Chesnara PLC on Wednesday said it swung to a loss on falling equity values, rising interest rates and high inflation.

In the six months to June 30, the Preston, England-based insurance company turned to a pretax loss of £104.6 million, from a profit of £20.8 million a year prior.

Total net investment return turned to a loss of £1.31 billion from a profit of £822.2 million a year prior. Economic value fell 16% to £526.7 million at June 30 from £624.2 million at December 31.

‘Conflict in Ukraine and uncertainty in financial markets has been reflected in falling equity values and rising interest rates which, coupled with the impact of inflationary pressures, has led to negative investment returns and economic losses across the operating divisions,’ the company explained.

Chesnara increased its interim dividend by 3.0% to 8.12 pence from 7.88p a year ago, citing ‘acquisition momentum, cash generation and strong solvency’. It emphasised that its dividend has grown uninterruptedly for 18 years.

The firm’s Solvency II ratio increased to 195% at June 30 from 152% at December 31. Its normal operating range is between 140% and 160%. Cash balance tripled to £155.4 million from £46.1 million over the six months.

‘The wider business has performed robustly despite the high level of market volatility. We retain a strong and resilient solvency position with substantial cash balances at the holding company level, supporting our continued track record of growing our dividend. We remain optimistic about our ability to participate in future mergers & acquisitions and continue to be highly confident in our ability to finance and execute such transactions on attractive terms for both vendors and our shareholders,’ said Chief Executive Officer Steve Murray.

Chesnara shares were 1.3% lower at 301.41 pence each in London on Wednesday.

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