Just Group shares rise after the life insurer announced that its profits will “substantially” exceed forecasts

Shares in Just Group rose 13 percent on Tuesday morning after the life insurer said it expects to “substantially exceed” annual profit forecasts.

The retirement specialist revealed its underlying operating profit rose 44 per cent to £249m in the six months to June, partly thanks to new business growth.

Sales of retirement income products rose 30 per cent to £2.5bn, and its defined benefits business enjoyed a record first half after completing 55 transactions, compared with just 35 over the same period in 2023.

Among the plans completed by Just Group are a £400m investment in an unnamed technology company and a £130m investment in the Lucite International UK Pension Fund, sponsored by Mitsubishi Chemical UK.

Just Group’s Guaranteed Revenue division also achieved an extraordinary result, generating £600m of new business, an increase of 28 per cent on last year.

At 9:30 am on Tuesday, Group shares only rose 13.6 percent to 133.4 pence, bringing their gains since the start of the year to about 57 percent.

Higher interest rates over the past two years have helped accelerate the closure or, in many cases, eradicate funding gaps in defined benefit de-risking schemes, whereby companies transfer some or all of their pension obligations.

They have also boosted the returns on annuities, which typically pay retirees a fixed income for life but have historically had a reputation for being inflexible and of little value.

David Richardson, CEO of Just Group, said: ‘We are delighted with the strong momentum of our business driven by the multiple opportunities available and structural growth in our chosen markets.

‘Both our DB and retail businesses contributed to this excellent performance, reflecting our continued investment in technology and talent.’

He added: “Given the strong first half result, positive market dynamics and our forward-looking project pipeline, we expect to substantially exceed previous 2024 guidance of doubling 2021 operating profit of £211m over three years.”

Panmure Liberum subsequently raised its target price for the company from 144 pence per share to 169 pence per share.

Just Group expects new business volumes in the second half of 2024 to be “similar to the excellent results” achieved between January and June.

In the long term, the London-based firm believes it will benefit greatly from UK companies transferring assets from defined benefit pension schemes currently on their balance sheets.

In October 2023, consultancy Lane, Clark & ​​Peacock estimated that £600bn of defined benefit transactions could take place over the next decade, including £360bn over the next five years.