Chesnara

Specialist insurance concern Chesnara remains acquisitive after increasing first-half pre-tax profits 17% to £12m.

The Preston-based company, which owns closed UK life assurer Countrywide and bought Swedish life group Moderna last year for £20m, increased UK operating profits 45% to £16.8m in the six months to June, helped by improved mortality rates as people live longer and a £3.2m release from previous provisions.

However, Sweden proved 'more challenging than expected', concedes chief executive Graham Kettleborough, who blames 'competition issues' and economic challenges there for a £4.3m loss on that part of the business. He says Moderna is 'behind track but still growing' and argues another Swedish acquisition, health insurer Aspis, could enable Moderna to cut costs by moving from Stockholm to Apsis's headquarters outside the city.

On future acquisitions, Kettleborough says Chesnara is looking for 'something sizeable' in the UK or mainland Europe, but, having looked at two or three in the first six months, is still 'waiting for the right one'. Most analysts see full-year profits falling significantly short of last year's £44.7m pre-tax, but point to an embedded value of around 250p a share, against today's share price of 218.5p, combined with sound medium to long-term prospects and a prospective yield of some 7.5%.

Growth Company Investor recommended Chesnara shares at 144.75p last year and suggested partial profit taking at 230p in March. Lightening the load some more might be prudent, while still retaining some for future prospects.