Companies: CSN   

Given current uncertainties Chesnara, a life assurance venture with visible long-term income, good cash characteristics and a propensity for progressive dividends, should be on investors’ radars.

Guided by chief executive Graham Kettleborough, the holding company for the Countrywide Assured (closed to new business) life assurance book unveiled improved results for 2007, with pre-tax profits rising by 11% to £27.7m and earnings by 32% to 24.3p. A year of strong cash generation underpinned a 22.4% rise in the final dividend to 9.85p – the total dividend was increased to 15.1p (13.1p).

As well as income arising from Countrywide Assured, which now manages a portfolio of more than 200,000 life assurance and pension policies, Chesnara is also benefiting from a recent positive trend, namely a decline in mortgage endowment mis-selling complaints. Moreover, management insists Chesnara has ‘no direct exposure’ to credit market issues, while the search for value adding life assurance acquisitions, such as 2005’s City of Westminster Assurance takeover, as well as deals in the wider financial services sector, continues.

Significantly, management has demonstrated its ability to walk away from deals, preferring to return surplus cash to shareholders in the form of dividends rather than squander shareholder funds.

Trading on modest earnings multiples and offering a bumper yield – 9.2% based on the 2007 payout alone – the shares are compelling fare. Buy.

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Chesnara	LSE	£145.64m	139.25p	4.25p
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Panmure Gordon			05/10/2007
Chesnara ups dividend			10/05/2006
Chesnara: Allianz has 16 per cent			09/05/2006
Chesnara gets a boost from Resolution deal			08/05/2006