Thursday 13 August 2020 10:59 am

Just Group shares jump as profit survives pandemic

Just Group’s shares leapt today after it posted slightly higher profit for the first six months of 2020 today despite the pandemic.

The figures

Underlying operating profit rose £3m to £117m year on year for the first half of 2020. Profit from active life insurance policies shot up 25 per cent year on year to £50.6m to mitigate a 10 per cent fall in business profit fell to £73m.

A 10 per cent drop in retirement income sales to £744.9m hurt business profit.

But Just Group predicted sales in the second half will “significantly” out strip those in the first six months.

The firm said its capital coverage ratio – a measure of its capital compared to its risk – has risen to 145 per cent

Basic earnings per share more than doubled to 22.58p.

The company has chosen not to reinstate its dividend during the pandemic after cancelling it in March 2019 due to uncertainty around regulatory changes relating to equity release mortgages.

Why it’s interesting

Just Group enjoyed a bumper share price boost of 14.5 per cent to 58.3p on the back of today’s results, though that is still far off its pre-pandemic level of 83p.

Credit: London Stock Exchange

It enjoyed an IFRS profit before tax of £305m, more than double the £125m it posted for the first half of 2019. The insurer credited the leap to investment and economic profits partly thanks to the record low interest rate of 0.1 per cent.

Just Group’s board called the balance sheet “resilient” but said it would continue to manage its outlook and capital position after “significant” changes to equity release mortgages.

Coupled with economic uncertainty, that persuaded the company not to resume the payment of a dividend.

What Just Group said

Group chief executive David Richardson said “I am very pleased with our progress in the first half of 2020 – our capital coverage ratio has increased to 145 per cent during a turbulent and difficult time in financial markets. 

“The solvency balance sheet has been resilient and we’ve achieved substantial organic capital generation, driven by a number of significant management actions.  We recognise there are short term macroeconomic uncertainties, including the UK property market, but we have multiple levers at our disposal, and we are demonstrating our execution credentials.”