Just Group, born from the merger of annuity providers Just Retirement and Partnership, saw its new business profit increase by 106 per cent compared to last year.
New business profit more than doubled year on year, from £31.0m in the first half of 2016 to £64m for the same period in 2017.
According to Rodney Cook, group chief executive at Just, this increase was driven by a 16 per cent growth in retirement income sales, and higher profit margin from five per cent to 8.9 per cent.
He said: “The increase in volume was driven by a stronger start to the year for defined benefit [DB] de-risking solutions than in H1 2016, when volumes were affected by the introduction of Solvency II.
“We have benefitted from improving unit costs due to these higher volumes and the impact of substantial merger synergies. Our disciplined approach to pricing in a growing market has also benefitted the margin.”
Overall, Just had an adjusted operating profit of £67.2m in the first six months of the year, an increase of 39 per cent when compared with the same period in the previous year.
Mr Cook said that new business profitability is also due to benefits of cost cutting.
The company has already achieved its original £40m cost cutting target after the merger, and will continue to work to exceed the £45m of savings targeted.
Just Retirement and Partnership completed a £1.4bn merger, first announced in the summer 2015, in April last year, in a bid to shore up the businesses against pension freedoms, which saw demand for their annuity products fall.
According to Mr Cook, the outlook remains favourable for each of Just’s key businesses.
He said: “We expect the guaranteed income for life [annuity] market to continue to grow, driven by demographics, individual customer defined benefit pension scheme transfers, and continued growth in shopping around.
“The defined benefit de-risking market is set for more rapid expansion as trustees seek to assure the benefits of their members. Lifetime mortgages prospects remain positive as a property rich, but pension poor, generation prepares to retire.”
Mr Cook also said that the company’s pricing discipline has been rewarded by the reported strong margins.
“Although there is uncertainty as to second half DB volumes, a full year margin in excess of 8 per cent is looking increasingly likely,” he concluded.