Chesnara has wrapped up the acquisition of Direct Line Life Insurance in the UK for a total cash consideration of £39.3m, as part of its expansion strategy to boost its footprint in the insurance business arena.

Originally in October this year, Chesnara embarked on an agreement to acquire the entire issued share capital of UK-based life insurance company Direct Line Life.

According to the company, it acquired Direct Line Life at an effective 74.7% of Chesnara directors’ estimate of the residual embedded value of £52.6m as at 30 June 2013, adjusted to reflect a capital extraction of £23m by the seller immediately at completion.

To raise the required capital to fund the transaction, Chesnara has reached a new loan facility with RBS worth £73.8m, which will be given in two facilities.

The acquired business will boost Chesnara’s strategic acquisitions in the life assurance sector and in particular in its core UK life operations.

For the year ended on 31 December 2012, Direct Line Life posted an operating profit before tax of £9.4m, reported a profit for the period after tax of £6.9m and had gross assets of £177.6m.

Chesnara CEO 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."

"It is of benefit to our shareholders as it fits with our strategy, is accretive to our embedded value and will also help support our dividend paying capacity in the medium term."

Direct Line Life closed to new business on 5 July 2011, and since then the company has been managing the existing portfolio in line with the run-off plan agreed at the time with the UK FSA (currently FCA).