Pensions provider Just delays dividend amid mortgage rule change fears

Pensions provider Just Group has delayed issuing its half-year dividend due to the threat posed to its finances by new lifetime mortgage rules.

The life insurer also reported an 85 per cent increase in its adjusted operating profit to £124m for the six months ending 30 June after “exceptional sales growth” of its retirement products.

But the company said the Prudential Regulation Authority's consultation on lifetime mortgages could lead to a “material reduction in our capital position” and that it had deferred its dividend until there was greater clarity.

The PRA's rules would require Just to set aside more money to protect clients from the risks of mortgages, for example a fall in house prices.

Its share price has fallen 35 per cent since the consultation was launched in July.

Just said it had already made changes to its pricing and product features to protect against the impact of the potential changes.

Chief executive, Rodney Cook, said: “We are actively planning for a wide range of outcomes from the consultation process.

“We have a number of capital management options open to us and in evaluating those will seek to optimise shareholder value.

He added: “Given the uncertainty surrounding the potential outcomes [from the consultation], the board felt it appropriate to defer any dividend declaration until we have greater clarity on our capital position.”

Cook said parts of the retirement market the company operates in were experiencing “positive momentum”, which had led to strong sales growth.

Defined benefit (DB) de-risking sales were up 143 per cent and its so-called guaranteed income for life pension annuity sales were up nine per cent.

“The DB market has accelerated this year as the de-risking process has become a mainstream solution," Cook said.

“Shopping around for retirement income has been further encouraged by a number of FCA initiatives.”

Shares in the company rose 2.6 per cent in early trading.