The decision by specialist annuity providers Just Retirement and Partnership Assurance to join forces looks to have paid off, with the merged entity posting expectation-busting first-half figures.
New business profit at JRP Group (JRP) was £31 million in the six months to 30 June. This beat forecasts by 63% largely thanks to margins increasing to 5% from 2% in 12 months.
JRP sells higher income paying annuities to people with lower a life expectancy due to illness. This market has been hit by the government giving savers greater freedom over how they invest their pension pot.
This resulted in Just Retirement and Partnership Assurance merging in April in a bid to boost sales and capital strength.
It appears to have been the right decision. The group’s individual annuity sales increased by 52% to £321 million in the first half, while sales of equity release mortgages also proved popular, growing by 57% to £322 million.
These offset a 49% slide in corporate de-risking sales at £164 million. Management report that £330 million of these corporate deals have been made since the end of June, giving Numis confidence that £1 billion of revenue will be achieved here in 2016.
The results also put any concerns over the group’s capital reserves to bed. JRP is well capitalised with a Solvency II ratio of 134% of the underwriting risk it carries, ahead of the 100% minimum.
This was better than the 130% the group had anticipated, the result of improving bond values and winning new business.
Management also increased its cost savings target from the merger to £45 million from the initial £40 million estimate by 2018, of which £15 million has already been achieved.
The market welcomed the update, sending shares 17% higher to 113.9p.
