Just Share Discussion Threads

[1jat] 18/1/2022 20:04

All metrics up…..I wonder why there were no deal announcements despite an increased number and presumably size of wins.

Personally not bothered about the dividend this year if it helps cement recovery and a stronger capital position. I would like clarity on their risk appetite / SCR position leading to dividend reinstatement.

The share price needs a major uplift otherwise this will be trading with a PE of less than 5 which is a bargain and extremely cheap.

At the moment it seems like Just has sorted itself out and is increasingly capital generative…..but waiting for PRA to put a dampener on them….all the extra duration risk associated with deferred DB transfer business must be concerning the regulator…..just as they changed the rules on equity release mortgages ahead of one of the largest property price booms seen for a long time.

[baddeal] 18/1/2022 09:31

See the divi back will imo be a major step forward so would be good to see that when they announce on March

[undervaluedassets] 18/1/2022 08:03

Timely update.

Let us see if JUST joins the outperforming surge seen in so-called "value" equities so far this year.

[18bt] 18/1/2022 07:56

Strong update this morning. Their overall lack of communication makes me nervous, but they have now over-delivered for a couple of years now.

As a reminder their "underlying organic capital generation" was £18m in 2020, so that now looks to be c£40m. And new business strain was 2.2% in 2020, so getting it under 2% is allowing them to grow premiums and therefore future profit at a faster pace.

Lastly, getting the equity release into the internal model suggests that the PRA are now comfortable with their assumptions or else they would not have approved the change.

No mention of dividends, but the market has 1.6p in for 2022. That would only cost them £16-17m, so under half the organic capital generation - so looks feasible.

[undervaluedassets] 07/1/2022 09:45

Cashflows wax and wane in this business. One year up a bit. one year down bit. Still oceans of cash in the business.

232p per share of cash if I recall right from interims.

Update ..the market suddenly likes value ..might we catch a bit of that wave? certainly Just qualifies as value

[weemonkey] 06/1/2022 15:39

Of note is the fact that 2012 profits were £24 million and turnover was £825 million

Since then profits have exploded; 2020 profits were £236 million (and the pre pandemic 2019 profits were £369 million!). 2020 turnover was £4.465 billion

The share price however has, over the same period, limped downwards by 60% leaving the shares on a pe of 5.

It's a bargain but seems friendless. It really is a head-scratcher this one.

[undervaluedassets] 23/12/2021 16:25

The slightest touch of complexity and investors back off (too much brain power needed to understand the results)

This does not negate the fact that this is both a good company and cheap.

[18bt] 30/11/2021 11:12

Disproportionally hit since the peak share price at end May

[mikesymike] 20/10/2021 14:40

Thanks Rapier - appreciate it. I still think this is currently well undervalued, so intend topping up a bit. Fingers-crossed!

[rapier686] 20/10/2021 07:22

I don't think it's either. But it's closer to "the same money" than "add the two".

The £3.6bn is a Solvency II figure. Slide 8 shows how new business initially consumes capital (extra money beyond the premium needs to be set aside to cover the possibility that the contracts turn out badly), but that capital is expected to be released (and substantially more) over the next 35 years. £3.6bn is the total amount of capital release expected from the current book if the next few decades turn out as expected.

Whereas the £2bn is an IFRS figure. If the next few decades proceed to plan, the current book will produce future in-force profits, but this won't add up to £3.6bn.

[mikesymike] 19/10/2021 21:05

Hi,
First post, so hope OK to ask a question as I'm hoping someone might be able to help me understand Just's asset value.... I just read their half year presentation available at hxxps://www.justgroupplc.co.uk/investors/results-and-presentations

At bottom of slide 6 it refers to a net asset value of nearly £2 per share alongside "Future Cash Flows" of £3.6Bn. My question is simply, are these the same money (i.e. is the nav just the discounted NPV of £3.6Bn?) or is the company really backed by almost £2 per share of assets PLUS future flows of over £3 per share...? Even allowing for long timescale to release future income the current share price would seem a clear bargain for any larger insurer - or even a Private Equity vehicle (who could bid at, say, a 70% premium to current share price, and still come out with a chunky profit by just selling on the book of loans to larger insurers...?

[18bt] 13/9/2021 06:26

This from PIC this morning "After a slow start to the year, the Pension Risk Transfer market is once again very busy". Mirrors what JUST said at their interims.

[18bt] 08/9/2021 16:15

Thanks Codger - useful gloss on where the capital might be allocated and I agree about IO mortgage replacements; there's a lot coming up which can' be repaid.

[theoldcodger] 08/9/2021 11:32

Thanks 18BT, a bit more detail about the transaction from Just's perspective is here:

[18bt] 08/9/2021 10:25

I missed this announcement from Phoenix, which appeared last week: Phoenix didn't RNS this, so there is a good chance most of the market did as well

[rapier686] 06/9/2021 09:27

I don't understand the point of tendering. Why not just let them run to the call rather than paying the required premium to incentivise tender acceptance?

[18bt] 06/9/2021 09:03

Not quite sure what the tender offer of old notes and issue of new notes does to the running cost. But presumably should reduce it as they are redeeming at a premium. The old notes had a coupon of 9.375% up to the call date in 2024. At a premium of 117%, that is equivalent to a running coupon of 8.01% - so that's the benchmark of the new notes - but last time the issue costs were £6m, so that needs to be taken into account too. £28.1m of annual interest on the old notes, so this might make a meaningful difference as well as telling us ow far JUST has come in regaining the confidence of the debt markets.

[18bt] 26/8/2021 11:41

Interesting report from Barnett Waddingham on COVID and the effect on mortality/longevity assumptions. About DB pensions but readacross to JUST on the assumption side as well as the DB de-risking

[jimmyh1] 14/8/2021 23:12

As I said back in March - no dividend because they can’t afford it. This is heavily geared with temporary capital in the form of transitional relief. Own Funds reduction over the half year. IFRS loss. More debt capital (yes, I am happy to ignore the conversion feature) being raised. So where is the double digit return?
I don’t see it except in an irrationally high share price. Oh - except that the share price has fallen 7% today.

[18bt] 13/8/2021 13:35

From the IC:
Just Group (JUST) results are never entirely straightforward and, at least on a reported level, seemed to show little progress. However, a headline loss was due to reverses on interest hedges as credit rates tightened during the half.

Dig further into the figures, and you’ll find the retirement product specialist generated £25m in organic capital (up from £3m in the first half of 2020) and is now well ahead of its target to double growth of this key measure by 2022, so ensuring the underlying stability of its Solvency II ratio.

The indirect effect of large cohorts of retiring baby boomers is that companies, with an estimated £2 trillion of total defined benefit (DB) pension liabilities on their balance sheets, are starting to move these risks into the insurance market. Just is a clear beneficiary of this trend as its key DB segment recorded a 20 per cent rise in gross premiums written to £554m, while the popularity of guaranteed income for life products ensured a 27 per cent rise in premiums to £330m.

But chief executive David Richardson has ruled out the return of dividends: “Our larger shareholders have said they are satisfied with the mid-teens return-on-capital we are generating at the moment.” He added that Just has built a niche in medically underwritten customers and was ahead of the rest of the market in this specialisation.

Despite these solid results, Just trades on six times’ Panmure Gordon’s earnings forecast for 2022. With evidence that cost control and capital generation are both ahead of expectations and, with the shares still trading at a big discount to net assets, there is room for growth. Buy.

[18bt] 13/8/2021 09:56

Some interesting things in the webcast now on the investor site:
- Expecting at least to match H2 202's c£1bn DB de-risking
- Moving into participating in pension buyouts
- Likely to move more into the £250-£1bn de-risking segment where currently they only have a 2% mkt share, all whilst not taking on too much capital strain
- big emphasis on long term returns: £17m of new business strain, has a 3.5 year payback and leads to £110m of cashflow return over next 35 years
- Now targeting 20% LTM backing of new business - down from 25% target and close to 35% at it's worst under Rodney Cook

[undervaluedassets] 12/8/2021 20:49

Well operating profits - which is what matters - are up.

Good results and shares fall = opportunity

had a top up.

[whatja] 12/8/2021 07:49

If the PRA forced conversion the trigger point is an SCR of 75%…..ie already bust…so there is little to fear from a conditional conversion.