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Just bolsters capital base

The life insurer also failed to pay a dividend in 2018
Just bolsters capital base

Shareholders in Just Group (JUST) are feeling the sting of the Prudential Regulation Authority’s (PRA) plans to implement tighter capital requirements for equity-release mortgages. The life insurer has raised £300m in tier one debt and £75m via a share placing to boost capital levels, and has also pulled its final dividend after already deferring the interim payment. The dividend will now be rebased to around a third of the 3.72p paid in 2017.

IC TIP: Hold at 82p

A change in mortality and property price assumptions put a £33.5m dent in the life insurer’s adjusted pre-tax profits, which dropped by 5 per cent to £210m. However, a 15 per cent rise in retirement income sales, together with a 2.2 percentage point improvement in new business margins at 11.2 per cent, meant new business operating profit rose 44 per cent to £244m. Bulk annuity sales led the way – up almost a third – offsetting a 4 per cent dip in individual annuity sales.

To reduce the capital strain of writing new business, management plans to marginally reduce the proportion of equity-release mortgages backing new business, as well as the duration and loan-to-value of those products. That is expected to lower this year’s new business margin by one percentage point.

City analysts were forecasting consensus adjusted earnings of 16.3p a share for 2019, according to Bloomberg.

JUST GROUP (JUST)    
ORD PRICE:82pMARKET VALUE:£772m
TOUCH:82-82.25p12-MONTH HIGH:159pLOW: 69p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:177pSOLVENCY II RATIO:136%
Year to 31 DecGross written premiums (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2016*2.6919920.24.4
20171.8918116.73.72
20182.18-85.5-6.83nil
% change+15---
Ex-div:na   
Payment:na   
*18-month period, following Just Retirement/Partnership merger