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Trading statements

Chesnara sees strong embedded value growth

19 May 2015 07:33

Chesnara says it has seen strong embedded value growth in the quarter of £19.5m (5% increase compared to 31 December 2014), predominantly due to investment market economic profits (particularly in Sweden) offset in part by further exchange rate losses.

It says the embedded value continues to benefit from the new business profits in Sweden although total new business APE during the quarter of £14.9m has reduced compared with the prior year equivalent (Q1 2014: £16.9m).

It says: "The general shift in the market preference in Sweden from unit-linked savings towards traditional savings contracts with guaranteed returns, that we saw in the second half of 2014, has continued during the first quarter of 2015. Indeed the attractiveness of the guaranteed returns has increased as Swedish government bond yields have become negative. This has had a dampening effect on total new business volumes in the unit-linked market, particularly higher margin single premium transfer-in business.

"In line with the Chesnara strategy, Movestic retains its pricing discipline and will not compromise its long term profit margins. We remain of the view that the level of guarantees being offered in the traditional market is not sustainable and recent guarantee reductions support this view.

"We do however expect the unit-linked total market to remain somewhat suppressed throughout the rest of 2015."

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Related Company: CSN

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