Diverse Income Trust plc (LON:DIVI) Fund Manager Gervais Williams caught up with DirectorsTalk to discuss portfolio company Just Group plc (LON:JUST).
DirectorsTalk asked: Just Group is a financial services company in the Diverse Income trust and focussed on the retirement sector. In its results over the summer, it highlighted a record pipeline of £5 billion. It clearly has strong growth prospects. What are your thoughts?
Gervais Williams commented:
“The key issue about Just Group is it’s been preparing itself for a period of uncertainty. When interest rates are falling, it constrains the ability of the business to grow. When interest rates are rising, it’s helpful for this business. We’ve been through a long period on interest rate reductions, clearly, we’re in a period of interest rate rises and the net effect is the prospects of this company continue to improve.
Specifically, it’s a company which is more complex and for that reason, a lot of investors overlook its advantages. We think the valuation is low, the prospects are good and that’s a lovely combination to invest in at a time when quite a lot of other companies are coming under margin pressure and global growth is more uncertain.”
Financial strengths assessment
On the 12 September 2022, AKG Financial Analytics Limited provided a financial strengths assessment and a summary below on the company:
· Just Group plc (renamed from JRP Group plc on 18 May 2017) was formed on 4 April 2016, following the merger of Just Retirement Group plc and Partnership Assurance Group plc.
· Just Group plc (LON: JUST) is a specialist UK financial services group focusing on attractive segments of the UK retirement income market. They are a leading and established provider of retirement income products and services to individual and corporate clients.
· The recent key focus has been capital self-sufficiency, resilience, and providing optionality to deploy surplus capital.
· The focus in 2021 shifted to sustainably growing the business after Just completed its programme to strengthen its capital position in 2020, including delivering positive underlying organic capital generation for the first time.
· The capital position of the Group was further strengthened during the year as it built its Solvency II capital coverage ratio to 164% [2020: 156%], aided by £51m of underlying organic capital generation · New business volumes grew by 12% in 2020 and by 25% in 2021.
· Just remains highly regarded for service in the intermediary market and was named as Company of the Year at the Financial Adviser Service Awards for 2021.
· Product innovation continues, illustrated by the recent development of the Secure Lifetime Income platform proposition, Destination Retirement (an automated advice tool for those with modest savings) and the DB partnering arrangement.
· Two senior management appointments were made in quick succession; David Richardson, who has been with the business since 2013 and was Deputy CEO from merger in April 2016 to May 2019, as Group Chief Executive Officer (firstly as interim in May 2019 and permanent in September 2019) and Andy Parsons as Group Chief Financial Officer in January 2020.
· Further appointments have been: Paul Fulcher as Group Capital Management and Investment Executive (February 2021); Lisa Davis as Chief People Officer (February 2022) and Pretty Sagoo as Managing Director DB Solutions (April 2022).
· Just Retirement Ltd (JRL) is the Group’s main life insurance company both in terms of size and new business written.
· Partnership Life Assurance Company Ltd’s (PLACL) principal activities are the run-off of life assurance and annuities and the writing of new UK Care business. As at 31 December 2021, PLACL accounted for 21% of the Group’s insurance reserves.
· At 31 December 2021, JRL’s and PLACL’s SCR coverage ratios were 156% and 146% respectively [2020: 150% and 162%]
A full copy of the Financial Strengths Assessment can be can be seen below: