Just Retirement Surges as Annuity Sales Surprise Investors

Just Retirement Group Plc surged the most in 15 months in London trading as the insurer ramped up its corporate pensions business.

The company helped insure 17 company pension plans in the six months to Dec. 31, generating 354.7 million pounds ($547.5 million) of revenue, mitigating a 58 percent drop in annuities sold to retirees, Just Retirement said in a statement Tuesday. Total annuity sales fell 4 percent from a year earlier.

The shares rallied 16 percent to 167.1 pence at 10:31 a.m. the most since November 2013, recouping losses on the year. Just Retirement had seen its market value reduce by almost half since Chancellor of Exchequer George Osborne’s 2014 budget scrapped rules that pushed retirees to buy an annuity product, threatening a key source of revenue.

“A lot of people thought that the annuity business would be dead,” Chief Executive Officer Rodney Cook said on a conference call. “We do regard defined-benefit business as an important and core part of the business going forward.”

Just Retirement is among U.K. insurers to have responded to Osborne’s changes by ramping up their bulk annuities business. The market, where the insurer removes pension risk from company balance sheets, is expected to post “double digit growth” in the next five years, Cook said.

The Reigate, England-based company’s underlying operating profit for the fiscal first half fell 10 percent to 42.6 million pounds with new business sales down 9 percent.

Before it's here, it's on the Bloomberg Terminal.