Just Group is in the process of outsourcing its UK income drawdown service and has closed its current drawdown product to new clients.
According to the company’s interim results for the six months ended June 30, 2019, published today (September 4), Just closed its Flexible Pension Plan to new business from July 2019 as part of its plans to achieve capital efficiency by 2022.
Existing customers of this product will not be affected.
Drawdown sales were up 10 per cent in a year to £26.4m in the first half of 2019 from £23.9m in the first half of 2018.
Just stated it has deliberately reduced new business across the group to become more capital efficient but the board would keep any decisions to further reduce or close new business under review.
According to today’s results, retirement income sales decreased by 30 per cent compared with the prior period, from £1,2bn for the six months ended June 2018, to £831.3m for the six months ended June 2019.
This contributed to a fall in new business operating profit and adjusted operating profit before tax, but a significant fall in new business strain at the same time.
New business operating profit for the six months to June was £73.7m, down from £120.6m last year, and operating profit before tax was £75.5m, down from £124.4m.
David Richardson, interim group chief executive officer of Just, said: “We are adapting our business model with the aim of ensuring it is economically attractive in a challenging regulatory environment.
"However, we are developing other strategic and business options to maximise shareholder value in parallel, with no options excluded.
“This includes keeping under regular review the possible need for further reductions in new business volumes.
“We demonstrated our resilience and adaptability when we responded to pensions freedom, and I am convinced we can do so again."
In March, Just cancelled its dividend and announced capital raising plans to strengthen its balance sheet following the introduction of the Prudential Regulatory Authority’s capital rules on the treatment of equity release mortgages, which come into force December 31, 2019
Due to this, shares in the company fell.
Today the company announced that since the end of June it has made a £70m increase in its solvency capital requirement in preparation for the change of capital rules.
The solvency capital requirement is the amount of funds that insurance companies are required to hold under the European Union's Solvency II directive to have a 99.5 per cent confidence they could survive the most extreme expected losses over the course of a year.
In June, Just announced the appointment of chief financial officer Andy Parsons, who will join the company from LV in January.
The company is still in the process of appointing a CEO after Rodney Cook stepped down to plan for his retirement on April 30.
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