March 29, 2018 / 7:09 AM / in a year

UPDATE 1-Chesnara FY profit jumps on Dutch insurance deal

(Adds details, analyst comment)

March 29 (Reuters) - Chesnara Plc, an insurance-focused takeover specialist, reported on Thursday a surge in full-year pretax profit, driven by strength in its domestic business and gains from its acquisition of Legal & General’s Dutch insurance business.

Chesnara, which mainly buys life insurance funds closed to new customers, said IFRS pretax profit rose to 89.6 million pounds ($126.2 million) in 2017, from 40.7 million pounds a year earlier.

“We now have sufficient scale and presence in both the UK and the Netherlands to continue our focus on acquisition activity in those territories. We also remain open minded about new territories,” Chesnara said in a statement.

Chesnara reported a Solvency II ratio of 146 percent, up from 144 percent last year. The lower the ratio, the greater the chances of a company defaulting on its obligations.

The results were better than anticipated, said Panmure Gordon analyst Barrie Cornes.

“Whilst we knew about the positive impact of the acquisition of L&G Nederland ... we had not anticipated the positive economic drivers that extended H1 performance into H2.”

Economic value earnings (EcV) net of tax rose to 139.5 million pounds in the year, from 72.5 million pounds a year earlier, while cash generation excluding the impact of the Dutch acquisition rose to 83.9 million pounds, from 36.5 million pounds in 2016.

EcV is a metric adopted by European insurance companies to make their results more meaningfully comparable and provides a longer-term measure of value generated during a period.

$1 = 0.7101 pounds Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri

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