disciplined growth, higher margins/media/files/j/jrms... · final dividend 2.55p, +6%. 2017 total...
Post on 26-Sep-2020
0 Views
Preview:
TRANSCRIPT
Q1 2018 business update
2017 preliminary Results
Disciplined growth, higher margins
30 May 2018JP Morgan European insurance conference
2017 Interim results
Q1 2018 business update
Highlights
Continued pricing discipline
Marked increase in DB opportunities as EBCs proactively manage the industry pipeline and the market becomes less seasonal
GIfL sales continue to benefit from regulatory initiatives to encourage shopping around. We continue to invest in HUB
Q1 18 LTM sales at 33% of Retirement Income (“RI”) sales were up 42%, in line with growth in RI as we optimise matching
A
Just Group
published 17 May 2018
£m %
Q1 18 Q1 17 Change FY 17
Defined Benefit De-risking 249 125 99 998
GIfL 188 174 8 821
Care Plans 17 17 2 72
Retirement Income sales 454 317 43 1,890
Drawdown 11 12 (2) 51
Protection 1 2 (50) 6
Lifetime Mortgage advances 151 107 42 510
Total New Business sales 617 436 41 2,457
Note (1): GIfL – Guaranteed Income for Life(2) Column sums may differ from totals due to rounding
2017 Preliminary Results
1 5 march 2018
Disciplined growth, higher margins
2017 preliminary results 4
Disciplined growth, higher margins
New business margin rose from 6.8% to 9.0%. New business profit up 37%
Our focus on profit over volume has delivered a 35% increase in adjusted pre-tax operating profit
£52m of run rate cost synergies, one year ahead of schedule
Successful £230m T3 issue since year end, taking our pro forma SCR coverage ratio to 156%New banking facility and inaugural credit rating achieved during the year
EEV 228p per share. IFRS TNAV 165p per share
Final dividend 2.55p, +6%. 2017 total dividends 3.72p, +6%
2017 preliminary results
1,728 1,917 2,119
2,497 2,336 2,259
2015 2016 2017
OMO Rest of market
5
Attractive growth markets
Historical and expected growth in DB de-risking transactions (£bn) Growth in the external GIfL market (£m)
Industry lifetime mortgage advances (£m) Source: ABI and Just analysis
Source: ERC and Just analysis
41%
+11%
OMO as % of total market
5.2 4.47.5
13.2 12.3
10.2
9.0
12 15
700
2011 2012 2013 2014 2015 2016 2017P- LCP
2018P-LCP
2017-2031P
Buy-in / Buy-out Backbook acq. Projections
Source – PPF, Hymans Robertson, LCP
19.2
77
2
92
0
1,0
73
1,3
79
1,6
02
2,1
49 3,0
57
2011 2012 2013 2014 2015 2016 2017
Industry lifetime mortgage advances (£m)
+42% DB market remains exciting, solid long term growth prospects intact
Our addressable GIfL market, the Open Market Option (“OMO”) is up 11% in 2017 v 2016
Strong 2017 lifetime mortgage market momentum, exceeding £3bn for the first time. Just expect a £6.6bn market by 2021
+11%
45% 48%
2017 preliminary results 6
Financial reSULTS
Simon ThomasGroup chief financial officer
2017 preliminary results 7
Summary IFRS results
Just Group
£m
FY 17FY 16
Pro forma%
change
New business profit 170 124 37
In-force operating profit 71 75 (5)
Underlying operating profit 241 199 21
Operating experience and assumption changes
35 3 -
Other Group company results (15) (12) 22
Reinsurance and finance costs (40) (26) 56
Adjusted pre-tax operating profit
221 164 35
Note: Column sums may differ from totals due to rounding
Margin expansion, 4% Retirement Income sales increase
Higher opening reserves more than offset by bond spread tightening and lower earnings on surplus assets
Includes 12 months interest from T2 issued in Oct 2016
Mainly driven by new business profit growth
Expense savings partly offset by mortgage strengthening
Comment
2017 preliminary results 8
FY 2017 sales
Just Group
£m
FY 17FY 16
Pro forma%
change
Defined Benefit De-risking 998 943 6
Guaranteed Income for Life 821 778 5
Care Plans 72 97 (26)
Retirement Income sales 1,890 1,819 4
Drawdown 51 25 103
Protection 6 5 28
Lifetime mortgage advances 510 559 (9)
Total New Business sales 2,457 2,408 2
Note: Column sums may differ from totals due to rounding
Continued focus on margin over volume
Addressable GIfL market continues to grow
Comment
Discontinued during 2018
Uncertainly over future government care policy
2017 preliminary results 9
Strong IFRS new business profitability post merger
6.0%
4.2%3.3%
6.8%
9.0%
2013 2014 2015 2016 2017
A significant improvement in new business margins New business profit (£m, calendar year)
New business margins (calendar year)
142
83 68
124
170
2013 2014 2015 2016 2017
2017 saw an increase in new business margins driven by similar factors as in the first half
o Continued pricing discipline
o Attractive mortgage spreads
o Cost synergies driving improved unit costs
o Longer duration liabilities enabling increased mortgage backing ratio
Note 1: Pro forma prior to 2017
+37%
2017 preliminary results
70 74
55 5545
2013 2014 2015 2016 2017
10
IFRS in-force profit
64
7671
7571
2013 2014 2015 2016 2017
In-force profit down 5% at £71m
Result is driven by
o Higher opening reserves driven by netinflows offset by
o Fall in corporate bond spreads and impacton bond default allowance
o Lower earnings on surplus assets
In-force profit stability In-force profit1 (£m, calendar year)
In-force margins2 (bps)
Note 1: Pro forma prior to 2017
Note 2: Basis change in JRL from 1/1/2015 reflecting adoption of a compounding accrual of mortgage yield from straight line previously. The total return recognised over the life of the mortgage is unchanged
2017 preliminary results 11
Positive operating experience variances and assumption changes
18.6
(6.6) (5.6)
2.6
34.6
2013 2014 2015 2016 2017
We have released £90m of expense reserves asthe synergy benefits reduce in-force expenseallowances
General population longevity trends have madeour standard underwritten DB assumptionsappear conservative, but we have strengthenedour mortgage assumptions
We remain comfortable with our medicallyunderwritten reserving basis and will reviewwhen our IP datasets have been fullyharmonised
Operating experience variances and assumption changesOperating experience variances and assumption changes1,2 (£m,
calendar year)
Note 1: Pro forma prior to 2017
Note 2: In 2013, Partnership benefited from an expense assumption profit after it transferred a block of in-force reinsured GIfL and Care Plans onto its in-house administration platform. This was the
primary driver behind a £21m positive contribution from assumption and other changes, resulting in a pro forma £18.6m
Analysis of operating experience variances and assumption changes
£m 2017
Maintenance expenses 90
Experience variances (15)
Mortality reserves (30)
Other (10)
Net experience variances and assumption changes 35
2017 preliminary results 12
Statutory IFRS results: focus on non-operating items
Just Group
£m
FY 1718 months to Dec 161
Adjusted operating profit before tax 221 216
Non-recurring and project expenditure (12) (21)
Investment and economic profits 23 93
Merger transaction costs - (23)
Merger integration costs (26) (41)
Amortisation of intangibles (25) (25)
Profit before tax 181 199
Note 1: includes 9 months of Partnership from the date of acquisitionNote: All figures subject to rounding
Favourable credit spread movements partly offset by changing economic assumptions. Significant falls in risk-free rates in 2016
Four quarters of amortisation (three in 2016)
Comment
Formation of HUB. 2016 included SII costs
Cost to achieve £52m in run rate savings
2017 preliminary results
Our 7 year £230m T3 bond issue after the year end means we are no longer under-leveraged compared to peers
The 3.5% coupon confirms that our cost of capital is falling
2017 year end gearing ratio of 16%, pro forma 25% post T3 issuance
Fitch have confirmed our A/A+ credit rating with a Stable outlook
It follows from our inaugural credit rating announced in August 2017
We have a £200m undrawn revolving credit facility to provide further financial flexibility
13
Significantly improved capital structure and liquidity
Yields - Just Group Tier 2 & Tier 3, and PLACL Tier 2
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
May-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
Just 9.000% 2026,yield to maturity
PLACL 9.500% 2025,yield to call
Just 3.500%, 2025,yield to maturity
Source – NatWest Markets, Bloomberg, mid-price
Impact of credit rating
Mar-18
2017 preliminary results 14
capital
David richardsonGroup deputy chief executive officer andManaging director UK corporate business
2017 preliminary results
Our pro forma SII SCR coverage ratio at year end would have been 156% including our recent T3 bond issue
Economic capital coverage ratio of 238% was well above the prior year level even before the T3 bond issue,and would have been 257% on a pro forma basis
The Board remains comfortable with the quality and quantity of capital
The proposed final dividend of 2.55p is a 6% increase on the prior year. 2017 total dividends 3.72p, also up 6%
15
Capital and dividends
Just Group Solvency II1 and Economic Capital4 surplus (£m) & coverage (%)
Own Funds SCR
Tier 1: 75%
SII capital tiering (£m) – 31 Dec 2017 (Pro forma)
2,499
Tier 2: 16%
Tier 1 117%of SCR
1,606
Note 1: SII Own Funds and Solvency Capital Requirement are estimatedNote 2: Assuming TMTP recalculation, reported was 151%Note 3: Adjusted for £230m T3 issued in Q1 18 Note 4: Our assessment of the capital required to absorb 1 in 200 year risk events, and excludes certain elements of SII (e.g. risk margin, matching adjustment portfolio eligibility), and focuses on the economic value of assets such as LTMs
Tier 3: 9%Tier 2&3 39%of SCR
Surplus 893
666 663893
1,4361,644
1,874
31-Dec-16 31-Dec-17 31 Dec 17 Proforma £230m T3
31-Dec-16 31-Dec-17 31 Dec 17 Proforma £230m T3
S II EC
148% 141%156%
216%238%
257% 156%
23
3
2017 preliminary results
666 663
893
230
YE 16 surpluswith TMTP
recalculation
2017 in-forcesurplus (1)
NB strain Dividend &interest
Cost overruns v2018e
Integrationcosts
Other YE 17 surpluswith TMTP
recalculation
Tier 3 debtissuance
February 2018
Pro forma YE 17surplus
16
Reconciliation of SII surplus1
Note 1: All figures net of tax. Solvency II surplus is estimatedNote 2: YE 16 surplus with assumed TMTP recalculation, YE 17 surplus and pro forma YE 2017 surplus are after actual TMTP recalculation at 31 December 2017Note 3: TMTP – Transitional Measures on Technical Provisions
1 January – 31 December 2017 (£m)
141%
76
128
(59)(22)
(105)
(21)
156%148% As expected, despite a
stable surplus after TMTP
recalculation, the SCR
ratio has fallen as we have
grown the balance sheet
Cost overruns and
integration costs reflect
the closing stages of the
integration
The 2017 figures are
shown after actual TMTP
recalculation at 31
December 2017
22
2
3 3
2017 preliminary results 17
Solvency II sensitivities before management actions
893
(257)
(38)(66)
9
(174)(192)
Pro formasurplus
including T3issue
Interestrates
-50bps(no TMTP
recalc)
Interestrates
-50bps(with TMTP
recalc)
Creditspreads+100bps
LTM earlyredemption
+10%
Propertyvalues-10%
Mortality-5%
A resilient capital position (£m)
The February 2018 Tier 3 issuanceprovides an additional buffer
Our SII coverage ratio is resilient in theface of economic and operational shocks
We have no equity sensitivity andlimited credit spread sensitivity
Property and longevity are the mostsignificant sensitivities
156% 137% 150% 151% 157% 144% 143%
(19)% (6)% (5)% +1% (12)% (13)%
Coverage post stress
Impact of stress on coverage
Note 1: TMTP – Transitional Measures on Technical ProvisionsNote 2: Represents a 10% permanent fall below the assumed long term trend for property prices
2
1
2017 preliminary results 18
A fast moving regulatory landscape
The PRA continues to refine Solvency II, and has various industry-wide consultation papers and supervisory statements in issue.
A reduction in risk margin is not the only possible change, with refinements to transitionals, matching adjustment and internal models more generally also under debate. Any of these areas could have a positive or negative effect on Just Group
The recent speech by David Rule (PRA Executive Director of Insurance Supervision) “An annuity is a very serious business” (26 April 2018) set out some thoughts on the risk margin and on the use of illiquid assets to match illiquid DB De-risking liabilities.
“We expect that a more appropriate level of risk margin…would lead to a better balance between longevity risk being retained and reinsured”
“illiquid assets can be a good match for annuities”
“The PRA recognizes the value of (LTMs) to consumers”
“The Bank of England supports the Matching Adjustment framework”
“the main risk is long term stagnation in UK house prices”
“My primary concern is that the Matching Adjustment is being calculated correctly”
“Compensation for the risks taken by the insurer, particularly providing a no negative equity guarantee, should not translate into a matching adjustment benefit”
The devil will be in the detail and we remain in regular dialogue with the PRA in respect of these areas
Many areas of focus
Recent speech by David Rule at the Westminster
& City Bulk Annuities conference (26/4/18)
– “An annuity is a very serious business”
Refinement of SII
2017 preliminary results 19
outlook
RODNEY COOKGroup chief EXECUTIVE officer
2017 preliminary results 20
Attractive growth markets
IP driven competitive advantage
Sustainable capital model
Attractive returns
A sustainable model in growing markets
Just – a sustainable model in growing markets
2017 preliminary results 21
Conclusions and outlook
New business profits up
37%
£52m of run rate merger cost savings
Significant balance
sheet progress
Our model will continue
to deliver
2017 preliminary results 22
Questions
2017 preliminary results 23
Appendix
2017 preliminary results
Note 1: Percentages relate to total portfolio, totals subject to roundingNote 2: AAA and unrated both include units in liquidity fundsNote 3: Based on IFRS PV01 methodology and does not include the impact of derivatives
24
Diversified and well-matched asset portfolio - conservative management of credit risk
38.5%
9.6%8.3%
18.6%
21.6%
0.8%2.6%
Loans securedby mortgages
AAA
AA and gilts
A
BBB
BB or below
Unrated
Asset portfolio by rating 1,2 Asset portfolio by sector 1,2
Asset and liability duration3: ~10 & 11 years respectively
o LTMs ~14 years
o Corporate credit ~ 7 ½ years (reduces migration risk)Single name
concentration limit
Sector concentration limit
Foreign currency hedged
Rating limit (relative to iBoxx)
Total asset portfolio -£18,287m
Lifetime mortgages
37%
Commercial mortgages
1%
Banks12%
Cash and equivalents
5%
Utilities10%
Financial - other4%
Communications4%
Consumer5%
Government7%
Insurance4%
Industrials4%
Energy2%
Auto manufacturers
2%Basic materials
1%
Other2%
2017 preliminary results
25%
45%
25%
57.5%
75%
55%
75%
42.5%
DB -standard
DB -u/written
GIfL Care
Retained RGA Scor Hannover Re
25
Reinsurance on new business
Reinsurance is an integral part of Just’s capital-lightstrategy and a key enabler of its business plan
Reinsurance is used primarily to manage longevityrisk, both to reduce economic exposure andregulatory capital requirements
o full risk transfer taking the form of longevityswaps with collateral arrangements toreduce counterparty risk
We retain the investment risk
Deep pools of capacity as reinsurers seekdiversification benefits for their mortality books
Just’s reinsurance arrangements have beenoptimised for SII capital regime – any new treatiesentered into post SII implementation have beenbackdated to 1 January 2016
Our market leading IP enhances our reinsurancecredentials, and results in keener pricing
Go forward % use of longevity reinsurance per product line
2017 preliminary results 26
Longevity trends – still improving, but more slowly
Average rate of mortality improvement, England & Wales ages 65-84, five year rolling periods to 2017, by gender
Source: Own calculations using data from ONS
Life expectancy at 65 for men rose by around six years over the period 1970 to 2010
The pace of change has moderated over the last seven years, with rates of mortality improvement peaking around 2005-10
Updated version of the CMI projection model was released in March 2018
We are tracking the emergence of mortality trends closely, particularly in relation to our own experience
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Males Females
2017 preliminary results 27
PrognoSysTM : colon cancer excess mortality
Stage 1 Stage 4
0.00
0.20
0.40
0.60
0.80
1.00
0 5 10 15 20 25
Ha
zard
Years
External dataJust data
0.00
0.20
0.40
0.60
0.80
1.00
0 5 10 15 20 25
Ha
zard
Years
External dataJust data
28
The Defined Benefit De-risking market
2017 preliminary results
2017 preliminary results
Post
transaction
29
Continued innovation by Just in our chosen markets
New DB Choice proposition offering a guaranteed dual pricing structure with
o Choice
A lower medically underwritten price (minimises premium), or
standard underwritten price (minimises contact with members)
o Upfront certainty – price is not dependent on gathering medical data post transaction, or indeed the outcome of that medical data
o Value – trustees and sponsor can see the value of MU upfront, irrespective of appetite for MU. The sponsor can compare both prices with those of other insurers’ ahead of transaction
Will continue to offer existing suite of 4 pricing solutions on a case by case basis
Launch of DB Choice proposition – November 2017
Pre transaction
Top-slicing(pre transaction)
DB Choice
Standard underwriting
or
combined into
Medical Under-writing
<300 lives
1
2 3
4
10-300 lives
>300 lives
2017 preliminary results 30
Defined Benefit – a £2.3 trillion opportunity
85% of schemes (by number) are closed to future accrual or new members LDI liabilities for UK pension schemes by type of mandate (£bn)
“The most attractive insurance market in Europe” (Barclays Capital, 1st August 2016)
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Closed to new members Closed to future accrual
0
100
200
300
400
500
600
700
800
2011 2012 2013 2014 2015
Segregated Bespoke PooledSource – PPF Source: KPMG
Source – PPF, Hymans Robertson, LCP
37% of liabilities relate to pensions in payment
Deferred, 38%
Pensioner, 37%
Active, 25%
Historic and expected growth in DB de-risking transactions (£bn)
Source – PPF
5.2 4.47.5
13.2 12.3
10.2
9.0
12 15
700
2011 2012 2013 2014 2015 2016 2017P- LCP
2018P- LCP
2017-2031P
Buy in / Buy out Backbook acq. Projections
19.2
2017 preliminary results 31
Our scale, and the addressable DB de-risking market
140
9%
19
55%
transactions since 20131,
a 3 year market share of
viaEBCs, leading to
generating
of Group Retirement Income sales over 2015 / 16 / 17
No members No SchemesTotal Buyout
Liabilities£bn
Split Total by liability type (£bn)
Pen Def Act
<100 1,994 22 10 10 2
100-999 2,458 201 78 105 18
1000-4999 759 391 153 195 43
5000-9999 180 287 121 132 34
>10000 197 1,376 557 626 193
TOTAL 5,588 2,277 919 1,068 290
£bn
Pensioners addressable now in full 241
Pensioners partially addressable in tranches 678
Deferreds addressable now or in future as pensioner tranches
135
Deferreds partially addressable in future as pensioner tranches
1,223
2,277Source – PPF, Just analysisNote 1: Pro forma, up to 31 December 2017
32
Guaranteed Income for Life
2017 preliminary results
2017 preliminary results
44% 40% 38%
2015 2016 2017
Just market share All other OMO
33
Open market option (OMO) beginning to recover
57%60% 59%
52%
41%
45%48%
30%
35%
40%
45%
50%
55%
60%
65%
2011 2012 2013 2014 2015 2016 2017
OMO % of Total
External GIfL market (£m) 2015 - 2017
Source: ABI and Just analysis
GIfL – a growing addressable market
1,728
1,917
Source - ABI
+11%
2018 – 6 insurers quoting in the Open Market
HUB is an enabler to grow the OMO via provisionof services to panels. Panels encourage maturingpension customers to shop around
o Panels established by Prudential, StandardLife, Royal London, and Phoenix
1,985 2,126 2,236
2,240 2,127 2,142
2015 2016 2017
H1 H2
GIfL market 2015 – 2017 (£m) – steady flow business
Source: ABI and Just analysis
4,225 4,2532,119
4,378 +11%
2017 preliminary results 34
1.9
2.9
2.0
2016 Demographic Previous zeroincome DD
GAR DB transfer LifeCos 2020f
Potential OMO market size - 2020
£bn
Base case
Potential upside
£4.9bn
11%CAGR
Source of future GIfL growth
The OMO continues to gradually recover. Just sees no reason why the OMO should not reach 75-80%share of the overall GIfL market in time
o Just predicts a £2.9bn OMO market by 2020, driven by underlying GIfL market growth of 6%
Source – ABI, Just analysis
2017 preliminary results
65 year old individual who is 5’ 7” tall, weighing
15st 13 lbs
Illustrative example Provider Annual incomeUplift if chose
Just
Just quote £2,754
Best standard underwritten quote £2,613 +5%
Worst standard underwritten quote £2,551 +8%
Just quote £2,964
Best standard underwritten quote £2,613 +13%
Worst standard underwritten quote£2,551 +16%
Just quote £3,252
Best standard underwritten quote £2,613 +24%
Worst standard underwritten quote£2,551 +27%
35
Real outcomes - our customer rates vs. standard providers
Note: Illustrative examples for £50,000 purchase price and GIfL paid monthly in advance, single life, no escalation, 5 year guarantee period, RH2 7RT post code. Quotes correct as of 1st March 2018
65 year old with diabetes type 2 diagnosed 4.5 years
ago, supplied HbA1c readings, takes 1
medication daily and 23 units of alcohol weekly
65 year old diagnosed with Parkinson’s Disease
diagnosed 9 years ago, hospitalised 1 year ago, high blood pressure, and
cholesterol with 1 medication daily for each
condition (3 total)
Mo
de
rate
Mil
dS
ev
ere
36
LifetimeMortgages
2017 preliminary results
2017 preliminary results 37
Growth drivers
Changing attitudes towards using housing equity
Peace of mind from No Negative Equity Guarantee (“NNEG”) feature in products
Favourable demographics
Increased housing wealth amongst retirees
Retirement Income shortfall
Move from Defined Benefit to Defined Contribution pensions
Maturity of Interest Only mortgages
Increased advertising spend by providers and distributors
Increased distribution capacity
Source: Equity Release Council, Just internal analysis
772 920 1,0731,379 1,602
2,149
3,057
6,600
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Lump sum mortgage sales New drawdown mortgages - initial advance Existing drawdown mortgages - further advance Forecast
£m
LTM market forecast (£m)
21% CAGR
A strong starting point in LTM
Just expects a £6.6bn market by 2021, a CAGR of 21% from the £3bn market in 2017
2017 preliminary results 38
Lifetime mortgages – current portfolio
Total outstanding of £5.3bn1 is made up of over 65k
loans, average balance £82k
Average property-weighted LTV for new business is
c.27%, only 0.5% of loans with LTV greater than 75%
Average LTV across portfolio remains low at 29%
LTV breakdown by geography (£m / %) 31 December 2017
Self origination and funding to 3rd partiesLTV breakdown by customer age bands (£m) 31 December 2017
A low risk LTM portfolio
573 584325
150 83
584
894
736
390
187
0
2
9
14
12
0
200
400
600
800
1000
1200
1400
1600
Below 70 70-75 75-80 80-85 85+
<30% 30% ~ 50% 50%+
664749 772
267
677
347 400330
456
169 204 232
37
0%
10%
20%
30%
40%
0
500
1,000
Gre
ate
r L
on
do
n
Ou
ter
Me
tro
po
lita
n
Ou
ter
So
uth
Ea
st
Ea
st A
ng
lia
So
uth
We
st
Ea
st M
idla
nd
s
We
st M
idla
nd
s
Yo
rksh
ire
& H
um
be
r
No
rth
We
st
No
rth
Wa
les
Sco
tla
nd
No
rth
ern
Ire
lan
d
LT
V
Ou
tsta
nd
ing
Total outstanding (LHS) Average of LTV based on total outstanding (RHS)
Note 1: The difference between the total amount outstanding (principal and accruedinterest), and the balance sheet amount on slide 23 is due to the discount rate used to compute fair value.
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49C
ash
flo
ws
pe
r a
nn
um
(£
m)
Year
Corporate Bonds & Gilts
Lifetime Mortgages
GIfL Liabilities
DB Liabilities
LTMs play a key role in our ALM process
Source – Just analysis
2017 preliminary results 39
LTMs – The economics of NNEG, 30% initial LTV
Projected LTV by age and HPI (initial 30% LTV and 5.5% interest)
Impact of NNEG for different HPI growth rates (initial 30% LTV and 5.5% interest)
0%
20%
40%
60%
80%
100%
120%
140%
160%
70 75 80 85 90 95 100
0%HPI
1%
2%
3%
4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
50
70
90
110
130
150
-3% -2% -1% 0% 1% 2% 3%
Age at which NNEG materialises Yield if lives to exactly 100
100% LTV at 92 ½ years
femalesc.18 years
malesc.16 years
UK life expectancy from age 701
Note 1: Source, CMI 2017, published on 1/3/2018, based on life expectancy data at age 65
We guarantee that a borrower’s estate will never
have to repay more than the value of the house
NNEG allowance is sufficient if property prices
immediately fall by c. 20% and never grow again
House price inflation of 0% indefinitely would only
drive a 100% LTV as our typical 70 year old, initial
20% LTV customer approaches 100. At 30% initial
LTV, 100% LTV is reached at age 92½
No-Negative Equity Guarantee (NNEG)
2017 preliminary results 40
Contacts and financial calendar
James Pearce
Director of Group Finance
Just Group plc
01737 827 245
james.pearce@wearejust.co.uk
Paul Kelly
Investor Relations Manager
Just Group plc
0207 444 8127
paul.kelly@wearejust.co.uk
www.justgroupplc.co.uk
Calendar
Ex-dividend date – 3 May 2018
Dividend payment date – 25 May 2018
Q1 2018 business update and Annual General Meeting (“AGM”) – 17 May 2018
Expected announcement of 2018 interim results - 6 September 2018
2017 preliminary results 41
Disclaimer
For the purposes of this notice, "document" means this document, any oral presentation, any question and answer session and any written or oral material discussed or distributed by Just
Group plc (“Just”) during the presentation. This document has been prepared and issued by and is the sole responsibility of Just.
This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Just or any related
company nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contractual commitment or investment decision in relation thereto
nor does it constitute a recommendation regarding any securities. This document, which speaks as of the date hereof only, is intended to present background information on Just, its business
and the industry in which it operates and is not intended to provide complete disclosure upon which an investment decision could be made. The merit and suitability of an investment in Just
should be independently evaluated and any person considering such an investment in Just is advised to obtain independent advice as to the legal, tax, accounting, financial, credit and other
related advice prior to making an investment.
This document and any materials distributed in connection with this document may include certain “forward-looking statements”, beliefs or opinions, including statements with respect to the
business, financial condition and results of operations of Just. These statements, which may contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect” and words of similar
meaning, reflect the beliefs and expectations of the directors of Just and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.
No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. There are a number of factors that could cause actual
results and developments to differ materially from those expressed or implied by these statements and forecasts. Past performance of Just cannot be relied on as a guide to future
performance. Forward-looking statements speak only as at the date of this document and Just expressly disclaim any obligations or undertaking to release any update of, or revisions to, any
forward-looking statements in this document. No statement in this document is intended to be a profit forecast. As a result, you are cautioned not to place any undue reliance on such
forward-looking statements.
To the extent available, the industry, market and competitive position data contained in this document has come from official or third party sources. Third party industry publications, studies
and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such
data. While Just believe that each of these publications, studies and surveys has been prepared by a reputable source, Just has not independently verified the data contained therein. In
addition, certain of the industry, market and competitive position data contained in this document come from the internal research and estimates of Just based on the knowledge and
experience of Just's management in the markets in which Just operates. While Just believe that such research and estimates are reasonable and reliable, they, and their underlying
methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change without notice. Accordingly, undue reliance should
not be placed on any of the industry, market or competitive position data contained in this document. All projections, valuations and statistical analyses are provided to assist the recipient in
the evaluation of the matters described herein. They may be based on subjective assessments and assumptions and may use one among alternative methodologies that produce different
results and to the extent that they are based on historical information, they should not be relied upon as an accurate prediction of future performance.
The document has not been independently verified and no representation or warranty, express or implied, is made or given by or on behalf of Just, or its directors, officers, advisers or any
person acting on its behalf, as to, and no reliance should be placed for any purposes on, the accuracy, completeness or fairness of the information or opinions contained in this document and
no responsibility or liability whatsoever for any loss howsoever arising from any use of this document or its contents otherwise arising in connection therewith is assumed by any such persons
for any such information or opinions or for any errors or omissions. Just is not under any obligation to update or keep current information contained in this document, to correct any
inaccuracies which may become apparent, or to publicly announce the result of any revision to the statements made herein except where they would be required to do so under applicable
law, and any opinions expressed in them are subject to change without notice.
top related