Insurance Curator LONDON — UK-based insurance consolidator Chesnara plc has finalized the integration of a substantial legacy life insurance portfolio from HSBC Life (UK), signaling a broader spike in mergers and acquisitions within the British life insurance sector as global banks offload non-core assets.
The transaction, which involves the transfer of approximately £1.1 billion in assets under management, underscores a strategic shift as major lenders streamline their operations to focus on high-growth wealth management. For Chesnara, the acquisition of the onshore individual protection and retirement income books adds roughly 47,000 policies to its UK subsidiary, Countrywide Assured.
The move comes as the UK life insurance market experiences a period of intense consolidation. Specialist firms, often referred to as "consolidators," are increasingly targeting legacy "closed book" portfolios—policies that are no longer sold to new customers but remain on the balance sheet.
"This transaction further strengthens our position as a leading consolidator in the UK market," said Steve Murray, Chief Executive Officer of Chesnara, in a statement regarding the group’s expansion strategy. "It aligns with our objective of acquiring attractive blocks of business that deliver value for both our shareholders and policyholders."
Market analysts suggest the deal is indicative of a wider trend where universal banks seek to reduce capital intensity. By transferring these asset pools to specialists like Chesnara, HSBC Life (UK) is able to free up capital and reduce the operational complexity associated with managing aging policy systems.
The spike in M&A activity is also being driven by the current interest rate environment and regulatory developments. According to a report by KPMG on insurance sector trends, higher interest rates have improved the solvency positions of many life funds, making them more attractive targets for acquisition. Furthermore, the implementation of the Financial Conduct Authority’s (FCA) Consumer Duty has increased the administrative burden on firms managing legacy books, prompting many to sell to specialists who possess the scale to manage them more efficiently.
"We are seeing a clear bifurcation in the market," said Marcus Wright, a senior insurance analyst. "Global players are pivoting toward capital-light wealth management products, while consolidators are leveraging technology and scale to extract value from back-book portfolios that were previously seen as stagnant."
For HSBC, the divestment represents a tactical refinement rather than an exit from the insurance space. The bank has indicated it will continue to focus on its "Wealth and Personal Banking" division, prioritizing international clients and digital-first insurance products over legacy domestic books.
The Chesnara-HSBC deal is expected to be followed by further activity in the 2025 fiscal year. Industry insiders point to several other "Tier 1" banks currently reviewing their insurance subsidiaries. As regulatory pressure for competitive policyholder returns increases, experts predict that smaller, fragmented books of business will continue to migrate toward large-scale consolidation platforms.
The transfer of the HSBC assets remains subject to formal judicial approval via a Part VII transfer, a standard legal process for the bulk transfer of insurance contracts in the United Kingdom, ensuring that policyholder protections remain intact.