AKG Financial Strength Assessment Report/media/Files/J/JRMS-IR...As a result of the changed regulatory environment towards lifetime mortgages introduced by PS 31/18 and PS 19/19, the

ISSUED 08 NOVEMBER 2019

PROVIDER SECTOR Just

FINANCIAL

STRENGTH

ASSESSMENT

Just P R O V I D E R S E C T O R

© AKG Financial Analytics Ltd 2 08 November 2019

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ABOUT THIS FINANCIAL STRENGTH ASSESSMENT

This AKG report and the analysis and ratings contained within it provide assessment of financial strength and associated considerations. Financial Strength is focused on the ability of a company to deliver ongoing operational capability in the interest of its customers and in line with their fairly held expectations. AKG’s perspective in the assessment of financial

strength is wholly that of a customer of a product or service. From that foundation, this analysis is specifically designed to inform financial advisers and assist in their required understanding of a company’s operational financial strength.

Given the underlying customer perspective, the financial strength of companies needs to be focused at an operational

level (i.e. the elements and functions of an organisation which operate to specifically deliver and manage a proposition or service to the customer), specifically on the company that is effecting the product or service that a customer is selecting. This is important, because from the customer’s perspective it is that company that needs to survive in a form that maintains the requisite operational characteristics to meet their fairly held requirements. And it is thus at this level that the selection

needs of the customers’ advisers must be met. This contrasts to credit rating, which will be undertaken at group or parent company level where investment or debt placement etc. is made.

Further details on how analysis is undertaken is provided at the end of this report and may also be obtained from AKG.

TABLE OF CONTENTS

Rating & Assessment Commentary ........................................................................................................................................................................... 3

Ratings .................................................................................................................................................................................................................................................................... 3

Summary ............................................................................................................................................................................................................................................................... 3

Commentary ...................................................................................................................................................................................................................................................... 4

Group & Parental Context............................................................................................................................................................................................ 7

Background ......................................................................................................................................................................................................................................................... 7

Group Structure (simplified) ................................................................................................................................................................................................................... 8

Company Analysis: Just Retirement Ltd ................................................................................................................................................................... 9

Basic Information ............................................................................................................................................................................................................................................. 9

Operations ....................................................................................................................................................................................................................................................... 10

Strategy ............................................................................................................................................................................................................................................................... 12

Key Company Financial Data ............................................................................................................................................................................................................... 14

Company Analysis: Partnership Life Assurance Company Ltd .................................................................................................................... 17

Basic Information .......................................................................................................................................................................................................................................... 17

Operations ....................................................................................................................................................................................................................................................... 17

Strategy ............................................................................................................................................................................................................................................................... 18

Key Company Financial Data ............................................................................................................................................................................................................... 18

Guide ................................................................................................................................................................................................................................... 21

Introduction ..................................................................................................................................................................................................................................................... 21

Rating Definitions ......................................................................................................................................................................................................................................... 21

About AKG ...................................................................................................................................................................................................................................................... 24

CONTACT INFORMATION

AKG Financial Analytics Ltd, Anderton House, 92 South Street, Dorking, Surrey, RH4 2EW Tel: +44 (0) 1306 876439 Email: [email protected] Web: www.akg.co.uk



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Rating & Assessment Commentary

RATINGS

Overall Financial Strength

B+

PROVIDER SECTOR VERY STRONG

JUST RETIREMENT LTD

B+

PROVIDER SECTOR VERY STRONG

PARTNERSHIP LIFE ASSURANCE COMPANY LTD

Additional Financial Strength and Supporting Ratings

Non Profit

Financial

Strength

Unit Linked

Financial

Strength

With Profits

Financial

Strength

Service Image &

Strategy

Business

Performance

Just Retirement Ltd ��

Partnership Life Assurance

Company Ltd ��

SUMMARY

On 4 April 2016, the merger of Just Retirement Group plc and Partnership Assurance Group plc was completed and JRP Group plc (renamed as Just Group plc on 18 May 2017) was formed

With both component operations initially impacted by Pension Freedoms, merger was a logical step both (initially) as a defensive move and (ongoing) as an opportunity to exploit synergies/cost savings and greater scale/resources

to grow within chosen markets

Integration is complete and capital generation is now stated as the group's number one priority. Just is committed to achieving organic capital generation by 2022

As a result of the changed regulatory environment towards lifetime mortgages introduced by PS 31/18 and PS 19/19, the Group is planning for a capital impact of approximately £350m to be phased in between 31 December

2018 and 31 December 2021, and is managing the business so as to meet these extra requirements

Stability and growth opportunities are now apparent in chosen markets

Just remains highly regarded for service in the intermediary market

Product innovation continues, illustrated by the recent development of the Secure Lifetime Income platform

proposition

David Richardson was appointed Group Chief Executive Officer in September 2019, with Andy Parsons expected

to join as Group Chief Financial Officer in January 2020



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COMMENTARY

Financial Strength Ratings

Just Retirement Ltd

Just Retirement, and similarly Partnership, were undoubtedly negatively impacted by the announcement and subsequent introduction of Pension Freedoms and the merger was a logical and positive development, bringing advantages in terms of strategic development as well as providing significant comfort over long term prospects. Just Retirement Ltd (JRL) is

now the main company both in size and new business writing terms.

In February 2018 Just issued £230m of Tier 3 subordinated debt and as at 31 December 2018, Just Group held £695m [2017: £596m] of Excess Own Funds representing a capital coverage ratio of 144% [2017: 139%] of its SCR of £1,589m

[2017: £1,539m]. Excess Own Funds and coverage ratios were £347m [2017: £296m] and 133% [2017: 130%] for JRL, and £226m [2017: £161m] and 144% [2017: 129%] for Partnership Life Assurance Company Ltd (PLACL) respectively. The 2018 ratio does not include a recalculation of TMTP, which would reduce the ratio from 144% to 136%.

The group's capital position was subject to regulatory challenges, however it has quantified the lifetime mortgage related regulatory cost expected between now and 2021. In addition, the PRA has asked Just to reconsider certain aspects of the internal model used to calculate JRL's SCR, which it intends to do during 2019. New business sales have also driven capital strain in the Solvency II balance sheet. As well as continuing to introduce steps to reduce the capital strain, such as managing

down sales and changes to pricing and asset mix, in March 2019 Just issued £300m of Restricted Tier 1 capital and £75m of new equity to further strengthen its capital base in order to support the new business franchise. The group’s SCR coverage ratio at 30 June 2019 was 149%, after allowance for notional TMTP recalculation [31 December 2018: 136%].

The increase reflects the benefit of the capital raised in March 2019, which was partly offset by new business strain, a fall in house prices and the effects of falling risk-free rates.

Since the end of June, Just has:

taken further steps to improve its capital ratio, including a transaction with RGA to increase the existing longevity reinsurance programme in relation to the post Solvency II DB liabilities written during the 3 ½ years to 30 June

2019. This transaction is expected to increase the solvency surplus by £118m. Furthermore, from 1 July 2019, Just has increased the proportion of longevity reinsurance on DB new business, which will further reduce new business strain going forward

as per the PRA request mentioned above, Just has made a £70m increase in its SCR in preparation for adjustments

to the treatment of LTMs within its internal model.

These two actions would increase the group SCR coverage ratio to 152% on a pro forma basis as at 30 June 2019.

Just has estimated that a change in the regulatory treatment of lifetime mortgages will lead to a capital impact of £350m. Of this, £70m has already been implemented, £150m arises from PS31/18 and £130m from PS19/19. This is being phased in during the 3 year period between 31/12/18 and 31/12/21. To offset this, Just has already executed £118m via a

management action in H2 2019 (the DB reinsurance transaction referred to above), and is working on other management actions to offset the balance. Just has stated that it would continue to review the need for further capital and its optimal mix, including consideration of the refinancing of PLACL's Tier 2 debt of £100m, which has a call option in March 2020

and in October 2019 it issued £125m of Tier 2 capital, primarily to refinance this. Just states that this means 'we can focus on our key objective of being organically capital generative by 2022'. A £200m revolving credit facility remains undrawn and available to support the business.

In its 2019 half yearly results announcement, Just announced that, although it had previously stated that it expected to

recommence dividends for the 2019 financial year at a rebased level of around one third of the amount paid in 2017, regulatory and economic uncertainty meant that the directors were not recommending the payment of an interim dividend. Just will revisit its dividend policy with its full year (2019) results, informed by its capital position and the outlook

at that time.



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Just has been faced with a number of challenges recently, some of which are ongoing. Notwithstanding regulatory challenges, it is working hard to address these and is looking to maintain a stable and healthy solvency position. Progress with this will be key for future success and necessary in maintaining its financial strength.

Partnership Life Assurance Company Ltd Considerations similar to JRL apply to PLACL and whilst it is not the primary life company in the group, it is still an important component part.

Service Rating Both Just Retirement and Partnership had stressed a customer focused, service orientated philosophy within their respective businesses and both were highly regarded in the intermediary market for service delivery. Whilst this excellence

and similarity is a strength of the merged business, the tasks of integration and maintaining service excellence during the merger process have been no less significant. Now, following this activity, Just had announced £10m in investment to enable it to step off from integration to innovation and power diversification developments, which will include further

digitalisation, product launches and service enhancement.

At the heart of the service credentials is an integrated approach to continuous improvement in customer experience. This includes:

The active use of the Temkin model of Customer Experience to develop all aspects of processing and communicating to ensure the three dimensions of outcome, effort and emotion are considered

An extensive programme of training and coaching on Customer Centric Call Taking to develop mastery skills for

telephone support staff

A network of Customer Champions who specialise in areas of customer vulnerability such as dementia, physical

impairment and mental emotional distress with a view to educating staff and adapting processes to accommodate these customer needs

A balanced scorecard which accentuates customer outcomes and staff development over historic operational performance measures.

The business is also placing an increased emphasis on plain English to support better understanding of its offering by

customers and thus benefit the ease of service excellence.

Image & Strategy Rating Now under the single and simplified Just brand, the business is able to demonstrate a clear and established retirement solutions market position.

With ongoing growth opportunities the aspiration of sustainable model and increased scale appears achievable with the

business having demonstrated progress to date.

The operational strategy remains focused firmly on the at and in-retirement market where it seeks to leverage its experience, specific expertise and intellectual property (which has the potential of being further developed and delivering

further differentiation and diversified growth, post the combination of the two businesses' IP sets). An example of diversified growth has been the establishment and maturity of the buy-out/buy-in proposition. As above, this side of the business has become increasingly important and has grown significantly in terms of its scale and contribution in a relatively short space of time.

After the March 2014 Budget, both Just Retirement and Partnership pursued an imperative to adjust and develop their propositions in the light of implications for annuity volumes. The merged group operated two embryonic overseas ventures. These reflect initial activity from each of the two constituent businesses:

a South African business previously being developed by Just Retirement (offering Risk shared annuities, a non profit guaranteed annuity and longevity swaps) and whilst still very small, development is ongoing for this

a US business previously being developed by Partnership, for an immediate needs care annuity offering, which was closed to new business in 2019.

The group is focused on 'delivering capital self-sufficiency by 2022, while in parallel developing other strategic and business

options to enhance shareholder value'.



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Business Performance Rating During 2018, Just continued to improve margins and grow its new business operating profit. Just also completed the

integration of its underwriting IP and updated its IFRS mortality, mortgage voluntary redemptions and property assumptions. The net effect of these assumption changes, particularly property growth and volatility, was the main driver for the IFRS loss before tax for the year of £85.5m [2017: IFRS profit before tax of £181.3m].

The focus is on growing operating profits rather than sales volumes. New business operating profit was £243.7m [2017: £169.8m], and adjusted operating profit before tax was £210.3m [2017: £220.6m].

In 2018, Just announced that £52m of run-rate cost synergies had been achieved, one year ahead of schedule and ahead

of the original £40m and revised £45m targets, with the focus now shifting from integration to investment.

Outside of the life companies, HUB Financial Solutions Ltd (HUB) reported a slightly higher pre-tax loss of £4.2m [2017: £4.1m] in 2018. No dividend was paid [2017: nil] The company continued to receive capital contributions [2018: £3m;

2017: £3.5m], with a further £2.2m received as at end June 2019. HUB now provides services to a number of UK insurance companies including Phoenix Life, Prudential, Royal London, Scottish Widows, Standard Life and Zurich.

Total new business sales for the group increased by 15% from £2,457m to £2,827m in 2018 (JRL: £2,699m, PLACL: £99m). Within this:

Defined Benefit De-risking sales, written in JRL, increased by 32% from £997.8m to £1,314.2m as the defined benefit de-risking market grew significantly and in 2018 rose to £24.2bn [2017: £12.2bn]. Employee benefits

consultants actively managed the industry pipeline, reducing seasonality, which resulted in an increase in business completed in the first half of the year

Guaranteed Income for Life (GIfL) sales reduced by 4% from £820.5m to £786.5m and, as expected, sales slowed

in the final quarter of 2018 as pricing increases were implemented as a result of regulatory developments.

Sales of care plans, all written in PLACL increased by 2% up from £71.6m to £72.8m. Just remains a leading

provider in this sector

Drawdown Sales, all written in JRL, mainly in relation to the Flexible Pension Plan (now closed), were steady at

£51.0m [2017: £51.2m]. Capped Drawdown is no longer open to new business

Protection sales, which have since been discontinued and were all written in PLACL, decreased from £6.0m to

£0.8m, being the completion of pipeline applications up to March 2018

Lifetime Mortgage Loans increased by 18% from £510.0m to £602.1m (JRL: £576.7m, PLACL £25.4m). PLACL now only writes such business where contractual arrangements remain in place.



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Group & Parental Context

BACKGROUND

On 4 April 2016, the merger of Just Retirement Group plc and Partnership Assurance Group plc was completed and JRP Group plc (renamed as Just Group plc on 18 May 2017) was formed, with former Just Retirement and Partnership shareholders initially owning 60% and 40% respectively of the group.

The group has around 600,000 customers and 1,100 employees. Its principal subsidiaries are JRL and PLACL.

JRL was launched in August 2004 having been established with financing from Langholm Capital Partners LLP. In December 2006 Just Retirement carried out an IPO, with just over 20% of its issued shares being placed on AIM, raising an additional £56m in capital. At the same time the group launched its distribution business, Just Retirement Solutions Ltd. In October

2010 the group acquired The Open Market Annuity Service Ltd (TOMAS), a move designed to improve Just Retirement's presence in the annuity platform space. In November 2009 Avalon Acquisitions Ltd (renamed Just Retirement Group Holdings Ltd in August 2013), a newly incorporated company owned by Avallux Sarl, itself controlled by private equity

funds advised by Permira Advisers LLP, acquired Just Retirement, valuing the group at £228m. Avalon subsequently injected £25m into the group. The AIM listing was also withdrawn. In June 2013, Just Retirement Group plc was established as the new group holding company in anticipation of an IPO. On 15 November 2013 the group was admitted to the London

Stock Exchange, valued at around £1.1bn. Permira and other shareholders sold 19m shares equal to 3.8% of the shares on offer and the group raised around £280m after costs.

PLACL came into operation at the end of September 2005, established by Phoenix Equity Nominees Ltd (Phoenix) using

their Phoenix Equity Partners Fund IV. On 30 September 2005, The Pension Annuity Friendly Society Ltd demutualised and its business was transferred to PLACL. On 5 August 2008, Cinven Ltd became the principal owner taking a 77% ownership, having agreed to buyout the Phoenix Equity Partners' holding. The remainder stayed under management

ownership. On 26 February 2013 Partnership Assurance Group plc (renamed Partnership Assurance Group Ltd in June 2017) was incorporated, becoming the holding company, ahead of its listing on the London Stock Exchange on 12 June 2013, a flotation, valuing the group at around £1.5bn, which raised £125m.

Just Group's other subsidiaries include: Just Retirement Money Ltd (JRML), which funds the loans secured by residential

mortgage it originates under an agreement provided by JRL; its operations in South Africa and HUB Financial Solutions Ltd, formed by the combination of Just Retirement Solutions Ltd and The Open Market Annuity Service Ltd in 2017 and a provider of a range of retirement-focused services, including software development and customer services. In May 2019,

Just announced its intention to close its American operation as part of its focus on achieving capital neutrality by 2022.

In October 2016, Just issued £250m of Tier 2 subordinated debt part of which was used to repay bank borrowings.

February 2018 saw the group issue £230m of Tier 3 regulatory qualifying capital, so increasing its capital ratios and

enhancing its financial resilience.

Both Cinven and Permira had been gradually reducing their ownership of the group, completing their divestments in January and May 2018, respectively.

May 2018 saw the group announce that it had developed a new business - HUB Pension Solutions - to 'transform the way trustees, pension scheme members and financial advisers implement and participate in scheme transfer exercises'. The new business is one of the HUB companies within the group, which focus on delivering corporate solutions to employee benefit consultants, financial advisers, pension schemes, other UK businesses and to their members, customers

and clients.

In August 2018, Just announced it had launched a new joint venture, Spire Platform Solutions, with Spire Financial Ltd, a business consultancy and technology firm. The new business will focus on 'modernising financial services propositions for

the rapidly changing marketplace of retirement income'. Just Group plc has made a strategic investment into Spire Platform Solutions Ltd and is one of a number of product providers exploring how to deliver product solutions via Spire Platform Solutions Ltd.



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August 2018 also saw Just Group plc announce that it had acquired a 75% shareholding in the holding company of Corinthian Pension Consulting Ltd (Corinthian Pension Consulting). Corinthian Pension Consulting specialises in providing professional advisory services to DB pension scheme trustees and scheme sponsors undertaking bulk scheme exercises.

The acquisition of Corinthian Pension Consulting adds additional capabilities to the group of businesses trading under HUB brands within Just Group, which focus on delivering corporate solutions to employee benefit consultants, financial advisers, pension schemes, other UK businesses and to their members, customers and clients. Corinthian Pension

Consulting is an authorised representative of HUB Financial Solutions Ltd.

In October 2018, Simon Thomas stepped down as an Executive Director, after 12 years as Group Chief Financial Officer. David Richardson who was then Group Deputy Chief Executive Officer and Managing Director of UK Corporate Business

of Just Group plc, is now also acting as Interim Chief Financial Officer, until January 2020, when Andy Parsons will assume the role.

In March 2019 Just issued £300m of Restricted Tier 1 capital and £75m of new equity to further strengthen its capital

base in order to support its new business franchise.

Rodney Cook, Group Chief Executive Officer, stepped down from the Board on 30 April 2019. David Richardson, who assumed the role of Interim Group Chief Executive Officer at the time, was himself appointed Group Chief Executive Officer in September 2019.

2019 saw the closure to new business of Just's US Care unit.

In October 2019, Just issued £125m of Tier 2 capital, primarily to refinance £100m of Tier 2 debt within PLACL, which is due in 2025 but callable in March 2020.

GROUP STRUCTURE (SIMPLIFIED)

Just Retirement Ltd P R O V I D E R S E C T O R


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Company Analysis: Just Retirement Ltd

BASIC INFORMATION

Company Type Life Insurer

Ownership & Control Just Group plc

Year Established 2004

Country of Registration UK

Head Office

Vale House, Roebuck Close, Bancroft Road, Reigate, Surrey, RH2 7RU

Contact www.wearejust.co.uk/contact-us/

Key Personnel

Role Name

Group Chairman Dr C S Gibson-Smith

Group CEO, Interim Group CFO & MD UK Corporate Business D L Richardson

Group Finance Officer (wef January 2020) A Parsons

Group Marketing & Distribution Director D P Cooper

Group Chief Risk Officer A Duncan

Group Actuarial Executive G S Horton

Group Chief Actuary P M Jolly

Group Chief Digital Information Officer G Offen

Group Human Resources Director K Gray

Managing Director Retail P J Turner

Company Background JRL was established in 2004 with a capitalisation of £25m from Langholm Capital. Around 20% of the group was floated on AIM in December 2006, raising an additional £56m. November 2009 saw the group acquired by Avalon Acquisitions Ltd, a company established by private equity advisers Permira and now renamed as Just Retirement Group Holdings Ltd.

Admitted to the London Stock Exchange in November 2013, April 2016 saw Just Retirement merge with Partnership and the formation of Just Group plc (formerly JRP Group plc).

JRL is the group's main life company, now writing more than 95% of the group's principal products.



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OPERATIONS

Governance System and Structure The business operates a governance model which it believes is effective and proportionate and is characterised by being active at all stages, including at the most senior board level. Key components are: the Board; the Group Risk & Compliance Committee; the Group Chief Risk Officer; the Group Executive Officer; and Subsidiary Boards.

Just Group’s system of governance is applied across all UK regulated subsidiaries of the group, including the insurance regulated entities JRL and PLACL. The Just Group plc Board is committed to the highest levels of corporate governance, and focuses primarily on strategic, policy and governance issues, acting in accordance with the best interests of

policyholders and shareholders as a whole. Through delegation to the various committees and functions, the application of best practice across the Just Group is considered by it to be efficient and effective.

The terms of reference of the various committees are tightly defined enabling robust governance supportive of strong

decision making. Oversight of the risk management and compliance activities across the Just Group, including within JRL and PLACL, is provided by the Risk and Compliance Committee. Audit activities are overseen by the Audit Committee.

The aim is then to have governance embedded via the established three lines of defence model. Clear distinction is made

between the ‘three lines of defence’, with the Risk function, Compliance function and the Chief Actuary’s function representing the second line which is independent of the Finance and Actuarial reporting teams constituting the first line, and the Internal Audit function as the third line.

Risk Management

The Risk Management Framework enables risk management to be integrated into Just’s organisational and decision making processes, with the preparation of Just’s group-wide Own Risk and Solvency Assessment (ORSA) document providing 'a comprehensive assessment' of the regulated group companies’ risk and solvency positions.

Risk identification is performed on a continuous basis, and is embedded in the ORSA. The primary risks to which Just is exposed arise through its regulated insurance entities JRL and PLACL. The key risks are:

Market risk comprising exposure to interest rate risk affecting the current value of future cash flows, credit risk and

residential property risk which affects the value of guarantees provided within lifetime mortgages

Underwriting risk arising through the exposure to longevity, mortality and morbidity risks

Regulatory risk and uncertainties - in particular, there is a risk that a change in the regulatory treatment of lifetime mortgages will result in a material negative impact on the Solvency II recognisable value of those products or the

capital which needs to be held in respect of them which could have a negative effect on the business, results of operations, financial condition and prospects of the group, JRL, and PLACL.

Risk is measured qualitatively and quantitatively, including through the Solvency II SCR calculations.

The Just operation has developed a strong and central risk management approach, with significant evolution having taken

place in recent years. The risk management framework seeks to align overall business strategy with financial and non-financial risk exposures, capital allocation and sustainable growth. Central to this has been work to engage all employees in making more effective decisions which incorporate a better understanding of risk. Within this, alongside business

outcomes, Just articulates the following in terms of desired stakeholder outcomes:

Creating and protecting value

Competitive advantage

Security of policyholder benefits

Improved returns and lower volatility

Reduced capital requirements and lower cost of capital

Increasing confidence of stakeholders.



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Administration Since the launch of both constituent businesses, management philosophy has been that the quality of service to the intermediary is a key driver to long term success, along with an ability to deliver such in a cost effective and consistent

manner; with both operations having constructed appropriate infrastructure to do this and consequently developing positive reputations in this area.

The ongoing Just strategy is to utilise the benefits of technology to improve the quality of its service and proposition whilst

also controlling costs. Overall the company regards service quality and customisation to be key factors for selection in each of its chosen markets.

All areas of operations have published and measured service standards. The company compares well against these whether judged by customer satisfaction rates or by independent research.

Just has proved itself able to also cope with the rapid growth of DB scheme de-risking, including a significant medically underwritten element.

Benchmarks

Both Just Retirement and Partnership have gathered a wealth of service awards and standards over many years. Including Financial Adviser 5 Star Service Awards for both businesses over many consecutive years leading up to the merger and since, and other awards such as Moneyfacts for annuity service. Now operating as Just, the group has continued to win Financial Adviser 5 Star service awards in both the Life & Pensions and Mortgages categories.

Just also won Quality Service Provider of the Year at The Institute of Customer Service UK Customer Satisfaction Awards 2016.

Just was also awarded 5 stars in the 2018 Moneyfacts Equity Release Star Ratings.

JRML won the award for 'Equity Release Lender of the Year' at the 2019 MoneyAge Awards.

Just DB Solutions won the 'Pension Insurance Firm of the Year' at the 2019 European Pensions Awards and 'Risk Management Provider of the Year' at the 2019 Pensions Age Awards.

Just won the 'Best Innovation in Retail Finance' award at the 2019 Retail Asset Management Awards in specific recognition of the flexible 'Just for You' mortgage range and the 'Customer Focus Award - Large Enterprise' at the 2019 ICS UK Customer Satisfaction Awards.

Outsourcing The Just Group policy is to consider outsourcing functions or services where:

there are clear financial and/or operational benefits, on condition that the associated risks can be adequately

mitigated

associated operational and other risks can be monitored and controlled in line with risk appetite without unduly increasing overall risk exposure

the arrangement will not materially impair the quality of the Group's system of governance including its risk management and internal control framework

the arrangement will not impair the ability of the Group's supervisory authorities to monitor compliance with regulatory requirements

there is confidence that standards of service to the Group’s commercial counterparties and customers will be maintained or enhanced by outsourcing and

the remuneration arrangements with outsourced service providers do not encourage risk-taking that is excessive in

view of the undertaking’s risk management strategy.

As a result of the merger of Just Retirement and Partnership Assurance, there was an increase in the number and range

of material outsourced arrangements reflecting the companies’ different operational strategies.



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The principal activities that are outsourced are:

Investment Management - outsourced by JRL to service providers in the UK, the Netherlands and the USA, and by

PLACL to service providers in the UK

Defined benefit (buy out/buy in) policy administration - outsourced by JRL to JLT and by PLACL to service

providers in the UK

Administration of Post Completion policies - outsourced by PLACL to Capita Hartshead (annuities) and Direct

Group Ltd (life protection).

Just is in the process of outsourcing its income drawdown service, and has closed its Flexible Pension Plan product to new business from July 2019.

In the USA, Genworth fully reinsures Care Annuities through a quota share reinsurance treaty with Partnership Life US

Company. Also in South Africa, annuity administration, investment management and most underwriting is outsourced to a range of local third parties.

STRATEGY

Market Positioning Both businesses reacted positively to the prospect of a radically different decumulation landscape from 2015. Against this

backdrop, the formation of Just Group plc was a welcome development, further enhanced by the raising of £1.1bn of additional capital, which increases flexibility, improves the regulatory capital structure, enabled the repayment of around £100m of senior bank debt and also provides greater growth opportunities.

In January 2017 the business moved to operate under the single Just brand.

The group has three areas of strategic focus:

UK retail (retirement income, lifetime mortgages and long-term care)

UK Defined Benefit De-risking

International (South Africa retirement income, launched in 2015 and now with around 40 FTEs).

As a single operation, Just has a specialist but increasingly balanced distribution strategy. This sees a balance between the DB solutions arena, which draws on the recent strengths and growth of both businesses, and the strong specialist position

of each in the retail space.

Within this overall balance there is then further balance sought within the retail space. Here the primary focus of the merged business remains on the intermediary market, although the company continues to seek to widen and re-balance

its distribution through the development of other complementary channels and opportunities overseas. Alongside the 'mainstream' intermediary channel other distribution partnerships include relationships with other life companies, such as Phoenix Life and Zurich, aggregators and media organisations. Further, Just is able to provide a range of options and components for the B2B2C market, including white labelling and outsourcing of advice, software and database support.

In July 2017, the business of The Open Market Annuity Service Ltd (TOMAS) was transferred to Just Retirement Solutions Ltd, a sister company. Just Retirement Solutions Ltd was then renamed as HUB Financial Solutions Ltd. HUB Financial Solutions is seen as a prime enabler, including with corporate pension schemes to enable simplified advice to members

and offers Retirement Income Services and Equity Release Advice Services for a number of different audiences, as well as software and consultancy services that are provided to businesses and their employees.

In 2019, the Secure Lifetime Income (SLI) platform proposition was launched in partnership with Spire Platform Solutions.

At launch, the SLI solution was made available via the Novia Platform.



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Proposition Just is a leading specialist provider of retirement income products and services to both individuals and corporates, and a major provider of lifetime mortgages (LTM). With its strategy firmly focused on the at-and-in-retirement impaired and

enhanced life market, Just has four core products with JRL focusing on providing retirement income products to individual and corporate clients and lifetime mortgages and PLACL on care products. Protection, previously written into PLACL, was discontinued in August 2017, although pipeline business was accepted until the end of March 2018. Just is in the

process of outsourcing its income drawdown service, and has closed its Flexible Pension Plan product to new business from July 2019. JRL is the group's principal life company writing all new business in respect of annuities and DB de-risking contracts and the majority of residential lifetime mortgage business. JRL purchases the majority of the residential mortgages written by PLACL. During 2017, JRL also acquired a tranche of in-force mortgages from PLACL valued at around £250m.

The following are written into JRL:

Defined Benefit De-risking Solutions (DB)

GIfL (annuities)

Lifetime Mortgages (LTM).

written by PLACL:

Care Plans (CP)

Its markets, which are all relatively attractive from a growth perspective, and where the business has an established track record, as well as highly developed relevant intellectual property in certain areas, are positioned to also form a complementary environment from a funding perspective.

Lifetime mortgages complement the annuity business, with a controlled proportion of annuity proceeds invested in them. Lifetime mortgages are an investment of annuity funds on more favourable terms than normally available through corporate bonds, the more conventional investment medium for annuities. Whilst potentially providing a higher return,

this diversifies the investment portfolio and is therefore beneficial from a Solvency II perspective, albeit the regulatory backdrop raises potentially negative issues here. In addition, the duration characteristics of Lifetime Mortgages are beneficial in matching annuity liabilities, particularly Defined Benefits, which tend to be of longer duration. A small proportion of the

funds are invested in index-linked gilts to match indexed annuities.

As above the use of technological solutions is seen as a key part of enabling the development of the market and its own growth. As well as its own web presence, Just continues to develop links with portal services and is keen to meet the requirements of its distributors as they evolve.

2015 saw JRL upgrade its GIfL offering to include extended guarantees and taxable lump sums. The company also moved into regulated advice with the launch of an automated simplified advice proposition. In recent years, Just has also invested heavily in its systems for appropriate underwriting, with current activity now benefiting from use of its PrognoSys system.

The 'Just for You' mortgage range was launched in January 2019. The product includes standard features, then the customer decides with their advisor which additional options and flexibility suits their individual needs, and includes an interest serviced offering as part of the proposition.

Consideration of the role of platforms is also central in further product development. Just is taking steps to make its specialist retirement components increasingly accessible via current adviser technology and practices. This opportunity in this regard would appear to be significant for both the company and the wider market.

Since outset, JRL had used Robeco, an investment house based in the Netherlands and experienced in the matching of liabilities with appropriate fixed interest investments, as the sole manager of the bond portfolio. This changed in 2012, when Just Retirement appointed an additional fund manager, BlackRock. BlackRock has since taken on further responsibility for specific sectors such as industrials and utilities within the public bond portfolio. As of 31 December 2018, Robeco and

Blackrock manage £5.5bn in public bond assets on behalf of JRL/Just, while Insight manage £3.2bn comprising PLACL’s public bond portfolio. In June 2014, MetLife was appointed to manage £250m in private bond issues, since extended, and valued at £534m as at 31 December 2018. In June 2015, Westbourne was appointed to manage £250m in infrastructure

related debt, since extended, and valued at £375m as at 31 December 2018. Furthermore, Rothschild manage £392m of



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commercial real estate debt investments through a co-investment model. During 2017, Just appointed Macquarie, and have invested £57m in infrastructure related debt investments as of 31 December 2018.

On an IFRS basis, group total assets amounted to £23.9bn [2017: £24.1bn]. The asset portfolio is managed by multiple

managers with clear mandates and oversight provided by Investment Committees.

KEY COMPANY FINANCIAL DATA

Last 3 reporting periods up to 31 December 2018

Assets

Dec 16

£m

Dec 17

£m

Dec 18

£m

Fixed interest 5,794 5,763 6,225

Equities 0 0 0

Collectives 186 278 346

Property 0 0 0

Linked 30 74 104

Derivatives 56 58 65

Loans and mortgages 4,826 5,711 6,532

Reinsurance recoverables 2,692 2,006 1,244

Cash 40 21 60

Other 580 793 702

Total Assets 14,204 14,705 15,278

Liabilities

Dec 16

£m

Dec 17

£m

Dec 18

£m

Technical provisions - non-life

0 0 0

Technical provisions - health (similar to life)

0 0 0

Technical provisions - life 9,807 11,074 12,122

Technical provisions - linked 30 74 104

Other 3,295 2,626 2,102

Total Liabilities 13,132 13,773 14,328

Excess of assets over

liabilities 1,072 931 950

JRL's main asset classes are fixed interest (41%), lifetime mortgages (shown above as loans & mortgages - 43%), both reflecting the nature of the liabilities, and reinsurance recoverables (8%).

At 31 December 2018, on a Solvency II basis the Just group had total assets of £21.1bn [2017: £21.2bn] and the excess of assets over liabilities amounted to £1.7bn [2017: £1.7bn), and those of JRL and PLACL were £950m and £630m respectively [2017: £931m and £598m respectively].



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Life & Health SLT Technical Provisions

Dec 16

£m

Dec 17

£m

Dec 18

£m

Insurance with profit

participation 0 0 0

Linked insurance 30 74 104

Other life insurance 9,807 11,074 12,122

Annuities - from non-life health

0 0 0

Annuities - from non-life

non-health 0 0 0

Health insurance 0 0 0

Health reinsurance 0 0 0

Life reinsurance 0 0 0

Total life and health SLT

technical provisions 9,836 11,148 12,226

Life Expenses

Dec 16

£m

Dec 17

£m

Dec 18

£m



participation 0 0 0


Other life insurance 87 90 112


health 0 0 0


non-health 0 0 0



Other expenses 129 83 96

Total life expenses 216 174 209

JRL has two lines of business under Solvency II: 'Other life', in which all of its principal products are reported and 'Index-linked and Unit-linked' within which the Flexible Pension Plan (FPP) product is reported, representing less than 1% of total provisions.

Solvency Capital Requirement (SCR)

Dec 16

£m

Dec 17

£m

Dec 18

£m

Market risk 1,001 954 1,118

Counterparty default risk 0 0 0

Life underwriting risk 551 606 664

Health underwriting risk 0 0 0

Non-life underwriting risk 0 0 0

Diversification (396) (437) (566)

Intangible asset risk 0 0 0

Operational risk 33 33 31

Capital add-ons already set 0 0 0

Other items (237) (177) (192)

Solvency capital

requirement 951 980 1,056

Own Funds

Dec 16

£m

Dec 17

£m

Dec 18

£m

Tier 1 unrestricted 1,072 931 950

Tier 1 restricted 0 0 0

Tier 2 322 345 301

Tier 3 0 0 152

Eligible own funds 1,394 1,276 1,403

Excess of own funds over

SCR 442 296 347

SCR coverage ratio (%) 147.0 130.0 133.0

JRL calculates its Solvency II capital requirements using a full internal model. Just Group is on a Partial Internal Model,

because the capital requirement for PLACL is assessed using the standard formula.

Tier 2 Own Funds relates to subordinated debt. Just Group issued £250m of subordinated debt in October 2016. On the same date, JRL issued £250m of back to back debt to Just Group, enabling JRL to redeem £200m of debt previously

held by Just Retirement (Holdings) Limited (JRH), leaving £50m outstanding. The JRH debt had been issued by JRL in tranches commencing in October 2012, including £30m in June 2016.

JRL received £200m of additional capital in 2018 consisting of £50m of equity and £150m of Tier 3 debt - in February

2018, Just Group plc issued £230m of subordinated debt and in May 2018, JRL issued £100m of back to back debt to Just Group plc, and a further £50m of back to back debt to Just Group plc in December 2018.



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JRL's excess own funds and coverage ratios were £347m and 133% [2017: £296m and 130%] respectively. These increases were due to the additional capital and the expected return on inforce business, offset by new business strain and £70m of additional voluntary TMTP amortisation.

Gross Life Premiums Written By Line of

Business

Dec 16

£m

Dec 17

£m

Dec 18

£m


Insurance with profit participation

0 0 0




health 0 0 0


non-health 0 0 0



Total gross life premiums

written 2,617 1,852 2,123

Gross Life Premiums Written By Country

Dec 16

£m

Dec 17

£m

Dec 18

£m

Home country 2,617 1,852 2,123

Country 1 0 0 0

Country 2 0 0 0

Country 3 0 0 0

Country 4 0 0 0

Country 5 0 0 0

Other countries 0 0 0

Total gross life premiums written

2,617 1,852 2,123

Retirement income sales increased by 15% in 2018 to £2,072m [2017: £1,804m], driven by a 32% growth in DB sales

from £998m to £1,314m, with the overall defined benefit de-risking market growing to £24.2bn [2017: £12.2bn]. GIfL sales decreased by 6% to £757.3m [2017: £802.8m] impacted by price increases.

Lifetime Mortgage advances increased to £577m [2017: £469m].

JRL's gross written premiums increased due to higher new business volumes.

Profit

Dec 16

£m

Dec 17

£m

Dec 18

£m

Profit (loss) before taxation 215 153 (68)

Taxation (41) (29) 13

Profit (loss) after taxation 174 124 (56)

Other comprehensive

income 0 0 4

Dividends 0 0 0

Retained profit (loss) 174 124 (51)

Life Business Flows

Dec 16

£m

Dec 17

£m

Dec 18

£m

Net life premiums earned 2,285 2,333 2,678

Net life claims incurred (625) (536) (660)

Net flow of business 1,660 1,798 2,018

JRL reported an IFRS pre-tax loss of £68.1m [2017: £153.2m, profit], largely due to changes in valuation assumptions relating to lifetime mortgages and insurance liabilities, which more than offset improved profits on new business, which resulted from increased volumes and margins. No dividend was paid [2017: nil].

JRL's net premiums (gross premiums written together with the reinsurance recaptures made during the year, partly offset by reinsurance premiums ceded) increased from £2,333m to £2,678m.

Partnership Life Assurance Company Ltd P R O V I D E R S E C T O R


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Company Analysis: Partnership Life Assurance Company Ltd

BASIC INFORMATION

Company Type Life Insurer

Ownership & Control Just Group plc

Year Established 2005

Country of Registration UK

Head Office

Vale House, Roebuck Close, Bancroft Road, Reigate, Surrey, RH2 7RU

Contact www.wearejust.co.uk/contact-us/

Key Personnel

Role Name

See Just Retirement Ltd

Company Background

Partnership Life Assurance Company Ltd (PLACL) was established in October 2005 to receive the business of the Pension Annuity Friendly Society (PAFS) following its demutualisation, the first ever by a UK Friendly Society. PAFS was founded in 1995 to provide financial services products for people with non-standard medical requirements. The Anderton Mortality Tables were constructed specifically for PAFS to assess the anticipated life expectancy for individuals with medical

conditions. These were replaced with the Enhanced Mortality Tables (EMT) in 2004. 2008 saw the company change ownership, from Phoenix Equity Partners to Cinven Ltd. 2008 also saw a capital injection of £9.8m. There were also further drawdowns of its £16m subordinated debt arrangement with Lloyds Banking Group in 2008 and 2009 - at which

stage it was fully drawn down. 2012 saw capital injections totalling £111.8m from funds raised partly by Cinven and partly by Lloyds Banking Group. This enabled the company to repay the subordinated debt and also, along with retained profits, substantially boost its solvency coverages. In October 2013, the company acquired B&CE's annuity portfolio. April 2016

saw the merger of Just Retirement with Partnership and the formation of JRP Group plc, now known as Just Group plc.

OPERATIONS

Governance System and Structure See JRL

Risk Management See JRL

Administration See JRL



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Benchmarks See JRL

Outsourcing See JRL

STRATEGY

Market Positioning See JRL

Proposition See JRL

KEY COMPANY FINANCIAL DATA

Last 3 reporting periods up to 31 December 2018

Assets

Dec 16

£m

Dec 17

£m

Dec 18

£m

Fixed interest 3,570 3,212 2,916

Equities 0 0 0

Collectives 164 525 437

Property 0 0 0

Linked 0 0 0

Derivatives 27 19 13

Loans and mortgages 1,959 1,768 1,777

Reinsurance recoverables 3,468 577 502

Cash 35 162 16

Other 36 25 76

Total Assets 9,260 6,288 5,738

Liabilities

Dec 16

£m

Dec 17

£m

Dec 18

£m

Technical provisions - non-life

0 0 0

Technical provisions - health

(similar to life) 0 0 0

Technical provisions - life 5,972 5,417 4,911

Technical provisions - linked 0 0 0

Other 2,887 273 196

Total Liabilities 8,859 5,691 5,107

Excess of assets over

liabilities 401 597 630

The main asset classes are fixed interest (51% - reflecting the nature of the liabilities), lifetime mortgages (31%) and

reinsurance recoverables (9%).



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Life & Health SLT Technical Provisions

Dec 16

£m

Dec 17

£m

Dec 18

£m


participation 0 0 0



Annuities - from non-life health

0 0 0


non-health 0 0 0




Total life and health SLT

technical provisions 5,972 5,417 4,911

Life Expenses

Dec 16

£m

Dec 17

£m

Dec 18

£m



participation 0 0 0




health 0 0 0


non-health 0 0 0



Other expenses 12 17 17

Total life expenses 73 40 38

PLACL has one line of business under Solvency II: 'Other life'.

Solvency Capital Requirement (SCR)

Dec 16

£m

Dec 17

£m

Dec 18

£m

Market risk 307 446 415

Counterparty default risk 20 20 6

Life underwriting risk 205 224 200

Health underwriting risk 0 0 0

Non-life underwriting risk 0 0 0

Diversification (95) (135) (113)

Intangible asset risk 0 0 0

Operational risk 27 24 22

Capital add-ons already set 0 0 0

Other items (25) (30) (17)

Solvency capital

requirement 439 549 512

Own Funds

Dec 16

£m

Dec 17

£m

Dec 18

£m

Tier 1 unrestricted 386 597 630

Tier 1 restricted 0 0 0

Tier 2 105 113 108

Tier 3 15 0 0

Eligible own funds 506 710 738

Excess of own funds over

SCR 67 161 226

SCR coverage ratio (%) 115.0 129.0 144.0

PLACL's capital requirement is assessed using the standard formula.

The PLACL debt had initially been issued to Partnership Assurance Group plc (PAG) in March 2015 in a back to back arrangement with PAG’s external debt issued at the same time. In April 2016, PLACL replaced PAG as the principal

obligator for the externally held Tier 2 subordinated debt of £107.6m shown above. A deferred tax asset of £14.7m was classified as Tier 3 capital in 2016.

In June 2016, PLACL issued £10m of ordinary shares at par to its immediate parent company, Partnership Group Holdings

Ltd.

PLACL's excess Own Funds and coverage ratios increased to £226m [2017: £161m] and 144% [2017: 129%] respectively, mainly due to surplus generated from inforce business and positive economic variances, offset by dividend and interest

payments.



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Gross Life Premiums Written By Line of

Business

Dec 16

£m

Dec 17

£m

Dec 18

£m


Insurance with profit participation

0 0 0




health 0 0 0

Annuities - from non-life non-health

0 0 0



Total gross life premiums

written 185 80 76

Gross Life Premiums Written By Country

Dec 16

£m

Dec 17

£m

Dec 18

£m

Home country 185 80 76

Country 1 0 0 0

Country 2 0 0 0

Country 3 0 0 0

Country 4 0 0 0

Country 5 0 0 0

Other countries 0 0 0

Total gross life premiums written

185 80 76

Gross written premiums fell in 2018 due to the decision to stop writing protection business in the first quarter of 2018.

Profit

Dec 16

£m

Dec 17

£m

Dec 18

£m

Profit (loss) before taxation 152 93 11

Taxation (27) (18) 10

Profit (loss) after taxation 124 75 21

Other comprehensive income

0 0 0

Dividends 0 0 (25)

Retained profit (loss) 124 75 (4)

Life Business Flows

Dec 16

£m

Dec 17

£m

Dec 18

£m

Net life premiums earned 87 49 56

Net life claims incurred (161) (160) (160)

Net flow of business (74) (112) (105)

IFRS pre-tax profit reduced by 88% to £11.2m in 2018 [2017: £93.1m] mainly due to changes made to valuation assumptions relating to lifetime mortgages (loss of £48m) offset by mortality (gain of £45m), and a widening of corporate bond spreads (loss of £17m, as opposed to a narrowing in 2017, which led to a profit of £12m). Investment variances

were negative in 2018, whereas they were positive in 2017. A dividend of £25m was paid [2017: nil].

With both gross written premiums reducing from £79.9m to £76.1m and reinsurance premiums also reducing from £31.1m to £20.2m in 2018, net earned premiums increased from £48.8m to £55.9m. With net claims relatively stable at

£160.5m, there was a reduced net outflow of £104.6m [2017: £111.6m].



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Guide

INTRODUCTION

For over 20 years AKG has particularly focused on the financial strength requirements of financial advisers, who when acting on behalf of their clients, need to ascertain a company's ability to deliver sustained provision.

From this customer perspective, the financial strength of companies needs to be focused at an operational level, specifically

on the company that is effecting the product or service that a customer is selecting. This is important, because from the customer’s perspective it is that company (not some higher corporate entity) that needs to survive in a form that maintains the requisite operational characteristics to meet their fairly held requirements. And it is thus at this level that the selection needs of the customers’ advisers must be met.

It is also important to understand the sector approach (comparative peer groups) that is adopted in financial strength assessment and rating process.

At AKG, this is again driven by the end customer perspective and the fact that assessment is designed solely for this

purpose, i.e. as a component in helping customers’ advisers to select between comparable companies competing to deliver relevant products or services.

AKG’s focus and approach has remained consistent over the years since it commenced assessment and rating support for

the market. However, coverage, format and presentation has rightly evolved over this period, in line with the needs and expectations of assessment and rating users in the market. And AKG considers further changes on a continual basis.

Further details including an explanation of what is included in the assessment reports and coverage can be found online

at https://www.akg.co.uk/information/reports/provider.

AKG’s process for assessment and rating is to use a balanced scorecard of measures and comparative information, relevant to the companies contained within each peer group. This is gathered via Public Information only for non-participatory

assessments and public information plus company interactions with companies for participatory assessments. Further details on AKG’s process can be found at https://www.akg.co.uk/information/reports.

This includes further information on the different participatory and non-participatory basis and for companies wishing to learn more about participatory assessment AKG is pleased to outline this and welcomes contact.

This is a participatory assessment.

RATING DEFINIT IONS

Overall Financial Strength Rating The objective is to provide a simple indication of the general financial strength of a company from the perspective of those financial advisers who when acting on behalf of their clients need to ascertain a company's ability to deliver sustained

operational provision of products or services.

The overall rating inherently reflects the mix of business within the company, since different types of customer or policyholder have different requirements and expectations, and the company may have particular strengths and

weaknesses in respect of its key product or service areas. However, it also takes account of comparison across the sector in which it is assessed.

The rating takes into account those of the following criteria which are relevant (depending upon the company's mix of

business in-force): capital and asset position, expense position and profitability, structure (and size) of funds within the company, parental strength (and likely attitude towards supporting the company), operational capability, management



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strength and capability, strategic position and rationale, brand and image, typical fund performance achievements or product / service features, its operating environment and ability to withstand external forces.

Rating Scale A B+ B B- C D �

Superior Very Strong Strong Satisfactory Weak Very Weak Not applicable

With Profits Financial Strength Rating

The objective is to provide a simple indication of the with profits financial strength of a company, where it currently offers with profits business or has existing with profits business within it.

This is from the perspective of those financial advisers who when acting on behalf of their clients, for this product type, need to ascertain a company's ability to deliver sustained operational provision of with profits funds, products or

propositions. Its comparison is with other companies within the assessment sector that offer or have with profits business.

The main criteria taken into account are: capital and asset position, expense position and profitability, the amount of with profits business in-force, parental strength (and likely attitude towards supporting the company), and image and strategy.

NOTE: More detailed analysis of with profits companies is included in AKG’s UK Life Office With Profits Reports.

Rating Scale ��

Excellent Very Good Good Adequate Poor Not Rated

Unit Linked Financial Strength Rating The objective is to provide a simple indication of the unit linked financial strength of a company, where it currently offers unit linked business or has existing unit linked business within it. This is from the perspective of those financial advisers

who when acting on behalf of their clients, for this product type, need to ascertain a company's ability to deliver sustained operational provision of unit linked products or propositions. Its comparison is with other companies within the assessment sector that offer or have unit linked business.

The main criteria taken into account are: capital and asset position, expense position and profitability, structure (and size) of funds within the company, parental strength (and likely attitude towards supporting the company), operational capability, management strength and capability, strategic position and rationale, brand and image, typical fund performance

achievements or product / service features, its operating environment and ability to withstand external forces.

Rating Scale ��


Non Profit Financial Strength Rating The objective is to provide a simple indication of the non profit financial strength of a company, where it currently offers or has existing products and propositions such as term assurance and annuities. This focuses on the company’s ability to

deliver sustained operational provision of such non profit products or propositions. Its comparison is with other companies within the assessment sector that offer or have non profit business.

The main criteria taken into account are: capital and asset position, expense position and profitability, structure (and size) of funds within the company, parental strength (and likely attitude towards supporting the company), operational capability,

management strength and capability, strategic position and rationale, brand and image, product / service features, its operating environment and ability to withstand external forces.



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Rating Scale ��


Service Rating The objective is to assess the quality of the organisation's service to the intermediary market in respect of the brand concerned.

Criteria taken into account include: performance in surveys, awards and benchmarking exercises (external and internal), the organisation's philosophy, service charters, the extent of investments designed to improve service, and feedback from intermediaries.

Rating Scale ��


Image & Strategy Rating

The objective is to assess the effectiveness of the means by which the organisation currently positions itself to distribute its products for the brand concerned and the plans it has to maintain and/or develop its position.

Criteria taken into account include: overall trends in the company’s market share position, brand visibility and reputation, feedback from intermediaries and industry commentators, and AKG’s view of the company’s general strategy.

Rating Scale ��


Business Performance Rating This review is an assessment of how the company and the brand has fared against its peers, and how it is perceived externally. Effectively this is how it has performed recently in the market. Whilst it will include performance indicators from the most recent available statutory reporting (report and accounts and SFCRs in the case of insurance companies,

for example) it will also draw on other recent key performance elements before and after such disclosure, up to the point at which the assessment is undertaken.

Criteria taken into account include: increase/decrease in market shares, expense containment, publicity good or bad, press

or market commentary, regulatory fines, and competitive position.

Rating Scale ��




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ABOUT AKG

AKG is an independent organisation. Originally established as an actuarial consultancy AKG has, for over 20 years, specialised in the provision of assessment, ratings, information and market assistance to the financial services industry.

As the market has evolved over this period, the range of entities considered by AKG has expanded. Consequently, AKG

has brought additional skill sets into its operations. This has meant the inclusion of accounting, corporate finance, IT and market intelligence experience, alongside actuarial resources, to deliver an expanded professional capability.

Today AKG’s core purpose is in the provision of financial analysis and review services to support the wider financial services

sector and its customers.

© AKG Financial Analytics Ltd (AKG) 2019

This report is issued as at a certain date, and it remains AKG's current assessment with current ratings until it is superseded by a subsequently issued

report or subsequently issued ratings (at which point the newly issued report or ratings should be used), or until AKG ceases to make such a report

or ratings available.

The report contains assessment based on available information at the date as shown on the report’s cover and in its page footer. This includes prior

regulatory data which may have an earlier date associated with it, but the report also takes into account all relevant events and information, available

to and considered by AKG, which have occurred prior to this stated cover and footer date. Events and information subsequent to this date are not

covered within it, but AKG continually monitors and reviews such events and information and where individually or in aggregate such events or

information give rise to rating revision an updated report under an updated date is issued as soon as possible.

All rights reserved. This report is protected by copyright. This report and the data/information contained herein is provided on a single site multi

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AKG Financial Strength Assessment Report/media/Files/J/JRMS-IR...As a result of the changed regulatory environment towards lifetime mortgages introduced by PS 31/18 and PS 19/19, the