Just Group PLC Just notes publication of PRA consultation 13/18 (1618T)
02 July 2018 - 4:45PM
UK Regulatory
TIDMJUST
RNS Number : 1618T
Just Group PLC
02 July 2018
NEWS RELEASE www.justgroupplc.co.uk
2 July 2018
Prudential Regulation Authority publishes consultation paper
CP13/18 Solvency II: equity release mortgages
Just Group plc notes the consultation paper published today, CP
13/18 "Solvency II: equity release mortgages", which aims to
develop the regulatory approach to this asset class beyond
SS3/17(1) . The Group looks forward to playing a full part in an
open consultation, both bilaterally and in conjunction with the
Association of British Insurers and the Equity Release Council.
Just Group plc's audited capital position at 31 December 2017,
as reported in its Solvency and Financial Condition Report, was
computed on a basis which was consistent with SS3/17 as originally
published. New business is written on terms that allow us to
continue to comply with SS3/17.
Equity release mortgages, also known as lifetime mortgages, are
appropriate products for many UK retirees who wish to access value
from their homes and a valuable matching asset for our Retirement
Income portfolios.
Just Group observes that future UK residential house prices will
be the result of a number of economic factors. We would welcome
publication by the Prudential Regulation Authority of a common
economic stress test against which both banks and insurers could
test their portfolios.
A further announcement may be made as appropriate as the
consultation process progresses.
Enquiries
Investors / Analysts Media
James Pearce, Director of Group Stephen Lowe, Group Communications
Finance Director
Telephone: +44 (0) 7715 085 099 Telephone: +44 (0) 1737 827 301
james.pearce@wearejust.co.uk press.office@wearejust.co.uk
Temple Bar Advisory
Alex Child-Villiers
William Barker
Telephone: +44 (0) 20 7002 1080
FINANCIAL CALENDAR DATE
Interim results for the 6 months 6 September 2018
ended 30 June 2018
=================
Notes
1. In July 2017 the Prudential Regulation Authority issued
Supervisory Statement 3/17 "Solvency II: Matching adjustment -
illiquid unrated assets and equity release mortgages". SS3/17
includes a number of financial tests as to the reasonableness of
the Matching Adjustment, which life insurers are expected to meet.
The consultation paper CP13/18 seeks to provide clarification to
firms in interpreting SS3/17 particularly in respect of firms
investing in equity release mortgage portfolios.
2. The loan to value ratio of the Group's mortgage portfolio at
31 December 2017 was approximately 29%.
3. The conservatism within Just Retirement Limited's reserving
and capital requirements in relation to property risk is equivalent
to assuming a 28% immediate drop in house prices with no increases
indefinitely thereafter.
4. The Board of Just regularly reviews its exposures, and
ensures that appropriate provisions and mitigating actions are in
place to manage them. A key area is our exposure to future United
Kingdom ("UK") residential property prices, through the no-negative
equity guarantee provided to our equity release customers. This
limits their loan liability to the value of their property if they
die or enter long term care. Just Retirement Limited, the Group's
primary insurance company currently has GBP5.4bn of lifetime
mortgages, and benefits from the yield on these assets in
calculating its Matching Adjustment
JUST GROUP PLC
GROUP COMMUNICATIONS
Vale House, Roebuck Close
Bancroft Road, Reigate
Surrey RH2 7RU
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END
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