Just Group to 'outperform' after H1 beat

(Sharecast News) - RBC Capital Markets sees significant upside in the shares of retirement financial services firm Just Group after the company smashed expectations with its first-half results. The broker maintained its 'outperform' rating and 170p target price on the stock, which at 1125 BST on Tuesday was trading 1% higher at just 82.7p.

Helped by the recent rises in interest rates, the group reported an underlying profit of £173m for the first half, up 154% year-on-year and ahead of the consensus estimate of £162m.

The company said its Solvency II ratio - a regulatory measure to ensure insurers have enough capital to cope with worst-case-scenario losses - was 204%, up from 199% a year before and 2 percentage points ahead of forecasts, according to RBC, driven by markets and positive underlying organic capital generation.

"Just has also taken the opportunity to further de-risk the balance sheet, significantly reducing the sensitivity to moving interest rates; therefore providing an even more robust Solvency II position moving forward," said analyst Mandeep Jagpal.

"This facilitates Just's ability to take advantage of the growth opportunity in both DB de-risking (bulk annuities) and GifL (retail annuities), where Just has again demonstrated it is able to write new business at attractive margins (IFRS new business margin 8.4% in 1H23) and low new business capital strain (1.6% in 1H23)."