Just Share Discussion Threads

[18bt] 07/3/2023 07:46

This is their current position on interest rate hedges:
During the year, we actively reduced the level of interest rate hedging as the capital position strengthened, with the sensitivity at year end 2022 now close to zero (c.£7m of IFRS profit for a 100 basis point increase in long term rates compared to £526m loss at year end 2021).

[18bt] 07/3/2023 07:24

Results have delivered on their 15% growth promise and a confident outlook statement that this will continue. Yes, the IFRS results were hit as expected by their SII hedging, but as a result their SII capital has hugely strengthened. There's also first the first time a significant mortality reserve release of £90m as they have moved to CMI 2021, which in itself added 500bps to solvency.

Whilst I agree with cjac that in 2018-19, closing to new business would have been better for shareholders, the pandemic and rising interest rates have now completely changed the picture for me. It is now capable of underlying capital generation and 15% growth in operating profit and dividends for the next few years, whilst it has largely de-risked its investments by reducing the proportion devoted to ERMs. I don't see many FTSE250s on such a low multiple of underlying earnings or discount to NAV with the capacity to grow dividends that much.

No doubt more will come out of further reading and the analysts presentation at 9.30am.

PS: You don't get many CEOs starting their statement with: "We exceeded the promises made over the last four years and we are very optimistic about the future."

[cjac39] 03/3/2023 21:48

btw the losses on ifrs on hedging are of course irrelevant. capital generated and movements in s2 balance sheets are all that matter and allow cashflows to flow to shareholders. i worked in an insurance company for many years and we never once looked at ifrs outcomes

[cjac39] 03/3/2023 21:31

the problems with just are numerous: 1) there is a poison pill in that they have a lesser treatment in their internal model than most. A bargain struck with the PRA out of necessity. Anyone with a more onerous internal model will suffer a large capital hit to take them on. 2) they have had to sell so much of the upside in hedging longevity and property they are reliant on new biz which is now v competitive 3) they are too small and cant hope to have the illiquid origination franchise others have 4) when you do a proper sum of the parts they are only worth £1-£1.2 maximum so are almost fully valued already 5)they are a monoline with no diversification

ive thought since 2018 they should close to new business and runoff and shareholders would make the most money but mgmt would never vote for exit.

the only hope is a trade buyer outside uk on ifrs gets to enjoy the negative goodwill and doesnt suffer the internal model change plus gets a bpa platform

but as they trade around ive made decent money buying in 30s40s and selling in 80s over the years

[clive7878] 03/3/2023 21:07

Strange how the share price can fall so much when the sells are not much more than the buys, and prospects are still very good. Maybe the target share price has not changed as of today, and the fall is 'just' a blip.

[riverman77] 03/3/2023 17:54

Well couldn't resist taking a small position - expecting underlying profits to be strong, even if they do report a big IFRS loss. Having another look through the last interims, they said they have now reduced their sensitivity to interest rates now that the capital position is stronger, so hopefully the impact won't be as bad as feared. Whichever way you look at it though, this is incredibly cheap (approx 60% discount to NAV and trading strongly).

[salver2] 03/3/2023 15:59

Well just have to see next week share price is like a bungee jump!!

[riverman77] 03/3/2023 15:45

My understanding is that rate rises hit IFRS profit due to losses on the interest rate hedges (the hedges are there to protect the solvency position from falling rates). I believe Just have more hedging in place than other life insurers due to their weaker capital position. However, rising rates should be good for winning new business going forward, so potentially better profits down the line.

[deanmatlazin] 03/3/2023 15:39

Business is growing. Opportunity to buy at cheap price now

[deanmatlazin] 03/3/2023 15:38

A reminder


26 January 2023

JUST GROUP plc

BUSINESS UPDATE FOR THE YEAR ENDED 31 DECEMBER 2022

Just Group plc ("Just", the "Group") announces a business update for the year ended 31 December 2022.

Highlights


-- Retirement Income sales up 17% to GBP3.1bn, driven by Defined Benefit
De-risking ("DB") sales.
-- DB sales were up 33% to GBP2.6bn . We completed 56 transactions during
the year (2021: 29 transactions), aided by our proprietary bulk quotation
service and repeat business. We expect this strong growth momentum
to carry into 2023.
-- New business strain is expected to be c2%, continuing to outperform
our guidance, driven by our focus on pricing discipline and risk selection.
Low new business strain enables strong growth whilst delivering attractive
returns and maintaining capital strength .
-- Given the strong new business growth, we are confident in achieving
our expectations for FY 22 underlying operating profit growth , noting
that the increase in interest rates has boosted in-force profits, but
led to a lower new business margin.
-- Our performance in 2022 has further added to our confidence in Just's
ability to deliver 15% growth in underlying operating profit per annum,
on average over the medium term. This is underpinned by our successes
in a growing DB market, strong pricing discipline and risk selection,
and our increasing illiquid investment origination capabilities.

[spectoacc] 03/3/2023 15:33

Good for business, bad for hedges? ;)

[salver2] 03/3/2023 15:30

Although they announced that interest rate hikes were good for their business!

[riverman77] 03/3/2023 15:27

Concerns over losses on their interesr rate hedges - the recent rise in rates is likely to hit profits.

[salver2] 03/3/2023 14:51

Down 10 percent in a day on no news -results next week-is someone insider trading?

[salver2] 03/3/2023 14:17

Anyone know why this is melting quicker than a chocolate teapot?

[riverman77] 03/3/2023 07:22

Looks like it was caused by a negative broker note from Panmure Gordon - concerns over the negative impact of their interest rate hedging by the sound of it

[18bt] 03/3/2023 07:14

Barnett Waddingham review of the DB market in 2023 just published:

[salver2] 02/3/2023 20:58

Yes I’m surprised at that - I wonder why?

[1jat] 02/3/2023 19:40

Largest DB deal announced today and the shares are off 5.6%

An indication that the results are not as good as the sales update implied?

[18bt] 24/2/2023 10:03

The last line of this is relevant:


7IM launches retirement incomes solution
By Jean-Baptiste Andrieux 24th February 2023 9:00 am

7IM has launched a retirement income solution (RIS). This bespoke solution is designed to help financial advisers support their clients’ retirement plans.

It is available on the 7IM platform and was developed in partnership with EQ Investors, RBC Brewin Dolphin, Omnis Investments (part of The Openwork Partnership).

This allows financial advisers to combine the 7IM RIS with the investment approach of 7IM, EQ Investors, RBC Brewin Dolphin, Omnis Investments or other discretionary fund managers.

7IM RIS aims to give advisers the confidence that their clients’ retirement income can be maintained but also the flexibility to adapt when personal circumstances change.

7IM managing director of intermediary Verona Kenny said: “Since the introduction of pension freedoms, people have had more control over – and decisions to make about – their pension pots than ever before.

“But that increased freedom has also introduced a minefield of potential pitfalls that could leave people with not enough money to see them through retirement.

“Yet despite this, as an industry, we haven’t really all worked together to collectively help retirees navigate these challenges.

“That’s why we have got together with several key partners to launch the 7IM RIS.”

A key feature of 7IM RIS is that it uses a “bucketingR21; approach. It takes all of the client’s selected assets and treats them as a single portfolio that is aligned with their risk profile.

Investments are then allocated into a series of buckets invested across three time horizons: short, medium and long-term.

The long-term and medium-term buckets aim to provide capital growth and contains more higher-risk investments.

The short-term buckets are invested in lower-risk assets relative to the rest of the portfolio.

Alongside the three investment buckets is a cash bucket. It provides another year of income during periods of market downturn. It, therefore, delays the need to sell down and crystallise losses from the investment buckets.
The biggest retirement planning regrets

All of this is underpinned by 7IM’s methodology. It takes the client’s inputs and overlays them with modelling techniques to create a model that provides a probability of the client having excess capital at the end of their plan.

To support client conversations, the 7IM RIS provides financial advisers with tools to keep clients informed about their retirement portfolio.

That includes a personalised report, which illustrates how a client’s money will be invested. It also shows the likelihood of their desired income requirement being achieved over the duration of the RIS plan.

The 7IM RIS also includes a flexible SIPP and Just’s Secure Lifetime Income.

[18bt] 22/2/2023 09:57

In advance of the finals on 7/3: Jefferies raises Just Group price target to 120 (115) pence - 'buy'

[clive7878] 13/2/2023 19:36

Some larger trades going through - 1 of 9.1m - someone has faith.

[clive7878] 10/2/2023 15:00

Share price bobbing around a bit of late, cant bread out to go higher.

[scrapheap] 27/1/2023 09:18

Seem to be well priced for rpi linked annuities but miles away for level annuities vs competitors and those tend to be most popular.