Focus on growth markets a winning strategy for Just Group

Retirement products specialist Just Group updated the market on its business for the six months ended 30 June on Tuesday, reporting 62% year-on-year growth in retirement sales for the first half, driven by “exceptional” defined benefit de-risking sales.

The FTSE 250 company said defined benefit de-risking sales of £718m were up 143% on the same time last year.

This year, it said it saw an acceleration in the market as employee benefit consultants managed the industry pipeline, reducing seasonality.

At the same time, it had further strengthened its pricing discipline, the board said.

Guaranteed income for life sales improved by 9% to £426m for the period.

In March, the Financial Conduct Authority introduced new rules requiring pension companies to show the best quote available from the open market in order to stimulate shopping around.

Just Group said the FCA's recently released 'Retirement Outcomes Review' outlined new proposals, which it said should lead to greater take-up of guaranteed income for life via the open market option channel in which it operated, assisting customers to find better value.

Lifetime mortgage advances of £313m were up 36% in the first half, below retirement income sales growth, which the board said demonstrated its active asset liability matching approach.

Looking at smaller operations, Just Group’s care plans sales eked out gains of 2% to £35m in the period, while protection products new business fell 71% to £1m.

Total new business sales for the period reached £1.52bn, up 56% year-on-year.

“These new business figures show that our strategy of focusing on attractive growth markets is working,” said group chief executive Rodney Cook.

“Our segment of the defined benefit de-risking market has been buoyant, and increasing levels of shopping around have supported our guaranteed income for life business.”

Cook said volume growth had not been at the expense of financial discipline, and the firm’s focus remained on improving shareholder returns.

“The strength of first half new business means we are in a position to price even more selectively over the remainder of the year, particularly in defined benefit de-risking, and we remain comfortable with the full year expectations.”

The Prudential Regulation Authority issued CP13/18 in order to open a further consultation around lifetime mortgages being held to back annuity liabilities, Cook also noted.

He said the consultation with the industry would close on 30 September, and the conclusion from the authority would be available in time for a 31 December implementation and phase-in period.

“However, CP13/18 does contain proposals, which if implemented would result in a reduction in Just's regulatory capital position.

“The outcome will depend on the result of the consultation process.

“We, together with the industry, continue to work constructively with the PRA as part of the consultation and will update the market when appropriate.”