Interim Management Statement

Chesnara plc

                      Interim Management Statement 

         for the period from 1 January 2009 to 18 November 2009

19 November 2009

This statement relates primarily to the financial statements of Chesnara plc
(the `Group') as at 30 September 2009 and to its financial performance during
the first three quarters of the year. Where events and transactions have
occurred since the end of the third quarter, which are estimated to have a
material impact on management's core expectation of the financial position and/
or financial performance of the Group, then these are identified together with
a broad indication of their impact.

The Group's financial position and financial performance referred to in this
statement incorporate, for the first time, the financial position and financial
performance of Moderna Försäkringar Liv AB (`Moderna'), which was acquired on
23 July 2009. Accordingly, the financial performance of the Group, on both the
European Embedded Value (`EEV') and IFRS bases of reporting, includes (i) the
profit arising on the acquisition of Moderna and (ii) the Moderna
post-acquisition trading result for the 10-week period ended 30 September 2009.
This interim management statement follows a trading update statement issued on
27 October 2009, which advised of the significant profit arising on the
acquisition of Moderna, on both the EEV and IFRS bases of reporting.

EEV

The movement on Group EEV since the position last reported in the interim
financial statements for the six months ended 30 June 2009, stated before
recognition of an interim dividend of £5.7m (2008: £5.8m), may be summarised
as:

                                                            2009         2008
                                                              £m           £m
                                                                             
EEV as reported 30 June                                    178.9        179.0
                                                                             
Profit arising on acquisition of Moderna                    54.7            -
                                                                             
Third quarter earnings, net of tax                                           
                                                                             
- UK life and pensions business                             13.2          2.4
                                                                             
- Swedish life and pensions business (Moderna) for           4.9            -
10 week post-acquisition period                                              
                                                                             
- Parent company operations                                 (1.3)        (0.5)
                                                                             
Reduction in equity following share buyback                    -         (0.3)
operation                                                                    
                                                                             
Foreign exchange gain                                        8.3            -
                                                                             
EEV as at 30 September                                     258.7        180.6

The profit arising on the acquisition of Moderna is measured as the EEV of
Moderna at the acquisition date, which was £74.7m, less the purchase
consideration of £20.0m. This represents a discount of 73.2% to Moderna's EEV
at the acquisition date.

The dominant feature underlying the third quarter earnings of both the
continuing UK life and pensions operations and of Moderna was the recovery in
global investment markets. The leading UK equity market indices, for example,
posted an increase of some 21% over the third quarter. The favourable impact of
global investment market growth is reflected through higher current and
prospective deductions from unit-linked funds under management, with the UK and
Swedish life and pensions businesses benefiting to the extent of £6.9m (£6.2m
net of tax) and £2.9m (£2.9m net of tax) respectively.

Other favourable influences underlying earnings in the third quarter were:

1. UK life and pensions business

 i. £1.9m (£1.7m net of tax) expected return from unwind of risk discount rate;
   
ii. £1.9m (£1.7m net of tax) continuing favourable persistency experience 
   (£4.6m net of tax cumulative for the three quarters ended 30 September 2009);
    and
   
iii. £2.0m (£1.8m net of tax) other favourable investment market effects, net
    of economic assumption changes.
   
2. Swedish life and pensions business

(all amounts stated are pre-tax: tax effects for the period are immaterial)

(i) £0.8m expected return from unwind of risk discount rate;

(ii) £0.6m value of new business written; and

(iii) £0.3m favourable change in mix of assets under management.

The parent company loss of £1.3m for the third quarter is stated after
expenditure of £0.9m incurred, during the quarter, in connection with the
acquisition of Moderna, the total of such expenditure being £1.4m.

The foreign exchange gain of £8.3m arises from the effect of translating the
SEK-denominated EEV of Moderna into pounds sterling, the latter having
depreciated 10% against the Swedish Krona from the Moderna acquisition date to
30 September 2009. Subsequently, up to 17 November 2009, the pound has
appreciated 3.6% against the Swedish Krona. Accordingly, it is estimated that 
£2.8m of the gain reflected in the table above has reversed, with a
corresponding diminution of Group EEV.

IFRS

The IFRS result arising over the three quarters ended 30 September 2009
comprises:

                                         2009                   2008        
                                  Pre-    Tax   Post-    Pre-    Tax   Post-
                                   tax            tax     tax            tax
                                    £m     £m      £m      £m     £m      £m
                                                                            
Six months ended 30 June 2009     11.2   (2.9)    8.3    10.0   (1.9)    8.1
as reported                                                                 
                                                                            
Profit arising on acquisition     25.6      -    25.6       -      -       -
of Moderna                                                                  
                                                                            
Third quarter earnings                                                      
                                                                            
- UK life and pensions            10.3   (1.8)    8.5     4.7   (0.9)    3.8
business                                                                    
                                                                            
- Swedish life and pensions       (0.6)  (0.3)   (0.9)      -      -       -
business (Moderna) for 10-week                                              
post-acquisition period                                                     
                                                                            
- Parent company operations       (1.3)     -    (1.3)   (0.5)     -    (0.5)
                                                                            
Amortisation of intangible                                                  
assets                                                                      
                                                                            
- UK life and pensions            (0.8)   0.2    (0.6)   (0.8)   0.2    (0.6)
business                                                                    
                                                                            
- Swedish life and pensions       (0.8)     -    (0.8)      -      -       -
business                                                                    
                                                                            
Nine months ended 30 September    43.6   (4.8)   38.8    13.4   (2.6)   10.8
2009                                                                        

The profit of £25.6m arising on the acquisition of Moderna represents the
excess of the £45.6m estimate of the fair value of the net assets acquired over
the purchase consideration of £20m. This compares with the estimated excess of
£23.2m disclosed in the trading update statement issued on 27 October 2009 and
arises from adjustments to the estimated fair value of net assets acquired.

As for the EEV result, the IFRS result for the UK life and pensions business
for the three quarters ended 30 September 2009 has been dominated by the
improvement in global investment markets: the recovery in equity markets
contributed some £0.6m pre-tax, while the significant appreciation in the
capital value of fixed interest securities contributed some £2.8m pre-tax.

Moderna, which is well-positioned to take advantage of the recovery in
investment markets and which is re-establishing its market positioning with
brokers now that its ownership is clear, incurred a small loss over the 10-week
post-acquisition period. It is expected to continue to incur trading losses for
some two years as it continues to build scale and until realised profits from
an increasing base of in-force investment contracts outweigh the front-end
strain of writing new business.

Amortisation of intangible assets represents principally the write down of the
carrying value of in-force investment and insurance contracts recognised, for
the UK business, on the acquisition of City of Westminster Assurance Company
Limited in June 2005 and, for the Swedish business, on the acquisition of
Moderna in July 2009. As for EEV reporting, the parent company result is stated
after expenditure, during the quarter, of £0.9m on the acquisition of Moderna.

Solvency

The underlying emergence of surplus in the UK life and pensions business, and
hence the capacity of the Group to continue to pursue its dividend policy,
remains strong. This is reflected in the ratio of regulatory capital resources
to regulatory capital requirements in the UK life company, which has improved
from 241% at 30 June 2009 to 273% at the end of the third quarter. The
corresponding Group (IGD) position remains strong, notwithstanding the
diminution by £21.4m of available group capital resources arising from the
acquisition of Moderna. At 30 September 2009 the Group solvency ratio is
estimated to be a healthy 314% (30 June 2009: 408%). The Swedish life business
solvency ratio at 30 September 2009 is estimated to be 298%, compared with a
target ratio of 150%.

Market Opportunity

We have seen an increase in the number of potential acquisition opportunities
following the turbulence in financial markets. We will continue to consider
such opportunities as they arise and, after allowing for the acquisition costs
of Moderna, we continue to be in a strong financial position from which to
pursue them. We will maintain the application of our strict financial and risk
criteria to prospective acquisitions as they arise.

Enquiries

Graham Kettleborough
Chief Executive, Chesnara plc 07799 407519

Michael Henman
Cubitt Consulting 0207 367 5100

Notes to editors:

Chesnara plc, which listed on the London Stock Exchange in May 2004, is the
owner of Countrywide Assured plc ("CA") and Moderna Försäkringar Liv AB
("Moderna"). CA is a life assurance subsidiary that is substantially closed to
new business. In June 2005 Chesnara acquired a further closed life insurance
company - City of Westminster Assurance ("CWA") - for £47.8m. With effect from
30 June 2006, CWA's policies and assets were transferred into CA plc.

Moderna was acquired on 23 July 2009 for £20m. The company continues to write
new business and grow the strong position it has achieved in the Swedish
unit-linked market since its launch in 2002.