(Alliance News) - Just Group PLC on Tuesday announced it had disposed of the last of its lifetime mortgage portfolios to reduce its exposure to UK residential property risk.
Reigate, England-based Just Group provides retirement financial services to individuals and companies. It has completed the sale of a portfolio of lifetime mortgages to pensions insurance specialist Rothesay Life PLC for around GBP687 million, to be paid in cash.
The portfolio had an outstanding loan balance of GBP537 million, and was valued at GBP722 million at the end of December. The sale proceeds will be used to reinvest in a mix of other fixed interest assets backing the insurance liabilities of the company.
A net tax loss of around GBP35 million will be incurred from the sale, including "impact on the insurance liabilities resulting from the expected new asset mix".
As the third sale of a lifetime mortgage portfolio, it has completed its programme of mortgage sales. The move will reduce Just Group's exposure to the risk of UK residential property, it said.
Chief Executive David Richardson said: "I am very pleased to have completed our third LTM portfolio sale, which, together with the three no-negative-equity gurantee hedges we have completed and the reduction in new business LTM backing ratio we have achieved over the last two years, leaves our solvency position much more resilient to stresses in the UK housing market.
"This, alongside both our improved capital base and organic capital generation, has established a strong foundation for the business, from which to deliver profitable and sustainable growth."
Just Group's shares were trading down 0.5% to 87.25 pence each in London on Tuesday morning.
The company's annual results for 2021 will be released on March 10, and it will also update on its Solvency II position at that time.
By Elizabeth Winter; elizabethwinter@alliancenews.com
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Just Group (JUST)