Chesnara plc has announced an agreement to acquire HSBC Life (UK), the specialist life protection and investment bond provider, from HSBC Bank plc.
The transaction, valued at £260 million, is expected to complete in early 2026, pending regulatory approval.
As at December 31, 2024, HSBC Life (UK) reported Eligible Own Funds of £314 million. Chesnara said the acquisition is projected to generate incremental lifetime cash of more than £800 million, including over £140 million in the first five years following completion.
The £260 million consideration will be financed through a mix of £55 million in internal cash, a £65 million drawdown from Chesnara’s amended £150 million revolving credit facility, and gross proceeds of approximately £140 million from a fully underwritten rights issue. The issue is priced at 176p per share on a 10-for-19 basis.
The transaction will increase Chesnara’s assets under administration by an estimated £4 billion and add approximately 454,000 policies to its UK operations. The company also expects an adjusted 6% increase in its final FY25 and interim FY26 dividends, supported by the cash flow profile of the acquired business.
Following completion of the transaction, Chesnara’s combined assets under administration are projected to reach approximately £18 billion, up from £14 billion at the end of 2024, as per Bloomberg.
Additional opportunities for value creation, including potential cost and capital synergies, management initiatives, and new business, are also under review. The deal is expected to increase the company’s free float and may lead to inclusion in the FTSE 250 index,.
HSBC’s decision to divest its UK life business aligns with a broader repositioning strategy to streamline its global operations. In recent years, HSBC has sought to simplify its structure and concentrate on core banking activities, particularly in Asia, where it continues to deploy significant capital.
Chesnara’s acquisition of HSBC Life (UK) also follows a string of transactions that reflect its strategy of growth through consolidation. In December, the company completed the purchase of a closed book of business from Canada Life UK, which added around 17,000 policies and £1.5 billion in assets under management.
Steve Murray (pictured above), CEO of Chesnara plc, said the acquisition significantly increases the company’s scale in the UK and provides the opportunity for long-term cash generation.
“This highly accretive transaction will allow us to build on our strong, 20-year track record of uninterrupted dividend growth. It is also a further example of a major financial institution choosing to work with us, enhancing our reputation as a leading life and pensions consolidator. We are continuing to see a strong M&A pipeline across our group which we are well-positioned to execute on,” Murray said.
Murray added that Chesnara looks forward to integrating HSBC Life (UK) and working with HSBC Bank plc to ensure a smooth transition for both policyholders and staff.
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