Q3 New Business Figures
April 30 2009 - 2:01AM
UK Regulatory
TIDMJR.
RNS Number : 4259R
Just Retirement (Holdings) plc
30 April 2009
Press Release 30th April 2009
JUST RETIREMENT (HOLDINGS) PLC
("JUST RETIREMENT" OR "THE COMPANY")
THIRD QUARTER 2008/9 NEW BUSINESS FIGURES
Just Retirement, the specialist UK life assurance group focusing on the
provision of financial services to those at or in retirement, today announces
its new business figures for the third quarter ended 31st March 2009.
HIGHLIGHTS
* Q3 sales performance reflects profit-focused capital preservation strategy
* Group total sales in the third quarter of GBP164.9m, down 11% on corresponding
period of previous year (GBP184.7m)
* Group total sales in nine months to 31 March 2009 of GBP518.8m, down 9%
year-on-year on the corresponding period (GBP571.7m)
* Current annuity activity very strong with record application and quotation
activity
* Equity release demand satisfactory in light of consumer reaction to house price
falls
* Board expects total sales for Q4 to exceed GBP200 million for the first time
* Discussions ongoing in regard to possible offer for the Group
NEW BUSINESS RESULTS
+----------------------------+----------------+---------------+-----------+
| GBPm (unaudited) | 3 months ended | 3 months | % change |
| | 31 March 2009 | ended | |
| | | 31 March 2008 | |
| | | | |
+----------------------------+----------------+---------------+-----------+
| Annuity Policies | 127.5 | 147.6 | -13.6% |
+----------------------------+----------------+---------------+-----------+
| Equity Release Mortgage | 37.4 | 37.1 | 0.8% |
| Advances | | | |
+----------------------------+----------------+---------------+-----------+
| Group Total | 164.9 | 184.7 | -10.7% |
+----------------------------+----------------+---------------+-----------+
+----------------------------+----------------+---------------+-----------+
| GBPm (unaudited) | 9 months ended | 9 months | % change |
| | 31 March 2009 | ended 31 | |
| | | March 2008 | |
| | | | |
+----------------------------+----------------+---------------+-----------+
| Annuity Policies | 399.6 | 460.7 | -13.3% |
+----------------------------+----------------+---------------+-----------+
| Equity Release Mortgage | 119.2 | 111.0 | 7.4% |
| Advances | | | |
+----------------------------+----------------+---------------+-----------+
| Group Total | 518.8 | 571.7 | -9.3% |
+----------------------------+----------------+---------------+-----------+
Mike Fuller, Chief Executive of Just Retirement, commented:
"As previously indicated, sales for the third quarter of our financial year are
lower than the corresponding period last year. Given the lead times from
quotation to completion on our products, this is a further reflection of our
profit-focused strategy which delivered the resilience in profitability that we
reported in the first half.
"Current trading is strong with annuity application and quotation activity at
record levels. This has been achieved without having to compromise our
profit-focused strategy. We therefore expect total sales for the fourth quarter
to exceed GBP200 million for the first time, with annuity sales at record levels
and equity release business making steady progress from the level achieved in
the third quarter.
"Overall, Just Retirement goes into the final quarter of its financial year with
confidence. We have maintained our leadership position in enhanced annuities and
our place as a top three provider of equity release mortgages. That this was all
achieved against a highly challenging background is a testament to the
robustness of the business model and the calibre of our people. I remain
confident in the outlook for the current financial year."
Annuities
In annuities, Just Retirement continues to lead the enhanced market. In the
third quarter, despite the well-publicised economic difficulties, the Group was
able to report 4.8% growth versus Q2 2008/9 sales (GBP121.7m). Just
Retirement's participation in the Origo options project has seen a marked
improvement in funds transferred using this system, with the average time taken
to transfer falling from 35 days to 12 days as a result. This is of considerable
benefit to both IFAs and customers and the Group looks forward to more of the
industry joining this important initiative. Further reductions in the average
time taken to transfer funds from ceding providers should improve the
attractiveness of annuities within the IFA and retiree market.
Equity Release
Demand for equity release mortgages remains satisfactory although it is running
below the recent record levels. The Group has recently replaced its "fee free"
product with a "refunded valuation on completion" offer. This has been well
received by the marketplace and the new offer has continued to win approval from
the target audience. However, it is clear that in the short-term the background
of falling house prices is impacting the growth in the market for equity
release.
Capital and investment strategy update
Throughout the first half of this financial year, Just Retirement adopted a
defensive investment strategy in light of the volatile markets, investing an
increasing proportion of new annuity premiums received into gilts rather than
corporate bonds. Combined with the recent fall in interest rates on cash
deposits, this defensive strategy has caused the duration of the assets backing
the annuity portfolio to become less well matched with that of the liabilities,
progressively impacting the technical solvency ratio.
With the stabilisation of gilt and corporate bond markets and given the Board's
view that the returns available have now reached an attractive level, Just
Retirement is in the process of re-balancing its investment portfolio back
towards corporate bonds, better matching duration and allowing the business to
benefit from the liquidity premium available. With the reinvestment programme
largely completed, Just Retirement's Pillar 1 regulatory capital solvency ratio
is estimated at approximately 150%.
Update on possible offer
On 10 November 2008 the Board of Just Retirement announced that it had received
expressions of interest which could ultimately result in an offer for Just
Retirement. Discussions are ongoing and a further announcement will be made in
due course.
A conference call for analysts and investors will be held at 8.30am this
morning. Please contact Lindsay Noton at Citigate Dewe Rogerson on 020 7282 1032
for dial-in details.
Enquiries
+------------------------------------+------------------------------------+
| Just Retirement | +44 (0)1737 233396 |
| Mike Fuller, Chief Executive | |
| Simon Thomas, Finance Director | |
| Scott Fulton, Investor Relations | |
| | |
+------------------------------------+------------------------------------+
| Citigate Dewe Rogerson | +44 (0)20 7638 9571 |
| Michael Berkeley | |
| Ged Brumby | |
| | |
+------------------------------------+------------------------------------+
- ENDS -
Notes to Editors
Just Retirement (Holdings) plc was founded in 2004 by the current management; it
listed on the Alternative Investment Market (AIM) in December 2006. The Group
provides two products to those at or in retirement; enhanced annuities and
equity release mortgages.
Enhanced Annuities
Annuities are contracts offered by the Group to people at retirement
(annuitants) under which the Group undertakes to make a series of payments in
the future in return for the immediate payment of a lump sum to the Group by the
annuitant. This lump sum is provided by the annuitant's pension fund. The level
of future payments is set according to the rates of return available within the
capital markets and the expected longevity of the annuitant. In 2008, the total
value of the annuity market in the UK was GBP11.6bn (source: Association of
British Insurers "ABI").
Enhanced annuities are offered to people at retirement who may not live as long
as average due to lifestyle (smoking, for example) or illness. Given the impact
of these factors on longevity, it is possible for providers such as Just
Retirement to offer "enhanced" annuity rates to those qualifying. In 2008, the
total annual value of the enhanced annuity market in the UK was GBP1.8bn.
Just Retirement does not provide pension fund management. As such, it can only
offer annuity contracts to those utilising the Open Market Option (OMO). OMO
allows pension fund holders to "shop around" for an annuity rather than take
that provided by the incumbent pension fund provider. At the end of 2008, the
total value of annuities bought using the OMO was GBP5.7bn.
Equity Release Mortgages
Equity release mortgages are advances made to homeowners in or at retirement.
They fall into two main types: lifetime and reversion.
Just Retirement only offers lifetime mortgages. This allows the homeowner to
borrow a certain amount of capital against the value of their house. Although
this advance carries a rate of interest, this is capitalised over the life of
the mortgage. The loan, together with the accumulated interest, is repaid at the
end of the mortgage.
The equity release market is regulated by the FSA and is monitored by the
industry body, Safe Home Income Plans (SHIP). The latter estimates that the
total UK market for equity release is GBP1.2bn per annum.
Quarterly Sales (2007/8 & 2008/9)
+----------+--------+--------+--------+--------+--------+--------+--------+
| | 2007/8 | 2008/9 | |
+----------+-----------------------------------+-----------------+--------+
| | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 |
+----------+--------+--------+--------+--------+--------+--------+--------+
| Annuity | 151.5 | 161.6 | 147.6 | 143.8 | 150.4 | 121.7 | 127.5 |
| Policies | | | | | | | |
+----------+--------+--------+--------+--------+--------+--------+--------+
| Equity | 39.3 | 34.6 | 37.1 | 48.0 | 33.1 | 48.7 | 37.4 |
| Release | | | | | | | |
| Mortgage | | | | | | | |
| Advances | | | | | | | |
+----------+--------+--------+--------+--------+--------+--------+--------+
| Group | 190.8 | 196.2 | 184.7 | 191.8 | 183.5 | 170.4 | 164.9 |
| Total | | | | | | | |
+----------+--------+--------+--------+--------+--------+--------+--------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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