Mid-sized acquisition in Holland extends cash profile The acquisition of the run-off book from Argenta Bank at a 17% discount to Own Funds for £25m will give a £6.9m Own Funds uplift for Chesnara and extend cash generation of the group. It will be cash funded by Chesnara’s Dutch run-off unit, Waard, into which it will be integrated. This follows a smaller (unannounced) acquisition of 6,500 term life policies. Cash generative add-on, with scope for synergies While modest in the context of group Own Funds of £588m at H1, the deal will extend cash generation for the Dutch run-off unit, give validation of the division’s ability to integrate other closed life books, and, according to the CEO, “create material synergies” – unquantified, on first view, as well as enhancing Own Funds per share. Shows business as usual, underlines undemanding multiple The deal also suggests that the model of closed life acquisitions at reasonable multiples, supported by open book growth, has considerable runway, despite recent headlines about higher price expectations on behalf of sellers. That a deal of this size can also be cash funded also underlines our view in our recent initiation (here) that the cash position is robust and a continuation of the 15-year track record of rising dividends is much more secure than the c.8% dividend yield would imply. With our price target based on a target dividend yield of 6%, we leave our price target unchanged, with our forecasts under review for an expected modest uplift to Own Funds per share.