17th Sep 2015 06:55
LONDON (Alliance News) - Just Retirement Group PLC on Thursday said its retirement product sales were broadly flat in its recently ended financial year, as sales of defined-benefit de-risking products sales surged higher and helped to offset a decline in guaranteed income and care plan sales, which were hit hard by recent legislative changes made by the UK government.
Specialist annuity providers were knocked back by the implementation of new pension rules in the UK which removed the effective requirement on individuals to buy annuity products that guarantee income in retirement. This caused guaranteed income and care plan sales for Just Retirement to fall by 56% year-on-year in the 12 months to the end of June.
The FTSE 250-listed retirement products company said, however, that its defined-benefit de-risking products sales rose more than five-fold, up to GBP609.0 million, which largely offset the decline in guaranteed income sales. Defined-benefit de-risking involves taking responsibility for company pension schemes.
As a result, total retirement sales for the group in the year were down 9.9% to GBP1.15 billion, though margins improved for the company in the second half to end at 3.3% for the full year, compared to 2.9% in the first half.
But, due to the lower new business volumes, the group's underlying operating pretax profit was down 11% to GBP86.4 million. Its gross written premiums for the year came in at GBP1.10 billion, down from GBP1.20 billion.
The group said its final dividend will be maintained at 2.2 pence per share, meaning its total dividend also is flat at 3.3p.
In August, Just Retirement agreed a GBP1.66 billion merger agreement with rival Partnership Assurance Group PLC, a deal viewed as an attempt by the two to create a stronger competitor in the defined-benefit de-risking and UK retirement income markets. Just Retirement said Thursday its focus is now on getting this deal done and said the deal will deliver at least GBP40 million in annual cost synergies by 2018.
"This is our first full year set of results since the Budget 2014 pension reforms, and I hope our resilient performance will not be forgotten amid the excitement of the proposed merger with Partnership Assurance Group. Our response to the pension reforms has largely enabled us to replace lost Individual Guaranteed Income for Life business with DB De-risking premiums," said Rodney Cook, the company's chief executive.
"Our priority now is to ensure that we achieve the expected benefits of the proposed merger, while at the same time, not being distracted from the recovery in momentum we are beginning to see as a standalone business. We remain a young, agile company, so I am confident that we can deliver on both fronts. In fact the Just Retirement story has just become that much more exciting," Cook added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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