Wednesday 4 September 2019 8:14 am

Just Group share price falls as new regulations slash profits by a quarter

Life insurer Just Group shares fell 10 per cent this morning after it revealed profit fell more than a quarter in the first half of the year.

The company suffered a hit after new rules from the Prudential Regulation Authority, which require more capital behind lifetime mortgages, which is one of its key products.

The figures

Underlying operating profit fell to £114m for the first six months of 2019, a 27 per cent drop year-on-year. 

Revenue rose to £2.03bn, up from £1.45bn this time last year, while net assets were £2.13bn, a 28 per cent rise. 

Just Group, which did not pay a dividend last year, said it would not pay an interim dividend to shareholders.

Why it’s interesting

The life insurer warned the new rules could push up how much capital it needs to hold by another £130m. It raised £375m of fresh capital earlier in the year to compensate for the impact of the changes.

This morning, it said it had also cut back its new business volumes.

Just Group said the firm had signed reinsurance deals to pass longevity risk on to other firms, so as to ease the strain on its balance sheet.

Numis analyst Nick Johnson said: “Although capital risk remains in a heavily bearish house price scenario, we feel Just is now more in control of its capital position.”

What Just Group said

Interim chief executive David Richardson said: “Capital is the Group’s number one priority, and I am personally committed to delivering organic capital generation by 2022.

“Whilst we have made significant progress in adapting our business model, as is evident from today’s results, the first half of 2019 has not been easy for our business or for shareholders, as we have faced economic and regulatory challenges.

“However, we have made real operational progress and I take pride in the way the business is responding. I particularly want to recognise the response of my colleagues across the Group to the rapidly changing environment.”

(Main image: Getty)