JustAug 12 2021

Just shifts focus onto growth after period of rebuilding

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Just shifts focus onto growth after period of rebuilding
Photo by Tim Mossholder from Pexels

Just has shifted its focus onto growth after spending the past two years rebuilding its balance sheet due to regulatory changes in the mortgage market.

The retirement income product provider is confident there are still significant opportunities to be had in its two big core markets - defined benefit de-risking and guaranteed income for life.

"They’re incredibly attractive markets because they grow by design," Steve Lowe, director of Just’s communications, told FTAdviser.

"There’s been a massive increase in auto-enrolment, which is compounded by an ageing population and rising retirement incomes. Estimates show the de-risking market alone could grow from £20bn to £100bn over the next 10 years."

Just was formed through the merger of Just Retirement and Partnership in 2015. The two companies - which specialised in providing annuities - had been hit by that year's pension freedom reforms but the merged company has since seen large growth in the defined benefit de-risking market.

In its results for the first half of 2021, Just’s retirement income sales climbed 22 per cent to £909m, which saw its adjusted operating profit jump 47 per cent to £90m.

Defined benefit de-risking sales were up 21 per cent to £555m, compared to £460m this time last year. Meanwhile its guaranteed income for life sales were up 24 per cent to £330.3m.

Lowe said the latter figure’s growth is now higher than pre-pandemic figures.

Just has also grown its underlying organic capital generation to £25m, which has jumped 733 per cent from £3m in the first half of 2020.

“By being a business generating its own organic capital, it enables you to invest more sustainably in further growth,” said Lowe.

He added that Just’s ultimate aim is to become a “self-fulfilling engine of growth”.

Just posted an £87m loss before tax for the year to June 2021. But Lowe passed this off as “a paper movement” due to the rising market rates.

The firm is hopeful that these first half losses will fall in the second half of this year. Since June, it said long term market rates have fallen which it believes “will have reversed some of the losses experienced in the first half of the year”.

Through Hub, its advice business, Just is in the process of rolling out its Destination Retirement product, which Lowe described as an “automated advice service for middle Britain consumers who want to start taking out a pension income”. 

Issued through employers, Hub partnered with Mercer, a business of Marsh & McLennan, in March. Lowe said Mercer has a plan to distribute Destination Retirement through its platform to company clients, of which it has more than 1,000.

Currently, Hub is “not currently sufficiently significant to separate from other companies' results”, according to Just.

It was therefore grouped into ‘other companies’ in the firm’s H1 2021 results, which posted a loss of £8m - consistent with their £7.9m loss in the same period last year. 

Just also operates in the equity release space. Lowe said there’s plenty of scope for players to make more highly targeted products available to specific types of consumers.

He cited people who have approached retirement with mortgage loans - otherwise called the ‘‘interest-only ticking time bombs’ - as well as the uptick in re-broking activity over the last three years. Both are areas Just has already provided products in.

In its latest results, Just added: "The risk of increased competition in the equity release market is mitigated through continuing work to improve the customer appeal of the group's LTM products, explore new product variants and meet distributors' digital and service needs."

Just’s chief executive, David Richardson, today (August 12) announced the firm’s new environmental, social and corporate governance targets.

One is to bring the group’s own operations to carbon neutrality by 2025. Lowe said the firm has already reduced carbon emissions by 86 per cent in the last three years.

The other is to ensure its financial investments - of which it has around £23bn - are also carbon neutral by 2050, with half reaching this status by 2030.

“We are today further strengthening our sustainability credentials by introducing our new carbon net zero commitment, which builds on the excellent progress already made to reduce the carbon intensity of our business,” said Richardson.

ruby.hinchliffe@ft.com