Chesnara snaps up Dutch insurance assets, CEO resigns

By Richa Naidu

(Reuters) - Chesnara Plc (CSN.L) said its long-serving chief executive would step down early next year as the company moves into the Dutch life insurance market by acquiring assets of bankrupt financial services group DSB.

Graham Kettleborough will step down after more than a decade at the helm of the life insurance fund manager. Chesnara's London-listed stock rose marginally on Wednesday after falling in early trading.

Chesnara, which grows mainly by gobbling up life insurance books closed to new customers, said it would buy Waard Group for 67.8 million euros ($83.9 million), its first acquisition in more than a year.

The company plans to fund the takeover with its own cash and a further 35 million pounds to be raised through a placement of up to 11.5 million shares.

Shore Capital analyst Eamonn Flanagan said he expected the placement to be well-supported, but described Kettleborough's resignation in the midst of the deal as "disconcerting and disappointing". He maintained his "hold" rating on the stock.

Kettleborough will be replaced by John Deane, formerly the head of life and pensions group Royal London's intermediary business, where he worked for three years with Chesnara Finance Director David Rimmington.

"The strategy of the organisation isn't going to change. The investment criteria of the organisation isn't going to change," Deane told Reuters.

Chesnara, which operates in Britain and Sweden, typically targets western European firms valued at between 50 million pounds and 200 million pounds.

"The UK consolidation story may be halfway through, who knows? But in the Dutch market, consolidation hasn't really started," Kettleborough said. "We've identified that there is a lot of opportunity there."

The Netherlands-based Waard Group comprises three closed life funds and an insurance servicing company, all units of DSB, the privately owned financial services group that entered bankruptcy in October 2009.

Kettleborough said the owners were eager to sell the four companies in one go, meaning Chesnara was able to acquire Waard Group at a 26.3 percent discount to its estimate of Waard's EEV of 92.0 million euros as of June 30.

EEV, or European Embedded Value, is a metric that compares European insurance companies' results and provides a longer-term measure of value generated.

Chesnara's shares were up 1.1 percent at 323.13 pence at 1023 GMT.

(Editing by Robin Paxton)