20 JUST GROUP PLC Annual Report and Accounts 2019
developing new partnering propositions
DEVELOPING CAPITAL LIGHT PROPOSITIONS In March 2020, we completed our first Defined Benefit De-risking partnering deal
T his was an innovative quota share £250m that was transacted in 2019 to secure the benefits of over 1,700 pensioners and dependants in payment of the AA Pension Scheme. We have created capability in the Group to repeat the activity with reinsurance partners. Leveraging our strong reputation in the defined benefit de- risking market, we aim to develop a pipeline of business from a new segment of the market where the Group can generate fee-based income. It’s a significant step towards developing the Group’s capabilities to generate value without utilising the Company’s capital. The trustees of the scheme and the members covered will see no change as a result of this reinsurance arrangement. The scheme will continue to receive a monthly payment from us which exactly matches the benefits covered. Pensioners will continue to receive payments directly from the scheme. As part of this arrangement, Just will use Lifetime Mortgages (“LTMs”) to fund the deal. This provides suitable assets with a good match to the defined benefit pension scheme’s liabilities and enables Just to leverage its successful lifetime mortgage new business franchise. Our partnering proposition enhances our offering and enables us to grow our participation in the higher value segment of the market. For potential reinsurance partners Just offers a credible, low risk way to access the reinsurance of liabilities from the exciting DB De-risking market by utilising our award winning new business franchise. reinsurance arrangement that reinsured 100% of the investment, inflation and longevity risk for a Buy-in of just below
Our Defined Benefit De‑risking partnering initiative is a game-changer for new business capital generation. It allows the Group to target larger de‑risking transactions – a new segment for Just – and generate capital whilst continuing to complete transactions in our core market. Tim Coulson Director, Defined Benefit Solutions, Just Group
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