‘Never been stronger’: Just Group profits soar as jump in pension commutation deals boost specialist insurers
- It completed the de-risking of 56 DB pension schemes worth £2.6bn by 2022
- Higher interest rates reduced pension deficits, making de-risking more affordable for companies
- Underlying operating profit rose 19% to £249 million
Shares of Just Group rose after the specialist insurer boasted it had “never been stronger” as a spate of pension buyout deals helped boost profits.
The Surrey-based company completed the de-risking of 56 defined benefit schemes worth £2.6bn by 2022, almost double the 29 it completed in 2021 worth £1.9bn.
Analysts expect the pension buy-in and buy-out markets to boom in the coming years as more companies turn to insurers like Just Group to shift their pension obligations and run their retirement plans.
Pension commutation boom: Analysts predict £200bn in commutations over next three years
Analysts are forecasting £200bn in buyout deals over the next three years – similar to the total amount over the past decade, the group said.
The underwriter said its pipeline is in excess of £6bn in the near term and it expects ‘a busy year with a greater number of medium and large transaction opportunities coming to market’.
“We’ve never been stronger,” it told investors today, as it posted a 19 percent increase in underlying operating profit to £249 million for 2022.
“The sharp rise in interest rates in 2022 has had a positive impact as it further lowers the DB [defined benefit] funding shortfalls of the scheme, making lower-risk transactions more affordable,” the group explained.
“Many schemes are already or nearly fully funded sooner than expected and are therefore able to accelerate their risk reduction plans.”
Just Group completed its largest transaction to date worth £513m in February.
And the group added that it had already “signed or exclusive some other medium-sized deals.”
The company announced a final dividend of 1.23 pence per share, up 1 pence, bringing the total dividend to 1.73 pence per share.
Just group shares rose 10.5 percent to 90.70 p during midday trading on Tuesday. They are up 20 percent in the past year.