How many people tell the truth when insurers ask them awkward questions? How much do you drink? How often do you exercise? How would you describe your general health?
While outright lies are risky, not to mention morally questionable, even the most upright citizens are inclined to paint as rosy a picture of themselves as they can get away with.
For Just Group customers, it is all very different. The company pioneered the sale of retirement products to savers who are ill, unhealthy or simply more indulgent than their peers.
Running up profits: Just Group meets the retirement needs of savers, however healthy their lifestyles
Asking potential policyholders up to 250 questions, Just Group determines individuals’ life expectancy and offers annuities – guaranteed annual income for life – based on their calculations.
While this may sound macabre, it can deliver hefty gains, with Just Group offering rates that are up to 70 per cent higher than competitors. And, having been at it since 1995, the firm has amassed a huge bank of data to back up its analysis.
As a result, Just Group is the market leader in this area, with approaching half a million customers, ranging from fast-food fans to the seriously unwell.
Chief executive David Richardson, a trim 51-year-old, does not just offer annuities to such folk. Customers also include the fit and well, and business is booming.
Interim results, released last week, showed group sales more than doubled year-on-year, from £900,000 to £1.9 billion in the six months to June 30.
Across individual annuities alone, Just Group enjoyed its busiest six months since then Chancellor George Osborne made sweeping changes to pensions in 2014 – and sales rose 54 per cent to £500million.
But Richardson has built a fast-growing business in the so-called bulk annuity sector too, where companies offload onerous pension schemes to specialist insurers. Here, sales were 149 per cent ahead at £1.4billion.
Once, it was common practice for firms to provide defined benefit pensions to staff, based on their salary and length of service. Today, they are far less popular, with most employers viewing them as an expensive liability.
But because pension schemes last for years, the market is still vast, collectively valued at around £1.4trillion and providing benefits to almost 10 million workers and retirees.
Most firms are keen to transfer these pensions to specialists and increases in interest rates have made it far more affordable for them to do so. Independent experts suggest a record £60billion of transfers this year and Just Group is reaping the benefits.
Most insurers focus on large schemes, worth more than £1billion apiece. Here again, Just Group is a little different, specialising in schemes for small and mid-sized companies, many valued at less than £10million apiece.
Rival insurers often shy away from this type of business but Just Group has developed clever technology to offer competitive deals to firms of every size.
Small companies are often even more in need of external support than big corporations. And there are a lot more of them.
Around 3,700 defined benefit schemes have assets of less than £100million, equivalent to 72 per cent of the total number. Their enthusiasm for transferring these assets to firms such as Just Group is understandable. Running pension schemes can be time-consuming and expensive.
Handing them over to specialists allows businesses to focus on their core activities, while ensuring that the pension promises made to employees and former employees will be kept.
With annuities back in fashion and companies increasingly keen to offload costly pension liabilities, there is optimism about the future.
Operating profits soared 154 per cent to £173million in the first half of the year, momentum has continued through the summer and David Richardson expects to deliver 15 per cent annual profits growth for several years to come.
Interim dividends have been increased by 15 per cent to 0.58p and the group hopes to continue in that vein, with brokers pencilling in a total payout of 1.9p for 2023 rising to 2.1p next year and 2.3p the year after.
Midas verdict: Just Group shares have had their ups and downs but the mood under David Richardson is upbeat – and deservedly so. The company is making strides, winning new customers and delivering results. A period of sustained growth is in sight and, at 83p, the shares are a buy.
Traded on: Main market / Ticker: JUST / Contact: justgroupplc.co.uk or Equiniti on 0371 384 2787
This post first appeared on Dailymail.co.uk
