TIDMJUST
RNS Number : 6139L
Just Group PLC
14 January 2021
NEWS RELEASE www.justgroupplc.co.uk
14 January 2021
JUST GROUP plc
BUSINESS UPDATE FOR THE YEAR ENDED 31 DECEMBER 2020
Just Group plc ("Just", the "Group") announces a business update
for the year ended 31 December 2020.
Highlights
-- Retirement Income sales for 2020 up 12% to GBP2.1bn. Defined Benefit
De-risking ("DB") sales were up 22% during the year to GBP1.5bn
-- Further reducing our exposure to UK property risk by completing the
sale of a book of GBP540m of lifetime mortgages ("LTMs"). Separately,
we have transacted a third no-negative equity guarantee ("NNEG") hedge,
covering GBP280m of LTMs
Retirement Income sales for 2020 up 12% to GBP2.15bn
12 months to 12 months to
Just Group new business(2) 31/12/20 31/12/19 Change
GBPm GBPm %
Defined Benefit De-risking 1,508 1,231 22
Guaranteed Income for Life
(incl. Care)(3) 637 687 (7)
Retirement Income sales 2,145 1,918 12
The growth of 12% in Retirement Income sales for the year was
due to a 22% increase in DB premiums.
The defined benefit market remains buoyant - this has been the
second highest year for market transaction volumes and the industry
pipeline is very strong. During the year we have written 23
transactions. DB De-risking sales in the second half of the year
were over GBP1bn, a record six months for the Group.
The market for guaranteed income for life solutions has
continued to recover following the COVID-19 related sales
disruption in the first half of the year. Sales in the second half
were similar to the second half of 2019.
The percentage solvency capital strain on new business has
reduced further in the second half.
Increasing Just's balance sheet resilience by reducing property
risk
We continue to implement management actions to reduce the
exposure and sensitivity of our balance sheet to the UK property
market. In December we completed two transactions:
-- the sale of GBP540m of lifetime mortgage balances(1) ; and
-- completion of our third NNEG hedge covering GBP280m of lifetime mortgages.
Combined, these two transactions are solvency capital ratio
neutral, but more importantly they reduce the sensitivity of the
Group's solvency ratio to any potential future fall in UK property
prices.
We have sold the beneficial interest in GBP540m of LTMs, which
is approximately 8% of our mortgage portfolio at year-end. Just
will continue to provide LTM customer servicing activities on
behalf of the purchaser. The sale proceeds were immediately
reinvested in corporate bonds, with the reduced yield resulting in
a one-off reduction in IFRS net equity of GBP90m. However, over
time a proportion will be allocated to new illiquid assets reducing
this initial impact.
We are pleased to have completed our third NNEG hedge, which
provides protection for a further c.GBP280m of LTM mortgages and
increases the total amount of mortgages covered by the hedges to
GBP1.3bn, 20% of the LTM portfolio at year-end. We expect to
complete further NNEG hedges during 2021.
These transactions add to the multiple management actions
executed in 2019 and 2020, which have significantly strengthened
the Group's solvency position, and are reducing our property risk
exposure following changes in the regulatory environment in 2018.
We continue to actively evaluate further opportunities to reduce
property risk on the balance sheet.
Further UK COVID-19 related restrictions
Following the announcement of the third set of government
restrictions, we continue to be committed to supporting our
colleagues, customers and distributors. We expect our wholesale and
retail markets to continue to function as normal during the current
restrictions, as they did during November 2020. We continue to
monitor and assess the potential impacts of COVID-19 restrictions
and Brexit on the UK economy, including future house prices, as we
look to finalise our year-end assumptions.
Solvency II capital ratio(4) improvement
The Solvency II capital ratio was 145% at 30 June 2020. The net
proceeds of GBP177m from the issue of debt in October has improved
the ratio by 9 percentage points. Economic sensitivities in the
second half are expected to be broadly neutral - with a small
benefit from property growth above long-term assumptions,
offsetting the cost of further credit migration and no major impact
from interest rates.
David Richardson, Group Chief Executive, said:
"I am pleased that we continued to deliver on our commitments to
shareholders during 2020 to improve the Group's capital position.
We have also taken steps to improve balance sheet resilience and
reduce our exposure to UK property prices through the sale of a LTM
portfolio and the execution of our third NNEG hedge.
I am also delighted with the new business performance, where the
strong pipeline we indicated at the time of our interim results in
August has converted well, resulting in Retirement Income sales 12%
ahead of 2019. This will have a positive impact on new business and
operating profit. We have maintained strong pricing discipline
throughout, which is reflected in further reductions in our capital
strain percentage on new business. This performance is particularly
pleasing against the challenging and uncertain backdrop of COVID-19
that we faced during 2020.
As we head into 2021, supporting the welfare of our colleagues,
providing outstanding service to our customers and distribution
partners, and further improving the resilience of our capital
position remain our top priorities. We have a strong pipeline of
new business and we start the year with increased confidence.
We look forward to presenting our full year results on 11 March
2021."
FINANCIAL CALENDAR DATE
Results for the year ended 31 December 11 March 2021(5)
2020
=================
Note 1: Amount outstanding, including rolled up interest
Note 2: Numbers in table subject to rounding.
Note 3: Care Plan sales are now reported within GIfL. 2019
comparators have been adjusted.
Note 4: Solvency II capital coverage ratio is estimated
Note 5: Assuming no significant disruption from the current
lockdown
Note 6: All the figures are unaudited
Enquiries
Investors / Analysts Media
Alistair Smith, Investor Relations Stephen Lowe, Group Communications
Telephone: +44 (0) 1737 232 792 Director
alistair.smith@wearejust.co.uk Telephone: +44 (0) 1737 827 301
press.office@wearejust.co.uk
Paul Kelly, Investor Relations
Telephone: +44 (0) 20 7444 8127 Temple Bar Advisory
paul.kelly@wearejust.co.uk Alex Child-Villiers
William Barker
Telephone: +44 (0) 20 7183 1190
A copy of this announcement will be available on the Group's
website www.justgroupplc.co.uk
JUST GROUP PLC
GROUP COMMUNICATIONS
Enterprise House
Bancroft Road
Reigate
Surrey RH2 7RP
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