Defined benefits drive new business at JRP Group

JRP Group updated the market on its trading for the quarter to 31 March on Thursday, with overall total new business sales of £436m growing by 13%, driven by a large increase in defined benefit de-risking (DB) volumes, partly offset by more normal levels of mortgage advances.

The FTSE 250 firm said sales were up 92% compared to the statutory Q1 2016 level, which excluded partnership.

DB sales were 191% higher on a pro forma basis, at £125m.

The board said DB de-risking growth prospects remained “very positive”, as the company tailored solutions and focussed on transactions of less than £250m.

Guaranteed income for life (GIfL) sales were up 7% on a pro forma basis to £174m, helped by a stabilising market and demographic growth.

Care sales were £17m, which the board said was due to increased pricing selectivity, offsetting the increase in GIfL.

Lifetime mortgage (LTM) advances fell by 29% against a “tough comparator”.

At 34% of retirement income sales, compared to 63% at the same time last year, the board said it took advantage of attractive economics and warehoused excess assets for use later in the year.

“While maintaining our strong focus on margins and profit growth, I am delighted that we have also been able to grow sales in the first quarter of 2017,” said group chief executive Rodney Cook.

“Our core GIfL and DB products both grew well, confirming the momentum of these segments.

“The DB market offers sustained growth, and our pipeline in the below £250m segment remains very encouraging.”

Cook said JRP’s profit focus should deliver IFRS new business margins in excess of the mid 6% range, and it remained on track to deliver a sustainable mid-teen IRR3 on shareholder capital deployed in new business by year-end 2018.

“This will be helped by the progress being made with the £45m merger cost saving programme.

“Along with a number of other firms, we have been granted Prudential Regulation Authority approval to publish a single group Solvency and Financial Condition Report on 30 June,” Cook reported.

In common with most UK life companies, JRP’s capital position benefitted from a “significant transitional”, in line with the PRA's stance that recognises transitionals as long-term capital.

“The directors remain comfortable that the group's capital position is appropriate to deliver the growth and returns that we are targeting.

“Overall we have enjoyed a solid start to the year and we remain on track to meet our expectations.”