Just Group boosted by interest rate hikes as retirement income sales more than double to almost £2bn

Just Group has confirmed annual financial targets after seeing retirement income sales climb by £1billion to £1.9billion during the first half of its fiscal 2023.

The Surrey-based insurance and retirement specialist credited the Bank of England’s interest rate hikes with strong growth in new business across both the retail annuity and defined benefit de-risking markets.

For the former, the FTSE 250 firm achieved a 54 per cent surge in sales as financial advisers and customers took advantage of rising rates boosting guaranteed annuity returns.

Result: Retirement specialist Just Group credited interest rate hikes to the strong growth in new business across both the retail annuity and defined benefit de-risking markets

Just said the six-month period was the busiest for the individual annuity market since reforms announced in 2014 granted Britons greater flexibility over accessing their defined contribution pensions.

Demand for these products has traditionally been relatively weak but has improved significantly in recent times as government bond yields have soared.

At the same time, the value of defined benefit de-risking transactions, whereby firms remove part or all of their pension obligations, soared by 149 per cent to £1.4billion.

The company finalised its largest ever corporate pension deal during the period – a £513million full scheme buy-in for the GKN Group Pension Scheme.

Other sales completed included an estimated £190million buy-in from the Trustees of the Ibstock Pension Scheme, which Just has said was ‘made possible’ by the bump in gilt yields over the second half of 2022.

In total, the business completed 35 defined benefit transactions for the opening six months of 2023, compared to just 14 in the equivalent period last year.

Following the impressive result, Just said it was ‘highly confident of achieving our financial ambitions for the full year,’ as well as medium-term underlying operating profit expansion of 15 per cent per year on average.

David Richardson, the company’s chief executive, said: ‘We are exceptionally well positioned to continue benefiting from the unstoppable trends and positive developments in both our markets.’

He added that Just’s defined benefit business had ‘a record pipeline of new business opportunities’ going into the remainder of the year.

Approximately 1,000 corporate pension schemes are funded sufficiently to be offloaded to an insurer, according to actuarial consultancy LCP.

Richardson also said the mix of rising interest rates and new Financial Conduct Authority rules would encourage more annuity sales.

Under the FCA’s incoming Consumer Duty guidelines, insurers and other financial service businesses face new requirements to ensure better outcomes for customers.

Just Group shares were 6 per cent, or 4.6p, higher at 81.8p on Tuesday morning and have grown by around a fifth per cent over the past 12 months.