Demand for Just Group’s (JUST) retirement income products and services has slumped, knocking its share price down 10% to 58p.
The financial services provider has reported a much weaker than expected set of first quarter results. This follows the cancellation of the dividend in March and a £375m capital raise.
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For the three months to 31 March total new business sales fell 55% from £617m to £276m due to a 90% collapse in sales for its defined benefit de-risking product, from £249m to just £26m.
The company claims the fall is due to ‘a temporary reduction in activity levels’ in its target market which is individuals and corporate clients.
The aforementioned defined benefit de-risking product is aimed at pension scheme trustees to reduce the financial risks of operating pension schemes and, in its own words, ‘create certainty that members’ pensions will be paid in the future’.
Even with £300m-plus of new business this quarter, that still leaves the first half contribution from defined benefit de-risking product down more than 50% on last year’s £718m which was boosted by consultants ‘managing the industry pipeline’ and Just Group putting up prices.
Its other main retirement income product, which offers a guaranteed income for life, saw a 23% drop in new business sales from £188m to £145m as a result of customers baulking at price rises.
There isn’t even much comfort from the lifetime mortgage business with new sales down by almost half from £151m to £79m.
Management says that continued growth in its market means there is ‘a considerable opportunity to deploy capital in a disciplined and profitable manner’ and that ‘defined benefit-related sales for the year will be similar to the annualised rate seen in the second half of 2018’.
It also says it has ‘a plan in place’ to improve the firm’s capital position following the rights issue in March, but shareholders who forked out 80p per share won’t be impressed with today’s update and the fact that they’ve lost over a quarter of their money on their new shares already.
