Insurer Chesnara’s profit falls in first half on Italian bond exposure
Insurance and pensions administrator Chesnara said today its profit in the first six months of the year had fallen by nearly half, which it blamed on its exposure to Italian bonds.
Chesnara posted profit before tax of £26.5m, which was a fall of 48.6 per cent from £51.6m in the same period last year.
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Operating profit increased significantly to £27.3m, from £16.6m, but the company suffered a loss of £0.8m on economic profit.
It blamed its losses on exposure to badly performing Italian bonds and the weakness of the Swedish krona.
It boosted its interim dividend by three per cent to 7.21p per share which it said was a result of being able to generate more than sufficient cash to fund its dividend strategy.
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Its divisional cash generation was £53.1m, compared to £54.8m in the same period last year.
Chesnara chief executive John Deane said: “It is a good strong cash result which is the key, we are a dividend stock and its cash that pays the dividend.”
Panmure Gordon analyst Barrie Cornes said: "Chesnara has delivered another solid set of interim results that has enabled it to extend its unbroken policy of growing its dividend."
"We maintain our view that the shares are undervalued and that the positive impact of the new business profitability has, so far, been largely overlooked."