Life insurer Chesnara has signed an agreement with Sanlam UK to acquire Sanlam Life and Pensions UK (SLP) for a cash consideration of £39m.

SLP, which offers insurance and long-term savings products, is expected to bolster Chesnara’s existing life and pension liability business.

The insurer, which has £2.9bn of assets under management and approximately 80,000 policies, will be integrated into Chesnara’s UK operations.

The acquisition will be funded by Chesnara’s existing debt facility and is expected to close in early 2022.

Chesnara CEO John Deane said: “We are delighted to announce this transaction which will expand the scale of our UK operations and deliver potential for material value creation for Chesnara. The expected incremental cash generation from SLP will enhance the sustainability of our progressive dividend strategy.

“We believe that the market prospects for further acquisitions across our target markets remain positive and we continue to be confident in our ability to finance and execute such transactions on attractive terms for both vendors and our shareholders.”

Sanlam UK Jonathan Polin CEO said: “This deal is a testament to the strength and quality of SLP and its long-standing track record of excellent client service. I would like to thank all my colleagues there for their unstinting efforts.

“Chesnara is a highly respected and established life insurance and pensions consolidator and I am confident that the business will flourish under its new ownership for the benefit of all its key stakeholders, including policyholders.”

Founded in 2004, Chesnara is listed on the London Stock Exchange and manages £8.5bn for almost one million customers in the UK and across Europe.