JustSep 2 2021

Just sells equity release portfolio to Phoenix for £300m

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Just sells equity release portfolio to Phoenix for £300m

Just has sold the second half of a lifetime mortgage portfolio to Phoenix Group for £300m, after selling the first half to Rothesay in August.

The retirement income product provider announced the sale in its interim results last month, but did not disclose the identities of both buyers until today (September 2). 

The first sale, worth for £334m, took place four days after its results were published. Together, both parts of the sale make up just 7 per cent of Just’s “in-force portfolio”.

Just said in its results that shedding the LTM portfolio would boost the firm’s Solvency II capital coverage ratio by up to 1 per cent, and “reduce the sensitivity of that ratio to movements in UK residential property prices” by more than 1 per cent too.

But equity release is still an area of focus for Just, according to Steve Lowe, director of communications, who told FTAdviser last month there’s plenty of scope for itself and other players to make more targeted products available to specific types of consumers, such as interest-only borrowers approaching retirement.

Alan Lakey, director of CIExpert, believes Just is freeing up capital to obtain a greater volume of new business.

“In the mortgage world selling off loans is common," he added.

For Phoenix, the purchase "cements Phoenix’s position as one of the largest funders and managers of equity release assets in the UK,” it said in a statement.

It added customers will not need to take any action “as their mortgage will not change”.

The acquisition was headed up by Phoenix's Retirement Solutions arm, which is led by managing director Tom Ground.

Andy Curran, chief executive of Savings & Retirement Open - the umbrella brand for Retirement Solutions, said: “Equity release is an important option for many people when it comes to meeting their financial planning needs later in life. 

“It is a growing market that we fully support and know well, Phoenix have been active as a funder in the market since 2016. 

“We’re delighted to have acquired this portfolio and to be securing the retirement plans for more borrowers.

“You should expect to see more activity from us in the equity release space in the coming months and years.”

At the end of June 2021, Phoenix said about a third of its £10.7bn diversified illiquid asset portfolio comprised equity release mortgages.