Specialist annuity provider JRP (JRP) is up 17.4% to 103.6p as it reassures on trading after a volatile period which has taken in the UK vote to leave the EU (23 Jun) and a further cut to interest rates (4 Aug).

JRP says it has traded in line with expectations in defined benefit de-risking, individual guaranteed income for life solutions and lifetime mortgages.

The company adds it is comfortably capitalised under Solvency II regulations and is expecting to confirm a solvency capital ratio of 130% as of 30 June 2016 later this year.

The firm, formed by a merger of Just Retirement and Partnership Group in April, hopes to achieve cost savings of £40 million in the future. Both companies specialised in providing enhanced annuities, which pay higher incomes than mainstream products due to clients having shorter life expectancies due to smoking or illness

The annuity industry, offering insurance-type products which offer a guaranteed income in retirement, was badly hit by the announcement of new pension freedoms in the 2014 Budget. No longer do most retirees have to purchase an annuity, most of which offer rock-bottom returns in a low interest rate environment.

On 5 July, broker Panmure Gordon said JRP were trading at an ‘unwarranted’ 46% discount to its forecast embedded value of 207p per share.

It recommends investors ‘buy’ the stock as JRP can increase profitability and its sufficient capital strength allows the company to take advantage of growth opportunities in the short to medium term.

On 24 June following the Brexit result, the share price dropped from 148.5p to 117.4p as the market fretted about low annuity rates and its ability to cover liabilities.


Issue Date: 23 Aug 2016