Sanlam Life owner eyes more M&A with £100mn war chest

Sanlam Life owner eyes more M&A with £100mn war chest

The new owner of Sanlam Life and Pensions has tripled its cash balances since the end of last year as it looks to add more mergers and acquisitions to its books.

Chesnara completed its £39mn purchase of Sanlam’s life business in April. In the meantime, the consolidator has built up an M&A war chest to the tune of £100mn, according to its half-year financial results published today (August 31).

Group chief executive Steve Murray said the firm has proven “real momentum” is behind its acquisition strategy, citing the purchase of Netherlands-based annuity provider Robein Leven in April alongside Sanlam Life, and the proposed purchase of Conservatrix's Dutch insurance portfolio.

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“We remain optimistic about our ability to participate in future M&A and continue to be highly confident in our ability to finance and execute such transactions on attractive terms for both vendors and our shareholders,” said Murray.

The consolidator’s cash balances jumped to £155.4mn in the first half of 2022, compared with the £46.1mn at the end of last year.

In February, the company issued £200mn of Tier 2 subordinated debt to fuel its M&A strategy.

The firm’s chairperson, Luke Savage, said the outlook for acquisitions remains positive. 

“We continue to expect the market to be active and we have taken actions to enhance our ability to participate in that market, including the issuance of our inaugural Tier 2 bond in February,” he said.

Chesnara now looks after around 941,000 policyholders and customers and manages some £11.2bn of their assets. The acquisition of Conservatrix's insurance portfolio is expected to add a further 70,000 policyholders to the group, taking it to over 1mn policyholders.

But despite its recent acquisitions, the business’ commercial new business profit fell to £4.6mn in 2022, from £6.6mn this time last year.

It also posted a pre-tax loss of £104.6mn, compared to a pre-tax profit of £20.8mn this time last year.

The company said the loss was driven by “adverse investment conditions”. Analysts said the hit to earnings was anticipated as a result of both short-term economic conditions and the fall in equity markets.

Despite the hit to earnings, the company’s board declared a 2022 interim dividend of 8.12p per share, a 3 per cent increase on the interim dividend of 7.88p last year.

The firm said this extends a period of uninterrupted dividend growth to 18 years.