Just Share Discussion Threads

[1jat] 26/1/2023 08:18

No mention of IFRS17 effect….
I expect a large contract service margin will be established with a 25% hit to annual profits (as set out by L&G in their market update) - but that means a lot more stable future profits as market movements are taken through the CSM.

[18bt] 26/1/2023 07:27

Looks a strong trading update - yes, “in line”, but there seems to have been some doubts about whether they could on board all the derisking deals in time. You don’t get many stocks confident of growing 15% pa on this market.

[charlie] 24/1/2023 20:56

Long-term option pricing with a lower reflecting barrier

”Standard Black-Scholes, as prescribed by the Prudential Regulatory Authority (2020) for NNEG valuation for certain regulatory purposes. This simply ignores the reality that interventions are likely after large falls in prices, and produces what one well-known writer of long-dated puts has called “wildly inappropriate values when applied to long-dated options” (Buffett, 2011). In the context of NNEG, Black-Scholes seems to me a short-term model stretched well beyond its sensible range of application, like trying to use an egg-timer as a calendar.”

[1jat] 24/1/2023 08:33

Interesting PRA publication of the 2022 stress testing yesterday.

The stresses were quite severe…including significant property value falls and credit defaults and then loading a substantial longevity increase on top…apparently not all Firms passed although they still had more management actions they were not allowed to count towards capital

Overall companies need to review the feasibility of selling their non investment grade credit when everyone else may be doing the same….and PRA has concerns about concentrated reinsurance exposures and failure of a reinsurer causing a mass recapture event.

PRA seems determined to retain capital in the industry and will pull additional levers to keep it there.

WHo would have thought that using 100%reinsurance was not a free ride?

[clive7878] 11/1/2023 16:44

Investors taking profits at the end of today.
But share price could well hit £1 in time.

[18bt] 09/1/2023 09:21

On the chart it looks like it will face resistance around 95p, but we need it to hold above 82p for a bit first - looks good though.

[clive7878] 07/1/2023 12:26

I can see this - not if but when - reaching £1 a share soon.

[18bt] 06/1/2023 09:53

Nice to see at highest since June 2022

[1jat] 19/12/2022 14:13

Bulk purchase annuity market has been strong this year and set to get stronger in 2023.

Just has not announced any large deals but I expect they have done quite well in volume terms this year. Reduced risk margin sometime in 2023 will permit take on of much more new business…̷0;

Note that the changes to accounting with IRFS17 bring probably a 20-25% reduction in annual profit on annuities due to recognition of day 1 profits being much reduced and longevity releases going through the contract service margin and therefore being spread over many years….but all the economic gains/losses also go through the CSM so the business should become very reliable in terms of profits and distributable reserves.

[clive7878] 15/12/2022 19:50

18BT - Many thanks - sounds good
Biggest buy at the end of trading today

[18bt] 12/12/2022 07:40

Clive, consensus forecasts are for EPS of 18p

[clive7878] 10/12/2022 16:25

Do we have any profit forecasts?

[clive7878] 08/12/2022 16:51

Not expected that Just share price is coming off the boil after its good run,
could have further to go in the long run though.

[18bt] 28/11/2022 09:53

Jefferies starts Just Group with 'buy' - price target 115 pence

Presumably the reason for the good start to the week

[18bt] 22/11/2022 10:51

Barclays raises Just Group price target to 124 (121) pence - 'overweight'

[18bt] 17/11/2022 15:31

From KBW just out:
The UK government announced today the Solvency II reforms it will take forward, appearing to be a significant win for the bulk annuity writers. Importantly, even in the context of the buffering impact of the TMTP assets on pre-2016 liabilities, the government says that this will “free up substantial amounts of capital”. A key positive retained from the original proposals is that risk margin for life insurance and general insurance companies will reduce by 65% and 30%, respectively. However, the previous proposal to modify the methodology and calibration of the counterbalancing “fundamental spread”, an addition to liabilities, will be dropped.
Government guided that the reforms will “enable insurers to invest [additional] tens of billions of pounds in long-term productive assets”, though did not update on the specific amount of capital to be released. Previously (April 2022) it had guided that the “reforms could result in a material release of possibly as much as 10% or even 15% of the capital currently held by life insurers and unlock tens of billions of pounds for long term productive investments, including infrastructure”;.
We see today's announcement as an incremental positive for the annuity writers, Aviva (OP), Legal & General (MP), Phoenix (OP) and Just Group (MP).

[1jat] 10/11/2022 15:27

There is a PRA speech raising a couple of concerns about the bulk annuity market, in particular fully reinsured operators (are they thinking of Just?) where they do deals and pass on most of the risk to a reinsurer…..if the reinsurer gets into difficulty it would surely doom the originating insurer.
Own capacity is important to be able to capture growth with decent margins. Need to see what Just says about this with the FY reports.
Would not be surprised if PRA started adding capital requirements to those insurers with heavy use of reinsurance.

[18bt] 09/11/2022 07:30

Yes it's a highly competitive market, but there is just so much business around that the small-medium sized BPAs can be picked up on sensible margin. There's £40-50bn a year overall in the market. Aviva's results today show them sitting out abit.

[1jat] 08/11/2022 21:32

18BT
Interesting report….clearly high opportunities but what margin can be achieved? It seems there is strong competition and limited capital for smaller players like just….the conditions for a flight to quality and the bigger players.