REG - Just Group plc - RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
07/03/2025 07:15
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RNS Number : 7327Z Just Group PLC 07 March 2025
NEWS RELEASE www.justgroupplc.co.uk
7 March 2025
JUST GROUP PLC
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
SIGNIFICANTLY EXCEEDING TARGETS & BUILDING FOR THE FUTURE
Just Group plc (the "Group", "Just") announces its results for the year ended
31 December 2024.
David Richardson, Group Chief Executive Officer, said:
"We made a pledge three years ago to double profits over five years. We have
significantly exceeded that target in just three years and created substantial
shareholder value as a result.
Our markets remain buoyant and we are confident in our ability to grow
earnings at an attractive rate from this significantly higher level. We remain
committed to compounding further growth in shareholder value.
I'd like to thank my talented colleagues who are consistently delivering
excellent results and helping a broader range of customers. With a clear
purpose and vision, together we're shaping a brighter future for Just."
Profitable and sustainable growth
· Underlying operating profit(1) up 34% to £504m (FY 23: £377m), driven by new
business sales growth, higher recurring in-force profit and increased scale.
· Retirement Income sales(1) have grown by 36% to £5.3bn (FY 23: £3.9bn). New
business margins were slightly lower at 8.7% (FY 23: 9.1%), principally driven
by business mix. These combined to drive a 30% increase in new business
profits to £460m (FY 23: £355m).
Strong Solvency II and IFRS
· Capital coverage ratio is a robust and resilient 204%(2) proforma (31 December
2023: 197%(2)). The interest rate and residential property sensitivities have
further reduced through the cumulative effect of management actions, and as we
increasingly diversify the investment portfolio.
· New business strain(1) at 1.3% (FY 23: 0.9%) is once again well inside our
target of below 2.5% of premium. Cash generation before new business strain is
higher at £119m (FY 23: £111m). Our sustainable growth is driven by a low
capital intensity new business model, further augmented by management actions
and availability of surplus capital.
· Adjusted profit before tax(1) was £482m (FY 23: £520m), as strong underlying
profit was offset by lower non-operating items. Of this £482m, £369m of
profit is deferred to the CSM(3) , leaving an IFRS profit before tax of £113m
(FY 23: £172m).
Delivering shareholder value
· Improved return on equity(1) to 15.3% and tangible net assets per share(1) to
254p (FY 23: 13.5% and 31 December 2023: 224p respectively). This is a rapidly
growing store of long-term value.
· Dividend of 2.5p per share, 20% growth driven by confidence in the strong
fundamentals and future prospects of the business.
Notes
(1 ) Alternative performance measure ("APM") - In addition to statutory
IFRS performance measures, the Group has presented a number of non-statutory
alternative performance measures. The Board believes that the APMs used give a
more representative view of the underlying performance of the Group. APMs are
identified in the glossary at the end of this announcement and reconciled to
IFRS measures in the Business Review.
(2 ) Solvency capital coverage ratios as at 31 December 2024 and
31 December 2023 include a recalculation of transitional measures on technical
provisions ("TMTP") as at the respective dates. The estimated 2024 ratio is
presented after the impact of the pre-funded repayment of Tier 3 debt in
February 2025.
(3 ) Contractual Service Margin.
Enquiries
Investors / Analysts Media
Alistair Smith, Investor Relations Stephen Lowe, Group Communications Director
Telephone: +44 (0) 1737 232 792 Telephone: +44 (0) 1737 827 301
alistair.smith@wearejust.co.uk press.office@wearejust.co.uk
Paul Kelly, Investor Relations Temple Bar Advisory
Telephone: +44 (0) 20 7444 8127 Alex Child-Villiers, Sam Livingstone
paul.kelly@wearejust.co.uk Telephone: +44 (0) 20 7183 1190
just@templebaradvisory.com
For analysts and investors who have registered, a presentation will take place
today at 1 Angel Lane, London, EC4R 3AB, commencing at 09:30 am. The
presentation will also be available via a live webcast.
FINANCIAL CALENDAR DATE
Ex-dividend date for final dividend 10 April 2025
Record date for final dividend 11 April 2025
Payment of final dividend 14 May 2025
A copy of this announcement, the presentation slides and the transcript will
be available on the Group's website www.justgroupplc.co.uk
(http://www.justgroupplc.co.uk) .
Click on, or paste the following link into your web browser, to view a PDF of
this
announcement: http://www.rns-pdf.londonstockexchange.com/rns/7327Z_1-2025-3-6.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/7327Z_1-2025-3-6.pdf)
Click on, or paste the following link into your web browser, to view the
Annual Report and Accounts for the year ending 31 December 2024:
http://www.rns-pdf.londonstockexchange.com/rns/7327Z_2-2025-3-6.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/7327Z_2-2025-3-6.pdf)
The Full Year Results and Annual Report and Accounts will be available shortly
on the Just Group website
at https://www.justgroupplc.co.uk/investors/results-reports-and-presentations
(https://www.justgroupplc.co.uk/investors/results-reports-and-presentations)
and both documents have been submitted in full unedited text to the Financial
Conduct Authority's National Storage Mechanism and will be available shortly
for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
JUST GROUP PLC
GROUP COMMUNICATIONS
Enterprise House
Bancroft Road
Reigate
Surrey RH2 7RP
CAUTIONARY STATEMENT AND FORWARD-LOOKING STATEMENTS
This announcement has been prepared for, and only for, the members of Just
Group plc (the "Company") as a body, and for no other persons. The Company,
its Directors, employees, agents and advisers do not accept or assume
responsibility to any other person to whom this document is shown or into
whose hands it may come, and any such responsibility or liability is expressly
disclaimed.
By their nature, the statements concerning the risks and uncertainties facing
the Company and its subsidiaries (the "Group") in this announcement involve
uncertainty since future events and circumstances can cause results and
developments to differ materially from those anticipated. This announcement
contains, and we may make other statements (verbal or otherwise) containing,
forward-looking statements in relation to the current plans, goals and
expectations of the Group relating to its or their future financial condition,
performance, results, strategy and/or objectives (including, without
limitation, climate-related plans and goals). Statements containing the words:
'believes', 'intends', 'expects', 'plans', 'seeks', 'targets', 'continues',
'future', 'outlook', 'potential' and 'anticipates' or other words of similar
meaning are forward-looking (although their absence does not mean that a
statement is not forward-looking). Forward-looking statements involve risk and
uncertainty because they are based on information available at the time they
are made, based on assumptions and assessments made by the Company in light of
its experience and its perception of historical trends, current conditions,
future developments and other factors which the Company believes are
appropriate and relate to future events and depend on circumstances which may
be or are beyond the Group's control. For example, certain insurance risk
disclosures are dependent on the Group's choices about assumptions and models,
which by their nature are estimates. As such, although the Group believes its
expectations are based on reasonable assumptions, actual future gains and
losses could differ materially from those that we have estimated. Other
factors which could cause actual results to differ materially from those
estimated by forward-looking statements include, but are not limited to:
domestic and global political, economic and business conditions (such as the
longer-term impact from the COVID-19 outbreak or the impact of other
infectious diseases, climate change, the conflict in the Middle East, and the
continuing situation in Ukraine); asset prices; market-related risks (such as
fluctuations in interest rates and exchange rates, and the performance of
financial markets generally); the policies and actions of governmental and/or
regulatory authorities (including, for example, new government initiatives
related to the provision of retirement benefits or inheritance tax or the
costs of social care or climate action, particularly the transition to net
zero); the impact of inflation and deflation on both market conditions and
customer behaviours; market competition; failure to efficiently and
effectively respond to climate change related risks and the transition to a
net zero economy; changes in assumptions in pricing and reserving for
insurance business (particularly with regard to mortality and morbidity
trends, gender pricing and lapse rates); risks associated with arrangements
with third parties, including joint ventures and distribution partners and the
timing, impact and other uncertainties associated with future acquisitions,
disposals or other corporate activity undertaken by the Group and/or within
relevant industries; inability of reinsurers to meet obligations or
unavailability of reinsurance coverage; default of counterparties; information
technology or data security breaches including cybersecurity threats and the
rapid pace of technological change (including the role of artificial
intelligence and machine learning); the impact of changes in capital, solvency
or accounting standards; and tax and other legislation and regulations in the
jurisdictions in which the Group operates (including changes in the regulatory
capital requirements which the Company and its subsidiaries are subject to).
As a result, the Group's actual future financial condition, performance and
results may differ materially from the plans, goals and expectations set out
in the forward-looking statements.
The forward-looking statements only speak as at the date of this document and
reflect knowledge and information available at the date of preparation of this
announcement. The Group undertakes no obligation to update these
forward-looking statements or any other forward-looking statement it may make
(whether as a result of new information, future events or otherwise), except
as may be required by law. Persons receiving this announcement should not
place undue reliance on forward-looking statements. Past performance is not an
indicator of future results. The results of the Company and the Group in this
announcement may not be indicative, and are not an estimate, forecast or
projection of, the Group's future results. Nothing in this announcement should
be construed as a profit forecast.
Chief executive officer's statement
Buoyant markets and strong GROWTH.
"With a clear purpose and vision, we're shaping a future that's not just
bigger and better - but brighter."
Our underlying operating profit has grown by 34% to £504m, driven by very
strong growth in shareholder funded sales, up 36% to £5.3bn. Our DB and
retail businesses contributed to this excellent performance, and both are
operating in markets that are benefitting from long-term structural growth
drivers. We are committed to compounding the growth in value of the business.
During 2024, we have delivered 36.3p of underlying earnings per share and
increased the Group's tangible net asset value by 30p to 254p per share.
Defined Benefit De-risking business (shareholder funded) sales up 43%, total
DB sales up 57%
Our DB business generated another record year of transactions, with total
sales up 57% to £5.4bn. This total includes our largest transaction to date,
a £1.8bn full Buy-in with the Trustee of the G4S Pension Scheme, covering the
benefits of c.22,500 pensioner and deferred members. This transaction, our
first above £1bn, demonstrates that we have all the capabilities in place to
deliver de-risking solutions across the DB market.
During 2024, we completed 129 transactions, a significant increase on the 80
we completed in 2023 and more than double the 56 completed in 2022. This
number is a record year for any company in the history of the DB market as we
completed over one third of the total market transactions. We have used
technology to meet growing market demand and use of our bulk quotation and
price monitoring service, Beacon, continues to increase. It is now being used
by all major employee benefit consultants and Beacon has the capacity
to provide services to every DB pension scheme in the UK.
Pension scheme de-risking is helping to support growth in the UK economy by
enabling UK corporates to focus on growing their businesses and by investing
the assets in productive finance.
Guaranteed Income for Life sales up 16%
After a very strong return to growth in 2023, I am delighted that our retail
business has shown further excellent progress in 2024, with GIfL sales up 16%
to £1.0bn. Market demand has been strong as the appetite of advisers to
lock-in security for their clients continues to grow. Strong consumer demand
is also evidenced by the activity levels in our GIfL broking business, the
largest in the UK. The number of advisers sourcing quotes from Just has
increased rapidly over the last two years and continues to provide increased
opportunities to utilise our medical underwriting intellectual property to
select the most attractive risks.
SCALABILITY OF OUR investments CAPABILITY
Our successful illiquid origination strategy enabled us to source £2.4bn of
illiquid investments during 2024, a 40% increase year on year, at attractive
spreads above equivalent public assets. We are continuing to broaden our
capabilities, with £1.0bn of this total sourced internally by our expanded
Investments team, in addition to £0.3bn of funded lifetime mortgages via our
retail business. Our illiquid investments in 2024 included social housing,
infrastructure and private placements.
Our purpose and our customers
We help people achieve a better later life, that's our purpose and why we
exist. We fulfil that purpose by delivering market-leading products and
award-winning services to our customers. In 2024, more than 90,000 people
became new customers of one of our businesses. We are now in a privileged
position to be helping record numbers of customers, and we are investing to
explore how we can help more people, with unmet needs, across the wider
retirement markets.
Sustainability
We are committed to a sustainable strategy that protects our communities and
the planet we live on. The most material impact we can make to reduce carbon
emissions is through the decisions we take with our £27bn investments
portfolio, which accounts for over 99% of our carbon footprint. Compared to
our 2019 baseline, we have now reduced these emissions by 36%, which is
excellent progress on our journey to achieving our net zero target.
Our people
We are harnessing the power of our highly talented, ambitious and engaged
colleagues to deliver strong business growth and fulfil our purpose. Our focus
is on ensuring we have the right capabilities for today and the future,
delivering an exceptional colleague experience and enhancing the skills of our
people managers.
I am very pleased we've made excellent progress in two key focus areas. Our
colleague engagement score has continued to increase and is now 8.3 (2023:
7.9). We have exceeded our 2026 target, two years early, to increase the
number of females in senior positions to 40%.
I would like to thank all my colleagues for their significant efforts in
providing outstanding support to our customers - directly and indirectly - and
delivering these excellent results. It's always a team effort and my
colleagues make Just a brilliant place to work.
Financial performance, underlying operating profits up 34%
In 2024, underlying operating profit is up 34% to £504m, driven by strong new
business performance further augmented by robust growth in recurring in-force
profit, which combine to deliver a 15.3% return on equity. We incurred
operating experience variances, the cost of strengthening the maintenance
expense assumption, together with strategic costs as we invest to develop new
propositions. These were partially offset by investment and economic profits
and adjustments for items accounted for in equity, resulting in an adjusted
profit before tax of £481m for 2024 (2023: £520m). After allowing for
deferral of profit into the CSM balance sheet reserve, the IFRS profit before
tax is £113m (2023: £172m). Our disciplined approach to risk selection means
we can fund our growth ambitions from our own resources, maintain a strong
buffer of capital and reward shareholders with a growing dividend.
We will pay a final dividend of 1.8 pence per share, giving a total of 2.5
pence for the year, representing 20% year-on-year growth.
In conclusion
Over the last three years underlying operating profit has more than doubled as
we successfully executed our strategy. We are confident in our ability to grow
at attractive rates from this elevated level. We have multiple opportunities
available and structural growth in our chosen markets. Our DB and retail
businesses are both contributing to our excellent performance, reflecting our
continuing investment in technology and talent. We have a growth mindset, and
we've developed a winning formula - one which will ensure we fulfil our
purpose, to help people achieve a better later life. This formula is
delivering sustained growth in the value of the business. With a clear purpose
and vision, we're shaping a future that's not just bigger and better-but
brighter.
DAVID RICHARDSON
Group Chief Executive Officer
Business Review
DELIVERING COMPOUNDING GROWTH.
"Our robust capital position and reduced sensitivities to market and other
risks enable us to sustainably fund our ambitious growth plans from our own
means."
We innovate, risk select and price with discipline, ensuring our business
model delivers long-term value for customers and shareholders. The Business
Review presents the results of the Group for the year ended 31 December 2024,
including IFRS and Solvency II ("SII") information.
The continued growth and success of the business is built on the foundation of
our low capital intensity new-business model, supported by a strong and
resilient capital base. In line with our investment strategy, we continue to
diversify the asset portfolio by originating a wide variety of high quality
investments. We remain focused on cost control across the business whilst
specifically targeting investment in systems and people to enable the business
to scale efficiently. As we innovate and further broaden our growth strategy,
increased product development investment will be aligned to our purpose to
help people achieve a better later life through the before, at, and
in-retirement phases of life.
SALES
During 2024, total retirement income sales grew 49% to £6.4bn (2023:
£4.3bn), driven by continued strong momentum in both shareholder funded DB
(up 43% to £4.3bn) and GIfL (up 16% to £1.0bn), further augmented by £1.1bn
of DB Partner (funded reinsurance).
Since the beginning of 2022, rising interest rates have accelerated the
closure of, and in most cases eliminated, DB pension scheme funding gaps.
During 2024, we wrote a record amount of DB new business, up 57% to £5,376m
from 129 transactions (2023: £3,415m from 80 transactions). Our consistent
high level of activity translates into over one third of all market
transactions that have occurred over the past three years. Prior investment in
our proposition and early positioning enabled Just to take advantage of the
strong market demand as rates rose. In November 2024, Just announced that it
had completed its largest transaction to date, a £1.8bn deal with the G4S
pension scheme. This complex, multi-faceted transaction demonstrated our
structuring and operational capabilities, with Just now actively quoting and
participating in the large transaction segment (£1bn+), in addition to being
a major participant in the up to £1bn transaction size part of the market.
Combined, this translated into an 11% market share by value of a £47bn DB
market in 2024 (source: ABI, Just analysis). We expect the strong momentum in
all segments to continue in 2025 and beyond, with multiple small, medium and
large opportunities available as corporates of all sizes choose to offload
legacy and complex DB pension risk to insurers. Despite record market volumes
in recent years, we estimate that only c.20% of the £1.1tn DB market
opportunity has transferred across to insurers thus far. In October 2024,
LCP(1) re-affirmed their forecast that £400-600bn of DB Buy-in/Buy-out
transactions could transact over the decade to 2033, of which c.£300bn could
transact in the first five years (2024 to 2028 inclusive). The forecasts
demonstrate the growth opportunity available to drive material increases in
shareholder value.
Our Retail business also had a strong 2024, as the market continues to benefit
from higher and more normalised long-term interest rates, which directly
increase the GIfL customer rate on offer. This increases the attractiveness of
a guaranteed income relative to other forms of retirement income. The customer
rate can be further improved through bespoke medical underwriting, in which
Just is a market leader. During 2024, we continued to maintain pricing
discipline and selectively wrote £1,033m of GIfL/Care new business, up 16%
(2023: £894m), in a buoyant market.
Our market insight allowed us to tactically choose the most profitable risks
and allocate the available capital budget to those opportunities. Furthermore,
the introduction of the FCA's Consumer Duty and findings from the FCA's
thematic review into retirement income advice, are leading to increased
adviser conversations on the importance of considering guaranteed solutions to
help customers achieve their objectives. Regulatory pressure, technology tools
and consolidation into larger advice networks are driving new trends in
distribution, as advisers respond to the changing needs of their customers as
they decumulate in the spending phase of retirement. We see a multi-decade
opportunity as an increasing proportion of the population reach retirement age
with larger pension pots, driven by auto-enrolment.
1 LCP: "Reaching cruising altitude" - October 2024
PROFIT
In 2024, underlying operating profit was £504m (2023: £377m), up 34%,
thereby significantly exceeding guidance of doubling 2021's £211m underlying
operating profit over five years, achieving the target in three years instead.
Prior investment, market insight and strong demand for our products enabled us
to write high volumes of new business at an efficient capital strain.
Shareholder funded Retirement Income sales at £5,308m, were 36% higher (2023:
£3,893m). New business profit was up 30% at £460m (2023: £355m),
translating to a new business margin of 8.7% (2023: 9.1%) on shareholder
funded premiums. As expected, new business margin was a little lower and
reverted to its medium term average due to business mix and tighter credit
spreads compared to the prior year, where we had outperformed. Buoyant markets
in both of our business lines supported active risk selection, and we are
increasingly benefiting from operational gearing and systems investment.
Growth of the in-force book of business together with continued higher and
more normalised interest rates during 2024 boosted the return on surplus
assets, thereby increasing in-force operating profit, up 24% to £236m (2023:
£191m). Finance costs were stable at £69m, and we invested £25m (2023:
£17m) in development expenditure regarding new systems and processes to scale
the business efficiently for the future. We delivered a 15.3% Return on equity
and underlying earnings per share of 36p (2023: 13.5% and 28p respectively).
We incurred negative operating experience, the cost of strengthening the
maintenance expense basis, together with strategic costs as we invest to
develop new customer propositions. These were partially offset by investment
and economic profits and adjustments for items accounted for in equity,
resulting in an adjusted profit before tax of £482m (2023: £520m). After
allowing for the deferral of profit into the CSM balance sheet reserve, the
IFRS profit before tax is £113m (2023: £172m). This decrease primarily
reflects lower positive investment and economic variances of £18m (2023:
£92m) primarily due to lower asset trading and other variances, and a smaller
decrease in credit spreads in 2024 compared to 2023.
INCREASING SHAREHOLDER VALUE
Buoyant markets in both of our business lines drive volumes, which combined
with Just's strong pricing discipline, market insight and business mix
determine the new business margin, and therefore the shareholder value we
create through new business. In addition, we prudently reserve for credit
default and other risks, and release the excess provisions and profits earned
as the existing book of business unwinds, together with the return earned on
surplus assets into in-force profits.
Each year, the upfront profit delivered from new business increases the
Contractual Service Margin ("CSM") reserve, offset by the profits earned as we
pay the customer pensions due on business written in prior years. Our CSM
store of value (post-tax) grows strongly as the volume of new business added
each year far outweighs the amount of customer payments. When added to equity
attributable to shareholders (excluding intangible assets), Just's Adjusted
Equity or Tangible Net Assets is 254p per share (31 December 2023: 224p per
share), on which we are earning a 15.3% return (2023: 13.5%), greater than
our 12% Return on Equity target. The internal rate of return ("IRR") on
shareholder capital invested in new business remains above our "mid-teen"
target, as available capital is tactically allocated to exploit the
opportunities available - both today and in the future.
CAPITAL
The Group's estimated Solvency II capital coverage ratio has increased to
204%³ (31 December 2023: 197%) as the capital position benefited from
management actions and rising interest rates. In-force surplus after TMTP
amortisation was up 6% to £178m (2023: £168m), and over the medium term is
expected to grow in line with asset growth. Underlying organic capital
generation ("UOCG") was £23m (2023: £57m), as we continue to invest the
majority of cash generation into funding new business growth. Within this, the
£71m capital strain from writing the increased level of new business was 1.3%
of premium (2023: £35m and 0.9% of premium), well within our target of 2.5%
of premium and ahead of the 1.5% average over the past five years. This low
new business strain reflects continued strong pricing discipline, focused risk
selection and our ability to originate increasing quantities of high-quality
illiquid assets. Management actions and other items contributed a further
£58m (2023 £69m), leading to £81m of organic capital generation (2023:
£126m). In 2024, we paid a £23m shareholder dividend. We continue to closely
monitor and prudently manage our risks, including interest rates, inflation,
currency, residential property and credit. The Solvency II sensitivities are
set out in the Capital Management section of the Business Review.
Following the UK's exit from the European Union, over the past two years, all
proposed stages of the new Solvency UK capital regime have been fully
implemented. The Prudential Regulation Authority ("PRA") implemented the more
straightforward items including a significant reduction in risk margin for
life insurance business at the end of 2023, with revisions to the matching
adjustment ("MA") rules to increase investment flexibility and the reforms in
relation to fundamental spread applied during 2024. In the second half of
2025, we expect the PRA to publish the results of an industry wide life
insurance stress test ("LIST"). LIST will apply to a shortlist of UK life
insurers and include one core scenario and two additional exploratory
scenarios that build on the first. The results of the core scenario will be
published at an individual firm level.
OUTLOOK
The trajectory of central bank interest rates will be dependent on how new
government policies and wider macro and geopolitical forces impact the future
level of inflation. These external forces have a negligible impact on the
Group's business model, with the normalisation of long-term interest rates
continuing to drive demand for our products. Our positioning, reputation and
capabilities, including investments in our people enable us to continue to
strongly execute as we take advantage of the multiple growth opportunities in
our chosen markets.
We have a strong and resilient capital base, with a low-strain business model
that is generating sufficient capital on an underlying basis to fund our
ambitious growth plans, whilst also paying a progressive shareholder dividend
that is expected to grow over time.
ALTERNATIVE PERFORMANCE MEASURES AND KEY PERFORMANCE INDICATORS
The Group uses a combination of alternative performance measures ("APMs") and
IFRS statutory performance measures. The Board believes that the use of APMs
gives a useful insight into the underlying performance of the Group.
The Directors have concluded that the principles used as a basis for the
calculation of the APMs remain appropriate. Just Group has been growing
strongly for a number of years and regards the writing of profitable new
business contracts as a key objective for management. As a result, in
management's view, the use of a performance measure which includes the value
of profits deferred for recognition in future periods is a useful alternative
to IFRS profits under IFRS 17 which exclude the deferred profits from new
business sales.
Further information on our APMs can be found in the glossary, together with a
reference to where the APM has been reconciled to the nearest statutory
equivalent. KPIs are regularly reviewed against the Group's strategic
objectives, no changes have been made in 2024. The Group's KPIs are discussed
in more detail on the following pages.
The Group's KPIs are shown below:
2024 2023 Change
Retirement Income sales (shareholder funded)(1) £5,308m £3,893m 36%
New business profit(1) £460m £355m 30%
Underlying operating profit(1) £504m £377m 34%
IFRS profit before tax £113m £172m (34)%
Return on equity(1) 15.3% 13.5% +1.8pp
Tangible net asset value per share(1) 254p 224p +30p
New business strain(1) (as % of premium) 1.3% 0.9% +0.4pp
Underlying organic capital generation(1) £23m £57m (60)%
Solvency capital coverage ratio(2,3) 204% 197% +7pp
1 Alternative performance measure, see glossary for definition.
2 Solvency capital coverage ratios as at 31 December 2024 (estimated)
and 31 December 2023 include a recalculation of TMTP at the respective dates.
3 2024 capital position is presented on a proforma basis after the
impact of the February 2025 repayment of Tier 3 subordinated debt.
TANGIBLE NET ASSETS / RETURN ON EQUITY (UNDERLYING)
The return on equity in the year to 31 December 2024 was 15.3% (2023: 13.5%),
based on underlying operating profit after attributed tax of £378m (2023:
£288m) arising on average adjusted tangible net assets of £2,475m (2023:
£2,133m). Tangible net assets are reconciled to IFRS total equity as follows:
31 December 2024 31 December 2023
£m
£m
IFRS total equity attributable to ordinary shareholders 924 883
Less intangible assets (40) (41)
Tax on amortised intangible assets 1 2
Add back contractual service margin 2,328 1,959
Adjust for tax on contractual service margin (578) (488)
Tangible net assets 2,635 2,315
Tangible net assets per share 254p 224p
Return on equity % (underlying) 15.3% 13.5%
UNDERLYING OPERATING PROFIT
Underlying operating profit is a core performance metric on which we measure
the year to year performance of the business. It includes the value of profits
deferred for recognition in future periods. Underlying operating profit
captures the performance and running costs of the business including interest
on the capital structure, but excludes operating experience and assumption
changes, which by their nature are less predictable and can vary substantially
from period to period.
2024 underlying operating profit grew by 34% to £504m (2023: £377m), as we
strongly outperformed against both the prior year and our profit growth
target. We set the 15% per annum profit growth target from the 2021 baseline
(£211m), and significantly outperformed a more than doubling of underlying
operating profit in three years instead of five.
Year ended Year ended Change
31 December 2024 31 December 2023 %
£m £m
New business profit 460 355 30
CSM amortisation (71) (62) 15
Net underlying CSM increase 389 293 33
In-force operating profit 236 191 24
Other Group companies' operating results(1) (17) (15) 13
Development costs and other(1) (35) (24) 46
Finance costs (69) (68) 1
Underlying operating profit(2) 504 377 34
1 The classification of costs within Other group companies operating
results and Development costs and other has been aligned with the presentation
in Solvency II.
2 See reconciliation to IFRS profit before tax further in this Business
Review.
NEW BUSINESS PROFIT
New business profit was up 30% at £460m (2023: £355m) driven by 36% increase
in shareholder funded Retirement Income sales to £5.3bn (2023: £3.9bn).
Despite the significantly higher volumes, we continued to focus on risk
selection, which combined with strong pricing discipline, market insight and
internally originating increasing quantities of illiquid assets all
contributed towards offsetting the headwind of tighter credit spreads. New
business margin decreased to 8.7% (2023: 9.1%), but was in-line with the
recent average.
MOVEMENT IN CSM
The total movement in CSM represents the net underlying increase of profit
deferral in CSM during the year before any transfers to CSM in respect of
operating experience and assumption changes recognised in the current year.
The new business profit of £460m deferred in CSM is three times higher than
the CSM in-force release (£154m). This provides a healthy level of
replacement profit, and demonstrates the value of new business written during
the year relative to the CSM release from existing business. This strong
growth dynamic increases the CSM store of value, which predictably releases
into the recurring in-force profit in future years.
CSM amortisation is the release from the CSM reserve into profit as services
are provided, net of accretion (unwind of discount) on the CSM reserve balance
(see below). £71m of net CSM amortisation (2023: £62m) is a £154m release
of CSM into profit, offset by £83m of interest accreted to the CSM. The
£154m CSM release into profit (2023: £129m) represents 6.2% (2023: 6.2%) of
the CSM balance immediately prior to release.
Accretion at locked in rates on the CSM balance was £83m (2023: £67m),
adding 3.4% (2023: 3.4%) to the CSM. The rate of accretion reflects the
interest rates locked in on IFRS 17 transition and prevailing rates for
subsequent new business written.
IN-FORCE OPERATING PROFIT
In-force operating profit represents investment returns earned on surplus
assets, the release of allowances for credit default, CSM amortisation,
release of risk adjustment allowance for non-financial risk and other items.
Taken together, these are the key elements of the operating profit from
insurance activities on an IFRS 17 basis.
Year ended Year ended Change
31 December 2024 31 December 2023 %
£m £m
Investment return earned on surplus assets 133 100 33
Release of allowances for credit default 29 28 4
CSM amortisation 71 62 15
Release of risk adjustment for non-financial risk / Other 3 1 n/a
In-force operating profit 236 191 24
The in-force operating profit increased by 24% to £236m (2023: £191m),
driven by a significant increase in investment return, as a result of a
greater amount of surplus assets. The higher release of allowance for credit
default reflects growth in the investment portfolio that backs the insurance
guarantees we provide to our customers. Increase in CSM amortisation is due to
growth in the CSM release offset by the higher accretion as noted earlier.
OTHER GROUP COMPANIES' OPERATING RESULTS
Other Group companies operating results of £17m (2023: £15m) include the net
cost of corporate and proposition related initiatives in the HUB group of
businesses and the Group's holding companies. This reflects the Group's
commitment to investing in delivery against our longer-term strategic
priorities.
DEVELOPMENT COSTS AND OTHER
Development costs and other include development costs of £25m (2023: £17m)
and £10m of other items (2023: £7m). Development costs relate to investment
in systems capability, in addition to various business line and functional
transformation. This investment will enable Just to continue to grow
efficiently allowing us to increasingly benefit from operational gearing,
while managing our risks and delivering products and services to our customers
and business partners through the latest technology.
FINANCE COSTS
Finance costs are stable at £69m (2023: £68m). These include the coupon on
the Group's Restricted Tier 1 notes, as well as the interest payable on the
Group's Tier 2 and Tier 3 notes.
Due to favourable market conditions, in September 2024, the Group prudently
refinanced its £250m Tier 2 (callable from October 2025) and £155m Tier 3
(repaid in February 2025) into a single £400m Tier 2 bond, while extending
maturity to 2035. A larger and more liquid bond has expanded the pool of
investors available to Just, which improved pricing, while also acting as a
reference point for future issuance.
Reflecting growth in the balance sheet and our ambitious growth plans for the
future, in June 2024, we exercised our ability to increase the £300m
revolving credit facility to £400m, while extending it to June 2027. The
facility is provided by eight banks and has not been drawn upon since
inception.
On a statutory IFRS basis, the Restricted Tier 1 coupon is accounted for as a
distribution of capital, consistent with the classification of the Restricted
Tier 1 notes as equity, but the coupon is included as a finance cost on an
underlying and adjusted operating profit basis.
RETIREMENT INCOME SALES
Year ended Year ended Change
31 December 2024 31 December 2023 %
£m £m
Defined Benefit De-risking Solutions ("DB")(1) 4,275 2,999 43
Guaranteed Income for Life Solutions ("GIfL")(2) 1,033 894 16
Retirement Income sales (shareholder funded) 5,308 3,893 36
DB Partner (funded reinsurance)(1) 1,101 416 165
Total Retirement Income sales 6,409 4,309 49
1 Adding the DB shareholder funded and Partner business leads to total
DB de-risking sales volumes of £5,376m (2023: £3,415m).
2 GIfL includes UK GIfL, South Africa GIfL and Care Plans.
The structural drivers and trends in our markets underpin our confidence that
we can continue to deliver attractive returns and growth rates over the
long-term. We are extremely well positioned to take advantage of the growth
opportunities available in both of our chosen markets. Over the past three
years, rising interest rates have accelerated the closure of, and in most
cases eliminated, DB pension scheme funding gaps. Therefore, more of our
target schemes are able to begin the process to be "transaction ready",
accelerating business into our short/medium-term pipeline that previously
would have been expected to transact in the second half of the decade. The
retail GIfL market is also buoyant, driven by the customer rate available and
advisers shopping around in the Open market. The level of long-term interest
rates directly influences the customer rate we can offer, which is further
augmented by individual medical underwriting. This increases the value of the
guarantee to customers, making the product more attractive relative to other
forms of retirement income. We will take advantage of this very strong market
backdrop through our low-strain new business model, which enables us to fund
our ambitious growth plans through the Group's cash generation. When combined
with our proven ability to originate high-quality illiquid assets, shareholder
capital invested in new business adds substantially to increasing existing
shareholder value.
Shareholder funded DB sales at £4,275m (2023: £2,999m) were up 43%, as we
were consistently busy throughout the year. In November, we announced our
largest DB transaction to date at £1.8bn with the G4S pension scheme,
comprising a full scheme Buy-in with c.22,500 pensioner and deferred members.
In writing this transaction, we demonstrated our extensive structuring and
operational capabilities, including our large deal framework and DB Partner
(funded reinsurance) proposition to reinsure all of the investment and
longevity risks on 60% of the deal, with the remaining 40% subject to our
existing reinsurance structures on new business. The upfront origination fee
received from our external reinsurance partner partially offsets the new
business strain incurred on the £4.3bn of DB new business funded by Just's
shareholders. Transactions of this type are additive to Just's core
shareholder funded business by generating incremental fee income, while being
repeatable, scalable and providing optionality going forward. Adding both
shareholder funded and partner sales, DB wrote £5,376m of new business, up
57% year on year (2023: £3,415m), representing an 11% share of a £47bn DB
market in 2024 (source: ABI, Just analysis).
In 2024, we completed 129 deals, of which 120 were below £100m in transaction
size. Prior investment in our proposition and early positioning enabled Just
to take advantage of the very strong market demand, particularly for small
transactions, which are typically less hedged to interest rates. Over the past
three years, Just has completed 265 transactions, representing over a third of
all deals written in the market during that time. As part of our proposition
to EBCs (employee benefit consultants), trustees, and scheme sponsors, we are
always available to service and quote for schemes of all sizes, as evidenced
from our consistently high activity levels. Our whole of market offering is
demonstrated by the 2024 transaction range from £0.5m (our smallest to date)
to £1.8bn (our largest to date).
We maintained our leadership position in the less than £100m transaction size
segment, writing £1.8bn of business (2023: £1.4bn), with a further £1.7bn
from the £100m-£1bn medium transaction size segment. Combined, we estimate
that this resulted in a c.20% market share by value in the up to £1bn
transaction size part of the market, a doubling over the past three years. Due
to schemes improved funding position, there are now increased opportunities in
the large deal transaction size segment (£1bn plus), as per 2024's £1.8bn
G4S transaction, where we will continue to actively quote and selectively
participate. Our proprietary bulk quotation and price monitoring service,
("Beacon"), continues to grow in popularity with over 350 DB schemes now
onboarded. Demonstrating the success of the service, all major EBCs completed
a transaction during the year, reflecting its universal adoption across the
industry. Beacon provides access to the DB de-risking market for trustees,
accelerates transaction flow for EBCs by providing a streamlined process and
provides a steady source of completions for Just. Recent examples include a
£0.8m DB transaction with a charity, an £8m scheme that had been price
monitored since 2021, before interest rates rose, and a £30m scheme where we
transacted only six weeks after first receiving the member data - a unique
turnaround time due to our talented people, client focussed culture, systems
infrastructure and streamlined processes.
GIfL sales were up 16% to £1,033m (2023: £894m). A strong foundation from
the first half, together with continued market strength in the second half
enables us to utilise our market leading medical underwriting to risk select
more profitable and niche segments of a larger individual GIfL market. Due to
the higher customer rates now on offer, advisers and customers are positively
inclined to use guaranteed income in their retirement planning.
The introduction of the FCA's Consumer Duty in July 2023 and the findings
from the FCA's thematic review into retirement income advice published in
March 2024 are leading advisers to re-examine the importance of considering
guaranteed solutions to help customers achieve their objectives.
In recognition of our consistent level of customer service and excellence, in
November, at the FT Financial Adviser Service Awards ("FASA"), Just won its
20th consecutive five star award in the Pensions and Protection Providers
category, and five star award for the 15th time in the Mortgage Providers
category. In both categories, Just scored particularly highly on product
support, product knowledge, communications and reliability. This consistent
high level of service was achieved even as business volumes grew strongly in
2023 and 2024, and is a testament to the dedication from the customer
service and business development teams.
LIFETIME MORTGAGES ADVANCES
2024 internally funded lifetime mortgage advances were £326m (2023: £164m).
In 2024, the LTM market fell by 11% to £2.3bn, but began to stabilise towards
the end of the year. We continue to be selective, and use our market insight
and distribution to target certain sub-segments of the market. LTMs remain an
attractive asset class, however, in a higher interest rate environment, the
capital charge attaching to the NNEG risk becomes onerous and hence we
carefully monitor the loan to value and borrower age at inception. Prior
investment in LTM digital capabilities and proposition has been well received
by financial advisers, resulting in retention of our five star service award,
as mentioned above.
RECONCILIATION OF UNDERLYING OPERATING PROFIT TO IFRS PROFIT BEFORE TAX
Year ended Year ended
31 December 2024 31 December 2023
£m £m
Underlying operating profit(1) 504 377
Operating experience and assumption changes (37) 52
Adjusted operating profit before tax(1) 467 429
Investment and economic movements 18 92
Strategic expenditure (23) (17)
Adjustment for transactions reported directly in equity in IFRS 20 16
Adjusted profit before tax(1) 482 520
Deferral of profit in CSM (369) (348)
Profit before tax 113 172
1 Alternative performance measure, see glossary for definition.
OPERATING EXPERIENCE AND ASSUMPTION CHANGES
As usual, the Group carried out a full basis review in December 2024, and has
updated its longevity reserving using the CMI 2023 mortality tables (2023: CMI
2022). Assessment of the longer-term impact of the pandemic on the population
continues to evolve. Our year end assumptions reflect our expectation that
longer term mortality rates are predicted to be marginally higher than
previously as challenges over NHS funding, retention of healthcare staff and
insufficient investment mean that future healthcare capacity could be
insufficient to meet increased demand from an ageing, growing population.
Operating experience and assumption changes were £(37)m (2023: £52m
release). The Group reported negative operating experience of £14m in 2024
(2023: negative £10m). Assumption changes resulted in a £(23)m strengthening
(2023: £62m reserve release), and were primarily driven by a strengthening of
the Group's maintenance expense assumption. Sensitivity analysis is shown in
notes 16 and 22 of the Annual Report and Accounts, which sets out the impact
on the IFRS results from changes to key assumptions, including mortality,
expenses and property.
INVESTMENT AND ECONOMIC MOVEMENTS
Year ended Year ended
31 December 2024 31 December 2023
£m £m
Change in interest rates 1 (5)
Narrower/(Wider) credit spreads 6 44
Property growth experience (22) (13)
Other 33 66
Investment and economic movements 18 92
Investment and economic movements were positive at £18m (2023: £92m).
Movements in risk free rates have had a negligible effect due to the revised
hedging strategy that was first implemented in the latter part of 2022 and
continued into 2023 and 2024. This includes the purchase of £4.0bn (2023:
£2.5bn) of long dated gilts held at amortised cost under IFRS. This approach
has almost eliminated the IFRS exposure(1) whilst also containing our Solvency
II sensitivity to future interest rate movements (see estimated Group Solvency
II sensitivities below).
Credit spreads further narrowed during 2024 leading to a positive £6m
movement (2023: credit spreads narrowed leading to a positive movement of
£44m). The LTM portfolio property growth performed a little below the 3.3%
annual long-term property growth assumption (2023: 3.3% annual property growth
assumption), resulting in a negative variance. Other includes positives from
corporate bond default experience, investment return on surplus assets being
above the assumption allowed for in the in-force operating profit, offset by
lower asset trading and other variances.
1 See note 22 of the Annual Report and Accounts for interest rate
sensitivities, with a 100 bps increase in interest rates resulting in an
increase in pre-tax profit of £19m and a 100 bps decrease in interest rates
resulting in a decrease in pre-tax profit of £(24)m.
STRATEGIC EXPENDITURE
Strategic expenditure was £23m (2023: £17m). This included increased
investment to scale and bring to market various retail related propositions,
corporate project costs and costs in relation to the implementation of
Consumer Duty, Solvency UK reforms, and the internal model update.
UNDERLYING EARNINGS PER SHARE
Underlying EPS (based on underlying operating profit after attributed tax) has
increased to 36.3 pence (2023: 27.9 pence).
Year ended Year ended
31 December 2024 31 December 2023
Underlying operating profit (£m) 504 377
Attributable tax (£m) (126) (89)
Underlying operating profit after attributable tax (£m) 378 288
Weighted average number of shares (million) 1,040 1,032
Underlying EPS(1) (pence) 36.3 27.9
1 Alternative performance measure, see glossary for definition.
EARNINGS PER SHARE
Earnings per share (based on net profit after tax) has decreased to 6.5 pence
(2023: 11.3 pence). This includes any operating experience and assumption
changes, the non-operating items and deferral of profit to the CSM reserve,
and reflects the IFRS 17 statutory profit.
Year ended Year ended
31 December 2024 31 December 2023
Profit before tax (£m) 113 172
Tax (£m) (33) (43)
Profit attributable to equity holders of Just Group Plc (£m) 80 129
Coupon payments in respect of (12) (12)
Tier 1 notes (net of tax) (£m)
Earnings (£m) 68 117
Weighted average number of shares (million) 1,040 1,032
EPS (pence) 6.5 11.3
CAPITAL MANAGEMENT
The Group's proforma capital coverage ratio was 204% at 31 December 2024,
including a recalculation of transitional measures on technical provisions
("TMTP") (31 December 2023: 197% including a recalculation of TMTP). The
Solvency capital coverage ratio is a key metric and is one of the Group's
KPIs.
Unaudited Proforma 31 December 2023(1,2)
31 December 2024(1) £m
£m
Own funds 3,055 3,104
Solvency Capital Requirement (1,494) (1,577)
Excess own funds 1,561 1,527
Proforma Solvency capital coverage ratio(3) 204% 197%
1 Includes a recalculation of TMTP.
2 2023 capital position is the reported regulatory position as included
in the Group's Solvency and Financial Condition Report as at 31 December 2023.
3 2024 capital position is presented on a proforma basis after the
impact of the February 2025 repayment of Tier 3 subordinated debt. The capital
ratio at 31 December 2024 was 211% prior to this repayment. The 2024 capital
position is estimated.
The Group has approval to apply the matching adjustment and TMTP in its
calculation of technical provisions and uses an internal model to calculate
its Group Solvency Capital Requirement ("SCR").
In July 2024, the Group received approval to expand the scope of its revised
internal model, and applied it to include the Partnership business from 30
September 2024, which previously had its capital requirement calculated using
Standard Formula. The application of a full internal model from this date has
led to increased diversification benefits between the Group's two life
companies, which has resulted in a reduction in SCR. This one-off effect
accounted for 6% of the increase in the capital coverage ratio, and is
included in the management actions and other items line in the Movement in
Excess Own Funds analysis below.
MOVEMENT IN EXCESS OWN FUNDS(1)
The business is delivering sufficient cash generation, which augmented with
management actions, supports the deployment of capital to capture the
significant growth opportunity available in our chosen markets, provide
returns to our capital providers and further investment in the strategic
growth of the business.
The table below analyses the movement in excess own funds, in the year to 31
December 2024.
Unaudited Year ended Year ended
31 December 2024 31 December 2023
(Proforma) £m
£m
Opening excess own funds at 1 January 1,527 1,370
Operating
In-force surplus net of TMTP amortisation 178 168
Financing costs (48) (49)
Group and other costs (11) (8)
Cash generation(2) 119 111
New business strain(3) (71) (35)
Development costs and other (25) (19)
Underlying organic capital generation(2) 23 57
Management actions and other items 58 69
Total organic capital generation(2) 81 126
Non-operating
Strategic expenditure (17) (13)
Dividends (23) (19)
Economic movements 49 (22)
Regulatory changes (42) 109
Capital actions(4) (14) (24)
Proforma closing excess own funds 1,561 1,527
1 All figures are net of tax and include a formal recalculation of TMTP
where applicable.
2 Alternative performance measure, see glossary for definition.
Definition of cash generation has been revised in the year and development
costs and other are now stated outside of this measure. 2023 cash generation
has been restated.
3 New business strain calculated based on pricing assumptions.
4 Capital actions are the effect of Tier 2 buyback (2023 and 2024)
together with the proforma impact of the February 2025 Tier 3 repayment) and
includes the positive effect (if any) from release of Solvency tiering
restrictions.
UNDERLYING ORGANIC CAPITAL GENERATION AND NEW BUSINESS STRAIN
The Group is focused on sustainable growth, whereby the various costs of the
business including TMTP amortisation, finance and other costs, and new
business strain is funded through the cash generation from the existing
in-force book. In 2024, we have delivered £23m of underlying organic capital
generation (2023: £57m), as the 36% increase in shareholder funded new
business led to a higher amount of new business strain. Management actions and
other items, including the impact of the move to a full internal model,
increased the capital surplus by £58m (2023: £69m). This led to a total of
£81m from organic capital generation (2023: £126m).
In-force surplus after TMTP amortisation was up 6% to £178m, as growth in
assets was offset by lower release from the risk margin reserve. The Solvency
UK reforms led to a welcomed c.60% reduction in risk margin balance, which
boosted the surplus by an upfront £107m in 2023, however, that prudent
margin is no longer available to release annually into future capital
generation. Group and other costs including non-life costs were £11m
(2023: £8m), reflecting the non-insurance subsidiaries. Finance costs were
flat at £48m. Cash generation available to support new business was £119m
(2023: £111m).
The Group continues to maximise the growth opportunities available to increase
shareholder value. In 2024, due to writing £5.3bn of shareholder funded new
business (2023: £3.9bn), new business strain increased to £71m (2023:
£35m), which represents 1.3% of new business premium (2023: 0.9% of premium),
well within our target of below 2.5% of premium, and outperforming the 5 year
average (1.5%). This is due to a continued combination of focused risk
selection and DB/GIfL business mix based on our market insight, pricing
discipline, operational gearing and originating sufficient quantities of
high-quality illiquid assets.
Development costs and other were £25m (2023: £19m).
NON-OPERATING ITEMS
Changes in capital surplus were as follows. Together, economic movements
summed to a £49m increase. This is derived from the £(10)m effect of the
increase in long term interest rates at year end, but as the SCR fell more
relative to the Own Funds, it resulted in a five percentage point increase in
the capital coverage ratio. Property price growth experience was a little
below the 3.3% long-term growth assumption, which led to a £(19)m decrease,
while various economic and timing variances lead to a £78m increase.
Payment of shareholder dividends during 2024 cost £23m, while strategic
expenses reduced the capital surplus by a further £17m.
Regulatory changes relate to the Solvency UK reforms for matching adjustment
attestation and other items as explained in note 30 of the Annual Report and
Accounts.
Capital actions refer to the effect of raising £400m Tier 2 debt in September
2024, the proceeds of which were used to fully repay £250m (nominal) of Tier
2 debt in September/October 2024 and £155m (nominal) of Tier 3 debt in
February 2025. There were no capital restrictions following the Tier 3
repayment or deferred tax assets in the proforma closing excess own funds.
proforma GROUP SOLVENCY II SENSITIVITIES
The property sensitivity for an immediate 10% fall in UK house prices has
reduced to 6% (31 December 2023: 10%). This reduction has been driven by
modelling refinements following implementation of the internal model on the
Partnership business. We expect that a reduced LTM backing ratio on new
business will contain the Solvency II sensitivity to house prices within risk
appetite. The credit quality step downgrade sensitivity has slightly reduced
due to credit spreads narrowing during the period, which decreases the cost of
trading the 10% of our credit portfolio(3) assumed to be downgraded back to
their original credit rating.
Sensitivities to economic and other key metrics are shown in the table below.
Unaudited At 31 December 2024
CCR Excess own funds
%
£m
Proforma solvency coverage ratio/excess 204 1,561
own funds at 31 December 2024(1,2,3,4)
-50bps fall in interest rates (with TMTP recalculation) (4) 59
+50bps increase in interest rates (with TMTP recalculation) 4 (59)
+100bps credit spreads (with TMTP recalculation) 11 106
Credit quality step downgrade(5) (6) (89)
-10% property values (with TMTP recalculation)(6) (6) (84)
-5% mortality (8) (129)
1 The sensitivities above are determined by applying stresses to single
risk factors. Stresses to multiple risk factors at the same time can create
more severe outcomes than on individual factors as reported above.
2 In all sensitivities the Effective Value Test ("EVT") deferment rate
is allowed to change subject to the minimum deferment rate floor of 3.5% as at
31 December 2024.
3 The results do not include the impact of capital tiering restriction,
if applicable.
4 Sensitivities are applied to the reported proforma capital position
which includes a TMTP recalculation.
5 Credit migration stress covers the cost of an immediate big letter
downgrade (e.g. AAA to AA or A to BBB) on 10% of all assets where the capital
treatment depends on a credit rating (including corporate bonds, long income
real estate/income strips; but lifetime mortgage senior notes are excluded).
Downgraded assets are assumed to be traded to their original credit rating, so
the impact is primarily a reduction in Own Funds from the loss of value on
downgrade. The impact of the sensitivity will depend upon the market levels of
spreads at the balance sheet date. In addition, for residential ground rents,
the Group has identified that the impact of downgrading the entire portfolio
to BBB would reduce Excess own funds (the capital surplus) by £22m and CCR%
by two percentage points.
6 After application of NNEG hedges.
RECONCILIATION OF IFRS EQUITY TO SOLVENCY OWN FUNDS
31 December 2024 31 December 2023
£m £m
IFRS net equity 1,246 1,203
CSM 2,328 1,959
Goodwill (34) (34)
Intangibles (6) (7)
Solvency risk margin (194) (196)
Solvency TMTP(1) 409 637
Other valuation differences and impact on deferred tax (1,316) (1,059)
Ineligible items (3) (5)
Subordinated debt 643 619
Group adjustments (18) (13)
Solvency own funds(1) 3,055 3,104
Solvency SCR(1) (1,494) (1,577)
Proforma solvency excess own funds(1,2) 1,561 1,527
1 Solvency capital coverage ratios as at 31 December 2024 and 31
December 2023 includes a recalculation of TMTP.
2 2024 capital position is presented on a proforma basis after the
impact of the February 2025 repayment of Tier 3 subordinated debt.
Reconciliation from operating profit to ifrs consolidated statement of
comprehensive income
The table below presents the reconciliation from the Group's APM income
statement view to the IFRS statement of comprehensive income for the Group.
Statutory accounts format
31 December 2024 Reported(1) Quote date difference(2) CSM Adjusted total(4) Insurance service result Net investment result Other finance costs Other income, expenses and associates PBT
£m
£m
deferral(3)
£m
£m
£m
£m
£m
£m
£m
ALTERNATIVE PROFIT MEASURE FORMAT
New business profit 460 2 (462) -
CSM amortisation (71) 71 -
Net underlying CSM increase 389 2 (391) -
In-force operating profit:
Investment return earned on surplus assets 133 133 133 133
Release of allowances for credit default 29 29 29 29
CSM amortisation 71 71 154 (83) 71
Release of risk adjustment for 3 3 7 (4) 3
non-financial risk/other
Other Group companies' operating results (17) (17) (17) (17)
Development costs and other (35) (35) (35) (35)
Finance costs (69) (69) (69) (69)
Underlying operating profit 504 2 (391) 115
Operating experience and assumption changes (37) 22 (15) (12) (3) (15)
Adjusted operating profit before tax 467 2 (369) 100
Investment and economic movements 18 (2) 16 226 (192) (18) 16
Strategic expenditure (23) (23) (23) (23)
Adjustment for transactions reported directly in equity in IFRS 20 20 20 20
Adjusted profit before tax 482 (369) 113
Deferral of profit in CSM (369) 369 -
Profit before tax 113 113 149 298 (241) (93) 113
1 The rows and first numeric column of this table present the Reported
alternative profit measure (APM) format as presented in the Underlying
operating profit section and Reconciliation of Underlying operating profit to
IFRS profit before tax section of this review.
2 The Quote date difference adjustment is made because Just bases its
assessment of new business profitability for management purposes on the
economic parameters prevailing at the quote date of the business instead of
completion dates as required by IFRS 17 (see new business profit
reconciliation in the additional information section towards the end of this
announcement).
3 The CSM column presents how elements of the APM basis result are
deferred in the CSM reserve held on the IFRS balance sheet consistent with the
table in the Deferral of profit in CSM section of this review. Under IFRS 17,
new business profits and the impact of changes to estimates of future cash
flows are deferred in the CSM reserve for release over the life of contracts.
4 The Adjusted total column is then transposed in the columns on the
right-hand side into the IFRS statutory accounts Condensed consolidated
statement of comprehensive income format. Figures are presented on a net of
reinsurance basis.
The IFRS profit before tax of £113m (2023: £172m) is reported after deferral
of £460m new business profit in CSM (2023: £355m) and assumption changes of
£22m increase (2023: £67m reduction) in the balance sheet. The CSM
amortisation recognised in the IFRS result of £71m (2023: £62m) reflects the
recognition of services provided in the year net of accretion. This is
expected to increase as our stock of CSM grows with new business. The pre-tax
CSM closing balance stands at £2,328m (2023: £1,959m), as per the table in
the Deferral of profit in CSM section of this report.
Investment and economic movements recognised within IFRS finance costs of
£192m (2023: £70m) include a full year's worth of interest on repurchase
agreements of £146m (2023: £70m) that fund the Group's increased amortised
cost portfolio of sovereign gilts that now stands at £4.0bn (2023: £2.5bn).
Interest earned on the amortised cost gilts of £135m (2023: £54m) is
reported within net investment result. Net interest paid on collateral of £1m
is reported gross within net investment result for interest income of £34m
and in finance costs for interest paid of £35m.
The remaining impact on Net investment result, and IFRS PBT, from investment
and economic movements of £57m (2023: 145m) relates to changes in long-term
interest rates, and where the impact on the investment portfolio backing
insurance contracts does not perfectly match the impact on reserves.
HIGHLIGHTS FROM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
The table below presents selected items from the Condensed consolidated
statement of financial position. The information below is extracted from the
statutory consolidated statement of financial position.
31 December 2024 31 December 2023
£m
£m
Assets
Financial investments 34,390 29,423
Reinsurance contract assets 2,067 1,143
Cash available on demand 808 546
Other assets 657 726
Total assets 37,922 31,838
Share capital and share premium 199 199
Other reserves 944 943
Retained earnings and other adjustments (219) (259)
Total equity attributable to ordinary shareholders of Just Group plc 924 883
Tier 1 notes 322 322
Non-controlling interest - (2)
Total equity 1,246 1,203
Liabilities
Insurance contract liabilities 27,753 24,131
Reinsurance contract liabilities 94 125
Payables and other financial liabilities(1) 7,889 5,608
Other liabilities 940 771
Total liabilities 36,676 30,635
Total equity and liabilities 37,922 31,838
1 Other payables has been aggregated with other financial liabilities in
all periods presented.
The amounts reported in the Condensed consolidated statement of financial
position above for Insurance and Reinsurance contracts include our best
estimate, risk adjustment and contractual service margin "CSM". The analysis
of these is as follows.
31 December 2024 31 December 2023
Gross Net Reinsurance Net Gross Net Reinsurance Net
£m £m £m £m £m £m
Best estimate 23,970 (838) 23,132 20,758 64 20,822
Risk adjustment 1,052 (732) 320 924 (592) 332
CSM 2,731 (403) 2,328 2,449 (490) 1,959
Net closing balance 27,753 (1,973) 25,780 24,131 (1,018) 23,113
After tax, the closing CSM is £1,750m (31 December 2023: £1,471m).
FINANCIAL INVESTMENTS
During the year, financial investments increased by £4.9bn to £34.5bn (31
December 2023: £29.6bn). Excluding derivatives and collateral, and gilts
purchased in relation to the interest rate hedging, the core investments
portfolio on which we take credit risk increased by 13% to £27.0bn. The
increase in the portfolio has been driven by investment of the Group's £5.3bn
of shareholder backed new business premiums and credit spread tightening,
offset by the increase in long-term risk-free rates at the 2024 year end
compared to the previous year end, which decreases the market value of the
assets (and matched liabilities). The credit quality of the Group's bond
portfolio remains resilient, with 62% rated A or above (31 December 2023:
54%), driven by an increase in allocation to UK government gilts. Our
diversified portfolio continues to grow and is well balanced across a range of
industry sectors and geographies.
We continue to position the portfolio with a defensive bias. The Group
continues to have very limited exposure to those sectors that are most
sensitive to structural change or macroeconomic conditions, such as auto
manufacturers, consumer (cyclical), energy and basic materials. The Group has
further increased its infrastructure investments, driven by social housing and
private placement assets. We continue to increase long income real estate
assets from a low base as we originated a number of large investments
internally through our in-house team, but reduced the allocation towards other
sectors. The increase in government bonds and liquidity is driven by the
tighter corporate credit spreads, with excess cash and gilts expected to be
recycled into corporate credit and illiquid assets as opportunities arise. The
BBB rated bonds are weighted towards the most defensive sectors including
utilities, communications and technology, and infrastructure.
We prudently manage the balance sheet by hedging all foreign exchange and
inflation exposure, and continue to execute strategic interest rate hedging.
This involves the purchase of £4.0bn of long dated gilts, which are held at
amortised cost under IFRS. The effect is to significantly reduce the Solvency
II sensitivity to future interest rate movements, without exposing the IFRS
position to interest rate volatility on these assets.
Illiquid assets
To support new business pricing, optimise back book returns, and further
diversify its investments, the Group originates illiquid assets including
infrastructure, real estate investments, private placements and lifetime
mortgages. Income producing real estate investments are typically much longer
duration and hence the cash flow profile is beneficial, especially to match
DB deferred liabilities.
In 2024, we funded £2.4bn of illiquid assets, which represents a 45% new
business backing ratio. Over the past two years, we have invested in our
Investments function, and are now directly originating illiquids from
particular asset classes (e.g. social housing, private placements and
commercial ground rents), in addition to lifetime mortgages. These amounted to
£1.0bn and £0.3bn respectively. In parallel, we originated the remaining
£1.1bn of illiquid assets via a panel of 13 specialist external asset
managers, each carefully selected based on their particular area of expertise.
Our illiquid asset origination strategy allows us to efficiently scale
origination of new investments, and to flex allocations between sectors
depending on market conditions and risk adjusted returns.
To date, Just has invested £6.6bn in illiquid assets (excluding LTMs),
representing 24% of the investments portfolio (31 December 2023: 21%), spread
across more than 360 investments (average £18m), both UK and abroad. We have
invested in our in-house credit team as we have broadened the illiquid asset
origination, and work very closely with our specialist asset managers on
structuring to enhance our security, with a right to veto on each asset. We
anticipate that the Solvency UK and wider government reforms in pensions and
planning will increase the investment opportunities available to us through
wider matching adjustment ("MA") eligibility criteria, such as callable bonds,
or assets with a construction phase, where the commencement of cashflows is
not entirely certain. These changes to the MA are part of a package, that when
fully implemented are designed to support the pledge made by the insurance
industry to generate £100bn of productive investments over the next decade to
support UK economic growth.
Lifetime mortgages at £5.6bn represent 21% of the investments portfolio,
which we expect to continue reducing over time as we originate fewer new LTMs
and diversify the portfolio with other illiquid assets. The loan-to-value
ratio of the in-force lifetime mortgage portfolio was 39.0% (31 December 2023:
38.2%), reflecting the gradual seasoning of the mortgages across our
geographically diversified portfolio, as house price growth partially offset
the interest roll-up during the year. In 2024, shareholder funded LTM advances
were £326m (2023: £164m). We continue to be selective and use our market
insight to target sub-segments of the market.
The following table provides a breakdown by credit rating of financial
investments, including privately rated investments allocated to the
appropriate rating.
31 December 2024 31 December 2024 31 December 2023 31 December 2023
£m
%
£m
%
AAA(1) 2,766 8 2,252 8
AA(1) and gilts 8,354 24 5,327 18
A(1,2) 8,853 26 7,239 24
BBB(1,2) 7,826 23 8,083 27
BB or below(1,2) 195 1 176 1
Lifetime mortgages 5,637 16 5,681 19
Unrated(1) 894 2 837 3
Total(1,2,3) 34,525 100 29,595 100
1 Includes liquidity funds, derivatives, collateral and gilts (interest
rate hedging).
2 Includes investment in trusts which holds long income real estate
assets that are included in investment properties and investments accounted
for using the equity method in the IFRS Consolidated statement of financial
position.
3 The residential ground rent portfolio market value is £157m, and is
rated AAA (2023: £164m rated AAA and £12m rated AA).
On 9 November 2023, the previous government published a consultation seeking
views on capping the maximum ground rent that residential leaseholders can be
required to pay, but did not implement any reform of residential ground rent
before dissolution of parliament ahead of the election. The Group continues to
closely monitor developments as leasehold reform was included in the new
government's manifesto and subsequent King's Speech, and any adverse impact
this may have on the Group's £157m by market value (2023: £176m market
value) portfolio of residential ground rents. Reflecting the uncertainty
associated with the Consultation, an adjustment was made at year end 2023 and
the same approach to that adjustment has been followed at year end 2024. For
further information on the Group's approach to the valuation of residential
ground rents.
Sector
The sector analysis of the Group's financial investments portfolio is shown
below and continues to be well diversified across a variety of industry
sectors.
31 December 2024 31 December 2024 31 December 2023 31 December 2023
£m
%
£m
%
Basic materials 109 0.4 149 0.6
Communications and technology 1,154 4.3 1,334 5.6
Auto manufacturers 85 0.3 130 0.5
Consumer staples (incl healthcare) 1,226 4.5 1,167 4.9
Consumer cyclical 178 0.7 197 0.8
Energy 278 1.0 378 1.6
Banks 1,469 5.4 1,606 6.7
Insurance 745 2.8 735 3.1
Financial - other 590 2.2 583 2.4
Real estate incl REITs 630 2.3 660 2.8
Government 3,081 11.4 1,767 7.4
Industrial 524 1.9 543 2.3
Utilities 2,452 9.1 2,637 11.0
Commercial mortgages(1) 809 3.0 764 3.2
Long income real estate(2) 1,808 6.7 1,154 4.8
Infrastructure 3,512 13.0 2,473 10.3
Other 43 0.2 42 0.2
Bond total 18,693 69.2 16,319 68.1
Other assets 888 3.3 822 3.4
Lifetime mortgages 5,637 20.9 5,681 23.7
Liquidity funds 1,792 6.6 1,141 4.8
Investments portfolio 27,010 100.0 23,963 100
Derivatives, collateral 3,564 3,083
Gilts (interest rate hedging) 3,951 2,549
Total 34,525 29,595
1 Includes investment in trusts which are included in investment
properties in the IFRS Consolidated statement of financial position.
2 Includes direct long income real estate and where applicable,
investment in trusts of £135m which are primarily included in investments
accounted for using the equity method in the IFRS consolidated statement of
financial position. Long income real estate includes £1,651m commercial
ground rents/income strips and £157m residential ground rents.
REINSURANCE CONTRACT ASSETS AND LIABILITIES
The Group has identified separate portfolios of reinsurance contracts, based
on whether or not the underlying contracts transfer financial risk in addition
to longevity risk. The Group's contracts transferring financial risk are quota
share arrangements which are in asset positions. Since the introduction of
Solvency II in 2016, the Group has increased its use of reinsurance swaps
rather than quota share treaties and these are in liability positions.
Reinsurance assets increased to £2,067m at 31 December 2024 (31 December
2023: £1,143m) as the funded reinsurance in relation to the DB Partner
transaction in November 2024 was partially offset by other reinsurance quota
share treaties which are in gradual run-off.
CASH AND OTHER ASSETS
Other assets (primarily cash) remained consistent at £1.5bn at 31 December
2024 (31 December 2023: £1.3bn). The Group holds significant amounts of
assets in cash, so as to protect against liquidity stresses.
INSURANCE CONTRACT LIABILITIES
Insurance contract liabilities increased to £27.8bn at 31 December 2024 (31
December 2023: £24.1bn). The increase in liabilities reflects the new
business premiums written, offset by an increase to the valuation rate of
interest and policyholder payments over the period.
PAYABLES AND OTHER FINANCIAL LIABILITIES
Payables and other financial liabilities increased to £7.9bn at 31 December
2024 (31 December 2023: £5.6bn) due to an increase in repurchase agreements
used to fund the Group's amortised cost portfolio of gilts which has increased
by £1.4bn during 2024.
OTHER LIABILITIES
Other liability balances increased to £940m at 31 December 2024 (31 December
2023: £771m).
IFRS NET ASSETS
The Group's total equity at 31 December 2024 was £1.2bn (31 December 2023:
£1.2bn). Total equity includes the Restricted Tier 1 notes of £322m (after
issue costs) issued by the Group. The total equity attributable to ordinary
shareholders increased to £924m (31 December 2023: £883m).
DEFERRAL OF PROFIT IN CSM
As noted above, underlying operating profit is the performance metric on which
we had based our profit growth target. This includes new business profits
deferred in CSM that will be released in future. When reconciling the
underlying operating profit with the statutory IFRS profit it is necessary to
adjust for the value of the net deferral of profit in CSM.
Net transfers to contractual service margin includes amounts that are
recognised in profit or loss including the accretion and the amortisation of
the contractual service margin. The table below is on a pre-tax basis:
Year ended 31 December 2024 Year ended 31 December 2023
Gross insurance contracts Reinsurance contracts Total Gross insurance contracts Reinsurance contracts Total
£m £m £m £m £m £m
CSM balance at 1 January 2,449 (490) 1,959 1,943 (332) 1,611
New Business initial CSM recognised 438 24 462 380 (37) 343
Accretion of interest on CSM 113 (30) 83 79 (12) 67
Changes to future cash flows at locked-in economic assumptions (92) 70 (22) 203 (136) 67
Release of CSM (177) 23 (154) (156) 27 (129)
Net transfers to CSM 282 87 369 506 (158) 348
CSM balance at 31 December 2,731 (403) 2,328 2,449 (490) 1,959
The closing CSM balance (post tax) at 31 December 2024 is £1,750m (2023:
£1,471m), which when added to £924m of total equity attributable to ordinary
shareholders (2023: £883m) less £39m (post tax) intangible assets (2023:
£39m), results in Tangible Net Assets of £2,635m or 254p per share (2023:
£2,315m and 224p respectively), on which we earned a 15.3% Return on equity
(2023: 13.5%).
Dividends
In line with our stated policy to grow the dividend over time, the Board is
recommending a final dividend of 1.8 pence per share, or £19m, bringing the
total dividend for the year ended 31 December 2024 to 2.5 pence per share, or
£26m. The 20% growth in total dividend is a repeat of the 2023 dividend
growth rate.
MARK GODSON
Group Chief Financial Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2024
Year ended Year ended
31 December 2024
31 December 2023
£m
£m
Insurance revenue 1,809 1,555
Insurance service expenses (1,621) (1,396)
Net expenses from reinsurance contracts (39) (41)
Insurance service result 149 118
Interest income on financial assets measured at amortised cost 135 54
Other investment return (263) 2,119
Investment return (128) 2,173
Net finance income/(expenses) from insurance contracts 480 (2,006)
Net finance (expenses)/income from reinsurance contracts (52) 108
Movement in investment contract liabilities (2) (2)
Net investment result 298 273
Other income 18 21
Other operating expenses (85) (104)
Other finance costs (241) (122)
Share of results of associates accounted for using the equity method (26) (14)
Profit before tax 113 172
Income tax expense (33) (43)
Profit for the year 80 129
Other comprehensive income:
Items that will not be reclassified subsequently to profit or loss:
Revaluation of land and buildings (2) -
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (4) -
Other comprehensive income for the year, net of income tax (6) -
Total comprehensive income for the year 74 129
Profit attributable to:
Equity holders of Just Group plc 80 129
Profit for the year 80 129
Total comprehensive income attributable to:
Equity holders of Just Group plc 74 129
Total comprehensive income for the year 74 129
Basic earnings per share (pence) 6.5 11.3
Diluted earnings per share (pence) 6.5 11.2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2024
Year ended 31 December 2024 Share capital Share premium Other reserves Retained earnings1 Tier 1 Total equity excluding NCI Non-controlling interest Total
£m
£m
£m
£m
notes
£m
£m
£m
£m
At 1 January 2024 104 95 943 (259) 322 1,205 (2) 1,203
Profit for the year - - - 80 - 80 - 80
Other comprehensive income for the period, net of income tax - - (2) (4) - (6) - (6)
Total comprehensive income for the year - - (2) 76 - 74 - 74
Contributions and distributions
Dividends - - - (23) - (23) - (23)
Interest paid on Tier 1 notes (net of tax) - - - (12) - (12) - (12)
Share-based payments reserve credit - - - 9 - 9 - 9
(net of tax)
Transactions in shares held by trusts - - 3 (7) - (4) - (4)
Total contributions and distributions - - 3 (33) - (30) - (30)
Acquisition of non-controlling interest - - - (3) - (3) 2 (1)
Total changes in ownership interests - - - (3) - (3) 2 (1)
At 31 December 2024 104 95 944 (219) 322 1,246 - 1,246
Year ended 31 December 2023 Share capital Share premium Other reserves Retained earnings1 £m Tier 1 Total equity excluding NCI Non-controlling interest Total
£m
£m
£m
notes
£m
£m
£m
£m
At 1 January 2023 104 95 938 (354) 322 1,105 (2) 1,103
Profit for the year - - - 129 - 129 - 129
Total comprehensive income for the year - - - 129 - 129 - 129
Contributions and distributions
Dividends - - - (19) - (19) - (19)
Interest paid on Tier 1 notes (net of tax) - - - (12) - (12) - (12)
Share-based payments reserve credit - - - 7 - 7 - 7
(net of tax)
Transactions in shares held by trusts - - 5 (10) - (5) - (5)
Total contributions and distributions - - 5 (34) - (29) - (29)
At 31 December 2023 104 95 943 (259) 322 1,205 (2) 1,203
1 Includes currency translation reserve of £5m (31 December 2023:
£1m).
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2024
31 December 2024 31 December 2023
£m
£m
Assets
Intangible assets 40 41
Property and equipment 20 22
Investment property 27 32
Financial investments 34,390 29,423
Investments accounted for using the equity method 119 149
Reinsurance contract assets 2,067 1,143
Deferred tax assets 387 406
Current tax assets 1 4
Prepayments and accrued income 14 12
Other receivables 49 60
Cash available on demand 808 546
Total assets 37,922 31,838
Equity
Share capital 104 104
Share premium 95 95
Other reserves 944 943
Retained earnings (219) (259)
Total equity attributable to shareholders of Just Group plc 924 883
Tier 1 notes 322 322
Total equity attributable to owners of Just Group plc 1,246 1,205
Non-controlling interest - (2)
Total equity 1,246 1,203
Liabilities
Insurance contract liabilities 27,753 24,131
Reinsurance contract liabilities 94 125
Investment contract liabilities 42 35
Loans and borrowings 839 686
Payables and other financial liabilities1 7,889 5,608
Accruals and provisions2 59 50
Total liabilities 36,676 30,635
Total equity and liabilities 37,922 31,838
1 Other payables has been aggregated with other financial liabilities in
all periods presented.
2 Other provisions has been aggregated with accruals and deferred income
in all periods presented.
The financial statements were approved by the Board of Directors on 6 March
2025 and were signed on its behalf by:
MARK GODSON
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2024
Year ended Year ended
31 December 2024
31 December 2023
£m
£m
Cash flows from operating activities
Profit before tax 113 172
Adjustments for:
Depreciation of property and equipment 3 2
Share of results from associates 26 14
Amortisation of intangible assets 1 3
Impairment of intangible assets - 3
Share-based payments 1 1
Interest income (1,217) (1,104)
Interest expense 241 122
Change in operating assets and liabilities:
Net increase in financial investments (4,247) (6,068)
Increase in net reinsurance contracts balance (955) (363)
Increase in prepayments and accrued income (2) (1)
Decrease in other receivables 10 3
Increase in insurance contract liabilities 3,622 4,484
Increase in investment contract liabilities 7 2
Increase in accruals and provisions 9 16
Increase in net derivative liabilities, financial liabilities and other 2,101 1,774
payables1
Interest received 1,151 1,075
Taxation (paid)/received (1) 6
Net cash inflow from operating activities 863 141
Cash flows from investing activities
Acquisition of property and equipment (4) (3)
Disposal of property - 1
Dividends from associates 4 -
Net cash outflow from investing activities - (2)
Cash flows from financing activities
Proceeds on issue of borrowings (net of costs) 398 -
Payment on redemption of borrowings (256) (26)
Acquisition of non-controlling interests (1) -
Dividends paid (23) (19)
Coupon paid on Tier 1 notes (16) (16)
Interest paid on borrowings (48) (48)
Payment of lease liabilities - principal (2) (1)
Net cash inflow/(outflow) from financing activities 52 (110)
Net increase in cash and cash equivalents 915 29
Foreign exchange differences on cash balances (2) 2
Cash and cash equivalents at 1 January 1,687 1,656
Cash and cash equivalents at 31 December 2,600 1,687
Cash available on demand 808 546
Units in liquidity funds 1,792 1,141
Cash and cash equivalents at 31 December 2,600 1,687
1 Other payables has been aggregated with other financial liabilities in
all periods presented.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The consolidated financial statements in this announcement have been taken
from the Just Group plc Annual Report and Accounts 2024. The consolidated
financial statements have been prepared in accordance with UK adopted
international accounting standards in conformity with the requirements of the
Companies Act 2006 and the disclosure guidance and transparency rules
sourcebook of the United Kingdom's Financial Conduct Authority.
The consolidated financial statements have been prepared under the historical
cost convention, as modified by the revaluation of land and buildings, certain
financial assets and financial liabilities (including derivative instruments
and investment contract liabilities) and investment properties at fair value
and the accounting for the remeasurement of insurance and reinsurance
contracts as required by IFRS 17. Unless otherwise stated, values are
expressed to the nearest £1m.
The Just Group plc Annual Report and Accounts 2024, including the consolidated
financial statements, is available on the Group's website
https://www.justgroupplc.co.uk/investors/results-reports-and-presentations
(https://www.justgroupplc.co.uk/investors/results-reports-and-presentations) ,
and a copy has been submitted to the National Storage Mechanism and will be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
The auditor has reported on those consolidated financial statements. Their
reports for the years ended 31 December 2024 and 31 December 2023 were (i)
unqualified, (ii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006, and (iii) did not include a reference to any matters
to which the auditor drew attention by way of emphasis without qualifying
their report.
2. New accounting standards and new material accounting policies
The accounting policies adopted in the preparation of the Group's consolidated
financial statements for the year ended 31 December 2024 are consistent with
those adopted in the preparation of the Group's consolidated financial
statements for the year ended 31 December 2023.
The following amendments to existing standards have been adopted by the Group
but do not have a significant impact on the Group's accounting policies or
financial statements:
· IAS 1 "Presentation of financial statements" - Amendments in respect of
the classification of liabilities as current or non-current.
· IAS 1 "Presentation of financial statements" - Amendments in respect of
non-current liabilities with covenants.
The following new accounting standards are in issue but not endorsed yet.
These have not yet been adopted by the Group and are not expected to have a
significant impact on the results within the financial statements:
· IFRS 18 "Presentation and Disclosure in Financial Statements" (effective
1 January 2027 with restatement for comparatives). IFRS 18 introduces new
requirements on presentation and disclosures in the financial statements, with
a focus on the income statement and reporting of financial performance. Items
in the statement of profit or loss will be classified into different
categories such as operating, investing and financing. As a presentation and
disclosure standard, the implementation of IFRS 18 will not affect the Group's
results. The Group is considering the impact on the presentation of the
Group's financial statements.
Additional information
The following additional financial information is unaudited.
Financial investments credit ratings
The sector analysis of the Group's financial investments portfolio by credit
rating at 31 December 2024 is shown below:
Total % AAA AA A BBB % BBB BB or below
£m
£m
£m
£m
£m
£m
£m
Basic materials 109 0.4% - 5 21 79 1.1% 4
Communications and technology 1,154 4.3% 117 223 162 652 9.4% -
Auto manufacturers 85 0.3% - - 78 7 0.1% -
Consumer staples (including healthcare) 1,226 4.5% 129 175 541 364 5.3% 17
Consumer cyclical 178 0.7% - 4 47 127 1.8% -
Energy 278 1.0% - 67 5 175 2.5% 31
Banks 1,469 5.4% 51 108 908 402 5.8% -
Insurance 745 2.8% - 301 102 342 5.0% -
Financial - other 590 2.2% 90 85 329 86 1.3% -
Real estate including REITs 630 2.3% 30 16 289 245 3.6% 50
Government 3,081 11.4% 312 2,301 230 238 3.4% -
Industrial 524 1.9% - 105 155 254 3.7% 10
Utilities 2,452 9.1% - 64 889 1,489 21.6% 10
Commercial mortgages 809 3.0% 89 323 281 116 1.7% -
Long income real estate¹ 1,808 6.7% 157 234 921 496 7.2% -
Infrastructure 3,512 13.0% 57 367 1,246 1,829 26.5% 13
Other 43 0.2% - - 43 - 0.0% -
Corporate/government bond total 18,693 69.2% 1,032 4,378 6,247 6,901 100.0% 135
Other assets 888 3.3%
Lifetime mortgages 5,637 20.9%
Liquidity funds 1,792 6.6%
Investments portfolio 27,010 100.0%
Derivatives and collateral 3,564
Gilts (interest rate hedging) 3,951
Total 34,525
1 Includes residential ground rents of £157m rated AAA.
NEW BUSINESS PROFIT RECONCILIATION
New business profit is deferred on the balance sheet under IFRS 17. In
addition IFRS 17 provides clarification regarding the economic assumptions to
be used at the point of recognition of contracts. Just recognises contracts
based on their completion dates for IFRS 17, but bases its assessment of new
business profitability for management purposes based on the economic
parameters prevailing at the quote date of the business.
Year ended Year ended
31 December 2024
31 December 2023
£m
£m
New business CSM on gross business written 438 380
Reinsurance CSM 24 (37)
Net new business CSM 462 343
Impact of using quote date for profitability measurement (2) 12
New business profit 460 355
GLOSSARY
Acquisition costs Comprise directly attributable costs incurred in the selling, underwriting and
commencing of insurance contracts.
Adjusted operating profit before tax An APM, this is the sum of underlying operating profit and operating
experience and assumption changes. The net underlying CSM increase is added
back as the Board considers the value of new business is significant in
assessing business performance. As such Adjusted operating profit is reported
prior to the deferral of profit in CSM as defined below. Adjusted operating
profit before tax is reconciled to IFRS profit before tax in the Business
Review.
Adjusted profit/ An APM, this is the profit/(loss) before tax before deferral of profit in CSM
(loss) before tax and represents adjusted operating profit before tax plus the impact from
non-operating items (investment and economic movement, strategic expenditure,
and any adjustments to IFRS for transactions reported directly in equity).
Alternative performance measure ("APM") In addition to statutory IFRS performance measures, the Group has presented a
number of non-statutory alternative performance measures. The Board believes
that the APMs used give a useful insight into the underlying performance of
the Group. APMs are identified in this glossary together with a reference to
where the APM has been reconciled to its nearest statutory IFRS equivalent.
APMs regarding our Solvency position are reconciled to the Solvency II excess
own funds. APMs which are also KPIs are indicated as such.
Buy-in An exercise enabling a pension scheme to obtain an insurance contract that
pays a guaranteed stream of income sufficient to cover the liabilities of a
group of the scheme's members.
Buy-out An exercise that wholly transfers the liability for paying member benefits
from the pension scheme to an insurer which then becomes responsible for
paying the members directly.
Care Plan ("CP") A specialist insurance contract contributing to the costs of long-term care by
paying a guaranteed income to a registered care provider for the remainder of
a person's life.
Cash Generation A Solvency II APM and represents underlying organic capital generation before
the impact of new business strain and development costs and other.
Confidence interval The degree of confidence that the provision for future cash flows plus the
risk adjustment reserve will be adequate to meet the cost of future payments
to annuitants.
Contractual Service Margin ("CSM") Represents deferred profit earned on insurance products. CSM is recognised in
profit or loss over the life of the contracts.
CSM amortisation Represents the net release from the CSM reserve into profit as services are
provided. The figures are net of accretion (unwind of discount), and the
release is computed based on the closing CSM reserve balance for the period.
Deferral of profit in CSM The total movement on CSM reserve in the year. The figure represents CSM
recognised on new business, accretion of CSM (unwind of discount), transfers
to CSM related to changes to future cash flows at locked-in economic
assumptions, less CSM release in respect of services provided.
Defined benefit deferred ("DB deferred") business The part of DB de-risking transactions that relates to deferred members of a
pension scheme. These members have accrued benefits in the pension scheme but
have not yet retired.
Defined benefit de-risking partnering ("DB partnering") A DB de-risking transaction in which a reinsurer has provided reinsurance in
respect of the asset and liability side risks associated with one of our DB
Buy-in transactions.
Defined benefit ("DB") pension scheme A pension scheme, usually backed or sponsored by an employer, that pays
members a guaranteed level of retirement income based on length of membership
and earnings.
Defined contribution ("DC") pension scheme A work-based or personal pension scheme in which contributions are invested to
build up a fund that can be used by the individual member to obtain retirement
benefits.
De-risk An action carried out by the trustees of a pension scheme with the aim of
transferring risks such as longevity, investment, inflation, from the
sponsoring employer and scheme to a third party such as an insurer.
Development costs Incurred relating to the generation of incremental value (extending market
reach or share) in future years, from developing existing products, markets,
or new developments to the Group's technology and modelling capability, and
additionally major business transformational projects related to generating
incremental value in future years.
Drawdown (sales or products) Collective term for investment products including Capped Drawdown.
Employee benefits consultant ("EBC") An adviser offering specialist knowledge to employers on the legal, regulatory
and practical issues of rewarding staff, including non-wage compensation such
as pensions, health and life insurance and profit sharing.
Finance costs Finance costs included within underlying operating profit include coupons paid
on the Group's restricted Tier 1 notes, interest payable on the Group's Tier 2
and Tier 3 notes, facility non-utilisation fees and debt repurchase costs when
incurred, and amortisation of debt issue and facility arrangement costs
capitalised. Finance costs included in underlying organic capital generation
include coupons paid on the Group's restricted Tier 1 notes, interest paid on
the Group's Tier 2 and Tier 3 notes, and all facility costs when incurred.
Debt issue and repurchase costs are excluded from underlying organic capital
generation and included within capital actions when incurred.
Guaranteed Income Retirement income products which transfer investment and longevity risk and
for Life ("GIfL") provide the retiree with a guarantee to pay an agreed level of income for as
long as the retiree lives. On a "joint-life" basis, the policy will continue
to pay a guaranteed income to a surviving spouse/partner. Just provides modern
individually underwritten GIfL solutions.
IFRS profit before tax One of the Group's KPIs, representing the profit before tax attributable to
equity holders.
In-force operating profit An APM and represents profits from the in-force portfolio before investment
and insurance experience variances, and assumption changes. It mainly
represents expected release of risk adjustment for non-financial risk and of
allowance for credit default in the period, investment returns earned on
shareholder assets, together with the value of the (net) CSM amortisation.
Investment and economic movements Reflect the difference in the period between expected investment returns,
based on investment and economic assumptions at the start of the period, and
the actual returns earned. Investment and economic profits also reflect the
impact of assumption changes in future expected risk-free rates, corporate
bond defaults and house price inflation and volatility.
Key performance indicators ("KPIs") KPIs are metrics adopted by the Board which are considered to give an
understanding of the Group's underlying performance drivers. The Group's KPIs
are Retirement income sales (shareholder funded), New business profit,
Underlying operating profit, IFRS profit before tax, Return on equity,
Tangible net asset value per share, New business strain, Underlying organic
capital generation and Solvency II capital coverage ratio.
Lifetime mortgage ("LTM") An equity release product that allows homeowners to take out a loan secured on
the value of their home, typically with the loan plus interest repaid when the
homeowner has passed away or moved into long-term care.
LTM notes Structured assets issued by a wholly owned special purpose entity, Just Re1
Ltd. Just Re1 Ltd holds two pools of lifetime mortgages, each of which
provides the collateral for issuance of senior and mezzanine notes to Just
Retirement Ltd, eligible for inclusion in its matching portfolio.
Medical underwriting The process of evaluating an individual's current health, medical history and
lifestyle factors, such as smoking, when pricing an insurance contract.
Net asset value ("NAV") An APM that represents IFRS total equity, net of tax, and excluding equity
attributable to Tier 1 noteholders.
New business margin An APM that is calculated by dividing new business profit by Retirement income
sales (shareholder funded). It provides a measure of the profitability of
shareholder funded Retirement income sales.
New business profit An APM and one of the Group's KPIs, representing the profit generated from new
business written in the year after allowing for the establishment of reserves
and for future expected cash flows and risk adjustment and allowance for
acquisition expenses and other incremental costs on a marginal basis. The net
underlying CSM increase from new business is added back as the Board considers
the value of new business is significant in assessing business performance.
New business profit is reconciled to adjusted profit before tax, which is
reconciled to IFRS profit before tax in the Business Review.
New business strain An APM and one of the Group's KPIs, representing the capital strain on new
business written in the year after allowing for acquisition expense allowances
and the establishment of Solvency II technical provisions and Solvency Capital
Requirement.
No-negative equity guarantee ("NNEG") hedge A derivative instrument designed to mitigate the impact of changes in property
growth rates on both the regulatory and IFRS balance sheets arising from the
guarantees on lifetime mortgages provided by the Group which restrict the
repayment amounts to the net sales proceeds of the property on which the loan
is secured.
Operating experience and assumption changes Represents changes to cash flows in the current and future periods valued
based on end-of-period economic assumptions. This is reported prior to the
deferral of profit in CSM from changes to future cash flows.
Organic capital generation An APM that is calculated in the same way as underlying organic capital
generation, plus the impact of management actions and other items.
Other Group companies' operating results The results of Group companies including our HUB group of companies, which
provides regulated advice and intermediary services, and professional services
to corporates, and corporate costs incurred by Group holding companies.
Pension Freedoms/Pension Freedom and Choice/Pension Reforms The UK government's pension reforms, implemented in April 2015.
Peppercorn rent A very low or nominal rent.
PrognoSys™ The Group's proprietary underwriting engine, which is based on individual
mortality curves derived from Just Group's own data collected since its launch
in 2004.
Regulated financial advice Personalised financial advice for retail customers by qualified advisers who
are regulated by the Financial Conduct Authority.
REITs A Real Estate Investment Trust is a company that owns, operates, or finances
income-generating real estate.
Retail The Group's collective term for GIfL and Care Plan.
Retirement income sales (shareholder funded) An APM and one of the Group's KPIs and a collective term for GIfL, DB and Care
Plan new business sales "Sales" and excludes DB partner premium. Premiums are
reported gross of commission paid.
Return on equity An APM and one of the Group's KPIs. Return on equity is calculated by dividing
underlying operating profit after attributed tax for the period by the average
tangible net asset value for the period and is expressed as an annualised
percentage. Underlying operating profit and tangible net asset value are
reconciled respectively to IFRS profit before tax and IFRS total equity in the
Business Review.
Risk adjustment for non-financial risk ("RA") Allowance for longevity, expense, and insurance specific operational risks
representing the compensation required by the business when managing existing
and pricing new business.
Secure Lifetime A tax efficient solution for individuals who want the security of knowing they
Income ("SLI") will receive a guaranteed income for life and the flexibility to make changes
in the early years of the plan.
Solvency II Sets out regulatory requirements for insurance firms and groups, covering
financial resources, governance and accountability, risk assessment and
management, supervision, reporting and public disclosure.
Solvency UK Covers the reforms to the Solvency II requirements for the UK and implemented
by the PRA.
Solvency capital coverage ratio One of the Group's KPIs. Solvency II capital is the regulatory capital measure
and is focused on by the Board in capital planning and business planning
alongside the economic capital measure. It expresses the regulatory view of
the available capital as a percentage of the required capital.
Strategic expenditure Are costs that deliver major regulatory change, the implementation of major
strategic investment, new product and business lines and other restructuring
costs.
Tangible net asset value ("TNAV") An APM that comprises IFRS total equity attributable to ordinary shareholders,
excluding goodwill and other intangible assets, and after adding back
contractual service margin, net of tax.
Tangible net asset value per share An APM and one of the Group's KPIs, representing tangible net asset value
divided by the closing number of issued ordinary shares excluding shares held
in trust.
Trustees Individuals with the legal powers to hold, control and administer the property
of a trust such as a pension scheme for the purposes specified in the trust
deed. Pension scheme trustees are obliged to act in the best interests of the
scheme's members.
Underlying earnings An APM that is calculated by dividing underlying operating profit after
per share attributed tax by the weighted average number of shares in issue by the Group
for the period.
Underlying An APM and one of the Group's KPIs representing new business profit, in-force
operating profit operating profit, other Group companies' operating results, development costs
and other, and finance costs. Underlying operating profit is reported prior to
deferring new business profit to the CSM as the Board considers the value of
new business is significant in assessing business performance. The Board
believes the combination of both future profit generated from new business
written in the year and additional profit from the in-force book of business,
provides a view of the development of the business aligned to growth and
future cash release. Underlying operating profit is reconciled to adjusted
operating profit before tax, which is reconciled to IFRS profit before tax in
the Business Review.
Underlying organic capital generation An APM and one of the Group's KPIs. Underlying organic capital generation is
the net movement in Solvency II excess own funds over the year, generated from
in-force surplus, net of new business strain, cost overruns and other expenses
and debt interest. It excludes strategic expenditure, economic variances,
regulatory adjustments, capital raising or repayment and impact of management
actions and other operating items. The Board believes that this measure
provides good insight into the ongoing capital sustainability of the business.
Underlying organic capital generation is reconciled to Solvency II excess own
funds, which is reconciled to shareholders' net equity on an IFRS basis in the
Business Review.
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