JRP Group share price jumped after posting better than expected annual results despite a soft new business market

Oliver Gill
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JRP Group (as well as Esure) is headquartered in the leafy Surrey suburb of Reigate (Source: Getty)

The boss of retirement specialist JRP Group today urged the market to "get its act together" to help Britain's over-55's release £2 trillion of assets that could better fund their retirement.

After announcing results JRP said it was "truly proud of", shares in the FTSE 250 leapt over six per cent in early trading.

The figures

Total new business sales fell from £2.7bn to £2.4bn, a fall driven by a reduction in the defined benefit de-risking solutions business, which fell from £1.2bn to £0.9bn.

Adjusted operating profit jumped 58 per cent to £164m and the firm generated an 82 per cent growth in new business profit to £124m.

New business margins doubled from 3.3 per cent to 6.8 per cent.

JRP is the product of last year's merger of Just Retirement and Partnership Assurance and the combined group has eked out £30m of synergy savings, against a target of £45m that earmarked for the end of 2018.

Dividends per share will increase by six per cent to 3.5p and its Solvency II ratio increased from 134 per cent in June to 151 per cent at the end of December.

Read more: JRP shares jump by doing more than Just enough

Why it's interesting

Chief executive Rodney Cook was thoroughly pleased with today's results and highlighted it was profits rather than sales growth that interested him.

Speaking to City A.M., he praised Financial Conduct Authority (FCA) plans announced last November to force annuity providers to tell their customers about better deals in the market, a policy that would likely help the Reigate-based firm.

However, he questioned the amount of capital the firm needed to hold in order to provide solutions to Britain's ageing population.

Cook said Britain's over-55's owned around £2 trillion of assets in aggregate, and these could be used to better fund retirement if regulators made it easier for firms such as JRP by reducing associated risk capital. He said:

If this bloody country can’t get its act together to enable people to have a fair retirement by utilising all of their assets, then something’s wrong.

Shares rose primarily as a result of operating profits beating consensus estimates by eight per cent, according to analysts at Numis, which labelled the results as "remarkable", given the growth in margins, the new business profits in a soft market and the firm's Solvency II ratio.

Read more: JRP Group makes London Stock Exchange debut

What the company said

Cook said: "I am truly proud of what our team achieved in 2016. To deliver a step change in profit at the same time as our merger and Solvency II implementation is very special. Fortunately, there is more to come.

"Our focus is on growing profits, but this will be helped by market growth."

He added: "We are now in the later stages of the merger integration process. There are significant further savings to make, but now in more complex areas such as systems and IT.

"Our staff have shown considerable adaptability over the last year, and we appreciate their commitment despite the additional pressures of the merger."

In summary, our merger has catalysed a transformation of our earnings potential, and there are opportunities ahead of us. It is an exciting time to be serving JRP’s shareholders and we will strive to deliver further positive momentum during 2017.

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