JRP Group PLC BUSINESS UPDATE FOR THE PERIOD ENDED 31 DEC 2016 (8064V)

TIDMJRP

RNS Number : 8064V

JRP Group PLC

02 February 2017

 
NEWS RELEASE  www.jrpgroup.com 
 

2 February 2017

JRP GROUP PLC

BUSINESS UPDATE FOR THE PERIOD ENDED 31 DECEMBER 2016

FOCUS ON MARGIN EXPANSION, CAPITAL DISCIPLINE & MERGER PROGRESS

JRP Group plc ("JRP", "the Group") announces a business update for the period ended 31 December 2016.

Highlights

 
 
      *    Our core focus on pricing discipline has meant that 
           our IFRS new business margin for 2016 should exceed 
           previous guidance and is now likely to exceed 6% 
           (2015 pro forma - 3.6%). This expansion has been 
           helped by pricing and risk selection, as well as 
           attractive mortgage yields. 
 
      *    Pro forma sales (as if the merger had taken place on 
           1/1/15) were up 2% for Guaranteed Income for Life 
           (GIfL), confirming the stabilisation of this market 
           post pension freedom and choice. Our addressable 
           market is expected to grow in 2017, boosted by growth 
           in the open market. 
 
      *    Pro forma DB De-risking (DB) sales were 24% lower, as 
           fully expected, given the exceptionally high sales in 
           the second half of 2015 ahead of the introduction of 
           Solvency II. However, the underlying growth rate is 
           better indicated by pro forma DB sales in 2016 which 
           were up 37% compared to pro forma 2014 sales. Future 
           growth prospects remain very positive for the 
           segment. 
 
      *    Pro forma Lifetime Mortgage (LTM) advances fell by 6% 
           (reflecting the lower DB sales), but at 32% of GIfL 
           and DB sales were ahead of our 25% target. 
 
      *    Run rate merger cost synergies of GBP30m p.a. were 
           achieved, out of the GBP45m targeted by end 2018. 
           This is well ahead of schedule, and will contribute 
           to profit margins in 2017. 
 
 
                               12 months   12 months 
 JRP pro forma new business           to          to   Change 
                                31/12/16    31/12/15 
                                    GBPm        GBPm        % 
 Defined Benefit De-risking          943       1,233     (24) 
 Guaranteed Income for 
  Life                               778         763        2 
 Care Plans                           97          92        5 
                              ==========  ==========  ======= 
 Retirement Income sales           1,819       2,088     (13) 
 Drawdown                             25          21       22 
                              ==========  ==========  ======= 
 Total Retirement sales            1,844       2,109     (13) 
 Protection                            5           5      (7) 
 Lifetime mortgage loans 
  advanced                           559         598      (6) 
                              ==========  ==========  ======= 
 Total new business sales          2,408       2,712     (11) 
                              ==========  ==========  ======= 
 

Rodney Cook, Group Chief Executive, said:

"The transformation of our business since the merger is more than delivering the expected benefits. We have adapted the business rapidly in 2016 to the new regulatory environment. This will continue into 2017, with our primary focus on growing earnings by using our combined IP for better risk selection and by driving down costs.

Our DB pipeline continues to grow, and we are progressing transactions at all stages of the sales process with a number of major Employee Benefit Consultants.

The GIfL market is continuing to stabilise, and we remain confident that, following further regulatory intervention by the Financial Conduct Authority, more GIfL customers will shop around, rather than just taking their pension saving company's in-house offering. This means our addressable market for GIfL should increase, and several pension companies are creating GIfL panels on which we expect to feature.

We took full advantage of favourable economic conditions in the first 9 months of the year for Lifetime Mortgages and then intentionally managed back sales in the final quarter. The LTM market grew by more than 30% in 2016, and it remains attractive with favourable underlying dynamics.

I would like to thank colleagues across the Group for maintaining our excellent customer service during a challenging merger process. The rapid progress achieved to date, including our ahead of schedule delivery of cost savings, confirms the benefits we saw in recommending the merger to shareholders in 2015."

 
                               18 months   18 months 
 JRP Statutory                        to          to   Change 
                                31/12/16    31/12/15 
                                    GBPm        GBPm        % 
 Defined Benefit De-risking        1,645       1,310       26 
 Guaranteed Income for 
  Life                               973         749       30 
 Care Plans                           97          29      240 
                              ==========  ==========  ======= 
 Retirement Income sales           2,715       2,088       30 
 Drawdown                             32          56     (42) 
                              ==========  ==========  ======= 
 Total Retirement sales            2,747       2,144       28 
 Protection                            3           0      n/a 
 Lifetime mortgage loans 
  advanced                           730         545       34 
                              ==========  ==========  ======= 
 Total new business sales          3,481       2,689       29 
                              ==========  ==========  ======= 
 

Notes

1. The merger of Just Retirement and Partnership is required for accounting purposes to be treated as an acquisition by Just Retirement of Partnership with an effective date of the beginning of April 2016. Accordingly the statutory information includes 18 months of Just Retirement and nine months results of Partnership. Just Retirement Group plc (renamed JRP Group plc) changed its year end to 31 December and consequently its next statutory reporting period will be for the 18 months to December 2016. As a consequence pro-forma sales data as though the merger took place at the beginning of January 2015 have been presented to give the market an understanding of the business of the merged Group.

   2.     Numbers in table subject to rounding. 
 
 FINANCIAL CALENDAR                   DATE 
-----------------------------------  ----------------- 
 Defined Benefit De-risking seminar   22 February 2017 
  Preliminary results for the 18       10 March 2017 
   months ended 31 December 2016 
-----------------------------------  ----------------- 
 
 
 Enquiries 
 
  Investors / Analysts             Media 
 
  James Pearce, Group Director     Stephen Lowe, Group Communications 
  of Corporate Finance and         Director 
  Investor Relations 
 
  Telephone: [phone]          Telephone: [phone] 
  085 099                          827 301 
  [e-mail]     [e-mail] 
 
                                   Temple Bar Advisory 
                                   Alex Child-Villiers 
                                   William Barker 
                                   Telephone: [phone] 
                                   1080 
------------------------------  ------------------------------------- 
 

A copy of this announcement will be available on the Group's website www.jrpgroup.com

JRP GROUP PLC

GROUP COMMUNICATIONS

Vale House, Roebuck Close

Bancroft Road, Reigate

Surrey RH2 7RU

This information is provided by RNS

The company news service from the London Stock Exchange

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February 02, 2017 02:00 ET (07:00 GMT)