LONDON, July 24 (Reuters) - Specialist insurer Just Group said on Wednesday it needed to improve its capital position as it reported a 30% drop in first-half sales, sending its shares down 7%.
Just Group, which specialises in annuities for people with a reduced life expectancy, faces new rules from Britain’s Prudential Regulation Authority requiring more capital to be put behind lifetime mortgages, one of its key products. The rules come into force later this year.
Retirement income sales fell in the first half to 831 million pounds ($1.03 billion), Just Group said in a statement.
Falling interest rates and house prices hit the firm’s solvency levels, interim group chief executive David Richardson said, without disclosing the levels.
“We must reduce new business capital strain and achieve capital self-sufficiency by 2022,” he said, adding that the firm was continuing a “constructive dialogue” with the Prudential Regulation Authority.
Richardson became CEO in April, following the departure of Rodney Cook. Just Group last month appointed Andy Parsons as chief financial officer.
Richardson has previously said no options were excluded in the firm’s attempts to maximise shareholder value, raising speculation about a possible takeover.
Analysts at KBW said the solvency hit was a “cause for concern”, reiterating their “market perform” rating on the stock.
Just Group shares, which have fallen 45% this year, were down 6.8% at 50.45 pence at 0827 GMT.
$1 = 0.8030 pounds Reporting by Carolyn Cohn