May 12 (Bloomberg) -- Just Retirement Group Plc said it’s cutting jobs as part of a 14 million-pound ($23.7 million) cost-saving initiative in the wake of government plans to overhaul the annuities market.
The insurer, which today reported a 50 percent drop in annuity sales since the government unveiled its plan in the March budget, announced cost savings for the next financial year, according to a statement. The shares climbed.
“It will include redundancies,” Chief Executive Officer Rodney Cook said on a conference call with journalists, without giving details. “Activity levels appear to be stabilizing at around half of pre-budget levels. That is not good, but it’s not nearly as bad as the forecast of the death of the annuity industry.”
Shares of Just Retirement have slumped 40 percent since Chancellor Exchequer George Osborne scrapped rules in his 2014 budget that pushed retirees to buy annuities with their pension savings. The shares rose 1.7 percent to 160 pence in London trading as the Surrey, England-based company said it will look to other retirement products to recapture lost revenue.
As with U.K. competitors including Legal & General Group Plc, Just Retirement reported higher revenue from the de-risking market where it assumes liabilities from defined-benefit pensions on companies’ balance sheets. The insurer today reported 37 million pounds of revenue in the third quarter from such de-risking and said it remains confident that it will write at least 80 million pounds of defined-benefit premiums for the full year.
“There is huge number of small defined-benefit schemes that need to de-risk, and we see that as being a much larger portion of our sales” going forward, Cook said
The company still reported a 34 percent increase in individual annuities in the third quarter and a 128 percent jump in life time, or reverse, mortgages to 159 million pounds.
To contact the reporter on this story: Sarah Jones in London at firstname.lastname@example.org
To contact the editors responsible for this story: Edward Evans at email@example.com Steve Bailey