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Fall in endowment complaints boosts Chesnara profits

07 April 2008 / by Joy Tibbs
Life assurance group Chesnara, the holding company for Countrywide Assured plc and City of Westminster Assurance Company Limited, has revealed that a decline in mortgage endowment complaints contributed to improved financial results in 2007.

Its figures show that pre-tax profits rose 11 per cent to £27.7 million in 2007 from 25 million in 2006. And the company increased its final dividend by 22.4 per cent as a result of the lower level of mortgage endowment complaints. The significant reduction allowed for a provision release of £2.8 million, according to the report.

Chairman, Christopher Sporborg, says: "Our recent experience of mortgage endowment mis-selling complaints has been generally positive. The number of complaints has reduced significantly and an increasing proportion of those received are time-barred in line with FSA rules, while uphold rates on those complaints which are not time-barred have increased.

"Although we do not believe that this issue has fully run its course, we do feel able, however, whilst maintaining an element of conservatism, to reduce our redress provisions, by £2.8 million, based on our revised expectation of future complaint activity."

And, despite current turmoil in the financial markets, the company remains positive about the future.

"A 22.4 per cent increase in the final dividend reflects our confidence in the future as we continue to balance the opportunities we see in potential acquisitions against the needs of shareholders. We continue to look to the future with some optimism," says chief executive, Graham Kettleborough.

Chesnara also plans to make further acquisitions going forward, despite having made two unsuccessful bids for closed life groups in 2007. Mr Sporborg says: "With the recent lack of acquisition opportunities in the closed life sector in our target value range of £50m to £200m, we have, during 2007, concentrated primarily on enhancing shareholder value in the existing business.

"However, as the business matures the opportunity for this reduces and we have therefore also invested management time in reviewing other potential value-enhancing opportunities in the financial services sector."

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