Just Annual Report and Accounts 2022

THE RETIREMENT SPECIALIST

HELPING CUSTOMERS THE JUST WAY

Just group PLC | Annual Report and accounts 2022

OUR PURPOSE

WE HELP PEOPLE ACHIEVE A BETTER LATER LIFE

We believe that every decision we make and every action we take should help us fulfil our purpose.

INDIVIDUALS We provide guaranteed income for life to deliver security and peace of mind for our customers and we provide regulated advice, guidance and information services to help people make the most of their pensions and other savings. HOMEOWNERS We provide the resources to improve the later life of homeowners and their families. PENSION SCHEME TRUSTEES We provide improved security of income for members of defined benefit pension schemes by transferring the risk to Just. COMPANIES We provide advisory, technology and customer services to help UK companies with retirement- focused solutions to meet the needs of their customers and clients in later life.

All Just Group plc regulatory announcements, shareholder information and news releases can be found on our Group website, www.justgroupplc.co.uk

FOR MORE INFORMATION ABOUT EACH OF OUR STAKEHOLDERS SEE PG.4

GOVERNANCE

FINANCIAL STATEMENTS

strategic report

READ MORE ON PG.20

We are increasing organic capital generation to fuel profitable and sustainable growth so we may reward shareholders.

DAVID RICHARDSON Group Chief Executive Officer

GOVERNANCE

FINANCIAL STATEMENTS

strategic report

FINANCIAL AND OPERATIONAL HIGHLIGHTS

KEY PERFORMANCE INDICATORS

10.7 % RETURN ON EQUITY 1 8.3% at 31 December 2021 £ 336 m ADJUSTED OPERATING PROFIT BEFORE TAX 1 2021: £238m, up 41%

£ 29 m UNDERLYING ORGANIC CAPITAL GENERATION 1 £51m at 31 December 2021

£ 3,131 m RETIREMENT INCOME SALES 1 2021: £2,674m, up 17% £ (317) m IFRS LOSS BEFORE TAX 2021: £(21)m

£ 233 m NEW BUSINESS

OPERATING PROFIT 1 2021: £225m, up 4%

£ 249 m UNDERLYING OPERATING PROFIT 1 2021: £210m, up 19% 199 % SOLVENCY II CAPITAL COVERAGE RATIO (ESTIMATED) 1,2 164% at 31 December 2021

£ 153 m MANAGEMENT EXPENSES 1 2021: £147m, up 4%

£ 2,178 m IFRS NET ASSETS 2021: £2,440m, down 11%

FINANCIAL STRENGTH AND OTHER INDICATORS

A FITCH INSURER FINANCIAL STRENGTH RATING for Just Retirement Limited (2021: A+)

A FITCH ISSUER DEFAULT RATING for Just Retirement Limited (2021: A)

AWARDED FURTHER RECOGNITION FOR OUTSTANDING SERVICE

PENSIONS AGE

FINANCIAL ADVISER: 5 Star service award (Pension & Protection)

FINANCIAL ADVISER: 5 Star service award (Mortgages)

MORTGAGE SOLUTIONS Best provider for adviser support, training and development

1 Alternative performance measure (unaudited, see glossary for definition). Underlying organic capital generation is reconciled to Solvency II excess own funds on page 27. Return on equity, new business operating profit, management expenses, underlying operating profit, and adjusted operating profit are reconciled to IFRS profit before tax on pages 24 and 26. Retirement Income sales are reconciled to gross premiums written in note 6 to the consolidated financial statements on page 149. 2 Solvency II capital coverage ratios as at 31 December 2021 and 31 December 2022 include a recalculation of transitional measures on technical provisions (“TMTP”) as at the respective dates.

Just group PLC | Annual Report and accounts 2022

AT A GLANCE

Leaders in our markets. We positively disrupt markets where we can become a leader and deliver great outcomes for customers so we may deliver value for shareholders.

WE ARE A SPECIALIST IN OUR CHOSEN MARKETS, SERVING FOUR DISTINCT GROUPS…

TRUSTEES AND SCHEME SPONSORS: PROVIDING MEMBER SECURITY AND DE-RISKING PENSION LIABILITIES Defined benefit pension schemes de-risking their liabilities by securing member benefits

INDIVIDUALS: PROVIDING RETIREMENT INCOME

People who have built up pension savings throughout their career and want a guaranteed income, flexible income or a combination in retirement. > £ 1 trillion market value of defined contribution pension savings CORPORATE CLIENTS: SOLVING PROBLEMS FOR COMPANIES We develop scalable retirement-focused solutions for banks, building societies, life assurance companies, pension scheme trustees, other corporate clients and for their customers, clients and members.

with an insurance contract. > £ 1 trillion addressable market

HOMEOWNERS: ACCESSING PROPERTY WEALTH

People aged 55+ who want to access wealth locked up in their property. > £ 3.5 trillion Property wealth owned by people aged 55 +

retirement-focused solutions

GOVERNANCE

FINANCIAL STATEMENTS

strategic report

Competitive position: A leader

...WITH PRODUCTS AND SERVICES

Developing

SERVICES

BENEFIT AND COMPETITIVE POSITION

Just’s innovative approach and underwriting expertise in this segment delivers competitive prices for trustees.

DEFINED BENEFIT DE-RISKING SOLUTIONS (“DB”) Solutions for pension scheme trustees to reduce the financial risks of operating pension schemes and increase certainty that members’ pensions will be paid in the future. GUARANTEED INCOME FOR LIFE (“GIFL”) A solution for individuals/couples who want the security of knowing they will receive a guaranteed income for life. SECURE LIFETIME INCOME (“SLI”) SLI is a tax-efficient solution for individuals who want the security of knowing they will receive a guaranteed income for life and the flexibility to make changes in the early years of the plan. CARE PLANS (“CP”) A solution for people moving to residential care who want the security of knowing a regular payment will be made to the care provider for the rest of their life. LIFETIME MORTGAGES (“LTM”) Solutions designed for people who want to release some of the value of their home.

marketed products 1

By using our unrivalled intellectual property, Just provides an individually tailored solution providing customers typically with double-digit percentage increases in income compared to standard products. Just’s pioneering Secure Lifetime Income product enables customers to select a guaranteed income from within a Self-Invested Personal Pension. This enables a customer to manage and blend their total pension assets tax efficiently within a single technology platform. Just’s Care Plans can be tailored to the individual and offer a tax-efficient solution to making payments to residential care providers. By using our unrivalled intellectual property, Just provides an individually tailored solution providing around six-in-ten customers with a lower interest rate or a higher borrowing amount compared to standard products. Just provides a range of lifetime mortgages, enabling people to meet a variety of needs in later life.

1 Reported in our

Insurance segment.

SERVICES

BENEFIT AND COMPETITIVE POSITION

HUB Financial Solutions offers an innovative approach that provides affordable regulated advice to people with modest pension savings. It also delivers face-to-face nationwide advice at a time and place to suit the client, and enables pension schemes to deliver efficient and robust scheme-led defined benefit transfer programmes. + Provides a range of business services tailored to the needs of the organisation, ranging from consultancy and software development to fully outsourced customer service delivery and marketing services.

HUB GROUP Our professional services and distribution businesses delivering technology, broking and advice solutions for corporate clients and pension schemes. We also provide regulated financial advice on how people should use pension, investment and savings, or release some of the value from their homes. + Support for organisations wanting to deliver whole-of- market shopping around services to source retirement income products for their customers, employees or pension scheme members. HUB Financial Solutions is the UK’s largest GIfL broker.

professional services 2

2 Reported in our Other segment.

Just group PLC | Annual Report and accounts 2022

CHAIR’S STATEMENT HELPING CUSTOMERS THE JUST WAY

We are providing certainty to our customers in an uncertain world, delivering profitable and sustainable growth to fulfil our purpose and create value for shareholders.

JOHN HASTINGS-BASS Chair

ANNUAL GENERAL MEETING 2023 10.00 am 9 May 2023 at Just Group plc 1 Angel Lane London EC4R 3AB

GOVERNANCE

FINANCIAL STATEMENTS

strategic report

I am pleased to introduce Just Group plc’s 2022 Annual Report. We have maintained our focus in this period. We have delivered sustainable growth of the business, help to more of our customers and value for shareholders. HELPING OUR CUSTOMERS The challenging economic events in the UK and around the world are having profound impacts on the lives of our customers and their families. We help people achieve a better later life, this is our purpose, it’s why we exist. In these uncertain times, our solutions provide reassuring certainty to our customers. As the retirement specialist we are doing all we can, during these difficult times to help our customers and their families. Our customers, existing and prospective, are at the heart of everything we do at Just. OVERVIEW The primary focus of our Group in 2022 has been to capture profitable growth opportunities to ensure we meet our medium term profit growth pledge. It has been a year of continued delivery, with successful strategic execution, ongoing investment and continued growth. This has resulted in a strong balance sheet and financial performance, with continued business momentum. The Group’s financial strength and performance is set out in detail in the Business Review. DIVIDEND Given the Group’s performance and strong capital position, the Board has recommended a final ordinary dividend of 1.23 pence per share, in line with our ordinary dividend policy. BOARD COMPOSITION AND GOVERNANCE Clare Spottiswoode Independent Non-Executive Director did not seek re-election at last year’s AGM and stepped down from the Board on 10 May 2022. Steve Melcher, Independent Non-Executive Director retired from the Board at the end of December. Paul Bishop, Independent Non-Executive Director and Ian Cormack, Senior Independent Director, will step down from the Board and not seek re-election at this year’s AGM on 9 May 2023. I’d like to thank them for their long service to Just Group and the predecessor companies. You can read more about the Directors of the Company on pages 68 to 71. I’d like to welcome Mary Phibbs as Independent Non-Executive Director, who joined the Board on 5 January 2023. You can read her biography on page 70. I take great pride in leading the Board and the Group’s governance function, and my introduction to the Corporate Governance Report on page 66 provides further information on our governance and decision making processes. I would like to thank the entire Board for their significant contribution, and look forward to working with them in 2023. ACTING SUSTAINABLY We were encouraged by the government’s consultation on the proposed reforms of the Solvency II regime, published in November 2022. When implemented these reforms could unlock billions of pounds of investment from insurers into the UK economy and enable us to provide even more competitive products to our customers.

Our industry has an important role to play in helping the world transition towards a sustainable environment and low carbon global economy. We are making good progress developing our plan to become carbon net zero. You can read our high level transition plan on our Group website and this year’s Annual Report provides a better understanding of climate-related risks and opportunities. Our disclosures are consistent with those recommended by the Taskforce on Climate-related Financial Disclosures and you can read more on pages 36 to 43. Growing the Just Way is a theme our colleagues across the Company are active in shaping and the Board receives input from our colleagues. We are on an exciting journey as a Company, as an industry, as a country and as individuals. You can read more about our sustainability strategy on page 36 and at justgroupplc.co.uk . ENGAGEMENT WITH OUR STAKEHOLDERS The Board engages directly and indirectly with our customers, shareholders, colleagues, regulators, legislators, professional bodies and wider society to promote the interests of our customers more broadly. We place great importance on working effectively with these groups and actively seeking their feedback. We work hard to ensure our customers benefit from our services and our shareholders receive the benefit of long-term value creation. Throughout this report you can read how the Board takes into consideration feedback from the Company’s stakeholders and how the Board, and colleagues from across the Group, promote the success of the Company. PURPOSE DRIVEN We are a purpose driven Company. We fulfil our purpose by providing competitive products, services, financial advice and guidance to help our customers achieve security, certainty and provide them with peace of mind in retirement. Our purpose remains as relevant today as it did all those years ago when we created it. It’s clear, authentic and it acts as a beacon for colleagues across the entire Group to live our purpose every day. OUTLOOK There are strong structural drivers of growth which make our markets very attractive, including demographics and the appetite of company directors and pension trustees to transfer the risk of operating defined benefit pension schemes to insurance companies. We have focused our leadership team on driving long-term profitable growth. The commercial outlook remains favourable for our Group. On behalf of the Board, I would like to close by thanking David, his team and all of our colleagues across the Group for their commitment to helping our customers and doing such a great job. I’d also like to thank our business partners who have trusted us to provide outstanding service to their clients. We are helping our customers, building shareholder value through profitable and sustainable growth, fulfilling our purpose and helping contribute to a net zero economy. We are increasingly optimistic about the future.

Just group PLC | Annual Report and accounts 2022

CHIEF EXECUTIVE OFFICER’S STATEMENT ACCELERATING GROWTH

We exceeded the promises made over the last four years and we are very optimistic about the future.

£ 249 m UNDERLYING OPERATING PROFIT 1 2021: £210m, up 19% £ 3.1 bn RETIREMENT INCOME SALES 1 2021: £2.7bn, up 17%

1 Alternative performance measure.

DAVID RICHARDSON Group Chief Executive Offcer

GOVERNANCE

FINANCIAL STATEMENTS

strategic report

I’m pleased to present my Chief Executive Officer’s Statement for 2022. We’ve delivered a strong performance and have increased confidence in meeting our pledge to grow underlying operating profits over the medium term by an average of 15% per annum. RETIREMENT SALES GROWTH Sales in 2022 were up 17% at £3.1bn. This was driven by growth in DB sales, which were up 33% to £2.6bn (2021: £1.9bn). Operationally, we were exceptionally busy as we completed 56 DB transactions, almost double the number in 2021 (2021: 29 transactions). The rise in interest rates has improved pension scheme funding levels materially. As a result, DB de-risking market volumes were boosted in the second half of 2022, with that momentum carrying into 2023. Our pipeline of DB business is over £6bn and in March 2023 we announced our largest transaction to date at £513m. We expect that our DB sales in 2023 will continue to show substantial growth over the record levels achieved in 2022. In our retail market, sales of GIfL and Care products at £564m were 24% lower than in 2021. In a year of falling investment markets and a competitive environment, we maintained a disciplined approach to pricing and returns. However rising interest rates has stimulated increased customer appetite for guaranteed income solutions, boosting quotation volumes. This augers well for a return to growth in 2023. GROWING OUR DEFINED BENEFIT DE-RISKING BUSINESS AND EXPANDING OUR INVESTMENTS IN TANDEM During the year we were delighted to host two seminars for investors and analysts to develop their understanding of our growth potential. We showcased our investment capability and explained how the investment strategy delivers competitive customer pricing and shareholder returns. During 2022 our investments in other illiquids, including infrastructure, private placements, social housing, commercial mortgages, ground rents and income strips, amounted to over £1bn (2021: £615m). Growth will continue in 2023 as we access the fast developing investment opportunities in private debt markets through our partnerships with 15 external asset managers. We were pleased with the government’s consultation response to the proposed reforms of the Solvency II regime, published in November 2022. When implemented these reforms could unlock billions of pounds of investment from insurers into the UK economy. In our second seminar we highlighted the enormous growth potential in our DB business. The development of the DB risk transfer market is relatively immature. To date, only 11% of total DB liabilities have been transferred from sponsors to insurers. This is expected to accelerate in the coming years. Slowing longevity increases and significant employer contributions have led to a steady improvement in DB pension scheme funding levels, and in 2022, this was boosted by rising interest rates. This is translating into more schemes bringing forward their de-risking plans which will further increase our addressable market. We will drive growth by securing more larger transactions and by expanding our leadership position in the smaller transaction size segment of the DB market. We are receiving increased enquiries from smaller schemes and to service this demand efficiently we have developed a streamlined quotation service. This service delivers updated quotes each month to over 120 small and mid-sized schemes. In 2022 we completed 28 transactions that originated from our streamlined service. We have written almost 300 DB transactions since entering the market in 2013 and through these, have gained significant pricing and deal experience to now regularly quote on larger transactions. This is supported by our stronger capital position and expanded panel of reinsurance partners. Combined with the strong outlook for the market in 2023, we expect our participation in the larger deal segment to increase further.

CUSTOMERS AND OUR PURPOSE As the Chair mentioned in his statement, the challenging economic events in the UK and the volatility in investment markets witnessed by our customers in 2022 has created uncertainty and worry for many who have investments in equities and fixed interest bonds. We provide a guaranteed income for life to customers. This secure income is often purchased to cover the essential expenditure of the household and in these uncertain times, our solutions provide reassurance to customers. As the retirement specialist we are doing what we can to help people. We help them to discover whether they are entitled to State Benefits and often uncover many missed benefits, that when secured, can make a profound impact on their lives. We provide a range of professional advice and guidance to help our customers. We can’t resolve all the challenges faced by our customers, but we are helping where we are able to do so and remain focused on living up to the purpose we set out many years ago: we help people achieve a better later life. SUSTAINABILITY We achieve our goals responsibly and are committed to a sustainable strategy that protects our communities and the planet we live on. I am very proud that over the last three years we have reduced our operational carbon intensity per employee by 81%, but the most material impact we can make to reduce carbon emissions will be achieved through the decisions we take with our £20bn investments portfolio (excluding derivatives and collateral). During 2022, we invested in £279m of eligible green and social assets in accordance with our Sustainability Bond Framework and we have now completed our total £575m green and sustainability bond investment commitments well ahead of schedule. OUR PEOPLE Our Just culture is underpinned by our people who are passionate and are committed to making a difference to the lives of those around them. A key business priority is that all of our colleagues feel proud to work at Just. The combination of our strong purpose and having highly engaged teams working the ‘Just way’, is a competitive advantage which will help drive high performance and our growth strategy. I would like to thank my colleagues who once again rose to the challenge in 2022, providing support and certainty to our customers when they needed it most. Our people have been energised and inspired by our commitment to be a strong and sustainable purpose-led business for our customers, our colleagues and our planet. We have continued to maintain excellent levels of employee engagement, with a key priority to build a diverse and inclusive workforce. Further details on all our initiatives in this area can be found in the Colleagues and Culture section. FINANCIAL PERFORMANCE Underlying operating profit increased by 19% to £249m in 2022, helped by improved in-force returns and lower financing costs. Our interest rate hedging programme has successfully protected our solvency capital position during the years of falling interest rates. The continued rise in interest rates in 2022 has resulted in an economic loss, which means we have an overall IFRS loss after tax of £232m for 2022 (2021: £16m). The strength and resilience of our capital position and our disciplined pricing and risk selection ensures we are capital self-sufficient. This means we can fund our growth ambitions, reward shareholders with a growing dividend and maintain a high buffer of capital in what are uncertain times. We will pay a final dividend of 1.23 pence per share, giving a total of 1.73 pence for the year – which represents 15% growth over last year’s pro forma full year dividend. IN CONCLUSION We have never been stronger. We have the capability and opportunities to achieve our ambitious growth plans so that we build substantial value for shareholders and fulfil our purpose to help more people achieve a better later life.

Just group PLC | Annual Report and accounts 2022

MARKET CONTEXT HELPING CUSTOMERS STRENGTHEN THEIR FINANCIAL RESILIENCE

Structural drivers in our markets mean we can grow profits sustainably while delivering better outcomes for customers.

As of 31 March 2022, total UK Defined benefit obligations owed by sponsors were £2.1tn, or roughly the same size as the entire UK economy. There are more than 5,100 defined benefit pension schemes in the UK. To date, we estimate that only 11% of DB liabilities have been transferred to insurers via de-risking transactions. Over the period, March 2017-22, the funding level of the schemes on a full buy out basis has steadily increased from 63% to 79%, driven mainly by sponsor contributions. CURRENT MARKET 2022 was a year of significant financial change for defined benefit pension schemes which had a major impact on the dynamics of the bulk annuity market. We estimate that since March 2022, rising gilt yield further improved the funding level of schemes to c.90% on average, with half of all schemes fully funded or better. Whilst many larger schemes will have significant interest rate hedging in place, all schemes benefit to a varying extent from rising interest rates. As interest rates rise the value of the defined benefit liabilities fall more than the value of the assets held against them, which closes the funding gap. Combined with improved pricing for longevity reinsurance and widening credit spreads, Buy-out came into reach for an increasing number of schemes. As a result, demand for de-risking increased, particularly in the second half of 2022, with this strong momentum continuing into 2023. In 2022 bulk annuity volumes are estimated to around £30bn for the year (source: Just estimates), but with a continued shift towards full scheme transactions. COMPETITIVE FACTORS AND POTENTIAL ALTERNATIVE DE-RISKING SOLUTIONS At present, there are eight providers of Buy-in and/or Buy-out transactions in the UK defined benefit market. These providers focus on some or all segments of the market according to their preferred transaction size, risk appetite, asset origination or reinsurance arrangements. Following the introduction of the Solvency II capital regime in 2016, longevity reinsurance is widely used to reduce the capital requirements of writing bulk and other annuities.

DEFINED BENEFIT DE-RISKING SOLUTIONS Defined benefit pension schemes often called final salary schemes, were traditionally used in both the private and public sectors as an important benefit for employees. The employer shared some responsibility for the wellbeing of their former workers when they retired by providing a guaranteed retirement income based on their earnings history and length of employment. However, providing these guaranteed benefits became expensive. Almost 90% of the UK’s Defined benefit pension schemes are now closed to new members and/or accrual of future benefits. Continuing to operate these schemes has become more onerous for employers. The DB De-risking business has allowed these employers to alleviate the financial and operational challenges of running these schemes through passing responsibility for the schemes to insurers who can fully or partially de-risk the employer’s defined benefit obligations. Defined benefit de-risking can occur via a Buy-in or Buy-out. In a Buy-in, the pension scheme pays a premium to an insurance company to purchase an income stream that matches its defined benefit obligations to some or all of its members, but retains legal responsibility for those obligations. The risk attached to that portion of the scheme is transferred to the insurer, with schemes often de-risking over a period of time through multiple buy-in tranches. An alternative is a Buy-out, where a pension scheme removes its obligations by purchasing individual insurance policies to pay the benefits of its members, who then become policyholders of the de-risking provider. Subsequently, the pension scheme is wound down as the pension obligation owed to each member has moved to the insurer.

The structural growth drivers for the defined benefit de-risking market have accelerated and the outlook for 2023 and beyond is exciting.

GOVERNANCE

FINANCIAL STATEMENTS

strategic report

89% o dfnd bnft pnin s hms a e coe t nw mme s ad ic esnl t ftr a c ul (%) 89% OF DEFINED BENEFIT PENSION SCHEMES ARE CLOSED TO NEW MEMBERS AND INCREASINGLY TO FUTURE ACCRUAL (%)

We are continuing to invest in our proposition and service to reduce the impact on scarce human resources and eliminate process friction.

100

Heightened government, regulatory and fiduciary focus alongside consumer activism has pushed environmental, social and governance (“ESG”) considerations up the agenda for UK defined benefit pension schemes. With new regulations for climate reporting introduced with the Pensions Schemes Act 2021, more trustees considering de-risking have sought assurance that ESG considerations underpin the asset choices in insurers’ investment portfolios. OUTLOOK The structural growth drivers for the defined benefit de-risking market have accelerated and the outlook for 2023 and beyond is exciting. The increase in gilt yields has reduced the estimated liabilities of defined benefit pension schemes and dramatically improved funding levels. Employee Benefit Consultants expect that this will translate into rising market volumes and that demand will remain strong over the long term, with c.£600bn expected to transact in the next decade, of which potentially more than £200bn could transact in the three year 2023-25 period (source: LCP). Schemes who ordinarily expected to be fully funded towards the middle of the decade have been able to bring forward their de-risking plans. Insurance capacity has kept pace with demand but the increased transaction volumes forecast are likely to increase pressure on scarce human resources. When selecting new business, insurers will triage the opportunities available to them. As a result, small and medium size schemes targeting Buy-out must have their governance, data and benefit specifications in good order to secure insurer engagement. Just Group is continuing to invest in its proposition and service to reduce the impact on scarce human resources and eliminate process friction. This will increase the capacity to conduct more business.

2018 2019 2020 2021 2022 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Closed to new members (open to benefit accrual)

Source: The Purple Book 2021, PPF Closed to future accrual 2022

D D-rsig tasci n (£b) DB DE-RISKING TRANSACTIONS (£BN)

2022 (forecast)

2017 2028 2019 2020 2021

2011 2012 2013 2014 2015 2016

Backbook acquisition

Forecast range

Buy-in/Buy-out

Source: Just analysis, Hymans

In June 2020 The Pension Regulator (“TPR”) issued guidance for trustees and sponsoring employers considering transacting with alternative defined benefit de-risking solutions. Regulation by TPR is outside of the insurance regime and so these new alternatives including DB consolidators would offer reduced protection for members compared to a fully protected and PRA regulated insurance solution. So far, only one DB consolidator, Clara-Pensions, has completed the TPR assessment process, however at the time of writing have yet to transact. We welcome innovative solutions to the market, but irrespective, we believe the scale of the market and strength of demand for ‘gold standard’ insurance solutions will mean that trustees and their consultants will continue to prioritise the insurer pathway where possible. WIDENING THE INVESTMENT OPPORTUNITY Insurers cashflow match liabilities through the origination of a mix of investment grade liquid and illiquid fixed income assets. To offer attractive new business pricing, insurers must have strong capabilities to originate high-yielding, medium and long duration illiquid assets. Illiquid assets are split between the lifetime mortgages that we originate and manage ourselves and other illiquid assets, which includes a diverse range of investments such as infrastructure debt, private placements, commercial real estate mortgages, ground rents and income strips. The government’s consultation response to the proposed reforms of the Solvency II regime, published in November 2022, when implemented will widen asset eligibility criteria. This could unlock billions of pounds of investment from insurers into the UK. Insurer long term capital is particularly suitable for investments to decarbonise the economy, develop affordable and social housing, to make improvements to infrastructure and to support the UK’s world class science and research capabilities.

Just group PLC | Annual Report and accounts 2022

MARKET CONTEXT continued

their benefits. A proportion of the proceeds from these transfers are used to secure a guaranteed income by investing in a GIfL. This reduction in activity will be a drag on the positive growth factors above. In 2020 the FCA announced they intend to complete further work on the suitability of advice and associated disclosure (known as “Assessing Suitability Review 2”). The review aimed focus on initial and ongoing advice to consumers taking an income in retirement. This work was paused. In January 2023 the FCA announced their intention to complete a thematic review assessing the advice consumers are receiving on meeting their income needs in retirement. The review will start in Q1 2023 and the FCA aim to publish a report setting out their findings in Q4 2023. The FCA will have greater rule making powers under the future regulatory framework legislation. They have already announced that, to get ready for these changes, they intend to carry out a holistic review of the boundary between advice and guidance. Their aim is to understand where existing regulation may carry a disproportionate burden, and to explore ideas to reduce that burden, whilst continuing to provide the right level of consumer protection. This may, over the medium term, result in more people receiving help and guidance in how to use their pension savings, which may increase the size of our addressable market. LIFETIME MORTGAGES A lifetime mortgage (“LTM”) allows homeowners to borrow money secured against the equity in their home. The amount borrowed is repayable together with accrued interest on the death of the last remaining homeowner or their move into permanent residential care. This product can be used by retirees to supplement savings, top up retirement income or to settle any outstanding indebtedness. The typical lifetime mortgage customer is around 70 years old, has a house valued at around £345,000 and borrows 30% of the property value. People are becoming increasingly positively disposed to accessing some of the equity in their homes to improve the quality of their later lives or to help their family. The compound annual growth rate of the lifetime mortgage market between 2011 and 2022 was 21% and this has attracted new providers to enter the market in the last few years. Just Group is a leading product provider of lifetime mortgages. Our HUB Financial Solutions business is a leading distribution business providing consumers with regulated advice on equity release solutions from across the market. CURRENT MARKET AND OUTLOOK Just Group expects Lifetime Mortgages to continue to provide an important, but reducing proportion of the investments it uses to back its Retirement Income new business liabilities. Homeowners aged over 55 are estimated to own property wealth of over £3.5tn (source: ONS). We estimate that the existing industry loan book including interest is just £43.4bn. In October 2022, following the September 23 UK Growth Plan announced by the Chancellor, a number of product providers adjusted and/or removed their products as the markets faced a period of significant interest rate volatility. This reduced the products available to customers. Since the November 2022 Autumn Statement many providers have returned to the market and the number of products available to customers has increased. Just Group introduced medical underwriting into a niche segment of the lifetime mortgage market some years ago and in 2021 extended it across the Just for You mortgage range. We estimate by collecting medical information and lifestyle factors from applicants, we are able to provide six-in-ten a lower interest rate, or for those who need it, a higher borrowing amount. This market disruption is revolutionising how lifetime mortgages are advised.

INDIVIDUAL RETIREMENT INCOME MARKET Guaranteed Income for Life (“GIfL”) products are bought by individual customers to convert some or all of their accumulated pension savings into a guaranteed lifetime retirement income. The solution provides people with peace of mind from the security of knowing the income will continue to be paid for as long as the customer and, where relevant, for as long as they or, typically, their spouse, lives. In the UK, GIfL products traditionally offered an income payable without reference to the individual’s health or lifestyle, and were differentiated only by reference to a limited number of factors such as age, premium size and, prior to 31 December 2012, gender. An individually underwritten GIfL takes into account an individual’s medical conditions, personal and lifestyle factors to determine their life expectancy. People who are eligible and purchase an individually underwritten GIfL typically achieve double-digit percentage increases in income compared to purchasing a GIfL which is not individually underwritten. CURRENT MARKET AND OUTLOOK Pension customers are encouraged to compare the GIfL offer provided by their existing pension company to those offered on what is the open or external market. In March 2018 the Financial Conduct Authority (“FCA”) introduced rules requiring pension companies to provide customers with a comparison to the best income available from the external market alongside the quotation from the incumbent firm. These requirements were subsequently strengthened and from January 2020 all firms are required to provide a medically underwritten comparison where a customer is eligible. This has provided new opportunities for Just Group as we compete in the open market when these customers choose to shop around; this is our addressable market as we do not have an existing base of pension savings customers. The open market share of the total GIfL market for 2022 was 56.3% up from 54.2% in 2021 (source: Association of British Insurers (“ABI”)). Continuing developments are driving growth over the medium term in our addressable market: • the structural drivers of growth in the retirement income market are strong and assets accumulating in defined contribution (“DC”) pension schemes are projected to increase consistently over the next decade. This growth arises from an increase in the number of people joining workplace pension schemes as a result of the successful state auto-enrolment policy and the increase in contribution rates implemented in 2018; • growth in DC pension assets also arises as companies close down final salary or defined benefit pension schemes and offer their employees DC pensions instead; • some people are transferring out of defined benefit pension schemes into DC pension schemes to take advantage of Pension Freedoms. When transferring, many people are choosing to secure a guaranteed income for life, by using some of the transfer value to purchase an individually underwritten GIfL; • many life and pension companies are choosing to put in place broking solutions to offer their pension savings customers access to the best individually underwritten GIfL deals in the market. Some are choosing to transfer their obligations to provide a guaranteed GIfL rate to their customers to an alternative product provider or broking solution. This grows our addressable market and provides customers with better outcomes. Our HUB group of companies is providing many of these corporate services; and • following the rise in UK interest rates, the level of income on GIfL has risen by around 50% in 2022. This has resulted in the volume of quotations from financial intermediaries and their clients for guaranteed income solutions to increase. The number of individual retail customers transferring their pension benefits into defined contribution pensions from their final salary (defined benefit) pension has reduced significantly in the last few years. This reduction follows a review and introduction of remediation measures by the FCA into the quality of advice provided to individual retail customers exploring transferring

GOVERNANCE

FINANCIAL STATEMENTS

strategic report

Just is forecasting that the LTM market will experience a period of stagnation and potential decline in 2023, as the market and consumer demand adjusts to increased interest rates and the potential property market impacts of increased inflation. We forecast the market will return to growth in 2024 and will exceed the £6.2bn recorded in 2022. The primary drivers of growth are: • households wanting to top up their retirement income to improve their, or their family’s standard of living in later life; • people with outstanding interest-only mortgages who are entering retirement and require a solution to settle the debt with the existing mortgage company; • strong demographic growth. The number of people aged 65 and over is forecast to increase from around 13 million today to around 17 million by 2040; and • strong investment in advertising which results in people becoming aware of LTMs, combined with people becoming more disposed to using some of their housing equity. In October 2020 the FCA wrote to Chief Executive Officers and board directors of lifetime mortgage lenders and mortgage intermediaries. The FCA set out their view of the key risks these firms pose to their consumers or the markets in which they operate. They outlined their expectations of firms including how firms should be mitigating these key risks. They described their supervisory strategy and programme of work to ensure that firms are meeting the regulators’ expectations and that any harms and risks of harm are being remedied and/or mitigated. The FCA stated they would be engaging with a number of firms across the industry and that phase of work was due to conclude in May 2021. In June 2022 they wrote to firms providing an updated view of their expectations, and key risks posed by firms in this sector and their supervisory plans. LONG-TERM CARE SOLUTIONS Care Plans, or immediate needs annuities, are a form of purchased life annuity. In exchange for an up-front premium, they provide a guaranteed income for the life of the insured to help contribute to the cost of their care. Under current rules this income is tax free when paid directly to a registered care provider, with Care Plans available both to individuals entering care facilities and receiving domiciliary support. As such, Care Plans provide a form of longevity insurance to an individual against the ongoing costs of receiving care until their death. On 7 September 2021, the UK Prime Minister announced plans to substantially increase funding for health and social care over the period (2022-2025), to be funded by a new tax, the Health and Social Care Levy. From October 2023, the government had planned to introduce a new £86,000 cap on the amount anyone in England will have to spend on their personal care over their lifetime. The cap was to apply irrespective of a person’s age or income. The government said that the publication of the November 2021 document marked the start of a period of co-production of the statutory guidance with the sector, building on draft regulations and guidance published in 2015. It added that this would be followed by a public consultation early in 2022 with the intention that the final regulations and guidance will be published in spring 2022. In the November 2022 Autumn Statement, the government announced a delay to the national rollout of social care charging reforms from October 2023 to October 2025. CURRENT MARKET AND OUTLOOK There is a substantial market for care in the UK. The drivers of the need for care are strong because: • there are currently around 1.7 million people aged 85 or over in the UK – this is the average age at which people go into care homes; • this is the fastest growing demographic cohort, with its number expected to almost double over the next 25 years, suggesting a rate in excess of 2.6%; • 40% of all people in the UK aged 65 and over are estimated to have a limiting long-standing illness, which may require care in the future; and • the recent focus on pressures within the care sector has highlighted the need to plan for care, and any government reform will provide additional focus on the limited number of solutions currently available.

EXTERNAL GIFL MARKET (£M)

2,500

2,000

1,500

1,000

500

2015 2016

2017

2018

2019

2020

2021

2022

Source: Just analysis, ABI

Lftm mrgg mre sz ad g o t rt (£m) LIFETIME MORTGAGE MARKET SIZE AND GROWTH RATE (£M)

6,000

5,000

4,000

3,000

2,000

1,000

2017 2018 2019 2020 2021 2022 2011 2012 2013 2014 2015 2016

Lump sum mortgage sales

Existing drawdown mortgages – further advances Source: Equity Release Council New drawdown mortgages – initial advance

Nme o pol (mlin ) a e 60 + NUMBER OF PEOPLE (MILLIONS) AGE 60 +

% of UK population over age 60

25.0% 26.2% 27.9% 28.9% 29.3% 30.7%

2022

2025

2030

2035

2050

2040

Source: O ce for National Statistics

A LEADER IN UK LONG-TERM CARE FINANCIAL SOLUTIONS FOR 22 years

Just group PLC | Annual Report and accounts 2022

BUSINESS MODEL

Our business model converts the growth opportunities in our markets to deliver positive outcomes for customers, shareholders and colleagues.

KEY CHARACTERISTICS OF OUR BUSINESS MODEL

Focus on organic capital generation

Specialist focus

Risk Selection

Product innovation

Cost Discipline

Scalable operating model

HOW WE CREATE VALUE

WE CREATE VALUE FOR

We have created a sustainable business model that organically generates capital to support growth. We assess the risks related to the policies we sell and how much income we expect to provide to our customers. We charge a margin on the initial amount received in exchange for accepting the risk over the lifetime of the policy. We invest the margin and our customers’ pension savings in high quality assets, including the lifetime mortgages we originate. This generates financial value whilst ensuring we are able to pay policyholder pensions as they fall due.

SHAREHOLDERS By managing our resources effectively, we generate returns in excess of our cost of capital. We manage our capital conservatively and are focused on increasing our underlying organic capital generation to grow our business and service capital providers, enabling sustainable dividends. CUSTOMERS We use our medical underwriting to fairly optimise the returns for our customers. In addition, we strive to deliver the best experience for our customers, making it as easy for them as possible to navigate the complexities of later life planning and events. In addition, our resilient business model ensures our customers can rely on us to pay claims over the long term. PARTNERS Corporate clients: we create opportunities and solve problems for companies using our scalable retirement-focused solutions. Trustees and scheme sponsors: we provide member security and de-risk pension liabilities.

GROWTH OPPORTUNITIES

We have a growing ageing population with evolving needs. The complexity of retirement and therefore inertia amongst those approaching, at or in-retirement provides us with significant opportunity to help more customers achieve a better later life through the products and propositions we offer via our multi-channel distribution strategy. Each and every current and future retiree will have a unique set of circumstances and be exposed to a number of risks. These risks include: • their defined benefit pension scheme running into financial difficulty; • running out of money; • being unable to plan their financial affairs;

COLLEAGUES We develop, recognise and reward our colleagues to secure a skilled and motivated team, with a focus on high-performance working.

• access to affordable financial advice; • increasing and uncertain care costs;

• not being able to achieve the lifestyle they had expected; • being invested in inappropriate products and securities; and • inflation outpacing their savings.

ENVIRONMENT We help the environment through how we operate and the investment decisions we make, which align with our focused sustainability strategy.

Our solutions service these needs, and our scalable and sustainable business model is built to optimise value from those solutions.

Page i Page ii Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 80 Page 81 Page 82 Page 83 Page 84 Page 85 Page 86 Page 87 Page 88 Page 89 Page 90 Page 91 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 Page 104 Page 105 Page 106 Page 107 Page 108 Page 109 Page 110 Page 111 Page 112 Page 113 Page 114 Page 115 Page 116 Page 117 Page 118 Page 119 Page 120 Page 121 Page 122 Page 123 Page 124 Page 125 Page 126 Page 127 Page 128 Page 129 Page 130 Page 131 Page 132 Page 133 Page 134 Page 135 Page 136 Page 137 Page 138 Page 139 Page 140 Page 141 Page 142 Page 143 Page 144 Page 145 Page 146 Page 147 Page 148 Page 149 Page 150 Page 151 Page 152 Page 153 Page 154 Page 155 Page 156 Page 157 Page 158 Page 159 Page 160 Page 161 Page 162 Page 163 Page 164 Page 165 Page 166 Page 167 Page 168 Page 169 Page 170 Page 171 Page 172 Page 173 Page 174 Page 175 Page 176 Page 177 Page 178 Page 179 Page 180 Page 181 Page 182 Page 183 Page 184 Page 185 Page 186 Page 187 Page 188 Page 189 Page 190 Page 191 Page 192 Page 193 Page 194 Page 195 Page 196 Page 197 Page 198