholders.
first full year under Sara Lindberg’s leadership, and we see further
opportunities to expand our partnerships in 2025.
Our people have continued to deliver across a number of
material operational programmes and for our customers in the
It was a tougher market in the Netherlands for our main term life
period. I thank them again for their efforts.
product with overall new business materially lower compared to
the same period in 2023. However, it has been pleasing to see
As I highlighted in the interim results, we celebrated our 20th
the team maintain their disciplined approach to pricing against this
anniversary as a listed Company in May 2024. Chesnara has
more challenging market backdrop.
delivered 20 years of positive returns for shareholders and
I look forward to continuing to deliver for our investors going
In the UK, we have continued to see positive flows into our
forward. And the excellent work of our teams again this year
intermediated onshore bond proposition and we have been
further supports my belief that there is a lot to look forward
engaging positively with other platforms in the market with
to here at Chesnara.
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
Steve Murray
financial reporting background. He has made a positive start to life
Chief Executive Officer
at Chesnara and is focused on improving our capital allocation
26 March 2025
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.
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
CHESNARAANNUALREPORTANDACCOUNTS202419
OVERVIEW
CHIEF FINANCIAL OFFICER’S REPORT
Overview
I am delighted to have joined Chesnara at this exciting stage of
The Solvency Coverage Ratio of 203% remains comfortably
The Economic Value of the Group grew from £525m to £531m
the Company’s development. I have been incredibly impressed
above our operating range of 140%-160% and continues to
with positive contributions from operating activities, acquisitions
by the drive and commitment of the team and want to express
be resilient to a wide range of financial scenarios and provides
and market conditions, partially offset by stronger expense and
my thanks to colleagues for the warm welcome they have given
the Group with significant scope to pursue M&A and other
demographic assumptions.
me since joining the Group in April 2024.
investment opportunities as they arise.
This strong set of financial results underpins the Board’s
I am pleased to say that 2024 was another year of strong
The Group continues to grow, with AuA increasing to £14bn
recommendation to increase the full year dividend by 3%
and resilient cash generation for the Group, with £60m of
(2023: £11bn), benefitting from positive investment returns
to 24.69p per share.
Commercial Cash generated, an increase of 14% compared
on existing business, the addition of the Canada Life portfolio
to 2023. Each of our operating divisions contributed positively
acquisition and value generated from new business written.
to this result, supporting strong coverage of the dividend and
our debt servicing costs.
CASH RESULT CAPITAL POSITION FUTURE VALUE GENERATION
Commercial Cash Generation
Solvency II Ratio
EcV
AuA
£60m
203%
£531m
£14bn
FY 23: £52m
FY 23: 205%
FY 23: £525m
FY 23: £11bn
Dividend cover
IFRS leverage
IFRS Capital Base
1.60x
31%
£449m
FY 23: 1.45x
FY 23: 30%
FY 23: £479m
Full year dividend 24.69p per share, up 3% YoY
Business performance
UNITED KINGDOM SWEDEN NETHERLANDS
Own Funds increased by £29m (2023: £51m) and SCR reduced
Solvency surplus generation of £10m arose from an increase in
Solvency surplus generation of £3m arose from a reduction in
by £5m (2023: increase of £2m), resulting in a pre-dividend
Own Funds of £15m (2023: £10m) offsetting an increase in SCR
Own Funds of £4m (2023: £32m) and a reduction in SCR of £7m
Solvency Coverage Ratio of 182% (2023: 179%). The growth in
of £5m (2023: £13m), with a closing Solvency Coverage Ratio
(2023: £19m), with a closing Solvency Coverage Ratio (before
Own Funds arose primarily from the impact of positive economic
(before foreseeable dividends) of 153% (2023: 153%). The
foreseeable dividends) of 237% (2023: 230%), noting the 2023
conditions on the in-force book, the second acquisition from
increase in Own Funds and SCR were both largely driven by
comparators included the day one impact of the Conservatrix
Canada Life and the writing of profitable new business over
positive market movements, alongside an adverse consolidation
acquisition. Own Funds benefitted from the impact of cost
the period. The extension of existing mass-lapse reinsurance
impact on surplus due to depreciation of SEK against the pound
management actions in Scildon, but were more than offset by
arrangements, alongside existing book run-off, supported the
and elevated levels of short-term persistency experience. The
the impact of foreign exchange movements on consolidation.
reduction in SCR. The UK division held a Solvency II surplus
business unit held a pre-dividend Solvency II surplus of £40m
The reduction in SCR was driven primarily by lower expense risk
(before foreseeable dividends) of £60m above its Board’s risk
above its Board’s risk appetite level (2023: £39m) and made
with partial offset from higher market risk due to a lower interest
appetite level (2023: £60m) and made remittances of £35m to
remittances of £3m to Group Centre. IFRS Pre-Tax Profit of
rate environment. The Group’s Dutch entities held a Solvency II
Group Centre over 2024. IFRS Pre-Tax Profits of £28m (2023:
£10m (2023: £5m) arose from higher AuA generating higher
surplus of £68m above its Board’s risk appetite levels and made
£3m) arose from strong investment returns, albeit lower than prior
fee income and fund rebates. A positive contribution from the
remittances of £7m to Group Centre (2023: £4m). IFRS Pre-Tax
year, and a much-improved positive insurance result in the year,
risk business also meant that the insurance result was much
Profit of £5m (2023: £23m) with the reduction primarily being
with the combined effect of these broadly netting off. The prior
improved compared to the prior year.
driven by a positive but less favourable investment return in the
year pre-tax profits were suppressed by a £21m impairment of
year compared to 2023, whilst the 2023 result also included
AVIF (Acquired Value of In Force) related to the CASLP book.
a £7m day one gain from the Conservatrix acquisition.
20 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
Capital & cash management
Solvency II capital position
Cash generation
4%
Commercial Cash Generation
16%
of £60m (2023: £52m)
(3%)
£16.2m
comprised contributions
(7%)
of £66m from the operating
205%
divisions, partially offset by
203%
net surplus usage at Group
(12%)
Centre to fund M&A activities,
Our normal operating solvency range: 140%-160%
£39.6m
debt financing costs and
£10.6m
central overheads.
UK
SII ratio
Capital
Management
Acquisitions SII
Dividend
SII ratio
Sweden
FY 2023
generation
actions
adjustments
payments
FY 2024
Netherlands
At 31 December 2024, Group Solvency II surplus was £327m and the Group’s Solvency II Coverage
The contribution from the operating divisions of £66m (2023: £73m) benefitted from
Ratio was 203% (2022: £351m and 205% respectively).
favourable market conditions across our operating territories, robust new business
performance and stronger operating performance relative to 2023. Group Centre
The change in surplus since 31 December 2023 is driven by the positive impacts of capital generation
surplus usage reflected Group Centre and debt servicing costs, partially offset by
from the Group’s operating activities and market conditions, in addition to management actions taken
capital benefits from Group diversification and foreign exchange hedging facilities.
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
Commercial Cash Generation represents 1.60x coverage of the total 2024 dividend,
diversification and the benefits of the Group’s foreign exchange hedging arrangements.
demonstrating that the Group has ample resources to finance ongoing debt and
dividend commitments whist maintaining a strong Solvency Coverage Ratio.
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
SOLVENCY
SOLVENCY
The Group regularly assesses the resilience of the Solvency II Coverage Ratio against a range
RATIO
SURPLUS
of scenarios as part of its internal risk management processes.
Impact range £m
(80) (60) (40) (20)
-
20 40 60 80
Market risks largely arise from foreign exchange rate movements, changes in equity valuations
20% sterling appreciation
33.6%
and movements in interest rates and inflation. Solvency surplus is most sensitive to the effect
20% sterling depreciation
(12.3)%
of equity movements on the value of the Group’s AuA and the consequent impact on future
25% equity fall
6.4%
earnings from charges levied on these AuA.
25% equity rise
(4.6)%
The Group reviews the matching profile of its liabilities relative to their matching assets on an
10% equity fall
2.6%
ongoing basis. As a result, the impact on solvency surplus of interest rate movements is not
10% equity rise
(1.9)%
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
1% interest rate rise
6.1%
accordingly. It is worth noting that the sensitivities make no allowance for recovery management
1% interest rate fall
(8.4)%
actions that the Group would apply in case of a prolonged stress event. These potential actions
50 bps credit spread rise
(3.6)%
are regularly reviewed as part of the Group’s ongoing risk management processes.
25 bps swap rate fall
(4.7)%
Demographic risks mainly comprise lapse risk from early surrenders and mortality risk on our
10% mass lapse
(0.2)%
protection and investment books. The Group manages lapse risk through a combination of
1% inflation
(9.9)%
active customer engagement, high levels of customer service and mass-lapse reinsurance
5% mortality increase
(3.6)%
arrangements. The Group manages mortality and longevity risk through its reinsurance
arrangements and reviews the overall reinsurance programme on a regular basis.
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).
CHESNARAANNUALREPORTANDACCOUNTS202421
OVERVIEW
CHIEF FINANCIAL OFFICER’S REPORT
Leverage
Capital management actions
Leverage of 31% remained broadly unchanged as the impact of
Management actions are an important component of our strategy
reinsurance arrangements were extended to provide the Group
the increased CSM largely offset the decrease in IFRS equity.
to maximise value from existing business. In 2024, we renewed
with further capital relief against the risk of extreme lapse events.
Our leverage ratio remains in line with our long-term preference
the Group’s foreign exchange derivative instrument, further
Taken in aggregate, these actions increased the Group’s Solvency
of 30% or less and we continue to see opportunities to manage
reducing capital requirements relating to the risk of extreme
Ratio by 5%.
leverage in line with or below our preferred level into the longer term.
foreign exchange movements. In our UK division, mass-lapse
IFRS
IFRS Pre-Tax Profit
21
2528
Group IFRS Pre-Tax Profit of £20.8m is £19.1m
higher than 2023 (£1.7m) with an improved
26
insurance service result, a positive but lower
(22)
479
investment result and an improvement in fee
(21)
income net of expenses.
Insurance service result 9
449
Net investment result 53
(37)
Other income and expenses (40)
Pre-Tax Profit 21
FY23 Capital
CSM
Pre-Tax
Other
FY24
FX Tax Shareholder
FY24
Base
movement
Profit
adjustments
Capital Base
dividends
Capital Base
Pre-Tax, FX
& dividends
IFRS insurance result
Fees, commission and other operating income
IFRS Capital Base
The insurance service result comprises the revenue and expenses
Fee, commission and other operating income mainly comprises
Before allowing for the 2024 dividend, the IFRS Capital Base
from providing insurance services to policyholders and excludes
the fee income generated in the UK and Sweden from unit-linked
of £449.1m increased by £6.2m over 2024 as a result of the
economic impacts. Assumption changes only apply to the
contracts measured under IFRS 9.
positive IFRS profit after tax of £3.9m, the increase in CSM
insurance service result to the extent that they relate to groups
net of tax of £15.2m and negative impacts going through
The income generated in the year after removing the effects
of onerous contracts in a ‘loss component’ position.
‘other comprehensive income’ or directly to shareholder
of Swedish policyholder yield tax, which has an equal and
equity of (£12.8m), these being mainly in respect of foreign
The insurance service result of £8.6m (2023: loss of £5.2m)
opposite offset within ‘Other Operating Expenses’, was £73.4m
exchange impacts.
comprises a relatively stable and positive contribution from
(2023: £71.5m) with equity market returns in the UK and Sweden
the release of the CSM and the Risk Adjustment of £22.2m
being the largest contributory factors to the result.
In December 2024, the Group announced that agreement had
(2023: £23.0m). This is offset by some adverse experience
been reached with Canada Life to transfer an in-force portfolio
Other operating expenses and financing costs
primarily in the Netherlands and assumption changes on lines
to Chesnara’s UK division. This acquisition contributed £0.7m
Other operating expenses comprises those costs incurred by the
of onerous contracts also in the Netherlands, with these impacts
to the increase in CSM gross of tax, however this amount
Group that are not incurred from servicing insurance contracts,
being much more significant in the prior year, resulting in the
reflects the profits to be earned in the reinsurance phase only,
with such costs being reported within the insurance result.
overall loss.
during which it will be accounted for at the reinsurance contract
After stripping out the impact of the policyholder yield tax noted
level under IFRS 17. Following the legal transfer of the underlying
IFRS investment result
above, the total other operating expenses and finance costs
policies, IFRS 9 will then apply, as the policies are investment
The investment result comprises the economic result from
in the year was £113.9m (2023: £143.0m), with the prior year
contracts and profits will therefore be recognised as the fee
all the Group’s assets together with the impacts to its insurance
amount also being impacted by an impairment of AVIF in the
income is earned.
and investment contract liabilities.
UK segment of £21.0m.
A further £6.8m of CSM gross of tax arose from new business
The positive investment result of £52.7m (2023: £71.7m) reflects
in Scildon, offset by £18.9m released to the income statement.
the strong market performance in the year, although the
The closing CSM on the balance sheet will be earned over
investment returns from equities and fixed income securities
the coverage period of the policies to which it relates, and the
did not reach the levels seen in 2023.
expected earnings pattern is such that after 10 years more than
40% will remain to be earned.
22 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
OVERVIEW
Economic Value Earnings
The Economic Value of the Group
represents the present value of future
11
594
profits from existing business, plus the
5
5
(2)
adjusted net asset value of non-insurance
50
business within the Group. Group EcV
(26)
Earnings of £69m increased by £10m
(2023: £59m) with economic earnings
531
being the largest component of Economic
525
(37)
Value Earnings, reflecting favourable
market conditions throughout 2024.
EcV at
Economic
Operating
New
Acquisitions Other
EcV at
FX Paid
EcV at
FY 2023
earnings:
earnings
business
central and
FY 2024
dividends
FY 2024
real-world
one off
pre FX &
returns
items
dividends
EcV Economic Earnings
Other EcV Earnings
Dividend
Positive global equity market movements contributed strongly to
The acquisition of the Canada Life portfolio results in an up-front
Our continued strong performance along with our strong and
†
the growth in the value of AuA
over 2024, increasing the store of
EcV gain of c£11m. Other non-operating items include the
resilient solvency position has supported the directors’ decision
future value available from investment-linked portfolios. This was
positive impact or risk margin releases (£23m), offsetting central
to recommend a 3% increase in the total dividend to 24.69p per
partially offset by the impact of foreign exchange movements,
financing costs (including Tier 2 coupon payments) of £11m.
share (2023: 23.97p).
primarily from the strengthening of Sterling against the Euro and
Economic Value as at 31 December 2024
the Swedish Krona.
Outlook
Before allowing for dividends of £37m, the Economic Value
Chesnara has now delivered 20 years of consecutive dividend
EcV Operating Earnings
of the Group grew to £568m (2023: £525m).
increases to our shareholders. Looking forward, we continue
EcV Operating Earnings of £10m (2023: £6m) were supported by
to have a strong line of sight to future cash generation over
strong contributions from the Group’s Dutch businesses, and a
the medium and longer term. We have opportunities to further
small year-on-year increase in contribution from new business.
optimise future value generation from our existing portfolio
The contribution from the in-force portfolio and new business
through continued capital and investment management actions.
was partially offset by a strengthening of short-term lapse
Our capital and liquidity resources remain strong and resilient to
assumptions in the Group’s Swedish division, mortality
market movements and position us strongly to generate further
assumptions in the Netherlands and expense assumptions
sources of future value through acquisitions and investment in
in the UK. Whilst these effects had the impact of reducing
our operating divisions.
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.
Tom Howard
Chief Financial Officer
†
26 March 2025
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.
CHESNARAANNUALREPORTANDACCOUNTS202423
STRATEGIC
REPORT
24CHESNARAANNUALREPORTANDACCOUNTS2024
STRATEGIC REPORT
OUR STRATEGY, BUSINESS MODEL AND CULTURE & VALUES
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
STRATEGIC OBJECTIVES
Read more on p28
MAXIMISE VALUE FROM
ACQUIRE LIFE AND
ENHANCE VALUE THROUGH
EXISTING BUSINESS
PENSIONS BUSINESSES
PROFITABLE NEW BUSINESS
Managing our existing customers efficiently,
Acquiring and integrating companies into
Writing profitable new business supports
whilst delivering good outcomes, is core to
our business model is key to continuing
the growth of our Group and helps mitigate
delivering our overall strategic aims.
our growth journey.
the natural run-off of our book.
KPIs
KPIs
KPIs
Cash generation
Cash generation
EcV growth
EcV Earnings
EcV growth
Customer outcomes
Customer outcomes
Customer outcomes
IFRS Pre-Tax Profit
IFRS Pre-Tax Profit
Risk appetite
IFRS Capital Base
IFRS Capital Base
IFRS Pre-Tax Profit
1
IFRS Capital Base
2
3
BECOMING A SUSTAINABLE CHESNARA
HOW WE ORGANISE OURSELVES
UK NETHERLANDS SWEDEN
DIVISION
OPERATING
COUNTRYWIDE
WAARD
SCILDON
MOVESTIC
COMPANY
ASSURED
GROUP
Read more on p40
Read more on p44
Read more on p44
Read more on p42
Linked pension business;
Mainly term life policies,
Protection, individual
Predominantly unit-linked pensions
KEY
life insurance, covering both
with some unit-linked and
savings and group
and savings. Also provides life
PRODUCTS
index-linked and unit-linked;
non-life policies.
pensions contracts.
and health product offerings
endowments; whole of life;
as well as custodian business.
annuities and some with
profit business.
NUMBER OF
c290k c128k c240k c280k
POLICIES
Largely through a network of
DISTRIBUTION
Onshore bond sold through
Sold through
n/a
brokers and partners, although
METHOD
Investment platforms.
a broker network.
some is directly to customers.
UNDERPINNED BY A ROBUST RISK MANAGEMENT AND GOVERNANCE FRAMEWORK
26 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STAKEHOLDERSOBJECTIVESKPIs
STRATEGIC REPORT
OUR BUSINESS MODEL
INVESTORS CUSTOMERS REGULATORS STAFF SUPPLIERS AND
THE PLANET
PARTNERS
& NATURAL
ENVIRONMENT
Competitive returns through
Good outcomes Financial stability and
Attract, promote and
Long-term reliable
Progress to being
attractive dividends and
regulatory compliance
retain quality staff
relationships
a sustainable group
share price growth for
Job satisfaction
shareholders and a
and motivation
dependable coupon
payment for debtholders
†
Cash generation
Good outcomes
Good outcomes
Staff survey results
Quality of service
Operational emissions
†
EcV
growth
Investment return
Solvency Coverage Ratio
Staff retention rates
Tracking expenditure
Financed emissions
Solvency Coverage
Openness of relationship
Energy usage
Ratio
Investment in
positive solutions
OUR CULTURE AND VALUES
Responsible risk-based
Fair treatment
Maintain adequate
Provide a competitive
Robust regulatory
A just transition to
management for the
of customers
financial resources
return to our investors
compliance
a sustainable group
benefit of all our
stakeholders
STAKEHOLDERS
– Shareholders
– Customers – Customers
– Shareholders
– Shareholders
– All stakeholders
including the planet
– Debtholders
– Regulators
– Debtholders
– Debtholders
– Staff
– Staff
– Customers
– Suppliers and partners
– Regulators
– Natural environment
– Natural environment
– Customers
†
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.
CHESNARAANNUALREPORTANDACCOUNTS202427
STRATEGIC REPORT
OUR STRATEGY
Our strategy focuses on three areas: the efficient management of our existing business, the creation of value through acquisitions and writing
profitable new business.
STRATEGIC
WHY THIS MATTERS
HOW WE DELIVER
OBJECTIVE
OUR BUSINESS MODEL
Delivering on the commitments we
A centralised governance oversight and corporate management team ensures robust and consistent
have made to customers is fundamental
governance across the Group. Operational execution is devolved to our divisions to ensure the
to the success of the Group. Existing
Group benefits from strong divisional management teams and reflects the need to ensure
1
books of policies are the principal source
that processes are fit for purpose locally. The core operations of our UK division follow a largely
†
of the Group’s cash generation
and
outsourced business model. The core operating activities of our businesses in Sweden and the
MAXIMISE VALUE FROM
†
Economic Value
and are at the heart of
Netherlands are predominately managed internally.
EXISTING BUSINESS
the investment case for our shareholders
We create value and generate cash through:
and debtholders. If we do not do a good
– running our in-force books of business efficiently and effectively;
job for our customers then we will not
have the right to execute against our
– executing management actions that create long-term value and/or generate cash;
other two strategic objectives.
– 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
– Identify potential deals through an effective network of our own relationships, supplemented by
into the Group maintains and potentially
advisors and industry associates.
enhances the efficiency of the operating
– Assess deals by applying well established criteria which consider the impact on cash generation,
2
model, creates a source of ongoing
Economic Value and solvency under the best estimate and stressed scenarios and the impact of the
value enhancement and sustains the
deal on the enlarged Group’s risk profile.
ACQUIRE LIFE AND
longer-term cash generation potential
– Minimise transaction risk through stringent risk-based due diligence procedures and the senior
PENSIONS BUSINESSES
of the Group.
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.
The Group financial model supports
– In the UK, new business is primarily sold via advisors who provide new customers with access
incremental value generation through
to our onshore bond product via a selection of investment platforms.
writing profitable new business.
– In Sweden, we primarily focus on unit-linked pensions and savings business, distributed largely
3
New business activity supplements
through brokers, and custodian business distributed by partners, albeit with an ambition to grow
the growth delivered from the
our risk protection business.
ENHANCE VALUE
management of our in-force portfolio
– In the Netherlands, we sell protection products and, individual savings contracts via a broker-led
THROUGH PROFITABLE
and periodic acquisitions.
distribution model.
NEW BUSINESS
– New business terms are regularly reviewed to ensure that they remain competitive in their respective
markets whilst maintaining profitable returns to the Group.
28 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
RISKS: FOR FURTHER INFORMATION ON PRINCIPAL RISKS LISTED
PLEASE SEE THE RELEVANT CODES ON PAGES 6167
RISKS: WHAT CAN STOP US MEETING
RISKS: WHAT CAN WE DO
HOW WE MEASURE DELIVERY UPDATE
THIS OBJECTIVE?
ABOUT THIS?
Customer outcomes
–
PR1
Adverse investment market conditions can result
– Active investment management to deliver competitive investment
UK
This is measured through monitoring:
in lower assets under management and hence lower
returns for policyholders, within agreed risk appetite levels.
Pages 40 - 41
– customer service metrics;
fee income from unit-linked business. For products
– Outsourcer service level arrangements that ensure strong
– policyholder fund performance against industry
with guarantees, this can increase the cost of fulfilling
customer service standards.
and market expectations;
the guarantees.
– Strong expense management to ensure that the cost base is
–
PR4
Increased lapses on cash generative/value
– customer complaint levels; and
efficient, well controlled, predictable and within direct
enhancing products.
SWEDEN
management influence.
– our compliance with regards to regulatory
–
PR4
PR6
Loss of key brokers, or aggressive
Pages 42-43
conduct matters.
– Close monitoring of persistency levels and strong customer
competitor pricing, can result in increases in the level
service standards help manage lapse rates and ensure customers
Financial outcomes
of customers moving to competitors.
do not unknowingly exit when it is not in their interest to do so.
Cash generation is the surplus generated by
–
PR2
Regulatory change can potentially impact the
– Implementation of efficient reinsurance and hedging strategies.
the Group over its capital requirements, as set
cash flows arising from the existing business.
– Strong model controls including do/check/review and adherence
NETHERLANDS
by the Board.
–
PR5
Expenditure levels could exceed those assumed.
to Technical Actuarial Standards, plus independent internal and
Pages 44-45
–
PR1
Foreign currency fluctuations can impact the
Economic Value is a prudent estimate of the
external review and sign off.
sterling value emerging from overseas operations.
potential future store of cash generation available
–
PR10
Weakness in modelling results may lead to
– Strengthening controls and documentation around financial
to the Group from the efficient management of the
poor decisions regarding strategic, operational
reporting and decision making models, and improving the
in-force portfolio and so is an important measure
or investment matters.
independent testing of those controls through the operational
of the long-term performance of the Group.
resilience programmes and in preparation for the new Corporate
Governance code.
Financial outcomes
–
PR3
A lack of value adding acquisition opportunities
– Operating in three territories increases our options thereby
UK
Acquisitions must meet the hurdle-rate financial
come to market, the investment case for the Group
reducing the risk that no further value adding deals are done.
Pages 40 - 41
returns required by our capital allocation policies and
diminishes over time.
– Additional investment has been made in resources that
must be attractive relative to alternative uses of the
–
PR3
PR9
There is the risk that we make an
support our M&A efforts.
Group’s capital resources.
inappropriate acquisition that adversely impacts the
– A broader target market also increases the potential for deals
SWEDEN
financial strength of the Group.
that meet our strategic objectives.
Pages 42-43
Customer outcomes
–
PR10
Inaccurate model outputs during due diligence
Acquisitions must ensure we protect, or ideally
– Each acquisition is supported by a financial deal assessment
stage could potentially lead to overestimating the
enhance, customer interests.
model which includes high quality financial analysis. This is
value of acquisitions, resulting in over payment.
reviewed and challenged by management and the Board.
NETHERLANDS
Risk appetite
Pages 44-45
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.
Financial outcomes
–
PR8
The attractiveness of products can be influenced
– In the UK, looking to expand the platforms that we work with.
UK
New business activity must meet the hurdle-rate
by economic conditions, politics and the media.
– In Sweden, continuing to extend the breadth of broker
Pages 40 - 41
financial returns and deliver an acceptable level
–
PR6
PR8
PR9
New business volumes are sensitive
support and develop more digital and automation capabilities.
of New Business Contribution to the Group.
to the quality of service to intermediaries and the
– Ensuring good quality of service to existing network
end customer.
of intermediaries.
SWEDEN
Customer outcomes
–
PR8
In Sweden, new business remains relatively
Pages 42-43
New business activity must ensure we protect,
– Focusing on other margin drivers beyond product pricing,
concentrated towards several large brokers and
or ideally enhance, customer interests.
such as the fund management operation.
private banks.
– Enhancing business processes and product offering to be
†
–
PR8
A competitive market puts pressure on new
Alternative Performance Measure (APM) used to enhance
attractive to brokers and consumers.
NETHERLANDS
understanding of financial performance. Further information
sales margins.
Pages 44-45
on APMs can be found in the additional information section
–
PR10
Inaccurate assumptions modelling resulting
of this Annual Report and Accounts.
in writing unprofitable new business.
CHESNARAANNUALREPORTANDACCOUNTS202429
STRATEGIC REPORT
OUR CULTURE & VALUES
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.
WHY IS IT IMPORTANT? WHAT WE HAVE DONE
FAIR TREATMENT OF CUSTOMERS
– UK: Continued to deliver good levels of service to our customers, meeting the high standards expected by
The fair treatment of customers across the Group is our primary responsibility.
our regulators, including work to deliver the ongoing operational resilience programme (which is on track for
It is also important to our business strategy as it promotes stronger relationships
the 31 March 2025 deadline) and formation of a fully-funded plan in compliance with the Consumer Duty
with our customers, distributors and regulators. When applying the terms of our
rules for the closed-book business (completed in line with the regulatory deadline of 31 July 2024). The UK
customer contracts, coupled with guidance and requirements set out by our local
division has also continued to proactively maintain contact with long-standing customers and to reunite
regulators, we place a high priority on ensuring good outcomes for our customers.
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.
RESPONSIBLE RISKBASED MANAGEMENT FOR THE
– The ORSA (Own Risk and Solvency Assessment) process is fully embedded across the Group. It provides a
BENEFIT OF ALL OF OUR STAKEHOLDERS
clear articulation of our risk appetite, ensures that strong risk oversight applies on an ongoing basis, and acts
In managing the business, it is essential that our decision making assesses the risk
as a key input to inform risk-based decision making.
impact of any decision. We achieve this by understanding the key risk drivers of the
– We have enhanced the Group’s Cyber Response Framework and performed simulation testing.
business plan and strategy, as well as by making sure we monitor the potential
– Delivered our continuous improvement regime regarding how we manage risk across the Group, supported
impact of these risks across our whole range of stakeholders.
by our annual systems of governance review.
PROVIDE A COMPETITIVE RETURN TO OUR INVESTORS
– Continued our impressive track record of increasing our dividend for the last 20 years, even during turbulent
As a public company, we seek to offer an attractive investment proposition for
investment market conditions.
investors. As most of our shareholders hold our shares through income-focused
– Delivered strong cash generation with all divisions contributing to provide coverage of 160% against the
investment funds, we are conscious of the importance of delivering an attractive
shareholder dividend.
and sustainable dividend to our investors. Debt-holders also want confidence in
– Maintained a robust solvency position in all divisions and at Group level, supporting the continued dividend
our ability to service our debt costs. We also recognise the benefit of an investment
growth and providing substantial headroom for future acquisitions.
that offers clarity and consistency of performance.
ROBUST REGULATORY COMPLIANCE
– Maintained robust solvency levels across the Group and all divisions, above regulatory requirements.
Working constructively with our regulators and complying with regulatory
– Continued to place a high priority on compliance, maintaining an open dialogue with our regulators.
requirements and guidance is imperative to the delivery of our objectives.
– Continued to monitor forthcoming non-financial reporting frameworks to ensure we implement them in line
Regulators’ desire for robust and responsible governance is very much part
with their effective date.
of our culture and a principal priority for the Chesnara Board.
MAINTAINING ADEQUATE LIQUIDITY
– We use the business plan to project cash flows over the forthcoming five-year period.
Ensuring we have liquidity to meet our ongoing financial obligations requirements
– We assess the liquidity of the Group on a regular basis, working to an internal buffer and this is also
is fundamental to the sound financial management of the business.
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.
A JUST TRANSITION TO A SUSTAINABLE GROUP
Whilst we recognise the urgency for change and the opportunities that can arise from
Further information on what we are doing and the outcomes are included on pages 74 to 91 and in our
transitioning to a low-carbon economy and environmentally sustainable society, our work will
Annual Sustainability Report.
be guided by key principles of a just transition, ensuring the most vulnerable are not left behind.
30 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Risk management is at the heart of what we do and embedded within our robust Governance Framework.
THE OUTCOMES
– Netherlands: Waard launched its digital customer portal in the year, making
– Generally, a low level of complaints across the Group
– More individually adapted communication and services,
it easier for customers to access documents. Scildon simplified its product
has continued.
leading to higher customer engagement.
portfolio and further digitalised its customer and advisor portals. In 2025,
– Transparent customer communications, supporting better
– Delivered positive investment returns for customers.
the Group intends to merge our two Dutch entities, and will ensure that
customer outcomes.
customers continue to receive high quality service over this change period,
– Good ongoing service levels over the course of the year,
and into the future as part of a larger, more sustainable combined business.
with a high level of customer satisfaction.
– 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.
– Robust solvency coverage over the course of the year.
– Strong results from the annual review of the systems of
governance across the business.
– Ongoing constructive dialogue with regulators across the
different territories in which the Group operates.
– Remained active in the M&A market and completed one further value adding
– Dividend growth track record continues, with 3% dividend
– TSR of 17.4% delivered for 2022-24 (2021-23: 14.7%).
UK acquisition in 2024.
per share growth in 2024.
– Monitored our leverage ratio, ensuring it remains in line with our ambition
– Completed a further acquisition during 2024, adding
of 30% over the medium to longer term.
additional value and cash flow to the Group.
– Ongoing constructive relationships with UK, Swedish
– Materially compliant with DORA requirements in Sweden
and Dutch regulators.
and the Netherlands by the January 2025 deadline, with
further activity during 2025 to fully embed into operations.
– Continued adherence to internal governance policies
and principles.
– Reviewed compliance with the guidance of the FCA’s
anti-greenwashing rule, as part of the Sustainability
– Continued oversight of the Group’s sustainability agenda
Disclosure Requirements and investment labels.
and targets.
– Progressed our implementation of the Corporate Sustainability
– The UK division met the 31 July 2024 deadline for the
Reporting Directive in our Dutch entities and continued to
closed-book operations to comply with the FCA’s
review the timeline of other frameworks. We are considering
Consumer Duty regulation. The division is also on
the impact of the EU Omnibus proposals announced in
track to meet the 31 March 2025 deadline for the
February 2025, which would mean we would no longer
FCA’s Operational Resilience regulation.
have to implement CSRD across the Group.
– Strong closing Group Centre liquidity holdings at the end
30 June 2025, after allowing for the expected receipt
of 2024 of £109m, significantly exceeding our internal
of further divisional cash remittances, net of certain
buffer. Pro forma Group Centre liquidity of £130m forecast
Group Centre costs.
CHESNARAANNUALREPORTANDACCOUNTS202431
STRATEGIC REPORT
SECTION 172 THE BOARD’S APPROACH
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 statement
The Board’s approach
The directors of Chesnara believe that they have acted in a way that they consider, in good faith,
Role of the Chair
would be most likely to promote the success of the Company for the benefit of its members as
As described on page 99 within the Corporate Governance Report, it is the role of the Chair to lead
a whole, and in doing so have had regard (amongst other matters) to:
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
a) the likely consequences of any decision in the long term;
have been taken into account when making decisions.
b) the interests of the Company’s employees;
Business planning
c) the need to foster the Company’s business relationships with suppliers, customers and others;
The principal process supporting the longer-term decision making of the Board is the Group business
d) the impact of the Company’s operations on the community and the environment;
planning process. This is a three-stage process that takes place throughout the course of the year,
e) the desirability of the Company to maintain a reputation for high standards of business conduct; and
as follows:
f) the need to act fairly between members of the Company.
The following disclosures provide further insight supporting the above statement over the course
STAGE 1
of 2024. The disclosures have been split into three key sections:
STRATEGIC PLANNING
The Board’s approach
The preliminary stage of the business planning process allows the Board to review
The overall approach taken by the Board in ensuring that the requirements of Section 172 are met.
and challenge the strategy of the Group.
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
STAGE 2
impacted by the decisions of the Company; and how we engage with those stakeholders.
REVIEW AND CHALLENGE OF DIVISIONAL
Significant decisions
AND GROUP OPERATIONAL PLANS
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
Following completion of the strategic planning, including any associated feedback to the
making these decisions.
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.
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.
32CHESNARAANNUALREPORTANDACCOUNTS2024
STRATEGIC REPORT
The business planning process for 2024 confirmed that the Board continues to support the Group’s
Each key objective within the Group business plan is supported by relevant information to support
strategic objectives:
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.
1
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
MAXIMISE VALUE FROM EXISTING BUSINESS
our stakeholders. The key financial items/metrics that the Board considers are shown below.
Managing our existing customers efficiently whilst delivering good outcomes is core
Key financial metrics in the business planning process:
to delivering our overall strategic aims.
†
CASH GENERATION
RETURN ON CAPITAL
SOLVENCY COVERAGE SHAREHOLDER DIVIDENDS
†
2
ECONOMIC VALUE
DIVISIONAL CASH REMITTANCES
IFRS PROFITS EXPENSES
ACQUIRE LIFE AND PENSIONS BUSINESSES
†
Acquiring and integrating companies into our business model is key to continuing
IFRS CAPITAL BASE & GROUP LEVERAGE NEW BUSINESS CONTRIBUTION
our growth journey.
RETURN ON IFRS EQUITY
Governance Framework and Board reporting
Long-term decision making of the Board is supported by the Group’s Governance Framework,
3
which is set out in the Corporate Governance Report.
Regular Board meetings and robust reporting requirements (underpinned by a schedule of matters
ENHANCE VALUE THROUGH PROFITABLE NEW BUSINESS
reserved for the Board) allow the Board to operate effectively, fulfil its responsibilities (including
Writing profitable new business supports the growth of our Group and helps mitigate the
in relation to Section 172 (1) (a) to (f) of the Companies Act 2006) and provide valuable oversight.
natural run-off of our book.
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:
The strategy of the Group has regard for the following core culture and value principles:
– Divisional updates, including financial results, business plan progress, key customer initiatives,
– Fair treatment of customers
regulatory interactions, operational performance (including updates on key outsourcer, supplier and
– Responsible risk-based management for the benefit of all of our stakeholders
employee matters);
– Providing a competitive return to our investors
– Matters pertaining to investor relations;
– Robust regulatory compliance
– Consolidated financial results;
– Maintaining adequate financial resources
– Investment performance analysis, covering both customer and shareholder returns;
– A just transition to a sustainable group.
– Progress updates on key objectives within the business plan and projects;
These are described in more detail on pages 26 to 31.
– Risk matters affecting the Group; and
– Sustainability updates.
†
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.
CHESNARAANNUALREPORTANDACCOUNTS202433
CUSTOMERS EQUITY INVESTORSDEBT INVESTORS
STRATEGIC REPORT
SECTION 172 KEY STAKEHOLDERS
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.
DEPENDENCIES OF
IMPACT OF BUSINESS
HOW WE ENGAGE
KPIs MONITORED
BUSINESS ON THE
ON THE STAKEHOLDER
WITH THE STAKEHOLDER
RELATING TO THE
STAKEHOLDER
STAKEHOLDER
Our customers are key to
Our primary concern is ensuring that our
Our primary engagement with customers comes from a combination of
Policy lapses
the long-term success of
customers receive consistently strong outcome
outward communication, coupled with customer contact, be it through
Complaints
the Group, both in terms
from a well-capitalised and financially secure
policy changes, queries or claims.
Service levels
of retaining existing
company. Our financial management and culture
From an outwards communication perspective, our aim is to ensure we
customers and attracting
& values statements demonstrate that this is
Customer survey scores
provide transparent and understandable information to our customers,
new ones to our open
embedded across the Group. We closely manage
Policyholder investment
be it in the form of regular written letters/booklets, information available
books of business. Without
all aspects of the customer journey, covering
returns
on our website or through any other material made available to customers.
our customers, the Group
customer experience, communications,
Customer engagement
would cease to exist.
policyholder expectations, product value for
From the perspective of responding to customer contact, we seek to make
money, and our solvency coverage levels.
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.
Having a strong and stable
Any business decision that is made that affects
We primarily engage with investors through the following key channels:
Dividend growth
shareholder base is critical
either the future dividend payments of the
– Formal public financial reporting, which we produce every six months.
Share price
for the long-term success
Group or its long-term sustainability may be
– Meetings with current and potential investors during the year, including as
TSR
of the Group. It allows us
of significant interest to our investors. If either
part of investor roadshows after formal results and at investor conferences.
to pursue our long-term
of those elements are put under pressure, it
Significant investor
strategy, including the
could reduce confidence in the Group, and could
– Our Annual General Meeting.
purchases/sales
potential for raising new
lead to a reduction in shareholder returns.
– Periodically, we hold ‘investor days’ with our shareholders and other market
Cash generation
capital for acquisition
related stakeholders, which are designed to provide further insight into
Solvency Coverage Ratio
purposes.
our business and give investors an opportunity to meet a wider range
Economic Value
of Chesnara senior management.
IFRS Capital Base &
– We will periodically contact investors for feedback in advance of formal
Leverage
publication of matters, such as material changes to our Remuneration
Policy. If we seek to raise additional debt or equity, our investors are actively
IFRS Pre-Tax Profit
engaged at the appropriate point in the process.
Investor feedback
Net zero targets
The support of our debt
Any business decision that is made that affects
We primarily engage with debt investors through the following key channels:
Debt investor feedback
investors facilitates the
the Group’s long-term sustainability may be of
– Formal public financial reporting, which we produce every six months.
Fitch Long-Term Issuer
pursuit of our long-term
significant interest to our debt investors, and any
Default Rating
– Meetings with debt investors, including as part of investor roadshows after
strategy, including the
decision that could reduce capacity is likely to
formal results and at investor conferences.
Gearing ratio
potential for raising new
reduce confidence in the Group.
capital for acquisition
Price of listed debt
purposes.
instruments
Cash generation and
Solvency Coverage Ratio
Net zero targets
†
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
SUPPLIERS AND PARTNERS
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.
DEPENDENCIES OF
IMPACT OF BUSINESS
HOW WE ENGAGE
KPIs MONITORED
BUSINESS ON THE
ON THE STAKEHOLDER
WITH THE STAKEHOLDER
RELATING TO THE
STAKEHOLDER
STAKEHOLDER
†
Key suppliers and partners include
Our various suppliers and partners are
Banks: Our regular engagement with our banks takes the form of quarterly covenant
Leverage ratio
our banks, outsourcers, intermediaries
impacted by the Group as follows.
compliance reporting, which is required for our existing Revolving Credit Facility
†
EcV position
and professional services providers.
(RCF) debt arrangement. On an ad-hoc basis, we engage with our banks in the
Banks: Our banking partners earn a return
Solvency levels
We depend on them for various aspects
event of a change in our business or to seek new funding, say to support an
on the facilities they provide and take
of our business model.
acquisition. In the event of an acquisition where we would like to secure more
IFRS Return on Equity
a keen interest in ensuring we manage
short-term debt funding, we work with banks and other advisors to ensure that we
Service levels
Banks: Access to ongoing short-term
our finances and strategy in a way that
are providing relevant information to support the banks’ decision making process.
lending to support our business.
minimises their risk of loss.
Adherence to timescales
Outsourcers: We view having strong, open and honest relationships with our
Cost efficiency
Outsourcers: Supporting the day-to-day
Outsourcers: Our outsourcers have an
outsourcers as key to the long-term success of our business. We engage with our
policy administration, customer contact
opportunity to share in the growth of the
Quality of service
outsourcers through various scheduled meetings, focusing on a combination of
and associated accounting of our
Group through further acquisitions or
specific function-driven relationship meetings and wider meetings focusing on the
Credit rating applied
business, primarily in the UK, together
portfolio transfers. Our outsourcers rely on
overall relationship. It is important that our outsource partners are suitably informed
to Chesnara plc and
with the decarbonisation of their
the ongoing financial stability of the Group
regarding business developments in the Group, and that the Group is aware of
its subsidiaries
operations to support our own net
to ensure that the services they provide
any relevant business changes in our outsourcers. This ongoing communication
Investment performance
zero plans.
continue to be paid for by the Group.
enhances the relationships and works towards maintaining the longer-term success
Financed and
of the Group. We are also working with our outsourcers to ensure they support the
Intermediaries and partners: Distributing
Intermediaries and partners: Selling our
operational emissions
delivery of our emission targets.
our products in the UK, Sweden and
products is a source of immediate and
of key third parties
the Netherlands.
ongoing revenue for our intermediaries.
Intermediaries and partners: We strive to work closely with our intermediaries,
When dealing with the end customer,
engaging in a variety of ways. In both Movestic and Scildon, all intermediaries have
Suppliers: Support and advice from
intermediaries and partners rely on quality
access to a partner website, where they can administer customer processes and
our key suppliers, including professional
information being provided by us in a
obtain information as required. The Swedish division also hosts annual meetings
services, together with the
timely manner.
to engage with intermediaries, facilitating two-way discussion around products,
decarbonisation of their operations
services and market developments. Other areas of engagement include frequent
to support our own net zero plans.
Suppliers: For key suppliers of the Group,
meetings with intermediaries and partners, on an individual basis.
we are likely to be an important source
Derivative counterparties: Provision
Suppliers: A number of the Group’s suppliers take the form of the provision of
of revenue, and therefore the Group’s
of financial instruments to enable us
a service or advice as opposed to the supply of goods. For these suppliers, our
ongoing success in terms of delivering its
to manage our risk profile in line with
engagement focuses on ensuring that the service or advice is fit for purpose and
growth plans and remaining financially
our tolerances.
meets the intended scope. This typically involves up-front interaction in scoping
stable will be of interest to our suppliers.
the work, coupled with close monitoring of progress throughout the duration
Rating agency: Fitch has assigned an
Derivative counterparties: They manage
of the services. The Group ensures that it adheres to supplier payment terms.
investment grade credit rating for the
their own risk exposures through the
We are also engaging with our key suppliers to understand how they will be able
Group’s subordinated debt, which
derivative instruments or make a return
to support the delivery of our sustainability targets and goals.
supports the Group in raising capital
as market makers for the trades.
Derivative counterparties: Once a risk exposure has been identified that we want to
at attractive rates of interest.
manage, we engage with the derivative counterparty about the structures available
Rating agencies: Any business decision
Asset managers: Support the delivery
to mitigate that risk. This engagement process continues through to execution of the
that affects the Group’s long-term
of positive investment outcomes for
trade and on an ongoing basis via regular reporting during the life of the instrument.
sustainability may be of significant
customers through the management
interest to Fitch and could impact the
Rating agencies: In addition to the annual ratings review process, we regularly
of certain assets on behalf of the Group
credit rating assigned.
engage with Fitch to discuss the strategy, operational and financial performance
and its divisions and in the transition
of the Group. We also liaise with Fitch on an ad-hoc basis in advance of any key
of our investment portfolio to net zero.
Asset managers: Our asset management
events, such as acquisitions or other key corporate activity.
partners earn fees on the assets they
Asset managers: Regular meetings are held with our main asset management
manage and have an opportunity to share
partners to review the investment mandates in place with significant focus on
in the success of the Group through
the underlying performance of the investments and their fit with our sustainability
additional assets brought into the Group
objectives.
through new business and acquisitions.
CHESNARAANNUALREPORTANDACCOUNTS202435
STAFF
REGULATORSTHE PLANET AND NATURAL ENVIRONMENT
STRATEGIC REPORT
SECTION 172 KEY STAKEHOLDERS
DEPENDENCIES OF
IMPACT OF BUSINESS
HOW WE ENGAGE
KPIs MONITORED
BUSINESS ON THE
ON THE STAKEHOLDER
WITH THE STAKEHOLDER
RELATING TO THE
STAKEHOLDER
STAKEHOLDER
Compliance with regulatory
The manner in which the Group manages itself,
Our engagement with regulators generally takes the following forms:
Relationship with
requirements is fundamental
both from a prudential and conduct perspective,
supervisory team
– Regulators across the Group typically have regular routines and practices
to the success of the Group.
will dramatically affect how regulators view and
in place to support the delivery of their oversight objectives. This typically
Formal feedback
Without it, we would not
interact with Chesnara and its subsidiaries. The
takes the form of periodic meetings with management, and involves the
from regulators
be able to maintain our
higher risk that the Group is deemed to be to the
Group furnishing regulators with relevant information, such as quarterly
existing status as a life
regulator, the more focus that Chesnara and its
and annual financial risk reporting. The Group fully supports this process.
and pensions provider.
subsidiaries are deemed to require. In addition,
– The Group management will also typically engage with regulators as and
through being a member of the ABI, the Group
when required should there be a business update that would warrant this;
also has the potential opportunity to respond to
for example at the appropriate point during an acquisition process.
and shape future regulatory change in the UK.
– Annual regulatory college meeting where a number of the Group’s
regulators meet with the Group CEO and CRO.
Our people are a key asset
We aim to provide a place of work that supports
Chesnara and its subsidiaries have various mechanisms in place to ensure
Staff surveys
and drive the development
and develops the Group’s employees, and we
appropriate levels of engagement exist with employees. This involves:
Feedback from employee
and deliver the strategy of
recognise that the Group’s day-to-day culture and
– Completing staff feedback surveys.
forums
the Group. We recognise
its overall remuneration and benefits package also
– Holding regular update briefings covering matters such as business
Feedback from
that to be able to meet the
have a significant effect on employees.
performance, policy updates or any other matters that are relevant
appointed NED
expectations that we have
to employees.
set ourselves, we need to
Staff turnover
ensure that we continue to
– Holding regular employee forums to discuss any employee-related matters.
Diversity information
attract, promote and retain
– Having an appointed non-executive director (NED) who is responsible
high quality candidates.
for employee-related matters and engages with local HR directors and
Without high performing
employee forums.
and motivated staff, the
– Ensuring that we have relevant employee policies in place and that these
Group would not be
are available to our employees.
able to deliver against its
– Having robust whistleblowing policies in place. Our corporate and social
strategic aims.
responsibility statement on pages 71 to 91 provides further information.
Our business relies on
Our main impact is from the assets in which
We impact the planet and natural environment through the business
CO
₂
e financed and
natural capital and the
we and our policyholders invest and their carbon
decisions that we and our policyholders make. Ensuring that sustainability
operational emissions
environment, both for our
and wider impact on nature. For our own
is at the heart of our decision making is critical to ensuring that we consider
Climate Value at Risk
operations and our
operations, the main category of emissions are
the planet and natural environment.
Energy consumption
investments. Changes in the
those arising from goods and services purchased
Our business units are working closely with their respective fund managers
natural environment and the
from suppliers. The impact of our investment
ESG risk scores
to fully embed sustainability within our own investment decision making
effects of climate change
decisions and the investment choices made by
Value of assets invested
criteria. For policyholders who choose where they wish to invest, we
can potentially affect the
our customers are wide-ranging and will continue
within our definition of
provide access to a range of sustainability-focused funds, and we continue
way we operate our
to be a key focus area as we transition to become
positive solutions
to provide relevant material so that they can make informed decisions.
businesses, and the returns
a sustainable group and work towards our net
to our customers and
zero targets.
In regard to our own operations, our business units are taking practical steps
shareholders. We are
to reduce our emissions and minimise the impact that we have
committed to applying
on the environment, as described on pages 74 to 91.
sustainability-based decision
Climate change risk is monitored as part of our risk identification and
making across the Group.
assessment processes (see pages 60 to 67 and 74 to 91).
36 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
SECTION 172 SIGNIFICANT DECISIONS
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).
SIGNIFICANT
OTHER STAKEHOLDER
DECISION
CONSIDERATIONS
PROPOSED
OVERVIEW
Staff: The merger will impact the
MERGER OF
During the year, the Board approved the potential merger of the two Dutch subsidiaries, Scildon and Waard, and submission of the
day-to-day work for employees of
SCILDON
required documents to local regulators for approval. The merger is expected to complete in July 2025. The emergent Dutch division
Scildon and Waard. Implementation
AND WAARD
will trade under the Scildon brand.
plans are being put in place with steps
included to make this transition run as
KEY CONSIDERATIONS
smoothly as possible.
a) Customers’ interests will continue to be protected or enhanced.
Customers: Throughout the transitionary
b) The proposed merger will enhance the long-term prospects of the business from efficiencies that scale will bring.
period of the merger, ensuring that it
c) The interests of employees within the two entities was a significant consideration during the process, as the merger will result in
does not detrimentally affect customers
organisational restructuring. Management engaged with employees through the Works Council in Scildon following the decision
and continuing to foster the relationship
and a positive opinion was received from their independent considerations. In addition, the Nomination & Governance Committee
with our customers is a priority.
considered the proposals for the senior roles.
Regulators: The Dutch regulator,
d) A key part of the implementation plan will be ensuring the merger brings no detriment to customers.
De Nederlandsche Bank (DNB), will
e) The merged entity will trade under the Scildon brand which has a strong reputation in the Netherlands for high standards of
be interested in ensuring that the
business conduct.
merger does not cause any prudential
or conduct issues.
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.
ACQUISITION
OVERVIEW
Staff: The decision is of interest to the
ANNOUNCED
The Board is required to approve any acquisitions that the Group enters into. In addition to this, the Board reviews and approves any
staff of our existing Group given it
IN THE YEAR
‘firm’ material acquisition offers.
supports our growth ambitions which
provides greater financial stability and
In December 2024, the UK division reached agreement with Canada Life UK to acquire a closed portfolio of unit-linked bonds and
development opportunities.
legacy pension business with total AuM of £1.5bn. The deal was initially executed via a reinsurance agreement, with the policies
Regulators: The FCA and PRA are
expected to transfer to Countrywide Assured through a Part VII insurance business transfer process once court approval is obtained.
responsible for approving elements of the
KEY CONSIDERATIONS
Part VII documents and ensuring that the
a) The UK division is largely closed to new business; therefore, acquisitions are the primary source of growth for the business. As such,
Company continues to remain compliant
this decision improves the long-term prospects of the division which benefits multiple shareholders including staff, our UK suppliers
with regulations during the reinsurance
and partners.
period and after the Part VII.
b) The impact on employees of completing the acquisition was considered through the process and in discussion with the seller.
Suppliers: Our outsource partner, SS&C,
c) Ensuring that customers would not be adversely affected by the acquisition and continue to receive good outcomes was fundamental
will be administering the policies once
to the decision making process. We consulted with our regulators in advance of completing the acquisition.
the Part VII is complete, and therefore
has an interest in the acquisition. Our
d) Our due diligence process in assessing potential acquisitions includes an initial and ongoing assessment of sustainability criteria
ratings agencies were engaged in
against our goals and commitments.
advance of the completion of the
e) The Board considered how the acquisition would impact the business’ reputation for high standards of business conduct.
acquisition.
PRIMARY BENEFICIARIES
IFAs: Financial advisors who
Customers: The customers of the acquired portfolio will wish that their policies continue to be administered in line with expectations,
recommended these products to the
and that they continue to be prudently managed. As part of the Part VII process, we ensure all policyholders continue to receive the
impacted customers will want to feel
same benefits in their existing policies with the same level of security after the transfer.
confident that the products will continue
Shareholders: The acquisition resulted in a day 1 EcV gain of £11m (in excess of the expected day 1 gain as quoted in the
to be supported.
announcement of £8m).
CHESNARAANNUALREPORTANDACCOUNTS202437
STRATEGIC REPORT
SECTION 172 SIGNIFICANT DECISIONS
SIGNIFICANT
OTHER STAKEHOLDER
DECISION
CONSIDERATIONS
STAFF AND
OVERVIEW
Shareholder: Investment
REMUNERATION
Over the course of the year, there were a number of significant staff and remuneration related decisions, the most notable of which are:
in staff provides a
DECISIONS
– Tom Howard was appointed as a director of Chesnara plc. He joined as Group CFO in April 2024.
sustainable environment
– Dave Rimmington stood down as a director and as Group Finance Director.
and workforce, which in
– Stefan Klohammar was appointed as CEO of the subsidiary Movestic Fonder AB in September 2024.
turn is expected to have
– Pauline Derkman and Edwin Bekkering are proposed as the CEO and CFRO of the future merged business in the Netherlands, subject to regulatory approval.
a positive impact on the
business. Both in advance
– UK staff were invited to a 2024 issuance of the approved save as you earn (SAYE) scheme.
of the 2024 AGM and
– Salary increases across the UK as part of the annual review.
following shareholders’
KEY CONSIDERATIONS
votes on the 2023
Each decision was discussed by the Board giving consideration as to the relevant merits of each item and whether the cost was appropriate given
Directors’ Remuneration
the current economic climate. For each of the decisions, the impact, the benefits and the position in the market and relative to competitors were
Report, the Chair of the
considered (where appropriate).
Remuneration Committee
a) The Board considered the long-term impact of their choice of leadership and remuneration.
engaged with major
b) The impact of expanding employees’ benefits packages on employees was considered by the Board.
shareholders and a
c) The Board considered the impact the Group’s leadership has on the Group’s reputation for high standards of business conduct.
number of changes and
PRIMARY BENEFICIARIES
clarifications were made
The appointment of appropriately skilled and experienced Board members and senior leaders is in the interest of all our stakeholders.
as a result.
Staff: The primary stakeholder affected by the SAYE decision is the UK workforce, as this directly affects their benefits packages.
GOVERNANCE
OVERVIEW
CHANGES
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
OVERVIEW
Banks: Our bankers are
OF CAPITAL
Every year, the Board is required to consider what level of dividends are appropriate for shareholders, whilst also ensuring that it continues to adhere
considered in terms of the
MANAGEMENT
to its own Capital Management Policy. Dividend proposals are subject to Board approval, with proposed final dividends being included in a resolution
impact of distributions on
AND DIVIDEND
voted for at the Annual General Meeting.
our liquidity and solvency
POLICIES
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.
position.
KEY CONSIDERATIONS
Regulators and
The Directors’ Report on page 135 provides information on the key considerations made by the Board when approving dividends. The aim is to
customers: These
satisfy investor expectations by delivering an attractive dividend, with steady growth where possible. This dividend cannot and will not be delivered
stakeholders are
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
considered in the context
management which considers the various aspects of the dividend decision, including cash generation, solvency, leverage, the Group’s acquisition
of ensuring that the
strategy and investor expectations.
solvency position of the
a) The Board ensures that the payment of a dividend does not jeopardise the long-term prospects of the Group.
Group remains robust.
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.
38 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
SIGNIFICANT
OTHER STAKEHOLDER
DECISION
CONSIDERATIONS
DECISIONS
OVERVIEW
Regulators have a
UNDERPINNING
Over the course of the year, a number of key regulatory projects were progressed or completed. The most material were:
vested interest to
REGULATORY
– Consumer Duty in the UK – with a deadline of 31 July 2024 to comply for closed books.
ensure compliance.
ACTIVITIES
– 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.
EMBEDDING
OVERVIEW
Asset managers:
SUSTAINABILITY
We have continued to embed sustainability into our processes and decision making across the Group. This is in line with our commitment to become
Our asset managers
INTO OUR
a sustainable Chesnara, including being a net zero Group by 2050.
are fundamental to the
BUSINESS
transition to net zero for
In reaching its decision to continue with our sustainability strategy, the Board considered the rationale for investing time and expenses in becoming
financed emissions and
a sustainable Chesnara. The Board, supported by the oversight and direction provided by the Group Sustainability Committee, has considered the
sustainability criteria forms
importance of managing the transition to net zero of the investments we hold, being an organisation where all stakeholders feel welcome and
part of our selection and
decarbonising our own operations and supply chain. The strategic importance of these activities, together with their potential to provide risk
oversight processes. We
mitigation for issues such as climate change, continued to be assessed by the Board.
will continue to have active
Notable areas of focus during 2024:
engagement to ensure
that our targets are met.
– 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
Suppliers and
a foundation of knowledge of key issues such as climate change, biodiversity loss, equality, diversity and inclusion and key governance principles;
outsourcers: Sustainability
criteria forms part of our
– Embedding sustainability as a key consideration in the acquisition process for potential businesses and portfolios;
supplier selection and
– Enhancing our climate risk assessment to further understand the resilience of our investment portfolio to climate change;
oversight processes.
– 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.
CHESNARAANNUALREPORTANDACCOUNTS202439
STRATEGIC REPORT
MAXIMISE VALUE FROM
BUSINESS REVIEW UK
KPIs
EXISTING BUSINESS
Capital & value management
Commercial Cash Generation:
The UK division manages
The division has continued the programme of migrating the existing books
£40m
c290k policies covering linked
of business to SS&C Technologies as part of the long-term strategic
(2023: £49m)
partnership entered into in 2023. This now includes the migration and
pension business, life
integration of the Canada Life acquisitions. In December, the UK division
extended the scope of its existing mass-lapse reinsurance arrangements,
SII ratio (pre dividend):
insurance, endowments,
further reducing its associated capital requirements.
182%
annuities and some with-profit
(2023: 183%)
Customer outcomes
business. The division is largely
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
SII ratio (post dividend):
closed to new business,
high standards for consumer protection and focuses on ensuring firms act
135%
in a way to deliver good outcomes for customers. The division is also on
generating future value
(2023: 149%)
track to meet the 31 March 2025 deadline for the FCA’s Operational
Resilience regulation.
through small levels of new
EcV Earnings:
business, investment returns
Governance
£20m
The insurance business of CASLP was transferred to Countrywide Assured
on unit-linked policies,
(2023: £38m)
on 31 December 2023. CASLP Limited was de-authorised in Q3 2024, and
the remaining assets were subsequently transferred to Countrywide
increments to existing policies
Assured. The Company was dissolved in January 2025. The division has
IFRS Pre-Tax Profit:
and periodic acquisitions.
supported the wider Group’s sustainability programme over the course of
£28m
the year and rolled out training for staff across the business to help embed
(2023: £3m noting the 2023 result
sustainability into day-to-day decision making.
included a one off impairment charge
of £21m).
FUTURE PRIORITIES
Dividend remittances
– Continued migration of the majority of the existing and the acquired
in 2024:
books of business to SS&C.
– Implementation of identified potential capital management actions.
£35m
– Finalisation of the operational resilience programme to ensure the
Analysis of the segmental movements
regulatory deadline of 31 March 2025 is met.
are available on pages 47 and 49 to 54.
– 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
ACQUIRE LIFE AND
KPIs
PENSIONS BUSINESSES
In December 2024, the UK division reached agreement with Canada Life
Acquisitions in the year
UK to acquire a closed portfolio of unit-linked bonds and legacy pension
have added:
business with a total AuA of £1.5bn. This transaction is being initially
executed via a reinsurance agreement, with the policies expected
– Day 1 OF:
£10m
to transfer to the Group through a Part VII insurance business transfer
– Day 1 EcV: £11m
process following court approval.
(£3m in excess of the expected
During 2024, work progressed on the Part VII transfer of the Canada Life
day 1 gain as quoted in the
individual protection business acquired in May 2023 under a reinsurance
announcement of £8m)
agreement. The transfer completed on 24 February 2025 following
– AuM: £1.5bn
court approval.
– Policies: 17,000
FUTURE PRIORITIES
In the last three years,
– Support the Group in identifying and delivering UK acquisitions.
acquisitions have added
– Continue to deliver strong financial outcomes from past acquisitions.
£39m of EcV at group level.
ENHANCE VALUE THROUGH
KPIs
PROFITABLE NEW BUSINESS
The division generated positive new business profits, through significantly
APE:
increased volumes of the on-platform onshore bond. This resulted in a
£13m
New Business Contribution of £2m.
(2023: £7m)
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
New Business Contribution:
inheritance tax.
£2m
The division has developed a suite of advisor-facing technical product
(2023: £2m)
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.
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.
CHESNARAANNUALREPORTANDACCOUNTS202441
STRATEGIC REPORT
MAXIMISE VALUE FROM
BUSINESS REVIEW
KPIs
EXISTING BUSINESS
SWEDEN
Capital & value management
Commercial Cash Generation:
Over 2024, the division saw growth in AuA driven by positive total net client
£11m
Our Swedish division consists
cash flows and favourable investment markets. High transfer activity within
(2023: £nil)
the Swedish occupational pension segment has continued, affecting both
of Movestic, a life and pensions
inward and outward transfer flows. Inflows within both the unit-linked and
the custodian lines grew compared to the prior year, generating a positive
SII ratio (pre dividend):
business which is open to
net client cash flow.
153%
new business. It offers
(2023: 153%)
Customer outcomes
personalised unit-linked
During 2024, Movestic released an updated version of its digital service
which helps customers to plan their retirement, start withdrawing and
SII ratio (post dividend):
pension and savings solutions
change how they receive their occupational pension. To enable increased
151%
individual adaptation, more flexible terms for pension withdrawals were
through brokers, together
(2023: 147%)
launched during the year. An additional digital service within salary sacrifice
savings was launched during the year, and more customers than ever signed
with custodian products
up for individual pension advice within the ‘Movestic Freedom’ concept.
EcV Earnings:
via private banking partners
£31m
Governance
and is well regarded within
(2023: £7m)
Movestic’s sustainability programme is aligned to the Group’s strategy and
commitments, forming the basis of Movestic’s own sustainability work and
both communities.
targets. The EU commission adopted a new regulatory framework, Digital
IFRS Pre-Tax Profit:
Operational Resilience Act (DORA), and over 2024, work progressed on this
£10m
project to ensure compliance when it came into force. Work in the year also
(2023: £5m)
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.
Dividend remittances
in 2024:
£7m
FUTURE PRIORITIES
(payment in Q4 2024 and Q1 2025)
– Continue building solid and long-term sustainable value creation for
customers and investor stakeholders through a diversified business model.
Analysis of the segmental movements
– Continue offering modern and individually adapted high-quality solutions
are available on pages 47 and 49 to 54.
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
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
– Seek out opportunities to bring in additional scale through M&A.
ENHANCE VALUE THROUGH
KPIs
PROFITABLE NEW BUSINESS
New Business Contribution of £5m over 2024 which is an increase on the
APE:
prior year result of £3m.
£100m
The division expanded its custodian distribution network in 2024, two new
(2023: £65m)
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.
New Business Contribution:
£5m
To improve distribution and sales within the life and health insurance
segment, the division launched a new, updated risk insurance offering, as
(2023: £3m)
well as new technical integrations for brokers and partners during the year.
A new partnership for the distribution of the digital life insurance product
Occupational pension
has also been entered into over the course of the year.
market share:
4.4%
(2023: 4.4%)
FUTURE PRIORITIES
– Continue to build customer value and loyalty through further enhancement
Custodian accounts
of the division’s offering, consisting of individually adapted pension and
savings and life and health products, and associated digital services.
market share:
Focus on both growing new business and retention activities.
12.2%
– Continued development and enhancement of partnerships with our
(2023: 7.7%)
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.
CHESNARAANNUALREPORTANDACCOUNTS202443
STRATEGIC REPORT
MAXIMISE VALUE FROM
BUSINESS REVIEW
KPIs
EXISTING BUSINESS
NETHERLANDS
Capital & value management
Commercial Cash Generation:
Scildon’s enhancement of its IT infrastructure completed in 2024, generating
£16m
Our Dutch businesses deliver
operating and cost efficiencies. Scildon also conducted asset reviews to
(2023: £24m)
provide more efficient interest rate hedges, replaced short-duration
growth through our acquisitive
government bonds with investments in money market funds to improve its
overall return profile and is increasing its investment in mortgage funds to
SII ratio (pre dividend):
closed-book business, Waard,
improve its asset/liability matching positions. Waard also made changes to
Waard 350%
its asset mix to improve longer-term expected returns. The proposed merger
and our open-book business,
of the two Dutch businesses will result in a division stronger than the sum of
Scildon 205%
its parts, through scale and synergies.
Scildon, which seeks to write
(2023: 377% Waard
and 184% Scildon)
profitable term, investments
Customer outcomes
Scildon has continued to make improvements to its customer offering
and annuity business.
SII ratio (post dividend):
through new products and digitalisation options. Waard launched its digital
customer portal, making it easier for customers to access their documents
Waard 324%
in digital format.
Scildon 205%
(2023: 353% Waard
Governance
and 184% Scildon)
During 2024, the businesses progressed the implementation of the
requirements of the Digital Operational Resilience Act (DORA), becoming
EcV Earnings:
compliant by the January 2025 implementation date. Work progressed
over the year in respect of the implementation of the Corporate Sustainability
£21m
Reporting Directive (CSRD), with both companies completing their double
(2023: £41m of which £21m related
materiality assessments and gap analyses in 2024. We are considering the
to the day 1 gain from Conservatrix)
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,
IFRS Pre-Tax Profit:
Waard Leven and Waard Schade becoming directly owned by Chesnara plc.
£5m
Chesnara Holdings BV was de-registered in April 2024. During the year,
the division prepared all of the required documents relating to the
(2023: £23m)
potential merger and submitted these to the local regulator for approval
in January 2025.
Dividend remittances
in 2024:
£7m
FUTURE PRIORITIES
– Complete the proposed merger of the Waard and Scildon businesses
Analysis of the segmental movements
(subject to regulatory approvals), enhancing the scale, efficiency and
are available on pages 47 and 49 to 54.
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
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.
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.
ENHANCE VALUE THROUGH
KPIs
PROFITABLE NEW BUSINESS
Scildon generated a New Business Contribution of £2m (2023: £5m),
New Business Contribution:
against a backdrop of continued suppressed term market volumes and
£2m
pressure on pricing. Scildon has maintained a disciplined approach
to pricing, albeit at lower volumes.
(2023: £5m)
In April 2024, Scildon launched a Stop Smoking lifestyle proposition on
new business, reflecting its focus on expanding offerings to customers.
Term assurance market share:
The initiative won an award in the Customer Interest category of the Adfiz
10.6%
Performance Survey 2025.
(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.
CHESNARAANNUALREPORTANDACCOUNTS202445
STRATEGIC REPORT
CAPITAL MANAGEMENT SOLVENCY II
The Group’s Solvency Coverage Ratio is significantly above the upper end of our operating range of 140% to 160%.
GROUP SOLVENCY
Solvency position
205%
203%
351
327
Group Solvency II surplus is £327m (2023: £351m) with a Solvency Coverage Ratio of 203% (2023:
684
643
205%), which includes the proposed final 2024 dividend of £24m and payment of the interim 2024
dividend of £13m.
KEY
316
333
Own Funds include the impact of a £32m rise in the Tier 2/3 restriction and a £10m day 1 gain from
Own Funds (Post Div)
SCR
the acquisition of the policy portfolio from Canada Life. The SCR reduced in 2024, mainly due to a
Surplus
general fall in market and life underwriting risk, with a rise in LACDT in UK and Dutch businesses.
31 Dec 2024
31 Dec 2023
Solvency coverage movement
4%
16%
(3%)
(7%)
205%
203%
(12%)
CONTINUED ROBUST
SOLVENCY COVERAGE
Operating solvency range: 140% to 160%
OF 203%
SII ratio
Capital
Management
Acquisitions SII
Dividend
SII ratio
31 Dec 2023
generation
actions
adjustments
1
payments
31 Dec 2024
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.
46
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
DIVISIONAL SOLVENCY
Solvency position
UK
SWEDEN
The rise in surplus (pre-foreseeable dividend of
Surplus growth of £11m (pre-foreseeable dividend
£45m) to £60m (2023: £29m) includes growth
of £2.5m) was underpinned by economic factors,
151%
in Own Funds and an SCR reduction during 2024.
with unit-linked equity returns driving the increase
Key drivers of the increase in Own Funds included
in Own Funds, offsetting adverse lapse experience.
147%
37
the portfolio acquisition from Canada Life UK,
149%
A smaller rise in SCR was also largely attributable
new business profits and economic returns
to the impact of positive market conditions on the
29
135%
29
(rising equities and bond income).
equity risk component of the SCR.
24
15
22
21
19
184
159
152
130
122
108
103
KEY
96
KEY
Own Funds (Post Div)
Own Funds (Post Div)
SCR
SCR
Buffer
Buffer
Surplus
Surplus
31 Dec 2024
31 Dec 2023
31 Dec 2024
31 Dec 2023
NETHERLANDS WAARD GROUP
NETHERLANDS SCILDON
The reduction in Solvency II surplus (£10m) includes
Growth in Solvency II surplus arose from higher
the Own Funds impact of a foreseeable dividend
353%
Own Funds with a broadly flat SCR over the period.
(£7m) and a transfer of capital to the Group,
Growth was driven by positive operating variances,
following liquidation of Chesnara BV. The reduction
324%
205%
and operating assumption changes from cost
in SCR was primarily due a fall in life underwriting
management actions. An increase in LACDT
184%
20
risks and an increase in LACDT, offsetting a rise in
outweighed rises in expense and lapse risks,
6
market risks.
58
resulting in a small reduction in SCR (£1m).
48
51
52
94
82
140
127
9
9
KEY
KEY
6869
Own Funds (Post Div)
Own Funds (Post Div)
SCR
25
27
SCR
Buffer
Buffer
Surplus
Surplus
31 Dec 2024 31 Dec 2023
31 Dec 2024 31 Dec 2023
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.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
47
STRATEGIC REPORT
CAPITAL MANAGEMENT SENSITIVITIES
The Group’s solvency position remains strong and we proactively evaluate the main factors that can affect our solvency.
The diagram below provides some insight into the immediate impact of certain sensitivities on the
Swap rates: A reduction in the swap discount rate profile reduces the Group’s surplus by increasing
Group’s Solvency Coverage Ratio and solvency surplus.
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.
Foreign exchange: Appreciation of sterling relative to our overseas currencies reduces the value
of overseas surplus with partial mitigation from the Group currency hedge.
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.
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.
Inflation: A permanent increase in inflation for all future years increases the Group’s future
The reduction in SCR is limited by the impact of the Solvency II symmetrical adjustment.
expense profile, reducing Own Funds and surplus.
Interest rates: An interest rate fall has a more adverse effect on surplus than an interest rate rise.
Mortality rates: A 5% increase in mortality rates across the Group will reduce the future
Group solvency is less exposed to rising interest rates, as a rise in rates causes capital requirements
surplus projections from the in-force book, leading to lower Own Funds and a reduction in the
to fall, increasing solvency.
Group’s surplus.
Credit spreads: Higher spreads reduce surplus, as the rise in spreads decreases the value of
Own Funds.
SOLVENCY
SOLVENCY
RATIO
SURPLUS
Impact range £m
(80) (60) (40) (20) - 20 40 60 80
20% sterling appreciation
33.6%
20% sterling depreciation
(12.3)%
25% equity fall
6.4%
25% equity rise
(4.6)%
10% equity fall
2.6%
10% equity rise
(1.9)%
1% interest rate rise
6.1%
1% interest rate fall
(8.4)%
50 bps credit spread rise
(3.6)%
25 bps swap rate fall
(4.7)%
10% mass lapse
(0.2)%
1% inflation
(9.9)%
5% mortality increase
(3.6)%
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).
48CHESNARAANNUALREPORTANDACCOUNTS2024
STRATEGIC REPORT
FINANCIAL REVIEW CASH GENERATION
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.
£59.6M 2023 £52.4m
£51.6M 2023 £31.9m
COMMERCIAL CASH GENERATION
BASE CASH GENERATION
UK SWEDEN NETHERLANDS
NETHERLANDS
DIVISIONAL
GROUP ADJ ACQUISITIONS TOTAL
WAARD
SCILDON
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
UK
SWEDEN
The UK reported another strong year of cash generation, contributing £39.6m in 2024
In Movestic, cash generation of £10.6m (2023: £0.3m) was stronger, with economic returns
(2023: £48.5m). This was delivered through both Own Funds growth and a reduction in
on the division’s unit-linked business the primary factor in Own Funds growth, exceeding
capital requirements. Economic conditions (mainly the positive impact of rising yields)
a rise in SCR and underpinning the cash result. The rise in SCR was also attributable to the
supported both the growth in Own Funds and the reduction in SCR, predominantly lapse
equity market-driven growth, with an increase in market-risk related capital requirements.
risk (resulting from management action on mass lapse reinsurance).
NETHERLANDS – WAARD
NETHERLANDS – SCILDON
Waard recorded modest cash generation of £1.6m (2023: £15.8m), with positive movements
Scildon generated an increased cash return of £14.6m for the period (2023: £8.2m).
in both Own Funds and SCR. Own Funds growth, delivered through operating profits, was
Operating profits, including management actions on cost efficiencies, were the primary
restricted due to economic losses (mainly the negative impact on bond holdings of interest
driver of Own Funds growth. This action also had a positive effect on capital requirements,
rates). An increase in LACDT offset a rise in market risk, owing partly to the purchase of
driving a reduction in SCR, offsetting the adverse impact of economic conditions and
government bonds (with longer duration increasing interest rate SCR) and proactive re-risking
lower interest rates.
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.
GROUP
The Group Centre component of cash generation includes Tier 2 debt coupon payments
(c£10m) and other central costs.
†
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
49
STRATEGIC REPORT
FINANCIAL REVIEW EcV
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.
£531.0M 2023: £524.7m
ECONOMIC VALUE (EcV)
Value movement: 1 Jan 2024 to 31 Dec 2024 £m
EcV to Solvency II £m
200
7
643
58
11
567
(34)
(24)
525
531
531
(26)
4
(37)
(42)
EcV
EcV
Acquisitions Forex EcV
Dividends EcV
EcV
Risk
Contract
Tier 2
RFF &
DeferredDividends
SII Own
31 Dec
Earnings
31 Dec
31 Dec
31 Dec
margin
boundaries
debt
Tier 2/3
tax asset
Funds
2023
before
2024
2024
2024
restrictions
adj
31 Dec
acquisitions
(pre-div)
2024
EcV Earnings: EcV profits of £59m have been driven primarily by positive market conditions
EcV is based on a Solvency II assessment of the value of the business but adjusted for certain items
during 2024, supported by operating profits. Further detail can be found on page 51.
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.
Acquisitions: The Group completed the acquisition of a closed portfolio from Canada Life,
the transaction delivering a day 1 EcV gain of £11m.
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
Foreign exchange: The closing EcV of the Group reflects a foreign exchange loss in the
above a realistic cost. We therefore reduce this margin for risk for EcV valuation purposes from being
period, which is a consequence of sterling appreciation against both the Swedish krona and
based on a 6% (UK: 4%) cost of capital to a 3.25% cost of capital, risk tapering is subsequently
also the euro.
applied in line with the parameters and approach used in the calculation of the risk margin under
Dividends: Under EcV, dividends are recognised in the period in which they are paid. Dividends
Solvency II in the UK.
of £37m were paid during the year, representing the final dividend from 2023 and interim
Contract boundaries: Solvency II rules do not allow for the recognition of future cash flows on
dividend for 2024.
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.
EcV by segment at 31 Dec 2024 £m
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
UK
189
valuation purposes as they are deemed to be temporary in nature.
Sweden
199
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.
Netherlands
252
Tier 2: The Tier 2 debt is treated as ‘quasi equity’ for Solvency II purposes. For EcV, consistent
Other group
(110)
with IFRS, we continue to report this as debt. Under SII, this debt is recognised at fair value,
activities
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
The above chart shows that the EcV of the Group remains diversified across its different
regulatory rules. For EcV, the Tier 3 Own Funds are recognised at a deemed realistic value.
geographical markets.
50
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
FINANCIAL REVIEW EcV EARNINGS
Continued strong EcV Earnings have been delivered through economic profits, new business gains and delivery of our acquisition strategy.
Total Operating Earnings: Operating earnings of £10.4m were
Analysis of the EcV result by business segment:
£69.2M 2023 £59.1m
reported in 2024, driven by positive results in our Dutch and
Swedish businesses, offsetting an operating loss in the UK.
EcV EARNINGS
31 Dec
31 Dec
Total Economic Earnings: The economic result continues
£m
2024
2023
to be the largest component of the total EcV Earnings, with
Analysis of the EcV Earnings by source of value:
UK 19.6 31.4
a profit of £50.3m in the year. The result is in line with our
reported sensitivities and is driven by the following key
31 Dec
31 Dec
Sweden 30.9 6.8
market movements:
£m
2024
2023*
Equity indices:
Netherlands 21.4 19.5
Expected movement in period 15.0 14.9
– FTSE All Share index increased by 5.6% (year ended
New business 5.2 4.4
31 December 2023: increased by 3.7%).
Group and Group adjustments (13.3) (27.0)
Operating experience variances (9.1) 14.9
– Swedish OMX all share index increased by 5.6%
Acquisitions 10.5 28.4
(year ended 31 December 2023: increased by 15.6%).
Operating assumption changes 9.0 (25.9)
– The Netherlands AEX all share index increased by 7.5%
EcV Earnings inc. acquisitions 69.2 59.1
Other operating variances (9.7) (1.9)
(year ended 31 December 2023: increased by 13.4%).
Total Operating Earnings
†
10.4 6.4
Credit spreads:
UK: The UK’s result of £19.6m was driven primarily by favourable
market conditions, predominantly the long-term impact of rising
Total Economic Earnings
†
– UK AA corporate bond yields decreased to 0.68%
50.3 42.9
(31 December 2023: decreased to 0.71%).
yields and equities with an offset from non-recurring costs of
investment in outsourcing arrangements and the business
Other non-operating variances (11.3) (11.9)
– European AA credit spreads decreased to 0.56%
acquisitions. The result was also supported by higher year on
Central costs (11.8) (14.1)
(31 December 2023: increased to 0.63%).
year new business earnings.
Risk margin movement 22.8 1.1
Yields:
Sweden: The Movestic result of £30.9m benefitted from
Tax (1.8) 6.3
– 10-year UK gilt yields increased to 4.64% (31 December 2023:
favourable market conditions in Sweden and Europe. New
decreased to 3.64%).
business volumes contributed further earnings of £2.3m
EcV Earnings 58.6 30.7
– 10-year euro swap yield decreased to 2.37% (31 December 2023:
(on an EcV basis). The operating result was partially offset
decreased to 2.49%).
Acquisitions 10.5 28.4
by the impact of transfers out.
Other costs: The result also includes Group Centre, primarily
Netherlands: The Dutch businesses reported combined growth
EcV Earnings inc. acquisitions 69.2 59.1
associated with the M&A strategy and development of the
of £21.4m, with positive operating profits offsetting economic
Group, and other non-operating items, including the release
losses, primarily due to the impact of rising interest rates on
of risk margin and financing costs, such as Tier 2 debt servicing.
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.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
51
STRATEGIC REPORT
FINANCIAL REVIEW IFRS BALANCE SHEET
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).
HOW THE CSM HAS MOVED IN THE PERIOD
£m
2
74
32
176
(19)
157
(7)
CSM
Experience &
New
Interest
Other FX
CSM
CSM
(gross of tax)
assumption
business
accreted
release
impact
(gross of tax)
31 Dec 2023
changes
31 Dec 2024
The CSM represents future profits that are expected to be released to the income statement over
HOW DOES IFRS COMPARE TO ECV AND SOLVENCY II?
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.
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
Positive experience and assumption changes across the Group have added £32.0m of CSM. New
arise. This differs to the approach in EcV, where these future profits are fully recognised on the
business in Scildon and the portfolio acquisition in the UK have also added £7.5m of CSM, reflecting
balance sheet, subject to contract boundaries.
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
LEVERAGE
other smaller net negative movements including the impact of foreign exchange and the interest
accretion totalling £1.7m making up the total movement.
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
The CSM values are shown net of reinsurance but gross of tax. When calculating the IFRS Capital
†
30.9% (31 December 2023 restated: 29.5%).
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.
†
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.
52 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
FINANCIAL REVIEW IFRS INCOME STATEMENT
Group IFRS Pre-Tax Profit of £20.8m represents a £19.1m year on year increase versus 2023.
£20.8M 2023 restated: £1.7m
£(11.0)M 2023 restated: £10.2m
IFRS PRETAX PROFIT
TOTAL COMPREHENSIVE INCOME
Net insurance service result
Analysis of IFRS result:
The net insurance service result comprises the revenue and expenses from providing insurance
Restated
services to policyholders and ceding insurance business to reinsurers and is in respect of current
31 Dec 2024
31 Dec 2023
and past service only.
£m
£m
Assumption changes, relating to future service, are excluded from the insurance result (as they
Net insurance service result 8.6 (5.2)
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.
Net investment result 52.7 71.7
The net insurance service result of £8.6m is broken down into the following elements:
Fee, commission and other operating income 104.2 89.4
– gains from the release of risk adjustment and CSM of £22.2m (2023 restated: £23.2m).
Other operating expenses (133.6) (149.9)
These gains represent a consistent source of future profits for the Group.
Financing costs (11.1) (11.0)
– losses of £13.6m (2023 restated: £28.5m loss) caused by experience impacts and loss component
Profit arising on business combinations and portfolio
effects where portfolios of contracts with no CSM have suffered adverse impacts that would
– 6.7
acquisitions
otherwise be offset in the balance sheet if the CSM for those portfolios were positive.
Net investment result
Profit before income taxes 20.8 1.7
The net investment result contains the investment return earned on all assets together with the
Income tax (charge)/credit (16.9) 16.9
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
Profit for the period after tax 3.9 18.6
of locked-in discount rates has contributed a further £4.3m (2023: £12.8m), largely in respect of
Foreign exchange (loss)/gain (15.3) (7.8)
groups of contracts in a loss component position and therefore partly offsetting the losses noted
above in the insurance service result.
Other comprehensive income 0.4 (0.6)
Fee, commission and other operating income
Total comprehensive income (11.0) 10.2
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
Movement in IFRS Capital Base
†
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
Opening IFRS Capital Base 479.4 469.2
£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
Movement in CSM (net of reinsurance and tax) 15.2 34.5
business in Sweden being the largest contributory factor.
Total comprehensive income (11.0) 10.2
Other adjustments made directly to shareholders’ equity 2.1 0.9
Other operating expenses
Other operating expenses consist of costs relating to the management of the Group’s investment
Dividends (36.5) (35.4)
contracts, non-attributable costs relating to the Group’s insurance contracts and other certain
one-off costs such as project costs.
Closing IFRS Capital Base 449.1 479.4
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).
CHESNARAANNUALREPORTANDACCOUNTS202453
STRATEGIC REPORT
FINANCIAL REVIEW IFRS INCOME STATEMENT
Financing costs
Other comprehensive income
This predominantly relates to the cost of servicing our Tier 2 corporate debt notes which were issued
This represents the impact of movements in the valuation of land and buildings held in our
in early 2022. Further details can be found in Note C5 of the financial statements.
Dutch division.
Profit arising on business combinations and portfolio acquisitions
Income tax
The portfolio acquisition of unit-linked bond and pension business from Canada Life in December
Income tax consists of both current and deferred taxes.
2024 is not classed as a business combination under IFRS accounting and has therefore been
The income tax expense of £16.9m in 2024 predominately arises from a UK deferred tax charge,
accounted for as an ‘asset and liability’ transfer at cost, with no day 1 gain. The acquisition of the
driven by the investment returns on assets backing policyholder liabilities. Under current UK tax
Conservatrix insurance portfolio in 2023 did meet the requirements of a business combination and
legislation, these investment returns are taxed over a seven-year period, leading to the deferred
the resulting day 1 gain is reported within the 2023 income statement.
tax impact.
Foreign exchange
Although current tax charges are being offset by carried-forward tax losses (Excess Expenses) from
The IFRS consolidated result of the Group reflects a foreign exchange loss of £15.3m in the period, a
prior periods, these losses had already been fully recognised as a deferred tax asset by year end
consequence of sterling appreciation, against both the euro and the Swedish krona. The loss is partly
2023. As a result, their utilisation in 2024 does not reduce tax expense but instead triggers a deferred
offset by a £4.0m gain from foreign exchange rate hedges, reported within the investment result.
tax charge.
54 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
FINANCIAL MANAGEMENT
The following diagram illustrates the aims, approach and outcomes from the Financial Management Framework:
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:
Maintain solvency in
Provide an attractive
Optimise the gearing ratio
Ensure there is sufficient
Maintain the Group
or above our normal
return to investors
to ensure an efficient
liquidity to meet
as a going concern
operating range of
capital base
obligations to
140-160%
policyholders, debt
financiers and creditors
HOW WE DELIVER OUR OBJECTIVES
In order to meet our obligations we employ and undertake a number of methods. These are centred on:
1. Monitor and control risk
2. Longer-term projections 3. Responsible investment
4. Management actions
& solvency
management
OUTCOMES
Key outcomes from our financial management process, in terms of meeting our objectives, are set out below:
1. Solvency
2. Investor returns
3. Capital structure
4. Liquidity and
5. Maintain the Group
policyholder returns
as a going concern
Group solvency ratio: 203%
2022-2024 TSR 17.4%
Leverage ratio of 30.9%
Policyholders’ reasonable
Group remains
(2023: 205%)
(2021-2023: 14.7%)
(2023: 29.6%)
expectations maintained.
a going concern.
(see page 56)
2024 dividend yield 9.6%
Asset Liability Matching
(2023: 8.7%)
Framework operated
effectively in the year.
Based on average 2024 share
price and full year 2024 dividend
Sufficient liquidity in the
of 24.69p.
Group holding company.
Further detail on capital structure
The Group is funded by a combination of share capital, retained earnings and debt finance. Debt
The net proceeds of the notes has been partially used for corporate purposes, including the funding
leverage was 30.9% at 31 December 2024 (29.5% at 31 December 2023). The level of debt that the
of the CASLP acquisition in 2022 and the partial funding of the Conservatrix acquisition in 2023.
Board is prepared to take on is driven by the Group’s Debt and Leverage Policy which incorporates
The balance is held as investments.
the Board’s risk appetite and has a long-term ambition to maintain IFRS leverage at 30% or less.
Acquisitions are funded through a combination of debt, equity and internal cash resources. The ratios
Over time, the Group’s debt leverage will change, and is a function of the funding requirements for
of these three funding methods vary on a deal-by-deal basis and are driven by a number of factors
future acquisitions and the repayment of existing debt. During 2022, the Company announced the
including, but not limited, to the size of the acquisition; current cash resources of the Group; solvency
successful pricing of its inaugural debt capital markets issuance of £200m Tier 2 Subordinated Notes.
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.
CHESNARAANNUALREPORTANDACCOUNTS202455
STRATEGIC REPORT
FINANCIAL MANAGEMENT
Outcomes from implementing our financial management objectives
3. Viability Statement
Based on the results of the analysis above, the directors have a reasonable expectation that the
1. Maintain the Group as a going concern
Company will be able to continue in operation and meet its liabilities as they fall due over the
After making appropriate enquiries, the directors confirm that they are satisfied that the Company
three-year period of their assessment. Although we produce business plans and other financial
and the Group have adequate resources to continue in business for a period of twelve months from
projections over longer time horizons, the selection of a three-year viability assessment recognises
the date of this report. Accordingly, they continue to adopt the going concern basis in the preparation
that the level of operating, regulatory and market certainty reduces towards the later years of the
of the financial statements.
projection time-frames. The three-year period also aligns with executive director LTIP performance
In performing this work, the Board has considered the current solvency and cash position of the
time frames.
Group and Company, coupled with the Group’s and Company’s projected solvency and cash position
4. Assessment of prospects
as highlighted in the most recent business plan and Own Risk and Solvency Assessment (ORSA)
Our longer-term prospects are primarily assessed through the Group’s quarterly business forecasting
process. These processes consider the financial projections of the Group and its subsidiaries on
cycles and the annual business planning process. The Group’s performance projections include
both a base case and a range of stressed scenarios, covering projected solvency, liquidity, and
underlying operational deliverables, an assessment of the business model and the financial
IFRS positions. These projections assess the cash generation of the life insurance divisions and
consequences of following those plans. We also consider the principal risks and uncertainties
how these flow up into the Group Centre Company balance sheet and support the Group’s debt
that the Group faces (see pages 61 to 67) and how these might affect our prospects.
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,
An assessment of our prospects is shown below and is structured around our three strategic
cash generation, can be found on page 48 under the section headed ‘Capital Management
objectives:
Sensitivities’. The directors believe these scenarios encompass the potential future impact of
Value from in-force book: The Group has c1m policies in force at 31 December 2024. These are
the prevailing economic uncertainty on the Group. The following key assumptions underpin the
generally long-term policies, and the associated cash flows can, at an overall portfolio level, be
sensitivity analyses:
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.
– Economic assumptions: long-term investment returns reflecting current investment portfolio mix.
During the year, we have seen a rise in yields in the UK and Sweden and a small reduction in
– Operating assumptions: based on most recent actuarial assumptions for mortality and morbidity,
euro-denominated yields. Coupled with rising equity indices, this has contributed positively overall
lapses and expenses.
to the Group’s solvency coverage. We are mindful that in uncertain economic times, this situation
– New business volumes: future sales and margins in line with the Board-approved business plan.
can reverse, leading to sustained depressed equity market values and an adverse impact on
– Acquisitions: the Group does not engage in future M&A activity.
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
As set out in pages 46 to 48, the Group’s capital position is resilient to a wide range of adverse
requirements. Temporary market volatility is a natural feature of investment markets, and the
economic and operating scenarios.
Group is well positioned to withstand adverse economic scenarios without creating any permanent
harm to the longer-term profitability prospects.
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.
Acquisition strategy: The outlook and prospects of continuing to deliver against this strategic
This position was further enhanced in early 2022, when the Company announced the successful
objective are covered on pages 40 to 45. We see no reason to expect that periods of economic
pricing of its inaugural debt capital markets issuance of £200m Tier 2 Subordinated Notes, the net
uncertainty will have a long-term impact on the availability of acquisition opportunities. Indeed, we
proceeds of which have been used for corporate purposes, including investments and acquisitions.
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
The Group’s subsidiaries rely on cash flows from the maturity or sale of fixed interest securities
on legal documentation. We announced another UK acquisition on 23 December and our second
which match certain obligations to policyholders, which brings with it the risk of bond default.
portfolio deal with Canada Life. Our latest acquisition involves the acquisition of a portfolio of c17k
To manage this risk, we ensure that our bond portfolio is actively monitored and well-diversified.
onshore bond and personal pensions. We expect an uplift in Economic Value of around £11m from
Other significant counterparty default risk relates to our principal reinsurers. We monitor their
the deal against the £2m of consideration paid. The first step of the deal has been executed by way
financial position and are satisfied that any associated credit default risk is within acceptable
of a reinsurance agreement between both parties.
risk-appetite levels.
We retain significant fire power for future acquisitions and can immediately deploy around £200m
2. Assessment of viability
in support of deals. We have additional financing options available as well, should we have the
The Board’s assessment of the viability of the Group is performed in conjunction with its going
opportunity to execute a larger value enhancing opportunity.
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
Value from new business: The Group’s prospects are not significantly reliant on sustained new
the same key financial metrics as for assessing going concern, being solvency, cash, EcV and IFRS,
business volumes. New business levels have contributed positively to the Own Funds of the Group
both on base case and stressed scenarios.
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.
56 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
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
RISK
MANAGEMENT
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024 57
STRATEGIC REPORT
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.
RISK MANAGEMENT SYSTEM
The Group adopts the ‘three lines of defence’ model,
with a single set of risk and governance principles
applied consistently across the business.
RISK MANAGEMENT SYSTEM REVIEW
CLEAR ACCOUNTABILITIES
AND DEVELOPMENT
AND RESPONSIBILITIES
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
STRATEGY
Committees. Our risk assessment processes have regard
to the significance of risks, the likelihood of their occurrence
The risk management strategy contains the objectives and principles of risk management, the risk appetite,
and take account of the controls in place to manage them.
risk preferences and risk tolerance limits.
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
POLICIES
Group ORSA Reports to the relevant Boards. There is a
The risk management policies implement the risk management strategy and provide a set of principles
strong correlation between these adverse events and the
(and mandated activities) for control mechanisms that take into account the materiality of risks.
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.
PROCESSES
The risk management processes ensure that risks are identified, measured/assessed,
monitored and reported to support decision making.
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.
58 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
RISK MANAGEMENT ROLE OF THE BOARD
The Group Board is responsible for monitoring the Group Risk Management System and carrying out a review of its effectiveness on an annual basis.
The Group and its divisions have a defined risk strategy and supporting Risk Appetite Framework to embed an effective Risk
RISK STRATEGY
Management Framework, with culture and processes at its heart, and to create a holistic, transparent and focused approach to risk
AND RISK APPETITE
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 has a set of Risk and Control Policies that set out the key policies, processes and controls to be applied. Senior
RISK AND CONTROL
management is responsible for the day-to-day implementation of the Risk and Control Board Policies. Subject to the materiality
POLICIES
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.
The Group maintains a Risk Register of risks which are specific to its activity and reports these, along with the principal risks
RISK IDENTIFICATION
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
OWN RISK AND SOLVENCY
ORSA findings and supplements these with an assessment specific to Group activities. The Group and divisional ORSA policies
ASSESSMENT ORSA
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
RISK MANAGEMENT
System. The assessment considers the extent to which the Risk Management System is embedded.
SYSTEM EFFECTIVENESS
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.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024 59
STRATEGIC REPORT
RISK MANAGEMENT EMERGING RISKS
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.
GEOPOLITICAL RISK
ARTIFICIAL INTELLIGENCE AI
Geopolitical risk continues to create a greater level of uncertainty across the Group risk profile,
Developments in the field of AI mean companies are looking towards both self-developed and
for example market volatility and investment performance. To name some examples, the ongoing
externally acquired AI applications, often with the aim to automate or optimise existing processes
conflict between Ukraine and Russia, unrest in the Middle East and growing tensions between
and sub-processes. As a result, financial services organisations are entering the AI space, with many
China and Taiwan all continue to be areas of emerging risk for the Group, in the sense that these
looking at incorporating it into their long-term strategies.
are evolving situations which have potential implications for the Group’s principal risks.
The Group is exploring the use of Artificial Intelligence, including the risks and opportunities arising
During 2024, more than 40 countries, accounting for over 40 percent of the world, held national
from developments in the field of AI.
elections, making it the largest year for global democracy. Against a backdrop of geopolitical tensions
The EU Artificial Intelligence Act officially came into force in August 2024. The regulations are
and economic instability, significant political change is happening:
designed to ensure that AI systems are safe, transparent, and respect fundamental rights while
– The UK’s Conservative Party was heavily defeated after 14 years in power. Labour’s first Budget
promoting innovation within the EU.
announced significant changes impacting business owners and employers, with an anticipated
inflationary impact.
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
– In the US, former president Donald Trump was re-elected with a decisive victory. Pledges made
for AI regulation. Various regulators, including the FCA and the Information Commissioner’s Office
around tariffs and trade wars could impact inflation, global markets and economic growth.
(ICO) have been updating their strategic approaches to AI.
The long-term effects of his policies are unpredictable but could bring significant turbulence.
SUSTAINABILITY
MACROECONOMIC VOLATILITY
Sustainability and the response to the challenges and opportunities presented continues to be a
Global economic growth is experiencing fluctuations due to various factors, including geopolitical
key focus in the UK and Europe and is an evolving area of potential risk for the business. The 2030
tensions, supply chain disruptions, and changes in consumer behaviour. It was anticipated that 2024
Agenda for Sustainable Development, adopted by all United Nations Member States in 2015,
would see a number of interest rate cuts but inflation proved persistent, meaning central banks have
however, in early 2025, the United States of America withdrew from the United Nations Sustainable
been reluctant to ease interest rates too quickly. The future path of inflation remains difficult to
Development Goals. The agenda provides a shared blueprint for peace and prosperity for people and
predict, with most commentators forecasting a continuation of disinflation but with potential for
the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs),
smaller shocks or further persistence in some areas.
which are an urgent call for action by all countries – developed and developing – in a global
Economic uncertainty remains a prominent emerging risk for the Group, with inflation driven expense
partnership. The SDGs and the potential risks they look to address cover areas including poverty,
risk and future market risk exposures being the potential key areas with greatest potential impact.
inequality, climate change, environmental degradation, peace, and justice.
– Many of the Group’s material supplier contracts, as well as a majority of the Group’s internal costs,
Of these, a prominent area of focus across the UK and the EU is the financial risks of climate change.
are directly linked to wage/price inflation measures.
2024 was the hottest year on record and the first calendar year to exceed the 1.5°C warming
– Changes in market conditions can affect the Group’s capital position, future growth and long-term
threshold of the Paris Agreement, with the global average at 1.6°C, and an understanding of the
investment performance.
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.
The following tables outline the principal risks and uncertainties of the Group and the controls in place to mitigate
KEY
or manage their impact. It has been drawn together following regular assessment, performed by the Audit & Risk
HEIGHTENED
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
NO MATERIAL CHANGE
defined as principal, the impacts are potentially significant. Those risks with potential for a material financial impact
LESSENED
are covered within the sensitivities on page 48.
60 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
RISK MANAGEMENT PRINCIPAL RISKS AND UNCERTAINTIES
INVESTMENT AND LIQUIDITY RISK PR1
Exposure to financial losses or value reduction
POTENTIAL IMPACT
Market risk results from fluctuations in asset values, foreign exchange rates and interest rates and has the potential to affect the
arising from adverse movements in currency,
Group’s ability to fund its commitments to customers and other creditors, as well as pay a return to shareholders.
investment markets, counterparty defaults,
Chesnara and each of its subsidiaries have obligations to make future payments, which are not always known with certainty in terms
or through inadequate asset liability matching.
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
RISK APPETITE
funds not be available to make payment.
The Group accepts this risk but has controls in place
to prevent any increase or decrease in the risk
Other liquidity issues could arise from counterparty failures/credit defaults, a large spike in the level of claims or other significant
exposure beyond set levels. These controls will result
unexpected expenses.
in early intervention if the amount of risk approaches
Worldwide developments in environmental, social, and governance (ESG) responsibilities and reporting have the potential to
those limits.
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
RECENT CHANGE/OUTLOOK
– Regular monitoring of exposures and performance;
There remains a high level of uncertainty in the external operating environment
with a varied outlook globally.
– Asset liability matching;
– Maintaining a well-diversified asset portfolio;
Uncertainty around geopolitics and monetary policy may bring continued market
volatility and potential for shocks. Escalating tariffs could impact inflation, equity
– Holding a significant amount of surplus in highly liquid ‘Tier 1’ assets such as cash and gilts;
and credit markets.
– Utilising a range of investment funds and managers to avoid significant concentrations of risk;
With greater global emphasis being placed on environmental and social factors
– Having an established investment Governance Framework to provide review and oversight of external fund managers;
when selecting investment strategies, the Group has an emerging exposure to
– Regular liquidity forecasts;
‘transition risk’ arising from changing preference and influence of, in particular,
– Considering the cost/benefit of hedging when appropriate;
institutional investors. This has the potential to result in adverse investment
– Actively optimising the risk/return trade-off between yield on fixed interest assets compared with the associated
returns on any assets that perform poorly as a result of ‘ESG transition’.
balance sheet volatility and potential for defaults or downgrades; and
Work is ongoing to embed sustainability into the wider strategy of the Group.
– Giving due regular consideration (and discussing appropriate strategies (with fund managers)) to longer-term global
Ongoing global conflict brings additional economic uncertainty and volatility
changes that may affect investment markets, such as climate change.
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
POTENTIAL IMPACT
The Group currently operates in three main regulatory domains and is therefore exposed to potential for inconsistent application
practice/regulation, or inconsistent application
of regulatory standards across divisions, such as the imposition of higher capital buffers over and above regulatory minimum
of regulation across territories.
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.
RISK APPETITE
Regulatory developments continue to drive a high level of change activity across the Group, with items such as operational
The Group aims to minimise any exposure to this
resilience, climate change, Consumer Duty and ESG reporting being particularly high profile. Such regulatory initiatives carry
risk, to the extent possible, but acknowledges that
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
it may need to accept some risk as a result of carrying
of the Group’s businesses. The Group is therefore exposed to the risk of:
out business.
KEY
– incurring one-off costs of addressing regulatory change as well as any permanent increases in the cost base to meet enhanced
ongoing standards;
HEIGHTENED
– erosion in value arising from pressure or enforcement to reduce future policy charges;
NO MATERIAL CHANGE
– 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
LESSENED
regulatory standards on a timely basis.
CHESNARAANNUALREPORTANDACCOUNTS202461
STRATEGIC REPORT
RISK MANAGEMENT PRINCIPAL RISKS AND UNCERTAINTIES
REGULATORY CHANGE RISK CONTINUED PR2
KEY CONTROLS
RECENT CHANGE/OUTLOOK
The Group seeks to limit any potential impacts of regulatory
There continues to be active regulatory agendas across the territories in which we operate.
change on the business by:
The UK Treasury and EIOPA have both been undertaking a review of SII rules implementation. In the UK, this resulted in a reduction
– Having processes in place for monitoring changes, to enable
in the SII Risk Margin and similar is expected for the overseas entities from the EIOPA review. The European Parliament approved
timely actions to be taken, as appropriate;
the final text of the Solvency II review in 2024 with the Solvency II Directive amended on 5 November 2024. It is expected once
– Maintaining strong open relationships with all regulators,
fully entered into force Member States will have two years to transpose it.
and proactively discussing their initiatives to encourage
There is also potential for divergence of regulatory approaches amongst European regulators, with potential implications for
a proportional approach;
the Group’s capital, regulatory supervision and structure.
– Being a member of the ABI and equivalent overseas organisations
and utilising other means of joint industry representation;
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
– Performing regular internal reviews of compliance with
companies, have been the focus of new recovery and resolution planning requirements developed by regulators and policy makers
regulations; and
nationally and internationally. The PRA is expected to publish a policy statement in the near future following CP2/24 Solvent exit
– Utilising external specialist advice and assurance,
planning for insurers. UK Insurers will be required to prepare a Solvent Exit Analysis (SEA) as part of BAU activities.
when appropriate.
In July 2022, the FCA published final rules for a new Consumer Duty and response to feedback to CP21/36 – A New Consumer Duty.
Regulatory risk is monitored and scenario tests are performed
The Consumer Duty regulations set higher and clearer standards of consumer protection across financial services and require firms
to understand the potential impacts of adverse political, regulatory
to act to deliver good outcomes for customers. The first key regulatory deadline of 31 July 2023 required implementation for new
or legal changes, along with consideration of actions that may be
business, whilst all products including closed books must be compliant by 31 July 2024. Our UK business established a Consumer
taken to minimise the impact, should they arise.
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
POTENTIAL IMPACT
The acquisition element of the Group’s growth strategy is dependent on the availability of attractive
or the execution of acquisitions with subsequent unexpected financial
future acquisition opportunities. Hence, the business is exposed to the risk of a reduction in the
losses or value reduction.
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
RISK APPETITE
change influencing the extent of life company strategic restructuring.
The Group has a patient approach to acquisition and generally expects
Through the execution of acquisitions, the Group is also exposed to the risk of erosion of value or
acquisitions to enhance EcV and expected cash generation in the medium
financial losses arising from risks inherent within businesses or funds acquired which are not
term (net of external financing), though each opportunity will be assessed
adequately priced for or mitigated as part of the transaction.
on its own merits.
KEY CONTROLS
RECENT CHANGE/OUTLOOK
The Group’s financial strength, strong relationships and reputation as a ‘safe hands acquirer’
During 2024, the Group announced a second portfolio acquisition from Canada Life which will
via regular contact with regulators, banks and target companies enables the Company to adopt
see a closed portfolio of unit-linked bonds and legacy pension business transfer to Chesnara’s
a patient and risk-based approach to assessing acquisition opportunities. Operating in multi-
UK subsidiary.
territories provides some diversification against the risk of changing market circumstances
There remains a positive pipeline of activity in relation to acquisitions, with the Group also looking
in one of the territories. Consideration of additional territories within Western Europe remains
at whether further M&A is possible in Sweden.
on the agenda, if the circumstances of entry meet the Group’s stated criteria.
The successful Tier 2 debt raise in 2022, in addition to diversifying the Group’s capital structure,
The Group seeks to limit any potential unexpected adverse impacts of acquisitions by:
has provided additional flexibility in terms of funding the Group’s future growth strategy.
– 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.
62 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
DEMOGRAPHIC EXPERIENCE RISK PR4
Risk of adverse demographic experience
POTENTIAL IMPACT
If demographic experience (rates of mortality, morbidity, persistency etc.) deviates from the assumptions underlying product pricing
compared with assumptions (such as rates
and subsequent reserving, more or less profit will accrue to the Group.
of mortality, morbidity, persistency etc.).
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.
RISK APPETITE
The Group accepts this risk but restricts its exposure,
If mortality or morbidity experience is higher than that assumed in pricing contracts (i.e. more death and sickness claims are made
to the extent preferred, through the use of reinsurance
than expected), this will typically result in less profit accruing to the Group.
and other controls. Early warning trigger monitoring is
in place to track any increase or decrease in the risk
If persistency is significantly lower than that assumed in product pricing and subsequent reserving, this will typically lead to reduced
exposure beyond a set level, with action taken to
Group profitability in the medium to long term, as a result of a reduction in future income arising from charges on those products.
address any impact as necessary.
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
RECENT CHANGE/OUTLOOK
The Group performs close monitoring of persistency levels across all groups of business to support
Continued cost of living pressures could give rise to higher surrenders and lapses should
best estimate assumptions and identify trends. There is also partial risk diversification in that the
customers face personal finance pressures and not be able to afford premiums or need to
Group has a portfolio of annuity contracts where the benefits cease on death.
access savings. The Group continues to monitor closely and respond appropriately.
The Group seeks to limit the impacts of adverse demographic experience by:
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
– Aiming to deliver good customer service and fair customer outcomes;
shorter-term assumptions but anticipated to fade away in the longer-term assumptions, in line
– Having effective underwriting techniques and reinsurance programmes, including the application
with industry practice/standard tables.
of ‘Mass Lapse reinsurance’, where appropriate;
Any prolonged stagnation of the property market could reduce protection business sales
– Carrying out regular investigations, and industry analysis, to support best estimate assumptions
compared to plan, particularly in the Netherlands.
and identify trends;
– Active investment management to ensure competitive policyholder investment funds; and
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
– Maintaining good relationships with brokers, which is independently measured via yearly external
actively monitored.
surveys that consider brokers’ attitudes towards different insurers.
EXPENSE RISK PR5
Risk of expense overruns and unsustainable
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
unit cost growth.
key functions, or through higher inflation of variable expenses.
RISK APPETITE
A key underlying source of potential increases in regular expense is the additional regulatory expectations on the sector.
The Group aims to minimise its exposure to this risk,
For the closed funds, the Group is exposed to the impact on profitability of fixed and semi-fixed expenses, in conjunction with
to the extent possible, but acknowledges that it
a diminishing policy base.
may need to accept some risk as a result of carrying
out business.
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.
CHESNARAANNUALREPORTANDACCOUNTS202463
STRATEGIC REPORT
RISK MANAGEMENT PRINCIPAL RISKS AND UNCERTAINTIES
EXPENSE RISK CONTINUED PR5
KEY CONTROLS
RECENT CHANGE/OUTLOOK
For all subsidiaries, the Group maintains a regime of budgetary control.
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
– Movestic and Scildon assume growth through new business such that the general unit
the capabilities and capacity to support our growth ambitions, whilst continuing to keep tight cost control.
cost trend is positive;
Acquisitions also present opportunities for unit cost reduction and the UK business announced a
– The Waard Group pursues a low cost-base strategy using a designated service company.
long-term strategic partnership with Fin Tech market leader SS&C Technologies (‘SS&C’) in May 2023,
The cost base is supported by service income from third party customers;
to provide policy administration services to the Group’s UK division.
– 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
The merger of our businesses in the Netherlands is anticipated to create a more sustainable business
with the potential for further synergies.
– 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
Through its exposures to investments in real asset classes, both direct and indirect, Chesnara has an
material projects.
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
POTENTIAL IMPACT
The Group and its subsidiaries are exposed to operational risks which arise through daily activities and running of the business.
continuity event.
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
RISK APPETITE
outcomes, reputational damage, regulatory intervention or business plan failure.
The Group aims to minimise its exposure to this risk,
to the extent possible, but acknowledges that it
Part of the Group’s operating model is to outsource support activities to specialist service providers. Consequently, a significant
may need to accept some risk as a result of carrying
element of the operational risk arises within its outsourced providers.
out business.
KEY CONTROLS
RECENT CHANGE/OUTLOOK
The Group perceives operational risk as an inherent part of the day-to-day running of the
Significant operational change is underway across the Group particularly from the merger in the
business and understands that it can’t be completely eliminated. However, the Company’s
Netherlands and through the transition and transformation programme in the UK. This may bring
objective is to always control or mitigate operational risks, and to minimise the exposure
additional operational risk in the shorter term but is anticipated to significantly reduce the risk in the
when it’s possible to do so in a convenient and cost-effective way.
longer term.
The Group seeks to reduce the impact and likelihood of operational risk by:
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.
– Monitoring of key performance indicators and comprehensive management
information flows;
Operational resilience remains a key focus for the business and high on the regulatory agenda following
– Effective governance of outsourced service providers, in line with SS2/21
the regulatory changes published by the BoE, PRA and FCA. The Group continues to progress activity
Outsourcing and Third Party Risk Management, including a regular financial
under the UK operational resilience project. The next key regulatory deadline is 31 March 2025; the
assessment. Appropriate contractual terms contain various remedies dependent
deadline by which all firms should have sound, effective, and comprehensive strategies, processes, and
on the adverse circumstances which may arise;
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
– Regular testing of business continuity plans;
project is currently in the process of running a schedule of ‘real life severe but plausible’ scenario testing.
– Regular staff training and development;
The Digital Operational Resilience Act (DORA) entered into force in January 2023 and applied from
– Employee Performance Management Frameworks;
January 2025. It aims at strengthening the IT security of financial entities such as banks, insurance
– Promoting the sharing of knowledge and expertise; and
companies and investment firms and making sure that the financial sector in Europe is able to stay
– Complementing internal expertise with established relationships with external
resilient in the event of a severe operational disruption. Movestic, Scildon and Waard are considered to
specialist partners.
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.
64 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
ITDATA SECURITY & CYBER RISK PR7
Risk of IT/ data security failures or impacts of
POTENTIAL IMPACT
Cyber risk is a growing risk affecting all companies, particularly those who are custodians of customer data. The most pertinent
malicious cyber-crime (including ransomware)
risk exposure relates to information security (i.e. protecting business sensitive and personal data) and can arise from failure
on continued operational stability.
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
RISK APPETITE
Group’s exposure to such threats also includes third party service providers.
The Group aims to minimise its exposure to this risk,
The potential impact of this risk includes financial losses, inability to perform critical functions, disruption to policyholder services,
to the extent possible, but acknowledges that it
loss of sensitive data and corresponding reputational damage or fines.
may need to accept some risk as a result of carrying
out business.
KEY CONTROLS
RECENT CHANGE/OUTLOOK
The Group seeks to limit the exposure and potential impacts from IT/data security failures or cyber-crime by:
The Group continues to invest in the incremental
strengthening of its cyber risk resilience and response options.
– Embedding the Information Security Policy and Group Cyber Response Framework in all key operations and development processes;
During 2024, there have been no reports of any material
– Seeking ongoing specialist external advice, modifications to IT infrastructure and updates as appropriate;
data breaches.
– Delivering regular staff training and attestation to the Information Security Policy;
The risk of cyber-crime campaigns particularly originating
– Regular employee phishing tests and awareness sessions;
from state sponsored attacks remains heightened as a result
– Ensuring that the Board maintains appropriate information technology and security knowledge;
of the ongoing geopolitical unrest.
– Conducting penetration and vulnerability testing, including third party service providers;
During 2024, the Group has continued to test and seek
– Executive Committee and Board level responsibility for the risk, including dedicated IT Security Committees with executive membership;
assurance of the resilience to cyber risks, this has included:
– Having established Group and supplier disaster recovery and business continuity plans which are regularly monitored and tested;
– Completing a ransomware scenario test, which involved
– Ensuring the Group’s outsourced IT service provider maintains relevant information security standard accreditation (ISO27001);
one business unit, group crisis management team and
– Monitoring network and system security including firewall protection, antivirus and software updates; and
Group Board. A lessons learned session has been held
with relevant actions identified;
– 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
– Regular phishing testing and training campaigns;
third parties.
– Board training and awareness; and
In addition, a designated steering group provides oversight of the IT estate and information security environment including:
– Ongoing penetration testing and vulnerability management.
– Changes and developments to the IT estate;
Enhancements to the IT control environment have also been
– Performance and security monitoring;
made as a result of implementation of EU Digital Operational
Resilience Act in our overseas business units, which came
– Oversight of information security incident management;
into effect on 17 January 2025.
– Information security awareness and training;
– Development of business continuity plans and testing; and
– Overseeing compliance with the Information Security Policy.
NEW BUSINESS RISK PR8
Adverse new business performance compared
POTENTIAL IMPACT
If new business performance is significantly lower than the projected value, this will typically lead to reduced value growth in the
with projected value.
medium to long term. A sustained low-level performance may lead to insufficient new business profits to justify remaining open
to new business.
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.
CHESNARAANNUALREPORTANDACCOUNTS202465
STRATEGIC REPORT
RISK MANAGEMENT PRINCIPAL RISKS AND UNCERTAINTIES
NEW BUSINESS RISK CONTINUED PR8
KEY CONTROLS
RECENT CHANGE/OUTLOOK
The Group seeks to limit any potential unexpected adverse impacts to new business by:
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
– Monitoring quarterly new business profit performance;
which give greater transfer freedom.
– Investing in brand and marketing;
Market share is currently being maintained in the Netherlands with activity to look at some broader
– Maintaining good relationships with brokers;
wealth products.
– Offering attractive products that suit customer needs;
In Sweden, action is being taken to diversify distribution partners whilst expanding product offering
– Monitoring market position and competitor pricing, adjusting as appropriate;
across unit-linked, custodian and life & health markets.
– Maintaining appropriate customer service levels and experience; and
The UK continues to write new business primarily through the onshore bond wrapper acquired as part of
– Monitoring market and pricing movements.
Sanlam Life & Pensions UK.
REPUTATIONAL RISK PR9
Poor or inconsistent reputation with customers,
POTENTIAL IMPACT
The Group is exposed to the risk that litigation, employee misconduct, operational failures, the outcome of regulatory investigations,
advisors, regulators, investors, staff or other key
press speculation and negative publicity, disclosure of confidential client information (including the loss or theft of customer data),
stakeholders/counterparties.
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
RISK APPETITE
of its intermediaries) do not perform as expected (whether or not the expectations are realistic) or in line with the customers’
The Group aims to minimise its exposure to this risk,
expectations for the product range.
to the extent possible, but acknowledges that it
Any damage to the Group’s brand or reputation could cause existing customers or partners to withdraw their business from the
may need to accept some risk as a result of carrying
Group, and potential customers or partners to elect not to do business with the Group and could make it more difficult for the
out business.
Group to attract and retain qualified employees.
KEY CONTROLS
RECENT CHANGE/OUTLOOK
The Group seeks to limit any potential reputational damage by:
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
– Regulatory publication reviews and analysis;
– Operational and IT Data Security Frameworks;
associated with not meeting our published targets and there are regulatory
– Timely response to regulatory requests;
– Product Governance and Remediation Frameworks;
and reputational risks arising from our public disclosures on the matter through
– Open and honest communications;
– Appropriate due diligence and oversight of outsourcers
the potential of unintentional greenwashing.
and third parties; and
– HR policies and procedures;
The Group has a published sustainability strategy which aims to provide clear
– Proactive stakeholder engagement with inclusivity
– Fit & Proper procedures;
and honest disclosure of the actions being taken, the rationale for those actions
for all stakeholders.
and areas of uncertainty.
MODEL RISK PR10
Adverse consequences from decisions based
POTENTIAL IMPACT
The Group and each of its subsidiaries apply statistical, economic and financial techniques and assumptions to process input data
on incorrect or misused model outputs, or fines
into quantitative estimates. Inaccurate model results may lead to unexpected losses arising from inaccurate data, assumptions,
or reputational impacts from disclosure of
judgements, programming errors, technical errors, and misinterpretation of outputs.
materially incorrect or misleading information.
Potential risk impacts of inaccurate model results include:
– Poor decisions, for example regarding business strategy, operational decisions, investment choices, dividend payments
RISK APPETITE
or acquisitions;
The Group aims to minimise its exposure to this risk,
to the extent possible, but acknowledges that it
– Potentially overestimating the value of acquisitions resulting in over payment;
may need to accept some risk as a result of carrying
– Misstatement of financial performance or solvency, resulting in misleading key shareholders or fines; and
out business.
– Provision of inaccurate information to the Board on business performance resulting in poorly informed or delayed decisions.
66 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
MODEL RISK CONTINUED PR10
KEY CONTROLS
RECENT CHANGE/OUTLOOK
– Robust model Governance Framework and independent
Model risk management is becoming an increased area of focus of the regulators, particularly in the UK banking industry, with PS6/23 and
standards of ‘do-check-review’;
SS1/23 becoming effective for bank and building societies on 17 May 2024, and an expectation that further guidance will follow for insurers.
– Independent model validation & internal audit review;
The Group is in the process of embedding a new aggregation model (Tagetik) that provides greater access control for Group consolidation on
– Monitoring and reporting of risk appetite limits;
both IFRS and SII bases.
– Documented processes and policies;
Many insurers, including Chesnara, are exploring the use of artificial intelligence, including the risks and opportunities arising. While this
– Ongoing and regular data quality assessment checks;
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.
– Model version control and user access restrictions;
– Robust due diligence processes on acquisitions including
As part of the Group’s operational resilience programme, the Group is undertaking a review of the operational resilience of its financial
external support on model development/review; and
reporting and modelling processes. This includes resilience scenario testing of the processes, and is expected to improve efficiency and
model risk mitigation.
– Intra-Group financial reporting planning, monitoring and
delivery management.
CLIMATE CHANGE RISK PR11
Exposure to adverse consequences
POTENTIAL IMPACT
Physical risks impacts
of the physical or transitional risks
– Extreme weather events such as floods, hurricanes, and wildfires can damage physical assets leading to direct business interruption as well as
arising from climate change.
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
RISK APPETITE
from third parties to data centres.
The Group aims to restrict its exposure
to climate change risk, such that it can
Transitional risks impacts
continue to operate within the existing
– New regulations aimed at reducing carbon emissions may impact the profitability of certain investments, particularly in carbon-intensive industries.
risk tolerance limits for the associated
– As the economy transitions to greener technologies, there may be shifts in market demand, affecting the value of investments in traditional
risks and potential impacts. The risk
energy sectors.
impacts below can have a direct impact
– Inflationary impacts from global climate policy failure, including on energy prices.
on the operations of the Group and, more
significantly, to the businesses within the
– Reputational damage if we are seen to be failing to manage the effects of climate change or to deliver on our targets/commitments.
Group’s investment universe.
– Litigation risk if we are considered not to have published enough information or to have made unsubstantiated claims leading to ‘greenwashing’.
KEY CONTROLS
RECENT CHANGE/OUTLOOK
– Quantitative analysis of the potential impact of
To manage the risks associated with climate change, financial institutions are increasingly adopting advanced data and modelling techniques.
climate change on our business;
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
– Working towards embedding climate change risk
action. The outcomes reflected the ongoing efforts to enhance global climate action and cooperation although it was made clear more ambition
into investment and operational decision making
and concrete plans are needed to meet the 1.5°C target.
across the business;
– Providing clear and honest disclosure on our
In early 2025, the United States of America implemented a number of actions and executive orders that have potentially wide reaching implications
targets and commitments and where there are
for climate change and global action plans.
areas of challenge and uncertainty for those targets;
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
– Robust Risk and Governance Frameworks;
being developed using the IIGCC’s Net Zero Investment Framework 2.0 and is due to be published later this year.
– Monitoring of associated KPIs;
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
– Using external data providers to provide groupwide
on Own Funds from climate risk, demonstrating the potentially significant impact of climate change, and the mitigating actions that are being taken.
ESG data on our asset portfolio;
Whilst we consider climate change to be a cross-cutting risk, that manifests through other Principal risks (e.g. equity, credit, regulatory etc), the
– Factoring an assessment of climate commitments
Group has recently enhanced its climate change risk modelling by utilising MSCI data, and this has increased our assessment of the potential
into the selection of prospective partners; and
materiality of potential impacts in the longer term. It is a significant step forward in terms of coverage, granularity and robustness of Chesnara’s
– Factoring sustainability-related risk analysis into the
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
due diligence completed on potential acquisitions.
more explicit the exposure to potential adverse consequences of the physical and transitional risks that could arise from climate change.
CHESNARAANNUALREPORTANDACCOUNTS202467
STRATEGIC REPORT
CORPORATE
& SOCIAL
RESPONSIBILITY
We are committed to transitioning to become
Our Annual Sustainability Report (www.chesnara.co.uk/
We believe that sustainability is not solely for our Board and
sustainability) provides detail on the work we are doing to
leadership teams, and we have taken and will continue to take
a sustainable group and manage our business
become a sustainable Chesnara, including setting out our
steps to educate, involve and support our workforce and other
for the long-term benefit of all stakeholders,
sustainability vision and targets. We want sustainability at the
stakeholders, including our suppliers, in the delivery of our
including our customers, investors, employees,
heart of decision making at all levels across the business and
sustainability strategy. In 2024, we delivered our groupwide
are basing our work on the mantra of ‘Do no harm. Do good.
Sustainability and Skills Development Programme for all staff.
regulators, suppliers and partners, local
Act now for later’. Our commitments are:
In addition, the Group and divisional directors received training
communities, and the planet.
on transition planning, delivered by the Institutional Investors
1. Supporting a sustainable future, including our net zero
Group on Climate Change (IIGCC). Each of our businesses
transition plans.
Transitioning to a sustainable group
has also incorporated sustainability into its Investment Policy,
2. Making a positive impact, including our plans to invest in
Investment Committee Terms of Reference and investment
We have a clear corporate and social purpose. As a business,
positive solutions.
decision making. We are expanding this to capture all
we help protect our customers and their families from the
3. Creating a fairer world, ensuring our Group is an inclusive
policies across the business to ensure that sustainability
economic impact of an early death through our product offering,
environment for all employees, customers and stakeholders.
is a key consideration.
and help support them during retirement through pension and
investment savings. We believe that stakeholder value creation
These commitments have been developed with consideration of
The sustainable management of our Assets Under Administration
is best delivered through the embedded consideration of
the UN Sustainable Development Goals. These 17 goals are an
(AuA) is a critical component of our sustainability journey.
environmental, social and governance issues. In this regard,
urgent call to action to promote peace and prosperity for people
In all three of our territories, we work with fund managers
among our key considerations are the following strategic aims:
and the planet, now and into the future. We’ll focus our activities
that are committed to the UN SDGs and the UN’s Principles
on those goals where we feel we can have the greatest impact;
of Responsible Investment (UNPRI). Both Chesnara and
– Care for our customers, helping them create financial security
however, we will support all of the goals wherever possible.
Movestic Livförsäkring are signatories to the UNPRI. As well
now and for the future;
as this, we are signatories to the UN Global Compact and will
– Investments focusing on long-term sustainability and strong
submit an annual Communication on Progress report setting
Embedding sustainability
financial solvency for the Company;
out specific actions taken with regard to the four designated
– Assessing and managing our impact on the planet and natural
Embedding sustainability into decision making at all levels
categories covering human rights, labour, environment and
environment, including managing climate-related and wider
across the Group is a fundamental part of what we are working
anti-corruption. Chesnara is also a signatory of the Finance
sustainability-related risks; and
to achieve. This is vitally important as sustainability needs to be
for Biodiversity Pledge.
part of every strategic conversation. Our Annual Sustainability
– Maintaining a long-term sustainable working environment for
Our TCFD report on pages 74 to 91 describes our assessment
Report (ASR) gives more detail on what we are going to do to
our staff, suppliers and partners and local communities.
of climate change risks and opportunities under four pillars –
achieve this.
Governance; Strategy; Risk Management; and Metrics and
As described on pages 59 and 93 to 103, a key part of this
Targets. Further regulatory and disclosure requirements around
work includes the annual review of the effectiveness of our Risk
sustainability are forthcoming and we will take measures
Management System and the system of governance to ensure
to ensure that we give full and appropriate disclosure of our
that we can achieve our business objectives and safeguard the
progress as these standards are issued.
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.
68 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
OUR MANTRA
DO NO HARM.
DO GOOD.
ACT NOW FOR LATER.
CHESNARAANNUALREPORTANDACCOUNTS202469
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY
OUR CUSTOMERS
Customer care
Health, safety and welfare at work
Our actions are always underpinned by our focus on delivering good outcomes to customers.
As a responsible business, we place primary importance on the health, safety and welfare of our
We understand that every customer is different, yet everyone deserves good service. We are taking
employees. We operate a hybrid working model across all of our geographies, taking into account
action across the Group to continue to identify potential enhancements including some that can
individual circumstances where necessary so that appropriate support can be provided.
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
Our colleagues have access to a range of initiatives that benefit their physical and mental wellbeing,
communications and completing fair value assessments of the products our customers have with us.
including comprehensive health insurance, annual health checks and Employee Assistance
Programmes. All staff are made aware of these benefits through contracts of employment, policies
Our products and services
and staff briefings.
We offer and manage life and health insurance and pension products for our customers to help them
Employees are supported by policies that promote a healthy work/life balance, including flexible
meet their financial goals. We achieve this by paying attention to and understanding the customer’s
working, compressed hours, summertime hours, remote working, enhanced maternity and paternity
point of view, by regularly asking for feedback and by investigating any complaints thoroughly and
leave, and paid sickness, bereavement and carers’ leave. They are also reminded of their duty to act
promptly. Lessons learned from our interactions with customers are used to train and develop our
responsibly and do everything possible to prevent injury to themselves and others. Management
staff, make our processes more efficient and to take further steps to ensure our policyholders are
teams across the Group monitor the level of sick leave and absence and, where necessary, they
treated fairly. Our aim is to consistently exceed industry service standards.
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
Reuniting customers with their policies
appropriate standards. Any hazards or material risks are removed or reduced to minimise or, where
We appreciate that customers can lose touch with their policies due to business acquisitions, house
possible, exclude the possibility of accident or injury to employees or visitors.
moves, name changes and the passage of time, so we actively try to trace and recontact customers
wherever possible.
Equal opportunities and diversity
The Group always aims to attract, promote and retain high quality candidates suitable for the roles
Digitalisation
within all its operations. Our approach is to be open, entrepreneurial, transparent and inclusive in
Advancements in technology and data usage are having a significant impact on how business is
how we select and manage our employees.
conducted, and the way regular communication is taking place. We have continued to invest in digital
We are committed to providing equal opportunities in employment and will continue to treat all
technology and applications so that we can meet the expectations of our business partners and
applicants and employees fairly regardless of race, age, gender, marital status, ethnic origin, religious
customers, whilst maintaining the traditional contact methods for customers that are more
beliefs, sexual orientation or disability. The Group has policies in place to ensure that no employee
comfortable using that option.
suffers discrimination, harassment or intimidation and to effectively address any issues that do come
Regulatory compliance
to light.
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.
70 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Employees with a disability
2024 2023
The Group endeavours to provide employment for people with a disability wherever the requirements
Year end headcount Male Female Total Male Female Total
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
Directors of Chesnara plc 4 3 7 5 3 8
continuity of employment by making reasonable adjustments to give the staff member as much
Group senior leaders 4 4 8 4 4 8
access to any training, promotion opportunities and employee benefits that would otherwise be
available to any non-disabled employee.
Executive management total 8 7 15 9 7 16
Staff training and development
Executive management gender split % 53.3 46.7 56.3 43.8
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
Employees of the Group 190 181 371 175 175 350
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
Total 198 188 386 184 182 366
needs of the business.
Total gender split % 51.3 48.7 50.3 49.7
Fair pay
We are a Living Wage employer, paying the real living wage in the UK. We also engage with our
Note:
The number of staff reported in the table above is based on the number of employees employed at the year end.
suppliers to raise the profile of paying a wage that enables people to meet their everyday needs.
This differs to the employee note, which is calculated based on average FTEs during the course of the year.
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
Gender diversity forms an important part of Chesnara’s selection and appointment process
employee benefits to our performance.
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.
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
We define executive management as: non-executive and executive directors, Group senior
since taken place in late 2024 for the 2025 calendar year.
leaders and business unit CEOs.
Details of our staff pay and benefits, and in relation to executive pay, are set out in the corporate
The executive management data presented in the table is based on collected data. Other employees
governance section as part of our Remuneration Report.
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.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
71
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY OUR CUSTOMERS
Employee engagement
Across our businesses, we provide high quality jobs with competitive remuneration along with
appropriately remedied. Each of our divisions make use of stringent policies and procedures to
requisite training and good working conditions. Regular contact with employees and keeping them
ensure that the highest standards are met across the Group. These policies are made in accordance
updated on business strategy, priorities and achievements is a key part of management responsibility
with the relevant laws and regulations of the respective jurisdictions and are available in local
at Chesnara. Frequent employee engagement has become even more important over the last few
languages. Policies are reviewed on an annual basis and any changes made are communicated
years given the shift to more remote working. Each of our businesses has a multi-channel approach
to individuals throughout the Company.
for effective employee communication such as regular updates from the CEO, monthly team and
In the UK, the Audit & Risk Committee Chair is appointed as a Whistleblowing Champion, whose
departmental meetings, Company briefings, discussions via Employee Forums, and the use of
responsibilities are aligned to the prescribed requirements set out in the PRA’s Senior Managers
employee surveys to highlight issues and drive any necessary change.
Certification Regime. The policy is shared with all new joiners and whenever it is updated it is
As the Workforce Engagement NED appointed by the Chesnara Board, Carol Hagh’s liaison with the
provided to all existing employees. Similar arrangements are in place within our overseas divisions
CEOs, HR teams and Employee Forum representatives has been invaluable in terms of independent
with the policies being available in employees’ local languages. Confirmation was also received
engagement with staff and also for the ongoing assessment of our culture and embedding of our
that each material outsource service provider (OSP) has a Whistleblowing Policy in place which
values across our UK, Swedish and Dutch divisions.
is provided to all employees.
Within the UK division, the Employee Forum has continued to meet on a monthly basis. This forum
Our suppliers and business partners
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.
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
Our operations in Sweden and the Netherlands make similar use of Employee Forums, staff surveys,
remain commercially competitive and operationally viable. This is achieved through a structured
formal and informal employee engagement both at the individual, team and whole Company level.
due diligence process before selection, followed by clear agreement of the business objectives,
In the Scildon business, this is formalised through the operation of a Works Council and, in Sweden,
consistent implementation of regulatory requirements and relevant policies, and effective attention
staff representation is via a Working Environment Committee and a trade union.
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.
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
We are conscious that through our outsourcing arrangements we indirectly utilise the services
to the Board to assist its deliberations on any potential acquisition opportunities.
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.
Whistleblowing
As part of our work to decarbonise our operations, in 2024 we have engaged a defined set of
At Chesnara, we strongly encourage all employees, suppliers, customers, and other contracted
suppliers to understand how they are taking action on climate change. This is the first step in
parties experiencing concerns about any aspect of the Company’s work to come forward and
creating a long-term supplier engagement initiative.
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
72 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Human Rights and the Modern Slavery Act 2015
Human rights are the basic rights and freedoms that belong to all human beings regardless
We have zero tolerance to financial crime, including money laundering and bribery and corruption.
of nationality, gender, race, age, religion, language, physical or mental ability or any other
Our Internal Control Framework includes the maintenance and review of a Gifts & Hospitality
political, economic or social status. Such rights are protected by the rule of law through legal
Register, the disallowance of any political contributions or inducements and careful consideration
mechanisms designed to prevent abuse by those in positions of power.
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
Modern slavery is just one such form of human rights abuse. In addition to the freedom
importance and application. There were no instances of money laundering or bribery or corruption
of expression, human rights includes:
in the period.
– the right to life;
Taxation
– prohibition on torture;
– the right to a fair trial; and
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,
– the right to fair and just working conditions.
pay the appropriate taxes due throughout the Group, details of which are set out in the respective
The Group has zero-tolerance to the abuse of human rights and modern slavery and is committed
Annual Report and Accounts for each of our operating entities.
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
Our communities
systems and controls to ensure human rights abuse and modern slavery are not taking place
Chesnara’s management and staff support local community initiatives to the extent deemed
anywhere in the Group or its supply chains.
appropriate given our financial responsibilities as a public limited company. Chesnara supports
The Modern Slavery Act (2015) requires a commercial organisation over a certain size to publish
charitable causes both locally and internationally, donating £9k across the Group during 2024
a slavery and human trafficking statement for each financial year.
(2023: £36k).
The Modern Slavery Act does not apply to our European divisions, but instead they adhere to the
We have provided financial and non-financial assistance to charitable organisations including UNICEF,
European Convention on Human Rights (ECHR) treaty which is similarly designed to protect people’s
Sherpa, Justdiggit and Safenet. UK colleagues also can donate through a Give as You Earn scheme,
human rights and basic freedoms.
supported by the Charities Aid Foundation.
In the UK, our Human Rights & Modern Anti-Slavery Policy is made available to our entire workforce
Our people across the UK and Netherlands can take two days’ paid leave each year to volunteer.
and is also available at www.chesnara.co.uk/sustainability/modern-anti-slavery-statement
The planet
There have not been any breaches of human rights or the Modern Slavery Act during the
reporting period.
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
Anti-bribery and corruption
our Annual Sustainability Report.
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.
CHESNARAANNUALREPORTANDACCOUNTS202473
STRATEGIC REPORT
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
Complied with the Energy
Updated our UK Expense Policy
Embedded
using the IIGCC’s Net Zero Investment
Savings Opportunities
to encourage sustainable travel
sustainability into the
Framework 2.0 underway
Scheme Regulations 2014
acquisition process
Delivered
Joined UK Sustainable Investment
Enhanced our climate risk modelling,
Engaged with our largest
sustainability training
and Finance Association, Finance
including assessing our Climate Value
suppliers and asset managers
to all employees
for Biodiversity Foundation and
at Risk (CvaR)
on their climate strategy
across the Group
became a signatory to the
Principles for Responsible
Investment
74 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
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.
a) Board oversight of climate-related risks and opportunities
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.
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
NOMINATION & GOVERNANCE COMMITTEE
GROUP REMUNERATION COMMITTEE
Meets at least quarterly
Meets a minimum of three times a year
Meets a minimum of three times a year
The role of the GA&RC includes reviewing and
The Nomination & Governance Committee plays a key role
The role of the Remuneration Committee is to
monitoring the current and potential risk
in ensuring that the composition of the Board and its
ensure that the Remuneration Policy promotes,
exposures, including the monitoring of
subsidiaries is appropriate and that members have the
encourages and drives long-term growth of
climate-related risk exposures across the Group
necessary skills, knowledge and experience to discharge
shareholder value of which climate change is a key
and how such risks are treated. The GA&RC
their duties effectively, including with regards to climate
consideration. In 2024, a 20%/15% weighting of the
reviews external reporting, including with regards
change. It is also responsible for reviewing the Group’s
Group CEO and CFO strategic objectives were
to climate-related risks and opportunities.
governance practices and procedures to ensure they
linked to sustainability actions.
remain appropriate and reflect best practice.
GROUP SUSTAINABILITY COMMITTEE GSC1
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.
GROUP CEO
SENIOR LEADERSHIP TEAM SLT
GROUP INVESTMENT COMMITTEE GIC
Meets monthly
Meets twice a quarter
The SLT is in place to challenge and support the Group CEO. It supports the
The GIC is in place to challenge and support the Group CEO. The GIC
identification and review of risks impacting the Group, including any material
Terms of Reference specifically include consideration of ESG factors,
variations in the impact of climate change upon the Group, as well as the
including overseeing the asset managers’ approach to ESG and climate
monitoring of risk appetite compliance. It also supports oversight of the
change related matters.
sustainability programme.
The business units, with their own local governance structures and Boards, feed climate-related matters into the Group governance structure via GSC reporting,
Board Board committees
quarterly business reviews, risk reporting and annual local business plans (note this list is not exhaustive) where applicable.
Group Sustainability Committee
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.
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.
CHESNARAANNUALREPORTANDACCOUNTS202475
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY CLIMATERELATED FINANCIAL DISCLOSURES
b) Management’s role in assessing and managing climate-related risks and opportunities
How climate-related risks and opportunities are
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
identified and considered
and its divisions. This committee is the key focal point for the review of climate-related risks and
The divisions are responsible for identifying their own climate-related risks and opportunities through
opportunities and links in with the other Group governance committees. The GSC annual agenda
assessing potential matters that may impact the business. These risks and opportunities, together
planner determines which topics are covered at each meeting and those meetings, together with
with those areas that may impact the Parent Company or Group as a whole, are reviewed by the
the GIC and SLT, will determine the items to be escalated to the Board. The interactions of the
Group Head of Sustainability and the Group Chief Risk Officer & Chief Actuary, to form an
GSC with the different committees and the Board are detailed on the previous page. Jane’s tenure
assessment of the risks and opportunities for the Group. The risks and opportunities are reassessed
as a Non-Executive Director of the Group is ending in May 2025 and therefore steps to appoint
regularly so that, if a material risk was to arise, we would add it to the risk and opportunity register to
a replacement chair are ongoing.
ensure that it is are evaluated according to the Risk Management Framework and evolving climate-
Senior Leadership Team: regularly discusses climate-related risks and opportunities and how they
related matters.
factor into business planning, strategy and risk management.
Who is assigned responsibility?
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
Management responsibility for matters related to climate change is assigned to the Group Chief
targets. The GIC and GSC also work together to identify potential further areas of impact investing.
Executive at Group level and the respective CEOs at business unit level. All divisions and business
The local Investment Committees are fundamental to the transition by providing oversight of the
units are responsible to the relevant divisional Chief Executive who has dual reporting lines to
asset managers across the Group. They also approve and oversee the application of investment
the divisional Board and the Group Chief Executive. Sustainability forms part of the executive
policies which incorporate climate and sustainability related considerations.
management variable remuneration, and the ratio allocated to sustainability will continue to be
assessed on an ongoing basis.
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
How management and Board members are informed of and monitor
GSC. In addition, we have established a Transition Plan Steering Group to oversee and direct the
climate-related risks and opportunities
production of our transition plan and delivery of the actions that will be identified.
Group Board: receives regular reporting on sustainability, including climate change. This includes
Acquisitions: as part of the due diligence process, for potential acquisitions of entities, we assess
consideration of the Group climate change risk assessment (through the GA&RC), and the overall
the target company’s approach to climate-related risks and consider the emissions of their operations
vision and approach of the Group in regards to sustainability and groupwide climate change-related
and underlying assets. For potential acquisitions of books of business, we assess the Climate Value
scenario analysis. Specific training on transition plans and their key elements was delivered to
at Risk and financed emissions of the assets.
executive and non-executive directors across the Group during 2024.
76 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
STRATEGY
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
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
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
Our definition of materiality is as follows:
Physical risks
up to 12 months – in line with budget setting process
Arise due to the direct impact of events
EcV Cash generation
such as heatwaves, flood, wildfire, storms,
Medium term
>£20m >£3.5m
increased weather variability, and rising
2 to 5 years – in line with our business planning and Own
Reputational
mean temperatures and sea levels.
Risk and Solvency Assessment (ORSA) projection period
Nationally publicised reputational event
Transition risks
Longer term
Regulatory
Emerge from the process of change
6+ years – post business plan horizon
Action involving penalty imposition (£0 threshold) and/or requirement
towards a low carbon economy such as:
During the setting of the time horizon profile, we considered
for remediation leading to a restriction of activity
climate-related developments in policy
the useful life of the Group’s assets and believe our definition
and regulation; technological change
Other
takes this into account. The average duration of the wider
(e.g. electric vehicles); a shift in consumer
For example, safety – high potential for an injury to an individual or
Group’s assets is between 5-10 years, but the Group is
sentiment and social attitudes; and
several individuals.
acquisitive and writes longer-term business for our insurance
climate-related litigation against firms
liabilities so the risk assessment needs to consider a longer
that fail to mitigate, adapt or disclose
The materiality levels of the Group are approved by the Board annually as part
time horizon also. The short-term period of 12 months aligns
climate-related financial risks.
of the Principal Risk Definition report and consider a number of factors that
with the risk basis that underpins SII, and the medium term
are broader than purely financial indicators. Whilst this is largely risk focused,
Likelihood
is aligned to our business planning period.
we have chosen to apply this materiality definition to opportunities as well.
Likelihood is determined as low,
This is deemed to be an appropriate limit and is predicated on the Group risk
medium or high.
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.
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
We are also currently developing our first climate transition plan, which will be published later
sustainability strategy is included into both operational and financial plans to reflect our
this year. Using the NZIF 2.0 framework to structure our actions, it will outline our initial plans
immediate priorities, risks and longer-term ambition. This includes consideration of our products,
on how we will tackle and report on the net zero transition. Delivering against our plans, targets
investments, and our value chain in order to manage our climate risks and opportunities and meet
and commitments will become a fundamental part of our business. We acknowledge that further
our commitments. Sensitivities are also performed to assess the impacts of negative exposures
plans will be required as more information, data and methodology becomes available.
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.
CHESNARAANNUALREPORTANDACCOUNTS202477
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY CLIMATERELATED FINANCIAL DISCLOSURES
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
Time horizon:
Likelihood:
portfolio, as a result of data limitations, uncertainty and impacts from the current geopolitical
Medium term 2-5 years
Medium
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
Potential impact (linking to financial statements)
How is the risk being managed, mitigated and addressed?
Investment decision making impacts which could lead to a reduction in value of policyholder and shareholder
Utilising MSCI to provide groupwide ESG data analysis on our asset portfolio.
assets held by the Group, directly impacting the balance sheet, Economic Value and solvency, as well as
Engaging with our asset managers to understand their own plans and pathways.
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.
Producing our transition plan which will outline our steps to decarbonise, including targets
and actions.
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.
Associated targets and metrics:
Physical or transition risk: Transition
The % coverage of our asset look through data which is shown in our financed emissions data.
Territory: Groupwide
2. Not meeting changing and evolving stakeholder expectations in relation to climate change.
Time horizon:
Likelihood:
For example, through failure to meet our targets and commitments.
Medium term 2-5 years in respect of our 2030 financed
Medium
emissions interim target and longer-term 6+ years in respect
Climate change risk is identified as a principal risk, with this risk also being captured as
of our 2050 net zero target
a principal risk under operational and reputational risk
Potential impact (linking to financial statements)
How is the risk being managed, mitigated and addressed?
Loss of customers, major suppliers and investors if we fail to meet our commitments and targets or provide
Engaging with stakeholders and providing clear and honest disclosure on our targets and
inadequate disclosure around progress against them.
commitments and where there are areas of challenge and uncertainty for those targets.
Reduction of the liquidity of our shares and impact to the market capitalisation of the Group.
Committing time and resources to complete and publish a transition plan in 2025 which
will outline our steps to decarbonise.
Associated targets and metrics:
Physical or transition risk: Transition
Our net zero and interim targets, and associated metrics for our operational and financed emissions.
Territory: Groupwide
78 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
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.
3. Not adequately anticipating the cost implications associated on our business, value chain and
Time horizon:
Likelihood:
wider society of both:
Medium term 2-5 years
High
– 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
Potential impact (linking to financial statements)
How is the risk being managed, mitigated and addressed?
Negative financial impact on the expense base and cost assumptions.
Active monitoring of costs, upcoming regulations and performing sensitivities
to manage our future cash flows.
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.
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:
Physical or transition risk: Transition and physical
Our net zero targets and associated metrics for our operational and financed emissions.
Territory: Groupwide
4. Litigation risk if we are seen not to have published enough information or taken enough action;
Time horizon:
Likelihood:
are considered to have made unsubstantiated claims leading to a claim of ‘greenwashing’;
Medium term 2-5 years
Medium
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
Potential impact (linking to financial statements)
How is the risk being managed, mitigated and addressed?
Litigation may lead to potential fines and payouts increasing the Group’s liabilities and potentially damaging
Providing clear and honest disclosure on our work and areas of challenge and uncertainty.
the Group’s reputation.
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:
Physical or transition risk: Transition
Number of complaints and threatened litigation regarding sustainability matters.
Territory: Groupwide
For the first time, a separate climate risk report assessing the CVaR of our asset portfolio was
We have also considered climate-related physical risks; however, as we lease the majority of our
presented to the Board and the conclusions were also included in the 2024 ORSA report. There are
office buildings and most of our staff would be able to work from home if workplaces were affected,
a number of risks that are not featured in the table above that one may consider to be potentially
we do not believe physical risks present a material impact to the operations of the Group.
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.
CHESNARAANNUALREPORTANDACCOUNTS202479
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY CLIMATERELATED FINANCIAL DISCLOSURES
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
Time horizon:
Likelihood:
increased investment in aligned assets.
Longer term 6+ years
Medium
Potential impact (linking to financial statements)
How is the opportunity being managed and implemented?
Increase in key metrics: cash generation and Economic Value.
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
Time horizon:
Likelihood:
to climate change.
Medium term 2-5 years
High
Potential impact (linking to financial statements)
How is the opportunity being managed, mitigated and addressed?
Positive share price movements through access to increased options and potential for lower borrowing costs.
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
Time horizon:
Likelihood:
a big impact in a smaller organisation.
Medium term 2-5 years
Medium
Potential impact (linking to financial statements)
How is the opportunity being managed, mitigated and addressed?
Our people are the Group’s biggest value creator, which translates into cash generation
Clearly defining and demonstrating our commitment to sustainability
and Economic Value for the business.
and helping to address climate change.
Disclosing our training and development opportunities.
Associated targets and metrics:
Employee retention rate and survey feedback.
80 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
Our approach to decarbonisation
We understand that our best strategy to mitigate our climate risks and realise the opportunities
To support the understanding of our approach, in line with the United Nations, we define net zero as
is to actively manage our transition to become a net zero business. We frame this transition in line
cutting carbon emissions to a small amount of residual emissions that can be absorbed and durably
with the UN Sustainable Development Goals (SDGs), including goal 13: Climate Action.
stored by nature and other carbon dioxide removal measures, leaving zero in the atmosphere.
1 Decarbonise our investment portfolio
The emissions from our investment portfolio, captured as part of scope 3, category 15 reporting
self-select their own investments. We remain strongly committed to net zero by 2050 for all our
under the Greenhouse Gas (GHG) Protocol, represent the significant majority of our carbon
financed emissions and so our targets will expand over time to include all asset classes.
footprint. We have currently set two targets for financed emissions:
There are a number of significant headwinds largely out of our control which will affect our ability
1. Net zero for all emissions by 2050.
to meet our targets, such as policyholder choices and asset manager progress. Therefore, as
2. 50% intensity reduction by 2030 from our 2023 baseline figures in the scope 1 and 2 emissions for
our transition plans are developed and refined and baseline data is further understood, we may
our listed equity and corporate fixed income investments which we are able to influence or control.
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
We will set further interim targets covering additional asset classes and time periods up to 2050.
on the steps we will take to meet our targets as well as challenges which may affect the Group’s
For our targets, we have followed the Institutional Investors Group on Climate Change’s (IIGCC)
ability to implement the plan. Additional governance has been put in place to provide oversight for
Net Zero Investment Framework (NZIF) and the Intergovernmental Panel on Climate Change
the development of the transition plan, including a cross-group steering committee to ensure there
(IPCC) Special Report on Global Warming of 1.5°C (SR1.5), which states that in mitigation
are appropriate review and approvals.
pathways with no or limited overshoot of 1.5°C, global net carbon emissions need to decline
We have started to engage with some of our key asset managers, who collectively manage c60%
by between 41% and 58% from 2010 levels by 2030, reaching net zero around 2050.
of our assets under management. Initially, this is to gain an understanding of their own net zero
As an asset owner, to reduce these emissions it is necessary to work with our asset managers to
plans and how our portfolios of assets fit in with those plans. During 2025, we will be further
understand their own decarbonisation plans. We will also be working with partners and customers
engaging and collaborating to assess if their strategy aligns with our decarbonisation pathway.
for those assets where we have less control or influence, for example those where policyholders
CHESNARAANNUALREPORTANDACCOUNTS202481
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY CLIMATERELATED FINANCIAL DISCLOSURES
2 Decarbonise our operations and supply chain
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.
Chesnara’s carbon footprint
97% of our operational emissions arise from scope 3 emissions;
Scope 1
Scope 2
specifically purchased goods and services, which represent 77%.
1% 62 tCO
e
2% 64 tCO
e
Methodology to calculate these emissions currently relies heavily
2
2
on estimates and industry averages and so we have been working
Scope 3
with Greenly, as our carbon accounting data provider, to enhance
the accuracy of this data by bringing in supplier specific data
97%
3,592 tCO
e
2
where possible. This has lead to a reduction of our scope 3.1
tCO
e
2
emissions. As this methodology evolves, we hope to see
77%
Purchased goods and services
2,907
a reduction in intensity for those suppliers who are transitioning.
2%
Capital goods
66
As with our asset managers, we have started conversations
with our key suppliers, to understand their decarbonisation
1%
Fuel- and energy-related
28
plans. We will be continuing to engage with our supply chain
activities
3,718
during 2025.
4%
Upstream transportation and
147
tCO
e
2
distribution
The UK business has also enhanced its supplier onboarding due
(2023 4,961 tCO
e)
2
diligence and annual attestation processes, bringing the Supplier
2%
Waste generated in operations
81
Code of Conduct in line with the key principles of the United
4%
Business travel
122
Nations Global Compact to ensure our suppliers uphold the
same values, standards and commitments that we do.
5%
Employee commuting
192
2%
Upstream leased assets
49
3 Invest in positive solutions
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.
Scenario analysis
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios
Overview
During 2024, Chesnara completed an assessment to understand the resilience of our investment
– Physical risks: This captures the risk of asset damage or business interruption as a direct
portfolio to climate risk. This was previously considered as part of the ORSA process, but a stand-
consequence of extreme weather events or from sustained gradual changes in the weather.
alone assessment was performed this year to enhance our understanding of the risk faced by climate
The physical risk assessment is dependent on the location in which the Company operates and
change. This analysis is also a key consideration in the development of the Group transition plan,
the scenario under consideration
as this document will begin to consider how we mitigate the risks we, as a business, are facing as a
– Transition risks: This estimates the cost of achieving the required reduction in emissions in the
result of climate change. The focus of our assessment was the Climate Value at Risk (CVaR) metric,
scenario under consideration. Transitional risk is dependent on the sector and location in which
which is a forward-looking measure of the potential impact of climate on Chesnara’s portfolio of
the Company operates and the scenario under consideration.
invested assets. CVaR includes an assessment of the following in relation to the companies
in which we invest:
82 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
– Transition opportunities: This estimates the potential benefits arising from the switch to low-
granularity and robustness of Chesnara’s climate risk analysis compared to our previous approach.
carbon technologies. Transitional risk is dependent on company specific data and the scenario
Both the methodology and data will continue to evolve over time reflecting the fact that the industry
under consideration.
approach to modelling climate change is in its infancy and is continuing to develop.
For this assessment, we have changed our approach to modelling climate risk from using the PRA’s
Our climate risk assessment is based on the invested assets under management. The impact arising
2019 UK Insurance stress test scenarios to using a climate risk model provided by MSCI which uses
from non-invested assets and the liabilities are less material for Chesnara and hence have not been
data from the Network for Greening the Financial System (NGFS) scenarios. We made the decision
considered to date.
to change our approach as the MSCI methodology is a significant step forward in terms of coverage,
Climate-related scenarios and key assumptions
The climate-related scenarios considered, and the key assumptions embedded within these scenarios, are summarised below:
MSCI scenario name Underlying NGFS
Physical risk – policy
Transition risk Technology change Carbon dioxide removal Regional Policy variation
scenario
ambition
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
Fast change Low-medium use Medium variation
across sectors
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
Timelines
Key findings
The modelling of climate risk associated with bond holdings is based on the maturity date of the
The key findings observed from the scenario analysis are summarised below:
bond (i.e. it is assumed that the bond is held to maturity). The transitional risks and opportunities
– 1.5°C scenarios: In the two 1.5’ scenarios the estimated impact of physical risk is the same,
associated with equity holdings are modelled until 2050 with physical risks modelled until 2100.
reflecting the same assumed level of warming in both scenarios. Transitional risks are higher in the
It is noted that this exceeds the duration of Chesnara’s liabilities and hence Chesnara will realise
disorderly scenario reflecting the delayed or divergent implementation of low carbon policies. The
the equity prior to this date. MSCI discounts the estimated impacts over the above timelines to
transitional risks are partially offset by the transitional opportunities which are expected to emerge
produce a shock factor which is then applied to our portfolio of invested assets.
as a result of increased low-carbon technologies.
Limitations
– 2.0°C and 3.0°C scenarios: In these scenarios the expected physical risk increases as expected.
As noted above, climate scenario analysis is still an evolving field and as such there are limitations
However, we note that whilst physical risk is thought to be underestimated in all scenarios the
in our approach. The key limitations are listed below and are common throughout the industry.
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-
– It is assumed that the market has not already priced the effects of climate risks into market values
carbon policies.
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.
Summary
Climate risk is a material financial risk factor and as such we have made commitments to transition
– The analysis does not take into account future management actions in respect of the transition
to net zero by 2050. The new approach has a larger Own Funds stress impact than in previous years,
to net zero, i.e. it is based on the current assets held and it does not reflect any future switches
and therefore the impact is potentially greater in the longer term than has previously been assessed.
to low carbon assets.
We are currently developing our first transition plan and its implementation will be fundamental to
– The modelling of physical risk only considers the direct physical risks (i.e. the direct physical
helping us to mitigate climate-related risks. The transition plan will map the journey, and thereafter
damage to a company’s assets because of climate change or the costs associated with
monitor progress, against the net zero commitments, whilst acknowledging the areas of uncertainty.
interruption to business operations as a direct consequence of an extreme weather event or
Furthermore, we are taking steps to embed climate risk into business as usual and as part of key
from long-term gradual changes in the weather). The wider impacts of indirect physical risks
decision making processes, in particular in the investment decision making process. Our climate
(i.e. the impacts on the supply chain of a company as a result of climate change) are not
scenario analysis will continue to be developed and enhanced to monitor our climate-related
currently considered.
exposure and to identify management actions to mitigate against these.
– 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.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
83
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY CLIMATERELATED FINANCIAL DISCLOSURES
RISK MANAGEMENT
Risk and solvency management are at the heart of Chesnara’s robust Governance Framework.
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
PROCESSES FOR IDENTIFYING, ASSESSING AND MANAGING CLIMATE-RELATED RISKS
A high-level summary of Chesnara’s Risk Management Framework is below:
RISK MANAGEMENT
RISK MANAGEMENT
GROUP RISK MANAGEMENT
GROUP’S RISK
POLICY
SYSTEM
FRAMEWORK
APPETITE
Chesnara’s Risk Management Policy
The Risk Management System
The Group Risk Management Framework is designed
The Group’s risk appetite reflects the
which sets out the framework of principles
supports the identification,
to embed effective risk control systems with a holistic and
Chesnara Board’s view on the amount of
and practices, policies and strategies for
assessment and reporting of risks.
transparent approach to risk identification, assessment,
risk the Group is willing to take and sets
the Group’s Risk Management System.
management, monitoring and reporting. The definition and
boundaries to determine when there is
scope of each principal risk category is based on a set of
too much or too little risk.
strategic and operating principles/tolerance limits.
In addition, Chesnara’s Investment Policy contains investment criteria which are monitored by the
With regards to the sector specific guidance, we believe the impact of: physical risks from changing
Investment Committee.
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
The Group Chief Risk Officer is responsible for maintaining the overall Risk Management Framework.
be material and therefore not disclosed within the TCFD report as material risks. Chesnara has
The CEOs for each business unit are required to ensure that the framework is fully integrated into the
developed an environmental, social and governance (ESG) Policy Statement for the Group, in which it
business model and decision making processes. Each of our divisions is required to apply the Risk
recognises the importance of understanding climate change risk in its operations and its investments
Management Policy and operate within the limits set by the risk appetite. Each business unit is
and continued monitoring of associated risks.
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,
Chesnara believes its businesses that hold investments (insurance companies and investment
events, and their causes and potential consequences. These risks are recorded in the risk register
companies) should consider sustainability and implications for climate change in their investment
and evaluated based on the likelihood of occurrence and severity of impact. Depending upon the
policies. It expects each company to consider the implications of these for its business and
nature and impact of the risk, the risk is either accepted, avoided, managed or transferred. Climate-
investments and document its position. Chesnara’s businesses have adopted, either directly or via
related risks and opportunities are identified and evaluated according to this framework by the
their respective fund managers, the six UN Principles of Responsible Investment with the aim to
respective management teams in our business units.
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
Management teams keep up to date through the monitoring and assessment of emerging risks,
primarily focus on companies that invest in improving health.
reviewed by the executive teams on a quarterly basis.
The 2024 approach to modelling climate risk has changed using the PRA stress tests as part
Climate change risk has been included as its own principal risk (PR11) for the first time to reflect
of the ORSA process to using a climate risk model provided by MSCI. This is considered to be a
the exposure to adverse consequences of the physical and transitional risks arising from climate
significant step forward in terms of the coverage, granularity and robustness of Chesnara’s climate
change. We also consider climate change to be a cross-cutting risk, that manifests through other
risk analysis: however, it is still subject to a number of limitations which will evolve over time.
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.
84 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management
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
Chesnara’s approach to assessing financial risk is to identify and assess factors that could potentially
Prudential Solvency II Regulations to perform the ORSA on an annual basis. The Chesnara Board is
threaten the continued successful delivery of the anticipated stakeholder outcomes over a three-year
responsible for the overall design of the ORSA process including its annual review. Climate-related
time horizon, including risks to the business model and strategy. The Chesnara Board requires the
risks are considered within the ORSA process and the impact of material risks upon the solvency
management teams to ensure a good understanding of the solvency position at any point in time.
and resilience of the business is documented. The views of the Actuarial function holder and any
In Q2 2024 a series of stress and scenario tests were selected for the ORSA with the requirement
recommendations or prior feedback from the regulator are considered when conducting the
to follow the testing principles set out in the Group Risk Management System Policy. As well as
assessment at business unit level. Conclusions drawn from the risk and solvency assessment are
current known risks, the stresses and scenarios took account of forward looking and emerging risks.
reported to the respective regulators by each of our businesses every year. The Group Sustainability
These selected stresses and scenarios along with the rationale were reviewed and approved by
Committee also review the climate-related risk and opportunities and climate scenario analysis, with
the Chesnara Board. The tests conducted covered equity asset values, yields and credit spreads,
overall responsibility for overseeing the programme of work across the group.
expense inflation, mass lapse and adverse operational experience. The ORSA also included the
Each business unit provides a forward-looking perspective on risks that are emerging quarterly to
output of the climate risk report, and it will be determined how this will be incorporated going
its own Audit & Risk Committee, the Group Audit & Risk Committee and monthly to the SLT.
forwards. Performance against the business plans as well as known and emerging risks and
A summary of principal risks and emerging risks is also provided quarterly to the Chesnara Board.
opportunities are discussed at quarterly business review meetings at entity and group level.
From a climate change perspective this incorporates consideration of the content of relevant
Climate-related risk impacts and opportunities are considered at these meetings.
publications and guidance, in the context of the Chesnara risk landscape, such as the reports
More detail on Chesnara’s Risk Management Framework is set out in this section of the Annual
published by the IPCC on the physical climate change risks to the environment. Similarly, our
Report and Accounts.
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.
CHESNARAANNUALREPORTANDACCOUNTS202485
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY CLIMATERELATED FINANCIAL DISCLOSURES
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.
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
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.
TARGETS
We are committed to decarbonising
2030
2050
our investment portfolio and have
50% intensity reduction
Net zero all emissions
set the following climate targets
to achieve this:
in the scope 1 and 2 emissions for our listed equity and
corporate fixed income investments which we are able
to influence or control
To meet our commitments, we will report on the following metrics to monitor performance against our targets:
1.
2.
3.
Total financed carbon
Financed carbon emissions
Weighted Average
emissions (absolute emissions)
(absolute emissions normalised
Carbon Intensity (WACI)
(tCO
e)
by $M invested) (tCO
e)
2
2
a) WACI Corporate
This shows our exposure to carbon intensive
This shows our absolute greenhouse gas emissions
This shows the total carbon financed emissions
companies (tCO
e by $M sales).
2
(GHG) and allows us to establish the emissions
of a portfolio normalised by the market value
b) WACI Sovereign
baseline of our portfolio by measuring financed
of the portfolio. The metric enables us to compare
This shows our exposure to a country’s transitional
scope 1, 2 and 3 emissions.
the emissions of different portfolios.
risks and physical and economic vulnerability to
climate change (tCO
e by $M GDP nominal).
2
86 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
2024 performance
The below tables summarise our 2024 performance against our baseline financed emissions.
FINANCED EMISSIONS (tCO
e)
2
Scope 1 and 2 Scope 3
2024 2023 baseline Movement 2024 2023 baseline Movement
Total financed carbon emissions
515,298 533,073 (3%) 4,764,459 4,345,991 10%
(absolute emissions)
Financed carbon emissions
34 39 (13%) 313 316 (1%)
(normalised by $M invested)
% coverage 59% 58% 1% 59% 56% 3%
WEIGHTED AVERAGE CARBON INTENSITY WACI
Corporate Constituents
Sovereign Constituents
(tCO
2
e/$M sales)
(tCO
2
e/$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%)
Our 2024 calculations, which are based on the data at the end of September 2024, show we made
When opportunities have arisen to rebalance our portfolios, we have been careful to integrate our
good progress against our targets. For the assets classes for which emissions can be calculated, we
financed emissions objectives into our decision making process. Analysis shows that redemptions
1
saw the scope 1 and 2 normalised emissions
of our total portfolio reduce by 13%. The investments
within our portfolios have also contributed to the change in our financed emissions figures. Of
included in our 2030 targets represent a majority of the assets within this total and so we are on
course, changes in data coverage and any updates that our investee companies have made in the
track to achieve our target. Our scope 3 normalised emissions also dropped by 1% and whilst we
reporting of their own financed emissions have all played a part in the changes we see.
2
saw progress in reducing our absolute
scope 1 & 2 emissions by 3%, we did increase our scope 3
Our climate data comes from an external provider and just as we baseline and monitor our financed
emissions by 10%. The difference between these two metrics is partly explained by the increase of
emissions figures, we do the same for data coverage. Except for WACI sovereign, the data coverage
our in-scope assets under management by circa 5% as a result of acquisition activity meaning that
has improved across all our measures this year. We are eager that this continues to improve and so
we have more assets for which we are reporting emissions.
we are working with our external data provider to identify any assets that are not covered to help
3
Our WACI corporate
exposure to carbon intensive companies decreased by 5% (scope 1 & 2) and
ensure that they are added to coverage within expected timeframes. This will allow us to increase
4
1% (scope 3); however, our WACI sovereign exposure
has increased by 7%. It is however important
the accuracy of our financed emissions and exposures.
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.
1. The absolute greenhouse gas emissions associated with an asset class or portfolio divided by the loan and investment volume (expressed in tCO
2
e/ $M invested).
2. The absolute greenhouse gas emissions associated with an asset class or portfolio (expressed in tCO
2
e).
3. Exposure to carbon intensive companies (expressed in tCO
2
e/$M sales).
4. A country’s exposure to transitional risk and physical and economic vulnerability to climate change (expressed in tCO
2
e/$M GDP nominal) to be provided for above text.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
87
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY CLIMATERELATED FINANCIAL DISCLOSURES
Positive solutions
As explained in the strategy section, we will continue to commit to assessing and investing in
Targets and metrics: the amount of investments (£m) we currently invest in our Positive Solutions
positive solutions, by intentionally directing capital into activities that deliver or enable the
Framework is the key metric we currently report and monitor, and at the end of 2024 we had £135m
achievement of the UN Sustainable Development Goals. We report annually on our progress against
(2023: £80m). We are looking to set medium-term targets for our positive solution investments, and
this commitment, detailing the level of investments held. These activities will be monitored by the
include additional metrics to monitor the impact of the investments.
GSC and reported annually to the Board.
Operational emissions
Since setting our initial 2028 target in March 2022, we have spent time collating and analysing our
To monitor our performance against our targets and intensity, we report on the
data, broadening the emissions captured by our calculations and reporting, engaging with key
To monitor our performance, we report on the following metrics:
following metrics:
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
1
1
2
2
to be ambitious, meaningful and reflect the urgency of the climate crisis, yet we must do it in a way
Absolute emissions tCO
Absolute emissions tCO
e
e
Operational emissions
Operational emissions
2
2
that doesn’t negatively impact livelihoods, wellbeing or inclusion.
(scope 1,2 and 3)
(scope 1, 2 and 3)
per FTE tCO
per FTE tCO
e (including
e (including
2
2
Later this year, we will publish our first transition plan and in it we will communicate how and when
and excluding scope 3.1)
and excluding scope 3.1)
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.
88CHESNARAANNUALREPORTANDACCOUNTS2024
STRATEGIC REPORT
2024 performance
The below table summarises our 2024 performance against our baseline operational emissions.
OPERATIONAL EMISSIONS tCO
e
2
2024 2023 baseline
UK &
Global
Total UK &
Global
Total
Offshore
(excl UK &
Offshore
(excl UK &
Offshore)
Offshore)
Scope 1 Combustion of fuel and operation of facilities 2 60 62 18 65 83
Electricity, heat, steam and cooling purchased for own use (location based) 9 55 64 10 87 97
Scope 2
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
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
Scope 3
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:
tCO
2
e per FTE* 14.2073 8.2344 10.4772 19.2982 10.3692 12.8660
tCO
2
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.
The 2024 results show a 25% reduction to our 2023 baseline. This is a movement in the right
The reduction in purchased goods and services (scope 3.1) emissions is due to an enhancement of
direction. Whilst this movement is in part down to data and methodology changes, we are pleased
the data used in the calculations. Through our carbon accounting partner’s database, we have been
to be able to able to point to actions we have taken across the Group to reduce our emissions:
able to use an increased number of emission factors specific to suppliers to calculate the associated
emissions instead of industry averages.
– 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
Not all types of emissions have reduced. For example, we have seen emissions from commuting
during certain days of the week.
increase during the year, as a result of higher office attendance across our businesses. This
– The Group has also been focusing on digitalisation, particularly Waard through its online customer
demonstrates some of the challenges we have with reducing emissions but we continue to consider
portal ‘Mijn Waard’, as an endeavour to reduce postal emissions (scope 3.4).
methods of encouraging and incentivising sustainable travel, including our employee electric vehicle
salary sacrifice scheme in the UK.
– 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.
CHESNARAANNUALREPORTANDACCOUNTS202489
STRATEGIC REPORT
CORPORATE & SOCIAL RESPONSIBILITY • CLIMATE-RELATED FINANCIAL DISCLOSURES
Carbon offsetting
We remain focused on reducing the carbon emissions associated with our operations and
There are three (2023: five) Company-leased vehicles in total across the Group which are used
investments. We also continue to consider the important yet complex role offsetting can play in the
primarily for commuting and not business-related activities; this is in addition to eight Company-
global transition to net zero.
owned vehicles. All of the eleven vehicles are either hybrid or electric.
For 2024, we have again offset our operational emissions, excluding scope 3.1 purchased goods and
services, of 811 tCO
e by supporting several verified projects in alternative energy and water safety,
2
METHODOLOGY, DATA & ASSUMPTIONS
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
Operational emissions: Greenly has detailed methodology for each category and
portfolio. We will continue to assess our approach to offsetting, including considering partnerships
we can interrogate the Group’s accounting data to generate the results. Greenly has
with organisations supporting nature-based solutions.
integrated thousands of emission factors from Government publications and Life
Energy usage
Cycle Assessment (LCA) dashboards as reliable sources of data. No further data
Energy consumption in the Group is reported on an actual basis where the records are kept in the
and assumptions have been included for the calculation of non-financed emissions
business (scope 2 – office use and scope 3.6 – business travel) with employee survey responses
outside of the use of the Greenly platform. For further informations on Greenly
used to obtain information for home working and commuting data. These are then converted to
and its methodology, please visit www.greenly.earth/en-gb.
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
Financed emissions: For more information on the MSCI methodology, please visit
consumption over the last two years is shown in the following table:
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
UK &
Global
a three month lag to our reporting. We acknowledge that this is not in line with PCAF
Offshore
(exc UK & Offshore)
Total
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.
Energy consumption (KwH ’000) 360 1,298 1,658
2024
A separate climate-related financial disclosure report which included the basis of
Water usage (m³)* 289 1,815 2,104
preparation of each scope and the method of calculation has been published
Energy consumption (KwH ’000) 382 1,301 1,684
separately on the website at www.chesnara.co.uk.
2023
The performance of climate-related disclosures requires the application of a number
Water usage (m³)* 163 1,526 1,689
of key judgements, assumptions and estimates to be made, in particular, for the
* Excludes Waard since water usage is incorporated in the office service charge. The increase in water usage is due
calculation of emissions and forming an assessment of the climate scenario analysis.
to higher office attendance in 2024.
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
The Group encourages all employees to take reasonable steps to reduce waste, and to re-use and
that certain disclosures are likely to be amended in the future and should be treated
recycle office materials, and our sustainability statement reiterates our commitment to becoming
with caution.
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
Intensity measurements
risk exposure to weather-related catastrophes of their property business by relevant jurisdiction; the
Our operational emission intensity measurements are ratios of operational emissions against the
extent to which their insurance underwriting activities are aligned with a well below 2°C scenario;
number of FTE staff, calculated as:
and also indicate which insurance underwriting activities are included – this has been considered and
1. Operational emissions per FTE = total non-financed emissions (scope 1, 2 & 3.1-3.8 tCO
e)/number
2
the impact is either immaterial or not applicable to the business, and therefore, no disclosure has
of average FTE staff in the year.
been made.
2. Operational emissions (less scope 3.1 emissions) per FTE = non-financed emissions as defined
To increase energy efficiency, management in each of our business units takes practical steps to
above (less scope 3.1 emissions)/number of average FTE staff in the year.
minimise the effect of our operations on the environment and our workforce is encouraged to
We believe these are appropriate measures, given a large proportion of the GHG emission
conserve energy, avoid unnecessary travel, use video conferencing, and minimise waste. In 2024,
categories are employee-related including commuting, business travel and waste. As supplier
we delivered sustainability training to all employees to raise awareness of the impact we have on
purchases (scope 3.1) are not directly correlated with the number of employees we have also chosen
climate change, and how energy usage contributes to this. We also finalised our UK Expense Policy
to disclose the FTE ratio without these emissions to reduce the impact of increased spend on goods
which outlines the need to consider the business need to travel and the most sustainable option to
and services.
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.
90 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
STRATEGIC REPORT
We have also determined appropriate intensity measures for financed emissions (scope 3.15),
Non-Financial and Sustainability Information Statement
as explained in detail on page 86, being:
This section of the Annual Report constitutes Chesnara’s Non-Financial and Sustainability
1. Total financed carbon emissions (absolute emissions) tCO
e – This shows our absolute
2
Information Statement, produced to comply with sections 414CA and 414CB of the Companies
greenhouse gas emissions (GHG) and allows us to establish the emissions baseline of our portfolio
Act 2006. The following table sets out where, within our Annual Report, we provide further
by measuring financed emissions.
details on the matters required to be disclosed under the section listed above. In particular, it
2. Financed carbon emissions (absolute tCO
e emissions normalised by $M invested) –
covers the impact we have on the environment, our employees, social matters, human rights,
2
This enables us to compare the emissions of different portfolios. This shows the total carbon
anti-corruption and anti-bribery matters, policies pursued and the outcome of those policies,
financed emissions of a portfolio normalised by the market value of the portfolio.
and principal risks that may arise from the Company’s operations and how we manage those
risks, to the extent necessary for understanding of the Company’s development, performance
3. Weighted Average Carbon Intensity (WACI) tCO
e/$M revenue – This enables us to understand
2
and position and the impact of its activity.
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 (tCO
e by $M GDP nominal).
2
Reporting requirement Section(s) Page(s)
– WACI Corporate – our exposure to carbon intensive companies (tCO
e by $M sales).
2
Anti-corruption and anti-bribery Corporate & Social Responsibility 73
We hope that this combination of metrics will show the relative and absolute performance of our
Business model Overview of our Business Model,
decarbonisation activities.
Strategy and Culture & Values
26-27
Employees Corporate & Social Responsibility
70 -72
S172
36-38
Environmental matters Corporate & Social Responsibility
74- 91
S172 Statement
32
Non-financial key performance indicators S172 Key Stakeholders
34-36
Business Reviews
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
CHESNARAANNUALREPORTANDACCOUNTS202491
CORPORATE
GOVERNANCE
92CHESNARAANNUALREPORTANDACCOUNTS2024
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
CORPORATE GOVERNANCE
BOARD PROFILE AND BOARD OF DIRECTORS
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 KNOWLEDGE AND SKILLS SUMMARY
THE BOARD
LUKE SAVAGE
Industry knowledge – UK
P P P P P P P
CHAIR
Industry knowledge – Sweden/Netherlands
P P P P P P S
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.
Governance – actuarial
P P P P S S S S
Appointment to the Board: Appointed to the Board and as Chair in February 2020.
Committee membership: Nomination & Governance (Chair to 31 December 2021) and
Governance – financial/audit
P P P P P P P S
a member of the Remuneration Committee (from February 2020). Attends the Audit & Risk
Committee by invitation.
Risk management
P P P P P P P S
Current directorships/business interests:
– Numis Corporation Ltd
– Numis Securities Ltd
Investment management
P P P P S S
– Liontrust Asset Management plc, Chair
M&A and business development
P P P P P S S S
Commercial management
P P P P P P S
STEVE MURRAY
GROUP CHIEF EXECUTIVE
Change management
P P P P S S S
Appointment to the Board: Appointed as a director of Chesnara on 2 August 2021 and as Group
Ensuring good customer service and outcomes
P P P S S S
Chief Executive on 19 October 2021.
Career, skills and experience: Steve joined Chesnara from Royal London where, as part of their
Information Technology/Cyber
P P P S S S S
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
Sustainability including ESG
P P S S S S S S
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
People & Reward
P P S S S
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
Regulatory
P P P P S S S
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.
KEY
Current directorships/business interests:
P
Primary specialism
– Countrywide Assured Services Ltd
S
Secondary specialism
– CASFS Ltd
– Countrywide Assured Life Holdings Limited
– Movestic Livförsäkring AB
– Scildon NV Supervisory Board
– Waard Group Supervisory Board
– Cattanach – a private charity (Chair)
94 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
JANE DALE
KARIN BERGSTEIN
SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR AND
INDEPENDENT NON-EXECUTIVE
CHAIR OF THE AUDIT & RISK COMMITTEE
DIRECTOR
Appointment to the Board: Appointed to the Chesnara Board in May 2016 and as Chair of
Appointment to the Board: Appointed to the Chesnara Board on 14 February 2022.
the Audit & Risk Committee in December 2016. Appointed as the Board’s Senior Independent
Committee membership: Nomination & Governance and Audit & Risk.
Non-Executive Director in October 2018. After a nine-year tenure, Jane intends to stand down at
Current directorships/business interests:
the conclusion of the next AGM, due to be held on 13 May 2025.
– Van Lanschot Kempen N.V., NED
Committee membership: Audit & Risk (Chair) and Nomination & Governance.
– Bank Nederlandse Gemeenten N.V., NED
Current directorships/business interests:
– University Medical Center Groningen, NED
– Countrywide Assured plc, Chair of the Audit & Risk Committee
– Bergstein Advies B.V., General Manager
– Covea Insurance plc and Covea Life Limited, NED and Chair of the Audit Committee
– Foundation for Continuity of NN Group, NED
– Novia Financial plc, NED and Chair of the Audit Committee; and The Quanta Group (Holdings)
– Foundation for Preference Shares Wereldhaven, NED
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
EAMONN FLANAGAN
GROUP CHIEF
INDEPENDENT NON-EXECUTIVE DIRECTOR AND
FINANCIAL OFFICER
CHAIR OF THE REMUNERATION COMMITTEE
Appointment to the Board: Appointed to the Chesnara Board on 15 April 2024.
Appointment to the Board: Appointed to the Chesnara Board in July 2020 and
as Chair of the Remuneration Committee in January 2022.
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
Committee membership: Audit & Risk and Remuneration (Chair).
management and corporate development functions. He also held executive responsibility for Aviva
Current directorships/business interests:
Investors’ North American operations and was a member of Aviva Group’s Finance Leadership Team.
– Movestic Livförsäkring AB, Chair of the company and member of the Audit & Risk Committee
He held a variety of senior leadership roles over a 14-year period in Aviva, including CFO of Aviva’s
– AJ Bell, NED and Chair of the Audit and Disclosure committees
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.
GAIL TUCKER
CAROL HAGH
INDEPENDENT NONEXECUTIVE
INDEPENDENT NONEXECUTIVE DIRECTOR, CHAIR OF THE NOMINATION
DIRECTOR
& GOVERNANCE COMMITTEE AND DESIGNATED WORKFORCE NED
Appointment to the Board: Appointed to the Chesnara Board on 29 January 2025.
Appointment to the Board: Appointed to the Chesnara Board on 14 February 2022.
Committee membership: Audit & Risk and Nomination & Governance.
Committee membership: Nomination & Governance (Chair) and Remuneration.
Current directorships/business interests:
Current directorships/business interests:
– Countrywide Assured plc
– Countrywide Assured plc, NED
– Breast Cancer Now (Trustee)
– Old Game New Rules Ltd, Director and Founder
– ICAEW Financial Services Board (Member)
– Direct Line Insurance Group plc, NED
– UK Insurance Ltd and Churchill Insurance Company Ltd (part of Direct Line Insurance Group)
CHESNARAANNUALREPORTANDACCOUNTS202495
GOVERNANCE
OVERVIEW
FROM THE CHAIR
96CHESNARAANNUALREPORTANDACCOUNTS2024
CORPORATE GOVERNANCE
Our robust Governance Framework enables us to effectively manage risks and opportunities,
Chesnara Board composition
as well as to take appropriate steps to address relevant environmental and social issues in
Current balance of executive and
a proportionate manner.
non-executive directors
Dear Shareholder
Following the completion of a nine-year tenure, Jane Dale will
not seek re-election at the Company’s Annual General Meeting
On behalf of the Chesnara Board, I am pleased to present
1
(‘AGM’) in May 2025 and will step down as Senior Independent
our Corporate Governance Report for the year ended
2
Director and as a director of the Company at the conclusion of
Non-executive
31 December 2024.
that meeting. I would like to thank Jane for her significant
contributions to the Group as a non-executive director and in
Executive
Chesnara’s Corporate Governance Framework underpins the
delivery of sustainable value to our customers and shareholders
particular as Chair of our Audit & Risk Committee. The Group has
Chair
through effective deployment of our staff and technology, and
changed much over her time with us and Jane has overseen
constructive engagement with our suppliers, partners and
several key acquisitions and ensured timely reporting of strong
5
regulators. The Board drives the Group’s culture and values
financial results irrespective of these and external changes to
by assigning clear roles and responsibilities and setting high
reporting regimes.
expectations of business performance and ethical conduct.
Gail Tucker joined the Board on 29 January 2025 and will chair
Our robust Governance Framework enables us to effectively
the Audit & Risk Committee upon Jane standing down. She
Board tenure
manage risks and opportunities, as well as to take appropriate
brings with her a wealth of reporting expertise including from her
steps to deliver our sustainability agenda.
time as IFRS 17 Global Technical Lead for PwC. She has advised
1
insurance audit teams around the world and has sat on a number
This section of the Annual Report and Accounts sets
of technical committees. We are delighted to have attracted such
out our governance policies and practices and includes
talent into the Group.
0-6 years
details of how the Company has applied the principles
and complied with the provisions of the UK Corporate
No NED chairs the Board as well as a Board committee
Over 6 years
Governance Code 2018 (the ‘Code’) during 2024.
nor does any NED chair more than one Chesnara Board
Committee. The principles and policies that support the
The Board recognises that sustainability and stewardship
Governance Framework outlined in the Group Corporate
7
is central to a Company’s ability to operate responsibly.
Governance Framework are designed to encourage high
The Board is also mindful of the critical importance of the
standards of ethical and business conduct and consideration
interests of its employees, customers and suppliers for the
of matters such as diversity. Each of the businesses within the
purposes of delivering sustainable performance, whilst engaging
Group has continued to make further progress in ensuring that
Current gender diversity of the Board
constructively with regulators and shareholders to understand
the governance arrangements remain effective, whilst also
and meet their expectations. Details of how we have engaged
integrating environmental and social factors within their risk
with key stakeholders and performed our duties under s172 of
assessment system.
the Companies Act 2006 are set out on pages 32 to 39 within the
Strategic Report.
This report summarises the steps the Board and its committees
Male
have taken to fulfil their governance responsibilities.
The Board agenda appropriately balances governance, strategy,
44
Female
risk, financial performance and emerging matters in order to
I look forward to having the opportunity to engage with our
promote the success of the Company. Each member significantly
shareholders at our AGM on 13 May 2025 as set out in our
contributes to Board discussions and devotes sufficient time to
Notice of AGM on page 253 of this report.
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.
Current ethnic diversity of the Board
1
White
Luke Savage, Chair
Ethnic minority
26 March 2025
7
CHESNARAANNUALREPORTANDACCOUNTS202497
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
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.
Compliance with the Code
The Company has applied the principles and complied throughout the year with all of the relevant
The table below provides an overview of the Company’s compliance with each of the five sections
provisions of the Code. The UK Corporate Governance Code is available at www.frc.org.uk.
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.
98
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
Under local legislation or regulation for all divisions of the Group, the directors have responsibility for
independent non-executive directors and two executive directors.
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
Biographical details of current directors are given on pages 94 and 95 and a Board profile, which assesses
the adoption of appropriate assumptions. The Prudential Regulation Authority is the Group supervisor
the core competencies required to meet the Group’s strategic objectives, is provided on page 94.
and maintains oversight of all divisions of the Group through the college of supervisors.
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
The responsibilities that the Board has delegated to the respective executive management teams
of 2025, has a schedule of matters reserved for its consideration and approval. These matters include:
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
– implementation of the corporate strategy and business plan;
and budget; prioritising the allocation of capital, technical and human resources and developing and
– major acquisitions, investments and capital expenditure;
managing Risk Management Systems.
– financial reporting and controls;
The roles of the Chair and Group Chief Executive
– Dividend Policy;
The division of responsibilities between the Chair of the Board and the Group Chief Executive is
– capital structure;
clearly defined and has been approved by the Board. The Chair leads the Board in the determination
– Board and Board committee composition and appointments;
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
– appointments to the Board and Board committee membership;
from non-executive directors and setting its agenda. The Chair has no day-to-day involvement in the
– appointment or removal of the Company Secretary; and
management of the Group. The Group Chief Executive has direct charge of the Group on a day-to-day
– of the Remuneration Policy for Board directors and senior executives.
basis and is accountable to the Board for the strategic, financial and operational performance of
the Group.
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
Senior Independent Director
divisions. Specifically:
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
(i) three directors of the Company were also directors of Countrywide Assured plc during the year, those
delivery of the Board’s objectives and in ensuring that the views of all shareholders and stakeholders
being Jane Dale, Mark Hesketh (until 09 April) and Carol Hagh;
are conveyed to the Board. Jane is available to meet shareholders on request and to ensure that the
(ii) three directors of the Company were also directors of CASLP Ltd during the year, until CASLP Ltd was
Board is aware of shareholder concerns not resolved through the existing mechanisms for shareholder
dissolved on 16 January 2025, those being Jane Dale, Mark Hesketh (until 9 April) and Carol Hagh;
communication. The Senior Independent Director also meets with the non-executive directors, without
(iii) four directors of the Company, being Karin Bergstein (until 5 December), Eamonn Flanagan, Steve Murray
the Chair present, at least annually, and conducts the annual appraisal of the Chair’s performance and
and David Rimmington (until 16 May 2025), were also directors of Movestic Livförsäkring AB in 2024; and
provides feedback to the Chair and the Board on the outputs of that appraisal.
(iv) Steve Murray was also a director of the Scildon and Waard Supervisory Boards throughout the year.
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.
Code consideration Question
Provision 11 & 12 1. Are at least half the Board, excluding the Chair, NEDs whom the Board considers to be independent?
YES
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
Principle-G 3. Does the Board include an appropriate combination of executive and non-executive (and, in particular, independent non-executive) directors,
YES
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
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?
YES
6. Are a majority of members of the Nomination Committee independent NEDs?
YES
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
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.
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
No No No No No No
that has such a relationship with the Company?
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
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
In addition to these structured processes, the papers are supplemented by information which the
during the year under review. The Board notes that Jane Dale will have served almost nine years
directors require from time to time in connection with major events and developments, where critical
on the Board by the date of the AGM, and as outlined on page 107, Ms Dale will not seek re-
views and judgements are required of Board members outside the normal reporting cycle.
election as a director of the Company at the 2025 AGM, concluding her tenure on the Board.
Board effectiveness and performance evaluation
The Board has no familial relationship with any other member of the Board or senior
As part of the annual performance, an internal effectiveness evaluation of the Board and each of its
management team.
committees was undertaken in the latter part of 2024.
Other than their fees, and reimbursement of taxable expenses, which are disclosed on page 113,
This was through directors completing an anonymous questionnaire followed by individual meetings
the non-executive directors received no remuneration from the Company during the year.
between the Chair and each director to obtain their views on what was working well and what could
The directors are given access to independent professional advice, at the Company’s expense,
be improved. Individual director performance and time commitment to the Board was considered as
when the directors deem it necessary in order for them to carry out their responsibilities.
part of these meetings.
Independent professional advice of this nature was drawn upon with regard remuneration matters.
The questionnaire covered wide-ranging matters, including how well the Board operates, the process
This has been disclosed on page 111 in the Remuneration Report.
of decision making, the balance between the focus on risk, good customer outcomes and running
The Board is satisfied that its overall balance continues to provide significant independence of mind
the business, the culture and dynamics of the Board ensuring its composition and that of its
and judgement and further considers that, taking the Board as a whole, the independent directors are
committees are aligned. In addition, using similar methods to those described above, the non-
of sufficient calibre, knowledge and number that they are able to challenge the executive directors,
executive directors, led by Jane Dale as Senior Independent Director under a separate process,
their views carry significant weight in the Company’s decision making and bring diverse cultural and
contributed to a formal performance evaluation of the Chair.
territory insight and skills.
The outcome of the reviews of the Board and its committees indicated that they continue to be
Professional development
effective. The evaluation of directors’ performance concluded that each of the directors
The directors were advised, on their appointment, of their legal and other duties and obligations as
demonstrates commitment to his or her role and dedicates sufficient time to effectively discharge
directors of a listed Company. This has been supplemented by the circulation to each director of their
their responsibilities to the Company.
responsibilities and duties as contained within the Group’s Corporate Governance & Responsibilities
The review indicated that information provided to the Board is clear and focused and that the Board
Map. Throughout their period in office, the directors have, through the conduct of business at
operates in an open and constructive manner. Continuous progress on the Company’s long-term
scheduled board meetings and training, been updated on the Group’s business and on the competitive
strategy and ensuring appropriate time is allocated to this continues to be a focus for the Board in
and regulatory environments in which it operates. The directors are committed to their own ongoing
2025. Similarly, having overseen a number of changes to the executive team in 2024 (detailed on
professional development and the Chair discusses training with each non-executive director at
page 105 of the Nomination and Governance Report), talent and succession planning remains a focus
least annually. All directors are encouraged to suggest training topics of interest. In 2024, specific
for 2025 in order to ensure the Group is well placed to meet its strategic ambitions.
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
The evaluation findings were presented back to each committee and formally approved on that basis
key jurisdictional market trends. Each member of the Board, except the Chair and the Group Chief
before each committee then confirmed to the Board that it continued to operate effectively.
Financial Officer, served on one or more subsidiary Board during the period under review, through
Directors’ conflicts of interest
which they have considerable knowledge and experience of the divisional businesses across the
The Board has a policy and effective procedures in place for managing and, where appropriate,
Group. The Chair regularly attends committee and subsidiary Board meetings by invitation.
approving conflicts or potential conflicts of interest. This is a recurring agenda item at all Board
Information
meetings, giving directors the opportunity to raise any conflicts of interest they may have or to
Regular reports and information are circulated to the directors in a timely manner in preparation for
update the Board on any changes to previously lodged interests. A director may be required to leave
Board and committee meetings.
a Board meeting whilst such matters are discussed.
As stated above, the Company’s directors are also members of various Boards of key subsidiaries
The Company Secretary holds a register of interest, and a log of all potential conflicts raised is
within the UK, Dutch and Swedish divisions. These Boards hold scheduled meetings, at least
maintained and updated. The Board is empowered to authorise potential conflicts and agree what
quarterly, which are serviced by regular reports and information, covering all of the key areas
measures, if any, are required to mitigate or manage them. No material conflicts of interest were
relevant to the direction and operation of those subsidiary entities, including business development,
noted in 2024.
key projects, financial performance and position, actuarial assumptions setting and results analysis,
Whenever a director takes on additional external responsibilities, the Chair considers any potential
compliance, investments, information technology and cyber security, operations, customer
conflicts that may arise and whether or not the director continues to have sufficient time to fulfil his
care and communication, internal audit, all aspects of the Risk function and own risk and
or her duties. There were considered to be no such concerns in 2024.
solvency assessment.
Customer/third-party conflicts of interest
Key divisional subsidiaries monitor risk management procedures, including the identification,
The Board has a policy in place to manage customer and third-party conflicts of interest. This policy
measurement and control of risks through the auspices of a Risk Committee. These committees
sets out how the Company and its regulated subsidiaries manage conflicts of interest fairly, both
are accountable to and report to their Boards on a quarterly basis.
between the relevant Company and its customers, between groups of customers and between
Annual reports are produced which cover an assessment of the capital requirements of the life
customers, suppliers and shareholders.
assurance subsidiaries, their financial condition and a review of risk management and internal
No material conflicts of interest were noted in 2024.
control systems.
Furthermore, the divisions are required to submit a quarterly risk report and an annual report on risk
management and internal control systems.
CHESNARAANNUALREPORTANDACCOUNTS2024101
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
Employee engagement
Hybrid working arrangements are in place across the Group to the extent appropriate to each territory
appropriate. Shareholders are nonetheless encouraged to submit in advance any questions that they
and business unit. This hybrid flexibility has enabled the Group to attract candidates to new roles that
may have in order that the Chairs of the Board committees can answer them on the day.
otherwise might not have considered its main office locations.
Sustainability governance
The Board has a standard agenda item at each of its meetings to cover culture and stakeholder
Our third report covering the broad range of climate-related information to be disclosed under the
engagement, including workforce engagement. This has helped highlight workforce and other
four overarching pillars (Governance, Strategy, Risk Management and Metrics & Targets) of the
stakeholder matters as part of Board discussion and decision making. In addition, the designated
Taskforce for Climate-Related Financial Disclosure (TCFD) is contained on pages 68 to 91. This details
Workforce NED supports the Board’s ability to engage with the wider workforce as a two-way
the governance information required in accordance with recommendations of TCFD.
communications channel.
The Group Chief Executive Officer takes overall accountability for sustainability at group level, with
A full description of our employee engagement and well-being is provided in our corporate and social
the support of divisional CEOs, other executive management and a Group Sustainability Committee,
responsibility section on pages 70 to 72.
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
Customer/supplier engagement
and targets. The Board receives regular reporting on sustainability, including with regards to progress
The Board remains vigilant to ensure the importance of customer- and supplier- engagement remains
towards our targets and consideration of the Group climate change risk assessment (with support
high on the Group’s agendas.
from the Audit & Risk Committee). Further details of how we are embedding sustainability into our
Relations with shareholders
Governance Framework are included in our Annual Sustainability Report.
The Group Chief Executive and the Group Chief Financial Officer meet with institutional shareholders
Company Secretary
and are available for additional meetings when required. Should they consider it appropriate,
The directors had access to the advice and services of the Company Secretary throughout the year.
institutional shareholders are able to meet with the Chair, the Senior Independent Director and any
The Company Secretary is responsible for advising the Board on all governance matters.
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
Remuneration Committee
Officer and, with support from the Senior Independent Director as appropriate, is responsible for
Full details of the composition and work of the Remuneration Committee are provided on page 111.
ensuring that the views of shareholders are known to the Board. This includes twice yearly feedback
Audit & Risk Committee
prepared by the Company’s brokers on meetings that the executive directors have held with
Full details of the composition and work of the Audit & Risk Committee are provided on pages
institutional shareholders.
127 to 134.
The Company’s full year and interim results presentations are available as a webcast for all
Nomination & Governance Committee
shareholders and provides opportunities for investors to ask questions directly to senior management.
Full details of the composition and work of the Nomination & Governance Committee are provided
The Company also has a programme of meetings with its larger shareholders as managed by the
on pages 105 to 107.
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
The attendance record of each of the directors at scheduled board and committee meetings for the
programme continued during 2024, with meetings held both in person and virtually, as well as
period under review is:
engagement with prospective new investors and private client wealth managers. The Company
Nomination &
also meets with existing and prospective debt investors. These include specific meetings for the
Scheduled
Governance
Remuneration
Audit & Risk
debt investor community as well as ad hoc meetings arranged either directly or through investor
Board
1
Committee
Committee
Committee
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
Luke Savage Non-Executive Chair 11 (11) 4 (4) 5 (5) n/a
for investors which includes access to equity research. Management also undertake webinars on the
Steve Murray Executive Director 11 (11) n/a n/a n/a
Company’s prospects that are publicly available to private investors.
David Rimmington Executive
3 (3) n/a n/a n/a
Director
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
Jane Dale Non-Executive Director 11 (11) 4 (4) n/a 6 (6)
website, www.chesnara.co.uk.
Mark Hesketh Non-Executive
2 (2) 1 (1) n/a 2 (2)
Director
All shareholders are encouraged to attend the Annual General Meeting (‘AGM’) at which the results
Eamonn Flanagan Non-Executive
are explained and an opportunity is provided to ask questions on each proposed resolution.
11 (11) n/a 5 (5) 6 (6)
Director
At our AGM on 14 May 2024, all resolutions were passed, with votes for ranging from 92.74%
Karin Bergstein Non-Executive
11 (11) 4 (4) n/a 6 (6)
to 99.99% (votes against ranging from 0.01% to 7.26%). The lowest support (92.74%) was for
Director
Resolution 17, which authorises the directors to disapply pre-emption rights on share issuances
Carol Hagh Non-Executive
11 (11) 4 (4) 5 (5) n/a
relating to acquisition or other capital investments. Although there are currently no plans or intentions
Director
to issue shares in relation to acquisitions or other capital investments, the Board considers the
Tom Howard Executive Director 9 (9) n/a n/a n/a
resolution to seek such authority common market practice and it offers the Company flexibility
Gail Tucker non-executive director – (–) – (–) n/a – (–)
should the authority be required.
The figures in brackets indicate the maximum number of scheduled meetings in the period during which the
Our next AGM is to be held on 13 May 2025 and details of the resolutions to be proposed can be
individual was a Board or committee member.
found in the Notice of the Meeting on pages 253 to 259. It is intended that the meeting be held in
Note:
person, with the chairs of the Board and its committees available to answer such questions as
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
The Board is satisfied that the overall internal control framework has remained effective during the
effectiveness. In establishing the system of internal control, the directors have regard to the
year, that the group has responded appropriately to any risks or issues which have arisen, and that
significance of relevant risks, the likelihood of risks occurring and the methods and costs of mitigating
any control deficiencies identified are being appropriately addressed. Additionally, there are a number
risks. It is, therefore, designed to manage rather than eliminate the risks, which might prevent the
of live change programmes that exist across the Group. These include the planned migrations for
Company meeting its objectives and, accordingly, only provides reasonable, but not absolute,
the majority of the UK’s outsourced operations to SS&C and potential merger of our Dutch businesses.
assurance against the risk of material misstatement or loss.
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
In accordance with the FRC’s guidance on Risk Management, Internal Control and Related Financial
UK Operational Resilience, UK Third Party Risk Management and DORA.
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
Financial reporting
for the year under review and up to the date of approval of the Annual Report and Accounts.
Management is responsible for establishing and maintaining adequate internal controls over financial
The process is regularly reviewed by the Board and accords with the guidance.
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.
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
The Group has comprehensive planning, budgeting, forecasting and reporting processes in place.
that the identification, assessment and control of risk are firmly embedded within the organisation
A summary of the Group’s financial results supported by commentary and performance measures
and that there are procedures for monitoring and update of the same. The Audit & Risk Committee
is provided to the Board on a quarterly basis.
regularly reviews and reports quarterly on risks to the Board.
In relation to the preparation of the Group financial statements, the controls in place include:
The Group also maintains a principal risk register, which ensures identification, assessment and
– reviewing new developments in reporting requirements and standards to ensure that these are
control of the significant risks subsisting within the Company and its business units CA, Waard
reflected in group accounting policies; and
Group, Movestic and Scildon. The principal risks and uncertainties of the Group can be found on
– developing the Group’s financial control processes and procedures which are implemented across
pages 61 to 67.
the Group.
The maintenance of principal risk registers is the responsibility of senior management, who report
The reporting process is supported by transactional and consolidation finance software. Reviews
on them quarterly to the respective divisional Audit & Risk Committees and to each Chesnara Audit
of the application of controls for external reporting purposes are carried out by senior finance
& Risk Committee meeting.
management. The results of these reviews are considered by the Board as part of its monitoring
The divisions maintain a risk and responsibility regime, which ensures that:
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
– the Boards and Group Chief Executive have responsibility for ensuring that the organisation and
by management.
management of the operation are characterised by sound internal control, which is responsive to
internal and external risks and to changes in them;
Going Concern and Viability Statement
– the Boards have responsibility for the satisfactory management and control of risks through the
The Statement on Going Concern is included in the Directors’ Report on page 138 and the
specification of internal procedures;
Long-Term Viability Statement is set out on page 56.
– there is an explicit Risk function, which is supported by compliance; and
Financial crime and whistleblowing
– the Internal Audit functions provide independent assurance that the risk management, governance
Amongst others, the Company operates policies for anti-bribery & corruption as well as anti-fraud
and internal control processes are operating effectively.
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
At least quarterly principal and emerging risks are reported to the Board, assessing their proximity,
of wrongdoing or suspected wrongdoing with clear communication lines highlighted to enable
probability and potential impact. This has enabled the Board to carry out a robust assessment of
individuals to advise of their concerns in a safe and confidential manner; in this regard, an external
the Company’s emerging and principal risks.
whistleblowing line was established during the year. No instances of whistleblowing or financial
As an integral part of this regime, detailed risk registers are maintained to identify, monitor and
crime were noted during the year. These policies are all reviewed annually and staff are asked to attest
assess risk under appropriate classifications. It includes climate change risk.
to their embedding and understanding. A Gifts & Hospitality Register is maintained and no breaches
were recorded during the year.
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.
CHESNARAANNUALREPORTANDACCOUNTS2024103
NOMINA TION &
GOVERNANCE
COMMITTEE REPORT
104CHESNARAANNUALREPORTANDACCOUNTS2024
CORPORATE GOVERNANCE
The Nomination & Governance Committee considers the mix of skills and experience
The composition of the Board
that the Board requires to be effective and reviews talent development and succession
The committee has continued to focus on succession planning, with a view to maintaining an
planning across the Group.
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
Nomination & Governance Committee
future business and strategic direction of the Group.
During the period under review, the committee comprised Carol Hagh, who also served as Chair
During 2024 the committee finalised the process that led to Tom Howard’s appointment as the
of the committee from 9 April, Jane Dale, Luke Savage, and Karin Bergstein. Mark Hesketh served
Group’s Chief Financial Officer and as a director of the Company. It also determined the approach
as Chair of the committee until his resignation on 9 April 2024 to become Chair of our UK business
to allocating Company Secretary responsibilities upon the resignation of the Group General Counsel
unit, Countrywide Assured. No individual participated in discussion or decision making when the
& Company Secretary.
matter under consideration related to themselves.
The committee approved the appointment of Pauline Derkman as Chief Executive Officer and Edwin
The committee Chair reports material findings and recommendations from each meeting at the
Bekkering as Chief Financial & Risk Officer, of what will become the combined Scildon & Waard
next Board meeting.
business, subject to regulatory approval.
The Terms of Reference for the committee can be found on the Company website
The development of talent below Board level is vital. The Company continues to build an internal
www.chesnara.co.uk
leadership pipeline for senior roles to ensure that the necessary skills and experience exist within
the business.
The role of the Nomination & Governance Committee is to:
– keep under review the balance, structure, size, diversity and composition of the Board and its
Board appointment process
committees, ensuring that they remain appropriate;
The committee adopts a formal and transparent procedure for the appointment of new directors
to the Board.
– assess the independence of each NED and any circumstances that are likely to impair, or could
impair, their independence;
The Board’s typical process may include the use of independent external search firms for appointing
– be responsible for overseeing the Board’s succession planning requirements including the
directors. As part of the appointment process, these external advisors would be asked to provide
identification and assessment of potential Board candidates and making recommendations
candidates from a diverse range of backgrounds, from which we select a short list of candidates
to the Board for its approval;
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
– scrutinise and hold to account the performance of the executive directors against agreed
preferred candidate. Any candidate deemed suitable for appointment will provide references and,
performance objectives and advise the Remuneration Committee of their assessments;
if necessary, undergo the fit and proper assessment process as outlined in the FCA Senior Managers
– keep under review the leadership needs of, and succession planning for, the Group in relation
& Certification Regime (SMCR) prior to appointment.
to both its executive directors and other senior management;
The Board engaged the services of Teneo in its appointment of Tom Howard as a director of the
– identify and nominate, for the approval of the Board, candidates to fill Board vacancies as and
Company on 15 April 2024 and as Chief Financial Officer following the 2024 AGM.
when they arise;
– oversee the search process for new directors, recommending appointments to the Board; and
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
– evaluate the balance of skills, knowledge, experience and diversity of the Board.
contribution to the Company during her tenure. We are delighted to have announced Gail Tucker as
This includes consideration of recommendations made by the Group Chief Executive for changes
a new appointee to the Board and she brings a wealth of experience to the Group from her previous
to the executive membership of the Board.
role at PwC. The Board engaged the independent services of executive search firm, Lygon Group,
in Gail’s appointment.
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.
CHESNARAANNUALREPORTANDACCOUNTS2024105
CORPORATE GOVERNANCE
NOMINATION & GOVERNANCE COMMITTEE REPORT
Diversity
The committee is mindful of the corporate governance developments in the areas of diversity
In accordance with Listing Rule 6.6.6R(10), the following tables set out numerical data on the sex
and gender balance, including the requirements under the Disclosure and Transparency Rules.
and ethnic background of the Board and executive management as at 31 December 2024, with the
data collected from the individuals.
a) Gender reporting table
Number of
Number of senior
Number in
% of
Board
% of
positions on the Board
executive
executive
Gender
members
Board
(CEO, CFO, SID or Chair)
management
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
b) Ethnicity reporting table
Number of
Number of senior
Number in
% of
ONS ethnicity
Board
% of
positions on the Board
executive
executive
category
members
Board
(CEO, CFO, SID or Chair)
management
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
106 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Review of effectiveness
Directors standing for re-election
The Board recognises the benefits of having diversity across all
The Board and its committees undertook annual effectiveness
Jane Dale will stand down as a director at the Company’s AGM
areas of the Group – please see the equal opportunities section
reviews and the respective chairs discussed the findings in each
on 13 May 2025, at which time Gail Tucker will be put forward for
on page 70 for further detail. When considering the make-up of
forum. Other standard processes were also undertaken, including
election. In accordance with the Code, all other directors will
the Board, the benefits of diversity are reviewed and balanced
Fit & Proper assessments, Board Diversity Policy review, NED
offer themselves for re-election at that time. Following the annual
where possible and appropriate, along with the breadth of skills,
succession planning and the review of the effectiveness of the
Board effectiveness reviews of individual directors, as applicable
sector experience, gender, race, disability, age, nationality and
Chair. The evaluations did not identify any additional changes
and subject to re-election/election, the Chair considers that
other contributions that individuals may make. In identifying
needed to Board composition over and above those that had
each director:
suitable candidates, the committee seeks individuals from a range
been initiated.
– continues to operate as an effective member of the Board;
of backgrounds, with the final decision being based on merit
Areas where increased focus and/or action was considered to
– has the necessary skills, knowledge and experience to enable
against the role criteria set. Through its Board Diversity Policy,
be of potential value have either been addressed in 2024 or will
them to discharge their duties and contribute to the continued
the Board maintains its practice of embracing diversity and
be taken into account in 2025. The 2024 Board effectiveness
effectiveness of the Board; and
operates a measurable gender-based target of having at least
reviews were internally facilitated having been last led by an
40% representation of both male and female membership
– has sufficient time available to fulfil their duties.
external third party (Nasdaq Governance Solutions) in 2022.
on the Board by 31 December 2025 in recognition of the
The Board, on the advice of the Nomination & Governance
recommendations of the FTSE Women Leaders Review. We are
Succession planning
Committee, recommends the election- or re-election of each
pleased to report that during 2024 we met this target and, in
Succession planning is an important element of good governance,
director so proposed at the 2025 AGM. The full 2025 AGM
addition, have met the requirements under Listing Rule 9.8.6R
ensuring that Chesnara is fully prepared for planned or sudden
Notice can be found on page 253.
of having at least 40% female directors and we remain committed
departures from key positions throughout the Group. The
to continuous review and improvement of diversifying the Board,
committee, in the year, has reviewed the succession plans
senior management and the wider workforce. Since April 2024
for the Board and senior executives across the Group.
and throughout the majority of the financial year, the Board
Mindful of the need for effectiveness and engagement, the
comprised 42.9% female: 57.1% males in line with the Hampton-
committee through its ongoing review of Board and committee
Alexander Review target of 33% for FTSE 100 companies though
memberships determined that a number of changes were
a voluntary target for FTSE 350 organisations. In addition, the
appropriate as noted above. And the committee will continue
Company will target having a female appointee to at least one of
to also have efficiency and value in mind when determining
the key senior roles of Chair; Senior Independent Non-Executive
Carol Hagh
board membership and giving optionality for its longer-term
Director; Group CEO or Group CFO by 31 December 2025 and
Chair of the Nomination & Governance Committee
composition as the Group continues to change and succession
has met this target for a number of years. Actual levels of gender
26 March 2025
plans are effected.
diversity will be monitored and be reported in the Annual Report
and Accounts. The Board currently comprises four men and four
Non-executive director engagement
women with the role of Senior Independent Non-Executive
It is important to the Board that non-executive directors are
Director held by Jane Dale. It will comprise four men and three
provided with training and development both within the
women upon Jane Dale standing down after the 2025 AGM.
business and at a group level. The Board believes that on-going
Further details of our board’s diversity, including our approach
training is essential to maintaining an effective and knowledgeable
to collecting data, can be found on page 71 of the Strategic
board. The Company Secretary supports the Chair in ensuring
Report.
that all new directors receive a tailored and comprehensive
induction programme on joining the Board. Continuing education
Further, Chesnara has determined that it will ensure that it
and development opportunities are made available to all board
continues to meet the measurable target of having at least one
members throughout the year. In 2024, a number of development
director from an ethnic minority on the Board in line with the
initiatives have continued, these included one-to-one sessions
Parker Review. In consideration of the longer term, the Board
with key members of the senior management team and training
has discussed increasing its range of knowledge and experience
sessions given by external providers.
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.
CHESNARAANNUALREPORTANDACCOUNTS2024107
We seek to achieve
strong alignment
between the interests
of stakeholders and
executive directors.
EAMONN FLANAGAN, CHAIR
REMUNERA TION
COMMITTEE
ANNUAL STATEMENT
108CHESNARAANNUALREPORTANDACCOUNTS2024
CORPORATE GOVERNANCE
Dear Investor
Executive performance in 2024
On behalf of the Board and its Remuneration Committee (‘committee’), I am pleased to present
Executive director remuneration outcomes for 2024
the Directors’ Remuneration Report for the year ended 31 December 2024, for which we seek
In light of the performance of the executive team relative to the financial targets and strategic
shareholder support at our forthcoming Annual General Meeting.
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,
Summary of the year
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.
Chesnara has a very clear strategic focus across three key areas:
1. Maximising value from our existing business;
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
2. Acquiring life and pension businesses that meet the strategic criteria of the Company; and
acquisition strategy created £11m of incremental Economic Value during the year, the committee has
3. Enhancing value through profitable new business generation.
applied no discretion in its assessment of the STIS outcome.
These three strategic objectives are underpinned by the culture, values and risk appetite of the
The committee has reviewed the position of the 2022 LTIP ahead of vesting and is satisfied that no
Group, which looks to deliver positive investment returns and value for money for our customers.
windfall gains have occurred and that no adjustment is required on vesting. Further, the committee
From a remuneration perspective, we seek to achieve strong alignment between the interests
reviewed underlying financial, operational and risk performance of the business over the relevant
of stakeholders and executive directors and continue to operate two executive incentive schemes:
performance periods and was satisfied that outcomes were a fair reflection of performance achieved
the Short-Term Incentive Scheme (STIS) and Long-Term Incentive Plan (LTIP).
and therefore applied no further adjustment to the formulaic outcomes.
As covered in the financial report, we have seen further excellent delivery on our key performance
New Group Chief Financial Officer (‘Group CFO’)
metrics in the year:
In December 2023, we announced that David Rimmington had agreed with the Board that he would
†
1. Commercial Cash Generation
of £60m, showing that the Group continues to deliver cash
not seek re-election at the Company’s Annual General Meeting (‘AGM’) in 2024 and that he would
generation through a wide variety of market conditions.
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
2. EcV
increased by £43m before the impact of dividend distributions of £37m, demonstrating
incoming Group Chief Financial Officer Tom Howard.
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
As set out in last year’s Directors’ Remuneration Report, David has been treated as a good leaver in
well placed to execute M&A as opportunities are created or emerge.
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
4. New Business Contribution of £9m, further supplementing the Group’s EcV and
the period of the year David worked. Awards will continue to be subject to the original performance
demonstrating a recurring and sustainable source of value to the Group.
targets and there will be no acceleration of vesting.
5. Acquisition strategy saw the completion of the second Canada Life transaction in
December 2024.
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
6. An increase in dividend of 3% retaining our track record of growing the full year dividend
AGM. The structure of Tom’s remuneration is the same as that provided to his predecessor, with an
every year for the last 20 years.
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.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
109
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT •
REMUNERATION COMMITTEE CHAIR’S ANNUAL STATEMENT
Implementation of pay in 2025
Shareholder engagement
In line with our Remuneration Policy, it is our normal practice to award executive directors,
The Directors’ Remuneration Report for the year ended 31 December 2024 comprises my Annual
and indeed all employees, an annual salary increase broadly in line with inflation. In 2025, UK
Statement as Chair of the Remuneration Committee and our Annual Remuneration Report, which
employees below executive level received an average salary increase of 2.5%. The Group CEO
together are subject to an advisory shareholder vote at the AGM in May 2025.
was awarded a 2.1% increase and the Group Chief Financial Officer a 2.0% increase.
The voting outcome at the 2024 AGM in respect of the Directors’ Remuneration Report for the year
It is intended that the grants be made in the STIS and LTIP schemes and that quantums and
ended 31 December 2023 and the Remuneration Policy is set out on page 126 and reflects the
performance measures remain unchanged from those of 2024. In line with the approved
support of both private and institutional shareholders. The committee will continue to be mindful
Remuneration Policy, the CEO and CFO will be eligible for an STIS opportunity of 100% of salary.
to the interests of shareholders.
The metrics (cash generation, EcV and personal strategic measures) and weightings will be
I hope that my annual statement, together with our Remuneration Report, provides a clear
unchanged from 2024, with the committee of the view that the metrics remain well aligned
account of the operation of the Remuneration Committee during 2024 and how we have put our
to Chesnara’s key strategic aims. Similarly, the LTIP too will remain consistent with that of 2024
Remuneration Policy into practice. As Chair of the Remuneration Committee, I look forward to
and the Group CEO will be awarded a 125% of salary grant and the Group CFO a 100% grant.
engaging with you on our activities and decisions. As this year progresses, we will commence
The executive directors’ remuneration for 2025 can be found on page 123.
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
Non-executive director fees
shareholders, as we consult on any material changes that we determine to be appropriate.
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
Eamonn Flanagan
are kept informed and their views are considered on key subject matters. The committee engaged
Chair of the Remuneration Committee
with staff sitting in both Chesnara plc and our UK business unit on the components of the Group’s
26 March 2025
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.
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:
Committee
Role on the
Committee
Attendance
Maximum possible
members
1
committee
member since
in 2024
meetings in 2024
Luke Savage Committee member February 2020 5 5
Notes.
1. By invitation, the Group CEO and Group Chief of Staff attended the Remuneration Committee, as under their
Eamonn Flanagan
2
Committee Chair July 2020 5 5
role did the Group General Counsel & Company Secretary but none were present when matters relating to
their own remuneration were discussed.
Carol Hagh Committee member February 2022 5 5
2. Eamonn Flanagan joined the committee in July 2020, and was appointed Chair on 15 January 2022.
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:
Area of focus Matter considered
Executive director
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
remuneration
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.
and reward
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
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.
executive remuneration
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
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
Remuneration Policy
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
The committee reviewed the draft Directors’ Remuneration Report for the 2023 Report and Accounts and recommended its approval by the Chesnara Board.
Reporting
Performance against
The committee reviewed the executive directors’ performance against objectives set.
strategic objectives
Shareholder
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
engagement
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.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
111
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
Salary
All taxable
Non-taxable
Total for
and fees
Pension
3
benefits
1
benefits
STIS
LTIP
2+4
Buy-out
2024
Fixed
Variable
Name of director
£000
£000
£000
£000
£000
£000
awards
8
£000
£000
£000
Steve Murray
5
525 45 21 5 501 280 – 1,377 596 781
Tom Howard
6
253 19 1 1 238 – 665 1,177 274 903
David Rimmington
7
118 11 20 2 111 – – 262 151 111
Total 896 75 42 8 850 280 665 2,816 1,021 1,795
Executive directors’ remuneration as a single figure – year ended 31 December 2023
Salary
All taxable
Non-taxable
Total for
and fees
Pension
3
benefits
1
benefits
STIS
LTIP
2+4
Buy-out
2023
Fixed
Variable
Name of director
£000
£000
£000
£000
£000
£000
awards
8
£000
£000
£000
Steve Murray
5
458 39 21 8 439 217 – 1,182 526 656
Tom Howard
6
– – – – – – – – – –
David Rimmington
7
315 30 41 8 299 102 – 795 394 401
Total 773 69 62 16 738 319 – 1,977 920 1,057
Notes:
1. Includes amounts paid in lieu of accrued dividends and interest arising upon the exercise of share options under
4. No portion of the LTIP single figure value in relation to the 2022 LTIP award is attributable to share price growth.
the 2014 STIS.
5. This vesting outcome of the 2022 LTIP award has been applied to the average share price between 1 October
2. Includes amounts paid in lieu of accrued dividends and interest arising upon the exercise of share options under
2024 and 31 December 2024 (255.5p) to produce the estimated LTIP figures shown for 2024 above. There will
the 2014 LTIP.
be a true-up based on the actual share price on the day of vesting which will be shown in the 2025 Annual Report
3. The pension component in the single figure table represents employer contributions. No directors were members
and Accounts.
of a defined benefit scheme. The executives can participate in a defined contribution pension scheme at the same
6. Tom Howard joined as an executive director on 15 April.
level as all employees with employer contributions currently being 9.5% of basic salary. If pension limits are
7. David Rimmington stood down as a director on 14 May 2024.
reached, the executive may elect to receive the balance of the contribution as cash.
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.
112
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
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:
Non-executive directors’ remuneration as a single figure – year ended 31 December 2024 and 2023
2024
2023
Fees
Benefits
Total
Fees
Benefits
Total
Name of director
£000
£000
£000
£000
£000
£000
Luke Savage
147
–
147
135
–
135
Eamonn Flanagan
75
–
75
70
–
70
Jane Dale
83
–
83
75
–
75
Mark Hesketh
1
19
–
19
70
–
70
Carol Hagh
74
–
74
65
–
65
Karin Bergstein
67
–
67
65
–
65
Total 465 – 465 480 – 480
Notes.
1. Mark Hesketh stood down as a director on 9 April 2024.
Salary and fees
The Remuneration Committee usually reviews basic salaries annually. Assessments are made
UK employee share ownership is encouraged and facilitated through participation in the
giving full regard to external factors such as earnings inflation and industry benchmarks and
SAYE Scheme.
to internal factors such as changes to the role by way of either structural reorganisations or
The committee engaged directly with employees on the alignment of directors’ pay with UK
enlargement of the Group. In addition, basic pay levels reflect levels of experience. The single
employees, including with regard to the proposed 2025 salary increase.
earnings figures demonstrate the application of this assessment process.
Taxable benefits
The Remuneration Policy for the executive directors is designed with regard to the policy for
The taxable benefits for executive directors relate to the provision of a car, fuel allowance and
employees across the Group as a whole. Our ability to meet our growth expectations and
medical insurance. For non-executive directors, the taxable benefits represent the reimbursement
compete effectively is dependent on the skills, experience and performance of all our employees.
of travelling expenses incurred in attending board meetings at the Preston head office. These
Our employment policies, remuneration and benefit packages for employees are regularly
amounts also include an amount to compensate for the personal tax burden incurred.
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.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
113
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
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.
Actual
Percentage
Percentage
Percentage
percentage
award for
award for
award for
Actual
award, as
Threshold
threshold
On target
on target
Maximum
maximum
Actual
percentage
percentage
Total
performance
performance
performance
performance
performance
performance
result
total award
of salary
award (£)
Steve Murray
1
£15.6m
0%
£19.5m
1
Cash generation
25.0%
£25.4m
35.0%
£66.4m
1
35.0%
35.0%
183,750
Total EcV Earnings
2
£14.5m
0%
£20.8m
25.0%
£31.2m
35.0%
£82.4m
35.0%
35.0%
183,750
Group strategic
75%
0%
100%
15.0%
125%
30.0%
85.0%
25.5%
25.5%
133,696
objectives
of max
Total 65.0% 100.0% 95.5% 95.50% 501,196
Tom Howard
3
Cash generation
1&3
£15.6m
0%
£19.5m
1
25.0%
£25.4m
35.0%
£66.4m
1
35.0%
35.0%
86,771
Total EcV Earnings
2&3
£14.5m
0%
£20.8m
25.0%
£31.2m
35.0%
£82.4m
35.0%
35.0%
86,771
Group strategic
75%
0%
100%
15.0%
125%
30.0%
87.3%
26.2%
26.2%
64,820
objectives
of max
Total 65.0% 100.0% 96.2% 96.2% 238,362
David Rimmington
4
Cash generation
1&4
£15.6m
0%
£19.5m¹
25.0%
£25.4m
35.0%
£66.4m¹
35.0%
35.0%
45,984
Total EcV Earnings
2&4
£14.5m
0%
£20.8m
25.0%
£31.2m
35.0%
£82.4m
35.0%
35.0%
45,984
Group strategic
75%
0%
100%
15.0%
125%
30.0%
80.5%
24.1%
24.1%
31,672
objectives
of max
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
3. The award is pro-rata to the number of months in the role from the date of appointment on 15 April 2024.
in the same manner.
4. The award is pro-rata to the number of months in the role up to the date of termination on 31 May 2024.
2. The total EcV Earnings before exceptional items on page 51 has been adjusted in line with the basis of the target.
†
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.
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
Set clear direction for, and ensure efficient delivery
UK Consumer Duty July deadline met with fully-funded plan in place. Regulatory relationships remain positive
delivery (25%)
by, business units across Chesnara.
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
Improve external and internal communications
Further simplification of investor presentation including more focus on smaller range of metrics with positive
and culture (10%)
with key stakeholders.
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
Proactively identify and execute value
A busy year of opportunity assessment and further development of relationships with potential partners.
M&A (35%)
enhancing M&A.
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
Further action taken across the wider Group SLT including responding to leavers. New Group CFO onboarded and
the talent pool across Chesnara.
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
ISS governance score improved materially. Further work conducted to improve wider sustainability ratings.
environmental/climate, people and sustainability
Targets published and CEO sustainability group formed with transition plans tabled for 2025. On track to meet
policies and practices, for the benefit of our
external targets.
customers, shareholders, staff, suppliers and other
stakeholders, which respond to regulatory and
ESG assessment formally part of M&A process with MSCI tooling used.
non-regulatory guidance and industry practice.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
115
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
Complete a smooth and measured transition
Successful handover and a smooth transition into the Chesnara Group CFO.
responsibilities to Group
of Group FD responsibilities.
Onboarding plan met in full with meetings held with individual SLT members, divisional ExCo members, Board,
CFO (15%)
AR&C members and external audit partners.
Developed understanding of Group strategy and broader operational issues quickly and effectively.
Business planning &
Planning and leading delivery of 2025 business
2024 H1 results delivered in line with planned timelines.
performance and 2024
plan and the HY 2024 year end across Group
Improvement in the timeliness of the HY reporting process versus 2023.
interim reporting (30%)
and divisions including associated investor
communication.
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
Proactive approach to capital management across the BUs, mainly through the inclusion of management actions
sheet including in support of M&A.
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
Improved ways of working across the Group Finance team and successful separation of the Group Financial
improve ways of working with divisions.
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
ESG requirements included within M&A assessments and TCFD reporting requirements.
environmental/climate, people and sustainability
Investment considerations included with the Group Investment Committee TORs.
policies and practices, for the benefit of our
customers, shareholders, staff, suppliers and other
ESG reporting requirements embedded withing TCFD processes.
stakeholders, which respond to regulatory and
non-regulatory guidance and industry practice.
David Rimmington
Transition of Group FD
Proactively support a smooth and measured
Helped support transition of CFO responsibilities in a timely manner including facilitation of meetings with
responsibilities (20%)
transition of GFD responsibilities.
appropriate team members and wider stakeholders.
Full, effective and appropriate engagement with team through transition.
2024 financial year end
Planning and leading delivery of 2024 year end
FY 2023 results delivered in line with plans.
(40%)
including associated investor communication.
Strong support provided for investor roadshow.
Balance sheet (15%) Proactive management of the Group’s balance
Supported early year work on management actions which has ultimately led to FX hedge and mass lapse in the UK
sheet including in support of M&A.
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
Annual Sustainability Report delivered to a high standard.
environmental/climate, people and sustainability
Good progress made regarding disclosure with a strong continuous improvement philosophy adopted.
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.
116
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
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:
Name of
Salary on which award is based
Maximum potential award
Actual award
Total value of award
director
£
as % of salary
as % of salary
£
Steve Murray
525,000
100.00%
95.47%
501,196
Tom Howard
247,906
100.00%
96.15%
238,362
David Rimmington
131,378
100.00%
94.11%
123,640
Total 863,198
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
Performance
% of award
Value of
Threshold Maximum
achieved
vesting
award £
Steve Murray Award 1
Personal performance
100%
n/a
n/a
n/a
100.0%
83,054
Award 2
TSR
50%
0.0%
23.0%
17.4%
38.2%
144,284
Award 2
EcV
†
50%
£639.3m
£656.0m
£531.0m
0.0%
nil
David Rimmington TSR
50%
0.0%
23.0%
17.4%
38.2%
100,299
†
EcV
50%
£639.3m
£656.0m
£531.0m
0.0%
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.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
117
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
The table below sets out potential LTIP interests that have accrued during the year, and each directors’ interest in that scheme:
Face value on the
% of award
Length of vesting
Name of
Date award
Amount of
date of grant
2
vesting for minimum
period – 3 years
executive director Name of scheme
was granted
options awarded
1
(based on share price)
performance
Date of vesting
Steve Murray 202 3 LTIP 02 April 2024 249,525 £525,000 (263.00p) 10.4% 02 April 2027
3
2023 LTIP 06 July 2023 210,386 £457,800 (272.00p) 10.4% 06 July 2026
3
2014 LTIP 28 April 2022 147,627 £420,000 (284.50p) 10.4% 28 April 2025
3
Tom Howard 2023 LTIP 16 April 2024 135,135 £350,000 (259.00p) 10.4% 16 April 2027
3
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
2014 LTIP 06 July 2023 115,927 £315,321 (272.00p) 8.3% 06 July 2026
3
Rimmington
2014 LTIP 28 April 2022 105,556 £300,306 (284.50p) 10.0% 28 April 2025
3
2014 LTIP 28 April 2021 94,502 £259,882 (275.00p) 10.0% 28 April 2024
3
2014 LTIP 28 April 2020 81,213 £259,882 (320.00p) 10.0% 28 April 2023
3
2014 LTIP 28 April 2019 71,070 £254,785 (358.50p) 10.0% 28 April 2022
3
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
3. LTIP awards from 2019 onwards are subject to a two-year holding period
on vesting.
in addition to the three-year performance period.
Basis of awards and summary of performance measures
Awards granted under the 2023 LTIP: 33.3% will vest at
EcV growth target
and targets 2014 LTIP and 2023 LTIP:
maximum for TSR performance 6% per annum higher than the
Awards granted under the 2014 LTIP: 50% of the award
Share options awarded are based on the share price at close of
median Company in the comparator group over the performance
will vest subject to the EcV outcome being within a certain
business on date of award and a percentage of basic salary, that
period with this calibration aiming to ensure that a maximum
range of its target.
being Steve Murray 100% in 2022 and 125% in both 2023 and 2024;
pay-out is achieved for performance comparable to the upper
Awards granted under the 2023 LTIP: 33.3% of the award
and David Rimmington 75% in 2014 and 2015, 90% in 2016 to 2021
quartile of life insurance peer companies. The calibration of
will vest subject to the EcV outcome being within a certain range
and 100% in 2022 and 2023. Options have a nil exercise price.
threshold is unchanged such that Chesnara must perform as
of its target.
a minimum at the median of the comparator group for any payout
Total Shareholder Return
to be achieved subject to the TSR target being in a certain range,
Commercial Cash Generation
Awards granted under the 2014 LTIP: 50% of the awards will
with the range being the ranking of the TSR of Chesnara against
2023 Awards granted under the 2023 LTIP: 33.3% of the
vest subject to the TSR target being in a certain range, with the
the TSR of the individual companies in the FTSE 350 Higher Yield
award will vest subject to the Commercial Cash outcome
range being the ranking of the TSR of Chesnara against the TSR
Index at the start of the performance period. The award will be
being within a certain range of its target.
of the individual companies in the FTSE 350 Higher Yield Index.
made on a sliding scale from nil if the Chesnara TSR is below the
The award will be made on a sliding scale from nil if the Chesnara
median to full if the Chesnara TSR is in the upper quartile.
TSR is below the median to full if the Chesnara TSR is in the
upper quartile.
118 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Core Surplus Emergence
Payments to past directors (audited information)
2024 Awards granted under the 2023 LTIP: 33.3% of the
No payments were made during the year to past directors.
on 15 April 2024. When the minimum holding level has not been
award will vest subject to Core Surplus Emergence outcome
achieved, directors may only dispose of shares where funds are
Statement of directors’ shareholding and share interests
being within a certain range of its target. Core Surplus Emergence
required to discharge any income tax and National Insurance
(audited information)
is defined as the absolute surplus movement of the divisions
liabilities arising from awards received from a Chesnara incentive
The Remuneration Policy requires executive directors to
including Chesnara entity but adjustments will be made for the
plan. The Chair and non-executive directors are encouraged to
build up a shareholding through the retention of shares. For
impact of items such as FX, T2/T3 restrictions, acquisition
hold shares in the Company but are not subject to a formal
executives who joined Chesnara before 1 May 2021 (i.e. David
impacts and shareholder dividends as deemed appropriate.
shareholding guideline.
Rimmington), their minimum is 100% of basic salary but with
Payments for loss of office (audited information)
a 200% of salary shareholding requirement (including a provision
The following table shows, in relation to each director, the total
The following payments were made to Dave Rimmington during
for this to be held for the full 2 years in a post-employment
number of share interests with and without performance
the year for loss of office:
scenario) applying to all future awards granted from 2023 onward.
conditions, the total number of share options with and without
For executives joining from 1 May 2021 (i.e. Steve Murray and
performance measures, those vested but unexercised and those
Tom Howard) the minimum is 200% of salary. Steve Murray who
exercised at 31 December 2024 or the date of resignation.
Remuneration type Amount (£000)
joined on 2 August 2021 has not yet met this requirement albeit
No changes took place in the interests of the directors between
has continued to acquire shares in 2024 outside the LTIP
Salary and fees 195
31 December 2024 and 26 March 2025.
programme. Similarly, nor has Tom Howard who joined Chesnara
Pension 17
Shares held Options
Taxable benefits 9
With
Without
Exercised
Percentage of
Non-taxable benefits 4
Name of
1 January
31 December
performance
performance
Vested but
during
shareholding
director
2024
2024
measures
measures
1
unexercised
the year
target held
2
Annual bonus 13
Steve Murray 147,248 219,946 607, 538 106,603 29,525 80,420 146.5%
2022 LTIP award 125
Tom Howard – 10,000 498,230 9,084 – – 14.4%
Total payments for loss of office 363
David
140,919 167,754 221,483 99,249 – 51,737 186.5%
Notes.
Rimmington
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
Luke Savage 30,000 30,000 – – – – –
value on vesting.
3. LTIP awards from 2019 onwards are subject to a two-year holding period
Jane Dale 3,333 3,333 – – – – –
in addition to the three-year performance period.
For all of the above items of remuneration, with the exception
Eamonn
30,000 30,000 – – – – –
Flanagan
of the LTIP award, the figures represent the amounts paid to
Dave Rimmington from the point he stood down as a director
Carol Hagh 10,000 30,000 – – – – –
(14 May 2024) to his final termination date (5 December 2024).
The amount awarded under the 2022 LTIP is based upon Dave
Karin
– – – – – – –
Rimmington being classed as a ‘good leaver’ under the rules of
Bergstein
3
the scheme and is pro-rated based upon the percentage of the
performance period in which Dave held the office of director.
Gail Tucker
4
– – – – – – –
This includes the period from 1 January 2022 to 14 May 2024,
the date upon which he stood down as acting director.
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
2. Calculated using the share price of 264.50p at 31 December 2024.
not include the share options that will be awarded as part of the
3. As a Netherlands national, Karin Bergstein is not permitted by the Dutch
mandatory deferral rules under the 2023 STIS in respect of awards made
Central Bank (‘De Nederlandsche Bank’) to hold shares in a Company
in relation to the 2023 financial year, which equate to 35% of the cash
of which she is a director.
award under this scheme. The timetable for the administration of the
4. Gail Tucker became a director on 29 January 2025.
scheme means that these will be reported in the 2025 Annual Report
and Accounts.
†
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.
CHESNARAANNUALREPORTANDACCOUNTS2024119
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
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.
Number of
Number of
shares
Number
shares under
under
Number
Number
waived/
option and
Name of
Steve Murray
Tom Howard
option at
granted
exercised
lapsed
unexercised at
End of
Date of
executive
David Rimmington
Grant
Exercise
1 January
during
during
during
31 December
performance
Performance
expiry of
director Scheme
date
price (p)
2024
year
year
year
2024
period Vesting date
period
option
2023 LTIP
02/04/24
Nil
–
249,525
–
–
249,525
31/12/26
02/04/27
3 Years
02/04/34
(2024 award)
2023 LTIP
06/07/23
Nil
210,386
–
–
–
210,386
31/12/25
06/07/26
3 Years
06/07/33
(2023 award)
2014 LTIP
28/04/22
Nil
147,627
–
–
–
147,627
31/12/24
28/04/25
3 Years
28/04/32
(2022 award)
2014 LTIP
26/11/21
Nil
140,105
–
(46,795)
(93,310)
–
31/12/23
28/04/24
3 Years
26/11/31
(2021 award)
2014 LTIP
26/11/21
Nil
33,625
–
(33,625)
–
–
31/12/23
30/06/24
3 Years
26/11/31
(2021 award)
2023 STIS
02/04/24
Nil
–
58,484
–
–
58,484
n/a
02/04/27
n/a
02/04/34
(2024 award)
2023 STIS
31/05/23
Nil
39,953
–
–
–
39,953
n/a
31/05/26
n/a
31/05/33
(2023 award)
2014 STIS
28/04/22
Nil
29,525
–
–
–
29,525
n/a
28/04/25
n/a
28/04/32
(2022 award)
Share save
01/12/22
220.40
8,166
–
–
–
8,166
n/a
01/12/25
n/a
01/06/26
609,387 308,009 (80,420) (93,310) 743,666
2023 LTIP
16/04/24
Nil
–
135,135
–
–
135,135
31/12/26
16/04/27
3 Years
16/04/34
(2024 award)
Buy-out plan
15/05/24
Nil
–
75,397
–
–
75,397
15/05/27
15/05/27
3 Years
15/05/34
Buy-out plan
15/05/24
Nil
–
99,206
–
–
99,206
15/05/26
15/05/26
2 Years
15/05/34
Buy-out plan
15/05/24
Nil
–
188,492
–
–
188,492
15/05/25
15/05/25
1 Years
15/05/34
Share save
25/10/24
204.20
–
9,084
–
–
9,084
n/a
01/12/27
n/a
01/06/28
– 507,314 – – 507,314
2023 LTIP
06/07/23
Nil
115,927
–
–
(41,863)
74,064
31/12/25
06/07/26
3 Years
06/07/33
(2023 award)
2014 LTIP
28/04/22
Nil
105,556
–
–
(2,933)
102,623
31/12/24
28/04/25
3 Years
28/04/32
(2022 award)
2014 LTIP
28/04/21
Nil
94,502
–
(32,934)
(61,568)
–
31/12/23
28/04/24
3 Years
28/04/31
(2021 award)
2023 STIS
02/04/24
Nil
–
39,807
–
–
39,807
n/a
02/04/27
n/a
02/04/34
(2024 award)
2023 STIS
31/05/23
Nil
28,115
–
–
–
28,115
n/a
31/05/26
n/a
31/05/33
(2023 award)
2014 STIS
28/04/22
Nil
31,327
–
–
–
31,327
n/a
28/04/25
n/a
28/04/32
(2022 award)
2014 STIS
28/04/21
Nil
18,803
–
(18,803)
–
–
n/a
28/04/24
n/a
28/04/31
(2021 award)
394,230 39,807 (51,737) (106,364) (275,936)
120 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Performance graph and CEO
120
Chesnara – Total Shareholder Return, rebased
remuneration table
FTSE 350 Higher Yield – Total Return Index, rebased
The following graph shows the
100
FTSE UK Life Insurance – Total Return Index, rebased
Company’s performance compared
80
with the performance of the FTSE
350 Higher Yield Index and the
60
FTSE UK Life Insurance Index.
The FTSE 350 Higher Yield Index
40
has been selected since 2014 as
a comparison because it is the
20
index used by the Company for
the performance criterion for
0
its LTIP, and the FTSE UK Life
Insurance Index has been selected
-20
due to Chesnara’s inclusion within
-40
this Index.
-50
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
Dec
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
The table sets out the details for the director undertaking the role of Group CEO:
Group CEO single figure
Long-term incentive
Individual performing
of total remuneration
STIS pay-out
vesting rates against
Year
Group CEO role
£000
against maximum
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
Notes.
1. Steve Murray joined Chesnara on 2 August 2021 and was appointed
TSR Index
4. During 2023, Steve Murray had two LTIP awards that vested, with one
Group CEO on 19 October 2021.
vesting at 100% and the other vesting at 43.65%. The figure reported
2. John Deane was appointed Group CEO on 1 January 2015 and stood
above is a combined percentage, based upon the total number of shares
down on 18 October 2021.
vesting under both grants.
3. During 2022, Steve Murray had two LTIP awards that vested, one
5. During 2024, Steve Murray had two LTIP awards that vested, with one
at 100% and the other at 33.40%. The figure reported above is a
vesting at 100% and the other vesting at 38.25%. The figure reported
combined percentage, based upon the total number of shares vesting
above is a combined percentage, based upon the total number of shares
under both grants.
vesting under both grants.
CHESNARAANNUALREPORTANDACCOUNTS2024121
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
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
David
Tom
in remuneration
Group
Rimmington
Howard
Luke
Jane
Eamonn
Mark
Carol
Karin
Group
CEO
(Group FD)
(Group CFO)
2
Savage
Dale
Flanagan
Hesketh
Hagh
Bergstein
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
1
All taxable benefits – (29.3)
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 – 173.4
1
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 162.5
1
(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 – 300.0
1
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
20.3
1
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
2. The title Group Finance Director was updated to the title of Group Chief Financial Officer with the appointment
of share options under the 2014 and 2023 STIS for the Group CEO and Group FD/CFO. For the non-executive
of Tom Howard in 2024. The title has been retrospectively updated for prior years to aid comparison.
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.
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
The analysis is then presented to show the ratio of the Group CEO’s 2024 single total figure
(Miscellaneous Reporting) Regulations 2018. This analysis has been conducted using
of remuneration to the:
‘Option A’ as set out in the Regulations, consistent with prior years, and has consisted of:
– Median (i.e. 50th percentile) FTE remuneration of our UK employees;
– Determining the total FTE remuneration of all UK employees for the 2024 financial year;
– 25th percentile FTE remuneration of our UK employees; and
– Ranking all those employees based on their total FTE remuneration from low to high; and
– 75th percentile FTE remuneration of our UK employees.
– Identifying the employees whose remuneration places them at the 25th, 50th (median) and
75th percentile points of this ranking.
122 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Comparison
Group CEO 25th percentile
Median pay ratio
75th percentile pay
+7%
of total
pay ratio (FTE UK
(FTE UK
ratio (FTE UK
174.6
remuneration
employees total
employees total
employees total
162.5
remuneration)
remuneration)
remuneration)
2024 2023
£ £ 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
+4%
+3%
36.9
37. 3
35.4
36.1
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.
Total employee pay
BusinessacquisitionandDividends
Over the longer term, the Group CEO pay ratios have moved broadly in line with the Group CEO’s
maintenance expenditure
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
Statement of Implementation of Remuneration Policy in the following financial year
junior colleagues (consistent with our reward policies), and this means the ratio is likely to fluctuate
The following states how remuneration will be implemented for the executive and non-executive
depending on the performance of the business and associated outcomes of incentive plans and
directors in 2025.
historically buy-out awards in each year.
Salaries and fees
Furthermore, the committee is satisfied that our pay and broader people policies drive the right
Will be set in accordance with the Company’s policy.
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.
Executive directors
Steve Murray (Group CEO) received a 2.1%. Tom Howard received a 2.0% uplift. UK employees
Relative importance of spend on pay
below executive level received an average salary increase of 2.5%.
The following graph shows the actual expenditure of the Group and change between the current and
previous years.
Non-executive directors
The Chair’s fee has been increased by 2.5%, with positioning remaining around the lower quartile
The graph shows a comparison of total employee pay and shareholder dividends with the Group’s
of the FTSE Small Cap and as decided by the other non-executive directors. The fee level for other
total acquisition and maintenance expenditure (which consists of administration expenses and costs
non-executive directors reflects an unchanged base fee and then role-specific uplifts and have been
associated with the acquisition of new business). This has been chosen as a comparator to give an
set by the Chair in discussion with the Group CEO and increased by different levels in parallel with
indication of the employee pay relative to the overall cost base. As can be seen, the total employee
a review of individual responsibilities. Individual non-executives have received fee increases of
pay is a relatively small component.
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.
CHESNARAANNUALREPORTANDACCOUNTS2024123
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
The table below sets out the anticipated payments for 2025:
Notes
Fees
Benefits
1
Total
1. Benefits shown here mainly relate to expenses grossed up for income tax, which is settled by the Company for
£000
£000
£000
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.
Luke Savage
150.7
1.0
151.7
2. Jane Dale’s fee is shown proportionately to the point she stands down as a director at the 2025 AGM.
Eamonn Flanagan
77. 5
1.0
78.5
Jane Dale
2
31.9
0.5
32.4
Carol Hagh
75.6
1.0
76.6
Karin Bergstein
69.0
10.0
79.0
Gail Tucker
73.0
1.0
74.0
Total 477.7 14.5 492.2
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
Target
Maximum
achievement (as
achievement
achievement (as %
Minimum
Target
Maximum
% of target)
(as % of target)
of target)
achievement
achievement
achievement
Steve Murray &
Cash generation
35.0%
70.0%
100.0%
130.0%
nil
25.0%
35.0%
Tom Howard
EcV Earnings
35.0%
70.0%
100.0%
150.0%
nil
25.0%
35.0%
Strategic Scorecard Activity
30.0%
75.0%
100.0%
125.0%
nil
15.0%
30.0%
of which ESG is 5%
The STIS will be implemented and operated by the Remuneration Committee as set out within
The objectives assigned to each executive director are relevant to their roles and include major
the policy.
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
Measures
weighting’ influenced by factors such as business criticality, scale, complexity and level of executive
Following review by the Remuneration Committee, changes were approved for 2019 onwards
director influence. Developments with a higher significance are weighted more heavily when
to remove the IFRS component used in prior years and base performance assessment on cash
establishing the overall performance target.
†
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,
Targets
to encourage sensible executive behaviour and better reflect an overall assessment of Company
The cash generation and EcV Earnings targets are initially based on the latest budget which is
financial performance. For 2023, group strategic objectives remained weighted 30% of the total to
produced annually as part of the Group business planning process. The Group business plan is
ensure that a sufficient proportion of the bonus potential was attributed to good strategic outcomes,
subject to rigorous Chesnara Board scrutiny and approval. The Remuneration Committee can make
including 55 in relation to ESG. Our assessment measures continued to ensure there was a balance
discretionary adjustments to either the targets or to the actual results for the year if it considers
between aligning executive director remuneration to shareholder returns whilst also recognising
this to be appropriate, in accordance with the scheme rules.
measures over which the directors can exercise more immediate and direct influence. The financial
Malus and clawback
measures are recognised outputs from the audited year end financial statements, although it should
The 2023 Scheme includes malus and clawback provisions covering a material misstatement of the
be noted that the Remuneration Committee is, in accordance with the policy, able to make
Company’s results, regulatory breach, gross misconduct on the part of the participant, reputational
discretionary adjustments if deemed necessary. As agreed in advance by the Remuneration
damage to the Company, a material failure of risk management, insolvency or corporate failure if this
Committee, the financial results for the year are adjusted to look through any impact of the symmetric
arises within two years of an award vesting and it is a precondition that the executive accepts such
adjustment and WP transfers/restrictions, be they negative or positive. Successful acquisitions are
provisions at the time of the award.
rewarded primarily through the LTIP scheme.
†
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
Minimum
Maximum
% of basic
achievement
Target
achievement
Minimum
Target
Maximum
salary
(as % of target)
achievement
(as % of target)
achievement
achievement
achievement
Steve
125% TSR
33.3%
<Median Median +6% p.a. above
nil
10.4%
41.7%
Murray
EcV
33.3%
the median
nil
10.4%
41.7%
Core Surplus
33.3%
nil
10.4%
41.7%
Emergence
Tom
100% TSR
33.3%
<Median Median +6% p.a. above
nil
8.3%
33.3%
Howard
EcV
33.3%
the median
nil
8.3%
33.3%
Core Surplus
33.3%
nil
8.3%
33.3%
Emergence
The two 2025 awards under the 2023 LTIP will be implemented and operated by the Remuneration
Targets
Committee as set out within the policy.
Targets for the 2025 LTIP are set out in the table below. In the case of the Economic Value and Core
Surplus Emergence metrics, targets have been set with reference to the Group’s business plan for
Measures
the period as set at the start of 2025. The relative TSR metric has been calibrated on a consistent
The three performance measures for the 2025 LTIP award use performance against the constituents
basis as the 2023 LTIP. For all targets, straight line interpolation applies between threshold and
of an index and internal targets.
maximum to determine vesting.
The external measure compares the 3-year TSR of Chesnara plc with the TSR of the companies
Performance target Rationale Threshold
Maximum
comprising the FTSE 350 Higher Yield Index with averaging over the 3 months prior to the start
target (25% of
target (100% of
and end of the performance period.
maximum vests)
maximum vests)
The first internal measure will be Core Surplus Emergence. It will be the absolute surplus
Relative Total
Relative TSR against
Median Median plus 6%
movement of the divisions including the Chesnara entity but adjustments will be made for the
Shareholder Return
the constituents
per annum
impact of items such as FX, T2/T3 restrictions, acquisition impacts and shareholder dividends,
of the FTSE 350
as deemed appropriate.
Higher Yield Index
The other internal measure assesses Economic Value growth. Both the EcV and Core Surplus
Economic Value
Measures 2027
£120.8m before
£170.8m before
Emergence targets are set with due regard to the Board approved business plan. All measures
(EcV) growth*
EcV against a 2024
dividends and
dividends and
seek to ensure an alignment between executive director reward and shareholder value, with
EcV baseline
debt costs
debt costs
one assessing relative performance to other investment opportunities and the others assessing
absolute performance.
Core Surplus
Aggregate Core
£116.3m £128.0m
Emergence*
Surplus Emergence
The Plan includes Change of Control provisions covering takeover, reconstruction, amalgamation
over 2025 to 2027
or winding-up of the Company and it is a precondition that the executive accepts such provisions
at the time of the award.
* Targets based on 2024 forecast outturn as set in January 2025.
Weightings
For the 2025 award the three measures have been assigned equal weighting.
Holding period
A two-year holding period was introduced to the LTIP for awards made from 2019, to follow
the three-year performance period.
CHESNARAANNUALREPORTANDACCOUNTS2024125
CORPORATE GOVERNANCE
DIRECTORS’ REMUNERATION REPORT • ANNUAL REMUNERATION REPORT
The Remuneration Committee can make discretionary adjustments to either the target or to the
actual result for the year if it considers this to be appropriate, in accordance with the scheme rules
and the policy.
Malus and Clawback
The 2023 Plan 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.
The following table sets out the voting in respect of the Directors’ Remuneration Report at the 2024 AGM:
Report Number of votes
Percentage of
Number of votes
Percentage of votes
Total votes
Number of votes
cast for
votes cast for
cast against
cast against
cast
withheld
Remuneration Report 87,088,647 98.42% 1,397,455 1.58% 88,486,102 44,346
The following table sets out the voting in respect of the directors’ Remuneration Policy at the 2023 AGM:
Report Number of votes
Percentage of
Number of votes
Percentage of votes
Total votes
Number of votes
cast for
votes cast for
cast against
cast against
cast
withheld
Remuneration Policy 87,638,247 96.2% 3,416,902 3.75% 91,055,149 70,635
Approval
This report was approved by the Board of Directors on 27 March 2025 and signed on its behalf by:
Eamonn Flanagan
Chair of the Remuneration Committee
26 March 2025
126 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Our focus in the year has
included embedding IFRS 17,
climate change reporting,
acquisitions, consumer
regulatory developments
and operational resilience.
JANE DALE, CHAIR
AUDIT & RISK
COMMITTEE REPORT
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024 127
CORPORATE GOVERNANCE
AUDIT & RISK COMMITTEE REPORT
Sustainability
NUMBER OF MEETINGS DURING YEAR: 6
The committee’s role in the Group’s sustainability programme is to oversee any reporting made by
the Group in this area, as well as understanding the sustainability-related risk exposures of the Group.
MEMBERS:
The committee oversees the production of the Group’s Annual Sustainability Report (ASR). The 2024
Jane Dale, Chair
year end ASR has been published alongside this Annual Report and Accounts. Our ASR provides an
Eamonn Flanagan, member
update on our progress over the course of the year against our sustainability targets and commitments.
As well as our ASR, this Annual Report and Accounts includes a section covering the Group’s
Mark Hesketh, member (from 9 April 2024)
Corporate and Social Responsibility.
Karin Bergstein, member
The committee has paid close attention to the reporting developments that are included in this
The requirements for the composition of the Audit & Risk Committee are detailed within its
year’s report on pages 68 to 91. This has included developments in our Task Force on Climate-
Terms of Reference. The composition of the committee in accordance with the requirements of
Related Financial Disclosures (‘TCFD’) report, which provides information on the key climate-related
the UK Corporate Governance Code and with DTR 7.1.1AR and committee member biographies
risks and opportunities facing the Group’s business. The Group enhanced its climate risk analysis
are detailed on pages 94 to 95.
during 2024, as documented on page 84 and the committee oversaw this work, reviewing and
challenging its conclusion through its oversight of the Group’s annual ORSA (Own Risk and Solvency
Chair’s introduction
Assessment) process. The committee has also kept updated on progress for potential forthcoming
reporting frameworks which are expected to be relevant to the Group, such as that being developed
Welcome to the Audit & Risk Committee Report of the 2024 Annual Report and Accounts. It has
by the International Sustainability Standards Boards (‘ISSB’) and the recommendations of the
been another busy year for the committee, with a packed agenda which has covered not only our
Taskforce for Nature-related Financial Disclosures (‘TNFD’), as well as how the business is
business-as-usual activities, but a number of other key areas of focus. These have arisen from
progressing with the development of a group-level inaugural climate transition plan. The committee
various internal and external factors and include the embedding of IFRS 17 Insurance Contracts;
has also overseen the progress of the implementation of the Corporate Sustainability Reporting
sustainability; risk management and reporting; considering a number of key accounting judgements,
Directive (‘CSRD’) in the Dutch and Swedish divisions. We are considering the impact of the EU
not least in relation to the one acquisition that completed in the year; and risk oversight over a
Omnibus proposals announced in February 2025, which would mean we would no longer have to
number of key operational changes across the Group. Further detail on these, and more, has been
implement CSRD across the Group.
provided below.
Operational change and operational resilience
IFRS 17
The Group has seen a reasonable level of operational change during the course of the year; the UK
The Group applied the new accounting standard IFRS 17 ‘Insurance contracts’ for the first time in
division continues to make good progress with its programme to migrate its outsourced operations
its 2023 interim results and full year audited financial statements. IFRS 17 is a complex accounting
to one strategic partner; and early preparation and operational planning commenced after the
standard and significantly changes both the profit profile of the Group’s insurance business and the
announcement of the proposed merger, subject to regulatory approval, of the two Netherlands
presentation and disclosure in the financial statements. Over the course of the year, the committee
businesses in the last quarter of 2024. The committee’s role has been to ensure that the risks
has monitored the embedding of the new standard through the 2024 interim results and the full year
associated with these changes are appropriately captured and managed. Detailed risk reporting
audited financial statements. I’m happy to report that we have a robust control environment in place
and analysis is managed at a local level, and the committee has had full sight of this through a
to monitor the controls around the reporting routines associated with the standard.
combination of direct interactions with local Audit Committees coupled with coverage through
the Group’s Risk Reporting processes, via the quarterly Chief Risk Officer’s risk report.
Other accounting and financial reporting matters
As well as the embedding of IFRS 17, the committee has considered a number of key accounting
From an operational resilience perspective, the committee has continued to ensure that it is
matters pertinent to this year’s Annual Report and Accounts. This has included the accounting for the
appropriately appraised regarding the Group’s operational resilience. This has included obtaining
one acquisition in the year, and the disclosures required around the OECD’s new Pillar 2 Global
updates regarding the status of the UK’s operational resilience programme, in line with regulatory
Anti-Base Erosion (GloBE) rules (BEPS 2.0), which are designed to address tax avoidance, ensure
requirements. Alongside this, the committee oversaw the embedding and testing of the Group’s
coherence of international tax rules, and, ultimately deliver a more transparent tax environment.
Cyber Response Framework, which is designed to ensure that the Group is appropriately positioned
These have been covered in more detail on pages 132 to 133.
to respond to any cyber incidents. The 2024 testing included a cross-group cyber attack simulation
and was facilitated by an external firm.
Corporate governance reform
In January 2024 the Financial Reporting Council (‘FRC’) announced its revisions to the Corporate
Acquisitions
Governance Code. One of the main changes to the Code extends the disclosures that are expected
The Company has agreed a deal to acquire a second book of business from Canada Life UK on
regarding the Board’s role in annually reviewing the effectiveness of the Company’s Risk
23 December 2024 with a view that a Part VII will take place before the end of 2025. In the
Management and Internal Controls Framework. The 2024 code requests that boards explain through
meantime, a reinsurance arrangement with Canada Life has been agreed for the portfolio with effect
a declaration in their annual reports how they have done this and their conclusions from this work.
from 31 December 2024. The committee’s role is to focus on ensuring that the acquisition diligence
These new disclosures will apply from periods beginning on or after 1 January 2025, with the
process has been delivered in line with the Group’s risk-based acquisition process; that all key
exception of Provision 29, which is effective from 1 January 2026. During 2024, a new Internal
benefits and risks are appropriately understood; and that the accounting and associated judgements
Control Framework document has been developed to support the Board in its risk management
for the transaction are in compliance with accounting standards. The committee fully discharged
responsibilities and as additional documentation to evidence compliance with the updated Code.
its responsibilities regarding the oversight of the diligence and deal benefit assessment processes
for these two transactions. Further information on the accounting for these transactions is included
Over the course of 2025 and beyond, the committee will work with the Group Risk function and the
on page 132.
Board in developing current policies and processes to embed the Internal Control Framework to align
to the New Code and applying these new disclosures.
128CHESNARAANNUALREPORTANDACCOUNTS2024
CORPORATE GOVERNANCE
Regulatory matters
The committee has a role in overseeing key compliance matters of the Group. This has included the
– Tax oversight: As the Group becomes more complex, with more complex transactions and
UK’s Consumer Duty implementation programme; and the new EU legislation, Digital Operational
arrangements in place, the committee’s role will be to ensure that tax risks around the Group
Resilience Act (DORA) which applies from January 2025. The committee has had full sight of all
are being appropriately identified and managed. This includes the implementation of the new
these areas of focus over the course of the year and was kept appraised of any emerging issues.
BEPS 2.0 requirements.
It is pleasing to report that the UK’s Consumer Duty programme met the July 2024 milestone
– Financial reporting controls: From a financial controls perspective, it remains critical that
for its closed book of products and has developed a framework and implementation plans for future
the committee has good oversight over any financial reporting control risks across the Group.
required developments. The overseas divisions have broadly implemented DORA in time and in
In particular the committee will focus on areas of operational change such as acquisitions; the
line with peers; however, further work will continue in 2025. The committee will continue to monitor
bedding in of new controls in relation to IFRS 17 and finalising the implementation of the Group’s
the progress of the Consumer Duty programme and the continued DORA work.
new financial and solvency reporting consolidation tool.
Governance
This is my final report after nine years and I wish to thank all my colleagues at Chesnara for their
The committee has continued to oversee some of the Group’s core governance processes.
dedication and professionalism over those nine years which has made my role as the Audit & Risk
This has included:
Committee Chair so much easier. There has been so much going on over that period, not least the
– monitoring the risk management and internal control system: the annual Risk Management
introduction of Solvency II, followed by IFRS 17, plus a number of significant acquisitions and more
and Internal Control Report was reviewed and challenged by the committee during the year.
recently the addition of sustainability reporting, all of which required our oversight. We also had to
This concluded that the controls across the Group were operating appropriately over the course
contend with a global pandemic and its aftermath as well as the changing economic, technological
of the year.
and political landscape; I did not envisage nine years ago that risk management would be so
interesting! We have safely navigated through these different challenges and I am very pleased to
– systems of governance effectiveness: the committee oversaw the Group’s annual assessment
be handing over to Gail Tucker, who brings a wealth of experience and will continue to provide strong
of the effectiveness of its systems of governance. This concluded that there were no major areas
scrutiny and oversight. I wish her and the entire Chesnara team every success for the future.
of concern.
– committee evaluation process: the committee performed its own evaluation process during the
year and concluded that it has operated effectively during the year. The evaluation also highlighted
areas the committee members wish to focus on in the year ahead, as set out below.
Looking forward
As ever, there is a full agenda ahead, much of which reflects a continuation of work that is currently
in train. As well as the committee’s business as usual activities particular focus will be given to:
Jane Dale
– Sustainability reporting: This is developing rapidly, and different regimes apply in the UK and
Chair of the Audit & Risk Committee
Europe. The committee will need to ensure all regulatory and public reporting is delivered on time
26 March 2025
and to a good standard.
– Corporate governance code: This new UK legislation is to formalise the monitoring of the
Role of the Audit & Risk Committee
internal Risk Management and Internal Control Framework effectiveness which comes into effect
The role of the Audit & Risk Committee includes assisting the Board in discharging its duties and
on 1 January 2026. The committee will need to follow the progress of the plan to ensure that the
responsibilities for financial reporting, corporate governance and internal control. The scope of its
Board is ready to report in 2026.
responsibilities also includes focus on risk management: accordingly, it also assists the Board in
– Operational change: There are a number of operational change programmes across the Group,
fulfilling its obligations in this regard. The committee is also responsible for making recommendations
including the UK’s transformation programme as well as the merger of the Dutch division.
to the Board in relation to the appointment, re-appointment and removal of the external auditor.
The committee will ensure that it maintains a close eye on risks around operational change across
The committee’s duties include keeping under review the scope and results of the audit work, its
the Group.
cost effectiveness and the independence and objectivity of the external auditor. The full Terms of
– Group operational resilience: The committee will be focusing on ensuring that it is satisfied that
Reference of the Audit & Risk Committee are available on our website www.chesnara.co.uk.
the Group remains materially operationally resilient, with appropriate recovery plans in place. This will
include monitoring emerging regulation and industry practice. A particular focus will be on ensuring
the requirements of the Digital Operational Resilience Act (‘DORA’) are embedded in our European
businesses, and that the UK delivers the regulatory Operational Resilience requirements to the
required deadline.
– Consumer Duty: The committee will be paying close attention to the ongoing delivery of the UK’s
Consumer Duty programme. It will also be mindful of the impact that the Consumer Duty has
regarding any associated risks for future UK-based acquisitions.
– Acquisitions: Should the Group enter into any acquisition processes over the course of 2025 the
committee will ensure that it has the appropriate oversight over the process, commensurate with
the size and complexity of the target, mindful of any industry developments that will need to be
considered in any future acquisition diligence process. Any associated benefits and risk analysis
will be scrutinised by the committee.
CHESNARAANNUALREPORTANDACCOUNTS2024129
CORPORATE GOVERNANCE
This section of the report includes the following:
1. Activities during 2024: A summary of the work performed by the Audit & Risk Committee during
4. Significant issues: Provides some insight into the significant issues that the committee has
considered during the year in relation to the financial statements, and how these were addressed.
130 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
Other
External audit
Internal audit
Financial reporting
AUDIT & RISK COMMITTEE REPORT
The Chesnara Audit & Risk Committee has responsibilities over a combination of both risk and audit matters. An update against each of these
two key obligations has been provided below.
Audit responsibilities
1. Activities during 2024
The committee’s work is driven by a combination of business as usual (‘BAU’) activities and
non-standard areas that have required attention during the year. The committee has focused
on the following non-BAU areas during 2024 and subsequent transformation programme, the
the year.
Group’s operational resilience programme; climate change and sustainability reporting; and any
2. External audit: Further detail of how the committee has overseen various aspects of the external
conduct regulatory developments, including the UK’s Consumer Duty. A summary of all the
audit process.
activities performed by the committee during 2024 in relation to its audit responsibilities is
3. Internal audit: The work performed by the committee in overseeing the Internal Audit function
summarised below:
of Chesnara.
Annual Report and Accounts: Reviewed the Annual Report and Accounts, including;
Solvency II narrative reporting: Reviewed the Chesnara Group Solvency and Financial
compliance with accounting standards, Accounting Policy appropriateness; consideration
Condition Report, which is published annually on the Chesnara website and sent to the
of any other financial reporting changes and emerging practice; whether they are fair,
Prudential Regulation Authority.
balanced and understandable; and disclosures surrounding going concern, prospects and
Financial performance: Monitored and scrutinised the financial performance of the Group,
longer-term viability. See the significant issues section on pages 132 to 133 for further details
covering IFRS, Solvency, EcV, cash generation and expenses.
on certain aspects of this year’s accounts.
IFRS 17: Monitored the embedding of the Group’s IFRS 17 application, which included the
Half year report: Reviewed and challenged the Chesnara half year report for the six
oversight of any residual key matters to be resolved, close monitoring of the audit process and
months ended 30 June 2024, which included the Group’s second reporting at the half year
an ongoing committee education programme.
under IFRS 17 Insurance Contracts.
FRC updates: Actively monitored and reviewed any key publications issued by the Financial
Actuarial assumptions: Reviewed and challenged the actuarial assumptions underpinning
Reporting Council regarding financial reporting matters during the year. This has included,
the quarterly financial reporting process, covering IFRS, Solvency II and EcV. See the
amongst other things, a review of our Annual Report and Accounts’ IFRS 17 disclosure as part
significant issues section on pages 132 to 133 for further detail.
of the FRC’s sample thematic review. As a result of the review no questions or queries were
raise by the FRC which was a positive outcome.
External audit plans: Reviewed the groupwide plans of the external auditor, including
External audit reporting and feedback: Reviewed key findings reported by the Group
consideration of the key audit risks.
external auditor on the Annual Report and Accounts, including key judgements and control
matters. As part of its interactions with the external auditor, the committee met with the
External audit quality: Assessed the quality of the external auditor during the year.
external auditor without the presence of executive directors.
This has included, amongst other things, consideration of feedback from management,
coupled with reviewing the FRC report entitled ‘Deloitte LLP Audit Quality Inspection
External audit independence: Reviewed the assessment regarding the independence of the
and Supervision Report’ which was published in July 2024.
external auditor, with specific consideration given to audit fees and the nature and volume of
the services delivered by the external auditor during the year.
Oversight of Internal Audit function during the year: The committee reviewed the work
Review of internal audit findings: Received regular updates from business unit Audit & Risk
of the Internal Audit functions across the Group, via interactions with local Audit & Risk
Committees regarding key findings from internal audits that have been performed during the
Committees, and their subsequent delivery. See page 131 for more information.
year. Reviewed the internal audit findings and management responses for Chesnara plc.
Evaluation of Internal Audit effectiveness: The committee evaluates the effectiveness
of Internal Audit on an annual basis and concluded that the function remains appropriate
for the business.
Feedback from divisional Audit & Risk Committees: Reviewed and challenged regular
Performance evaluation: Conducted an evaluation of the committee’s performance during
feedback provided by the Group’s divisional Audit & Risk Committees. The Audit & Risk
the year, which was completed by members of the committee. The review showed that the
Committee Chair of the Dutch divisions attended a Chesnara A&RC meeting during 2024;
committee performed well across all aspects of the Assessment Framework.
the Swedish and UK divisions are represented by plc directors who are also Chairs of the
local Audit & Risk Committees.
Committee Terms of Reference: Reviewed its Terms of Reference during the year and
completed its annual assessment of compliance with its Terms of Reference.
CORPORATE GOVERNANCE
2. External audit
Audit services
Quality and effectiveness of the audit process
The fees charged for audit services have decreased when compared with 2023. The key reasons
The quality and effectiveness of the external audit process is reviewed on an annual basis and had
for the net decrease since the prior year are:
regard to the following factors:
– A decrease of c£1,556k in relation to the preparatory audit work and additional scope work
– The quality of the background papers and verbal presentations to the committee on the audit
associated with the implementation of IFRS 17; and
planning process and final audit findings and compliance with independence criteria;
– An increase of c£104k in relation to additional recurring scope work and inflation increase offset
– This year has seen the change in the lead audit partner from Matt Perkins to Matt Bainbridge. The
by a reduction in one-off audit work.
committee concluded that Matt has the appropriate qualifications and experience to lead the audit;
Audit fees of £1,012k (2023: £1,056k) were paid to EY during the year for the audits of Scildon,
– The rationale put forward for the materiality limits established and the explanation given of the
the Waard Group and Movestic.
impact these have had on the work performed;
Assurance services
– The views of the executive on the way in which the audit has been conducted;
Assurance services totalling £186k (2023: £259k) were provided by Deloitte in 2024 and consisted
– The conclusion from the FRC’s publication entitled ‘Deloitte LLP Audit Quality Inspection and
of £171k (2023: £244k) relating to an annual CASS audit of CASFS Limited, and £15k (2023: £15k)
Supervision Report’ which was published in July 2024; and
relating to assurance on the Group’s covenant compliance. Further assurance services were provided
– The audit fees charged and the change in fees from the previous year. Changes in annual fees do,
by EY to Scildon of EUR 12.5k (2023: nil), for the provision of assurance on the accuracy of the cost
of course, need to reflect change in the nature of the Company’s business which has expanded
pricing model published on the entity’s website for its disability products, which is required by law/
over time.
regulation every 3 years.
It was concluded that the audit process was effective. The Company is committed to putting its
Non-audit services
audit out to tender at least every ten years, having completed its last external audit tender during
Non-audit services totalling £nil (2023: £71k) were delivered in 2024. The non-audit service in 2023
2017. The next audit tendering process will need to take place at the latest during 2027, following
was in relation to market analysis and strategic planning work delivered by EY to Movestic.
the 2026 audit.
In the prior year, a component auditor (EY Sweden) provided market analysis and strategic planning
Provision of non-audit services and independence
services totalling £71k to the Movestic division. These services were permitted under the component
The committee has in place a policy on the engagement of the audit firm for non-audit services.
auditor’s local ethical standard, however not the FRC’s Ethical Standard, and were approved by those
Approval is granted where the service is clearly related to the process of audit services, including
charged with governance at Movestic. We are satisfied that the independence and objectivity of the
regulatory returns (‘assurance services’). In other cases, the approval of the committee is required
Group and component auditor was not impaired as a result of this service being provided and have
and documented governance processes are followed.
implemented processes to ensure that FRC independence policies are applied by component auditors
within the Group.
The committee regularly monitors the level of fees paid for non-audit services to ensure, over a
period of years, that these represent a low proportion of total fees paid. Reports from the auditor on
3. Internal audit
independence are also reviewed annually and discussed with the auditor. It should be noted that
Within Chesnara, Internal Audit operates as separate functions within each of its businesses and
total fees paid by the Company are not material in the context of the overall business of the auditor.
these report into their own Audit & Risk Committee who have the primary oversight and supervisory
responsibility. This includes determining how the local Internal Audit function will be resourced and
Details of the fees paid to Deloitte, and its associates, for both audit and non-audit services during
as a result these are a mix of outsourced and in-house capabilities.
the year have been provided below:
At a Group level, the Chesnara Audit & Risk Committee sets three high level principles which must
Audit fees 2024
%
2023
%
be followed by each of the businesses. This committee then receives periodic reports from each
£000
proportion
£000
proportion
business on matters such as the make-up of the audit plan, progress against this plan and any
significant issues identified/reported.
Audit services
2,077
92
3,456
93
Assurance services
186
8
259
7
The remit of the UK based Internal Audit team also covers Chesnara plc and consequently the
committee gets similar periodic reports to the local committees on its own audit plan throughout
Total 2,263 3,715
the year.
Across the Group, Internal Audit covered a broad range of topics including Remuneration,
Reinsurance, Business Continuity planning, Outsourcing, Change Programme, Governance,
Claims Handling, CASS, Information Security, Operational Resilience and Consumer Duty.
No significant issues have been identified through the delivery of the internal audit programme
during the year.
CHESNARAANNUALREPORTANDACCOUNTS2024131
CORPORATE GOVERNANCE
AUDIT & RISK COMMITTEE REPORT
4. Significant issues
The table below provides information regarding the significant issues that the committee has considered in relation to the preparation of the Annual Report and Accounts.
This includes consideration of matters communicated by the auditors.
Area of focus Reporting issue Role of the committee Conclusion/action taken
IFRS accounting
The accounting approach applied to the Canada Life acquisition in 2023 has
The committee’s role is to review and challenge
The committee is satisfied that the new
for the Canada
been reassessed in these financial statements following consultation with
the change in accounting approach.
accounting approach is appropriate. The IFRS
Life acquisitions
the external auditor.
comparatives have been restated accordingly
throughout this report and the new accounting
A long contract boundary had previously been applied in valuing the future
approach has been applied in the year end 2024
cash flows. This approach has been revised so that only the cash flows within
financial statements.
the boundary of the initial reinsurance contract are valued.
Valuation of
Chesnara plc’s solo balance sheet includes the value of its investment in its
The committee’s role is to review and
As a result of the annual impairment process,
Chesnara plc’s
various subsidiaries. These are typically carried at cost and are reviewed at
challenge management’s paper covering the
it was concluded that the carrying value of
investment
least annually for impairment. As a result of dividend payments over time,
assessment of the carrying value of Chesnara’s
Chesnara plc’s investment in Countrywide
in CA plc
at some point the underlying value of the Group’s closed-book subsidiaries
investment in its subsidiaries. This includes
Assured plc required writing down by £4.0m.
will become lower than the carrying value that it is held at in the Chesnara plc
scrutinising the underlying assumptions
This reflects that the underlying value of
balance sheet, resulting in a need to write down the carrying value.
underpinning the ‘value in use’ assessment
Countrywide Assured has reduced, largely
and the conclusions made.
because of its continued dividend streams
up to Chesnara plc. Further detail can be
found on page 167.
Impairment
The Group IFRS balance sheet includes intangible assets (the ‘AVIF’ assets),
The committee is required to review the work
The review concluded that no impairment of the
assessment
representing the acquired value of the in-force policies at the point of
performed by management in assessing the
net of tax AVIF should be made.
of AVIF
previous acquisitions, which is amortised over the estimated profit profile
carrying value of the AVIF intangible assets,
intangible
of the associated polices that were acquired. An impairment test of these
including scrutinising the assumptions made,
assets
intangible assets is required on an annual basis.
and conclusions drawn.
BEPS 2.0 The Group has determined the impact of the OECD’s Pillar 2 Global Anti-Base
The committee’s role is to review and
The committee has reviewed the IAS 12
Erosion (GloBE) rules (BEPS 2.0). An impact assessment has been carried out
challenge the assessment performed by
disclosures that have been made within these
in conjunction with KPMG UK and Sweden, and it is noted that:
management, including the latest impact
financial statements and concluded that they
assessment provided by KPMG.
reflect our current view of the impact of BEPS
HMRC has released draft guidance for the insurance sector stating that
2.0 on the Group.
unit-linked returns are out of scope when determining a group’s eligibility
for BEPS 2.0 Pillar Two (EUR 750 million revenue threshold). As a result,
the Group is out of scope for the financial year ending 2024; and
The Swedish government has initiated a consultation stating that insurance
entities should be able to make a transparency election regarding their
investment funds. This would effectively remove any risk of policyholder
returns being subject to the top-up tax and mitigate any material risks of
BEPS applying to Movestic (under their domestic application of the rules).
UK expense
The actuarial reserving process for the UK division includes an assumption
The responsibility of the committee
The committee is satisfied that the expense
assumptions
on the future expenses that are required to run the business. This includes
is to satisfy itself that the judgements
assumptions included in the valuation of the
used in
making judgements on both the future outsourcer and non-outsourcer costs,
underpinning the projected future expenses
insurance contract liabilities of the UK division
determining
and any associated transition costs that might be incurred in achieving the
required to the run UK life insurance
on 31 December 2024 are appropriate and
insurance
longer-term expense assumptions.
operations are appropriate, and to ensure
that they are suitably described in note A6(m)
contract
these judgements are appropriately reflected
on page 167.
provisions
in the year end 2024 financial statements.
132 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
Area of focus Reporting issue Role of the committee Conclusion/action taken
Actuarial
A key aspect of the Audit & Risk Committee’s role is to review and challenge
The committee’s role is to review and
The committee concluded that the actuarial
assumptions
the actuarial assumptions that underpin the valuation of the policyholder
challenge the actuarial assumptions
assumptions were appropriate. Disclosures
liabilities in the financial statements. The assumptions are inherently
report which underpins the valuation
over key judgements are included in note 5
judgemental and are updated at least annually to reflect the facts and
of insurance liabilities.
of the IFRS financial statements.
circumstances available at the time. The assumptions are underpinned by
a combination of internally observed experience coupled with data that
is available at a market level. The key assumptions include estimates over:
– future mortality and morbidity rates;
– future lapse assumptions;
– future expense required to manage the policies in force; and
– policyholder options and guarantees.
Risk responsibilities
Focused activities performed during the year
This section of the report provides information regarding the risk oversight responsibilities
The below provides some information regarding the more focused activities that the committee
of the Audit & Risk Committee.
has performed during the year in discharging its risk oversight responsibilities.
Acquisitions
General responsibilities
The Audit & Risk Committee has overseen the due diligence for the acquisition of a second book
Overall, the committee is responsible for:
of business from Canada Life, ensuring that the Board is aware of all material associated risks, in
– the Group’s risk management and internal control systems and their effectiveness;
particular the implications for the risk appetite and tolerance of the Company, taking independent
– overseeing the Group’s risk profile in the context of its current and future strategy;
external advice where appropriate and available. The committee was satisfied that the risk
– discussing and recommending to the Board for approval, the Group’s risk appetite statement,
reporting surrounding these activities has been appropriate and that management has responded
reverse stress testing and scenario stress testing;
to any associated risks as they emerge.
– advising the Board on proposed changes to the Group’s risk appetite statement where this
UK transition and transformation
is deemed appropriate;
The Audit & Risk Committee has continued to be updated on the multi-year programme to migrate
– monitoring risk exposures across the Group and advising the Board where such exposures
our policy administration services and newly acquired books of business to SS&C Technologies.
do not appear to accord with the Group’s risk appetite statement;
The committee is satisfied that there is appropriate visibility of the key strategic risks and that
appropriate mitigants have been in place, with regular and transparent reporting on programme
– reviewing the Group’s capability to identify and manage emerging and new risk types;
progress.
– challenging the regular stress and scenario testing of the Group’s business;
IT/data security and cyber risk
– determining whether there is a sufficient level of risk mitigation in place;
The committee’s risk responsibilities include overseeing management’s plans to continue to
– overseeing due diligence of a major strategic transaction, including any proposed acquisition or
ensure the Group remains resilient to IT risks. This includes monitoring results from various
disposal, prior to the Board taking a decision to proceed with a view to ensuring that the Board
initiatives such as the Group’s ‘phishing’ tests, cyber-attack simulations and penetration testing
is aware of all material risks associated with the transaction;
and the implementation of the EU legislation, Digital Operational Resilience Act (DORA) which
– considering the adequacy and effectiveness of the technology infrastructure and supporting
came into force on January 1 2025. Chesnara has embedded a groupwide Cyber Response
documentation in the Risk Management System and framework;
Framework to guide the Group in preparing and responding effectively to a cyber-attack which
includes an updated policy on ransomware. The committee was satisfied that the Group’s IT
– considering and approving the remit of the Risk function and ensuring it has adequate resources
risk programme continues to focus on the right priorities and this ever-evolving area.
and appropriate access to information to enable it to perform its function effectively and in
accordance with the relevant professional standards;
– providing qualitative and quantitative advice to the Remuneration Committee on risk weightings
to be applied to any performance objectives; and
– considering and recommending to the Board for approval, the Group’s risk related regulatory
submissions, including the ORSA.
CHESNARAANNUALREPORTANDACCOUNTS2024133
CORPORATE GOVERNANCE
AUDIT & RISK COMMITTEE REPORT
Global market instability
Ongoing global conflict and economic uncertainty remains a prominent emerging risk for the
– Risk appetite: Reviewed and re-approved the Group’s Risk Appetite Framework, including
Group, with potential for inflation driven expense risk and future investment returns being the
reviewing and challenging the key risk indicators/tolerance limits and key business
affected key areas with greatest potential impact. As a result of these observations the committee
performance measures.
has obtained regular updates from management on potential impacts. This has included
– Review divisional Audit & Risk Committee progress: Received and challenged updates
consideration of the following:
provided by divisional Audit & Risk Committees.
– Financial results volatility;
– Continuous solvency monitoring: Reviewed the output from the Group’s continuous solvency
– Increased expense base with wage inflation and increasing supplier costs; and
monitoring activities. There were no issues arising from this process during the year.
– 3rd party/supplier failure risks.
– Standard formula assessment: As part of its annual cycle the Actuarial function performs an
assessment of the appropriateness of the standard formula for the purposes of calculating the
The committee is satisfied that management is monitoring these risks closely, and that the
Group’s capital requirements under Solvency II. The work and associated findings was reviewed
Group’s ORSA process suitably examines these scenarios.
and challenged by the committee as part of the ORSA process.
Operational and regulatory change
Assurance
There are a number of operational and regulatory change projects across the Group, and as
Taken together, the Group’s Risk function and Internal Audit function ensure that the committee
a result the committee has been monitoring these closely. Activity across the Group includes:
is provided with appropriate assurance throughout each year. The second-line Risk function
– integration and Part VII activity for the acquisitions of Canada Life;
ensures independent review and challenge of business performance and activities with the
– the UK Transition and Transformation project including moving to a new outsourced admin
opportunity to influence areas of review to be undertaken by the independent third-line Internal
provider, SS&C;
Audit function. The committee can direct the activity of either function as circumstances require,
amending work plans to accommodate deep dives if felt appropriate to do so. The committee
– the ongoing policy administration IT upgrade programme in Scildon;
leverages these functions within the Group’s proportionate three lines of defence model in
– the merger of our Dutch entities into one combined insurer;
addition to engaging with and having Board representation on the business unit Audit & Risk
– operational resilience and Digital Operational Resilience Act (DORA);
Committees which themselves have local Risk and Internal Audit functions. In this way, and
through receiving assurance reports from each business unit on a quarterly basis, the committee
– Consumer Duty; and
satisfies itself with regard to the assurance it obtains on the Group’s activities and performance.
– climate change risk and sustainability.
The committee was satisfied that the risk reporting surrounding these programmes has been
appropriate and that management has responded to any associated risks as they emerge.
Regular activities performed during the year
The below provides some further information regarding the ‘business as usual’ activities that the
committee has performed during the year in discharging its risk oversight responsibilities:
– Quarterly risk reporting: During the year the committee reviewed the quarterly group and
divisional risk reports on the identification, evaluation and management of principal risks across
Jane Dale
the Group, including any emerging risks. The quarterly risk reporting included ‘in focus’ topics
Chair of the Audit & Risk Committee
as required and reports against the Group’s ‘watchlist’ of items.
26 March 2025
– Principal risk definition: Reviewed and challenged the Group’s definition of principal risks for
the purpose of reporting and monitoring against these risks, including how they are mitigated
through the Group’s Internal Control Framework.
– Dividend proposal: The committee considered the final dividend proposal review document
prepared by the Group Chief Risk Officer.
– Risk plan review and sign off: The committee reviewed and approved the Group and divisional
risk plans and associated resourcing needs.
– Internal control report: The committee reviewed and approved the annual internal controls
assessment report, which concluded that the controls across the Group are operating effectively.
– Systems of governance review: An annual review of the effectiveness of the systems of
governance review was facilitated by the Risk function. This considered a number of areas of the
overall system of governance including its completeness, effectiveness, its use and the overall
culture. This concluded there were no major areas of concern. Any areas for improvement have
been built into future plans, with suitable priorities attached.
– ORSA review: The committee reviewed the 2024 Group ORSA and made a formal
recommendation to the Board to approve it. The ORSA includes the outcome of the Group’s
stress and scenario testing. The stresses that are modelled are reviewed and approved as part
of the ORSA planning process, and the results are included in the final ORSA report.
134 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
DIRECTORS’ REPORT
The directors present their annual report and the audited consolidated financial statements of Chesnara plc for the year ended 31 December 2024.
The Corporate Governance Report on pages 98 to 103 forms part of the Directors’ Report.
Chesnara plc – Company No. 4947166
Director appointments
The following information, that has been included by way of a cross reference to other areas
With regard to the appointment and replacement of directors, the Company followed the UK
of the Annual Report and Accounts, is required by the Companies Act to be included within the
Corporate Governance Code 2018 during the financial year ending 31 December 2024 and is
Directors’ Report:
governed by its Articles of Association, the Companies Act 2006 and related legislation. The Articles
of Association may be amended by special resolution of the shareholders. The Company follows the
UK Corporate Governance Code 2024 since 1 January 2025.
Requirements/reference
Financial risk management objectives and policies
Share capital
The financial management section on pages 55 to 56 and the risk management section on
Details of the issued share capital, together with details of movements in the issued share capital
pages 57 to 67.
of Chesnara plc during the year are shown in note H1 to the IFRS Financial Statements which is
incorporated by reference and deemed to be part of this report.
Exposure to price risk, credit risk, liquidity risk and cash flow risk
Note B3 Financial Risk to the IFRS Financial Statements.
The Company has one class of ordinary share which carries no right to fixed income. Each share
Likely future developments
carries the right to one vote at general meetings of the Company. The ordinary shares are listed on
The business review section on pages 40 to 46.
the Official List and traded on the London Stock Exchange. As at 31 December 2024, the Company
had 150,991,019 ordinary shares in issue, of which none were held as treasury shares. During the
Greenhouse gas reporting
year, no treasury shares were held or traded.
The corporate and social responsibility section on pages 68 to 91.
Environmental, employee and social community matters
In order to retain maximum flexibility, the Company proposes to renew the authority granted by
The corporate and social responsibility section on pages 68 to 91.
ordinary shareholders at the Annual General Meeting in 2024, to repurchase up to 10% of its issued
share capital. Further details are provided in the Notice of this year’s Annual General Meeting.
At the Annual General Meeting in 2024, shareholders approved resolutions to allot shares up to an
Directors
aggregate nominal value of £5,028,520 and to allot shares for cash other than pro rata to existing
Full information of the directors who served in 2024 is detailed in the Corporate Governance Report
shareholders. Resolutions will be proposed at this year’s Annual General Meeting to renew these
on pages 98 to 103.
authorities.
Detail of the non-executive directors who served as Chairs and members of the Board committees
No person has any special rights of control over the Company’s share capital and all issued shares are
of the Board are set out in the Corporate Governance Report on pages 98 to 103. Information in
fully paid. There are no specific restrictions on the size of holding nor on the transfer of shares which
respect of the Chair and members of the Remuneration Committee and in respect of directors’
are both governed by the general provisions of the Articles of Association and prevailing legislation.
service contracts is included in the Remuneration Report on pages 110 to 126, which also includes
The directors are not aware of any agreements between holders of the Company’s shares that may
details of directors’ interests in shares and share options. The Chair and all the non-executive
result in restrictions on the transfer of securities or voting rights. The directors have no current plans
directors will retire at the Annual General Meeting and, with the exception of Jane Dale, who has
to issue shares.
completed a nine-year tenure, offer themselves for election or re-election as appropriate. All of the
executive directors have service contracts with the Company of no more than one year’s duration
Articles of Association
and will offer themselves for re-election at least every three-years.
The Company’s Articles of Association may only be amended by special resolution of the Company
at a general meeting of its shareholders.
The service contracts of all the directors are retained at the Company’s office and will be available for
inspection for 15 minutes prior to the Annual General Meeting. No director had any material interest
Conflicts of interest
in any significant contract with the Company or with any of the subsidiary companies during the year.
Procedures are in place to ensure compliance with the directors’ conflict of interest duties as set out
in the Companies Act 2006. The Company has complied with these procedures during the year and
The directors benefitted from qualifying third party indemnity provisions in place during the years
the Board considers that the procedures operated effectively. During the year, details of any new
ended 31 December 2023 and 31 December 2024 and the period to 27 March 2025.
conflicts or potential conflicts were advised and submitted to the Board for consideration, and where
Director evaluations
appropriate, approved.
During the year, the Chair evaluated the performance of all appointed directors in one to one
There were no material conflicts of interest noted in 2024.
meetings and the Senior Independent Director evaluated the performance of the Chair. It was
confirmed that each director continued to make effective contributions in their role and to the
Board as a whole.
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024 135
CORPORATE GOVERNANCE
DIRECTORS’ REPORT
Results and dividends
The consolidated statement of comprehensive income for the year ended 31 December 2024,
The Group IFRS results are reported under IFRS 17 in the annual financial statements.
prepared in accordance with United Kingdom adopted international accounting standards and
An interim dividend of 8.61p (2023: 8.36p) per ordinary share was paid by Chesnara on 1 November
set out on page 148 shows:
2024. The Board recommends payment of a final dividend of 16.08p (2023: 15.61p) per ordinary share
on 20 May 2025 to shareholders on the register at the close of business on 4 April 2025.
Restated
2024
2023
The Chesnara Dividend Policy is directly influenced by two key factors. We recognise that our shares
£m
£m
are predominantly held as a source of predictable and sustainable income. Our primary aim is therefore
to provide an attractive yield with steady growth where possible.
Post-tax profit for year attributable to shareholders 3.9 18.6
Our aim to satisfy investor expectations cannot and will not be delivered at the expense of financial
security and solvency. As such, dividend capacity is assessed giving full regard to our Group Capital
Management Policy which currently prohibits dividends to be declared that would result in Chesnara
having a solvency ratio below 110%.
Total dividend as a ratio of cash generated Considerations
Cash
Historic and projected cash generation levels need to
generation
support any dividend payment although there is no explicit
Dividend growth
requirement for the current year’s cash generation to cover
the dividend.
£37.3m
Solvency The Company’s risk appetite solvency level is 140% of SCR,
£36.1m
however, the Board is prepared to approve dividend distributions
£35.0m
£33.9m
£32.9m
such that, post payment of the dividend, the solvency position
of the Group is at least 120% of SCR.
Acquisition
The Chesnara business model is based upon making future
strategy
acquisitions and any dividend payments consider the financial
requirements to continue to deliver our acquisition strategy.
0.84
1.56
1.33
1.47
1.60
Investor
In addition to a stable and attractive dividend yield our investors
expectations
value predictability and sustainability of earnings. As such, under
2023
normal circumstances, ‘special dividends’ are unlikely.
20202021202220232024
The chart above shows the coverage of Commercial Cash generated over the dividend paid in each respective year. Over the past 5 years, £175m of dividends have been paid at an average annual yield
of 8.4% (based on average annual share prices) representing a Commercial Cash Generation coverage of 1.37 against dividends paid.
136 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
The Board makes dividend decisions with reference to a range of management information,
Subsequent to 31 December 2024 there have been changes to this position and the holdings as
reports and policies including the Group ORSA, Group business plan, solvency analysis including
at 5 March 2025 are shown below. No other person holds a notifiable interest in the issued share
sensitivities, analysis of historic financial results and the Group Capital Management Policy.
capital of the Company.
Substantial shareholdings
Name of substantial
Total
Percentage of
Information provided to the Company by major shareholders pursuant to the FCA’s Disclosure and
shareholder
number
the issued share
Transparency Rules (DTR), is published via a Regulatory Information Service and is available on
of ordinary
capital as at
the Company’s website. The Company had been notified under Rule 5 of the DTR of the following
shares held
5 March 2025
interests in voting rights in its shares.
Columbia Threadneedle Investments
17,778, 343
11.71%
Name of substantial
Total
Percentage of
abrdn
14,592,272
9.66%
shareholder
number
the issued share
of ordinary
capital as at
Hargreaves Lansdown Asset Mgt
13,437,650
8.90%
shares held
31 December
Interactive Investor
12,544,702
8.31%
2024
M&G Investments
8,700,317
5.76%
Columbia Threadneedle Investments
17,936,775
11.88%
Royal London Asset Mgt
5,608,635
3.71%
abrdn
14,735,716
9.76%
Janus Henderson Investors
5,225,612
3.46%
Hargreaves Lansdown Asset Mgt
13,399,131
8.87%
Canaccord Genuity Wealth Mgt
4,935,113
3.27%
Interactive Investor
12,499,492
8.28%
M&G Investments
8,751,254
5.80%
Chesnara plc has no multiple voting rights or voting certificates relative to total voting rights and no
Canaccord Genuity Wealth Mgt
5,656,703
3.75%
issued share capital is composed of non-voting shares. Depositary receipts represent 0% of voting
rights and our free float percentage of voting rights exceeds 98%.
Royal London Asset Mgt
5,549,225
3.68%
Related party transactions and significant contracts
Janus Henderson Investors
5,227,132
3.46%
During the year ended 31 December 2024, the Company did not have any material transactions or
transactions of an unusual nature with, and did not make loans to, related parties in which any
director has or had a material interest.
There were no significant contracts with substantial shareholders during the year.
Post balance sheet events
There have been no post balance sheet events that either require adjustment to the financial
statements or are important in the understanding of the Company’s current position, financial
performance or results.
Charitable donations
Charitable donations made by Group companies during the year ended 31 December 2024 were
£9,491 (2023: £36,285). We have provided financial and non-financial assistance to charitable
organisations including UNICEF, Sherpa, Just Diggit and Safenet. UK colleagues also can donate
through a Give as You Earn scheme, supported by the Charities Aid Foundation.
No political contributions were made during the year ended 31 December 2024 (2023: £nil).
Employees
The average number of employees during 2024 was 355 (2023: 387).
CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
137
CORPORATE GOVERNANCE
DIRECTORS’ REPORT
Employee involvement
Disclosure of information to the auditor
The Group believes that employee communication and consultation is important in enhancing
The directors who held office at the date of approval of this Directors’ Report confirm that,
the Company culture and connectivity, and in motivating and retaining employees. An open
so far as they are each aware, there is no relevant audit information of which the Company’s
communications programme enables all employees to understand key strategies and other matters
Auditor is unaware; and each director has taken all the steps that they ought to have taken
of interest and importance, quickly and efficiently. The communication includes face-to-face
as a director to make themselves aware of any relevant audit information and to establish that
briefings, open discussion forums with executive and senior management and updates via email.
the Company’s Auditor is aware of that information. This information is given and should be
interpreted in accordance with the provisions of Section 418 of the Companies Act 2006.
Business relationships
Throughout the year the directors have had regard for the need to foster the Company’s business
Auditor
relationships with suppliers, customers and stakeholders, including on the principal decisions taken
A resolution for the re-appointment of Deloitte LLP as Auditor of the Company is to be proposed
by the Company during the financial year. Information supporting this is provided in the Section 172
at the forthcoming Annual General Meeting. Chesnara is satisfied that it adheres to the rules that
disclosures on pages 32 to 39.
are imposed on UK listed companies to perform a tender after 10 years and with a mandatory
change of auditors after 20 years.
Going concern statement
After making appropriate enquiries, including consideration of the economic uncertainty in the
Approved by the Board on 26 March 2025 and signed on its behalf by:
wake of a high-inflation environment on the Group’s operations, financial position and prospects,
the directors confirm that they are satisfied that the Company and the Group have adequate
resources to continue in business for the foreseeable future. Accordingly, they continue to adopt
the going concern basis in the preparation of the financial statements. Further details can be found
within the financial management section on page 56.
Viability Statement
In accordance with provision 30 of the 2018 UK Corporate Governance Code, the directors
Tom Howard
have assessed the prospects of the Group over a period longer than the 12 months required
Group Chief Financial Officer
by the ‘going concern’ provision. The viability statement, aligned with Provision 31 of the
2018 UK Corporate Governance Code, is included in the Strategic Report on page 56.
138 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
CORPORATE GOVERNANCE
DIRECTORS’ RESPONSIBILITIES STATEMENT
Directors’ responsibilities
The directors are responsible for preparing the Annual Report and the Group and Company
The directors are responsible for keeping adequate accounting records that are sufficient to show
financial statements in accordance with applicable law and regulations.
and explain the Company’s transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that the financial statements comply
Company law requires the directors to prepare financial statements for each financial year.
with the Companies Act 2006. They are also responsible for safeguarding the assets of the
Under that law, the directors are required to prepare the Group financial statements in accordance
Company and hence for taking reasonable steps for the prevention and detection of fraud and
with UK-adopted international accounting standards and have elected to prepare the Company
other irregularities.
financial statements on the same basis.
The directors are responsible for the maintenance and integrity of the corporate and financial
In preparing the financial statements, International Accounting Standard 1 requires that directors:
information included on the Company’s website. Legislation in the United Kingdom governing the
– properly select and apply accounting policies;
preparation and dissemination of financial statements may differ from legislation in other
– present information, including accounting policies, in a manner that provides relevant, reliable,
jurisdictions.
comparable and understandable information;
Details of the Company’s greenhouse gas emissions, energy consumption and energy efficiency
– provide additional disclosures when compliance with the specific requirements in IFRS Standards
can be found in the Climate-Related Financial Disclosures within section B, on pages 86 to 90.
are insufficient to enable users to understand the impact of particular transactions, other events
Disclosures under Listing Rule 9.8.4R
and conditions on the entity’s financial position and financial performance; and
For the purposes of Listing Rule 9.8.4C, the information required to be disclosed under Listing
– make an assessment of the Company’s ability to continue as a going concern.
Rule 9.8.4R can be found within the following sections of the Annual Report and Accounts:
Section Requirement Location
Section Requirement Location
1 Statement of interest capitalised Not applicable
8 As per 7, but for major subsidiary undertakings Not applicable
2 Publication of unaudited financial information Not applicable
9 Parent participation in any placing of a subsidiary Not applicable
3 Deleted Not applicable
10 Contracts of significance Not applicable
4 Details of long-term incentive schemes Directors’ Remuneration Report
11 Controlling shareholder provision of services Not applicable
5 Waiver of emoluments by a director Not applicable
12 Shareholder dividend waiver Not applicable
6 Waiver of any future emoluments by a director Not applicable
13 Shareholder dividend waiver – future periods Not applicable
7 Non pre-emptive issue of equity for cash Not applicable
14 Controlling shareholder agreements Not applicable
Responsibility statement
Approved by the Board on 26 March 2025 and signed on its behalf by:
The directors whose names and functions are listed in the Board profile and Board of Directors
section on pages 94 and 95, confirm that to the best of our knowledge:
– the Group and Company financial statements, prepared in accordance with the relevant Financial
Reporting Framework, give a true and fair view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the consolidation taken as a whole;
– the Strategic Report includes a fair review of the development and performance of the business and
the position of the Company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that they face; and
– the annual report and the Group and Company financial statements, taken as a whole, are fair,
Luke Savage Steve Murray
balanced and understandable and provide the information necessary for shareholders to assess the
Chair Chief Executive Officer
Company’s position, performance, business model and strategy.
26 March 2025 26 March 2025
CHESNARAANNUALREPORTANDACCOUNTS2024139
IFRS
FINANCIAL
STATEMENTS
140 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
142 Independent Auditor’s Report to the
Parent Company Financial Statements
members of Chesnara plc
244 Company Balance Sheet
245 Company Statement of Cash Flows
IFRS Consolidated Financial Statements
246 Company Statement of Changes in Equity
148 Consolidated Statement of
Comprehensive Income
Notes to the Parent Company Financial Statements
149 Consolidated Balance Sheet
247 Section J – Company notes to the
150 Consolidated Statement of Cash Flows
financial statements
151 Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
152 Section A – General information and accounting
policies and judgements
168 Section B – Risk and capital management
182 Section C – Segmental information
185 Section D – Performance in the year
193 Section E – Balance sheet assets
199 Section F – Insurance and reinsurance contracts
230 Section G – Balance sheet liabilities
235 Section H – Shareholder equity
236 Section I – Additional disclosures
CHESNARAANNUALREPORTANDACCOUNTS2024141
IFRS FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CHESNARA PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
In the prior year, a component auditor (Ernst & Young Sweden AB, EY Sweden) provided market
analysis and strategic planning services totalling £71k to the Movestic division. These services were
Opinion
permitted under the component auditor’s local ethical standard, however not the FRC’s Ethical
Standard, and were approved by those charged with governance at Movestic. No similar, prohibited
In our opinion:
services have been provided to the Group in the current year. In assessing the impact on our
independence, firstly, there was no self-review threat identified as the team providing the work was
– the financial statements of Chesnara plc (the Parent Company, the Company) and its
not involved in the component audit, and further, the service provided did not affect balances
subsidiaries (the Group) give a true and fair view of the state of the Group’s and of
audited by the component audit team. Secondly, we also considered that the fees for the work,
the Parent Company’s affairs as at 31 December 2024 and of the Group’s profit for the year
£71,000, were not material to the Group or EY Sweden or of a level that would give rise to a
then ended;
significant self-interest threat. Based on the lack of self-review and insignificant self-interest threats,
– the Group financial statements have been properly prepared in accordance with United
we believe an objective, reasonable and informed third party would agree that our independence
Kingdom adopted international accounting standards;
was not impaired.
– the Company financial statements have been properly prepared in accordance with
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
United Kingdom adopted international accounting standards and as applied in accordance
for our opinion.
with the provisions of the Companies Act 2006; and
Summary of our audit approach
– the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Key audit
The key audit matters that we identified in the current year were:
matters
We have audited the financial statements, which comprise:
– Expense assumptions used in the valuation of insurance contract
liabilities; and
– the Consolidated Statement of Comprehensive Income;
– Valuation of Chesnara plc’s investment in Countrywide Assured plc (CA)
– the Consolidated and Company Balance Sheets;
Within this report, key audit matters are identified as follows:
– the Consolidated and Company Statements of Changes in Equity;
– the Consolidated and Company Statement of Cash Flows; and
Similar level of risk
– the related Notes A1 to J9, excluding the Capital Management disclosures calculated in accordance
with the Solvency II regime in Note B4, which are labelled as ‘unaudited’.
Materiality The materiality that we used for the Group financial statements was
£9,900,000 which was determined on the basis of 2% of adjusted
The Financial Reporting Framework that has been applied in their preparation is applicable law and
net assets. In line with the previous year, we defined ‘adjusted net assets’
United Kingdom adopted international accounting standards and, as regards the Parent Company
as net assets plus contractual service margin.
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Scoping We scoped our audit at the significant account balance level, scoping in
Basis of opinion
4 components (2023: 4 components) for audit procedures on one or more
classes of transactions, account balances and disclosures that together
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
represent 99% of the Group’s net insurance and investment results, 98%
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
of the Group’s profit before tax and 100% of the Group’s insurance and
Responsibilities for the Audit of the Financial Statements section of our report.
investment contract liabilities. This involved the performance of procedures
for the CA division directly by the Group audit team, as well as the
We are independent of the Group and the Parent Company in accordance with the ethical
involvement of component auditors for the Movestic (Sweden), Scildon
requirements that are relevant to our audit of the financial statements in the UK, including the Financial
(Netherlands) and Waard (Netherlands) divisions.
Reporting Council’s (the FRC’s) Ethical Standard as applied to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit
Significant
In the previous year, we included a key audit matter in relation to the
services provided to the Group and Parent Company for the year are disclosed in Note D4 to the
changes in our
Group’s first-time adoption of IFRS 17 ‘Insurance Contracts’ given the
financial statements. We confirm that we have not provided any non-audit services prohibited by
approach
significance and complexity of judgements made when transitioning
the FRC’s Ethical Standard to the Group or the Parent Company, with the exception of the matter
to IFRS 17. As the year ended 31 December 2024 represents the second
described in the following paragraph.
year that the Group has applied IFRS 17, we no longer consider this
to represent a key audit matter.
142 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
Conclusions relating to going concern
Expenses assumptions used in the valuation of insurance contract liabilities
In auditing the financial statements, we have concluded that the directors’ use of the going concern
Key audit matter description
basis of accounting in the preparation of the financial statements is appropriate.
The Group’s insurance contract liabilities are one of the largest balances on the balance sheet, held
at £4.1bn (2023: £4.2bn) at 31 December 2024. The valuation of insurance contract liabilities
Our evaluation of the directors’ assessment of the Group’s and Parent Company’s ability to continue
is determined using actuarial assumptions that require complex judgements and forward-looking
to adopt the going concern basis of accounting included:
estimates to be made by management. A number of the assumptions, such as mortality and
– obtaining an understanding of relevant controls in place over management’s going concern
morbidity, economic assumptions, and lapse rates, are made with reference to industry tables
assessment process;
and actual experience, and hence market benchmarking highlights material deviations from
industry practices.
– evaluating the key assumptions underpinning the Group’s forecast liquidity and capital, including
those determined for each of its significant business units;
The expense assumptions require management to make significant judgements and estimates
relating to the future expenses attributable to insurance contracts. The risk associated with the
– evaluating the adequacy and completeness of stress testing performed within the Group’s Own
expense assumptions is higher than other actuarial assumptions as a result of:
Risk and Solvency Assessment (ORSA), with reference to our understanding of its internal and
external environment, including the impacts on the Group’s forecast liquidity and Solvency Capital
– planned changes to the policy administration outsourcing arrangements of CA, including the
Requirements, considering the Group’s principal risks and uncertainties as outlined on page 61
anticipated project costs of migration and termination;
to 67; and
– the impact of inflation on future expenses in the short- and long-term, particularly given recent
– assessing the appropriateness of the going concern disclosures in the financial statements, based
changes in the Group’s macroeconomic environments; and
on our knowledge gained throughout the audit.
– uncertainties in the costs of maintaining insurance portfolios in run-off, particularly where variable
Based on the work we have performed, we have not identified any material uncertainties relating
cost assumptions are used.
to events or conditions that, individually or collectively, may cast significant doubt on the Group’s
Given the significance of the insurance contract liabilities held within CA (£1.3bn), Scildon (£1.9bn)
and Parent Company’s ability to continue as a going concern for a period of at least 12 months from
and Waard (£0.7bn), our key audit matter was pinpointed to the expense assumptions within these
when the financial statements are authorised for issue.
divisions. As the expense assumptions are susceptible to manipulation by management, impacting
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we
its reported profit before taxation, we determined that there was a risk of material misstatement
have nothing material to add or draw attention to in relation to the directors’ statement in the
due to fraud and therefore identified this area as a key audit matter.
financial statements about whether the directors considered it appropriate to adopt the going concern
The Group’s accounting policy relating to its insurance contract liabilities has been presented in
basis of accounting.
Note A4, with details of the balance and movement from 31 December 2023 set out within Notes
Our responsibilities and the responsibilities of the directors with respect to going concern are
F2 to F5. The expense assumptions used in determining insurance contracts liabilities are also
described in the relevant sections of this report.
referred to in the Audit & Risk Committee Report on page 127.
Key audit matters
How the scope of our audit responded to the key audit matter
In respect of the expense assumptions used in the valuation of insurance contract liabilities, we
Key audit matters are those matters that, in our professional judgement, were of most significance
performed the following procedures:
in our audit of the financial statements of the current period and include the most significant assessed
– obtained an understanding of relevant controls in place around management’s assumption setting
risks of material misstatement (whether or not due to fraud) that we identified. These matters
processes at the Group and divisional level;
included those which had the greatest effect on: the overall audit strategy; the allocation of resources
in the audit; and directing the efforts of the engagement team.
– with the involvement of actuarial specialists, evaluated the appropriateness of expense
assumptions and methodology. Our assessment considered the reasonableness of forecasts for
These matters were addressed in the context of our audit of the financial statements as a whole,
future periods with reference to the Group’s internal and external business environments, the
and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
impacts of any planned management actions, and whether the assumptions have been subject
to management bias;
– tested actual expenses in the year ended 31 December 2024 and compared these to management’s
previous forecasts to understand the predictive accuracy of management’s process;
– assessed the mechanical accuracy of management’s underlying expense calculations, verifying that
management’s selected methodology had been applied correctly; and
– assessed the appropriateness of the disclosures within the financial statements in relation to
expense assumptions used in the valuation of the underlying insurance contract liabilities.
Key observations
Based on the procedures performed, we consider the expense assumptions used in the valuation
of insurance contract liabilities and related disclosures to be appropriate.
CHESNARAANNUALREPORTANDACCOUNTS2024143
IFRS FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CHESNARA PLC
Valuation of Chesnara plc’s investment in CA
Our application of materiality
Key audit matter description
Materiality
Chesnara plc holds investments in subsidiaries totalling £389.9m (2023: £399.6m) on its Company
We define materiality as the magnitude of misstatement in the financial statements that makes it
balance sheet, measured at cost less cumulative impairment losses.
probable that the economic decisions of a reasonably knowledgeable person would be changed
or influenced. We use materiality both in planning the scope of our audit work and in evaluating the
In line with IAS 36 ‘Impairment of Assets’, management are required to carry out an impairment
results of our work.
assessment if there is indication of impairment loss at the balance sheet date. Through its
assessment, management evaluated whether the investment in CA was carried at more or less
Based on our professional judgement, we determined materiality for the financial statements as
than its recoverable amount, which is the higher of fair value less costs of disposal and value
a whole as follows:
in use, and therefore whether an impairment is required. Management have historically deemed
Economic Value (EcV) to be an appropriate proxy for recoverable amount, with management’s
Group financial statements Parent Company
definition of EcV included on page 260.
financial statements
In recent years, the CA EcV has been on a downwards trend as dividends paid to the Parent
Materiality £9.9m (2023: £10.3m) £9.2m (2023: £9.0m)
Company have exceeded EcV growth, with this dynamic being a function of CA being a closed
book insurer. The impairment assessment performed by management at the balance sheet
Basis for
2% of adjusted net assets
3% of net assets
date highlighted £4.0m (2023: £14.4m) of impairment over the carrying value of the investment.
determining
(2023: 2% of adjusted net assets)
(2023: 3% of net assets)
materiality
Due to the potential for management to introduce inappropriate bias to judgements made in the
In line with the prior year, adjusted
The performance materiality
impairment assessment when determining the EcV, with impairment losses impacting the
net assets is defined as net
applied to the Parent Company for
Parent Company income statement and balance sheet, we determined that there was a risk of
assets plus Contractual Service
the purposes of the Group audit
material misstatement due to fraud and therefore identified this area as a key audit matter.
Margin (CSM).
opinion is discussed on page 145.
The Parent Company’s accounting policy relating to its subsidiary investments has been presented
in Note A4, with details of the impairment sensitivities included in Note A5. The carrying value
Rationale for
The Group’s key stakeholders
A net assets or equity measure
of Chesnara plc’s investment in CA is also referred to in the Audit & Risk Committee Report on
the benchmark
are focused on the management
is closely aligned to the objectives
page 127.
applied
of capital under Solvency II
of the Parent Company, in
and therefore we consider the
making dividend payments from its
How the scope of our audit responded to the key audit matter
most relevant and equivalent
distributable reserves, with the
In respect of the valuation of Chesnara plc’s investment in CA, we performed the
metric to be net assets.
benchmark representing a stable
following procedures :
long-term measure of the
IFRS 17 introduced the concept
Company’s financial position.
– obtained an understanding of relevant controls in place around management’s impairment
of CSM, which reflects the
assessment and EcV valuation processes;
estimated deferred profit that
is expected to be realised within
– evaluated management’s methodology for determining the recoverable amount of CA in accordance
net assets in future reporting
with IAS 36 ‘Impairment of Assets’, including the appropriateness of using EcV as a proxy for
periods. We deem it appropriate
recoverable amount;
to adjust net assets by adding
– with the involvement of actuarial specialists, evaluated the accuracy and completeness of
CSM to the benchmark, reflecting
adjustments made to CA’s IFRS balance sheet in order to determine the EcV and considered
the future value of the Group.
whether the adjustments have been subject to management bias;
As permitted by FRC Practice Note 20 ‘The Audit of Insurers in the United Kingdom’, we applied
– performed a stand-back assessment of management’s impairment assessment against our
a separate testing threshold of £24.5m (2023: £24.0m) when performing our testing over
knowledge and understanding of changes in CA internal and external business environment;
CA unit-linked insurance assets and the related notes. This was determined with reference to
– evaluated management’s impairment assessment by performing benchmarking against other recent
1% of unit-linked assets (2023: 1% of unit-linked assets).
industry transactions to gain corroborative and contradictory evidence; and
– evaluated the appropriateness of disclosures included in Note J1 of the financial statements.
Group materiality £9.9m
Key observations
Based on the procedures performed, we consider the carrying value of Chesnara plc’s investment
Component performance
Net Assets
in CA to be appropriate.
materiality range £3.2m
+ CSM £495m
to £5.6m
Audit & Risk Committee
reporting threshold £0.49m
Net assets + CSM
Group materiality
144 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
Performance materiality
An overview of the scope of our audit (continued)
We set performance materiality at a level lower than materiality to reduce the probability that,
in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial
Our consideration of the control environment
statements as a whole.
We focused our assessment of relevant controls around each of the key audit matters detailed
above, as well as significant account balances and business processes such as revenue, claims paid,
Parent Company
actuarial reserving, investments and financial reporting. With the assistance of IT specialists, we
Group financial statements
financial statements
also performed walkthroughs to gain an understanding of the Group’s key IT systems in each of its
significant business divisions. The extent of controls assessment and testing performed varied
Performance
65% (2023: 65%) of
£5.6m (2023: £5.8m), which
depending on the maturity of the IT systems and controls in place.
materiality
Group materiality
equates to 61% (2023: 65%)
Where, through the process of understanding the systems and controls in place, we identified
of Parent Company materiality
deficiencies or found that previously identified deficiencies had not been remediated, we did not
Basis and
In determining performance materiality, we considered the quality of the
seek to rely on those controls in the current year. We shared observations arising from our
rationale for
Group and Parent Company’s control environment and whether we
procedures with management and the Audit & Risk Committee. Where improvements to controls
determining
were able to rely on controls, our understanding of changes in the Group’s
have been identified, management are remediating the deficiencies in response to provision 29.
performance
internal and external business environment, the nature of the Group’s
The Board of Directors’ assessment of the Group’s control environment set out on page 103.
materiality
significant account balances and our past experience of the audit, which
In line with previous years, we relied on controls in place over the Movestic division’s
has indicated a low number of corrected and uncorrected misstatements
investments process.
identified in prior periods.
Our consideration of climate-related risks
In planning our audit, we considered the potential impact of climate-related risks on the Group’s
Error reporting threshold
business and its financial statements. The Group’s Risk Management Policy and Framework
We agreed with the Audit & Risk Committee that we would report to the committee all audit
encompass the potential impacts and opportunities of environmental, social and governance
differences in excess of £495,000 (2023: £500,000), as well as differences below that threshold
factors (ESG) and climate change as explained in the Strategic Report on pages 58 to 60.
that, in our view, warranted reporting on qualitative grounds. We also report to the Audit & Risk
As set out in Note A4, management does not consider that climate change risk is currently a key
Committee on disclosure matters that we identified when assessing the overall presentation of the
source of estimation uncertainty nor that it presents a material impact to the judgements made
financial statements.
in the financial statements.
An overview of the scope of our audit
We held discussions with management to understand the approach for identifying climate-related
risks, as well as their impact on the financial statements. This included obtaining an understanding
Identification and scoping of components
of governance controls in place over the Group’s risk assessment process, which includes the
We scoped our audit by obtaining an understanding of the Group and its environment, including
consideration of climate-related risks. We also obtained an understanding of the Group’s long-term
groupwide controls, and identifying significant account balances and related risks of material
strategy to respond to climate-related risks as they evolve, including the potential impact on the
misstatement at the Group level.
Group’s forecasts for future periods.
We scoped our audit at the significant account balance level, scoping in 4 components (2023: 4
Our audit work has included assessing the conclusions reached by management regarding the
components) for audit procedures on one or more classes of transactions, account balances and
impact of climate-related risks on the Group’s financial statements in the current year and reading
disclosures that together represent 99% of the Group’s net insurance and investment results,
the disclosures in the Strategic Report, with the involvement of ESG specialists, to consider
98% of the Group’s profit before tax and 100% of the Group’s insurance and investment contract
whether they are materially consistent with the financial statements and our knowledge obtained
liabilities. This involved the performance of procedures for the CA division directly by the Group
in the audit. We also evaluated the appropriateness of disclosures included in the financial
audit team, as well as the involvement of component auditors for the Movestic (Sweden), Scildon
statements in Note A4.
(Netherlands) and Waard (Netherlands) divisions.
Working with other auditors
For the Parent Company component, we applied a component performance materiality equal to
Referral instructions were provided to each of the component auditors of the Movestic, Scildon and
£5.6m; for the other components, we used individual component performance materiality levels
Waard divisions, outlining the procedures to be performed to support the Group audit opinion.
determined on the basis of their individual financial statements, which ranged from £3.2m to £5.6m.
The Group audit team directed and supervised the work performed by component auditors on its
At the Group level, we performed audit procedures over the consolidation process and analytical
behalf, which included:
procedures over account balances where no audit procedures had been performed, in order to assess
– involving the component audit teams in our groupwide fraud and planning discussions;
whether there were any additional risks of material misstatement at the Group level.
– holding regular meetings throughout the audit in order to monitor and challenge the nature and
extent of each component auditor’s planned audit procedures; and
– performing in-person file reviews of each component auditor’s risk assessment and audit work,
assessing the appropriateness of the conclusions reached.
In addition to reviewing the audit files of each component auditor, the Group audit team also
evaluated the formal responses provided to our referral instructions, assessing whether the planned
procedures had been performed appropriately.
CHESNARAANNUALREPORTANDACCOUNTS2024145
IFRS FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CHESNARA PLC
Identifying and assessing potential risks related to irregularities
Other information
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud
and non-compliance with laws and regulations, we considered the following:
The other information comprises the information included in the Annual Report and Accounts,
other than the financial statements and our auditor’s report thereon. The directors are responsible
– the nature of the industry and sector, control environment and business performance including the
for the other information contained within the Annual Report and Accounts.
design of the Group’s remuneration policies, key drivers for directors’ remuneration, bonus levels
and performance targets;
Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance
– the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or
conclusion thereon.
error that was approved by the Board;
Our responsibility is to read the other information and, in doing so, consider whether the other
– results of our enquiries of management, internal audit, the directors and the Audit & Risk Committee
information is materially inconsistent with the financial statements, or our knowledge obtained
about their own identification and assessment of the risks of irregularities, including those that
in the course of the audit, or otherwise appears to be materially misstated.
are specific to the Group’s sector;
If we identify such material inconsistencies or apparent material misstatements, we are required
– any matters we identified having obtained and reviewed the Group’s documentation of their policies
to determine whether this gives rise to a material misstatement in the financial statements
and procedures relating to:
themselves. If, based on the work we have performed, we conclude that there is a material
– identifying, evaluating and complying with laws and regulations and whether they were aware
misstatement of this other information, we are required to report that fact.
of any instances of non-compliance;
We have nothing to report in this regard
– detecting and responding to the risks of fraud and whether they have knowledge of any actual,
suspected or alleged fraud;
Responsibilities of directors
– the internal controls established to mitigate risks of fraud or non-compliance with laws
and regulations;
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible
– the matters discussed among the audit engagement team, including significant component audit
for the preparation of the financial statements and for being satisfied that they give a true and fair
teams, and relevant internal specialists, including tax, actuarial, IT and ESG specialists regarding
view, and for such internal control as the directors determine is necessary to enable the preparation
how and where fraud might occur in the financial statements and any potential indicators of fraud.
of financial statements that are free from material misstatement, whether due to fraud or error.
As a result of these procedures, we considered the opportunities and incentives that may exist
In preparing the financial statements, the directors are responsible for assessing the Group’s and
within the organisation for fraud and identified the greatest potential for fraud in the following areas:
the Parent Company’s ability to continue as a going concern, disclosing as applicable, matters
expense assumptions used in the valuation of insurance contract liabilities and the valuation of
related to going concern and using the going concern basis of accounting unless the directors either
Chesnara plc’s investment in CA. In common with all audits under ISAs (UK), we are also required
intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic
to perform specific procedures to respond to the risk of management override.
alternative but to do so.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates
Auditor’s responsibilities for the audit of the financial statements
in, focusing on provisions of those laws and regulations that had a direct effect on the determination
of material amounts and disclosures in the financial statements. The key laws and regulations
Our objectives are to obtain reasonable assurance about whether the financial statements as a
we considered in this context included the UK Companies Act, Listing Rules, and tax legislation.
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
In addition, we considered provisions of other laws and regulations that do not have a direct effect
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a
on the financial statements but compliance with which may be fundamental to the Group’s ability
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
to operate or to avoid a material penalty. These included the Group’s regulatory solvency requirements
misstatement when it exists. Misstatements can arise from fraud or error and are considered
and compliance with the requirements of the Financial Conduct Authority (FCA), Prudential
material if, individually or in the aggregate, they could reasonably be expected to influence the
Regulatory Authority (PRA), De Nederlandsche Bank (DNB) and the Swedish Financial Services
economic decisions of users taken on the basis of these financial statements.
Authority (FSA).
A further description of our responsibilities for the audit of the financial statements is located on
the FRC’s website at: www.frc.org.uk/auditorsresponsibilities This description forms part of our
Audit response to risks identified
auditor’s report.
As a result of performing the above, we identified expense assumptions used in the valuation of
insurance contract liabilities and the valuation of Chesnara plc’s investment in CA as key audit
Extent to which the audit was considered capable of detecting irregularities, including fraud
matters related to the potential risk of fraud. The key audit matters section of our report explains the
matters in more detail and also describes the specific procedures we performed in response to
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
those key audit matters.
procedures in line with our responsibilities, outlined above, to detect material misstatements in
In addition to the above, our procedures to respond to risks identified included the following:
respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
– reviewing the financial statement disclosures and testing to supporting documentation to assess
compliance with provisions of relevant laws and regulations described as having a direct effect on
the financial statements;
146 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
– enquiring of management, the Audit & Risk Committee and in-house legal counsel concerning actual
Matters on which we are required to report by exception
and potential litigation and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate
Adequacy of explanations received and accounting records
risks of material misstatement due to fraud;
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– reading minutes of meetings of those charged with governance, reviewing internal audit reports and
– we have not received all the information and explanations we require for our audit; or
reviewing correspondence with the FCA, PRA, DNB and FSA; and
– adequate accounting records have not been kept by the Parent Company, or returns adequate for
– in addressing the risk of fraud through management override of controls, testing the appropriateness
our audit have not been received from branches not visited by us; or
of journal entries and other adjustments; assessing whether the judgements made in making
– the Parent Company financial statements are not in agreement with the accounting records
accounting estimates are indicative of a potential bias; and evaluating the business rationale of any
and returns.
significant transactions that are unusual or outside the normal course of business.
We have nothing to report in respect of these matters.
We also communicated relevant identified laws and regulations and potential fraud risks to all
engagement team members including internal specialists and component audit teams, and remained
Directors’ remuneration
alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures
of directors’ remuneration have not been made or the part of the Directors’ Remuneration Report
Report on other legal and regulatory requirements
to be audited is not in agreement with the accounting records and returns.
Opinions on other matters prescribed by the Companies Act 2006
We have nothing to report in respect of these matters.
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Other matters which we are required to address
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the Strategic Report and the Directors’ Report for the financial year for which
Auditor tenure
the financial statements are prepared is consistent with the financial statements; and
Following the recommendation of the Audit & Risk Committee, we were appointed by the Group
Board of Directors on 1 October 2009 to audit the financial statements for the year ending
– the Strategic Report and the Directors’ Report have been prepared in accordance with applicable
31 December 2009 and subsequent financial periods. The period of total uninterrupted engagement
legal requirements.
including previous renewals and reappointments of the firm is 16 years, covering the years ending
In the light of the knowledge and understanding of the Group and the Parent Company and their
31 December 2009 to 31 December 2024.
environment obtained in the course of the audit, we have not identified any material misstatements
in the Strategic Report or the Directors’ Report.
Consistency of the audit report with the additional report to the Audit & Risk Committee
Our audit opinion is consistent with the additional report to the Audit & Risk Committee we are
Corporate Governance Statement
required to provide in accordance with ISAs (UK).
The Listing Rules require us to review the directors’ statement in relation to going concern,
Use of our report
longer-term viability and that part of the Corporate Governance Report relating to the Group’s
compliance with the provisions of the UK Corporate Governance Code specified for our review.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3
of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might
Based on the work undertaken as part of our audit, we have concluded that each of the following
state to the Company’s members those matters we are required to state to them in an auditor’s
elements of the Corporate Governance Statement is materially consistent with the financial
report and for no other purpose. To the fullest extent permitted by law, we do not accept or
statements and our knowledge obtained during the audit:
assume responsibility to anyone other than the Company and the Company’s members as a body,
– the directors’ statement with regards to the appropriateness of adopting the going concern basis
for our audit work, for this report, or for the opinions we have formed.
of accounting and any material uncertainties identified, set out on page 138;
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule
– the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment
(DTR) 4.1.15R – DTR 4.1.18R, these financial statements form part of the Electronic Format Annual
covers and why the period is appropriate, set out on page 138;
Financial Report filed on the National Storage Mechanism of the FCA in accordance with DTR
4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic Format
– the directors’ statement on fair, balanced and understandable, set out on page 139;
Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
– the Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks, set out on page 58;
– the section of the Annual Report and Accounts that describes the review of effectiveness of risk
management and internal control systems, set out on page 103; and
Matthew Bainbridge (Senior Statutory Auditor) for and on behalf of Deloitte LLP
– the section describing the work of the Audit & Risk Committee, set out on page 128.
Statutory Auditor
Leeds, United Kingdom
26 March 2025
CHESNARAANNUALREPORTANDACCOUNTS2024147
IFRS FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December | 2024 | 2023 | |
Note | £m | £m | |
Insurance revenue | D1 | ||
Insurance service expense | D1 | ( | ( |
Net expenses from reinsurance contracts held | D1 | ( | ( |
Insurance service result | ( | ||
Net investment return | D2 | ||
Net finance (expenses)/income from insurance contracts issued | D2 | ( | ( |
Net finance income/(expenses) from reinsurance contracts held | D2 | ||
Net change in investment contract liabilities | D2 | ( | ( |
Change in liabilities relating to policyholders’ funds held by the Group | D2 | ( | ( |
Net investment result | |||
Fee, commission and other operating income | D3 | ||
Total revenue net of investment result | |||
Other operating expenses | D4 | ( | ( |
Total income less expenses | |||
Financing costs | D5 | ( | ( |
Profit arising on business combinations and portfolio acquisitions | I7 | ||
Profit/(loss) before income taxes | C2 | ||
Income tax credit | D6 | ( | |
Profit/(loss) for the period | C2 | ||
| Items that may be reclassified subsequently to profit and loss: | |||
Foreign exchange translation differences arising on the revaluation of foreign operations | ( | ( | |
Revaluation of land and building | |||
| Items that will not be reclassified to profit and loss: | |||
Revaluation of pension obligations after tax | ( | ||
Other comprehensive (expense)/income for the period, net of tax | ( | ( | |
Total comprehensive income/(expense) for the period | ( | ||
Basic earnings per share (based on profit or loss for the period) | I3 | ||
Diluted earnings per share (based on profit or loss for the period) | I3 | ||
| The Notes and information on pages 152 to 243 form part of these financial statements. |
148 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
31 December | 2024 | Restated 2023 | |
Note | £m | £m | |
| Assets | |||
Intangible assets | E1 | ||
Property and equipment | E2 | ||
Investment properties | E3 | ||
Deferred tax assets | G4 | ||
Insurance contract assets | F1 | ||
Reinsurance contract assets | F1 | ||
Amounts deposited with reinsurers | |||
Financial investments | E4 | ||
Derivative financial instruments | E5 | ||
Other assets | E6 | ||
Cash and cash equivalents | E7 | ||
Total assets | |||
| Liabilities | |||
Insurance contract liabilities | F1 | ||
Reinsurance contract liabilities | F1 | ||
Other provisions | G1 | ||
Investment contracts at fair value through profit or loss | |||
Liabilities relating to policyholders’ funds held by the Group | |||
Lease contract liabilities | G2 | ||
Borrowings | G3 | ||
Derivative financial instruments | E5 | ||
Deferred tax liabilities | G4 | ||
Deferred income | G5 | ||
Other current liabilities | G6 | ||
Bank overdrafts | E7 | ||
Total liabilities | |||
Net assets | C2 | ||
| Shareholders’ equity | |||
Share capital | H1 | ||
Merger reserve | H1 | ||
Share premium | H1 | ||
Other reserves | H2 | ( | |
Retained earnings | H3 | ||
Total shareholders’ equity |
The Notes and information on pages 152 to 243 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
CHESNARAANNUALREPORTANDACCOUNTS2024149
IFRS FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 31 December | 2024 | Restated 2023 | |
Note | £m | £m | |
Profit/(Loss) for the period | |||
| Adjustments for: | |||
Depreciation of property and equipment | E2 | ||
Depreciation on right-of-use assets | |||
Amortisation of intangible assets | E1 | ||
Impairment of intangible assets | |||
Share-based payment | |||
Tax expense/(credit) | ( | ||
Interest receivable | ( | ( | |
Dividends receivable | ( | ( | |
Interest expense | |||
Fair value (gains)/losses on financial assets and investment properties | ( | ( | |
Profit on business combinations and portfolio acquisitions | ( | ||
Increase in intangible assets related to investment contracts | ( | ( | |
Adjustment total | ( | ( | |
Interest received | |||
Dividends received | |||
| Changes in operating assets and liabilities: | |||
Decrease/(increase) in financial assets and investment properties | |||
Decrease/(increase) in net reinsurers contract assets | |||
Decrease/(increase) in amounts deposited with reinsurers | ( | ||
(Increase)/decrease in other assets | ( | ||
Increase/(decrease) in net insurance contract liabilities | |||
Increase/(decrease) in investment contract liabilities | |||
Increase/(decrease) in provisions | ( | ||
Increase/(decrease) in other current liabilities | ( | ||
Cash generated/(utilised) by operations | ( | ||
Income tax paid | ( | ( | |
Net cash generated/(utilised) from operating activities | ( | ||
| Cash flows from investing activities | |||
Acquisition of subsidiary, net of cash acquired | |||
Capital contribution received from subsidiary | |||
Net proceeds/(purchases) of property and equipment | ( | ( | |
Net cash (utilised)/generated by investing activities | |||
| Cash flows from financing activities | |||
Net proceeds from the issue of share capital | |||
Repayment of borrowings | ( | ( | |
Repayment of lease liabilities | ( | ( | |
Dividends paid | ( | ( | |
Interest paid | ( | ( | |
Net cash utilised by financing activities | ( | ( | |
Net decrease in cash and cash equivalents | ( | ( | |
Net cash and cash equivalents at beginning of period | E7 | ||
Effect of exchange rate changes on net cash and cash equivalents | ( | ( | |
Net cash and cash equivalents at end of the period | E7 | ||
| Note. Net cash and cash equivalents includes overdrafts. |
The Notes and information on pages 152 to 243 form part of these financial statements.
150 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2024 | Share | Share | Merger | Other | Retained | |
capital | premium | reserve | reserves | earnings | Total | |
£m | £m | £m | £m | £m | £m | |
Equity shareholders’ funds at 1 January 2024 | ||||||
Profit for the year | ||||||
Foreign exchange translation differences | ( | ( | ||||
Other items of comprehensive income | ||||||
Total comprehensive income | ( | ( | ||||
Dividends paid | ( | ( | ||||
Share-based payment | ||||||
Equity shareholders’ funds at 31 December 2024 | ( |
Year ended 31 December 2023 – restated | Share | Share | Merger | Other | Retained | |
capital | premium | reserve | reserves | earnings | Total | |
£m | £m | £m | £m | £m | £m | |
Equity shareholders’ funds at 1 January 2023 | ||||||
Profit for the year | ||||||
Foreign exchange translation differences | ( | ( | ||||
Other items of comprehensive income | ( | ( | ||||
Total comprehensive income | ( | |||||
Dividends paid | ( | ( | ||||
Issue of share premium | ||||||
Share-based payment | ||||||
Equity shareholders’ funds at 31 December 2023 | ||||||
| The Notes and information on pages 152 to 243 form part of these financial statements. |
CHESNARAANNUALREPORTANDACCOUNTS2024151
IFRS FINANCIAL STATEMENTS
152 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION A GENERAL INFORMATION AND ACCOUNTING POLICIES AND JUDGEMENTS
A4 Material accounting policy information (continued)
154 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION A GENERAL INFORMATION AND ACCOUNTING POLICIES AND JUDGEMENTS
156 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION A – GENERAL INFORMATION AND ACCOUNTING POLICIES AND JUDGEMENTS
A4 Material accounting policy information (continued)
(b) Investment contracts
(c) Amounts deposited with reinsurers
(d) Investment return
158 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION A GENERAL INFORMATION AND ACCOUNTING POLICIES AND JUDGEMENTS
A4 Material accounting policy information (continued)
is revalued annually using an index valuation on each property. Any funds in receipt of the sale of
the property are for the benefit of the respective pension fund members.
160 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION A GENERAL INFORMATION AND ACCOUNTING POLICIES AND JUDGEMENTS
A4 Material accounting policy information (continued)
(y) Share capital and shares held in treasury (Parent Company only)
162 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION A GENERAL INFORMATION AND ACCOUNTING POLICIES AND JUDGEMENTS
164 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION A GENERAL INFORMATION AND ACCOUNTING POLICIES AND JUDGEMENTS
166 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION B RISK AND CAPITAL MANAGEMENT
B1 Risk Management Framework
The Group’s Board of Directors has overall responsibility for the adequacy of the design and
implementation of the Group’s Risk Management Framework and its consistent application
across divisions. The Group and its divisions operate within a defined risk strategy and supporting
Risk Appetite Framework. Risk preferences are approved by the Board of Directors and the risk
position of the business is monitored against these preferences.
The Group’s risk management policies are established to identify and analyse the risks faced by
the Group, set appropriate risk limits and controls, and monitor adherence to risk limits. The risk
management policies are reviewed regularly to reflect changes in market conditions and the Group’s
activities whilst the Board of Directors approves the review, updates and attestation of these
policies at least annually.
Risk is managed at local entity level where the business is transacted, based on the principles and
policies established at Group level. The Group Audit & Risk Committee oversees how management
monitors compliance with the Group’s risk management policies and procedures, and reviews
the adequacy of the Risk Management Framework in relation to the risks faced by the Group. It is
assisted in its oversight role by internal audit, which undertakes both regular and ad hoc reviews
of risk management controls and procedures, the results of which are reported to the Group Audit
& Risk Committee.
The Group issues insurance contracts and investment contracts. The nature and extent of the
underwriting and financial risks arising from these contracts are determined by the contract design.
The risks are evaluated for risk management purposes in conjunction with the risks mitigated by
related reinsurance contracts and the risks arising from financial assets held to fund the settlement
(a) UK business
of the liabilities.
(i) Immediate annuities
(ii) Term assurances and other non-linked
(iii) Unit-linked/Index-linked/With-profits – GMM
168 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION B RISK AND CAPITAL MANAGEMENT
(c) Waard Group
(ii) Term assurance and other non-linked
(iii) Unit-linked/Index-linked/With-profits – GMM
(iv) Unit-linked/Index-linked/With-profits – VFA
long-term contracts.
170 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION B RISK AND CAPITAL MANAGEMENT
(e) Sensitivity analysis
(i) Unit-linked savings are single or regular premium contracts, with the premiums invested in
(ii) Unit-linked pensions are single or regular premium contracts with features similar to unit-linked
B3 Financial risk
172 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION B RISK AND CAPITAL MANAGEMENT
B3 Financial risk (continued)
(iv) Currency translation risk
174 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION B RISK AND CAPITAL MANAGEMENT
B3 Financial risk (continued)
176 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION B RISK AND CAPITAL MANAGEMENT
B3 Financial risk (continued)
178 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
180 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION C SEGMENTAL INFORMATION
182 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION C SEGMENTAL INFORMATION
184 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION D PERFORMANCE IN THE YEAR
192 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION E BALANCE SHEET ASSETS
194 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION E BALANCE SHEET ASSETS
– Contract age – The CPR for newly originated mortgage loans will initially be low, after which
– Burnout effect – Borrowers who have not made a prepayment in the past, while their option to prep ay
196 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION G BALANCE SHEET LIABILITIES
G2 Lease liabilities
230 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION G BALANCE SHEET LIABILITIES
232 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION I ADDITIONAL DISCLOSURES
(g) 2021 award made under the Short-Term Incentive Scheme (STIS)
(h) 2021 award made under the Long-Term Incentive Plan (LTIP)
238 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
IFRS FINANCIAL STATEMENTS
SECTION I ADDITIONAL DISCLOSURES
(p) 2016 award made under the Long-Term Incentive Plan (LTIP)
240 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
CHESNARAANNUALREPORTANDACCOUNTS2024243
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).
244 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.
CHESNARAANNUALREPORTANDACCOUNTS2024245
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.
246 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
31 December 2023 Amortised FVTPL – FVTPL –
Company
cost designated mandatory Total
£m £m £m £m
Year ended 31 December 2024 2023
£m £m
Financial investments
Holdings in collective investment schemes – – 114.6 114.6
Cost
Debt securities – non government bonds – – – –
Balance at 1 January 439.0 439.0
Disposals (5.7 ) (4.8 )
Total – – 114.6 114.6
Balance at 31 December 433.3 439.0
Derivatives and other financial assets
Other assets 6.0 – – 6.0
Impairment
Cash and cash equivalents – 5.7 – 5.7
Balance at 1 January (39.4 ) (25.0 )
Impairment for the year (4.0 ) (14.4 )
Total financial investments and financial assets 6.0 5.7 114.6 126.3
Balance at 31 December (43.4 ) (39.4 )
Financial liabilities
Borrowings 200.6 – – 200.6
Carrying amounts
Derivative financial instruments – – 4.4 4.4
At 1 January 399.6 414.0
Other current liabilities 4.4 – – 4.4
At 31 December 389.9 399.6
Total financial liabilities 205.0 – 4.4 209.4
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
(b) Financial investment fair values
concluded that its investment in Countrywide Assured plc was impaired. As a result, an impairment
Fair value is the amount for which an asset or liability could be exchanged between willing parties
loss of £4.0m (31 December 2023: £14.4m) has been recognised in the year. The impairment, which
in an arm’s length transaction. The tables below show the determination of fair value according
was expected, has primarily arisen as a result of Countrywide Assured plc’s policy of distributing its
to a three-level valuation hierarchy. Fair values are generally determined at prices quoted in active
surplus capital up to Chesnara plc as it becomes available over time. Further details regarding the
markets (Level 1). However, where such information is not available, the Group applies valuation
assessment are reported in Note A5(j).
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
J2 Financial investments
estimate other than market-observable data within a valuation model for significant inputs (Level 3).
(a) Financial investments by classification
The carrying amounts of the financial investments and other financial assets and liabilities held by
Fair value measurement at Level 1 Level 2 Level 3 Total
the Group at the balance sheet date are as follows:
31 December 2024 £m £m £m £m
Financial assets
31 December 2024 Amortised FVTPL – FVTPL –
Holdings in collective investment schemes 93.9 – – 93.9
cost designated mandatory Total
Debt securities – non government bonds 10.1 – – 10.1
£m £m £m £m
Total 104.0 – – 104.0
Financial investments
Holdings in collective investment schemes – – 93.9 93.9
Current 104.0 – – 104.0
Debt securities – non government bonds – – 10.1 10.1
Non-current – – – –
Total – – 104.0 104.0
Total 104.0 – – 104.0
Derivatives and other financial assets
Financial liabilities
Other assets 13.7 – – 13.7
Derivative financial instruments – 0.3 – 0.3
Cash and cash equivalents – 4.8 – 4.8
Total – 0.3 – 0.3
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
CHESNARAANNUALREPORTANDACCOUNTS2024247
IFRS FINANCIAL STATEMENTS
SECTION J COMPANY NOTES TO THE FINANCIAL STATEMENTS
J2 Financial investments (continued)
(b) Financial investment fair values (continued)
J5 Borrowings
Fair value measurement at Level 1 Level 2 Level 3 Total
31 December 2024 2023
31 December 2023 £m £m £m £m
£m £m
Financial assets
Tier 2 debt 200.8 200.6
Holdings in collective investment schemes 114.6 – – 114.6
Debt securities – non government bonds – – – –
Total 200.8 200.6
Total 114.6 – – 114.6
Current – –
Non-current 200.8 200.6
Current 114.6 – – 114.6
Non-current – – – –
Total 200.8 200.6
Total 114.6 – – 114.6
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
Financial liabilities
to Tier 2 debt at 31 December 2024 was £166.1m (31 December 2023: £148.4m) and is classified
Derivative financial instruments – 4.4 – 4.4
as Level 1 in the fair value hierarchy.
Total – 4.4 – 4.4
J6 Other current liabilities
J3 Derivative financial instruments
31 December 2024 2023
£m £m
31 December 2024 2023
Other payables
Asset Liability Asset Liability
Accrued expenses 5.0 4.4
£m £m £m £m
Total 5.0 4.4
Foreign currency hedge – – – 4.4
Exchange traded futures – 0.3 – –
Current 5.0 4.4
Non-current – –
Total – 0.3 – 4.4
Total 5.0 4.4
Current – 0.3 – 4.4
Non-current – – – –
The carrying value of other payables is a reasonable approximation of fair value.
Total – 0.3 – 4.4
J7 Share capital and share premium
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).
31 December 2024 2023
Number Share Number Share
of shares capital of shares capital
J4 Cash and cash equivalents
issued £m issued £m
31 December 2024 2023
Authorised
£m £m
Ordinary shares of 5p each 201,000,000 10.1 201,000,000 10.1
Bank and cash balances 4.8 5.7
Issued
Ordinary shares of 5p each 150,991,019 7.5 150,849,587 7.5
Total cash and cash equivalents 4.8 5.7
Cash and cash equivalents in the statement of cash flows 4.8 5.7
Share Share
premium premium
Short-term bank deposits are subject to a combination of fixed and variable interest rates, with
£m £m
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
142.5 142.5
available on demand.
The number of shares in issue at the balance sheet date included Nil shares held in treasury
(31 December 2023: Nil).
248 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
CHESNARAANNUALREPORTANDACCOUNTS2024249
ADDITIONAL
INFORMATION
250 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
CHESNARAANNUALREPORTANDACCOUNTS2024251
ADDITIONAL INFORMATION
FINANCIAL CALENDAR KEY CONTACTS
27 March 2025
Registered and head office
Joint Stockbrokers and
Results for the year ended
2nd Floor, Building 4
Corporate Advisors
31 December 2024 announced
West Strand Business Park
Panmure Liberum
West Strand Road
25 Ropemaker Street
Preston
London
3 April 2025
Lancashire
EC2Y 9LY
Ex-dividend date
PR1 8UY
RBC Capital Markets
T +44 (0)1772 972050
100 Bishopsgate
4 April 2025
www.chesnara.co.uk
London
Dividend record date
EC2N 4AA
Advisors
22 April 2025
Burness Paull LLP
Bankers
Last date for dividend reinvestment
Exchange Plaza
National Westminster Bank plc
plan elections
50 Lothian Road
135 Bishopsgate
Edinburgh
London
EH3 9WJ
EC2M 3UR
13 May 2025
Annual General Meeting
Lloyds Bank plc
Auditor
3rd Floor, Black Horse House
Deloitte LLP
Medway Wharf Road
20 May 2025
Statutory Auditor
Tonbridge
Dividend payment date
1 City Square
Kent
Leeds
TN9 1QS
LS1 2AL
Public Relations Consultants
Registrars
FWD
MUFG Corporate Markets
15 St Helen’s Place
(formerly Link Group)
London
Central Square
EC3A 6DQ
29 Wellington Street
Leeds
LS1 4DL
252 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
NOTICE OF THE ANNUAL GENERAL MEETING
This document is important and requires your immediate attention
If you are in any doubt as to the action you should take, you should immediately consult your
If you have sold or otherwise transferred all of your shares in Chesnara plc, please pass this
stockbroker, bank manager, solicitor, accountant or other independent professional advisor
document as soon as possible to the purchaser or transferee, or to the person who arranged
authorised under the Financial Services and Markets Act 2000 if you are resident in the United
the sale or transfer so they can pass these documents to the person who now holds the shares.
Kingdom or, if you reside elsewhere, another appropriately authorised financial advisor.
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.
Company No. 4947166
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
Notice is given that the 2025 Annual General Meeting of Chesnara plc will be held at the offices
in a currency other than sterling shall be converted into sterling at such rate as the Board may decide
of Panmure Liberum, 25 Ropemaker Street, London, EC2Y 9LY on 13 May 2025 at 11am, for
is appropriate. Terms used in this resolution have, where applicable, the meanings that they have
the business set out below. Shareholders will be kept informed via the Regulatory News System
in Part 14 of the Companies Act 2006.
(RNS) should arrangements need to be changed for any reason.
14. That, from the passing of this resolution until the earlier of the close of business on 30 June 2026
Resolutions 1 to 14 inclusive and 18 will be proposed as ordinary resolutions and Resolutions 15
and the conclusion of the Company’s next Annual General Meeting, the directors be and are hereby
to 17 inclusive, 19 and 20 will be proposed as special resolutions.
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
1. To receive and adopt the audited accounts for the financial year ended 31 December 2024,
rights to subscribe for or to convert any security into shares in the Company (Allotment Rights):
together with the reports of the directors and auditor thereon.
(a) up to an aggregate nominal amount of £2,516,517 such amount to be reduced by the aggregate
2. To approve the Directors’ Remuneration Report for the year ended 31 December 2024.
nominal amount of any equity securities allotted pursuant to the authority in paragraph (b)
below in excess of £2,516,517; and
3. To declare a final dividend of 24.69 pence per ordinary share for the financial year ended
(b) up to an aggregate nominal amount of £5,033,034 (such amount to be reduced by the
31 December 2024.
aggregate nominal amount of any shares allotted or rights granted pursuant to the authority in
paragraph (a) above) in connection with an offer:
4. To re-appoint Steve Murray as a director.
i) to holders of ordinary shares in proportion (as nearly as may be practicable) to their
5. To re-appoint Carol Hagh as a director.
respective holdings; and
ii) to holders of other equity securities as required by the rights of those securities or as the
6. To re-appoint Karin Bergstein as a director.
directors otherwise consider necessary,
7. To re-appoint Luke Savage as a director.
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
8. To re-appoint Eamonn Flanagan as a director.
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,
9. To re-appoint Tom Howard as a director.
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
10. To appoint Gail Tucker as a director.
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
11. To re-appoint Deloitte LLP as auditor of the Company to hold office until the conclusion of the next
such offer or agreement notwithstanding the expiry of the authority conferred by this resolution.
general meeting of the Company at which accounts are laid before shareholders.
15 . That, subject to the passing of Resolution 14 in this notice, the directors be and are hereby
12. To authorise the directors to determine the auditor’s remuneration.
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
13. That, from the passing of this Resolution 13 until the earlier of the close of business on
Resolution 14 of this notice or by way of a sale of treasury shares as if Section 561 of the Act did
30 June 2026 and the conclusion of the Company’s next Annual General Meeting, the Company
not apply to any such allotment, provided that this power is limited to:
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,
CHESNARAANNUALREPORTANDACCOUNTS2024253
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
(e) the Company may enter into contracts or contracts to purchase ordinary shares under the
referred to in the Financial Conduct Authority’s listing rules) or any other pre-emptive offer that
authority hereby conferred prior to the expiry of such authority which will or may be completed
is open for acceptance for a period determined by the directors to the holders of ordinary
wholly or partly after the expiry of such authority, and may make a purchase of ordinary shares
shares on the register on any fixed record date in proportion to their holdings of ordinary shares
in pursuance of any such contract or contracts.
(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
18. That, in addition to the authority granted pursuant to Resolution 14 (if passed), the directors
as the directors may deem necessary or appropriate in relation to fractions of such securities,
be and are hereby generally and unconditionally authorised in accordance with Section 551 of the
the use of more than one currency for making payments in respect of such offer, any such shares
Companies Act 2006 (the Act), to exercise all the powers of the Company to allot shares in the
or other securities being represented by depositary receipts, treasury shares, any legal or
Company and/or grant rights to subscribe for or to convert any security into shares in the Company:
practical problems in relation to any territory or the requirements of any regulatory body or any
(a) up to an aggregate nominal value of £2,516,517 in relation to any issues of Restricted Tier 1 (RT1)
stock exchange; and
Instruments where the directors consider that such an issuance of RT1 Instruments would
(b) the allotment of equity securities (other than pursuant to paragraph (a) above) with an aggregate
be desirable, including in connection with, or for the purposes of, complying with or maintaining
nominal value of £754,955, and shall expire on the revocation or expiry (unless renewed) of the
compliance with the regulatory requirements or targets applicable to the Company and its
authority conferred on the directors by Resolution 14 of this notice, save that, before the expiry
subsidiaries from time to time;
of this power, the Company may make any offer or agreement which would or might require
(b) subject to applicable law and regulation, at such allotment, subscription or conversion prices (or
equity securities to be allotted after such expiry and the directors may allot equity securities
such maximum or minimum allotment, subscription or conversion price methodologies) as
under any such offer or agreement as if the power had not expired.
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
16. That, subject to the passing of Resolution 14 of this notice and, in addition to the power contained in
Section 551 of the Act until the conclusion of the Company’s next Annual General Meeting (or,
Resolution 15 of this notice, the directors be and are hereby empowered pursuant to Section 570
if earlier, at the close of business on 30 June 2026), save that the Company may, before such
of the Companies Act 2006 (the Act) to allot equity securities (as defined in Section 560 of the Act)
expiry, make offers or agreements which would, or might, require securities to be allotted or rights
for cash, pursuant to the authority conferred on them by Resolution 14 of this notice or by way of
to be granted after such expiry and the directors may allot securities or grant such rights in
sale of treasury shares as if Section 561 of the Act did not apply to any such allotment, provided that
pursuance of such offer or agreement notwithstanding the expiry of the authority conferred by
this power is:
this resolution.
(a) limited to the allotment of equity securities up to an aggregate nominal value of £754,955; and
19. That, subject to the passing of Resolution 18 in this notice, the directors be and are hereby generally
(b) used only for the purposes of financing (or refinancing, if the power is to be exercised within
empowered, pursuant to Section 570 of the Companies Act 2006 (the Act), to allot equity securities
12 months after the date of the original transaction) a transaction which the directors determine
(as defined in Section 560 of the Act and is to be interpreted in accordance with Section 560(2) of
to be an acquisition or other capital investment of a kind contemplated by the Statement of
the Act) for cash, pursuant to the authority conferred on them by Resolution 18 of this notice up to
Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group
an aggregate nominal value of £2,516,517 in relation to any issues of RT1 Instruments, as if Section
prior to the date of the notice of this meeting, and shall expire on the revocation or expiry
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 directors by Resolution 14 of this notice save
(unless renewed) of the authority conferred on the director by Resolution 18 of this notice save that,
that, before the expiry of this power, the Company may make any offer or agreement which
before the expiry of this power, the Company may make any offer or agreement which would or
would or might require equity securities to be allotted after such expiry and the directors may
might require equity securities to be allotted after such expiry and the directors may allot equity
allot equity securities under any such offer or agreement as if the power had not expired.
securities under any such offer or agreement as if the power had not expired.
1 7. That the Company be and is hereby generally and unconditionally authorised for the purposes of
This authority is in addition to the authorities conferred by Resolutions 15 and 16 in this notice.
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:
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.
(a) the maximum aggregate number of ordinary shares hereby authorised to be purchased
is £15,099,102;
By order of the Board
(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
Alastair Lonie
quotations for those shares (as derived from the Daily Official List of London Stock Exchange plc)
Chief of Staff and Company Secretary
for the 5 business days immediately preceding the date on which the terms of the tender offer
2nd Floor, Building 4
are announced;
West Strand Business Park
(d) the authority hereby conferred shall expire at the conclusion of the Company’s next Annual
West Strand Road
General Meeting (or, if earlier, at the close of business on 30 June 2026); and
Preston
Lancashire
PR1 8UY
26 March 2025
254 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
EXPLANATORY NOTES TO THE NOTICE OF THE ANNUAL GENERAL MEETING
Arrangements for the 2025 AGM
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.
1. Any member who is entitled to attend and vote at this Annual General Meeting is entitled to appoint
4. Proxymity voting – if you are an institutional investor you may also be able to appoint a proxy
another person, or two or more persons in respect of different shares held by the shareholder,
electronically via the Proxymity platform, a process which has been agreed by the Company
as their proxy to exercise all or any of their rights to attend and to speak and to vote at the Annual
and approved by the Registrar. For further information regarding Proxymity, please go to
General Meeting. Members who wish to appoint a proxy are encouraged to appoint the Chair
www.proxymity.io. Your proxy must be lodged by 11am on Friday 9 May 2025 in order to be
of the meeting as their proxy and give your instructions on how you wish the Chair of the meeting
considered valid or, if the meeting is adjourned, by the time which is 48 hours before the time of
to vote on the proposed resolutions. Appointing the Chair as your proxy will not prevent you
the adjourned meeting. Before you can appoint a proxy via this process, you will need to have
from attending and voting in person at the AGM but will ensure that your vote is able to be cast in
agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully
accordance with your wishes should you (or any other person who you might otherwise choose
as you will be bound by them and they will govern the electronic appointment of your proxy.
to appoint as your proxy) be unable to attend for any reason. Members are strongly encouraged to
An electronic proxy appointment via the Proxymity platform may be revoked completely by sending
vote electronically. Unless otherwise indicated on the Form of Proxy, CREST, Proxymity or any
an authenticated message via the platform instructing the removal of your proxy vote.
other electronic voting instruction, the proxy will vote as they think fit or, at their discretion, withhold
from voting.
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.
2. You will not receive a form of proxy for the AGM in the post. Instead, you will receive instructions
CREST personal members or other CREST sponsored members, and those CREST members who
to enable you to vote electronically and how to register to do so. You may request a physical
have appointed one or more voting service providers, should refer to their CREST sponsor or
copy proxy form directly from the registrars, MUFG Corporate Markets, PXS 1, Central Square,
voting service provider(s), who will be able to take the appropriate action on their behalf. In order for
29 Wellington Street, Leeds, LS1 4DL (email: shareholderenquiries@cm.mpms.mufg.com,
a proxy appointment or a proxy instruction made using the CREST voting service to be valid, the
telephone number: 0371 664 0300. Calls are charged at the standard geographic rate and will vary
appropriate CREST message (a ‘CREST proxy appointment instruction’) must be properly authenticated
by provider. Calls outside the United Kingdom will be charged at the applicable international rate.
in accordance with the specifications of CREST’s operator, Euroclear UK & International Limited
Lines are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and
(‘Euroclear’), and must contain all the relevant information required by the CREST Manual. To be valid,
Wales). If you request a physical copy proxy form, it must be completed in accordance with the
the message (regardless of whether it constitutes the appointment of a proxy or is an amendment
instructions that accompany it and then delivered (together with any power of attorney or other
to the instruction given to a previously appointed proxy) must be transmitted so as to be received
authority under which it is signed, or a certified copy of such item) to MUFG Corporate Markets,
by MUFG Corporate Markets, (ID RA10), by 11am on Friday 9 May 2025, which is acting as the
PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL so as to be received by 11am on
Company’s ‘issuer’s agent’. After this time, any change of instruction to a proxy appointed through
Friday 9 May 2025.
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
3. Any member wishing to vote at the Annual General Meeting without attending in person or (in the
Applications Host) the issuer’s agent is first able to retrieve it by enquiry through the CREST system
case of a corporation) through its duly appointed representative, must appoint a proxy to do so.
in the prescribed manner. Euroclear does not make available special procedures in the CREST system
A proxy need not be a member of the Company, but as noted above, members should appoint the
for transmitting any particular message. Normal system timings and limitations apply in relation
Chair of the meeting as their proxy to ensure that their vote is able to be cast in accordance with
to the input of CREST proxy appointment instructions. It is the responsibility of the CREST member
their wishes should they (or any other persons who members might otherwise choose to appoint
concerned to take (or, if the CREST member is a CREST personal member or a CREST sponsored
as their proxy) be unable to attend for any reason. Members may appoint a proxy online by following
member or has appointed any voting service provider(s), to procure that his CREST sponsor or voting
the instructions for the electronic appointment of a proxy at www.signalshares.com by entering
service provider(s) take(s)) such action as is necessary to ensure that a message is transmitted
the Company name ‘Chesnara plc’ and following the on-screen instructions. To be a valid proxy
by means of the CREST system by any particular time. CREST members and, where applicable, their
appointment, the member’s electronic message confirming the details of the appointment completed
CREST sponsors or voting service providers should take into account the provisions of the CREST
in accordance with those instructions must be transmitted so as to be received by 11am on Friday
Manual concerning timings as well as its section on ‘Practical limitations of the system’. In certain
9 May 2025. Members who hold their shares in uncertificated form may also use the ‘CREST’ voting
circumstances, the Company may, in accordance with the Uncertificated Securities Regulations
service to appoint a proxy electronically, as explained below.
2001 or the CREST Manual, treat a CREST proxy appointment instruction as invalid.
CHESNARAANNUALREPORTANDACCOUNTS2024255
ADDITIONAL INFORMATION
EXPLANATORY NOTES TO THE NOTICE OF THE ANNUAL GENERAL MEETING
6. Copies of (i) directors’ service contracts and letters of appointment; and (ii) a copy of the Company’s
12. Under Section 527 of the Companies Act 2006, members meeting the threshold requirements set
Articles of Association are available for inspection at the registered office of the Company during
out in that section have the right to require the Company to publish on a website a statement in
normal business hours each business day subject to prevailing public health measures. They will
accordance with Section 528 of the Companies Act 2006 setting out any matter relating to (i) the
also be available for inspection at the Annual General Meeting for at least 15 minutes prior to and
audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that
during the Annual General Meeting.
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
7. The time by which a person must be entered on the register of members in order to have the right
reports were laid in accordance with Section 437 of the Companies Act 2006. The Company may not
to vote at the Annual General Meeting (and for the purpose of the determination by the Company
require the members requesting any such website publication to pay its expenses in complying
of the votes they may cast) is close of business on Friday 9 May 2025. Changes to entries on the
with Sections 527 or 528 of the Companies Act 2006.
register of members after that time will be disregarded in determining the right of any person to
Where the Company is required to place a statement on a website under Section 527 of the
attend or vote at the Annual General Meeting.
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
8. The right to appoint proxies does not apply to persons nominated to receive information rights under
with at the Annual General Meeting includes any statement that the Company has been required
Section 146 of the Companies Act 2006; as such rights can only be exercised by the member
under Section 527 of the Companies Act 2006 to publish on a website.
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,
13. Members meeting the threshold requirements in Sections 338 and 338A of the Companies Act
in accordance with Section 149(2) of the Companies Act 2006, that they may have a right under an
2006 have the right to require the Company (i) to give to members entitled to receive notice of the
agreement with the registered member by whom they were nominated to be appointed, or to have
meeting notice of a resolution which may properly be moved and is intended to be moved at the
someone else appointed, as a proxy for this Annual General Meeting. If they have no such right, or
meeting and/or (ii) to include in the business to be dealt with at the meeting any matter (other than
do not wish to exercise it, they may have a right under such an agreement to give instructions to
a proposed resolution) which may be properly included in the business. A resolution may properly
the member as to the exercise of voting rights. Nominated persons should contact the registered
be moved or a matter may properly be included in the business unless (a) (in the case of a resolution
member by whom they were nominated in respect of these arrangements.
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
9. As at 20 March 2025 (being the last practicable date prior to the publication of this document), the
or vexatious. Such a request may be in hard copy form or in electronic form, must identify the
Company’s issued share capital consisted of 150,991,019 ordinary shares, carrying one vote each.
resolution of which notice is to be given or (as applicable) the matter to be included in the business,
No shares were held by the Company in treasury. Therefore, the total voting rights in the Company
must be authenticated by the person or persons making it, must be received by the Company not
as at 20 March 2025 (being the last practicable date prior to the publication of this document)
later than 11am on 1 April 2025, and (in the case of a matter to be included in the business only) must
were 150,991,019.
be accompanied by a statement setting out the grounds for the request.
10. Information regarding this Annual General Meeting, including information required by Section 311A
The notes on the following pages give an explanation of the proposed resolutions:
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.
256 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
Resolution 1
Resolution 13
Report and Accounts
Political donations
The Companies Act 2006 requires the directors of a public company to lay its Annual Report
It has always been the Company’s policy that it does not make political donations. This remains the
and Accounts before the Company in general meeting, giving shareholders the opportunity to ask
Company’s policy.
questions on the contents. The Annual Report and Accounts comprise the audited financial
Part 14 of the Companies Act 2006 (the Act) imposes restrictions on companies making political
statements, the Auditor’s Report, the Directors’ Report, the Directors’ Remuneration Report, and
donations to any political party or other political organisation or to any independent election candidate
the Directors’ Strategic Report.
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
Resolution 2
and ambiguous definitions of the terms ‘political donation’ and ‘political expenditure’ which may
Approval of the Directors’ Remuneration Report
apply to some normal business activities which would not generally be considered to be political
In accordance with the Companies Act 2006, the Company proposes ordinary Resolution 2 to approve
in nature.
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,
The directors therefore consider that, as a purely precautionary measure, it would be prudent to
for the purposes of this resolution, does not include the parts of the Directors’ Remuneration
obtain the approval of the shareholders to make donations to political parties, political organisations
Report containing the Directors’ Remuneration Policy. The vote on this resolution is advisory only and
and independent election candidates and to incur political expenditure up to the specified limit.
the directors’ entitlement to remuneration is not conditional on it being passed. The Companies
The directors intend to seek renewal of this approval at future Annual General Meetings but wish to
Act 2006 requires the Directors’ Remuneration Policy to be put to shareholders for approval annually
emphasise that the proposed resolution is a precautionary measure for the above reason and
unless the approved policy remains unchanged, in which case it need only be put to shareholders
that they have no intention of making any political donations or entering into party political activities.
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 14
Power to allot shares
Resolution 3
The Companies Act 2006 provides that the directors may only allot shares if authorised by
Final dividend
shareholders to do so. The directors’ current allotment authority is due to lapse at the 2025 Annual
The declaration of the final dividend requires the approval of shareholders in general meeting. If the
General Meeting. The Board is, therefore, seeking to renew its authority over shares having an
2025 Annual General Meeting approves Resolution 3, the final dividend of 16.08 pence per share
aggregate nominal amount of £2,516,517, representing approximately one-third of the issued ordinary
will be paid on 20 May 2025 to ordinary shareholders who are on the register of members at the close
share capital of the Company (excluding treasury shares) as at 20 March 2025 (being the latest
of business on 12 April 2025 in respect of each ordinary share.
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
Resolutions 4 – 10 inclusive
of the issued share capital of the Company (excluding treasury shares) as at 20 March 2025 by way
Appointment and re-appointment of directors
of pre-emptive offer to existing shareholders.
The Company’s Articles of Association provide that all directors retire at each Annual General Meeting
The allotment authority sought is in line with the Share Capital Management guidelines issued by
and that those wishing to continue to serve shall submit themselves for re-appointment or
the Investment Association. For the avoidance of doubt, the authority sought pursuant to this
appointment by the shareholders. In line with this, all directors will be retiring at this year’s AGM
resolution will give the directors the ability to allot shares (or grant rights to shares) up to a maximum
and will be standing for re-appointment, with the exception of Jane Dale who will step down from
aggregate nominal amount of £5,033,034.
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
As at 20 March 2025, the Company held no treasury shares.
29 January 2025). The Board is satisfied that the performance of each of the directors proposed
The authority will expire at the earlier of the conclusion of the Company’s next Annual General Meeting
continues to be effective and important to the Company’s long-term sustainable success and
and the close of business on 30 June 2026.
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
Passing Resolution 14 will ensure that the directors have flexibility to take advantage of any
directors be appointed or re-appointed as a director of the Company.
appropriate opportunities that may arise in pursuit of the Company’s strategic objective of acquiring
life and pensions businesses.
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 15 and 16 (special resolution)
Disapplication of statutory pre-emption rights
Resolutions 11 and 12
If the directors wish to allot shares, or grant rights to subscribe for, or convert securities into,
Re-appointment and remuneration of auditor
shares, or sell treasury shares for cash (other than pursuant to an employee share scheme), they
The Company is required to appoint an auditor, at each general meeting before which accounts
must first offer them to existing shareholders in proportion to their existing shareholdings. In order
are laid, to hold office until the end of the next such meeting. The Board (through its Audit & Risk
to give directors flexibility to finance business opportunities by allotting shares without making a
Committee) has recommended the re-appointment of Deloitte LLP and has confirmed that such
pre-emptive offer to existing shareholders and, in accordance with the updated Statement of
recommendation is free from influence by a third party and that no restrictive contractual terms have
Principles (PEG Statement of Principles) published by the Pre-Emption Group in November 2022,
been imposed on the Company. Deloitte LLP has indicated that it is willing to continue to act as
Resolutions 15 and 16 ask shareholders to grant a limited waiver of their pre-emption rights as
the Company’s auditor.
referenced below. If the directors elect to exercise powers granted under Resolutions 15 and 16 in
Resolution 11, therefore, proposes Deloitte’s reappointment as auditor to hold office until the
relation to a non-pre-emptive offer, they shall follow the shareholder protections in Part 2B of the
next general meeting at which the Company’s accounts are laid before shareholders. Resolution 12
PEG Statement of Principles.
authorises the directors to determine the auditor’s remuneration.
Resolutions 15 and 16 will be proposed as special resolutions.
CHESNARAANNUALREPORTANDACCOUNTS2024257
ADDITIONAL INFORMATION
EXPLANATORY NOTES TO THE NOTICE OF THE ANNUAL GENERAL MEETING
Resolution 15, if passed, will allow the directors to (a) allot shares in the Company for cash in
desirable to improve the capital structure of the Company and its subsidiaries. However, the request
connection with a rights issue or other pre-emptive offer; and (b) otherwise allot shares in the
for authority in Resolution 18 should not be taken as an indication that the Company will or will not
Company for cash up to a maximum aggregate nominal value of £754,955, in each case as if the
issue any, or any given amount of, RT1 Instruments.
pre-emption rights of Section 561 of the Companies Act 2006 did not apply. This aggregate
This authority is in addition to the authority proposed in Resolution 14, which is the usual authority
nominal amount equates to approximately 10% of the issued ordinary share capital of the Company
sought on an annual basis in line with the guidance issued by the Investment Association.
(excluding treasury shares) as at 20 March 2025 (being the latest practicable date prior to the
publication of this Notice of Annual General Meeting).
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
In line with the PEG Statement of Principles, the Company is seeking authority, under Resolution 16,
the future.
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
Resolution 19 (special resolution)
under this additional authority in connection with an acquisition or specific capital investment
Disapplication of pre-emption rights in relation to an issue
(within the meaning given in the Statement of Principles) which is announced contemporaneously
of Restricted Tier 1 (RT1) Instruments
with the allotment, or which has taken place in the preceding 12 month period and is disclosed in
Resolution 19, which will be proposed as a special resolution, proposes that, in addition to any
the announcement of the allotment.
authority conferred by Resolution 15, the directors be empowered to allot equity securities (as defined
The authority granted under Resolutions 15 and 16 will expire at the earlier of the conclusion of the
in Section 560 of the Companies Act 2006) for cash up to a nominal value of £2,516,517 in relation
Company’s next Annual General Meeting and the close of business on 30 June 2026.
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
Resolution 17 (special resolution)
this notice of Annual General Meeting), as if Section 561 of the Companies Act 2006 did not apply
Authority to purchase own shares
to any such allotment.
This resolution, which will be proposed as a special resolution, seeks to renew the Company’s
Resolution 19, if passed, would permit the Company the flexibility necessary to allot equity securities
authority to purchase its own shares. It specifies the maximum number of shares which may be
pursuant to any proposal to issue RT1 Instruments without the need to comply with the pre-emption
acquired as 10% of the Company’s issued ordinary share capital (excluding treasury shares) as
rights of Section 561 of the Companies Act 2006 did not apply. Resolution 18 is intended to provide
at 20 March 2025, being the latest practicable date prior to the publication of this document, and
the directors with the continued flexibility to issue RT1 Instruments which may convert into
specifies the minimum and maximum prices at which shares may be bought.
ordinary shares. This will enhance the Company’s ability to manage its capital. Further information
The directors will only use this authority if, in light of market conditions prevailing at the time,
on the Restricted Tier 1 Instruments is given in the AGM Notice.
they believe that the effect of such purchases will be (where such shares are to be purchased for
This authority will expire at the earlier of the conclusion of the Company’s next Annual General
cancellation) to increase earnings per share, and that taking into account other investment
Meeting and the close of business on 30 June 2026. The directors may seek a similar authority in
opportunities, purchases will be in the best interests of the shareholders generally. Any shares
the future.
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
Any exercise of the authorities in Resolutions 14, 15 and 16 (if passed) would be separate from and
authority, which will expire at the earlier of the conclusion of the Company’s next Annual General
in addition to the exercise of any powers under Resolutions 18 and 19 and would also have a dilutive
Meeting and the close of business on 30 June 2026.
effect on existing shareholdings.
The Company has options and awards outstanding under existing share schemes over an aggregate
Resolution 20 (special resolution)
of 1,531,582 ordinary 5p shares, representing 1.02% of the Company’s issued ordinary share capital
Notice of general meetings
(excluding treasury shares) as at 20 March 2025 (the latest practicable date prior to the publication
The Companies Act 2006 requires the notice period for general meetings of the Company to be at
of this document). This would represent approximately 1.13% of the Company’s issued share capital
least 21 days, but, as a result of a resolution which was passed by the Company’s shareholders
(excluding treasury shares) if the proposed authority being sought at the Annual General Meeting
at last year’s Annual General Meeting, the Company is currently able to call general meetings (other
to buy back 15,099,102 ordinary shares was exercised in full (and all the repurchased ordinary
than an Annual General Meeting) on not less than 14 clear days’ notice. In order to preserve this
shares were cancelled).
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
Resolution 18
Annual General Meeting, when it is intended that a similar resolution will be proposed. The Company
Authority to allot new ordinary shares in relation to an issue
will also need to meet the statutory requirements for electronic voting before it can call a general
of Restricted Tier 1 (RT1) Instruments
meeting on less than 21 days’ notice.
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,
The shorter notice period would not be used as a matter of routine for general meetings, but only
in accordance with Section 551 of the Companies Act 2006, up to an aggregate nominal amount
where the flexibility is merited by the business of the meeting and is thought to be to the advantage
of £2,516,517 in connection with the issue of RT1 Instruments (as defined in the AGM Notice)
of shareholders as a whole.
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
Directors’ recommendation
this notice of Annual General Meeting).
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
The directors believe that it is in the best interests of the Company to have the flexibility to issue
they are interested), and consider that all resolutions are in the best interests of the Company and
RT1 Instruments from time to time and the authority sought in Resolution 18 may be used if, in
its shareholders as a whole.
the opinion of the directors, at the relevant time, such an issuance of RT1 Instruments would be
258 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
APPENDIX TO AGM NOTICE
Further information on Restricted Tier 1 Instruments
What are ‘Restricted Tier 1 Instruments’?
How can the issue of Restricted Tier 1 Instruments provide
Solvency II-compliant Restricted Tier 1 Instruments, structured as contingent convertible securities,
a more efficient capital structure?
the terms of which will provide that, upon the occurrence of certain trigger events, the securities
The Group can satisfy its Tier 1 Capital requirements through, among other things, the issue of
will be irrevocably converted into ordinary shares.
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
Why is the Company seeking authorities in connection with
be a cost-effective means of raising capital, therefore enabling the Group to reduce its overall cost
the issuance of Restricted Tier 1 Instruments?
of capital. This would, in turn, be expected to be more beneficial for existing shareholders than if
The Group is subject to the Solvency II regulatory framework which came into force on 1 January 2016
the Group were to satisfy its Tier 1 Capital requirements through the issue of ordinary shares or the
and which has been retained in the United Kingdom following the end of the Brexit implementation
retention of profits alone.
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
At what price will Restricted Tier 1 Instruments be converted
losses, thereby protecting the interests of policyholders. At least half of the Group’s overall capital
into or exchanged for ordinary shares?
requirements may only be met with certain types of high-quality capital (referred to as ‘Tier 1
The terms and conditions of any Restricted Tier 1 Instruments issued will specify a conversion price
Capital’), including share capital, retained profits and, for up to 20% of Tier 1 Capital, instruments that
or a mechanism for setting a conversion price, which is the rate at which the Restricted Tier 1
are written down, or, in the case of Restricted Tier 1 Instruments, instruments that are converted
Instruments will be exchanged into ordinary shares. The resolutions enable the directors to set the
into ordinary shares, in the event that the Group’s capital position falls below defined levels (referred
specific terms and conditions of the Restricted Tier 1 Instruments (including a conversion price or
to as a ‘Trigger Event’). The Group may issue Restricted Tier 1 Instruments to satisfy part of its
mechanism for setting a conversion price) after considering market conditions at the time of issuance.
Tier 1 Capital requirements. Any issue of Restricted Tier 1 Instruments would form part of the Group’s
Given the nature of the Trigger Events and the implications on the Group’s business at the time any
overall strategy to maintain a strong Capital Base from which it can achieve its objectives.
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.
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
How have you calculated the size of the authorities you are seeking?
Authority, that it has ceased to comply with its capital requirements under Solvency II in a significant
These authorities are set at a level which, based on the share price of the Group as at 20 March
way. This may occur if the amount of capital held by the Group falls below 75% of its capital
2025 (being the latest practicable date prior to the publication of this document) corresponds
requirements, if the Group fails to comply with its capital requirements for a continuous period of
approximately to the Group’s regulatory headroom for Restricted Tier 1 Instruments as at the same
3 months or more or if the Group fails to comply with other minimum capital requirements
date (limited to 20% of Tier 1 Capital).
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.
CHESNARAANNUALREPORTANDACCOUNTS2024259
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
Cash generation is used by the Group as a measure of assessing
Commercial Cash Generation provides stakeholders with
See cash generation
Generation
how much dividend potential has been generated, subject to
enhanced insight into cash generation, drawing out components
on page 49
ensuring other constraints are managed.
of the result relating to technical complexities or exceptional
items. The result is deemed to better reflect the Group’s view of
Commercial Cash Generation excludes the impact of technical
commercial performance, showing key drivers within that.
adjustments and modelling changes; representing the inherent
commercial cash generated by the business.
Base Cash
Base Cash Generation is used by the Group as a measure of
Base Cash Generation is a key measure, because it is the net
See cash generation
Generation
assessing how much dividend potential has been generated,
cash flows to Chesnara from its life and pensions businesses which
on page 49 and
subject to ensuring other constraints are managed.
support Chesnara’s dividend-paying capacity and acquisition
reconciliation on
strategy. Cash generation can be a strong indicator of how we
page 264
Base Cash Generation is calculated as the movement in
are performing against our stated objective of ‘maximising
the Group’s surplus Own Funds above the Group’s internally
value from existing business’.
required capital, as determined by applying the Group’s
Capital Management Policy, which has Solvency II rules at
its heart.
Divisional Cash
Divisional Cash Generation represents the movement in
It is an important indicator of the operating performance of the
See cash generation
Generation
surplus Own Funds above local capital management policies
business before the impact of Group level operations and
on page 49
within the three operating divisions of Chesnara. Divisional
consolidation adjustments.
Cash Generation is used as a measure of how much dividend
potential a division has generated, subject to ensuring other
constraints are managed.
Economic Value
EcV is a financial metric that is derived from Solvency II Own
EcV reflects the market-related value of in-force business and
See EcV analysis
(EcV)
Funds. It provides a market consistent assessment of the
net assets of the non-insurance business and hence is an
on page 50
value of existing insurance businesses, plus adjusted net asset
important reference point by which to assess the Group’s value.
value of the non-insurance business within the Group.
A life and pensions group may typically be characterised as
trading at a discount or premium to its Economic Value. Analysis
We define EcV as Own Funds adjusted for contract boundaries,
of EcV provides additional insight into the development of the
risk margin and restricted with-profit surpluses. As such,
business over time. The EcV development of the Group over time
EcV and Own Funds have many common characteristics and
can be a strong indicator of how we have delivered to our
tend to be impacted by the same factors.
strategic objectives.
Economic Value
The principal underlying components of the EcV Earnings are:
By recognising the market-related value of in-force business
See EcV Earnings
(EcV) Earnings
(in-force value), a different perspective is provided in the
analysis on page 51
– The expected return from existing business (being
performance of the Group and on the valuation of the business.
the effect of the unwind of the rates used to discount the
EcV Earnings are an important KPI as they provide a longer-term
value in-force);
measure of the value generated during a period. The EcV Earnings
– Value added by the writing of new business;
of the Group can be a strong indicator of how we have delivered
– Variations in actual experience from that assumed in the
against all three of our core strategic objectives.
opening valuation;
– The impact of restating assumptions underlying the
determination of expected cash flows; and
– The impact of acquisitions.
260 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
APM WHAT IS IT? WHY DO WE USE IT? REF
EcV Operating
This is the element of EcV Earnings that is generated from the
EcV Operating Earnings provide an indication of the underlying
See EcV Earnings
Earnings
Company’s ongoing core business operations, excluding any
value generated by the business. This measure can identify
analysis on page 51
profit earned from investment market conditions in the period
profitable activities and also inefficient processes and potential
and any economic assumption changes in the future.
management actions.
EcV Economic
This is the element of EcV Earnings that is derived from
EcV Economic Earnings are important in order to measure the
See EcV Earnings
Earnings
investment market conditions in the period and any economic
additional value generated from investment market factors.
analysis on page 51
assumption changes in the future.
New Business Contribution
A more commercially relevant measure of new business profit
This provides a fair commercial reflection of the value added by
See business review
Note: This measure was previously
than that recognised directly under the Solvency II regime,
new business operations and is more comparable with how new
section on pages
referred to as ‘commercial new
allowing for a modest level of return, over and above risk-free,
business is reported by our peers, improving market consistency.
40 to 45
business’. There has been no change
and exclusion of the incremental risk margin Solvency II
to the basis of calculation.
assigns to new business.
Solvency Solvency is a fundamental financial measure which is of paramount
Solvency gives policyholders comfort regarding the security
See capital
importance to investors and policyholders. It represents the
of their provider. This is also the case for investors, together with
management section
relationship between the value of the business as measured on
giving them a sense of the level of potential surplus available
on pages 46 to 48
a Solvency II basis and the capital the business is required to
to invest in the business or distribute as dividends, subject to other
hold – the Solvency Capital Requirement (SCR). Solvency can be
considerations and approvals.
reported as an absolute surplus value or as a ratio.
Assets Under
AuA reflects the value of the financial assets that the business
AuA provides an indication of the scale of the business, and the
See Consolidated
Administration (AuA)
manages, as reported in the IFRS Consolidated Balance Sheet.
potential future returns that can be generated from the assets
Balance Sheet on
Note: This measure was previously
that the Group manages and administers on behalf of customers.
page 149
referred to as ‘Funds under
Management’ (FuM). There has
been no change to the basis
of calculation.
Leverage A financial measure that demonstrates the degree to which the
This measure indicates the overall level of indebtedness of
See IFRS balance
Company is funded by debt financing versus equity capital,
the Group and is also a key component of the bank covenant
sheet on page 52
presented as a ratio. It is defined as debt divided by debt plus
arrangements held by Chesnara.
equity, with the equity denominator adding back the net of
tax CSM liability, as measured under IFRS.
IFRS Capital Base IFRS net equity plus the consolidated CSM net of reinsurance
It is a more appropriate measure of the value of the business
See IFRS income
and tax.
than net equity as it allows for the store of deferred profits held
statement on page 53
in the balance sheet, as represented by the CSM, including
those as yet unrecognised profits from writing new business
and acquisitions.
Policies/policy count Policy count is the number of policies that the Group manages
This is important to show the scale of the business, particularly to
See Introduction to
on behalf of customers.
provide context to the rate at which the closed-book business is
Chesnara on page 8
maturing. In our open businesses, the policy count shows the net
impact of new business versus policy attrition.
CHESNARAANNUALREPORTANDACCOUNTS2024261
ADDITIONAL INFORMATION
OPERATIONAL AND OTHER PERFORMANCE MEASURES
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.
KEY STAKEHOLDERS
Measure
What is it and why is it important? Page
Customer
How well we service our customers is of paramount importance and so through various means we aim to assess
service levels
customer service levels. The business reviews within the Annual Report and Accounts refer to a number of indicators
40-45
of customer service levels.
Broker
Broker satisfaction is important because they sell our new policies, provide ongoing service to their customers and
satisfaction
influence book persistency. We include several measures within the Annual Report and Accounts, including direct
40-45
broker assessment ratings for Movestic and general assessment of how our brands fare in industry performance
awards in the Netherlands.
Policy investment
performance
Industry performance
assessments
Emissions and
energy usage
Assets Under
Administration
†
Policyholder
Investor
Regulators
Business
partner*
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
40-45
on environmental, social and governance factors.
This is a comparative measure of how well our investments are performing against the rest of the industry, which
40-45
provides valuable context to our performance.
Tracking our scope 1/2/3 emissions is a core part of our transition to be a net zero and sustainable Group. 87-90
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
8
are also a strong indicator of fee income.
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.
8
In our open businesses, the policy count shows the net impact of new business versus policy attrition.
Total Shareholder
This includes dividend growth and yield and shows the return that an investor is generating on the shares that they hold.
55
Returns
It is highly important as it shows the success of the business in translating its operations into a return for shareholders.
New business
This shows our ability to write profitable new business which increases the value of the Group. This is an important
40-45
profitability
indicator given one of our core objectives is to ‘enhance value through profitable new business’.
New business
This shows our success at writing new business relative to the rest of the market and is important context for
40-45
market share
considering our success at writing new business against our target market shares.
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
52-56
adding back the net of tax CSM liability, as measured under IFRS.
Knowledge, skills
This is a key measure given our view that the quality, balance and effectiveness of the Board of Directors has a direct
and experience of the
bearing on delivering positive outcomes to all stakeholders. This includes holding the management teams accountable
Board of Directors
94-95
for the delivery of set objectives and the proper assessment of known and emerging risks and opportunities,
e.g. those arising from climate change.
KEY
*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
Primary interest Secondary interest
can be found in the additional information section of this Annual Report and Accounts.
262 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.
FINANCIAL STATEMENTS ADDITIONAL METRICS
Solvency II valuation
I R
IFRS net assets
(Own Funds)
Capital requirements
Solvency Capital
SCR plus
Requirement
management buffer
P R B
II
IFRS profits
EconomicValueSolvency
BalancesheetPercentage
EarningsAbsolute
Stakeholder focus:
P
Policyholders
B
Business partners
I
I B
I
Investors
Key performance indicators
NewbusinessCashgeneration
R
Regulators
EcVGroup
ContributionDivisional
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:
£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.
Under Solvency II rules, future ‘foreseeable dividends’ are required to be recognised within Own Funds. Under
Foreseeable dividends (24.3) (23.5)
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
Group SII Own Funds 642.7 683.6
through periodic capital transfers.
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.
CHESNARAANNUALREPORTANDACCOUNTS2024263
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
The closing Solvency II position at 31 December 2024 reflects the payment of an interim dividend
a capital requirement on the Group.
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
A summary of the solvency position of the Group at 31 December 2024 and 31 December 2023
the cash generation metric and should be excluded. Consequently, Base Cash Generation can be
is as follows:
derived as follows:
£m 31 Dec 2024 31 Dec 2023
£m
Group SII Own Funds (OF) 642.7 683.7
Closing surplus available for distribution less opening available
Solvency Capital Requirement (SCR) 315.8 332.7
surplus for distribution (15.9 )
Solvency surplus 326.8 351.0
Add back: Movement in Tier 3 asset and restrictions 30.2
Solvency ratio 203% 205%
Add back: Interim dividend paid 13.0
Add back: Foreseeable year end dividend 24.3
Cash generation
Cash generation is used by the Group as a measure of assessing how much dividend potential has
Base Cash Generation 51.6
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
Symmetric adjustment 6.5
capital, as determined by applying the Group’s Capital Management Policy, which has Solvency II
WP restriction look through 1.5
rules at its heart. For further information on cash generation please refer to page 260 and the financial
Commercial Cash Generation 59.6
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
264 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
GLOSSARY
AGM
Annual General Meeting.
LACDT
Loss Absorbing Capacity of Deferred Tax.
ALM
Asset Liability Management – management of risks that arise due to mismatches
Leverage
A financial measure that demonstrates the degree to which the Company is funded by
between assets and liabilities.
debt financing versus equity capital, usually presented as a ratio, defined as debt divided
APE
Annual Premium Equivalent – an industry-wide measure that is used for measuring
by debt plus equity, with the equity denominator adding back the net of tax CSM
the annual equivalent of regular and single premium policies.
liability, as measured under IFRS.
Base Cash
This represents the cash that has been generated in the period. The cash generating
London Stock
London Stock Exchange plc.
Generation
capacity of the Group is largely a function of the movement in the solvency position
Exchange
of the insurance subsidiaries within the Group and takes account of the buffers that
LTI P
Long-Term Incentive Plan – a reward system designed to incentivise executive directors’
management has set to hold over and above the solvency requirements imposed by
long-term performance.
our regulators. Cash generation is reported at a Group level and also at an underlying
Movestic
Movestic Livförsäkring AB.
divisional level reflective of the collective performance of each of the divisions prior
New business
The present value of the expected future cash inflows arising from business written
to any Group level activity.
in the reporting period.
BLAGAB
Basic life assurance and general annuity business.
Official List
The Official List of the Financial Conduct Authority.
CA
Countrywide Assured plc.
Operating profit
A measure of the pre-tax profit earned from a company’s ongoing core business operations,
CALH
Countrywide Assured Life Holdings Limited and its subsidiary companies.
excluding any profit earned from investment market conditions in the period and any
CASLP
Sanlam Life & Pensions UK.
economic assumption changes in the future (alternative performance metric – APM).
Commercial
Cash generation excluding the impact of technical adjustments, modelling changes and
Ordinary shares
Ordinary shares of 5 pence each in the capital of the Company.
Cash Generation
exceptional corporate activity; the inherent commercial cash generated by the business.
ORSA
Own Risk and Solvency Assessment.
Core Surplus
Absolute surplus movement of the divisions including Chesnara entity but adjustments
Own Funds
In accordance with the UK’s regulatory regime for insurers, it is the sum of the
Emergence
will be made for the impact of items such as FX, T2/T3 restrictions, acquisition impacts
individual capital resources for each of the regulated related undertakings less the book-
and shareholder dividends as deemed appropriate.
value of investments by the Company in those capital resources.
Note: Any adjustments will be subject to Board approval (and Remco (Remuneration
PAA
Premium Allocation Approach – a simplified measurement model which can be applied
Committee) approval if they impact remuneration) and will be transparently reported.
to short-term contracts.
CSM
Contractual Service Margin (CSM) represents the unearned profit that an entity expects
PRA
Prudential Regulation Authority.
to earn on its insurance contracts as it provides services.
QRT
Quantitative Reporting Template.
Divisional Cash
This represents the cash generated by the three operating divisions of Chesnara (UK,
RA
Risk adjustment is the additional reserve held for non-financial risks.
Generation
Sweden and the Netherlands), exclusive of Group level activity.
RCF
3 year Revolving Credit Facility of £150m (currently unutilised) renewed in July 2024.
Dividend Cover
Defined as Commercial Cash Generation divided by the total of the interim and final
proposed shareholder dividend for the financial year.
Resolution
The resolution set out in the notice of General Meeting set out in this document.
DNB
De Nederlandsche Bank is the central bank of the Netherlands and is the regulator of our
RMF
Risk Management Framework
.
Dutch subsidiaries.
Robein Leven
Robein Leven N.V.
DORA
Digital Operational Resilience Act (European Union regulation).
Scildon
Scildon N.V.
DPF
Discretionary Participation Feature – a contractual right under an insurance contract to
Shareholder(s)
Holder(s) of ordinary shares.
receive, as a supplement to guaranteed benefits, additional benefits whose amount
Solvency II
A fundamental review of the capital adequacy regime for the European insurance
or timing is contractually at the discretion of the issuer.
industry. Solvency II aims to establish a set of EU-wide capital requirements and risk
Dutch business
Scildon and the Waard Group, consisting of Waard Leven N.V., Waard Schade N.V. and
management standards and has replaced the Solvency I requirements.
Waard Verzekeringen B.V.
Solvency
A measure of how much the value of the Company (Own Funds) exceeds the level of
Economic profit
A measure of pre-tax profit earned from investment market conditions in the period and
(absolute) surplus
capital it is required to hold.
any economic assumption changes in the future (alternative performance measure – APM).
Standard Formula
The set of prescribed rules used to calculate the regulatory SCR where an internal
EcV
Economic Value is a financial metric that is derived from Solvency II Own Funds.
model is not being used.
It provides a market consistent assessment of the value of existing insurance businesses,
STIS
Short-Term Incentive Scheme – a reward system designed to incentivise executive
plus adjusted net asset value of the non-insurance business within the Group.
directors’ short-term performance.
EcV Earnings
Measure of the value generated by the Group in a period.
SCR
In accordance with the UK’s regulatory regime for insurers, it is the sum of individual
FCA
Financial Conduct Authority.
capital resource requirements for the insurer and each of its regulated undertakings.
FI
Finansinspektionen, being the Swedish Financial Supervisory Authority.
Swedish business
Movestic and its subsidiaries and associated companies.
Form of proxy
The form of proxy relating to the General Meeting being sent to shareholders with
S&P
Save & Prosper Insurance Limited and Save & Prosper Pensions Limited.
this document.
TCF
Treating Customers Fairly – a central PRA principle that aims to ensure an efficient and
FSMA
The Financial Services and Markets Act 2000 of England and Wales, as amended.
effective market and thereby help policyholders achieve fair outcomes.
GMM
General Measurement Model – the default measurement model which applies to
Tier 2
Term debt capital (Tier 2 Subordinated Notes) issued in February 2022 with
insurance contracts with limited or no pass-through of investment risks to policyholders.
a 10.5 year maturity and 4.75% coupon rate.
Group
Chesnara plc and its existing subsidiary undertakings.
Transfer ratio
The proportion of new policies transferred into the business in relation to those
Group Centre
Parent Company operations of Chesnara plc.
transferred out.
Group
In accordance with the UK’s regulatory regime for insurers, it is the sum of the individual
TSR
Total Shareholder Return, measured with reference to both dividends and capital growth.
Own Funds
capital resources for each of the regulated related undertakings less the book value
UK or
The United Kingdom of Great Britain and Northern Ireland.
of investments by the Group in those capital resources.
United Kingdom
Group SCR
In accordance with the UK’s regulatory regime for insurers, it is the sum of individual
UK business
CA, S&P and CASLP.
capital resource requirements for the insurer and each of its regulated undertakings.
VA
The Volatility Adjustment is a measure to ensure the appropriate treatment of insurance
Group solvency
Group solvency is a measure of how much the value of the Company exceeds the level
products with long-term guarantees under Solvency II. It represents an adjustment to the
of capital it is required to hold in accordance with Solvency II regulations.
rate used to discount liabilities to mitigate the effect of short-term volatility bond returns.
HCL
HCL Insurance BPO Services Limited.
VFA
Variable Fee Approach – the measurement model that is applied to insurance contracts
IFRS
International Financial Reporting Standards.
with significant investment-related pass-through elements.
IFA
Independent Financial Advisor.
Waard
The Waard Group.
KPI
Key performance indicator.
CHESNARAANNUALREPORTANDACCOUNTS2024265
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.
266 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
ADDITIONAL INFORMATION
CAUTIONARY AND FORWARD-LOOKING STATEMENTS AND MSCI DISCLAIMER
Cautionary and forward-looking statements
MSCI disclaimer
This document has been prepared for the members of Chesnara plc and no one else. Chesnara plc,
Certain information contained herein (the ‘Information’) is sourced from/copyright of MSCI Inc.,
its directors or agents do not accept or assume responsibility to any other person in connection
MSCI ESG Research LLC, or their affiliates (‘MSCI’), or information providers (together the ‘MSCI
with this document and any such responsibility or liability is expressly disclaimed. Nothing in this
Parties’) and may have been used to calculate scores, signals, or other indicators. The Information
document should be construed as a profit forecast or estimate.
is for internal use only and may not be reproduced or disseminated in whole or part without prior
written permission. The Information may not be used for, nor does it constitute, an offer to buy
This document may contains, and we may make other statements (verbal or otherwise) containing,
or sell, or a promotion or recommendation of, any security, financial instrument or product, trading
forward-looking statements with respect to certain of the plans and current expectations relating
strategy, or index, nor should it be taken as an indication or guarantee of any future performance.
to the future financial condition, business performance, and results, strategy and/or objectives
Some funds may be based on or linked to MSCI indexes, and MSCI may be compensated based on
(including without limitation, climate-related plans and goals) of Chesnara plc.
the fund’s assets under management or other measures. MSCI has established an information
Statements containing the words ‘believes’, intends’, ‘will’, ‘expects’, plans’, ‘aims’, ‘seeks’, ‘targets’,
barrier between index research and certain Information. None of the Information in and of itself can
‘continues’ and ‘anticipates’ or other words of similar meaning are forward-looking.
be used to determine which securities to buy or sell or when to buy or sell them. The Information
is provided ‘as is’ and the user assumes the entire risk of any use it may make or permit to be made
By their nature, all forward-looking statements involve risk and uncertainty because they relate
of the Information. No MSCI Party warrants or guarantees the originality, accuracy and/or completeness
to future events and circumstances that are beyond the control of Chesnara plc including, amongst
of the Information and each expressly disclaims all express or implied warranties. No MSCI Party
other things, UK domestic, Swedish domestic, Dutch domestic and global economic, political,
shall have any liability for any errors or omissions in connection with any Information herein, or any
social, environmental and business conditions, market-related risks such as fluctuations in interest
liability for any direct, indirect, special, punitive, consequential or any other damages (including
rates, currency exchange rates, inflation, deflation, the impact of competition, changes in customer
lost profits) even if notified of the possibility of such damages.
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
In addition to the terms and conditions of any license agreement for MSCI information, services or
authorities, the impact of tax or other legislation and other regulations in the jurisdictions in which
products (‘MSCI Products’) entered into with MSCI Inc. and/or its affiliates (‘MSCI’) by customers
Chesnara plc and its subsidiaries operate. As a result, Chesnara plc’s actual future condition,
(‘Customer(s)’), each Customer must comply with the terms and conditions required by third party
business performance and results may differ materially from the plans, goals and expectations
suppliers (‘Supplier(s)’) regarding Customer’s use of Supplier content, data, software and other
expressed or implied in these forward-looking statements.
materials (‘Materials’) within MSCI Products. Customers may also be required to pay additional fees
associated with Supplier Materials. If a customer does not comply with a Supplier’s terms, a Supplier
No representation is made with regard to forward-looking statements, including that any future
may enforce such terms and/or require MSCI to terminate Customer’s access to that Supplier’s
results will be achieved. As a result, you are cautioned not to place undue reliance on such
Materials, without any remedy to Customer.
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
Additional terms and conditions required by Suppliers with respect to its Materials are provided
forward-looking statements we make. Forward-looking statements in this report are current only
in the expanders below. If Customer receives Materials from a Supplier not listed below via MSCI
as of the date on which such statements are made.
Products, additional terms and conditions related to such Materials may apply. Notwithstanding
anything to the contrary set forth below, none of the additional terms and conditions of MSCI Suppliers
The climate metrics used in this document should be treated with special caution, as they are more
shall supersede (nor shall MSCI waive) any MSCI proprietary and/ or intellectual property rights
uncertain than, for example, historical financial information and given the wider uncertainty around
in MSCI Products.
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.
CHESNARAANNUALREPORTANDACCOUNTS2024267
ADDITIONAL INFORMATION
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
Registered Number: 04947166
Designed by The Chase
268 CHESNARA ANNUAL REPORT AND ACCOUNTS 2024
