LONDON (Reuters) - Shares in British annuity provider JRP JRP.L surged 6 percent on Friday after the company reported a sharp jump in full year operating profit and said margins on new business would remain high.
JRP, formed in April 2016 through a tie-up between Just Retirement and Partnership Assurance and trading as Just, specialises in annuities for people with reduced life expectancy.
New business margins rose to 6.8 percent from 3.3 percent in 2016, helped by a rise in annuity prices due to the implementation of new European capital rules last year, Chief Financial Officer Simon Thomas told a media call.
“We think that margins will still be up, in probably about the mid-6 percents,” he said, pointing to a boost from cost savings as a result of the merger.
The firm said it has achieved 30 million pounds of a target 45 million in cost savings by 2018.
Annual operating profit of 164 million pounds for 2016 came in above a forecast 151 million pounds, according to a company-supplied poll.
IFRS statutory profit before tax for the 18 months to December 2016 was 199 million pounds, JRP said in a trading statement.
Chief Executive Rodney Cook said the pipeline was stronger than it had ever been in bulk annuities, which involve taking on the risk of some or all of the members of a company’s defined benefit, or final salary, pension scheme.
JRP shares hit their highest since January 2016 and were up 6.6 percent at 0901 GMT at 160 pence, the second-best performer in the FTSE mid-cap index .FTMC.
Analysts at Numis said JRP’s results were strong, reiterating their buy recommendation on the stock.
JRP said it would pay a final dividend of 2.4 pence and a total dividend for 2016 of 3.5 pence, up six percent from a year earlier.
Editing by Simon Jessop and Susan Fenton