JRP Group plc (lon:just)
Just Group – Prudent Fundraising Or In To A Risky Product, Equity Release?

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Title: Just Group – Prudent Fundraising Or In To A Risky Product, Equity Release?
Company: JUST - JRP Group plc
Share Price Then: 0p
Author: Ian Smith
Date: Fri 15 Mar 2019
Comments: Just Group is a provider of retirement income products and services to individuals, basically Annuities and Equity Release and to corporate clients Defined Benefit De-risking.

New sales for 2018 were up by about 15% over 2017 and adjusted operating profit was about £210million with a reported loss of a£86milion which is mostly due to changes to assumptions on property values.

This led to an announcement of £300million new borrowings and an £80million shares issue, about 10% of the current capitalisation which mostly seems to be related to the Equity Release PRA CP13/18 regulations.

More generally during the recent past there have been experts suggesting that in general the modelling of the future returns for Equity Release is too optimistic, lower house price growth or higher interest rates mean that borrowers hit the “no negative equity guarantees” sooner than expected and longer life could mean a longer wait for the property sale.

Against this is the fact that Equity Release is a newish product and appears that it could be a very profitable market to be in; If you have sufficient funds to wait out the period between issuing the loan and its repayment with its compounded interest.

I do have concerns about equity release in general becoming the next PPI scandal in 10 years time. Although the schemes are generally clear to me I can see collective actions from inheritees/customers when the consequences of compounding interest means that there is little or no equity left in an inherited/sold property.

So is Equity Release a bit like IVAs, there were popular for a few years for people with debt then became a tool rather than the first suggested solution?
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