220 | Just Group PLC | Annual Report and Accounts 2024
GLOSSARY continued
Finance costs
Finance costs included within underlying operating profit include coupons paid on the Group’s restricted Tier 1 notes, interest payable on the Group’s Tier 2 and Tier 3 notes, facility non-utilisation fees and debt repurchase costs when incurred, and amortisation of debt issue and facility arrangement costs capitalised. Finance costs included in underlying organic capital generation include coupons paid on the Group’s restricted Tier 1 notes, interest paid on the Group’s Tier 2 and Tier 3 notes, and all facility costs when incurred. Debt issue and repurchase costs are excluded from underlying organic capital generation and included within capital actions when incurred. Retirement income products which transfer investment and longevity risk and provide the retiree with a guarantee to pay an agreed level of income for as long as the retiree lives. On a “joint-life” basis, the policy will continue to pay a guaranteed income to a surviving spouse/partner. Just provides modern individually underwritten GIfL solutions. One of the Group’s KPIs, representing the profit before tax attributable to equity holders. An APM and represents profits from the in-force portfolio before investment and insurance experience variances, and assumption changes. It mainly represents expected release of risk adjustment for non- financial risk and of allowance for credit default in the period, investment returns earned on shareholder assets, together with the value of the (net) CSM amortisation. Reflect the difference in the period between expected investment returns, based on investment and economic assumptions at the start of the period, and the actual returns earned. Investment and economic profits also reflect the impact of assumption changes in future expected risk-free rates, corporate bond defaults and house price inflation and volatility. KPIs are metrics adopted by the Board which are considered to give an understanding of the Group’s underlying performance drivers. The Group’s KPIs are Retirement income sales (shareholder funded), New business profit, Underlying operating profit, IFRS profit before tax, Return on equity, Tangible net asset value per share, New business strain, Underlying organic capital generation and Solvency II capital coverage ratio. An equity release product that allows homeowners to take out a loan secured on the value of their home, typically with the loan plus interest repaid when the homeowner has passed away or moved into long-term care. Structured assets issued by a wholly owned special purpose entity, Just Re1 Ltd. Just Re1 Ltd holds two pools of lifetime mortgages, each of which provides the collateral for issuance of senior and mezzanine notes to Just Retirement Ltd, eligible for inclusion in its matching portfolio.
Guaranteed Income for Life (“GIfL”)
IFRS profit before tax In-force operating profit
Investment and economic movements
Key performance indicators (“KPIs”)
Lifetime mortgage (“LTM”)
LTM notes
Medical underwriting The process of evaluating an individual’s current health, medical history and lifestyle factors, such as smoking, when pricing an insurance contract. Net asset value (“NAV”) An APM that represents IFRS total equity, net of tax, and excluding equity attributable to Tier 1 noteholders. New business margin An APM that is calculated by dividing new business profit by Retirement income sales (shareholder funded). It provides a measure of the profitability of shareholder funded Retirement income sales. New business profit An APM and one of the Group’s KPIs, representing the profit generated from new business written in the year after allowing for the establishment of reserves and for future expected cash flows and risk adjustment and allowance for acquisition expenses and other incremental costs on a marginal basis. The net underlying CSM increase from new business is added back as the Board considers the value of new business is significant in assessing business performance. New business profit is reconciled to adjusted profit before tax, which is reconciled to IFRS profit before tax in the Business Review.
New business strain
An APM and one of the Group’s KPIs, representing the capital strain on new business written in the year after allowing for acquisition expense allowances and the establishment of Solvency II technical provisions and Solvency Capital Requirement. A derivative instrument designed to mitigate the impact of changes in property growth rates on both the regulatory and IFRS balance sheets arising from the guarantees on lifetime mortgages provided by the Group which restrict the repayment amounts to the net sales proceeds of the property on which the loan is secured. Represents changes to cash flows in the current and future periods valued based on end-of-period economic assumptions. This is reported prior to the deferral of profit in CSM from changes to future cash flows. An APM that is calculated in the same way as underlying organic capital generation, plus the impact of management actions and other items. The results of Group companies including our HUB group of companies, which provides regulated advice and intermediary services, and professional services to corporates, and corporate costs incurred by Group holding companies.
No-negative equity guarantee (“NNEG”) hedge Operating experience and assumption changes
Organic capital generation
Other Group companies’ operating results Pension Freedoms/ Pension Freedom and Choice/Pension Reforms
The UK government’s pension reforms, implemented in April 2015.
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