Shares in Just Retirement (JRG) rose about 14 per cent after interim figures showed that the expected fallout from changes to the annuity market in last March's Budget may have been overplayed. The freeing up of pension pots and how they are deployed is likely to generate further volatility after the new rules come into play this April. However, despite lower new business and a squeeze on margins, operating profits fell by a bearable 10 per cent to £42.6m. The headline pre-tax loss reflected an increase in insurance liabilities, mainly as a result of widening credit spreads and weakening house prices.
Predictably, the value of new individually underwritten annuities fell 58 per cent to £271m, as many people deferred making an investment decision until after April. However, the group's decision to underwrite defined-benefit pension schemes three years ago started to show results, with sales up from a nominal £5m a year ago to £355m. While defined-benefit schemes are now in decline, the market is still worth around £1,800bn and will take a decade or more to mature.
Just Retirement is also positioning itself to meet the pension changes with a range of guaranteed income-for-life products and new flexible fund-based products.
Analysts at Panmure Gordon are forecasting full-year underlying operating profits of £71.4m and EPS of 9.97p (from £96.7m and 16.2p in 2014).
| JUST RETIREMENT (JRG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 166p | MARKET VALUE: | £831m | |
| TOUCH: | 165-167p | 12-MONTH HIGH: | 289p | LOW: 115p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 167p | EMBEDDED VALUE: | 205p | |
| Half-year to 31 Dec | Gross premiums (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 651 | 26.5 | 5.6 | nil |
| 2014 | 626 | -9.2 | -1.7 | 1.1 |
| % change | -4 | - | - | - |
Ex-div: 16 Apr Payment: 14 May | ||||
