Chesnara plc to acquire Scottish Widows Europe SA for €110m

Chesnara plc (LON:CSN) has to announced that it has entered into an agreement to acquire 100% of the issued share capital of Scottish Widows Europe SA, a Luxembourg based closed life insurance business, from Scottish Widows Limited for total cash consideration of €110 million⁽¹⁾.

Acquisition Highlights

·    Cash generation of ~€250 million over the lifetime of the policies held in the Scottish Widows Europe portfolio, with ~€100 million of this cash generation occurring in the first five years.

·    Adds €1.7 billion of assets under administration and approximately 46,000 in-force policies.

·    €110 million⁽¹⁾ consideration fully financed with available cash, representing an attractive multiple 0.64x FY24 Own Funds of Scottish Widows Europe of €173 million.

·    Entrance into Luxembourg, an additional attractive market, and the addition of new policyholders (based in Germany, Austria and Italy) provides a platform for increased consolidation and scale across Europe.

·    Pro-forma Group Solvency II ratio to remain robust and above normal operating range at 173%⁽²⁾ and pro-forma leverage ratio expected to remain in line with investment grade rating.

·    Completion of the Acquisition expected around end 2026, subject to customary regulatory approvals.

Commenting on the Acquisition, Chesnara CEO, Steve Murray stated:

“We are delighted to announce Chesnara’s second significant acquisition in the past twelve months. Scottish Widows Europe is another material and value-accretive transaction with a product set that we know well. It marks our entry into Luxembourg, providing a new platform for in-market and wider European consolidation and expansion. We are pleased that another major financial institution, Lloyds Banking Group, has chosen us to look after their policyholders. We look forward to welcoming Scottish Widows Europe policyholders and new colleagues to Chesnara.”

Summary of Strategic Rationale and Financial Benefits of the Acquisition

Chesnara’s primary focus is consolidating life and pensions books in the UK and Europe, complemented by profitable new business written across the Group’s businesses in Sweden, the Netherlands and the UK. The Group’s business model is to identify and deliver value-enhancing acquisitions which can be efficiently integrated into the Group to grow future cash generation. This transaction further enhances the sustainability of the Group’s cash and capital generation following the recently completed transformative acquisition of HSBC Life (UK) Limited in January 2026. Chesnara diligently assesses deals on a regular basis by applying well-established criteria and a robust risk-based due diligence process. The board of directors of the Company unanimously considers the Acquisition to be in the best interests of the shareholders of the Company as a whole. The Acquisition is considered to be strategically attractive and offers significant financial benefits:

·    Enhanced cash generation: The Acquisition is expected to deliver ~€250m of incremental cash generation over the lifetime of the policies held in the Scottish Widows Europe portfolio, with ~€100m of this cash generation occurring in the first five years. This will be achieved through capital surplus generation from future profits and by applying our efficient and prudent approach to capital management.

·    Attractive transaction pricing: Total consideration for the Acquisition of €110 million⁽¹⁾ represents 64% of Scottish Widows Europe’s Eligible Solvency II Own Funds as at 31 December 2024.

·    Broadens the future consolidation opportunity: Luxembourg is a large life insurance market which broadens the opportunity set for future cross-border consolidation, further supporting the Group’s strategy of being a leading European life and pensions consolidator.

·    Scalable platform that provides value creation opportunities and facilitates further expansion: Scottish Widows Europe is a standalone operating business which will continue to be led by an experienced, local management team post-Acquisition. It has a largely outsourced model with modern technology and policy administration powered by Lifeware SA, a leading European third-party technology provider.

·    Efficient financing structure: Chesnara will fund the Acquisition from internal cash resources, utilising some of the proceeds from its £150 million RT1 bond issue, which was issued in August 2025.

·    Maintains balance sheet strength: The Group’s Solvency II capital coverage ratio is estimated to be 173%⁽²⁾ on a pro-forma basis as at 31 December 2024 taking into account the Acquisition and the issuance of the RT1 bond (compared to 169% on a pro-forma basis as at 31 December 2024 reflecting only the acquisition of HSBC Life (UK)) which is well above the Group’s normal operating range of 140% – 160%. Leverage is estimated to remain below longer-term target of <30% with significant financial firepower remaining to pursue further M&A opportunities.

The Acquisition, due to its size relative to the Group, constitutes a “significant transaction” for the purposes of the UK Listing Rules made by the Financial Conduct Authority, and is therefore notifiable in accordance with UK Listing Rules 7.3.1R and 7.3.2R. Additional details as required under the UK Listing Rules are included in the Appendix.

Webcast and Conference Call

A presentation for analysts and investors will be held today, 17^th February 2026, at 8.30 am (GMT).

A link to a live webcast of the presentation and a copy of the presentation will be available at www.chesnara.co.uk.

To join the webcast, please register using the following link here.

The person responsible for arranging for the release of this announcement on behalf of Chesnara is Al Lonie, Company Secretary.

Notes:

(1)  Subject to adjustment in accordance with the provisions of the Sale and Purchase Agreement (including via a “locked box” mechanism)

(2)  This information was derived from Scottish Widows Europe’s and Chesnara’s audited management accounts for the year ended 31 December 2024 and associated calculations provided by Chesnara’s management, and Chesnara’s estimates of forecast Scottish Widows Europe accounts using business plan assumptions. All estimated pro-forma metrics shown pro-forma of the acquisitions of HSBC Life (UK) and Scottish Widows Europe as well as the issuance of the £150 million RT1 Bond in August 2025.