16th May 2019 09:28
LONDON (Alliance News) - Just Group PLC said Thursday its retirement income sales in the first quarter fell sharply amid a "new regulatory regime" as it shuts its loss-making US operations.
On a more positive note, Just Group expects an improved performance in the second quarter due to the "continued growth" of its markets.
Just Group was the worst performer in London's mid-cap index in early trade, slipping 9.2% to 58.90 pence each.
Just Group's retirement income sales in the three months to March 31 decreased 59% to GBP184 million from GBP454 million the year before.
"Today's update reflects our disciplined approach to the management of our capital in the new regulatory regime. Our Guaranteed Income for Life price increases and Defined Benefit De-Risking 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," said interim Chief Executive David Richardson.
Defined Benefit De-Risking sales were almost wiped out, decreasing to GBP26 million from GBP249 million. Guaranteed Income for Life sales decreased 23% to GBP145 million from GBP188 million.
Lifetime mortgage loans advanced in the quarter decreased 47% to GBP79 million from GBP151 million.
As a result of the sharp drop in retirement income and lifetime mortgages, Just Group's total business sales in the period decreased 55% to GBP276 million from GBP617 million.
"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, Defined Benefit De-Risking transaction volumes in the second quarter have been good. Given the strength of our pipeline, we remain comfortable that Defined Benefit De-Risking sales for the year will be similar to the annualised rate seen in the second half of 2018," added Richardson.
The retirement insurer said its capital position has been "much improved" following its GBP375 million equity raise in March. Just Group said it is "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 lifetime mortgage backing ratios and a shift towards more capital efficient assets."
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