(Adds CEO comment, detail, analyst comment, share price)
By Carolyn Cohn
LONDON, Sept 18 (Reuters) - Annuity and mortgages provider Just Retirement Group Plc reported a 3 percent fall in annual underlying operating profit to 97 million pounds ($158 million) on Thursday, hit by a drop in annuity sales following UK reforms earlier this year.
The firm’s share price rallied 2.3 percent to a one-week high, however, as analysts said the results came in above expectations.
The UK government stunned the pensions industry in its March budget with the removal of the requirement for pensioners to buy annuities.
Annuity levels have fallen to slightly below half of pre-budget levels, Just Retirement said in its first set of full-year results following its initial public offering in Nov 2013, though sales of other financial products partly offset that weak performance.
“It’s a year of great uncertainty created by the Budget announcements,” said chief executive Rodney Cook, though he added that Britain’s ageing population supported the company’s prospects.
“UK demographics that drive actual demand ... continue to remain positive.”
Just Retirement increased its sales of lifetime mortgages by 54 percent to 476 million pounds in the year to June 30. The mortgages pay pensioners a fixed income against the value of their property, typically handed over as payment upon the retiree’s death.
The firm also said new products designed to de-risk final salary pension schemes had shown a strong performance.
Analysts said the results beat expectations.
“It seems that analysts had over-estimated the squeeze on new business margin in the period of post-Budget disruption,” Espirito Santo Investment Bank said in a client note, reiterating the bank’s “buy” rating on Just Retirement stock.
1 US dollar = 0.6130 British pound Editing by Mark Potter