Just Annual Report and Accounts 2023

192 | Just Group PLC | Annual Report and Accounts 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

26. INSURANCE CONTRACTS AND RELATED REINSURANCE continued The tables below set out rates at certain points on the yield curves used to discount the best estimate liability and risk adjustment reserves as at 31 December together with the weighted average discount rates applied to the new business cohorts for the principal insurance product lines. The discount rates used for the gross insurance and reinsurance contracts at the year end date are consistent, having been based on a single investment portfolio for each legal entity. The discount rates used for locking-in the CSM for the new business cohort are based on the interest rates applicable on the first day of the reinsurance treaty notice periods for reinsurance and the dates of recognition for underlying business. For 2022 and 2023 the reinsurance rates are not materially different to the gross insurance discount rates. As such only the rates for underlying business are presented below. Discount rate – insurance contracts JRL 2023 2022 (restated) Valuation rate at 31 December New business cohort (Locked-in rates) Valuation rate at 31 December New business cohort (Locked-in rates) All products GIfL DB All products GIfL DB 1 year 6.9% 7.1% 7.0% 6.6% 5.4% 5.6% 5 year 5.5% 6.5% 6.3% 6.3% 4.9% 5.3% 10 year 5.4% 6.2% 6.0% 5.9% 4.5% 4.9% 20 year 5.5% 6.0% 5.9% 5.8% 4.5% 4.8% 30 year 5.5% 5.9% 5.6% 5.6% 4.5% 4.7%

Discount rates have been disclosed in aggregate and have not been split according to their profitability groupings. Discount rate – insurance contracts PLACL 2023

2022 (restated)

Valuation rate at 31 December

GIfL/DB

6.8% 5.5% 5.4% 5.5% 5.5%

1 year 5 year 10 year 20 year 30 year

6.6% 6.3% 5.9% 5.7% 5.5%

Care new business forms an immaterial part of the Group’s insurance contract liabilities and therefore not shown in the table above. (iv) Inflation Assumptions for annuity escalation are required for RPI, CPI and LPI index-linked liabilities, the majority of which are within the Defined Benefit business. The inflation curve assumed in each case is that which is implied by market swap rates, using a mark to model basis for LPI inflation, taking into account any escalation caps and/or floors applicable. This methodology is unchanged compared to the previous period. For the purposes of calculating movements in the CSM relating to each group of contracts, for JRL separate weighted average inflation curves for each index are calculated and locked-in for each annual cohort. The inflation curves from each day are weighted by the business volumes completed on that day to which that inflation variant applies. (v) Future expenses Assumptions for future costs of maintaining policies are set with reference to analysis of the existing expense base and actual fees payable under the contracts for those services outsourced. The assumptions cover both the direct and indirect costs of maintaining policies. The JRL GIfL maintenance expense assumption used was £25.37 per plan (2022: £23.98), and the JRL DB maintenance assumption used was £68.49 per scheme member (2022: £62.73). The PLACL GIfL maintenance expense assumption used was £28.85 per plan (2022: £28.42), and the PLACL DB maintenance assumption used was £203.50 per scheme member (2022: £207.49). Assumptions for future policy expense levels are determined from the Group’s recent expense analyses and incorporate an annual inflation rate allowance of 3.6% (2022: 3.90%) derived from the expected retail price and consumer price indices implied by inflation swap rates and an additional allowance for earnings inflation. The annual inflation rate allowance is regarded as a financial assumption and therefore all changes in expense inflation rates are recognised in the profit or loss account.