Strategic Report Governance
Financial Statements
203
In managing its capital, the Group undertakes stress and scenario testing to consider the Group’s capacity to respond to a series of relevant financial, insurance, or operational shocks or changes to financial regulations should future circumstances or events differ from current assumptions. The review also considers mitigating actions available to the Group should a severe stress scenario occur, such as raising capital, varying the volumes of new business written and a scenario where the Group does not write new business. EVT Compliance The Effective Value Test (“EVT”) is a regulatory requirement that assesses the economic value of equity release mortgages (LTMs). The EVT is used to ensure that LTMs do not exceed the economic value of assets on the Solvency II balance sheet. At 31 December 2024, JRL and PLACL passed the PRA EVT with a buffer of 1.2% and 1.0% (unaudited) respectively, over the current minimum deferment rate of 3.5% (allowing for volatility of 13%, in line with the requirement for the EVT). At 31 December 2023, the buffer for JRL was 1.1% (unaudited) compared to the minimum deferment rate of 3.0%. PLACL did not take credit for the matching adjustment on LTM assets at 31 December 2023 so the EVT test was not applicable at that time. Regulatory developments Following PRA approval to move from Standard Formula to Internal Model for calculating the PLACL capital requirement in July 2024, the Firm now uses an Internal Model for calculating the capital requirement of JRL, PLACL and the Group. The key regulatory developments are included below. Residential ground rents – On 9 November 2023, the previous government published a consultation seeking views on capping the maximum ground rent that residential leaseholders can be required to pay. Although the previous government did not implement any reform of residential ground rent, the new government may still consider reforming the ground rent charges. The Group is closely monitoring the new government’s agenda, which remains uncertain, and the impact of this on the Group’s £157m (2023: £176m) portfolio of residential ground rents. An adjustment was made at year end 2023, which has been maintained at a similar level for year end 2024 to reflect the ongoing uncertainty. Matching adjustment (SUK) reform – In line with the requirements set out in PS10/24, the Group has implemented required changes at 31 December 2024, including: Matching Adjustment attestation, removal of the sub-investment grade cliff in the matching adjustment, and the reflection of rating notches in the fundamental spread. The overall impact of these regulatory changes is reported within the Business review analysis of movement in excess own funds. The Group is assessing new matching adjustment eligible investment opportunities. Life Insurance Stress Test – The PRA is conducting its second Life Insurance Stress Test (“LIST”) exercise in 2025 to assess sector and firm resilience to severe but plausible adverse scenarios and to strengthen market understanding of risk exposures. JRL and PLACL will take part in the exercise. The Group will assess the impact of a severe economic stress, as prescribed by the PRA in a document published in January, and provide results to the PRA in June 2025. The PRA plans to publish sector and firm level results in Q4 2025. The Group has been engaged with industry and regulatory discussions ahead of LIST 2025. 31. GROUP ENTITIES In accordance with the requirements of the Companies Act 2006, information regarding the Group’s related undertakings at 31 December 2024 are disclosed below. Related undertakings comprise subsidiaries, joint ventures, associates and other significant holdings.
Percentage of nominal share capital and voting rights held
Principal activity
Registered office
Direct subsidiary Just Retirement Group Holdings Limited 3 Partnership Assurance Group Limited 3
Holding company Holding company
Reigate Reigate
100% 100%
Indirect subsidiary HUB Acquisitions Limited 1, 3 HUB Financial Solutions Limited
Holding company
Reigate Reigate Reigate Reigate Reigate
100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Distribution
Investment activity Investment activity Holding company
Just Re 1 Limited 3 Just Re 2 Limited 3
Just Retirement (Holdings) Limited 3
Just Retirement (South Africa) Holdings (Pty) Limited Holding company
South Africa South Africa
Just Retirement Life (South Africa) Limited
Life assurance Life assurance
Just Retirement Limited
Reigate Reigate Reigate Reigate Reigate
Management services
Just Retirement Management Services Limited 3
Just Retirement Money Limited Partnership Group Holdings Limited 3
Provision of lifetime mortgage products
Holding company Holding company
Partnership Holdings Limited 3
Powered by FlippingBook