14th May 2020 12:39
(Alliance News) - Just Group PLC said Thursday its credit portfolio is "performing well", and its expects to see positive organic capital generation in 2020 and beyond.
Despite the "significant economic volatility", Just Group said its excess capital has grown by GBP60 million in the first four months of 2020.
This growth demonstrates "the resilience of our balance sheet and effectiveness of our hedging activity", Just Group said. The company added that its Solvency II coverage ratio has slipped 3 basis points to 138% at the end of April.
Turning to its GBP11.5 billion credit portfolio, Just Group said the portfolio is "performing well".
"As a long-term holder of credit and operating in a Solvency II framework, we actively manage the portfolio to minimise the risk of defaults and downgrades," Just Group said.
The retirement financial services firm continued: "Since the start of the crisis: over 15% of our issuers, by market value, have been downgraded, GBP350 million of our portfolio has been downgraded by one letter, and of this, only GBP110 million has been downgraded to sub-investment grade."
In response to this, Just Group said it has sold over GBP300 million of bonds most exposed to downgrades.
Just Group noted its BBB portfolio is weighted towards the sectors least at risk, with a combined 80% in financial services, utilities, communications, industrials, infrastructure, government and consumer staples including healthcare.
The company added: "Our markets are proving resilient in the face of considerable challenges and financial intermediaries are embracing virtual channels to maintain support for their clients and complete business."
Just Group said it has completed over GBP250 million of transactions since the start of the crisis in mid-March. The company noted its total Retirement income sales for the first quarter were in line with expectations, remaining "disciplined" in its approach to pricing.
Chief Executive David Richardson said: "Since the start of the Covid-19 lockdown we have continued to work towards capital self-sufficiency whilst supporting our customers by making changes to our products, and managing our credit portfolio, which is performing well, to reduce the risk of downgrades."
Shares in Just Group were down 6.3% in London on Thursday at 46.34 pence each.
By Paul McGowan; [email protected]
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