214 | Just Group PLC | Annual Report and Accounts 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
35. CAPITAL continued Capital management The Group’s objectives when managing capital for all subsidiaries are: • to comply with the insurance capital requirements required by the regulators of the insurance markets where the Group operates. The Group’s policy is to manage its capital in line with its risk appetite and in accordance with regulatory expectations; • to safeguard the Group’s ability to continue as a going concern, and to continue to write new business; • to ensure that in all reasonably foreseeable circumstances, the Group is able to fulfil its commitment over the short term and long term to pay policyholders’ benefits; • to continue to provide returns for shareholders and benefits for other stakeholders; • to provide an adequate return to shareholders by pricing insurance and investment contracts commensurately with the level of risk; and • to generate capital from in-force business, excluding economic variances, management actions, and dividends, that is greater than new business strain. The Group regularly assesses a wide range of actions to improve the capital position and resilience of the business. To improve resilience, the Group purchased long-term gilts during 2023 to reduce the Group’s capital exposure to interest rate risk. 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 At 31 December 2023, Just passed the PRA EVT with a buffer of 1.1% (unaudited) over the current minimum deferment rate of 3.0% (allowing for volatility of 13%, in line with the requirement for the EVT). At 31 December 2022, the buffer was 1.5% (unaudited) compared to the minimum deferment rate of 2.0%. Regulatory developments The Group has applied to the PRA to include the PLACL lifetime mortgages in the matching adjustment portfolio (via a securitisation) and to calculate the PLACL SCR using the internal model. Subject to PRA approval, we expect to report PLACL on an internal model basis from 31 December 2024. The Group implemented changes related to Risk Margin reform at 31 December 2023, in line with legislation. The impact of this is included in the reported results. On 9 November 2023, the Government published a consultation seeking views on capping the maximum ground rent that residential leaseholders can be required to pay. The consultation set out five options including capping ground rents at a peppercorn. The Group is closely monitoring the Government consultation and the impact of this on the Group’s £176m portfolio of residential ground rents. As explained in the Business Review on page 28 an adjustment has been included in the estimated Solvency II position to reflect the impact on the value of the asset portfolio, technical provisions and on the SCR. As part of the further proposed UK Solvency II reforms, the Group responded to the PRA consultation relating to matching adjustment and investment flexibility in January 2024. In advance of the PRA publishing the final Policy Statement ahead of the anticipated implementation date of 30 June 2024, we are preparing for implementation and assessing the potential financial impact. 36. GROUP ENTITIES In accordance with the requirements of the Companies Act 2006, information regarding the Group’s related undertakings at 31 December 2023 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 5 Partnership Assurance Group Limited 5
Holding company Holding company
Reigate Reigate
100% 100%
Indirect subsidiary HUB Acquisitions Limited 1, 5 HUB Financial Solutions Limited
Holding company
Reigate Reigate Reigate Reigate Reigate
100% 100% 100% 100% 100% 100% 100% 100%
Distribution
Just Re 1 Limited 5 Just Re 2 Limited 5
Investment activity Investment activity Holding company Holding company
Just Retirement (Holdings) Limited 5
Just Retirement (South Africa) Holdings (Pty) Limited
South Africa South Africa
Just Retirement Life (South Africa) Limited
Life assurance Life assurance
Just Retirement Limited
Reigate
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