GOVERNANCE
FINANCIAL STATEMENTS
strategic report
We’ve established a strong reputation with pension scheme trustees, sponsors and professional advisers and established a leading position in the small and medium transaction size segments of the market. Although we’ve successfully completed over 290 transactions and invested £12.8bn of members’ pension savings, in many ways we’re just getting into our stride. We see significant untapped potential to grow our business and extend our franchise into additional segments of the market.
J s | D D-rsig tas c i n v l e 2013-2022 (£m)
3,000
14,000
12,000
2,500
10,000
2,000
8,000
1,500
6,000
1,000
4,000
500
2,000
2013 2014 2015 2016 2017 2018
2019 2020 2021 2022
Cumulative transactions (right axis)
Annual transactions (left axis)
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It’s having a material impact in this space, and has really helped to establish our franchise with our target audience. We receive member and scheme data directly from the trustee, or employee benefit consultant, and we agree a target price. Our streamlined service then monitors our pricing, and when it aligns with the target price, we quickly execute using standard terms. To date, we have completed 61 transactions using this service. Some of these are repeat business, but for many schemes, this will be their first transaction with us. FOCUSING ON THE MEMBER AND THE CLIENT GENERATES REPEAT BUSINESS When we transact with a pension scheme – the transaction may be for a small part of their overall scheme. Their de-risking journey often consists of a number of transactions over many years. We’ve developed a very strong reputation with the schemes we’ve transacted with, for providing excellent service, demonstrating flexibility, and investing in our relationship with them. This in turn has translated into real commercial benefits, and the trustees of these schemes often develop a preference for doing subsequent, or repeat transactions with us. We have completed 49 repeat transactions with our existing customers’, and in the process we are building real franchise value. To bring that to life, we’ve written £2.0bn of repeat transaction premiums. Those customers initial transactions were £2.3bn. This is a very strong endorsement from the trustees of our service and the member experience we provide at Buy-out when members become policyholders of Just Group. INVESTING IN THE UK The £12.8bn of DB premiums we’ve secured have been invested to ensure we achieve the predictable cash flow required to pay the pensions of scheme members. We’ve invested billions of pounds sustainably, across social housing, utilities and infrastructure including offshore wind farms and solar. These investments deliver value for pension scheme members and help to support growth in the economy.
ENTERING THE MARKET – HELPING THE CUSTOMER THE JUST WAY We’ve always had strong innovation credentials, right back to the day when we launched the Company. When we entered the defined benefit de-risking market we used this innovation and underwriting expertise to create a point of difference in the market. When we designed our service we were very clear – the pension scheme member must come first. We knew trustees would demand the best outcome and service for their members. As the retirement specialist, we had deep insight into the needs of customers and a strong track record in delivering outstanding service. This forensic focus on the member has been a major reason why trustees award new and repeat business to Just Group and why we are confident in fulfilling our purpose. THE EARLY YEARS AND CHANGING SHAPE OF THE MARKET The majority of the business we completed in our earlier years was for transactions known as a Buy-in. This is an insurance contract that pays a guaranteed stream of income to the pension scheme trustees sufficient to cover the liabilities of a defined group of members. These transactions were for smaller pension schemes to cover the liabilities for members whose pensions were already in payment. More recently, as pension scheme funding has improved and pricing for deferred pensioners has become more attractive, the market has moved towards full scheme Buy-ins. These make up the majority of transactions we won during 2022. AGILITY – ACCESSING A RANGE OF SOLUTIONS We have to be agile and flexible to meet the needs of our customers and stakeholders. Because we know two transactions are never the same – we have developed a range of services and transaction structures. One example is our partnering proposition that we have successfully used to transact larger deals such as those we completed with the sponsors of the AA and Barloworld pension schemes. Through our portfolio of reinsurance partners we utilised funded reinsurance arrangements and this enabled us to optimise our use of capital with our ambition to grow sales. CONTINUING TO INNOVATE We’re never short of ideas at Just, we are always thinking how we can disrupt markets to deliver better outcomes for our customers. One of the main constraints in DB de-risking is human capital. Of the 5,000 plus defined benefit pension schemes in the UK, almost three quarters have assets of less than £100m, and nearly 1,500 of these have assets less than £10m. The key to increasing access for these smaller schemes to DB de-risking, is to provide a very efficient solution. Just is leading the way here through our innovative proprietary service. We’ve developed and implemented a streamlined bulk quotation service.
READ MORE ABOUT OUR INVESTMENTS ON PAGE 34
OUTLOOK We are participating in a highly attractive market with long term growth prospects. We have strong capabilities, an excellent reputation and a clear strategy to achieve profitable growth. We are increasingly optimistic about the future.
OUR DEVELOPMENTS
2015 First repeat transaction
2018 First deal over £250m
2019 First DB partner deal
2020 Deferred proposition launched
2023 Our largest DB transaction £513m full scheme Buy-in for one of the Melrose Group pension schemes
2013 First deal
19
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