Chesnara, UK-based company that manages life and pension policies in the UK, Sweden, and the Netherlands, and its subsidiaries announced they have entered an agreement to acquire the U.K. life insurance business of HSBC Bank for £260 mn in cash.
Chesnara intends to purchase HSBC Life, a specialist provider of life protection and investment bond products in the United Kingdom.
The transaction will add an estimated £4 bn in assets under administration and 454,000 policies, according to the statement.
The acquisition will be funded through £55 mn of existing internal cash, a £65 mn drawdown from Chesnara’s group revolving credit facility, and £140 mn raised via a rights issue at £1.76 per share.
Steve Murray, chief executive officer of Chesnara, stated the acquisition represents a material increase in scale for the group and that the HSBC business is expected to deliver substantial cash flows for many years.
Chesnara estimated lifetime cash generation from the deal will exceed £800 mn through future profits and the run-off of capital requirements.
The company projected £140 mn in cash generation within the first five years after acquisition, with significant additional cash expected in later years.
The £260 mn purchase price equates to 83% of HSBC Life (UK)’s Eligible Solvency II Own Funds as of Dec. 31. The acquisition will also expand Chesnara’s product offerings.
Chesnara expects to create shareholder value through operating efficiencies by migrating HSBC Life (UK)’s policy administration to its strategic outsourcing partner SS&C Technologies, as part of an ongoing transition of Chesnara’s U.K. business administration to SS&C.
Additional shareholder value is anticipated through management actions and capital synergies, including the Part VII transfer of HSBC Life (UK) to a single U.K. entity, mass lapse reinsurance, FX hedging, and capital diversification benefits.
The transaction is expected to close in early 2026, subject to customary regulatory approvals.
