Chesnara Share Discussion Threads

[sogoesit] 29/8/2019 08:46

Thanks for insightful posts, gents.

Just wondering out loud whether Eurozone negative interest rates, and support of asset prices by central bank purchases of equities (talked about), would provide a double whammy in effect?

[gabsterx] 29/8/2019 08:46

jonwig, thanks for the article quite informative! I don't believe Chesnara has a big exposure to equities, the bulk of their financial assets seem to be in their 'collective investment schemes', I couldn't find a breakdown of what was in there though.

[ramridge] 29/8/2019 08:37

jonwig - great minds and all that !

[jonwig] 29/8/2019 08:33

ramridge - sorry, our posts crossed!

[jonwig] 29/8/2019 08:33

Gabster - they (sort of) explain what symmetric adjustment is here:

Symmetric adjustment: The Solvency II capital requirement calculation includes an adjusting factor that reduces or increases the level of the equity capital required depending on historic market conditions. Following periods of market growth the factor tends to increase the level of capital required and conversely in falling markets the capital requirement becomes less onerous.

Not all that clear, but this article I think is a good explanation, "The idea is to suppress procyclical investment behavior of insurance companies by making equities less attractive in bull markets and vice versa."



So, ironically, whilst CSN's equity holdings will fall in value in a bear market, the adjustment will mitigate this. They expect it to happen in H2 because they see equities falling!

[ramridge] 29/8/2019 08:27

This is an extract from the chairman's statement.
"The total group cash results have however been suppressed by continued downward pressure on interest rates. In addition, the Solvency II standard formula capital model is more onerous regarding capital requirements for equity exposure during a period of strong equity market recovery."
That might explain why the share price has been on a downward slope since the start of the year. FTSE100 climbed over 10% and interest rates have remained stubbornly low.

Over the past month, the stock market has declined. So if the view is that the markets will remain in the doldrums, then that appears to be good for CSN share price. Let's see how it pans out.

[gabsterx] 29/8/2019 07:57

Cash generation fell from 48.6M to 13.4M, they're blaming this on "symmetrical adjustments". Not sure what to make of this as cash is what's used to pay the dividend now they have to use reserves from their balance sheet.

They claim the impact of the adjustment should reverse for H2, let's see..

[solarno lopez] 29/8/2019 07:45

Peel Hunt are suggesting dividends will start to plateau after 2021

[sogoesit] 29/8/2019 07:42

Thanks, jonwig, for the dividend dates.
(I couldn't find them)!

Waiting to see whether share price reacts to what looks pretty positive results compared to recent sentiment.

[jonwig] 29/8/2019 07:28

The interim results:



The 'Economic Value' of £645.1m is 3% up on last year, and works out at 430p/sh. I'd always regarded this as a substitute for 'Embedded Value' which nobody uses any more. I always regarded EV as a decent measure of where the share price should be but currently the share price is a 35% discount!

They do say that low interest rates are depressing returns, and there have been forex losses but I'm still at a loss to explain the huge discount.

As usual they don't give the dividend dates until almost the end:

7.43p, xd 05/09, pay 11/10.

[gabsterx] 27/8/2019 14:15

New 5 year low today..

[jonwig] 18/8/2019 10:44

gabster - two very useful posts, thank you.

[gabsterx] 18/8/2019 09:01

I've been doing some digging on how the solvency ratio is calculated:

SR = (Net assets - Dividends) / Solvency Capital Requirement

Basically the ratio increased because the SCR was marked down by 72.2 Million, to find out why you have to dig down to page 77 of the Solvency condition report (

SCR is the sum of Market Risk, Life underwriting risk, Health underwriting risk, etc.. biggest mover was the Market Risk as per Note 1: "The decrease in market risk is attributable to three main impacts. Firstly, the equity risk capital decreased by £50.0m. This is mainly due to reduced equity exposure for CA and Movestic as a result of falls in equity markets over the period, in addition to a reduction in the symmetric adjustment which dampens the impact of the stress. "

TLDR: The portfolio value is down which means less 'risk' in equities which is artificially boosting the solvency ratio despite lower NAV. I'd rather see the ratio rise because of the numerator going up than the denominator going down. Chesnara is touting this number in their front page, I'd keep my eyes open.

[gabsterx] 16/8/2019 11:41

I guess people are anticipating a drop in economic value which pretty much dictates the share price. As Chesnara's investment portfolio follows the market I'd expect it to remain depressed for a while longer.

That being said I've been looking at the yield vs dividend vs price history since 2004, until recently CSN was averaging a 8 to 9% yield until it dropped to the high 5s in 2013. They have been increasing their dividends for 14 years even in years of huge enterprise value drops. If the price drops a bit more I might add more shares.

[wayneduncan] 16/8/2019 09:06

Must unusual moves here. A huge sell off ahead of results at the end of the month doesn't bode well in my experience.

[speedsgh] 09/8/2019 12:56

Yes, as stated I will be quite happy with another healthy dose of 'steady-as-she-goes' on 29th. 'Boring is beautiful' does it for me hence my exposure to AIM these days is negligible (basically a long-term holding in RQIH).

[jonwig] 09/8/2019 12:23

J D did say he wanted them to be "the most boring share in your portfolio". That would be really good news!

[speedsgh] 09/8/2019 11:55

Last open market purchase by directors was Nov 2017 when John Deane (CEO) bought 10,000 @ 349.6665p = £35k. Since then it has just been exercising of options with simultaneous partial sales to cover tax liabilities and the occasional small purchase under the employee Share Save Scheme by both CEO & CFO. They obviously don't feel the current 310p offer represents good enough value to buy more with their own cash. Either that or the options packages are too generous!

Out of interest John Deane has been at the helm now since Jan 2015 when he replaced Graham Kettleborough. Time flies. Doesn't feel like GK left that long ago.

No news on the acquisition front since L&G Nederland acquisition completed in Apr 2017.

Looking forward with caution to Interim Results on 29th Aug. In the current environment I will be happy with continued 'steady-as-she-goes' results with another small tick-up in the dividend.

[jezreel] 09/8/2019 00:54

I don't know

[joan of arc] 07/8/2019 12:08

So why is CSN share price crashing? Fear of competition?

[epicsurf] 15/6/2019 09:22

Have held chesnara from £1.24 as a bond proxy,this might be the reason for the recent Drop in share price or not.
Insurer Swiss Re will float its British life operation in a £3.5billion spin-off next month.

The life insurance firm will be known as Reassure Group and will list on the London Stock Exchange as one of the year’s biggest public offerings.

Swiss Re bought the division in 2004 when it was known as Windsor Life.

Reassure buys and oversees old life insurance policies which other companies issued but no longer want to own – a growing area of business in the industry which could be worth £100billion over the next five years according to research by consultant Oliver Wyman.

[fenners66] 13/6/2019 21:10

I started paying attention the other day - as a bond proxy I am wondering how low it can go and see if I may buy some more...

[jonwig] 13/6/2019 16:37

PHNX has been quite steady. This share price has caused a lot of head-scratching over the years.

[gabsterx] 13/6/2019 16:30

What's going on with the share price lately? Is it sector wide as I don't see any news coming from Chesnara..

[chairman2] 23/5/2019 14:08

thanks Jonwig

does not mean the market understands
- and I missed it.