Just Share Discussion Threads

[18bt] 10/3/2022 10:35

I'd encourage any serious shareholders to listen to the webcast/presentation. Marked change in tone IMHO:
- have binned talking about "the journey to capital self sufficiency" and now strongly focussed on 15% growth
- have changed emphasis back to IFRS profits now that the SII capital is sorted
- worth noting that Op profit per share was 19p last year - i.e. that is how much TNAV per share increases in the absence of other changes.
- £12m PBT saving in 2022 for the RTI refinancing
- They reckon the £625m of T2 debt, which currently bears a blended cost of just over 8% would currently have a cost of 5% if they could be refinanced. They were cagey about whether some might happen in 2022, but over time, that's a further £19m saving
- The DB pipeline is at its highest ever for H1 - they have to land them, but they are pretty bullish. There were 2 deals over £250m in 2021- expect more this year. So there could be potential for positive newsflow.
- At a 2.5% new business strain, deals have a 3 year payback and then throw out cash for 25-30 years. In any sane world, that is a fantastic financial model....
But plenty more including some good questions. Worth an hour listening to.

[rapier686] 10/3/2022 09:20

I'm beginning to believe their treasury can walk on water.

I was impressed to read last year that
"The credit migration cost was much more than offset by £88m of positive capital impacts from management of the credit portfolio"

But they've followed it up this year with
"[Credit up/downgrades] led to a negligible £13m reduction in the Solvency II surplus, which was more than offset by £49m of positive capital impacts from portfolio management"

No doubt our current economic challenges from Putin are giving them more ducking and diving opportunities.

[18bt] 10/3/2022 07:52

Going to join the analysts call at 9.30. They have put the presentation up already - there's a mass (much more than usual) of useful information in the appendices which will need a lot of digesting. But overall, this does now feel like a watershed has been reached.

[18bt] 10/3/2022 07:30

Dividend back - it's taken some time, but should allow more instis to buy. Long term growth - if they can hit it, makes this incredibly cheap, but we knew that.

[scepticalinvestor] 10/3/2022 07:23

Not bad at all

[jimmyh1] 26/2/2022 15:59

They say that the impact on the capital RATIO will be broadly neutral - my guess is that they have reduced their required capital (their SCR) through this (otherwise what is the point of taking the IFRS hit?) - and if that is correct and if the ratio impact is neutral then the absolute amount of working capital (ie above the minimum) will have gone down.
Conversely, if they reinvest the proceeds into higher yielding assets to back their liabilities, then this might imply more risk and a higher SCR - in which case their working capital will have gone up.
So I don’t think it is clear at all.

[cb7] 25/2/2022 07:20

Only a few lines in the statement, but it clearly states that the effect on solvency II will be neutral.

[jimmyh1] 25/2/2022 06:28

The IFRS impact will be a combination of the asset value and the actuarial liability value impacts. Looks like they believe that the liability values will reduce through rebalancing their assets. Smoke and mirrors. What really matters is what the impact is on their Solvency II capital position - which they don’t say. I would guess, though, that this move has been necessary to get to an acceptable capital position. I predict a dividend of zero again…

[18bt] 22/2/2022 13:27

They could be reinvesting into new LTMs with a longer duration and or different geographic spread/LTV etc.

[rapier686] 22/2/2022 11:16

Any ideas how selling the things for £85m less than book value only results in a £35m net-of-tax loss?
They mention "impact on the insurance liabilities resulting from the expected new asset mix" but surely the resultant asset mix with fewer LTMs would be lower yield, reducing the liability discount rate?

[riverman77] 22/2/2022 11:04

The main reason seems to be to reduce their exposure to house prices (which in turn may improve their Solvency metrics). Not sure if they'll be able to find better returning assets - if they're moving into bonds these will almost certainly be lower returning. I guess we'll find out more at some point.

[18bt] 22/2/2022 10:57

They could be selling to better match assets with liabilities or because they will get a better economic return from investing in new ERMs. Or it could be because they need to strengthen capital still further. The announcement doesn't give us a real answer.

[riverman77] 22/2/2022 09:42

Don't understand why they are selling these assets at a loss. House prices booming, which should have increased the value of these loans. I'm sure they know what they're doing, but at first glance doesn't look great.

[18bt] 22/2/2022 09:03

Not really sufficient information to assess the sale of the portfolio of ERMs to Rothesay this morning. We don't know the ages or LTVs or fixed interest rate. It's an IFRS loss, but no info on the solvency effect or the liabilities they were backing. Guess we will have to wait until 10/3 for more info

[spectoacc] 04/2/2022 16:14

3% is the new 8%, but can't rule it out - "Ollie" Bailey seems determined to show he's doing something (even tho he's already far behind the curve, and even though increasing interest rates does diddly squat to counter inflation caused by fossil fuel price rises).

I don't think the economy collapses at 2% - we've just gone from 0.1% to 0.25% to 0.5% in 90 days, and will go to 0.75% at the next meeting IMO. Bear in mind even CPI inflation could top 7%, and RPI (the one we all grew up with) is 7.5% already (not yet on an annual basis).

Have an eye on going back into JUST - but never really get why this lot are so underrated, like MNG, LGEN, even PHNX.

[spooky] 04/2/2022 11:37

And how far are rates going? Put them up 2% and the economy would collapse IMO.

[rapier686] 04/2/2022 11:27

To my surprise, the article is readable without a subscription.
hxxps://www.investorschronicle.co.uk/ideas/2022/02/03/just-a-matter-of-time/
Rising interest rates won't be great for IFRS profit or tangible NAV though, which seems a bit of an omission from the last paragraph.

[18bt] 03/2/2022 17:28

Seems to be a buy tip in IC tomorrow. Headline: Amid a booming bulk annuities market, Just looks to be in the right place at the right time

[scrapheap] 21/1/2022 13:33

squeaked this in to help the figures!!

hxxps://www.professionalpensions.com/news/4043682/completes-largest-deal-gbp345m

[baddeal] 20/1/2022 21:25

Thanks, appreciate the insight

[1jat] 20/1/2022 19:07

Rising interest environment s generally seen as a positive for life insurers
This is because they get to discount future liabilities at a higher rate….this is offset by a recalculation of the transitional measures and potential asset impairment on the credit book backing the liabilities.
One major block of assets is the mortgage book. Just will lend at fixed rates largely funded by annuity business again at fixed rates so it will depend if the margin between the two can be maintained….like the banks insurers will tend to raise their income before offering better prices to customers.
The balance sheet and capital is managed to reduce volatility, you can see a half point reduction in interest rates costs about 70m of capital. There should be a s8milar gain on a rise in rates, but it will depend on how they are hedged.
The FY results, sensitivities will make interesting reading in March.

[spooky] 20/1/2022 12:39

Good question to ask but lets be honest here, rates aren't going up far or the economy will collapse IMO.

[baddeal] 20/1/2022 12:33

As a holder here for some time I would be interested in those knowledgable posters around justs likely performance in a rising interest rate environment.

[undervaluedassets] 19/1/2022 08:42

I think what the announcement highlighted here was cheapness.

Given that this is a market that is looking for value stocks JUST ticks all those value boxes.

If this value theme sustains then there should be a long way to go on these.

[18bt] 19/1/2022 07:39

1jat - yes there is increased duration risk, but they can still find assets to match the liabilities on the whole. The exception might be finding enough inflation risk, but there are some assets which will provide inflation protection.

Agree they have deliberately been keeping below the radar whilst adjusting to the PRA's expectations. But that period feels like it should come to an end.