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Just Group

Just Group plc Focus on capital discipline

Just Group plc (LON:JUST) announced a business update for the 3 months ended 31 March 2019.

Highlights

· Retirement Income sales for Q119 were 59% lower than for Q118, as a result of a lower level of completed Defined Benefit De-risking (“DB”) sales and our disciplined Guaranteed Income for Life  pricing stance.

· DB sales were down 90% year on year to £26m in Q119, due to a temporary reduction in activity levels in our target segment. In Q2 so far we have completed a series of transactions with a value in excess of £300m and the run rate is returning to that of the second half of 2018. The pipeline remains full and market pricing is attractive.

· GIfL sales for Q119 were down 23% year on year to £145m. The lower level of volumes reflects pricing increases implemented following the Prudential Regulation Authority’s publication of CP13/18. The volumes are in line with our planned run rate and more similar to the Q418 level.

· Lifetime Mortgage  advances of £79m were down 47%, as we focus on capital efficient LTMs and manage volumes in line with Retirement Income sales.

Just Group new business1

3 months to

31/03/19

3 months to

31/03/18

Change

£m

£m

%

Defined Benefit De-risking

26

249

(90)

Guaranteed Income for Life

145

188

(23)

Care Plans

13

17

(23)

Retirement Income sales

184

454

(59)

Drawdown

12

11

8

Total Retirement sales

196

465

(58)

Protection2

1

NM

Lifetime mortgage loans advanced

79

151

(47)

Total new business sales

276

617

(55)

 

David Richardson, Interim Group Chief Executive, said:

“Today’s update reflects our disciplined approach to the management of our capital in the new regulatory regime. Our GIfL price increases and DB pricing standards have been implemented rigorously, ensuring that we deliver to shareholders a new business internal rate of return in line with our targeted mid-teen levels. The continued growth in our markets gives us confidence that there remains a considerable opportunity to deploy capital in a disciplined and profitable manner. Although it was a quiet start to the year, DB transaction volumes in Q2 have been good. Given the strength of our pipeline, we remain comfortable that DB sales for the year will be similar to the annualised rate seen in H218.

Our capital position has been much improved by the £375m raised in March, and we are absolutely focussed on achieving capital neutrality by 2022. We have a plan in place to ensure we achieve this target, which includes a number of actions we will be taking over the course of this year. These include a renewed focus on cost control, the closure of loss making operations such as the US, reductions in new business LTM backing ratios and a shift towards more capital efficient assets.”