JUST GROUP PLC NEWS RELEASE JUST RETIREMENT GROUP PLC
www.justretirementgroup.com
11 March 2016Just Retirement Group plc ("the Group") announces its interim results for the six months ended 31 December 2015.
Total new business sales up 50%. A 98% increase in Defined Benefit De-risking ("DB") sales and a 2% increase in Guaranteed Income for Life ("GIfL") sales drove strong overall growth in premiums.
Lifetime mortgage advances of £237m, up 49% on the same period in 2014/15, in line with our 25% target of Retirement Income sales.
Operating profit increased by 43%, driven by a 153% rise in new business profit, partly offset by lower
in-force returns. The increase in new business profit reflected strong volumes, but also margin expansion due to an improving sales mix and helpful asset yields.
Record EV £1,144m (203p per share). Interim dividend of 1.1p. Group economic capital ratio 180%, Group Solvency II capital ratio 133% (capital comprised entirely of Tier 1), providing comfort to enable the Group to meet its growth plans.
Merger with Partnership Assurance Group plc due to complete in early April 2016. We remain confident of achieving at least £40m of cost savings, with the full run-rate being achieved in 2018.
Commenting on the results Rodney Cook, Group Chief Executive, said:
"The Group demonstrated further positive momentum in the second half of 2015, with a 50% increase in sales and a 43% increase in operating profit. In addition to this strong performance we are about to complete our merger with Partnership Assurance.
We are pleased with our progress to date in the evolving pensions landscape and changing regulatory environment. For the future, the DB market offers significant potential and today's figures show that we have real traction in this area. Meanwhile, the individual GIfL market has stabilised and we expect to see a return to longer-term growth here too.
The merger with Partnership provides us with a further source of earnings growth, and it will enable us to drive significant cost efficiencies, underpinning our value-for-money products. The integration planning we are doing confirms our confidence in achieving at least £40m of cost savings.
I also want to thank our colleagues once again, not just for delivering these record results, but also for coping with a period of uncertainty and for maintaining a strong focus on delivering for our customers which has been demonstrated by winning the UK's top Quality Service Provider Award from the Institute of Customer Service. The resilience of our colleagues is confirmed by our ranking once again among The Sunday Times 100 Best Companies to Work For.
I am pleased that the Just Retirement chapter is ending on a high note and these results give me confidence as to the future for the Combined Group."
Investors / Analysts James Pearce, Group Director of Strategy and Investor Relations Telephone: +44 (0) 7715 085 099 james.pearce@justretirement.com | Media Stephen Lowe, Group Communications Director Telephone: +44 (0) 1737 827 301 press.office@justretirement.com Temple Bar Advisory Alex Child-Villiers William Barker Telephone: +44 (0) 20 7002 1080 |
A presentation for analysts will take place at 9.00am today at Nomura, 1 Angel Lane, London EC4R 3AB
UK FreeCall: 08082380673
United States FreeCall: 18666551591
Std International Dial-In: +44 (0) 1452 541003
Conference ID: 52567060
A copy of this announcement, the presentation slides and a transcript of the conference call will be available on Just Retirement's website www.justretirementgroup.com
JUST RETIREMENT GROUP PLC
GROUP COMMUNICATIONS
Vale House, Roebuck Close Bancroft Road, Reigate Surrey RH2 7RU
FINANCIAL CALENDAR:
Date | |
Record date for interim dividend Business update for the period ending 31 March 2016 Payment of interim dividend | 6 May 2016 11 May 2016 20 May 2016 |
This announcement in relation to Just Retirement Group plc and its subsidiaries (the "Group") contains, and we may make other statements (verbal or otherwise) containing, forward-looking statements about the Group's current plans, goals and expectations relating to future financial conditions, performance, results, strategy and/or objectives.
Statements containing the words: 'believes', 'intends', 'expects', 'plans', 'seeks', 'targets', 'continues' and 'anticipates' or other words of similar meaning are forward-looking (although their absence does not mean that a statement is not forward-looking). Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the Group's control. For example, certain insurance risk disclosures are dependent on the Group's choices about assumptions and models, which by their nature are estimates. As such, although the Group believes its expectations are based on reasonable assumptions, actual future gains and losses could differ materially from those that we have estimated.
Other factors which could cause actual results to differ materially from those estimated by forward-looking statements include but are not limited to: domestic and global economic and business conditions; asset prices; market-related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of governmental and/or regulatory authorities including, for example, new government initiatives related to the provision of retirement benefits or the costs of social care and the effect of the European Union's Solvency II requirements on the Group's capital maintenance requirements; the impact of inflation and deflation; market competition; changes in assumptions in pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, gender pricing and lapse rates); risks associated with arrangements with third parties, including joint ventures and distribution partners; inability of reinsurers to meet obligations or unavailability of reinsurance coverage; the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which the Group operates.
As a result, the Group's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set out in the forward-looking statements within this announcement. The forward- looking statements only speak as at the date of this document and the Group undertakes no obligation to update or change any of the forward-looking statements contained within this announcement or any other forward-looking statements it may make. Nothing in this announcement should be construed as a profit forecast.
Chief Executive Officer's ReportThe first half of 2015/16 has been another period of significant change for Just Retirement, during which we have continued to demonstrate our ability to adapt to the evolving pensions landscape and changing regulatory environment.
We have achieved notable successes including further significant sales growth in the DB De-risking market, raising £97m of new equity (net of issue costs), and approval by the Prudential Regulation Authority ("PRA") of our internal model application for use in the new Solvency II capital regime.
In August 2015 we announced our intention to merge with Partnership Assurance Group plc to create JRP Group plc. On 10 March 2016 we announced that the PRA and the Financial Conduct Authority have each approved the change in control applications. We have previously received regulatory clearance from the Competition and Markets Authority and the merger is expected to complete in early April 2016. The completion of the merger will represent the culmination of a significant amount of hard work over the last year and I would like to thank those people who have contributed towards bringing the two groups together.
Total Retirement sales of Defined Benefit De-risking Solutions ("DB"), Guaranteed Income for Life Solutions ("GIfL"), Care Plans and Drawdown contracts, were £996.2m for the half year to 31 December 2015, an increase of 51% compared to the same period the previous year. This increase once again reflects the significant growth in our DB sales, which stand at £701.2m for the half year to 31 December 2015, almost double the amount sold in the half year to 31 December 2014 (DB sales: £354.7m), which itself was a record DB result at that time. This demonstrates our expertise in the medical underwriting of smaller DB schemes, and in "top slicing" of larger schemes where we medically underwrite the "top slice" of liabilities.
During this latest half year we have also seen a stabilisation of the GIfL market, with sales slightly up compared to the same period in 2014 (GIfL sales: £271.2m vs £266.4m).
We launched our new drawdown product, the Flexible Pension Plan ("FPP") in April 2015 which has replaced our Capped Drawdown product. FPP sales are now starting to come through, as customers adjust to the new products available to them in retirement. FPP sales for the half year to 31 December 2015 were a modest £4.8m, given their limited availability at that time. In addition Capped Drawdown sales were £2.4m (H1 2014/15: £35.3m).
Lifetime mortgages ("LTM") of £237.0m were advanced for the half year, which is in line with our c. 25% target of Retirement Income sales.
The margin achieved on new business, which is measured as the ratio of new business operating profit to Retirement Income sales (comprising DB, GIfL and Care), was 4.7% (H1 2014/15: 2.9%). The increase in margin compared to the prior period is a result of an improving business mix, higher absolute sales and helpful asset yields.
Overall, operating profit before tax increased to £49.8m (H1 2014/15: £34.9m), largely driven by the increase in new business volumes and margins.
The Group's financial investments continue to increase, from £8.5bn at 30 June 2015 to £9.5bn at 31 December 2015, mainly as a result of the new business premiums written during the period. The quality of the financial investment portfolio remains high, and is well balanced across a range of industry sectors.
The Group's total equity at 31 December 2015 was £921.5m (30 June 2015: £814.0m), and the profit after tax for the half year ended 31 December 2015 was £21.9m (H1 2014/15: loss of £8.3m), reflecting the increase in new business volumes and margins, and a slight positive overall impact in this period from investment and economic profits, compared to a significant hit in the prior period (investment and economic profits H1 2015/16: £2.4m; H1 2014/15 loss of £32.3m).
Group European Embedded Value amounted to £1,143.8m at 31 December 2015 (30 June 2015: £1,019.3m), including new business value of £71.0m (H1 2014/15: £48.6m).
In October 2015 the Group raised £100m of new capital (£97m net of issue costs) from a share placing and open offer. These funds will support the Group to cover expected non-recurring integration and transaction costs, provide further comfort over the transition to Solvency II, and support further growth initiatives and product development. The Group capital position provides comfort to enable the Group to meet its growth plans. The Group continues to explore, on an ongoing basis, a range of balance sheet options, including accessing the debt capital markets, with a view to providing further financial strength.
On 1 January 2016 the EU Solvency II regime finally came into force. Just Retirement was among only 19 insurance firms that secured PRA regulatory approval to use their bespoke Internal Models. We also secured permission to use the matching adjustment to calculate our solvency capital requirement.
Once again we are very proud to have received recognition from the industry for the quality of our service, receiving 5 star ratings at the 2015 Financial Adviser Service Awards. This continued success means that we have held 5 star ratings for an impressive 11 years for Life
& Pensions and eight years for Mortgage Lenders and Packagers, demonstrating our excellent quality of support and customer focus. In addition I am delighted that Just Retirement in 2016 has been awarded the Quality Service Provider Award by the Institute of Customer Service.
I am also pleased to report that we have once again ranked within "The Sunday Times 100 Best Companies to Work For" list for 2016, achieving a rating of "Outstanding" and the ranking of 92.
Just Retirement Limited issued this content on 11 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 11 March 2016 07:11:57 UTC
Original Document: http://www.justretirementgroup.com/~/media/Files/J/Just-Retirement/press-release/interim-results-2015.pdf?pdfdata=1
