Written by: Shekina Tuahene
Just Group sold a portfolio of life mortgages to insurance company Rothesay Life.
The portfolio includes an outstanding loan balance of £537 million and an International Financial Reporting Standards (IFRS) value of £772 million, as of December 31, 2021. The life mortgages sold are among the investments that will be used to secure the insurance liabilities of Juste.
The consideration is approximately £687 million and payable in cash. The deal covers 4,600 properties.
The proceeds will be reinvested in other fixed interest assets and will result in a net tax loss under IFRS of approximately £35 million, which includes the impact on insurance liabilities resulting from the new asset mix .
He added that Just Group is and will continue to be the lender and customer-facing service agent. Rothesay will own the beneficial interest in underwriting these loans. There will be no change to the terms of the loans for borrowers.
This is Just’s third lifetime mortgage portfolio sale in the past 15 months and further reduces its exposure to risk in the UK residential property market.
It is the second sale to Rothesay, which bought a portfolio of lifetime mortgages for £334m in August last year.
This current mortgage sale will be the last, Just said.
Just will announce its financial results for the year ending December 31, 2021 on March 10 and update the market on its Solvency II stance and reduced sensitivity to movements in the UK property market at that time. The impact of the sale on the group’s Solvency II capital ratio will be broadly neutral, the firm said.
David Richardson, Group Managing Director at Just, said: “I am very pleased to have completed our third lifetime mortgage portfolio sale, which together with the three negative equity collateral we have entered into and the reduction in the new business lifetime mortgage collateral ratio that we have achieved over the past two years, makes our solvency position much more resilient to the strains in the UK property market.
“This, along with improving our capital base and generating organic capital, has established a solid foundation for the business from which we can generate profitable and sustainable growth.”