Just Group has frozen its dividends despite an 85% jump in first-half operating profits over new capital rules proposed in the UK.
The Prudential Regulatory Authority wants firms like Just, which offers lifetime release or equity release mortgages, to hold more capital to protect against a fall in house prices.
The PRA’s CP13/18 consultation process will close on 30 September 2018 with a view to implementation at the end of the year.
Taking a prudent approach
“Whilst the outcome of the consultation remains uncertain, CP13/18 contains proposals, which if implemented as outlined, could result in a material reduction in our capital position,” Just said in a statement.
“The board has, however, been prudently considering a range of options for the business in case the consultation has a detrimental impact on the group’s regulatory capital position.
“The board will ensure that we make the best use of the capital we already have and this would include carefully considering the volume of new business that we write.”
Just said it was looking to reinsure part of its book, as one of a number of options.
In February, it raised £230m ($297m, €255m) in tier three capital and the group’s solvency capital requirement coverage ratio at 30 June 2018 was 150%.
Formed in 2016 by the merger of Just Retirement and Partnership Assurance, Just businesses operate in the UK and South Africa offering financial services to retirees.
