Chesnara announces £62m Direct Line purchase

Preston-based financial services investment group Chesnara is to acquire Direct Line's closed-book life division in a deal worth £62m.

ChesnaraThe proposed deal, which is subject to approval from regulators and Chesnara shareholders,  involves a £39m cash payment and Direct Line taking a £23m dividend.

Direct Line Life (DLL) closed for new business in July 2011 but still has 150,000 policies on its books and made a pre-tax profit of £6.9m last year.

Chesnara chief executive Graham Kettleborough said: “Adding this portfolio to our existing book of business brings extra security, from increased size and concentrated governance, to both existing and the newly-acquired policyholders.” To fund the purchase, Chesnara agreed a new £73.8m loan facility with Royal Bank of Scotland.