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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 SIGNIFICANT ACCOUNTING POLICIES General information Just Group plc (formerly JRP Group plc) (the “Company”) was incorporated and registered in England andWales on 13 June 2013 as a public company limited by shares. The Company’s registered office is Enterprise House, Bancroft Road, Reigate, Surrey, RH2 7RP. 1.1 Basis of preparation The consolidated financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and in accordance with International Financial Reporting Standards (“IFRS”) adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. As part of their assessment of going concern, the Directors are required to undertake an assessment of the Company and the Group’s ability to continue to adopt the going concern basis of accounting, and to disclose any material uncertainties identified. Having completed this assessment, which included consideration of the possible impacts on the Group’s business from the COVID-19 pandemic, the Directors are satisfied that the Group has adequate resources to continue to operate as a going concern for a period of not less than 12 months from the date of this report, and that there is no material uncertainty in relation to going concern. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. The Directors have considered the following in their assessment: • The benefit of £250m new Tier 2 capital raised during 2020, £75m of which was used to repurchase part of the Group’s Tier 3 loan notes, via a tender offer. • Steps taken over the last two years to improve capital efficiency, including during the current period: increasing the level of reinsurance for GIfL contracts, launching newmore capital-efficient products, such as our Defined Benefit De-risking partnering deals; additional NNEG hedging and the sale of a portion of our lifetime mortgages portfolio to further protect against UK residential property risk; reductions in new business volumes; and cost saving initiatives. • The projected liquidity position of the Company and the Group, current financing arrangements and contingent liabilities. • A range of forecast scenarios with differing levels of new business and associated additional capital requirements to write anticipated levels of new business. • Eligible own funds being in excess of minimum capital requirements in stressed scenarios, including reduced new business volumes. • Scenario testing to consider the possible impacts of the COVID-19 pandemic on the Group’s business, including stresses to UK residential property prices, house price inflation, credit quality of assets, and risk-free rates, together with a reduction in new business levels. In addition, the results of extreme property stress tests were considered, including a property price fall in excess of 40%, and a sensitivity analysis was performed to assess the impact from falling interest rates, including an assessment of the impact of negative interest rates. The possible impact on liquidity from the pandemic was considered through applying significant stresses to exchange rates and interest rates, and assessing the impact this would have on the Group’s cash collateral requirements. • The findings of the Group Own Risk and Solvency Assessment (“ORSA”). • Risks arising from the UK’s withdrawal from the European Union. • Scenarios, including those in the ORSA and potential regulatory intervention, where the Group ceases to write new business. However, in such a run-off scenario the going concern basis would continue to be applicable because the Group would be continuing to trade with its existing business (for example, collect premiums and administer policies) rather than ceasing to trade. • The Group Business Plan, which was approved by the Board in November 2020, and in particular the forecast regulatory solvency position for the period to 31 December 2022 calculated on a Solvency II basis, which includes scenarios setting out possible adverse trading and economic conditions as a result of the COVID-19 pandemic. The Directors’ assessment concluded that it remains appropriate to value assets and liabilities on the assumption that there are adequate resources to continue in business and meet obligations as they fall due for the foreseeable future, being at least 12 months from the date of signing this report, including in the event of the run-off scenarios considered above. Accordingly, the going concern basis has been adopted in the valuation of assets and liabilities. There are no new accounting standards or amendments to existing accounting standards effective from 1 January 2020 that have an impact on the Group. The following new accounting standards, interpretations and amendments to existing accounting standards in issue are being assessed but have not yet been adopted by the Group:
• IFRS 9, Financial Instruments.
Amendments to IFRS 4, Insurance Contracts, published in September 2016 and adopted by the Group with effect from 1 January 2018, allowed the deferral of the application of IFRS 9 until accounting periods commencing on 1 January 2021. This was intended to align with the effective date of IFRS 17, the replacement insurance contracts standard. In June 2020, the IASB issued a further amendment to IFRS 4 to extend the deferral of the application of IFRS 9 until accounting periods commencing on 1 January 2023, to align with the amended effective date of IFRS 17 also issued in June 2020. The option to defer the application of IFRS 9, which the Group has continued to adopt for 2020, is subject to meeting criteria relating to the predominance of insurance activity. Eligibility for the deferral approach was based on an assessment of the Group’s liabilities as at 31 December 2016, the end of the annual period during which the acquisition of Partnership Assurance Group plc took place and the most recent period of significant change in the magnitude of the Group’s activities. At this date the Group’s liabilities connected with insurance exceeded 90% of the carrying amount of the Group’s total liabilities. The Group’s total liabilities were £22,283.9m and liabilities connected with insurance in the statement of financial position at this date primarily included insurance contracts within the scope of IFRS 4 of £15,748.0m, investment contract liabilities of £222.3m, and certain amounts within other financial liabilities and insurance payables which arise in the course of writing insurance business of £5,527.4m.
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