Just Retirement calls the bottom

First off, management has been briefing the market on the pick-up in Just Retirement's individual annuity sales. Turnover from these products fell 57 per cent to £478m in the reported period. But in the three months following, Mr Cook says these sales are likely to have increased by 25 per cent. Government figures support the assertion that smaller pension holders have cashed out, leaving the more attractive larger pension pots up for grabs; surveys suggest consumers still want financial certainty in retirement. The average retirement pot converted into income by Just Retirement has increased from £47,000 before the reform to a current £65,000.

Second, the softer margins that have been a drag on profit are firming up, says Mr Cook. For the period covered here, Just Retirement's underlying operating profit was down 11 per cent at £86.4m, due both to the fall in individual annuity sales and a slip in the margin from 4.4 per cent to 3.3 per cent. Management now says the group will recover some of this slippage, pushing the margin back towards 3.5 per cent.

Finally, the growth in the group's 'defined benefit derisking' sales, from £92m to £609m, can only be described as meteoric. Here, Just Retirement provides retirement income for a corporate pension scheme's members in return for a premium. Management has upped the first-half sales target from £300m to £400m. The group seems to be having better luck than Partnership, which in its first half only booked £68m of its £200m full-year target. That's perhaps because Partnership focuses on more niche medically underwritten business, where pension scheme trustees can get a cheaper deal by providing medical data on scheme members.

For full-year 2016 analysts at broker Panmure Gordon predict statutory pre-tax profit of £83.7m, giving EPS of 13.2p.