STRATEGIC REPORT
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IFRS net assets The Group’s total equity at 31 December 2020 was £2,490.4m, compared to £2,321.0m at 31 December 2019. Total equity includes the Restricted Tier 1 notes of £294m (after issue costs) issued by the Group in March 2019. Total equity attributable to ordinary shareholders increased from £2,027.8m to £2,198.3m resulting in net asset value (“NAV”) per ordinary share of 212p (2019: 196p). DIVIDENDS Whilst the Group has made significant progress to build its capital base to accommodate the regulations on equity release mortgages and to start to grow its underlying capital generation, the external environment as we emerge from the pandemic continues to be uncertain. The Board therefore considers that it would not be appropriate to recommend recommencing dividend payments (total 2019 dividend: nil).
Environmental, Social and Governance and investing Just Group is a signatory to the United Nations Principles for Responsible Investment (“PRI”). We were the first UK insurer to do this. Just Group has also been a constituent of the FTSE4Good Index Series since December 2019. The index is designed to measure the performance of companies demonstrating strong ESG practices. During the 12 months to 31 December 2020, the Group increased its investments in dedicated green and social investments to £1,138m, representing 8.8% of the bond portfolio (2019: 6.6% of the bond portfolio). This proportion does not include the Group’s substantial investment in lifetime mortgages, which help customers achieve a better later life, through releasing equity tied up in their home. In making investment decisions, sustainable investing principles are formally embedded within our processes, as set out in our Sustainable Investment Framework approved by the Board, and which is available on our website www.justgroupplc.co.uk. In October 2020, Just Group became the first UK and the fifth European insurer to issue a Green Bond. The Group received a second party opinion as part of the bond accreditation process, and has committed to investing the bond proceeds in eligible green investment assets, focusing on renewable energy, green buildings and clean transportation. Reinsurance assets Reinsurance assets decreased to £3.1bn at 31 December 2020 (2019: £3.9bn). The decrease relates to the reinsurance recaptures made during 2020, offset by new reinsurance arrangements entered into for DB partnering (see reinsurance recapture section above). Since the introduction of Solvency II in 2016, the Group has increased its use of reinsurance swaps rather than quota share treaties. (Note that the 2019 comparative figures have been restated to correct for presentation of reinsurance liabilities included within this line item, see section in reinsurance liabilities below, and note 2 for further details). Other assets Other assets mainly comprise cash and cash equivalents, and intangible assets. During 2020 the Group has significantly increased the amount of assets held in cash and cash equivalents so as to increase protection against liquidity stresses, such as those experienced in Q1 of 2020 as an initial market reaction to the COVID-19 pandemic. Insurance liabilities Insurance liabilities increased to £21.1bn at 31 December 2020 (2019: £19.0bn). The increase in liabilities arose mainly as a result of new insurance business written less claims paid and the impact of changes to the valuation rate of interest over the period. Reinsurance liabilities Reinsurance liabilities relate to liability balances in respect of the Group’s longevity swap arrangements. These liability balances were previously included within the reinsurance assets balance. (A prior period restatement has been made to present these within the liability side of the balance sheet; further details of this adjustment are given in note 2). Other financial liabilities Other financial liabilities decreased to £3.3bn at 31 December 2020 (2019: £3.7bn). These liabilities mainly relate to deposits received from reinsurers, together with derivative liabilities and cash collateral received. The reduction from the prior year relates to the reinsurance recaptures in 2020. Other liabilities Other liability balances increased to £900.8m at 31 December 2020 (2019: £817.6m). The Group’s loans and borrowings increased by c.£110m as a result of the issuance of the green Tier 2 bond in October 2020, offset by a £75m Tier 3 tender and the call of the remaining amount of the PLACL bond in March 2020. This increase has been offset by decreases in other liability balances, including in relation to corporation tax for which there is no longer any liability at the year end (2019: £10.2m liability) due to changes to the quarterly payment regime in 2020 whereby corporation tax payments are made in full by the end of the year.
ANDY PARSONS Group Chief Financial Officer
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