Just Group to 'outperform' after H1 beat

RBC Capital Markets sees significant upside in the shares of retirement financial services firm Just Group after the company smashed expectations with its first-half results.

The broker maintained its 'outperform' rating and 170p target price on the stock, which at 1125 BST on Tuesday was trading 1% higher at just 82.7p.

Helped by the recent rises in interest rates, the group reported an underlying profit of £173m for the first half, up 154% year-on-year and ahead of the consensus estimate of £162m.

The company said its Solvency II ratio – a regulatory measure to ensure insurers have enough capital to cope with worst-case-scenario losses – was 204%, up from 199% a year before and 2 percentage points ahead of forecasts, according to RBC, driven by markets and positive underlying organic capital generation.

"Just has also taken the opportunity to further de-risk the balance sheet, significantly reducing the sensitivity to moving interest rates; therefore providing an even more robust Solvency II position moving forward," said analyst Mandeep Jagpal.

"This facilitates Just’s ability to take advantage of the growth opportunity in both DB de-risking (bulk annuities) and GifL (retail annuities), where Just has again demonstrated it is able to write new business at attractive margins (IFRS new business margin 8.4% in 1H23) and low new business capital strain (1.6% in 1H23)."