- Earnings Exceed Expectations: Just Group Reports 154% Increase in First-Half Earnings, Expects to Surpass Annual Targets
- Driving Factors: Strong Demand for De-Risking Schemes and Interest Rate Increases Boost Profits
- Market Growth Potential: Defined Benefit Transactions Expected to Reach £60 Billion, Favorable Demographics Support Growth
After reporting a 154 percent increase in first-half earnings, Just Group anticipates exceeding its annual earnings targets.
The retirement specialist informed investors that it was “extremely confident” of exceeding underlying operational profit growth of over 15% this year after revenues reached £173 million for the first half of 2023.
Profits increased from £68 million a year ago to £162 million, exceeding analyst predictions of £162 million.
The FTSE 250 company’s retirement income sales rose £1 billion to £1.9 billion in the first half of the year.
Demand for its defined benefit de-risking schemes, in which companies transfer a portion or all of their pension obligations, drove the majority of the expansion, while increases in interest rates helped to reduce or eliminate funding deficits.
During the period, the Surrey-based company completed 35 defined benefit transactions, the largest of which was a £513 million full scheme buy-in for the GKN Group Pension Scheme.
It also completed a £190 million buy-in transaction with the trustees of the Ibstock Pension Scheme, which Just attributes to the rise in gilt yields following former Prime Minister Liz Truss’s controversial mini-budget’ in September of last year.
Higher interest rates also increased returns in the retail annuity division of Just Group, which wrote £470 million in new business, a 54 percent increase over the prior year.
The section has been busier than ever since 2014, when Britons over 55 may withdraw from their defined-contribution pension fund.
Just has increased its quarterly dividend by 15% to 0.58 pence per share.
David Richardson, chief executive officer of Just Group, remarked, “We have delivered another impressive set of results. And we are highly confident that we will easily surpass our profit growth target of 15% this year.”
I am thrilled that our retail business has returned to growth as our DB business continues to thrive.
We are well-positioned to continue benefiting from the good drivers and demographics of both our core markets.
Lane, Clark, and Peacock predicts defined benefit transactions of up to £60 billion in 2019, up from £44 billion pre-pandemic.
Approximately one-fifth of the 5,000 corporate defined-benefit schemes in the United Kingdom are entirely funded on an insurer buyout basis.
Just Group shares opened at 82.4p on Tuesday, up 0.5%, and had risen 7% in the past year.
