Investment Opportunity with Just Group: Is it Worth the Risk?
Just Group, a UK-based company specialising in retirement products, has seen significant growth in recent years, particularly in the annuities market. Formed to cater to the UK market, the company went public in late 2013 and saw an impressive 35% increase above its initial public offering (IPO) price.
Just Group's current growth strategy focuses on expanding its presence in both bulk-purchase annuities (BPAs) and individual annuities. This strategic approach allows for diversified revenue streams and mitigates concentration risk.
In the financial year ending in 2024, Just Group reported a robust revenue of approximately £2.13 billion, primarily from annuity premiums. While earnings stood at £68 million, reflecting challenges in the insurance market, the company maintained a healthy gross profit margin of around 22%. However, the modest net profit margin of 3.2% indicates high costs or underwriting expenses.
The company's capital strength is evident in its high debt/equity ratio of approximately 524%, typical for insurers given their capital structures. Despite this, strong risk and capital management are crucial for Just Group's continued success.
As part of its growth plan, Just Group sold a significant portion of its lifetime mortgage portfolio to free up capital. The group's book of existing business is expected to more than double from 2023 to 2028.
In the bulk-purchase annuities (BPAs) market, Just Group closed 129 deals in 2024, giving it a 45% market share. The company also developed a tool called Beacon, a bulk quotation and price-monitoring service platform, for smaller BPA schemes.
Just Group's individual annuity business experienced a 34% overall increase and 17% growth specifically for Just in 2024. The expected dividend is set to increase from just under 2% to 3.4%.
While the financial results show profitable operations, the relatively low net margin highlights the competitive and capital-intensive nature of the annuities market. Just Group’s strategy to grow in the BPA market aligns with broader market trends where pension schemes seek stable, long-term risk transfer solutions. Their continued presence in individual annuities ensures a balanced business mix.
Looking ahead, Just Group aims to grow its operating profit by 15% per annum over the next five years, with a target of £422 million (later achieved two years early with a reported profit of £504 million for 2024). The company has received clearance to restructure its capital model and raised £565 million in new equity and debt.
Despite challenges in the past, such as a period of stagnant growth in 2020-2021 due to shares trading below 40p and a loss of market confidence, Just Group continues to thrive in the annuities market. With a focus on BPAs and individual annuities, the company is well-positioned for future growth.
[1] Just Group Annual Report and Accounts 2024 [4] Just Group Interim Results 2025 H1
- Just Group, in alignment with broader market trends, is aiming to expand in the bulk-purchase annuities (BPAs) market, providing stable, long-term risk transfer solutions.
- In the realm of personal-finance, Just Group reported a substantial growth of 34% in its individual annuity business in 2024, with an anticipated dividend increase from 2% to 3.4%.
- The company's growth strategy also includes a focus on technology, as evidenced by the development of Beacon, a platform for bulk quotation and price monitoring in the BPA market.
- Data-and-cloud-computing plays a role in Just Group's operations, as the company leverages technology to streamline processes, potentially offering cost savings and enhanced efficiency.
- In the ever-evolving field of finance, Just Group's continuous growth and focus on key areas like BPAs, individual annuities, and technological advances ensure its competitiveness in the sphere of gadgets and digital services.
