JRP ups guidance as merger benefits ahead of schedule

Retirement service provider JRP Group, the newly merged Just Retirement and Partnership Assurance, raised its target for synergies from the deal as it delivered benefits ahead of schedule.

The FTSE 250 company said it expects to achieve yearly savings of at least £45m by the end of 2018, a 13% increase on its prior prediction having so far made £15m since April's £1.6bn merger.

Sales for the guaranteed income for life scheme increased by 52% to £321m in the six months ended 30 June, or a pro-forma increase of 17% to £397m, compared to the same period last year.

Defined benefit de-risking scheme sales fell by nearly 50% to £164m, which the company expected due to a pricing disruption following the introduction of solvency II regime and increased capital requirements. Since the end of June over £330m of the scheme’s sales have been transacted.

Lifetime mortgage sales were up 71% to £255m, or a pro-forma increase of 57% to £322m.

New business margins using the International Financial Reporting Standards (IFRS) were up 6% from 4%, or pro-forma margins up 5% from 2%, before the company felt the benefit of merger.

IFRS tangible net asset value was £1,424m, or 153p per share and an interim dividend of 1.1p was proposed.

Chief executive Rodney Cook, said: "Our new business margin is starting to demonstrate the opportunity we have for potential further improvement as we deliver the cost synergies. We have seen a considerable increase in guaranteed income for life sales, which demonstrates the capability of the combined organisation and our competitive positioning in the open market."

He added that manage continue to see a "large and increasing" pipeline of opportunities for defined benefit de-risking deals, which together with strong mortgage advances positioned the group well for a strong second half.

With the benefits of the deal evident, Cook struck a confident tone on the outlook: “We are successfully adapting our business model to the new capital environment. The combination of increased margins, synergy delivery and a current coverage ratio of 134%, together with low gearing, gives us confidence in the long term growth prospects of the group."

Broker Shore Capital agreed it was an "excellent" set of interim results, "which should dispel many, if not all, of the fears in the market over the group's new business prospects, the strength of its balance sheet and the potential from the merger".