October 1, 2018 / 6:47 AM / 8 months ago

Just Group shares slump as CFO to leave amid regulatory uncertainty

(Reuters) - Just Group (JUSTJ.L) Chief Financial Officer Simon Thomas will step down at the end of the month, the British pensions provider said on Monday, days after it delayed dividends in the wake of proposed regulatory changes.

Shares of the FTSE 250 company fell about 9 percent to 80.65 pence in early trading on the London Stock Exchange, pushing the stock to the bottom of London's Midcap Index .FTMC and increasing year-to-date losses to more than 50 percent.

Thomas’ departure comes as the company grapples with the threat to its finances from proposed changes around lifetime mortgages, forcing it to delay in September a dividend payment.

Just Group’s shares took a major hit in July, when the firm warned that the new lifetime mortgage rules were likely to affect its finances, with analysts saying the company may need to raise additional regulatory capital to cope.

David Richardson, currently the deputy chief executive officer of Just Group’s UK corporate business, was named interim CFO, the company said.

Just Group did not provide a reason for Thomas’ departure, except that he was leaving with the consent of the group and the search for his successor is underway.

Panmure Gordon called the timing of Thomas’ departure “unfortunate” given the proposed rule change, but said Richardson was well equipped to handle the additional role.

“Simon helped steer the business through the March 2014 budget that required the business to reinvent itself and the current equally left of field issue of CP13/18,” Panmure Gordon analyst Barrie Cornes, said.

Formerly known as JRP, Just Group was forged from the merger of Just Retirement and Partnership Assurance in 2016.

Rules put out for consultation in July by Britain’s Prudential Regulation Authority (PRA), called CP13/18, will require Just and its rivals to set aside more capital to protect against the risks posed by mortgages.

“We understand that this move (departure) is unrelated to any issues surrounding the Group, including CP13/18 or the Group’s capital position,” Numis analyst Marcus Barnard, said.

PRA rules refer to lifetime mortgages, which enable homeowners to borrow against the value of their property and only pay back the loan when they die.

“Longer term there must be a question of the independence of Just and in the short term we anticipate that the share price will remain highly volatile,” Cornes said.

However, Just has benefited from demand for its retirement products as companies such as Pearson (PSON.L) and Smith Group (SMIN.L) look to offload pension liabilities, reporting an 85.1 percent jump in first-half adjusted operating profit in September.

Just Group specialises in annuities for people with reduced life expectancy.

Reporting by Muvija M and Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri and Matthew Mpoke Bigg

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