TIDMJUST
RNS Number : 8850M
Just Group PLC
14 May 2020
NEWS RELEASE www.justgroupplc.co.uk
14 May 2020
AGM statement - trading update
Just Group plc ("Just", the "Group") is holding its Annual
General Meeting ("AGM") today. In compliance with the UK
Government's social distancing guidelines, arrangements have been
made for a quorum of two shareholders only to be present at our AGM
this year. S hareholders should not attend the meeting in person
and have been invited to dial in to the proceedings.
The following trading statement is an extract from the speech to
be made by David Richardson, CEO, at the AGM.
Supporting colleagues and customers through the Covid-19
pandemic
In responding to the pandemic, the imperatives that guided our
actions were protecting the welfare of our colleagues across the
Group and ensuring the delivery of critical services to
customers.
Colleagues
-- We immediately increased our remote working capacity,
enabling over 98% of our colleagues to safely work at home
-- We have provided a range of well-being support to ensure our
colleagues are safeguarded, particularly for those with additional
caring responsibilities
-- All of our 1,100 colleagues remain on full pay and the Group is not furloughing employees
-- A senior member of our in-house medical intellectual property
team assisted the Department of Health and Social Care and teams
across NHS England in their national response.
Customers
I am pleased to confirm we have maintained the delivery of all
the Group's services to customers, most of whom are in the more
vulnerable groups.
To support our customers through this difficult period, we have
made a number of changes to our products and services:
-- in our lifetime mortgage business, we have introduced
policies to help people navigate the constrained conveyancing and
advice process;
-- we reduced interest rates on our lifetime mortgages for those
customers who have passed away or moved into long term care and are
unable to sell their property because the housing market has been
effectively closed; and
-- we are currently implementing a new temporary capital
guarantee feature for our long term care products, which will
return the total premium less any income paid should the customer
pass away within 12 months of the policy inception date.
These are extraordinary times and we are doing all we can to
ensure we live up to our purpose, which is to help people achieve a
better later life.
Updated financial and capital position
The Group's key focus is on improving our capital position and
achieving capital self-sufficiency and, as we demonstrated at the
full year results in March, we have a clear strategy to achieve
this. We have already made good progress with the management
actions taken last year and this year. This includes additional
de-risking through further no-negative equity guarantee hedging and
other forms of reinsurance as announced at our full year results.
We will continue to explore further actions during the course of
this year.
-- We expect to deliver positive organic capital generation in 2020 and beyond
-- Despite significant economic volatility, the Group's excess
capital has grown by GBP60m in the first four months of the year,
demonstrating the resilience of our balance sheet and effectiveness
of our hedging activity, although there has been a three point fall
in the Solvency II coverage ratio to 138% at the end of April 2020
due to our Solvency Capital Requirements increasing as interest
rates fall
-- This includes the effect of a year-to-date fall of 1% in the
ONS house price index; a limited impact, less than 1%, from
corporate bond downgrades; and a further 1% impact from six monthly
debt coupons paid in April 2020.
Credit portfolio
Our GBP11.5bn (YE 2019: GBP11.9bn) corporate and government
credit portfolio contained within the Group's overall financial
investments portfolio is performing well. As a long-term holder of
credit and operating in a Solvency II framework, we actively manage
the portfolio to minimise the risk of defaults and downgrades.
-- Since the start of the crisis: over 15% of our issuers, by
market value, have been downgraded, GBP350m of our portfolio has
been downgraded by one letter, and of this, only GBP110m has been
downgraded to sub-investment grade
-- We have sold over GBP300m of bonds that are most exposed to downgrades
-- Our BBB rated bonds have limited exposure to the more at risk
sectors with only 2% in energy and 1% in consumer cyclical
(airlines, hotel, leisure and retail)
-- Furthermore, our BBB portfolio is weighted towards the
sectors least at risk, with a combined 80% in financial services,
utilities, communications, industrials, infrastructure, government
and consumer staples including healthcare (see appendix).
Mortality developments
Recent ONS publications have shown a marked increase in the
number of deaths being registered each week in England and Wales,
in particular for older age groups and residents of care settings.
The number of deaths registered in the four weeks to 1st May 2020
was double the amount in the equivalent period last year. In our
business, we have seen these trends mirrored in the pattern of
death notifications received for this period. It is still too early
to accurately estimate the financial impact of these developments
and we will continue to monitor it closely. Our deepest sympathies
are with all those whose relatives and loved ones have passed
away.
Resilient retirement markets
Our markets are proving resilient in the face of considerable
challenges and financial intermediaries are embracing virtual
channels to maintain support for their clients and complete
business.
-- Despite advisers being unable to meet customers face to face,
our retail business was initially operating at only around 25%
below expectations and is now building from that base
-- The defined benefit de-risking market continues to be buoyant
and we have completed over GBP250m of transactions since the start
of the crisis in mid-March
-- Our total Retirement Income sales for the first quarter were
in line with expectations and we continued to remain disciplined in
our approach to pricing.
Chris Gibson-Smith, Chair, said:
"The Board are proud of the Company's leadership team in
responding with such pace to the Government's instructions. We are
very grateful to all of our colleagues across the Group for their
resilience during this difficult period. With their positive energy
and commitment to overcoming the disruption caused by Covid-19 we
continue to provide peace of mind to our customers in uncertain
times."
David Richardson, Group CEO, added:
"Since the start of the Covid-19 lockdown we have continued to
work towards capital self-sufficiency whilst supporting our
customers by making changes to our products, and managing our
credit portfolio, which is performing well, to reduce the risk of
downgrades. Our total Retirement Income sales in the first quarter
are in line with expectations and we continue to maintain pricing
discipline. Finally, I remain committed to ensuring the well-being
of our colleagues and would like to thank them all for their
continued hard work and how well they have adapted to the changes
we have had to embrace."
Enquiries
Investors / Analysts Media
Alistair Smith, Investor Relations Stephen Lowe, Group Communications
Telephone: +44 (0) 1737 232 792 Director
alistair.smith@wearejust.co.uk Telephone: +44 (0) 1737 827 301
press.office@wearejust.co.uk
Paul Kelly, Investor Relations
Telephone: +44 (0) 20 7444 8127 Temple Bar Advisory
paul.kelly@wearejust.co.uk Alex Child-Villiers
William Barker
Telephone: +44 (0) 20 7975 1415
A copy of this announcement will be available on the Group's
website www.justgroupplc.co.uk
JUST GROUP PLC
GROUP COMMUNICATIONS
Enterprise House,
Bancroft Road, Reigate
Surrey RH2 7RP
Appendix
The sector analysis of the Group's corporate and government
credit portfolio at 30 April 2020, and the split of BBB assets is
shown below.
30 April 30 April 30 April
2020 2020 2020
GBPm Of which BBB % of BBB
portfolio
GBPm
==================================== ============ ============= ===========
Basic materials 301 129 2%
==================================== ============ ============= ===========
Communications & Technology 1,032 783 15%
==================================== ============ ============= ===========
Auto manufacturers 387 240 5%
==================================== ============ ============= ===========
Consumer (cyclical) 166 64 1%
==================================== ============ ============= ===========
Consumer (staples incl. healthcare) 931 377 7%
==================================== ============ ============= ===========
Energy 348 125 2%
==================================== ============ ============= ===========
Banks 1,439 493 9%
==================================== ============ ============= ===========
Insurance 777 478 9%
==================================== ============ ============= ===========
Financial - other 301 95 2%
==================================== ============ ============= ===========
Real Estate incl. REITs 531 315 6%
==================================== ============ ============= ===========
Government 1,273 53 1%
==================================== ============ ============= ===========
Industrial 815 401 8%
==================================== ============ ============= ===========
Utilities 1,776 960 18%
==================================== ============ ============= ===========
Commercial mortgages 522 181 3%
==================================== ============ ============= ===========
Infrastructure loans 857 511 10%
==================================== ============ ============= ===========
Other 37 - -
==================================== ============ ============= ===========
Total 11,494 5,203 100%
==================================== ============ ============= ===========
Our BBB portfolio is weighted towards the sectors least at risk,
with a combined 80% in financial services, utilities,
communications, industrials, infrastructure, government and
consumer staples including healthcare.
Note: This analysis does not include derivatives and collateral,
liquidity funds or lifetime mortgages in line with previous
disclosure. Includes both publicly and privately rated BBB
assets
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END
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