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Annual Results

JRP adjusted operating profits up

10 March 2017 07:28

JRP Group's pro forma adjusted operating profit grew 58% in calendar year 2016 to £164m.

The increase was driven by an 82% growth in new business profit to £124m.

IFRS statutory profit before tax for the 18 months to December 2016 was £199m

The group also said new business margin more than doubled.

JRP focused on profit rather than volume in 2016, with Retirement Income sales falling 13%, but IFRS new business margins increasing from 3.3% to 6.8%.

Margin expansion was driven by price improvements, enhanced risk selection, and unusually high mortgage spreads

The group said £30m run rate synergies achieved out of the £45m 2018 target.

The merger integration delivered run rate savings of £30m by the end of 2016, one year ahead of schedule. Group chief executive Rodney Cook said: "I am truly proud of what our team achieved in 2016.

"To deliver a step change in profit at the same time as our merger and Solvency II implementation is very special. Fortunately, there is more to come.

"Our focus is on growing profits, but this will be helped by market growth.

"This is clearest in the DB de-risking and lifetime mortgage markets, where growth is already under way.

"Although GIfL market growth is more measured, our addressable market is growing as pensions companies put broking services in place to give their retiring customers access to the open market.

" It is easier for us to be selective with respect to the risks we take when markets are growing. The 2016 margins demonstrated this, and we remain selective in relation to new business.

"We are now in the later stages of the merger integration process. There are significant further savings to make, but now in more complex areas such as systems and IT.

"Our staff have shown considerable adaptability over the last year, and we appreciate their commitment despite the additional pressures of the merger.

"We also strengthened the merged Group's capital position during the year, particularly through the issuance of hybrid debt during Q4.

"Our approach to new business has reduced capital consumption, and in underlying terms our year end figure was little changed from the prior year level.

"Given our solid 151% Solvency II coverage ratio I am delighted the board has proposed a return to dividend growth.

"In summary, our merger has catalysed a transformation of our earnings potential, and there are opportunities ahead of us.

"It is an exciting time to be serving JRP's shareholders and we will strive to deliver further positive momentum during 2017."

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