European life and pensions consolidator Chesnara has acquired HSBC Life (UK) in a deal worth £260m.

HSBC Life (UK) is a specialist life protection and investment bond provider, with assets of around £314m (as at 31 December).

The deal will take Chesnara to around £4bn in assets under administration in the UK and around 454,000 policies.

Chesnara has agreed to pay a cash consideration of £260m. It will fund this via existing internal cash (£55m), a £65m drawdown from its revolving cash facility and the remainder through issuing new shares.

The deal is expected to complete early next year, subject to regulatory approvals.

Steve Murray, CEO of Chesnara, said: “The proposed acquisition of HSBC Life (UK) represents a material step up in scale for Chesnara Group. HSBC Life (UK) is a high-quality business operating in products that we know well and is capable, under our ownership, of generating substantial cashflows for many years. 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.” 

Chesnara said it expects incremental lifetime cash generation in excess of £800m from the acquisition, with cash generation of over £140m, within the first five years after the acquisition completes.

The deal is the seventh acquisition for Chesnara in the UK over the past four years.

Mr Murray added that the firm continues to look for more acquisitions in the UK.

In December Chesnara acquired Canada Life’s onshore bond arm, acquiring a closed portfolio of unit linked bonds and legacy pension business with approximately 17,000 policies and total assets under management of £1.5bn. The policies are expected to transfer to Chesnara's UK subsidiary, Countrywide Assured, at the end of 2025.

The deal followed a previous acquisition of the individual onshore protection business of Canada Life in 2023.