Capital defences provide a Just cause

Simply carrying out its day-to-day commercial activities has become more arduous, with home visits giving way to remote access, as its customer base is in the vulnerable category for Covid-19. The retail business was initially operating at 75 per cent of the group’s original business plan, though it bounced back to normal levels in May and June.

Total premiums written were down by around 10 per cent at the half-year mark, but the group anticipates that new business levels will pick up appreciably through the second half, as the pipeline of potential transactions is higher than it was prior to the outbreak.

Nevertheless, the fall in sales, combined with higher finance costs, meant that adjusted operating profits contracted by almost a fifth, though falling interest rates propped up reported returns. Credit downgrades affecting the group’s corporate bond portfolio had a relatively modest impact through the period, though the focus remains on shoring-up the capital position in case UK property prices start to slide.

Analyses from Numis Securities points to “no significant change to the main published capital sensitivities”, with the broker providing a target price of 160p a share.