During 2019 Chesnara continued to deliver strong cash generation, funding the dividend strategy as well as maintaining a robust group solvency ratio. Economic Value increased significantly as a result of favourable economic conditions, despite the impact of a substantive foreign exchange loss due to currency fluctuations. Prudent financial and operational management has resulted in Chesnara's operations, solvency and dividends all being resilient to the impacts of Covid-19, however the Economic Value will have fallen subsequent to the year end.
Other financial highlights include:
GROUP CASH GENERATION OF £36.7M (2018: £47.8M)
The 2019 result includes a cash strain of £24.7m from the symmetric adjustment impact. The prior year benefited from a positive symmetric adjustment impact and £20m of net releases from the with-profits fund (2019: £5.1m net growth in restricted surplus).
DIVISIONAL CASH GENERATION OF £50.8M (2018: £63.9M)
Operational and capital optimisation management actions together with modestly beneficial economic conditions have resulted in a strong divisional cash outcome.
GROUP SOLVENCY RATIO OF 155% (31 DECEMBER 2018: 158%)
We are well capitalised at both group and subsidiary level under Solvency II. We continue not to apply transitional arrangements however we have applied the volatility adjustment for the first time in 2019 in both of our Dutch subsidiaries.
ECONOMIC VALUE (ECV) OF £670.0M (31 DECEMBER 2018: £626.1M) Note 2
Movement in the year is stated after dividend distributions of £31.3m and includes a foreign exchange loss of £28.8m.
ECV EARNINGS NET OF TAX OF £104.0M (2018: £(60.9)M)
The result includes £121.1m of earnings resulting from investment market movements (2018: investment market loss of £49.7m).
COMMERCIAL NEW BUSINESS PROFIT OF £14.4M (2018: £15.4M)
Scildon has reported a 65% year on year improvement due to record term assurance policy sales and a reduction in acquisition costs. Pricing pressures and changes in transfer regulations have driven a 32% reduction in Movestic's new business value.
IFRS PROFIT BEFORE TAX OF £96.1M (2018: £27.0M)
The 2019 result includes £49.1m of profits relating to economic market conditions, predominantly asset growth in Scildon. Conversely, economic conditions created a £15.5m loss in 2018 which explains the large year on year movement.
IFRS TOTAL COMPREHENSIVE INCOME OF £60.6M (2018: £23.7M)
The 2019 result includes a foreign exchange loss of £18.7m (2018: gain of £0.8m).
