Just Group shares slide after it reveals sales plunge

 
James Booth
BRITAIN-ECONOMY-RATES-BOE
Just Group has been hit by tough new Bank of England rules on equity release mortgages (Source: Getty)

Just Group shares fell more than seven per cent this morning after it revealed a plunge in sales.


The retirement group said retirement income sales for the three months to 31 March were 59 per cent lower than for the previous quarter, which it said was a result of a lower level of completed defined benefit de-risking sales.

Read more: Just Group raises £375m to comply with new regulations

Defined benefit sales were down 90 per cent year-on-year to £26m which it said was due to a temporary reduction in activity levels in its target segment.

The company said that in the second quarter so far it had completed a series of transactions with a value in excess of £300m and said its run rate is returning to that of the second half of 2018.


“The pipeline remains full and market pricing is attractive,” it added.

Guaranteed income for life (Gifl) sales were down 23 per cent year-on-year to £145m.

Just Group said the lower level of volumes reflects pricing increases implemented following new, tougher Bank of England rules on equity release mortgages.

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Lifetime Mortgage advances of £79m were down 47 per cent, which it said was a result of a focus on capital efficiency.

Interim chief executive David Richardson said: “Today’s update reflects our disciplined approach to the management of our capital in the new regulatory regime. Our GIfL price increases and DB pricing standards have been implemented rigorously, ensuring that we deliver to shareholders a new business internal rate of return in line with our targeted mid-teen levels. The continued growth in our markets gives us confidence that there remains a considerable opportunity to deploy capital in a disciplined and profitable manner.”

The company said it would close its US business as it aimed to bolster its capital position.

"Our capital position has been much improved by the £375m raised in March, and we are absolutely focused on achieving capital neutrality by 2022. We have a plan in place to ensure we achieve this target, which includes a number of actions we will be taking over the course of this year. These include a renewed focus on cost control, the closure of loss making operations such as the US, reductions in new business LTM backing ratios and a shift towards more capital efficient assets," Richardson said.

At the end of April chief executive Rodney Cook resigned following a turbulent year that included cancelling its dividend and raising £375m in fresh capital in March.