Just Group PLC — Audit Report / Information 2020

Dec 15, 2021

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• Strategic Report pages 1 to 53
• Governance Report pages 54 to 97
• Financial Statements pages 98 to 170

Doing

business

the just

way

Js gop PCJust group PLC

Ana Rpr

ad acut 2020

Js Gop PC Ana Rpr ad Acut 2020

our PURPOSE

JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Financial Statements

98 Independent Auditors’ Report

107 Consolidated statement of

comprehensiveincome

108 Consolidated statement

of changes in equity

109 Consolidated statement

of financial position

110 Consolidated statement

of cash flows

111 Notes to the consolidated

financial statements

154 Statement of changes in equity

of the Company

155 Statement of financial position

of the Company

156 Statement of cash flows

of the Company

157 Notes to the Company

financial statements

161 Additional financial information

164 Information for shareholders

166 Directors and advisers

167 Glossary

169 Abbreviations

Contents

Strategic Report

1 Our purpose

2 Investment case

3 Financial and operational highlights

4 At a glance

6 Chair’s Statement

8 Chief Executive Ocer’s Statement

10 Market context

14 Business model

16 Strategic priorities

18 Sustainable investment strategy

20 COVID strategy

22 Key performance indicators

24 Business Review

32 Risk management

34 Principal risks and uncertainties

38 Environment

40 Colleagues and culture

44 Relationships with stakeholders

46 Section 172 statement

51 Non-financial information statement

Governance REPORT

54 Chair’s introduction to Governance

56 Board of Directors

60 Senior leadership

62 Governance in operation

68 Nomination Committee Report

71 Audit Committee Report

76 Group Risk and Compliance CommitteeReport

78 Directors’ Remuneration Report

93 Directors’ Report

97 Directors’ Responsibilities

All Just Group plc regulatory announcements,

shareholder information and news releases

can be found on our Group website,

www.justgroupplc.co.uk

Cross linking

Throughout this document we have linked

content together in order to provide a more

comprehensive report inside the Strategic

Report, Governance Report and Financial

Statements. These sections, taken together,

comprise the Strategic Report in accordance

with the UK Companies Act 2006 (Strategic

Report and Directors’ Report) Regulations 2013.

We believe that every

decision we make and

every action we take

should help us achieve

our purpose

1SRTGC RPR

Companies

We provide advisory, technology

and customer services to help UK

companies with retirement focused

solutions to meet the needs of their

customers and clients in later life.

READ MORE ON PG.4

Homeowners

We provide the resources to improve the

later life of homeowners and their families.

READ MORE ON PG.4

Individuals

We provide guaranteed income for life

to deliver security and peace of mind for

our customers and we provide regulated

advice, guidance and information services

to help people make the most of their

pensions and other savings.

READ MORE ON PG.4

Pension scheme trustees

We provide improved security

of income for members of defined

benefit pension schemes by transferring

the risk to Just.

READ MORE ON PG.4

we Help

people

achieve

a better

later life

2 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

investment case

Capital

sustainability,

competence,

innovation

and growth

Capital strength and sustainability

Our priority is to deliver a sustainable capital model so that we can

takeadvantage of the growth markets that we operate in. In 2020 we

achieved a major landmark in the Group’s history by achieving capital

self-suciency. We have improved our overall capital strength and are

now working to increase our resilience as well as increasing our levels of

organic capital generation. This focus will help us to fulfil our other goals

and ensure we deliver valuefor shareholders.

READ MORE ON PG.6

we Help people achieve

a better later life

Just has a compelling, clear purpose, to help people achieve a better

laterlife by providing financial advice, guidance, competitive products

andservices to those approaching, at and in-retirement.

READ MORE ON PG.5

Growing retirement markets

As the population ages, our retirement markets grow. Whether it is

defined benefit schemes de-risking or retirees seeking either to turn their

pension into a guaranteed income for life or access equity in their homes,

our markets have many years of growth ahead of them.

READ MORE ON PG.10

Positive disruption

As retirement specialists we seek to positively disrupt the markets where

we choose to participate, delivering better outcomes for customers so we

may deliver value for shareholders.

READ MORE ON PG.14

Leading distribution franchise

Just has leadership positions in attractive segments of the retirement

market. We have a strong brand, known and trusted for delivering

outstanding service, which combines with a diversified distribution

modelto create a uniquely valuable franchise.

READ MORE ON PG.14

Delivering value growth

Our sustainable capital model combined with a leading distribution

franchise that positively disrupts in growing retirement markets will

allowus to help more people achieve a better later life and provide

growthin shareholder value.

READ MORE ON PG.14

We have made huge strides

to rebuild our capital base

while focusing on fulfilling

our purpose and building

value for shareholders

DAVID RICHARDSON

Group Chief Executive Ocer

Deploying our highly ey effective

new business franchise to create

value from our leadership positions

in attractive segments of the UK

retirement income market

READ MORE ON PG.8

3SRTGC RPR

Financial and Operational Highlights

1 Alternative performance measure (see glossary on page 167 for definition).

Underlying organic capital generation/(consumption) and organic capital generation/(consumption) are reconciled to Solvency II excess own funds on page 25.

New business operating profit, management expenses and adjusted operating profit are reconciled to IFRS profit before taxonpage 27 and 28.

Retirement Income sales are reconciled to gross premiums written in note 6 to the consolidated financial statements on page122.

2 Solvency II capital coverage ratio allows for a notional recalculation of transitional measures on technical provisions (“TMTP”) at 31 December 2020.

KEY PERFORMANCE INDICATORS

SOLVENCY II CAPITAL COVERAGE

RATIO(ESTIMATED)

2

156

%

141% at 31 December 2019

UNDERLYING ORGANIC CAPITAL

GENERATION/(CONSUMPTION)

1

£

18

m

£(15)m at 31 December 2019

ORGANIC CAPITAL GENERATION/

(CONSUMPTION)

1

£

221

m

£36m at 31 December 2019

RETIREMENT INCOME SALES

1

£

2,145.3

m

2019: £1,918.1m, up 12%

NEW BUSINESS OPERATING PROFIT

1

£

199.2

m

2019: £182.0m, up 9%

ADJUSTED OPERATING PROFIT BEFORE TAX

1

£

239.3

m

2019: £218.6m, up 9%

MANAGEMENT EXPENSES

1

£

159.3

m

2019: £169.0m, down 6%

IFRS PROFIT BEFORE TAX

£

236.7

m

2019: £368.6m, down 36%

IFRS NET ASSETS

£

2,490.4

m

2019: £2,321.0m, up 7%

AWARDED FURTHER RECOGNITION FOR OUTSTANDING SERVICE

FINANCIAL ADVISER: 5 STAR SERVICE AWARD FINANCIAL ADVISER: 4 STAR SERVICE AWARD CONFIRMIT ACE AWARDS

FINANCIAL STRENGTH AND OTHER INDICATORS

FITCH INSURER FINANCIAL STRENGTH RATING

A+

for Just Retirement Limited (2019: A+)

FITCH ISSUER DEFAULT RATING

A

for Just Group plc (2019: A)

4 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

at a glance

Leaders in our markets. We positively

disrupt markets where we can become

a leader and deliver great outcomes

for customers so we may deliver value

for shareholders

We are a specialist in our chosen markets,

serving four distinct groups…

Trustees and scheme sponsors:

Providing member security and

de-risking pension liabilities

Defined benefit pension schemes de-risking their

liabilities by securing member benefits with

an insurance contract.

ADDRESSABLE MARKET

>

£

1

trillion

Individuals: Providing

retirement income

People who have built up pension savings

throughouttheircareer and want a guaranteed

income,flexible income or a combination in retirement.

MARKET VALUE OF DEFINED CONTRIBUTION

PENSION SAVINGS

>

£

1

trillion

Corporate clients: Solving

problems for companies

We develop scalable retirement-focused solutions forbanks,

building societies, life assurance companies, pension scheme

trustees, other corporate clients and fortheir customers,

clients and members.

Homeowners:

Accessing property wealth

People aged 60+ who want to access wealth locked

up in their property.

PROPERTY WEALTH OWNED BY PEOPLE AGED 55+

>

£

3.2

trillion

5SRTGC RPR

…WITH PRODUCTS AND SERVICES

SERVICES BENEFIT AND COMPETITIVE POSITION

marketed

products

1

Defined Benefit De-risking

Solutions (“DB”)

Solutions for pension scheme trustees to reduce

the financial risks of operating pension schemes

and increase certainty that members’ pensions

will be paid in the future.

Just’s innovative approach and underwriting

expertise in this segment delivers better prices

for trustees.

Guaranteed Income

for Life (“GIfL”)

A solution for individuals/couples who want

the security of knowing they will receive a

guaranteed income for life.

By using our unrivalled intellectual property,

Just provides an individually tailored solution

providing customers typically with double-digit

percentage increases in income compared to

standard products.

SECURE LIFETIME INCOME (“SLI”)

Launched in 2019, SLI is a tax-ecient solution

for individuals who want the security of knowing

they will receive a guaranteed income for life and

the flexibility to make changes in the early years

of the plan.

Just’s pioneering Secure Lifetime Income

product enables customers to select a

guaranteed income from within a Self-Invested

Personal Pension. This enables a customer to

manage and blend their total pension assets tax

eciently within a single technology platform.

Care Plans

A solution for people moving to residential care

who want the security of knowing a regular

payment will be made to the care provider for the

rest of their life.

Just’s Care Plans can be tailored to theindividual

and oer a tax-ecient solution to making

payments to residential care providers.

1 Reported in our

Insurance segment.

Lifetime Mortgages (“LTM”)

Solutions designed for people who want to

release some of the value of their home.

Just provides a range of lifetime mortgages,

enabling people to meet a variety of needs in

later life.

SERVICES BENEFIT AND COMPETITIVE POSITION

Professional

services

2

2 Reported in our

Other segment.

HUB Group

Our professional services and distribution

businesses delivering technology, broking and

advice solutions for corporate clients and pension

schemes. We also provide regulated financial

advice on how people should use pension savings,

or release some of the value from their home.

HUB Financial Solutions oers an innovative

approach that provides aordable regulated

advice topeople with modest pension savings.

Italso delivers face-to-face nationwide advice

at a time and place to suit the client, and

enables pension schemes to deliver ecient

and robust scheme-led defined benefit

transferprogrammes.

+

Support for organisations wanting to deliver

whole-of-market shopping around services to

source retirement income products for their

customers, employees or pension scheme

members. HUB Financial Solutions is the UK’s

largest GIfL broker.

+

Provides a range of business services tailored

tothe needs of the organisation, ranging from

consultancy and software development to fully

outsourced customer service delivery and

marketing services.

Competitive position:

A leader Developing

6

John Hastings-Bass

Chair

JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Chair’s statement

Just’s purpose is compelling,

clear and acts as a beacon for

colleagues across the Group

to live the purpose every day

Engaging

PURPOSE,

delivering

our

commitment

7SRTGC RPR

I am pleased to introduce Just Group plc’s

2020Annual Report, my first since becoming

ChairinAugust 2020. We have continued to

strengthenthe capital position of the Group,

increasing our resilience and delivered an

excellentoperating performance.

I’m delighted to have joined the Company to lead the Board. I’ve received

a warm welcome and have been hugely impressed by the quality of

colleagues I have had an opportunity to meet across theGroup.

Before commenting on the Company’s performance, on behalf of

theBoard I would like to express our gratitude to my predecessor,

ChrisGibson-Smith. Chris was Chair of Just Group since its creation,

overseeing a transformational merger and navigating significant

regulatory change. He has steered the Group through some very

challenging times and takes with him our best wishes for the future.

OUR PRIORITY IN 2020

Our first priority in 2020 has been to ensure the wellbeing of our

colleagues and our customers in response to the global COVID-19

pandemic. David Richardson and his team have demonstrated

outstanding leadership in their considered and rapid response. Within

days, 99% of our colleagues had been equipped with new technology

andother equipment to enable them to work at home productively.

All of our colleagues remain on full pay and the Group has not used the

government’s job retention scheme.

We maintained the delivery of all the Group’s services to customers, most

of whom are in the more vulnerable groups. To support our customers

through this dicult period, we have made a number ofchanges to our

products and services. You can read more about thesechanges and the

support we have provided to our colleagues throughout this report.

In the 2018 and 2019 Annual Reports we set out the uncertainty

presented to Just and other companies in the industry resulting from

thePrudential Regulation Authority’s (“PRA”) consultation and policy

statements into thetreatment of equity release mortgages being held

toback annuity liabilities. The impact on the Group over this period has

been significant.

In 2019 the Board instigated a less capital intensive strategy. David

Richardson and his team’s response to adapting the business model has

been disciplined and focused and we are improving our organic capital

generation. Additionally, they have demonstrated strong competence

indelivering their commitments by executing a wide programme of

management actions over a two year period to improve the Group’s

capital position.

We continue to engage constructively with thePRA and although our

solvency position continues to strengthen, regulatory scrutiny remains

high and some uncertainty and risk remains, further details of which are

set out in the principal risks and uncertainties section, and in note 35,

Capital.

The Group’s financial strength and performance is explained in detail in

the Business Review.

DIVIDEND

Whilst the Group has made significant progress to build its capital base to

accommodate the regulations on equity release mortgages and to start

to grow its underlying capital generation, the external environment as we

emerge from the pandemic continues to be uncertain. The Board

therefore considers that it would not be appropriate to recommend

recommencing dividend payments and will continue to keep this situation

under review.

BOARD COMPOSITION AND GOVERNANCE

I am pleased to welcome Kalpana Shah who joined the Group Board on

1 March. She has considerable commercial and insurance experience

which will benefit our Group.

I take great pride in leading the Board and the Group’s governance

function, and my introduction to the Corporate Governance Report

provides further information on our governance and decision making

processes. I would like to thank the entire Board for their significant

contribution, and look forward to working with them in 2021.

ENGAGEMENT WITH OUR STAKEHOLDERS

The Board engages directly and indirectly with our customers,

shareholders, colleagues, regulators, legislators, professional bodies and

wider society to promote the interests of our customers more broadly.

Weplace great importance on working eectively with these groups and

actively seeking their feedback.

We work hard to ensure our customers benefit from our services and our

shareholders receive the benefit of long-term value creation. Throughout

this report you can read how the Board takes into consideration feedback

from the Company’s stakeholders and how theBoard and colleagues

across the Group promote the success of theCompany.

OUR PURPOSE

Before joining the Company, as I began my conversations with members

of the Board, I was immediately drawn to the powerful purpose that sits

at the heart of Just.

Just’s purpose is compelling, clear and acts as a beacon for colleagues

across the entire Group to live the purpose every day. Quite simply,

wehelp people achieve a better later life. We achieve this by providing

financial advice, guidance, competitive products and services and we help

our customers achieve security, certainty and provide them with peace of

mind in retirement.

CONTRIBUTING TO A GREENER, MORE SUSTAINABLE FUTURE

In support of our important role in helping the world transition towardsa

sustainable environment and low-carbon global economy, Iwas delighted

that Just became the first UK insurance company to launch a Green Bond.

You can read more about this on page 18.

OUTLOOK

The fundamental drivers for growth in our core markets continue to be

strong. We have met our commitment to achieve capital self-suciency

this year which puts us in a strong position to selectively grow our

business and create value for shareholders. We are continuing to increase

our resilience with further planned actions to reduce our capital sensitivity

to our residential property exposure. The commercial outlook remains

favourable for our Group.

On behalf of the Board, I would like to close by thanking all of our

colleagues across the Group for their exceptional agility in responding

tothe pandemic and for their commitment to providing the best service

possible to our customers and business partners. We are building a

stronger, more resilient Just company that can be increasingly optimistic

about the future.

ANNUAL GENERAL MEETING 2021

10.00 am

11 May 2021

at Just Group plc

Enterprise House

Bancroft Road

Reigate

Surrey RH2 7RP

8 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

chief executive officer’s statement

2020 was a major landmark in the

Group’s history. We achieved our goal

ofbecoming capital self-sucient and

we now have more choices in how we

deploy our resources. We have a resilient,

sustainable business and are well placed

to help even more people achieve a better

later life

Solvency ii capital

coverageratio (estimated)

1

156

%

2019: 141%

Organic capital generation

2

£

221

m

2019: £36m

adjusted operating profit

before tax

2

£

239.3

m

2019: £218.6m

1 Solvency II capital coverage ratio allows

foranotional recalculation of TMTP at

31 December 2020.

2 Alternative performance measure. IFRS profit

before tax £236.7m (2019: £368.6m).

DAVID RICHARDSON

Group Chief Executive Ocer

Focusing

on capital,

sustainability

and purpose

9SRTGC RPR

I am delighted to present my Chief Executive

Ocer’s Statement for the 2020 financial year.

CAPITAL

Our priority has been to deliver a sustainable capital model and 2020 was

an important year in the attainment of that goal, as we achieved capital

self-suciency more than a year earlier than originally planned. Our

Solvency II capital coverage ratio has grown to 156% (estimated, post

notional TMTP recalculation) from 141% at the end of 2019, an exceptional

achievement given the particularly dicult economic environment. The

increase reflects a sustained improvement in organic capital generation

and the benefits arising from the successful execution of a range of

management actions.

Increasing the organic capital generation has been a key focus of the

whole leadership team. Underlying organic capital generation was

positive for the firsttime in2020, with management actions adding

further to the surplus. Our increased focus on reducing costs and new

business strain is helping to increase the underlying capital generation

which provides asustainable foundation for the future.

We have taken action to introduce significant de-risking initiatives over

the year which have helped to increase the resilience of the balance sheet

and to reduce the sensitivity of our capital position to economic factors.

We have entered into our second and third no-negative equityguarantee

(“NNEG”) hedging transactions, sold a portion of ourlifetime mortgages

portfolio, released capital through more longevity reinsurance, this time

on the GIfL portfolio and, as previously announced, signed our first DB

partnering deal.

We have successfully hedged against interest rate movements and

proactively managed our credit portfolio to positively contribute to

oursolvency capital despite credit downgrades.

The UK property market has been resilient since the start of theCOVID-19

pandemic. We recognise that the uncertainty over thehealth of the UK

economy makes it more dicult to predict the future trajectory of UK

property prices to which our solvency position is exposed, as shown in

theSolvency II property sensitivities included in the Business Review.

Thesensitivity has reduced due to the significant management actions

we have executed over the year – both in further NNEG hedges, which

partially protect around 20% of our LTM book against adverse future

property performance, and in the sale of around 8% of the mortgage

book. We expect further management actions will be implemented

toreduce risk and boost the Group’s capital position.

Regulatory engagement has remained high, as we have taken action

tostrengthen our capital position and reduce our property exposure.

Some uncertainty and risks remain with further details in the principal

risks and uncertainties section, and in note 35, Capital.

GROWTH AND INNOVATION

The retirement markets we participate in provide long-term structural

growth opportunities and we are able to achieve high levels of return on

the capital we invest in those markets. In the second half of 2020 we

started to take more of those opportunities and we will be building on

those foundations in 2021.

We are investing for growth by developing new solutions to positively

disrupt our markets and deliver better outcomes for customers. This year

we announced our first defined benefit partnering transaction, a capital

light model for DB de-risking transactions which exceed £250m in size. In

our retail markets we have introduced Destination Retirement, our unique

automated advice service which has been developed to help close the

financial advice gap for people in middle Britain with more modest

pension savings.

OUR PURPOSE AND SUSTAINABILITY

Just has a strong social purpose: we help people achieve a better later life.

We help our customers achieve security, certainty and peace of mind.

During 2020, we have further strengthened our sustainability credentials

as we became the first UK insurer to issue a Green Bond and the first to

provide a green lifetime mortgage. The Green Bond enshrines our

commitment to supporting the transition to a low-carbon global economy

as all the proceeds are earmarked to be invested in green infrastructure

projects. In 2019 our carbon intensity per employee was already the

lowest in the FTSE 350 life insurance sector and in 2020 we have achieved

further dramatic reductions. However this is a long-term journey and we

will continue to work hard to improve all aspects of sustainability that we

touch as a business.

CUSTOMERS

The needs of our customers are forefront when setting our goals. Many

ofour customers are in vulnerable groups and so we are proud that we

have maintained the delivery of all the Group’s services to customers

during the disruption caused by the pandemic. Inaddition, we made a

number of changes to our products and services tohelp support our

customers through this dicult period where many household services

have been impacted by the pandemic. You can read more about our

response to help customers on page 21.

COLLEAGUES AND CULTURE

Protecting the welfare of our colleagues across the Group and ensuring

the delivery of critical services to customers have been clear priorities

driving ourresponse to the pandemic. We are very aware of the

challenges colleagues face when working from home and particularly

forthose withadditional caring responsibilities. You can read in detail

howwe havesupported our colleagues and achieved our highest ever

Best Companies score on page 21.

We are rightly proud of our award-winning service, and of our strong

social purpose, which together deliver a “Just” experience to our

customers. Our colleagues are at the heart of this and I am grateful for

the immense contribution they make to our business and for the way

theyhave adapted so positively and with such agility to our new way

ofworking during the pandemic.

Building a diverse workforce and strengthening our inclusive culture is a key

priority for Just. It’s the right thing to do and it helps us to succeed, innovate

and better serve our customers. I am proud that we have increased

gender diversity across senior roles by five percentage points in 2020 and

we are on track to achieve our pledge as a signatory to the Women in

Finance Charter that 33% of our senior leaders will be female by 2023.

PERFORMANCE REVIEW

I am very pleased that, as our capital position has improved over the year

and after taking decisive action to reduce new business strain, we have

been able to return to new business growth in the second half of the year.

For the whole year, Retirement Income sales were £2,145m, an increase

of12% from the prior year.

The DB market has been very resilient throughout the crisis. DB sales were

up 22% to £1,508m which is testament to how well both trustees and

employee benefit consultants have adapted to working remotely.

The retail business was initially more aected but adapted swiftly and

bythe second half of 2020 GIfL and LTM sales were similar to those in the

second half of 2019.

IFRS profit before tax for 2020 was £237m (2019: £369m) due to lower

economic profits in 2020. Adjusted operating profit before tax rose to

£239m (2019: £219m), as higher sales and new business profit, together

with improved in-force earnings, have helped to oset higher finance costs.

The attention to capital discipline has resulted in a further fall in our new

business strain to £48m (2019: £74m) and helped to achieve a very

pleasing positive organic capital generation of £221m. We are building

astrong, sustainable track record in capital generation, something that

we are all committed to continuing.

IN CONCLUSION

These are extraordinary times and we are doing all we can to ensure

welive up to our purpose to help people achieve a better later life. I am

very grateful to my colleagues for their resilience, commitment and

adaptability during this challenging period. We are pleased that our

relentless focus on our key goal of strengthening the Group’s capital has

resulted in a much improved position that will allow us to make more

positive choices around growth, innovation and shareholder returns in

2021 and beyond.

10 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

market context

DEFINED BENEFIT DE-RISKING SOLUTIONS

Defined benefit pension schemes have an obligation to pay members

aretirement income based on their earnings history, length of

employment and age. Operating these schemes has become unattractive

and more costly for employers over the last decade and this has created

an opportunity for guaranteed income providers to de-risk, fully or

partially, an employer’s defined benefit obligations to its members.

Defined benefit de-risking can occur via a Buy-in, whereby a pension

scheme pays a premium to an insurance company to purchase an income

stream that matches its obligations to some or all of its members, but

retains legal responsibility for those obligations. An alternative is to

Buy-out, where a pension scheme removes its obligations by purchasing

individual insurance policies to pay the benefits of some or all of its

members, who then become customers ofthe de-risking provider.

DELIVERING

BETTER

OUTCOMES

FOR

CUSTOMERS

Structural drivers in our

markets mean we can grow

profits while delivering better

outcomes for customers

TAKING THE RISK

OUT OF PAYING

COMPANYPENSIONS

CURRENT MARKET AND OUTLOOK

2019 was a record year for de-risking transactions, with a total market

volume of over £40bn driven by a number of megadeals. Megadeals have

been largely absent from the market in 2020, providing an opportunity

formore sub-billion transactions to secure insurer interest. Volatility in

financial markets and subsequent illiquidity, both caused by COVID-19,

provided both challenges and opportunities for schemes. As credit

spreads widened, exceptional value in pensioner Buy-in and Buy-out

pricing relative to holding gilts was available between April and July for

those schemes ready and able to transact quickly. Since then, pricing still

represents better value than before COVID-19 and where schemes have

the funding in place, they’re keen to transact. Asa result, the market size

in 2020 is estimated to have exceeded £25bn (source: LCP), making it the

second busiest year on record.

There are an estimated £2.4tn of UK defined benefit pension scheme

liabilities which have yet to be secured with an insurer (source: PPF)

andthe drivers remain in place to ensure continued high demand for

de-risking solutions. The draft of the Pensions Regulator’s defined benefit

funding code is expected in spring 2021. The regulation is expected to

ensure pension schemes are managing their risks appropriately and are

on track to be fully funded by the time their cash flows turn negative,

orface a bespoke approach to regulation. As a result we expect more

schemes will have the funding in place to de-risk.

Research by LCP in 2020 found that 80% of defined benefit schemes

expected to reach their endgame within ten years, with steady annual

demand for de-risking volumes forecast to be in excess of £30bn until

2029 (source: Hymans Robertson). In their outlook for 2021, Fitch also

believe that the strong demand for defined benefit de-risking is likely

tocontinue. Even with self-suciency and commercial consolidation

aspossible endgames, we believe trustees will be competing for insurer

attention. While insurer capacity to write a higher volume of individual

transactions will increase in the long term, over themedium term we

believe the demand for the number of de-risking transactions will exceed

the supply available from providers.

The seasonality in the defined benefit de-risking market has become less

prevalent, with strong demand across the year. The exception in2020 was

in the months immediately after the first COVID-19 lockdown in March,

when demand fell sharply but recovered again topre-pandemic levels by

early summer.

Heightened government, regulatory and fiduciary focus alongside

consumer activism has pushed environmental, social and governance

(“ESG”) up the agenda for UK defined benefit pension schemes. Many

trustees considering de-risking seek assurance that ESG considerations

underpin the asset choices in theinsurer’s investment portfolio. At Just,

our assets are invested sustainably in line with our ESG policy and the

Green Bond we issued inOctober, the first by a UK insurance company,

demonstrates how we’ve embedded ESG into our investment strategy.

In June 2020 the Pensions Regulator issued their guidance for so

calledsuperfunds, a pension consolidation solution for schemes and

sponsors to transfer risk where they cannot achieve a Buy-out from

aninsurance company. The interim guidance sets out the standards the

regulator states must be met in the period before longer-term legislation

isin place.

Regulation by the Pensions Regulator is outside of the insurance regime

and so these new consolidators would not be subject to the more

robustcapital requirements of the Solvency II regulations. Ifthese new

arrangements are regulated as proposed, they would provide a cheaper

solution to a Buy-out of liabilities for some pension schemes, although at

the cost of reduced protection for members compared to an insurance

solution. One of these new consolidation models is a bridge to Buy-out

and so schemes entering would eventually come to the insurance market.

This new superfund regime could provide additional competition for parts

of the market we target. This won’t be clear until the government and

regulator have established rules for superfunds.

11

Closed to new members (open to benefit accrual)

Source: The Purple Book 2020, PPF

Closed to future accrual

87% o dfnd bnft pnin shms ae coe

t nw mmes ad icesnl t ftr acul (%)

100

80

60

40

20

2018 2019 20202006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Buy-in/Buy-out

Source: Just analysis, LCP

Backbook acquisition

Epce got i D d-rsig tascin (£b)

40

30

20

10

2017 2018 2019 2020

(forecast)

2011 2012 2013 2014 2015 2016

2,000

2,500

1,500

1,000

500

2015 2016 2017 2018 2019 2020

Source: Just analysis, ABI

SRTGC RPR

INDIVIDUAL RETIREMENT INCOME MARKET

Guaranteed Income for Life (“GIfL”) products are bought by individual

customers to convert some or all of their accumulated pension savings

into a guaranteed lifetime retirement income. The solution provides

people with peace of mind from the security of knowing the income will

continue to be paid for as long as the customer and, where relevant, for

aslong as they or, typically, their spouse, lives. In the UK, GIfLs traditionally

oered an income payable without reference to theindividual’s health or

lifestyle, and were dierentiated only by reference to a limited number

offactors such as age, postcode, premium size and, prior to 31 December

2012, gender.

An individually underwritten GIfL takes into account an individual’s

medical conditions and lifestyle factors to determine their life expectancy.

People who are eligible and purchase an individually underwritten GIfL

typically achieve double-digit percentage increasesin income compared

to purchasing a GIfL which is not individually underwritten.

Current market and outlook

Pension customers are encouraged to compare the GIfL oer provided

bytheir existing pension company to those oered on what is the open

orexternal market. In March 2018 the Financial Conduct Authority (“FCA”)

introduced rules requiring pension companies to provide customers

withan external GIfL quotation showing the best quote available from

theexternal market alongside the quotation from the incumbent

firm.These requirements were subsequently strengthened and from

January 2020 all firms are required to provide a medically underwritten

comparison where a customer is eligible. This should provide new

opportunities for Just Group as we compete in the open market when

these customers choose to shop around; this is our addressable market as

we do not have an existing base of pension savings customers. The open

market maintained a 50% share of the total GIfL market, unchanged from

2019 (source: ABI).

Continuing developments are driving growth in our addressable market:

• the structural drivers of growth in the retirement income market

arestrong and assets accumulating in defined contribution (“DC”)

pension schemes are projected to increase consistently over the next

decade. This growth arises from an increase in the number ofpeople

joining workplace pension schemes as a result of the successful state

auto-enrolment policy and the increase in contribution rates

implemented in 2018;

• growth in DC pension assets also arises as companies close down final

salary or defined benefit pension schemes and oer their employees

DC pensions instead;

• some people are transferring out of defined benefit pension schemes

into DC pension schemes to take advantage of Pension Freedoms.

When transferring, many people are choosing to secure aguaranteed

income for life, by using some of the transfer value topurchase an

individually underwritten GIfL; and

• many life and pension companies are choosing to put in place broking

solutions to oer their pension savings customers access tothe best

individually underwritten GIfL deals in the market. Some are choosing

to transfer their obligations to provide a guaranteed GIfL rate to their

customers to an alternative product provider or broking solution. This

grows our addressable market and provides customers with better

outcomes. Our HUB group of companies is providing many of these

corporate services.

The number of individual retail customers transferring their pension

benefits into defined contribution pensions from their final salary

(definedbenefit) pension has reduced significantly in 2019/20. This

reduction follows a review and introduction of remediation measures

bythe FCA into the quality of advice provided to individual retail customers

exploring transferring their benefits. A proportion of the proceeds from

these transfers are used to secure a guaranteed income by investing

inaGIfL. This reduction in activity will be a drag on the positive growth

factorsabove.

The first COVID-19 lockdown impacted the ability for some customers

totransact business in the market which has resulted in a reduction in the

size of the GIfL market in 2020. Volumes of transactions in the second half

of the year have started to return to near pre-pandemic levels.

The FCA has announced they intend to complete further work on the

suitability of advice and associated disclosure (known as “Assessing

PROVIDING SECURITY

AND PEACE OF MIND

87% OF DEFINED BENEFIT PENSION SCHEMES ARE CLOSED

TO NEW MEMBERS AND INCREASINGLY TO FUTURE ACCRUAL (%)

DB DE-RISKING TRANSACTIONS (£BN)

EXTERNAL GIFL MARKET (£M)

12 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Suitability Review 2”). The review will focus on initial and on-going advice

to consumers on taking an income in retirement. This evolving market has

changed significantly following the Pension Freedom reforms and the FCA

want to assess the outcomes consumers are receiving. The Governor of

the Bank of England has expressed concerns that people may not have

the financial resilience to withstand significant asset price volatility and

the FCA has expressed concerns that people may not have sucient

sources of sustainable income. These comments and regulatory reviews

shine a spotlight on the importance of securing a guaranteed income

forlife.

LIFETIME MORTGAGES

A lifetime mortgage (“LTM”) allows homeowners to borrow money

secured against the equity in their home. The amount borrowed is

repayable together with accrued interest on the death of the last

remaining homeowner or their move into permanent residential care.

Thisproduct can be used by retirees to supplement savings, top up

retirement income or to settle any outstanding indebtedness.

The typical lifetime mortgage customer is around 69 years old, has a

house valued at around £275,000 and borrows 29% of the property value.

People are becoming increasingly positively disposed to accessing some

of the equity in their homes to improve the quality of their later lives or

tohelp their family. The compound annual growth rate of the lifetime

mortgage market between 2011 and 2020 was 19.7% and this has

attracted new providers to enter the market in the last few years.

Just Group is a leading product provider of lifetime mortgages. Our HUB

Financial Solutions business is a leading distribution business providing

consumers with regulated advice on equity release solutions from across

the market.

CURRENT MARKET AND OUTLOOK

Just Group expects Lifetime Mortgages to continue to provide an

important, but reducing component of the investments it uses to back its

Retirement Income new business liabilities. Homeowners aged over 55

are estimated to own property wealth of over £3.2tn (source: ONS). We

estimate that the existing industry loan book including interest is just

£31bn. Increased competition stemming from the new entrants to the

marketplace has increased the availability of product variants, rising

from315 at the end of 2019 to 525 at the end of August 2020 (source:

YourMortgage), in turn resulting in greater product choice and flexibility

for customers. Market growth stalled in the second quarter of 2020 given

the unprecedented environment resulting from the COVID-19 pandemic

and the temporary closure of the housing market. Retail activity started to

rebuild in the second half of 2020 as customers looked to take advantage

of the broad range of competitive solutions available.

Just is forecasting that the LTM market will grow to around £5.7bn per

annum by the end of 2023, which is a compound annual growth rate of

13.6% from 2020. The primary drivers of growth are:

• households wanting to top up their retirement income to improve their

standard of living in later life;

• an increase in the number of people with outstanding interest-only

mortgages who are entering retirement and require a solution to settle

the debt with the existing mortgage company;

• strong demographic growth. The number of people aged 65 and over is

forecast to increase from around 12 million today to over 18 million by

2040; and

• an increase in new entrants who spend money on advertising which

results in people becoming aware of LTMs, combined with people

becoming more disposed to using some of their housing equity.

In October the FCA wrote to chief executive ocer’s and board directors

of lifetime mortgage lenders and mortgage intermediaries. The FCA set

out their view of the key risks these firms pose to their consumers or the

markets in which they operate. They outlined their expectations of firms

including how firms should be mitigating these key risks. They described

their supervisory strategy and programme of work to ensure that firms

are meeting the regulators’ expectations and that any harms and risks

ofharm are being remedied and/or mitigated.

market context continued

ENABLING PEOPLE

TO IMPROVE THEIR

LATER-LIFELIVING

STANDARDS

People are becoming increasingly

positively disposed to accessing

some of the equity in their homes

to improve the quality of their

later lives or to help their family

13

Nme o pol (mlin) ae 65+

20

18.3% 18.7% 19.9% 21.7% 23.2% 23.9%

15

10

5

2018 2020 2025 2030

2035

2040

Source: Oce for National Statistics

% of UK

population

over age 65

CAGR 19.7%

Lump sum mortgage sales

Existing drawdown mortgages – further advances

Source: Equity Release Council

New drawdown mortgages – initial advance

Lftm mrgg mre sz ad got rt (£m)

4,000

3,000

2,000

1,000

2017 2018 2019 20202011 2012 2013 2014

2015

2016

LIFETIME MORTGAGE MARKET SIZE AND GROWTH RATE (£M)

NUMBER OF PEOPLE (MILLIONS) AGE 65

+

SRTGC RPR

The FCA are engaging with a number of firms across the industry and

thisphase of work is due to conclude in May 2021. They have committed

to write to firms after this date to provide an updated view of the key

risksposed by firms in this sector and their supervisory plans.

LONG-TERM CARE SOLUTIONS

Care Plans, or immediate needs annuities, are a form of purchased

lifeannuity. In exchange for an up-front premium, they provide a

guaranteed income for the life of the insured to help contribute to the cost

of their care. Under current rules this income is tax free when paid directly

to a registered care provider, with Care Plans available both to individuals

entering care facilities and receiving domiciliary support. As such, Care

Plans provide a form of longevity insurance to an individual against the

on-going costs of receiving care until their death.

The COVID-19 pandemic had a severe and well publicised impact on the

care home sector during 2020. Although this caused significant short-

term disruption to our core market, it has helped to focus attention on the

funding issues that the care market is currently facing, and could be the

stimulus for future government structural reform for funding this critical

consumer need.

CURRENT MARKET AND OUTLOOK

There is a substantial market for care in the UK. The drivers of the need

forcare are strong because:

• there are currently around 1.6 million people aged 85 or over in the

UK– this is the average age at which people go into care homes;

• this is the fastest growing demographic cohort, with its number

expected to almost double over the next 25 years, suggesting a growth

rate in excess of 2.6%;

• 40% of all people in the UK aged 65 and over are estimated to have a

limiting long-standing illness, which may require care in the future; and

• the recent focus on pressures within the care sector has highlighted

theneed to plan for care, and any government reform will provide

additional focus on the limited number of solutions currently available.

20Years

A LEADER IN UK LONG-TERM CARE

FINANCIAL SOLUTIONS FOR

14 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

business model

Our resilient business model

is designed to create long-term

value in the retirement market

for customers and shareholders

Creating

long-term

value

RESILIENT AND AGILE

• We have met our commitment to achieve capital

self-suciency this year and we are continuing

to increaseour resilience.

A STRONG REPUTATION

• Our reputation in the retirement market isunrivalled.

• We put the customer at the centre of what we do and this

is reflected in the feedback wereceive from customers.

STRONG FINANCIAL, RISK MANAGEMENT

AND TECHNICAL PRICING CAPABILITY

• We are able to select risks that we know will create value.

• Through hedging and reinsurance, we are able to

manageour capital whilst continuing to grow and

scaleour business lines.

INDUSTRY INNOVATOR

• We have a strong track record of positively

disruptingmarkets.

• We selectively innovate and bring new solutions to market

– you can read more about these on pages 5 and 9.

IN-RETIREMENT SPECIALIST MARKETINSIGHT

• We focus on attractive segments of the retirement

market.

• We understand our markets and invest timedeveloping

insight to drive the direction of our business and to

understand what our customers need.

Our strengths are thefoundation

of our sustainable success…

Wa st u aat

Hw w cet vle

RISK SELECTION

Selecting the right risks

and pricing our products

appropriately

PrognoSys™ is our powerful proprietary

tool for pricing and reserving that allows

the Group to identify and price for the risks

we want and improve customer outcomes.

Our products

and services are

distributed via our

multi-channel model

15SRTGC RPR

Wo w cet vle fr

INNOVATION

Innovatively utilising external

funding and reinsurance tools

toimprove our capital position

This includes:

• Defined benefit partnering model.

• Reinsurance options on new and

existing business.

• No-negative equity guarantee

risk transfer solution.

INVESTMENT STRATEGY

Continuous improvements

in our investment strategy

to generate value for

shareholders and better

value for customers

We invest in private placements, commercial

property mortgages and infrastructure loans,

aswell as investment grade fixed income

securities such as government and corporate

bonds. We originate lifetime mortgages to

provide matching cash flows for longer duration

liabilities and to achieve a higher return than

liquid financial assets.

SHAREHOLDERS

By managing our resources eectively we generate

profits in excess of our cost of capital.We manage our

capital conservatively and are focused on increasing

our organic capital generation.

CUSTOMERS

Individuals: We use our medical underwriting to fairly

optimise the returns for our customers. Corporate

clients:We create opportunities and solve problems

forcompanies using our scalable retirement focused

solutions. Trustees and scheme sponsors: We provide

member security and de-risk pension liabilities.

COMMUNITIES

We are a significant local employer in our communities

ofReigate and Belfast. Our communities benefit from

jobcreation, our tax payments and community

outreachactivities.

COLLEAGUES

We develop, recognise and reward ourcolleagues

to secure a skilled andmotivatedteam.

For more information on engagement with stakeholders

seepage 44.

16 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

strategic priorities

In 2020 we successfully

executed our strategy

to strengthen the

Group’s capital position

2020 has been a year of challenges, but

it has also been a year where we have

evidenced howresilient we are as a business.

We have demonstrated our operational

capabilities torespond to the COVID-19

impacts to an exceptional standard.

Despite the economic headwinds we have

continued to make significant progress on

the delivery of strong capital generation. Our

markets have been resilient to the external

pressures with negligible impact on our

performance and strategy execution.

IMPROVE OUR

CAPITAL POSITION

TRANSFORM

HOW WE WORK

GET CLOSER TO OUR

CUSTOMERS& PARTNERS

GENERATE GROWTH

IN NEW MARKETS

BE PROUD TO

WORK AT JUST

FOCUS

We need to deliver a sustainable capital model

to maximise opportunities available to us.

FOCUS

To optimise our capital position we will continue

to improve our processes to become more

ecient and productive.

FOCUS

The customer is at the heart of what we do. We

will maintain this whilst forming a sustainable

business model.

FOCUS

We will improve returns on new business by

working to grow market demand.

FOCUS

Building our organisational resilience,

strengthening our talent/capabilities and

ensuring colleagues feel proud to work at Just.

2020 PROGRESS

• Capital management actions have been

delivered. We have reduced our property

riskexposure through the sale of an LTM

portfolio, further NNEG hedge transactions

and alternative investment strategies.

• We completed our first DB partner

transaction and have made progress

towardsscaling our partnering propositions.

• The cost base has further reduced in 2020

by£6m.

2020 PROGRESS

• We have successfully delivered a significant

technology upgrade across the Group this

year which was a critical enabler to our ability

to respond to COVID-19 impacts.

• Behavioural and technical learning to support

our new environment has been embedded to

support the upgrade.

• We have made good progress improving our

business processes across the Group.

2020 PROGRESS

• Our pioneering automated advice

proposition, Destination Retirement, has

made good progress with some significant

partnerships on the horizon.

• Two businesses within HUB group have

merged to create eciencies and better

serve our customers – HUB Pension Solutions

and Corinthian Pensions have merged to

become HUB Pension Consulting.

2020 PROGRESS

• The first stage of our LTM digitisation

programme went live in the second half of

2020 with further enhancements planned.

• Secure Lifetime Income (“SLI”) is now live and

will enable financial advisers to blend

guaranteed income alongside their

drawdown investment portfolios to improve

outcomes for their clients.

2020 PROGRESS

• We have achieved our highest levels of

colleague engagement and successfully

introduced new ways of working in response

to COVID-19.

• We increased our focus in critical areas,

including leadership communication,

facilitating colleagues to stay connected with

wellbeing and line manager support.

• Gender diversity across senior roles has

increased by five percentage points to 24%.

We are on track to achieve our pledge as a

signatory to the Women in Finance Charter

that 33% of senior leadership will be female

by 2023.

2021 FOCUS

• Maintain our focus on capital self-suciency,

while taking advantage of growth

opportunities in our markets.

• Continue to de-risk our balance sheet to

potential economic and regulatory

challenges.

2021 FOCUS

• We will have an enhanced focus on

transformation in 2021 with plans in place to

streamline and digitise our operations across

the business.

• Building on our new technology capability we

will complete the next stage of our

programme to create a modern workplace fit

for the future.

2021 FOCUS

• Building our customer strategy.

• Researching and testing innovative solutions

in the Care market.

2021 FOCUS

• Helping advisers to adapt their advice

processes so clients have solutions to

generate sustainable retirement income.

• Scaling Destination Retirement.

• Scaling our DB partnering and DB deferred

propositions.

2021 FOCUS

• Design and implement a new model of

working as part of our Modern Workplace

programme, supporting colleague

engagement, productivity and wellbeing.

• Drive progress on all aspects of diversity

andinclusion.

• Engage colleagues around our 2021

sustainability strategy.

Link to risks and uncertainties:

a b c d e

f

Link to risks and uncertainties:

 b c d e f

Link to risks and uncertainties:

a b c d e

f

Link to risks and uncertainties:

a b c d e

f

Link to risks and uncertainties:

a b

c

d e f

2.1.

A

Market environment

B

Pricing assumptions

C

Regulatory changes

D

Economic environment

E

Operational processes

and systems

f

Brand and reputation

Picpl rss ad ucranis

17SRTGC RPR

IMPROVE OUR

CAPITAL POSITION

TRANSFORM

HOW WE WORK

GET CLOSER TO OUR

CUSTOMERS& PARTNERS

GENERATE GROWTH

IN NEW MARKETS

BE PROUD TO

WORK AT JUST

FOCUS

We need to deliver a sustainable capital model

to maximise opportunities available to us.

FOCUS

To optimise our capital position we will continue

to improve our processes to become more

ecient and productive.

FOCUS

The customer is at the heart of what we do. We

will maintain this whilst forming a sustainable

business model.

FOCUS

We will improve returns on new business by

working to grow market demand.

FOCUS

Building our organisational resilience,

strengthening our talent/capabilities and

ensuring colleagues feel proud to work at Just.

2020 PROGRESS

• Capital management actions have been

delivered. We have reduced our property

riskexposure through the sale of an LTM

portfolio, further NNEG hedge transactions

and alternative investment strategies.

• We completed our first DB partner

transaction and have made progress

towardsscaling our partnering propositions.

• The cost base has further reduced in 2020

by£6m.

2020 PROGRESS

• We have successfully delivered a significant

technology upgrade across the Group this

year which was a critical enabler to our ability

to respond to COVID-19 impacts.

• Behavioural and technical learning to support

our new environment has been embedded to

support the upgrade.

• We have made good progress improving our

business processes across the Group.

2020 PROGRESS

• Our pioneering automated advice

proposition, Destination Retirement, has

made good progress with some significant

partnerships on the horizon.

• Two businesses within HUB group have

merged to create eciencies and better

serve our customers – HUB Pension Solutions

and Corinthian Pensions have merged to

become HUB Pension Consulting.

2020 PROGRESS

• The first stage of our LTM digitisation

programme went live in the second half of

2020 with further enhancements planned.

• Secure Lifetime Income (“SLI”) is now live and

will enable financial advisers to blend

guaranteed income alongside their

drawdown investment portfolios to improve

outcomes for their clients.

2020 PROGRESS

• We have achieved our highest levels of

colleague engagement and successfully

introduced new ways of working in response

to COVID-19.

• We increased our focus in critical areas,

including leadership communication,

facilitating colleagues to stay connected with

wellbeing and line manager support.

• Gender diversity across senior roles has

increased by five percentage points to 24%.

We are on track to achieve our pledge as a

signatory to the Women in Finance Charter

that 33% of senior leadership will be female

by 2023.

2021 FOCUS

• Maintain our focus on capital self-suciency,

while taking advantage of growth

opportunities in our markets.

• Continue to de-risk our balance sheet to

potential economic and regulatory

challenges.

2021 FOCUS

• We will have an enhanced focus on

transformation in 2021 with plans in place to

streamline and digitise our operations across

the business.

• Building on our new technology capability we

will complete the next stage of our

programme to create a modern workplace fit

for the future.

2021 FOCUS

• Building our customer strategy.

• Researching and testing innovative solutions

in the Care market.

2021 FOCUS

• Helping advisers to adapt their advice

processes so clients have solutions to

generate sustainable retirement income.

• Scaling Destination Retirement.

• Scaling our DB partnering and DB deferred

propositions.

2021 FOCUS

• Design and implement a new model of

working as part of our Modern Workplace

programme, supporting colleague

engagement, productivity and wellbeing.

• Drive progress on all aspects of diversity

andinclusion.

• Engage colleagues around our 2021

sustainability strategy.

Link to risks and uncertainties:

a b c d e

f

Link to risks and uncertainties:

 b c d e f

Link to risks and uncertainties:

a b c d e

f

Link to risks and uncertainties:

a b c d e

f

Link to risks and uncertainties:

a b

c

d e f

1. 1. 5.

18 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

sustainable investment strategy

Just has a strong social purpose: we help

peopleachieve a better later life. It follows

thatweconsider environmental, social and

governance (“ESG”) factors in all investment

analysis and decisions.

Just has developed a Sustainable Investment Framework (“SIF”),

toformally integrate ESGconsiderations into our investment

portfolioanddecision-making process.The SIF is available at

https://www.justgroupplc.co.uk/investors/ESG.

GREEN INVESTMENTS, GREEN BOND AND A POSITIVE SOCIAL PURPOSE

Just’s ESG credentials are already firmly established as a member of

theFTSE4Good index series. As of 31 December 2020, Just Group has

invested £1.1bn (8.8% of its bond portfolio

1

) in dedicated green and social

investments. During 2020, we formally developed a Sustainable Bond

Framework, which received a second party opinion from Sustainalytics on

the framework’s environmental and social credentials. Sustainalytics are

a subsidiary of Morningstar and one of the world’s leading ESG rating

firms. In October 2020, Just Group became the first UK insurer to issue a

Green Bond, resulting in gross issuance proceeds of £250m. The Group has

provided a commitment to invest the proceeds in eligible green projects,

including further investments in renewable energy, and expand into new

areas such as green buildings and clean transportation. Given the

predictable nature of guaranteed income cash flows, life insurers such as

Just are ideal providers of long-term finance to such projects.

As investors, Just benefits from further asset diversification, while

supporting the transition to a low carbon economy. Sustainalytics will

annually review the projects for which the Green Bond proceeds are

allocated and the bond’s ongoing compliance with the initial SIF.

Separately we expect to increase the Group’s exposure to social investments

including local authority loans, social housing, care facilities, student

accommodation, and other areas that have a positive social purpose.

A significant proportion of our investments are in lifetime mortgages,

which fulfil an important social purpose by providing an option to

customers to supplement their pension income or to fund larger

purchases such as home improvements. By releasing equity from their

home, the customer can remain in their home, close to friends and family,

rather than downsizing and moving elsewhere.

LOOKING TO THE FUTURE

ESG is constantly evolving. Therefore, in order to make successful

economic investments it is important to be proactive so as to anticipate

regulatory requirements and to manage our risks, including reputational.

Our framework will evolve over time to adapt to external and internal

requirements. For example, during 2021 we will consider refining our

investment approach to the mining sector and utilities, in particular those

that use coal for a proportion of their power generation.

CLIMATE CHANGE

Over the last decade there has been increased awareness of climate

change risk and its impact on asset owners. Our regulator, the Prudential

Regulation Authority

2

recently asked insurers to model the risks posed

byclimate change under a range of scenarios. This was an exploratory

exercise to gauge the impact to both the firm’s liabilities and the

investments stemming from physical and transition risks.

Just wishes to fully integrate climate change analysis and reporting for

our investment portfolios, not only to comply with the new standards

requested by the PRA, but also as a risk mitigating tool.

We believe that quality data is important in order to properly address and

map these risks. We have formed a long-term partnership with Carbon

Delta (part of MSCI) who provide a comprehensive bottom-up analysis on

both single holdings and at portfolio level to measure Climate Value-at-

Risk contribution on transition risk and physical risk scenarios.

1 Carrying value or cost.

2 https://www.bankofengland.co.uk/news/2019/december/boe-consults-on-proposals-for-

stress-testing-the-financial-stability-implications-of-climate-change.

Breaking new

ground,

investing the

just way

19SRTGC RPR

Our green and social credentials are already

evident in over £1,100m of investments in these areas.

Wind farms

£

381

m

local authority

loans

£

221

m

Commodity trade

finance

£

79

m

SoCIAL HOUSING

£

311

m

Solar energy

£

146

m

20 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

COVID strategy

OUR RESPONSE TO

COVID-19 WAS INTUITIVE,

DRIVEN FROM OUR CORE

VALUES AND CULTURE

99%

OF OUR COLLEAGUES EQUIPPED WITH

NEW TECHNOLOGY AND EQUIPMENT

21SRTGC RPR

Putting colleagues’ and customers’ needs

atthe forefront of our COVID-19 response

The development of the COVID-19 pandemic during 2020 has

brought unprecedented change to the way businesses operate,

both in the UK and globally. In responding to the pandemic, the

imperatives that guided our actions were protecting the welfare

ofour colleagues across the Group and ensuring the delivery of

critical services to customers.

OUR COLLEAGUES

We immediately increased our remote working capacity from around

300to over 1,000, and within weeks equipped 99% of our colleagues

withnew technology and other equipment to enable them to work at

home productively. This was a significant transition for a predominantly

oce-based community and demonstrated their agility to adapt and

theGroup’s responsiveness to drive change.

We are very aware of the challenges colleagues face when working from

home and particularly for those with additional caring responsibilities.

Wequickly introduced a number of flexible working arrangements

andprovided a range of wellbeing support to ensure our colleagues

weresafeguarded.

All of our colleagues remain on full pay and the Group has not used the

government’s job retention scheme.

We are rightly proud of our award-winning service, and of our strong

social purpose, which together deliver a “Just” experience to our

customers. Our colleagues are at the heart of this and we are grateful

forthe immense contribution they make to our business andfor the way

they have adapted to our new way of working during the pandemic.

READ MORE DETAIL ABOUT HOW WE HAVE

SUPPORTED OUR COLLEAGUES ON PG.40

OUR CUSTOMERS

We have maintained the delivery of all the Group’s services to customers,

most of whom are in the more vulnerable groups.

To support our customers through this dicult period, we made a number

of changes to our products and services:

• in our Lifetime Mortgage business, we introduced procedures to help

people navigate the constrained conveyancing and advice process;

• we reduced interest rates on our lifetime mortgages for those

customers who had passed away or moved into long-term care and

were unable to sell their property because the housing market was

eectively closed for a number of weeks; and

• we implemented a new temporary capital guarantee feature for our

long-term care products to return the total premium less any income

paid should the customer pass away within 12 months of the policy

inception date.

finding

new ways

of working

to support

customers

22

0 40 80 120 160

2020

2019

2018

141

136

156

-170 -90 -10 70 150 230

2020

2019

2018

36

(165)

221

-120 -100 -80 -60 -40 -20 0 20

2020

2019

2018

(15)

(111)

18

JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Key Performance indicators

The Board has adopted the

following metrics, which

areconsidered to give an

understanding of the Group’s

underlying performance drivers.

These measures are referred

toas key performance

indicators (“KPIs”)

The Board keeps KPIs under review to ensure theycontinue

toreflect the Group’s priorities and strategicobjectives.

During 2020 the Group introduced two new KPIs, management

expenses, and underlying organic capital generation/(consumption).

In-force operating profit has been discontinued as a KPI. These

changes reflect the Group’s focus on monitoring and controlling its

costs and growing capital, and provide a balance of KPIs across

capital, sales, expenses, profit andnet assets.

underlying Organic capital generation/

(consumption)

1

– £18m

Underlying organic capital generation/(consumption) is calculated

in the same way as organic capital generation, but also excludes

the impact of other operating items.

SOLVENCY II CAPITAL COVERAGE RATIO

2

–

156% (estimated)

Solvency II capital is the regulatory capital measure and is focused

on by the Board in capital planning and business planning. It

expresses the regulatory view of the available capitalas a percentage

of the required capital.

Link to strategic objective

1. 3. 4. 5.1.

Link to strategic objective

1. 3. 4. 5.1.

Link to strategic objective

1. 3. 4. 5.1.

2.

3.

4.

5.

Be Proud To

Work At Just

Generate Growth

In New Markets

Get Closer To Our

Customers & Partners

Transform

How We Work

Improve our

capital position

1.

MEASURED AGAINST OUR

STRATEGIC OBJECTIVES

1 Alternative performance measure.

Seeglossary on page 167 for definition.

2 These figures allow for a notional

recalculation of TMTP as at 31 December

2020.

SEE PAGE 16 FOR OUR

STRATEGIC OBJECTIVES

Organic capital generation/

(consumption)

1,2

– £221m

Organic capital generation/(consumption) is the net increase/

(decrease) in Solvency II excess own funds over the year, and includes

surplus from in-force, new business strain, cost overruns and other

expenses, interest and other operating items. It excludes economic

variances, regulatory adjustments, accelerated TMTP amortisation and

capital raising or repayment. The Board believes that this measure

provides good insight into our objective to improve our capital position.

23

0 50 100 150 200 250

2020

2019

2018

182.0

243.7

199.2

0 50 100 150 200

2020

2019

2018

169.0

177.9

159.3

0 50 100 150 200 250

2020

2019

2018

218.6

210.3

239.3

-100 0 100 200 300 400

2020

2019

2018

368.6

(85.5)

236.7

0 500 1,000 1,500 2,000 2,500

2020

2019

2018

2,490.4

2,321.0

1,663.8

SRTGC RPR

NEW BUSINESS OPERATING PROFIT

1

– £199.2m

New business operating profit represents the profit generated from

new business written in the year after allowing for the establishment

of prudent reserves for future expected annuity payments and

maintenance expenses and for acquisition expenses. Acquisition

expenses include the commission and trading costs, plus overhead

costs, associated with writing new business. New business operating

profit is reconciled to IFRS profit before tax in the Financial Review.

Retirement income SALES

1

– £2,145.3m

Retirement Income sales include DB, GIfL and Care premiums written

and are a key measure of the Group’s performance in these core

product areas. Retirement Income sales are reconciled to IFRS gross

premiums in note 6 to the consolidated financial statements.

ADJUSTED OPERATING PROFIT

BEFORE TAX

1

– £239.3m

Adjusted operating profit before tax is the sum of the new business

operating profit and in-force operating profit together with the impact

of one-o assumption changes, experience variances, results of the

other Group companies and financing costs. The Board believes that

adjusted operating profit, which excludes eects of short-term

economic and investment changes, provides a better view of the

longer-term performance and development of the business and aligns

with the longer-term nature of the products. Adjusted operating profit is

reconciled to IFRS profit before tax on page 27.

IFRS NET ASSETS – £2,490.4M

IFRS net assets represents the net assets attributable to

equityholders.

MANAGEMENT EXPENSES

1

– £159.3m

Management expenses are the business as usual costs incurred and

include all operational overheads. They are calculated as other operating

expenses excluding investment expenses and charges and reassurance

management fees, which are largely driven by strategic decisions, and

amortisation of acquired intangible assets as these relate to merger and

acquisition activity. The use of this metric provides the Board with a better

view of the Group’s cost base and how they support both development

and transformation and business as usual activities, ensuring that they

are able to be carefully monitored and controlled. Other operating

expenses continue to be a useful measure alongside management

expenses. Management expenses are reconciled to IFRS other operating

expenses in note 5 on page 120.

IFRS PROFIT BEFORE TAX – £236.7m

IFRS profit before tax represents the profit before tax attributable

toequity holders.

Link to strategic objective

1. 3. 4. 5.1.

Link to strategic objective

1. 3. 4. 5.1.

Link to strategic objective

1. 3. 4. 5.1.

0 500 1,000 1,500 2,000 2,500

2020

2019

2018

1,918.1

2,173.5

2,145.3

Link to strategic objective

1. 3. 4. 5.

1.

Link to strategic objective

1. 3. 4. 5.1.

Link to strategic objective

1. 3. 4. 5.

1.

24

andy parsons

Group Chief Financial Ocer

JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Business review

The Board is focused on building

amore resilient capital base and

delivering value for customers

andshareholders

delivering

results

SOLVENCY II CAPITAL COVERAGE

RATIO (estimated)

156

%

2019: 141%

Organic capital generation

£

221

m

2019: £36m

adjusted operating profit

before tax

£

239.3

m

2019: £218.6m

1 Solvency II capital coverage ratio allows

foranotional recalculation of TMTP at

31 December 2020.

2 Alternative performance measure. IFRS

profit before tax £236.7m (2019: £368.6m).

25SRTGC RPR

The Business Review presents the results of the

Group for the year ended 31 December 2020,

including IFRS and Solvency II information

The business has made strong positive progress over 2020, despite

theconsiderable impact from COVID-19 on daily life and the economy.

Ourcore products have proved resilient, with the DB market continuing

toremain active throughout lockdown and the retail market building

steadily after an initial slowdown. Advisers and customers have adapted

well to new virtual ways of doing business.

Most importantly, the capital position of the Group has strengthened

during the year as we have built the Solvency II capital coverage ratio

(“coverage ratio”) to 156% as at 31 December 2020 from 141% at the

endof 2019, and 136% at the end of 2018. This strong result has been

enabled by the completion of significant management actions, successful

capital raising and the impressive improvement in underlying capital

generation. All of this combined has improved the capital coverage ratio,

and at the same time oset the various negative regulatory costs

including accelerated TMTP amortisation.

We have delivered consistently on management actions that improve

thesolvency capital position and reduce the sensitivity of the solvency

balance sheet to UK house prices. During 2020 we have completed two

NNEG hedges, sold a portfolio of LTMs, increased GIfLlongevity

reinsurance and announced a DBpartnering agreement.

Underlying organic capital generation is now in a healthy positive position,

which is an important milestone. This has been achieved through both a

further reduction in new business strain to 2.2% (from 3.9% in 2019) and a

focus on costs that has reduced the expense overrun by £10m year on

year to £8m.

The balance sheet has proved extremely resilient as movements in

thefinancial markets have had limited impact on the Group’s capital

position during the year. House price growth has been slightly ahead of

our long-term assumptions. Active hedging of the Group’s interest rate

exposure has also minimised any impact from the c.60bps reduction in

long-term interest rates since the start of the year. Credit downgrades

aecting over 6% of the Group’s corporate bond portfolio have led to a

c.2% reduction in the coverage ratio, but were more than oset by the

positive capital impacts from portfolio management. The Green Bond

issue underscores the Group’s commitment to diversifying our illiquid

portfolio as the proceeds are earmarked for investment in renewable

energy and green infrastructure projects. At this time, the outlook for

theeconomy and continued progress of the COVID-19 pandemic both

continue to be uncertain, but the position has improved substantially from

the initial impact felt in the first half of 2020. The longer-term impact from

the pandemic on policyholder mortality is still unknown. The Group

remains exposed to the impact of further downgrades and future defaults

on its corporate bond portfolio as well as to a potential fall in UK house

prices. The impacts over 2020 have been minimal compared to initial

market fears. The key sensitivities of the Group’s capital and financial

position to future economic and demographic factors are set out below

and in notes 17 and 23 of these financial statements.

1 These figures allow for a notional recalculation of TMTP as at 31 December 2018 and 2020.

CAPITAL MANAGEMENT

Just Group plc estimated Solvency II capital position

The Group’s coverage ratio was estimated at 156% at 31 December 2020,

after notional recalculation of transitional measures on technical

provisions (“TMTP”) (31 December 2019: 141%). Steps taken by the Group

during the period to reduce new business strain and expenses and

implement management actions to de-risk the balance sheet have led to

positive organic capital generated of £221m. In addition the Group has

raised a net £113m of subordinated debt, which has added six percentage

points to the coverage ratio. The Solvency II capital coverage ratio is a key

metric and is considered to be one of the Group’s key performance

indicators (“KPIs”).

Unaudited

31 December

2020

1

£m

31 December

2019

£m

Own funds 3,014 2,562

Solvency Capital Requirement (1,938) (1,814)

Excess own funds 1,076 748

Solvency coverage ratio 156% 141%

1 These figures allow for a notional recalculation of TMTP as at 31 December 2020. Without this

recalculation, the Group’s regulatory solvency capital ratio as at 31 December 2020 was

estimated at 155%. See also note 35, Capital.

The Group has approval to apply the matching adjustment, volatility

adjustment and TMTP in its calculation of technical provisions and usesa

combination of an internal model and the standard formula tocalculate

its Group Solvency Capital Requirement (“SCR”).

Movement in excess own funds

The table below analyses the movement in the capital growth over 2020.

Unaudited

2020

£m

2019

£m

Excess own funds at 1 January 748 577

Operating

In-force surplus net of TMTP amortisation 164 150

New business strain (48) (74)

Finance cost (66) (47)

Expenses (32) (44)

Underlying organic capital generation/

(consumption) 18 (15)

Other 203 51

Total organic capital generation

2

221 36

Non-operating

Accelerated TMTP amortisation (24) (42)

Regulatory changes (19) (219)

Economic movements 37 (56)

RT1, T2 and equity issuance, net of costs

4

113 452

Excess own funds at 31 December 1,076 748

1 All figures are net of tax, and assumptions allow for a notional recalculation of TMTP as at

31 December 2020.

2 Organic capital generation/(consumption) includes surplus from in-force, new business strain,

overrun and other expenses, interest and other operating items. Itexcludes economic

variances, regulatory changes, accelerated TMTP amortisation, andcapital issuance.

3 The in-force line excludes the accelerated amortisation of a portion of TMTP which has been

shown separately.

4 2020 figure is £250m new Tier 2 capital raised in October 2020, net of tender for £75m of the

Group’s Tier 3 loan notes, and net of the repayment of PLACL’s Tier 2 bond which was called in

March 2020. 2019 figure is net of £37m repayment in respect of PLACL’s Tier 2 bond tender in

October2019.

Organic capital generation

Positive £221m of organic capital generation is a very significant

improvement on the £36m of capital generation in 2019.

During 2020, the Group reached an inflection point as we became

organically capital generative on an underlying basis for the first time, an

important milestone for the Group. The improvement to an underlying

organic capital generation of £18m (2019: £15m consumption) was as

aresult of a number of initiatives. New business strain is down, which

reflects a focus on new business pricing discipline, capital optimisation

and further longevity reinsurance. In-force surplus has continued to

increase as the size of the in-force book grows, osetting the increase in

finance cost from the new debt instrument issued. Continued focus on

costs has reduced expense overruns by £10m when compared to 2019.

We remain confident that the 2020 overruns of £8m will be eliminated by

the end of 2021.

26 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Business review continued

In addition, we have executed a number of management actions over

theperiod and these are included in the “other” activities. This includes

capital generation of £104m from the expansion of GIfL reinsurance

completed in June 2020, the second and third no-negative equity

guarantee (“NNEG”) hedges entered into during the year and the DB

partnering deal entered into in March. Furthermore, positive mortality

experience contributed £25m and modelling changes added a further

£54m benefit from the adoption of CMI 2019. Other modelling changes

added a further £19m.

Non-operating items

Economic movements of £37m resulted from the positive eect from

portfolio management and hedging profits arising from lower interest

rates more than osetting the negative property variances and credit

migration eects. The small positive property variance of £3m reflected

agrowth in house prices over 2020 of 3.9%, which was just above our

long-term assumption. The cost of credit migration during the year

was£42m, or a 2% reduction in our coverage ratio. Since the start of

thepandemic over 17% of our issuers, by market value, have been

downgraded, £730m of our portfolio has been downgraded by at least

one letter, and of this, £167m has been downgraded to sub-investment

grade. The credit migration cost was much more than oset by £88m of

positive capital impacts from management of the credit portfolio.

There is a small negative from regulatory changes in 2020, primarily

arising from the strengthening of the valuation of LTM notes in light of

thefall in risk-free rates over the period which was partially oset by the

increase in future corporation tax rate to 19%, which has increased own

funds and decreased the SCR due to its eect on deferred tax.

As a result of additional NNEG hedges and the sale of an LTM portfolio, the

property sensitivity has reduced to 14% (2019: 15%). We anticipate that

additional management actions will reduce this sensitivity further. Note

that the credit quality step downgrade sensitivity below, as well as being a

severe stress requiring a significant downgrade in credit quality for 20% of

our credit portfolio, also does not allow for the positive impact from credit

portfolio management during a time of stress.

Sensitivities to economic and other key metrics are shown in the

tablebelow.

Estimated Group Solvency II sensitivities

Unaudited % £m

Solvency coverage ratio/excess own funds at

31 December 2020 156 1,076

-50 bps fall in interest rates (with TMTP

recalculation) 1 94

+100 bps credit spreads 1 21

Credit quality step downgrade (with TMTP

recalculation) (13) (201)

+10% LTM early redemption 2 21

-10% property values (with TMTP recalculation) (14) (247)

-5% mortality (13) (236)

1 In all sensitivities the EVT deferment rate is maintained at the level consistent with base

balance sheet, except for the interest rate sensitivity where the deferment rate reduces in line

with the reduction in risk free rates but is subject to the minimum deferment rate floor (0% as

at 31 December 2020).

2 Sensitivity shows the impact of an immediate full letter downgrade on 20% of assets where

the capital treatment depends on a credit rating (including corporate bonds, commercial

mortgages and infrastructure loans) but excludes lifetime mortgage senior notes. All credit

assets were grouped into rating class, then 20% of each group were downgraded.

3 After application of NNEG hedges.

Reconciliation of IFRS shareholders’ net equity to Solvency II own funds

Unaudited

31 December

2020

£m

31 December

2019

£m

Shareholders’ net equity on IFRS basis 2,490 2,321

Goodwill (34) (34)

Intangibles (100) (120)

Solvency II risk margin (846) (873)

Solvency II TMTP 2,106 1,891

Other valuation dierences and impact on

deferred tax (1,391) (1,271)

Ineligible items (5) (35)

Subordinated debt 795 684

Group adjustments (1) (1)

Solvency II own funds 3,014 2,562

Solvency II SCR (1,938) (1,814)

Solvency II excess own funds 1,076 748

1 These figures allow for a notional recalculation of TMTP as at 31 December 2020.

ALTERNATIVE PERFORMANCE MEASURES

ANDKEYPERFORMANCEINDICATORS

Within the Business Review, the Group has presented a number of

alternative performance measures (“APMs”), which are used in addition to

IFRS statutory performance measures. The Board believes that the use of

APMs gives a more representative view of the underlying performance of

the Group. The APMs used by the Group are: organic capital generation,

underlying organic capital generation, new business operating profit,

in-force operating profit, underlying operating profit, adjusted operating

profit, Retirement Income sales, management expenses and adjusted

earnings per share. Further information on our APMs can be found in the

glossary, together with a reference to where the APM has been reconciled

to the nearest statutory equivalent.

The Board has also adopted a number of key performance indicators

(“KPIs”), which include certain APMs, and which are considered to give an

understanding of the Group’s underlying performance drivers. KPIs are

regularly reviewed against the Group’s strategic objectives to ensure that

we continue to have the appropriate set of measures in place to assess

and report on our progress. During 2020 the Group introduced two new

KPIs, management expenses, and underlying organic capital generation/

(consumption). In-force operating profit has been discontinued as a KPI.

These changes reflect the Group’s focus on monitoring and controlling its

costs and growing capital, and provide a balance of KPIs across capital,

sales, expenses, profit andnet assets. The Group’s KPIs are discussed in

more detail within the capital management section above, and on the

following pages.

The Group’s KPIs are shown below:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Change

%

Underlying organic capital generation/

(consumption)

1

18 (15)

Organic capital generation

1

221.0 36.0

Retirement Income sales

1

2,145.3 1,918.1 12

New business operating profit

1

199.2 182.0 9

Adjusted operating profit before tax

1

239.3 218.6 9

Management expenses

1

159.3 169.0 (6)

IFRS profit before tax 236.7 368.6 (36)

27SRTGC RPR

31 December

2020

£m

31 December

2019

£m

Change

%

Solvency II capital coverage ratio

2

156% 141%

IFRS net assets 2,490.4 2,321.0 7

1 Alternative performance measure, see glossary for definition.

2 Estimated, after allowing for a notional recalculation of TMTP as at 31 December 2020.

ADJUSTED OPERATING PROFIT

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Change

%

New business operating profit 199.2 182.0 9

In-force operating profit 97.8 84.4 16

Underlying operating profit 297.0 266.4 11

Operating experience and assumption

changes 46.2 42.2 9

Other Group companies’ operating

results (17.1) (13.1) (31)

Development expenditure (7.3) (10.3) 29

Reinsurance and finance costs (79.5) (66.6) (19)

Adjusted operating profit before tax

1

239.3 218.6 9

1 See reconciliation to IFRS profit before tax on page 28.

Adjusted operating profit before tax

Adjusted operating profit before tax of £239.3m increased by 9% in 2020

(2019: £218.6m). Within this, underlying operating profit, the sum of

newbusiness operating profit and in-force operating profit, rose 11%

to£297.0m. Operating experience variance and assumption changes

increased to £46.2m in 2020 (2019:£42.2m) and were broadly in line

withthe previous year. Finance costs increased by 19% to £79.5m,

drivenby a full 12 month run-rate from the Restricted Tier 1 notes

issuedin March 2019.

New business operating profit

New business operating profit has increased by 9% to £199.2m (2019:

£182.0m). This reflects a 12% increase in Retirement Income sales to

£2,145.3m (2019: £1,918.1m), with a strong performance in the second

half of the year, particularly in DB, while GIfL/Care sales returned to a

normalised run-rate following the easing of lockdown restrictions in June.

The new business margin achieved on Retirement Income sales during

the period was 9.3% (2019: 9.5%), reflecting adjustments made to the

asset mix backing the new business and increased longevity reinsurance

as part of the Group’s capital self-suciency objective. The Group

continues to focus on pricing discipline and risk selection, and is benefiting

from lower acquisition costs due to business mix and cost reductions.

Management expenses

Management expenses have decreased by 6% to £159.3m (2019:

£169.0m). This is due to strengthened procurement and cost controls,

elimination of certain vacant roles, selective hiring, and lower marketing

and distribution costs due to the eect of remote working and social

distancing. Furthermore, previous property rationalisation savings have

come through for the full 12 months.

In-force operating profit

In-force operating profit increased by 16% to £97.8m (2019: £84.4m),

reflecting growth in profit from the Group’s growing in-force book

ofbusiness and higher surplus assets, while maintaining control of

policymaintenance costs. The eect of widening credit spreads and

downgrades during the year further added to in-force operating profit.

Operating experience and assumption changes

The Group has paid close attention to developments as the COVID-19

vaccine programme rolls out across the population, which began with

itscustomer base, many of whom are in the most vulnerable category.

However, the long-term impact of the COVID-19 pandemic on those

whorecovered from the disease, the ecacy of the various vaccines

andsecondary impacts such as delayed diagnosis for other illnesses or

behavioural changes need to be considered when reviewing long-term

assumptions, in particular in respect of property and mortality.

The Group considered the early experience of the COVID-19 pandemic as

part of the annual basis review in December 2020, and will continue to

assess its long-term assumptions during 2021. Sensitivity analyses are

shown in notes 17 and 23 which set out the impact on the IFRS results

from changes to key assumptions, including property and mortality.

Overall, positive operating experience and assumption changes of

£46.2mwere reported in 2020 (2019: £42.2m). Within this £46.2m figure,

operating experience was £20.1m, primarily due to data and modelling

updates, oset by the reinsurance changes applied during 2020,

specifically, the increased reinsurance coverage on GIfL business and the

reinsurance implementation for our first DB partnering scheme. These

combined to a net positive £15.7m. Positive mortality experience for

guaranteed income due to higher than expected deaths during theperiod

was oset by a negative LTM experience in relation to early redemptions

arising from both mortality and also moves into long-term care and

voluntary redemptions, resulting in a net positive £6.8m. Variousother

items totalled a negative £2.4m. There were a number ofassumption

changes including the adoption of CMI 2019 across our product range,

which led to a net £61.9m longevity reserve release as the guaranteed

income release outweighed LTM strengthening. Osetting this release,

calibration and other modelling refinements led to a £31.7m

strengthening. The review of other assumptions led to a £4.0m reserve

strengthening, resulting in net assumption changes of £26.2m.

Other Group companies’ operating results

The operating result for other Group companies was a loss of £17.1m in

2020 compared to a loss of £13.1m in 2019.

Development expenditure

Development expenditure mainly relates to product development and

new initiatives, such as new capital light products. Development

expenditure also relates to distribution improvements such as online

capability and digital access. Development expenditure has fallen as

project expenditure concludes.

Reinsurance and finance costs

Reinsurance and finance costs include the coupon on the Group’s

Restricted Tier 1 notes, as well as the interest payable on the Group’s Tier

2 and Tier 3 notes. The increase for the period is due to a full 12 month

run-rate from the Restricted Tier 1 notes issued in March 2019 and the

£125m Tier 2 notes issued in October 2019. It also includes the coupon

from the Green £250m Tier 2 notes issued in October 2020.

On a statutory IFRS basis, the Restricted Tier 1 coupon is accounted for as

a distribution of capital, consistent with the classification of the Restricted

Tier 1 notes as equity, but the coupon is included as an interest cost on an

adjusted operating profit basis.

RETIREMENT INCOME SALES

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Change

%

Defined Benefit De-risking Solutions

(“DB”) 1,507.9 1,231.3 22

Guaranteed Income for Life Solutions

(“GIf L” ) 585.9 615.7 (5)

Care Plans (“CP”) 51.5 71.1 (28)

Retirement Income sales 2,145.3 1,918.1 12

28 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Business review continued

RECONCILIATION OF OPERATING PROFIT TO STATUTORY IFRS RESULTS

The following tables present the Group’s results on a statutory IFRS basis.

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Adjusted operating profit before tax 239.3 218.6

Non-recurring and project expenditure (12.7) (8.3)

Implementation of cost saving initiatives (8.5) (13.5)

Investment and economic profits 8.5 173.8

Interest adjustment to reflect IFRS accounting for

Tier 1 notes as equity 28.1 16.8

Amortisation costs (18.0) (18.8)

IFRS profit before tax 236.7 368.6

Non-recurring and project expenditure

Non-recurring and project expenditure was £12.7m (2019: £8.3m) and

includes preparations for the new insurance accounting standard, IFRS

17, the costs associated with Green Tier 2 bond/concurrent Tier 3 tender,

preparations for an internal model change to incorporate the recent

regulatory changes and to move PLACL from standard formula to a

Group internal model, and a number of smaller project costs. It also

includes a significant upgrade to our hardware systems, the roll out

of which was accelerated to enable our colleagues to work remotely

to support the business during the COVID-19 pandemic. The costs of

on-going interaction with our regulators and the costs of implementing

less significant regulatory changes are included in operating costs.

Implementation of cost saving initiatives

These costs are in respect of the cost savings initiated to optimise the

Group’s business model and prioritise capital eciency. During the

periodthe Group has carried out further improvements to its business

processes and management structure. This builds on improvements

made during 2019.

Investment and economic profits

Investment and economic profits for 2020 were £8.5m (2019: £173.8m).

Alarge gain from the fall in risk-free rates has been largely oset by a

change in the long-term property growth assumption and the sale of an

LTM portfolio.

The decrease in risk-free rates during the first half of 2020, has led to a

gain of £360m for the year as a whole. The impact of falling interest rates

has been further amplified by additional interest rate hedges entered into

to protect the Solvency II capital position, and which have increased the

sensitivity of the IFRS balance sheet to interest rate movements relative

to prior periods. There were small negatives from credit spreads and

downgrades (£14m) and property growth experience (£5m).

We have taken a prudent view to reduce the long-term property growth

assumption by 50 basis points to 3.3% from 3.8% previously. In updating

these assumptions, the Board took into consideration future macro-

economic uncertainties including the eect of COVID-19 and Brexit on the

UK property market. The strengthening of these assumptions has given

rise to a £166m loss, which is the combination of the change in lifetime

mortgage asset values and the increase to the value of insurance

liabilities from the resulting reduction to the valuation interest rate.

Furthermore, in December 2020, the Group sold a portfolio of lifetime

mortgages with accumulated value of £540m. These LTMs were sold

atagain to the IFRS fair value, but, we have foregone the dierence in

investment yield with the replacement bonds, and hence incurred a

£136m pre-tax loss. Over time a proportion is planned to be allocated

tonew illiquid assets reducing this initial impact.

Further details and sensitivities to changes in property assumptions are

given in notes 17 and 23 of these financial statements.

There were no corporate bond defaults within our portfolio during the

period (2019: no defaults).

The Group’s key focus is capital self-suciency, resilience, and providing

optionality to deploy surplus capital. As part of this commitment, in 2019,

we wrote less new business in order to reduce new business capital strain.

During 2020, as the first half COVID-19 related disruption subsided, we

executed our business plan by selectively increasing volumes at attractive

margins. Our chosen markets have proven resilient in the face of

considerable challenges, as the structural growth drivers that underpin

our markets are unchanged. Retirement Income sales for 2020 increased

by 12% to £2,145.3m (2019: £1,918.1m).

DB sales for the year were £1,507.9m, an increase of 22%. Transactions

are lumpy in nature and subject to timing dierences, with a number of

transactions postponed due to COVID-19 disruption subsequently

completing. DB sales in the second half of the year were over £1bn, a

record for the Group. We completed 23 transactions during 2020 (2019: 23

transactions). The defined benefit de-risking market continues to be

buoyant. We estimate that the DB market was c.£30bn in 2020, the

second highest on record, after an exceptional year in2019 (£43.8bn). In

2021, we expect to participate more fully in the deferred liabilities market,

thus improving our Buy-out proposition, andto actively quote on larger

case sizes including those suitable for DB partnering.

2020 GIfL sales decreased by 5% to £585.9m (2019: £615.7m). COVID-19

introduced challenges given the inherent face-to-face advice process;

however, advisers responded quickly by utilising virtual means. In June,

GIfL sales returned to their normal run-rate, demonstrating that

disruption was only temporary. Volatile investment markets and

economic uncertainty have demonstrated to customers the importance

and security of a guaranteed income. Care sales were most impacted by

COVID-19 disruption, but only represent 2% of Retirement Income sales.

Other new business sales

Lifetime Mortgage advances were £511.7m for 2020 (2019: £415.8m), an

increase of 23%. 2020 includes £36m of LTM origination on behalf of a

third party. The Group does not hold an economic exposure for these

assets, it earns a fee for originating and administering these loans. LTM

spreads were relatively stable during the year as risk-free rates fell,

whereas in 2019, there was increased competition, particularly in the first

half of the year, which resulted in lower volumes that year.

We continue to be more selective in the mortgages we advance, with a

focus on shorter duration loans to older borrowers, lower LTV business

and on customers with sucient income to service interest on their

borrowings. In future, we expect to gradually taper the proportion of

LTMs backing new business towards 20%.

During 2019, the Flexible Pension Plan drawdown closed to new business

and existing customers were migrated to a third party platform. The

Group also closed its US Care unit, which had been lossmaking.

ADJUSTED EARNINGS PER SHARE

Adjusted EPS (based on adjusted operating profit after attributed tax)

hasincreased from 17.6 pence for 2019, to 18.8 pence for 2020.

Year ended

31 December

2020

Year ended

31 December

2019

Adjusted earnings (£m) 193.8 177.1

Weighted average number of shares (million) 1,030.7 1,007.5

Adjusted EPS (pence) 18.8 17.6

EARNINGS PER SHARE

Year ended

31 December

2020

Year ended

31 December

2019

Earnings (£m) 165.5 285.8

Weighted average number of shares (million) 1,030.7 1,007.5

EPS (pence) 16.1 28.4

29SRTGC RPR

Amortisation costs

Amortisation mainly relates to the acquired in-force business asset

relating to Partnership Assurance Group plc, which is being amortised over

ten years in line with the expected run-o of the in-force business.

HIGHLIGHTS FROM CONDENSED CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

The table below presents the Condensed consolidated statement of

comprehensive income for the Group, with key line item explanations.

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Gross premiums written 2,147.8 1,921.0

Reinsurance premiums ceded (232.0) 2.8

Reinsurance recapture 940.0 436.8

Net premium revenue 2,855.8 2,360.6

Net investment income 1,777.7 1,451.7

Fee and commission income 11.7 12.7

Total revenue 4,645.2 3,825.0

Net claims paid (1,000.2) (861.1)

Change in insurance liabilities (2,983.1) (2,237.8)

Change in investment contract liabilities (1.8) 92.2

Acquisition costs (44.5) (35.2)

Other operating expenses (219.9) (227.8)

Finance costs (159.0) (186.7)

Total claims and expenses (4,408.5) (3,456.4)

Profit before tax 236.7 368.6

Income tax (44.2) (66.2)

Profit after tax 192.5 302.4

Gross premiums written

Gross premiums written for the year were £2,147.8m, an increase of 12%

compared to the prior period (2019: £1,921.0m). As discussed above, the

overall increase reflects a 22% increase in DB sales, oset by a reduction

in GIfL and Care sales, which were impacted by challenges from COVID-19

in the first half of 2020.

Reinsurance premiums ceded

Reinsurance premiums ceded (expense of £232.0m) has increased in 2020

as a result of reinsurance in relation to the Group’s DB partnering business.

Also included within this line item are reinsurance swap premiums and

fees (2019: £2.8m credit).

Reinsurance recapture

During 2020 the Group recaptured all of the remaining quota share

reinsurance arrangements held by its subsidiary JRL. These reinsurance

treaties included financing arrangements, which allowed a capital benefit

under the old Solvency I regime. The treaties allowed the recapture of

business once the financing loan from the reinsurer had been repaid, and

the Group has now fully repaid all such financing arrangements (2019:

outstanding financing of £14.5m). This has resulted in a decrease of

reinsurance assets of £940m and a reduction of equal amount in the

deposits received from reinsurers recognised within other financial

liabilities in the statement of financial position. These movements are

reflected in the statement of comprehensive income within net premium

revenue and net change in insurance liabilities respectively.

Net premium revenue

Net premium revenue increased from £2,360.6m to £2,855.8m, driven by

the increase in gross premiums written, plus the impact of the reinsurance

recaptures made during the year, oset by reinsurance premiums ceded.

Net investment income

Net investment income increased from £1,451.7m to £1,777.7m in 2020.

The main components of investment income are interest earned and

changes in fair value of the Group’s corporate bond, mortgage and other

fixed income assets. There has been a decrease in risk-free rates during

the first half of 2020 which has resulted in unrealised gains in relation to

assets held at fair value. During 2020 this line item also includes realised

gains from the sale of £540m of the Group’s lifetime mortgages, oset by

the change to the carrying value of mortgages from the change to the

Group’s property growth assumption.

Net claims paid

Net claims paid increased to £1,000.2m, from £861.1m in 2019, reflecting

the continuing growth of the in-force book.

Change in insurance liabilities

Change in insurance liabilities was £2,983.1m for the current year,

compared to £2,237.8m in 2019. The increase is principally due to a greater

fall in the valuation interest rate and a larger reinsurance recapture.

Acquisition costs

Acquisition costs have increased from £35.2m in 2019 to £44.5m in 2020,

mainly as a result of an increase in LTM new business compared to the

prior year.

Other operating expenses

Other operating expenses decreased from £227.8m in 2019 to £219.9m

for the current year. This is driven by a reduction in management

expenses, as explained above, which has been achieved through the cost

saving initiatives entered into during 2019 and 2020.

Finance costs

The Group’s overall finance costs decreased from £186.7m in 2019 to

£159.0m in 2020. The main driver relates to a reduction in reinsurance

deposits, which have fallen in line with the reinsurance recaptures made.

This decrease has partly oset by interest on the new Tier 2 loan notes

issued in October 2019 and October 2020.

Income tax

Income tax for the year ended 31 December 2020 was £44.2m (2019:

£66.2m), with an eective tax rate of 18.7% in line with corporation tax

rates (2019: eective tax rate of 18.0%).

HIGHLIGHTS FROM CONDENSED CONSOLIDATED STATEMENT OF

FINANCIALPOSITION

The following table presents selected items from the Condensed

consolidated statement of financial position, with key line item

explanations below.

31 December

2020

£m

31 December

2019

£m

Assets

Financial investments 23,269.8 21,606.0

Reinsurance assets 3,132.6 3,860.6

Other assets 1,771.0 555.8

Total assets 28,173.4 26,022.4

Share capital and share premium 198.3 198.0

Other reserves 948.8 949.9

Accumulated profit and other adjustments 1,051.2 879.9

Total equity attributable to ordinary

shareholders of Just Group plc 2,198.3 2,027.8

Tier 1 notes 294.0 294.0

Non-controlling interest (1.9) (0.8)

Total equity 2,490.4 2,321.0

Liabilities

Insurance liabilities 21,118.4 19,003.7

Reinsurance liabilities 267.1 128.6

Other financial liabilities 3,305.1 3,678.9

Insurance and other payables 91.6 72.6

Other liabilities 900.8 817.6

Total liabilities 25,683.0 23,701.4

Total equity and liabilities 28,173.4 26,022.4

1 Restated in relation to reinsurance assets and reinsurance liabilities. See sections on

reinsurance assets and reinsurance liabilities below, and note 2 to the financial statements.

30 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

The loan-to-value ratio of the mortgage portfolio at 31 December 2020

was 36.1% (2019: 34.3%). The percentage of lifetime mortgages

decreased by 1.4 percentage points to 35.5% of financial investments,

following the sale of a £540m portfolio of mortgages to a third party in

December 2020. This sale was oset by an increase in the valuation of

theremaining LTMs relative to bonds, due to the fall in interest rates

asLTMs are typically longer duration. Given the uncertain macro

environment, and volatile market conditions, the Group prudently

managed its balance sheet and exposure by increasing various hedges,

which led to an increase in derivatives and collateral.

The following table provides a breakdown by credit rating of financial

investments.

31 December

2020

£m

31 December

2020

%

31 December

2019

£m

31 December

2019

%

AAA 2,197.3 9.4 2,440.0 11.3

AA and gilts 1,988.8 8.5 1,777.3 8.2

A 4,135.5 17.8 3,709.8 17.2

BBB 6,023.4 25.9 5,290.7 24.5

BB or below 408.4 1.8 194.8 0.9

Unrated/Other 255.3 1.1 212.9 1.0

Lifetime mortgages 8,261.1 35.5 7,980.5 36.9

Total 23,269.8 100.0 21,606.0 100.0

1 Includes units held in liquidity funds.

2 Includes internally rated assets and own-rated assets. December 2019 disclosures for

privately rated assets have been updated and are shown within the appropriate ratings

bucket, where such a rating exists. Previously, these privately rated assets were classified as

“Unrated/Other”.

Business review continued

The sector analysis of the Group’s financial investments portfolio at 31 December 2020 is shown below and continues to be well diversified across a

variety of industry sectors.

31 December

2020

£m

31 December

2020

%

31 December

2019

£m

31 December

2019

%

Basic materials 199.9 0.9 329.8 1.5

Communications and technology 1,188.9 5.1 1,148.2 5.3

Auto manufacturers 385.0 1.7 446.6 2.1

Consumer (staples including healthcare) 976.6 4.2 927.1 4.3

Consumer (cyclical) 112.8 0.5 194.9 0.9

Energy 462.7 2.0 422.7 2.0

Banks 1,422.5 6.1 1,859.7 8.5

Insurance 824.9 3.5 724.2 3.4

Financial – other 462.5 2.0 426.6 2.0

Real estate including REITs 771.3 3.3 450.2 2.1

Government 1,340.4 5.8 1,128.9 5.2

Industrial 839.6 3.6 628.6 2.9

Utilities 2,029.9 8.7 1,708.2 7.9

Commercial mortgages 707.0 3.0 494.5 2.3

Infrastructure 1,220.5 5.2 892.9 4.1

Other 38.0 0.2 76.5 0.4

Corporate/government bond total 12,982.5 55.8 11,859.6 54.9

Lifetime mortgages 8,261.1 35.5 7,980.5 36.9

Liquidity funds 1,128.5 4.8 1,384.0 6.4

Derivatives and collateral 897.7 3.9 381.9 1.8

Total 23,269.8 100.0 21,606.0 100.0

Financial investments

During the last 12 months, financial investments increased by £1.7bn to

£23.3bn (2019: £21.6bn). The increase is mainly due to the eect of

decreases in risk-free rates during the period, somewhat oset by credit

spread widening, but also as a result of investing the Group’s new business

premiums. The credit quality of the corporate bond portfolio remains

resilient, with 50% of the Group’s corporate bond and gilts portfolio rated

A or above (2019: 53%) and continues to be well balanced across a

rangeof industry sectors and geographies. Given the macroeconomic

uncertainty, credit rating agencies have proactively taken a cautious

approach, and have been slower to restore corporates to a level our

fundamental credit analysis supports. The Group has limited exposure

tothose sectors that are most sensitive to structural change, such

asEnergy, Auto manufacturers and Consumer (cyclical), while the

BBB-rated bonds are weighted towards the sectors least at risk from

uncertainmacro conditions post COVID-19/Brexit, including Utilities,

Communications and Technology, and Infrastructure. Over the past year,

the Group actively managed its portfolio and sold £639m of bonds,

including those that weremost exposed to downgrade. We constantly

review the sector allocations, and within those, take the opportunity to

trade out of individual names to stay ahead of credit rating agency

actions, whilstmaintaining diversification. From a sector perspective,

themainrotational dierence during 2020 was an increase in utilities,

infrastructure and commercial mortgages and reduced exposure to banks

and basic materials. At 31 December 2020, the Group’s holding in liquidity

funds was in line with expectations, as the Group invested its excess year

end cash balances into corporate bonds and other fixed income assets,

atattractive credit spreads. Combined with an opportunity to improve

duration matching in 2020 following the LTM notes restructuring in

Q42019, new investments in alternative asset classes and proactive

management of the Group’s bond portfolio led to a net positive

contribution of £46m to Solvency II surplus.

31SRTGC RPR

Environmental, Social and Governance and investing

Just Group is a signatory to the United Nations Principles for Responsible

Investment (“PRI”). We were the first UK insurer to do this.Just Group has

also been a constituent of the FTSE4Good Index Series since December

2019. The index is designed to measure the performance of companies

demonstrating strong ESG practices. During the 12 months to

31 December 2020, the Group increased its investments in dedicated

green and social investments to £1,138m, representing 8.8% of the bond

portfolio (2019: 6.6% of the bond portfolio). This proportion does not

include the Group’s substantial investment in lifetime mortgages, which

help customers achieve a better later life, through releasing equity tied

upin their home. In making investment decisions, sustainable investing

principles are formally embedded within our processes, as set out in our

Sustainable Investment Framework approved by the Board, and which is

available on our website www.justgroupplc.co.uk.

In October 2020, Just Group became the first UK and the fifth European

insurer to issue a Green Bond. The Group received a second partyopinion

as part of the bond accreditation process, and hascommittedto investing

the bond proceeds in eligible green investmentassets, focusing on

renewable energy, green buildings andclean transportation.

Reinsurance assets

Reinsurance assets decreased to £3.1bn at 31 December 2020 (2019:

£3.9bn). The decrease relates to the reinsurance recaptures made

during2020, oset by new reinsurance arrangements entered into for

DBpartnering (see reinsurance recapture section above). Since the

introduction of Solvency II in 2016, the Group has increased its use of

reinsurance swaps rather than quota share treaties. (Note that the 2019

comparative figures have been restated to correct for presentation of

reinsurance liabilities included within this line item, see section in

reinsurance liabilities below, and note 2 for further details).

Other assets

Other assets mainly comprise cash and cash equivalents, and intangible

assets. During 2020 the Group has significantly increased the amount of

assets held in cash and cash equivalents so as to increase protection

against liquidity stresses, such as those experienced in Q1 of 2020 as an

initial market reaction to the COVID-19 pandemic.

Insurance liabilities

Insurance liabilities increased to £21.1bn at 31 December 2020 (2019:

£19.0bn). The increase in liabilities arose mainly as a result of new

insurance business written less claims paid and the impact of changes to

the valuation rate of interest over the period.

Reinsurance liabilities

Reinsurance liabilities relate to liability balances in respect of the Group’s

longevity swap arrangements. These liability balances were previously

included within the reinsurance assets balance. (A prior period

restatement has been made to present these within the liability side of

the balance sheet; further details of this adjustment are given in note 2).

Other financial liabilities

Other financial liabilities decreased to £3.3bn at 31 December 2020 (2019:

£3.7bn). These liabilities mainly relate to deposits received from reinsurers,

together with derivative liabilities and cash collateral received. The

reduction from the prior year relates to the reinsurance recaptures in 2020.

Other liabilities

Other liability balances increased to £900.8m at 31 December 2020 (2019:

£817.6m). The Group’s loans and borrowings increased by c.£110m as a

result of the issuance of the green Tier 2 bond in October 2020, oset by

a£75m Tier 3 tender and the call of the remaining amount of the PLACL

bond in March 2020. This increase has been oset by decreases in other

liability balances, including in relation to corporation tax for which there

isno longer any liability at the year end (2019: £10.2m liability) due to

changes to the quarterly payment regime in 2020 whereby corporation

tax payments are made in full by the end of the year.

IFRS net assets

The Group’s total equity at 31 December 2020 was £2,490.4m, compared

to £2,321.0m at 31 December 2019. Total equity includes the Restricted

Tier 1 notes of £294m (after issue costs) issued by the Group in March

2019. Total equity attributable to ordinary shareholders increased from

£2,027.8m to £2,198.3m resulting in net asset value (“NAV”) per ordinary

share of 212p (2019: 196p).

DIVIDENDS

Whilst the Group has made significant progress to build its capital base

toaccommodate the regulations on equity release mortgages and to

start to grow its underlying capital generation, the external environment

as weemerge from the pandemic continues to be uncertain. The Board

therefore considers that it would not be appropriate to recommend

recommencing dividend payments (total 2019 dividend: nil).

ANDY PARSONS

Group Chief Financial Ocer

32 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Risk management

Embedding governance via three lines of defence

1st LINE

2ND LINE

business operations

The first level of the control environment

isthe business operations which perform

day-to-day risk management activity

Risk & Control

• An established risk

andcontrolenvironment

oversight functions

Oversight functions in the Company,

suchasRisk Management, Compliance

andChiefActuary, support the Board in

settingrisk appetite and defining risk and

compliance policy

Risk & Control

• Oversight of the risk and control environment

• Independent challenge and reporting on

therisk profile and conduct of the business

• Monitoring actions being taken to

mitigaterisk

The Group’s enterprise-wide

riskmanagement strategy

istoenable all colleagues to

takemore eective business

decisions through a better

understanding of risk

PURPOSE

We use risk management to make better informed business decisions

that generate value for shareholders while delivering appropriate

outcomes for our customers and providing confidence to other

stakeholders. Our risk management processes are designed to ensure

that our understanding of risk underpins how we run the business.

RISK FRAMEWORK

Our risk management framework is continually developing to reflect

ourrisk environment and emerging best practice. The framework,

ownedby the Group Board, covers all aspects of risk management,

including risk governance, reporting and policies. Our appetite for

dierenttypes of risk is embedded across the business to create a

cultureof confident risk taking.

RISK EVALUATION AND REPORTING

We evaluate our principal and emerging risks and decide how best

tomanage them within our risk appetite. Management regularly reviews

its risks and produces reports to provide assurance that material risks

inthe business are being appropriately mitigated. The Risk function, led

bythe Group Chief Risk Ocer (“GCRO”), challenges the management

team on the eectiveness of its risk evaluation andmitigation. The

GCROprovides the Group Risk and Compliance Committee (“GRCC”)

withhisindependent assessment of the principal and emerging risks

tothebusiness.

33SRTGC RPR

VIABILITY STATEMENT

The Directors confirm that they have a reasonable expectation that

theGroup will continue in operation and meet its liabilities, as they

falldue, over the next five years. The Directors have carried out a

robustassessment of the principal risks facing the Group, including

thosethat could threaten its business model, future performance,

solvency orliquidity, and make this assessment with reference to therisk

appetite of the Board and the processes and controls in place to mitigate

the principal risks and uncertainties as detailed in the Strategic Report,

including risks from the COVID-19 pandemic, from the UK’s withdrawal

from theEuropean Union and regulatory intervention.

The Directors have also assessed the impact of complying with the

updated regulatory expectations set out in SS3/17 “Solvency II: matching

adjustment – illiquid unrated assets and equity release mortgages”

andPS19/19 “Solvency II: Equity release mortgages – Part 2”, which

willbefully phased in by the end of 2021. The impact of meeting these

updatedregulatory expectations is included in the Group plan approved

by the Board.

The Board has considered the ability of the Group to continue to write

theanticipated levels of new business over the next five years and

theassociated capital requirements in order to write that level of new

business. The Group has raised additional capital during 2020 through

theissue of £250m Tier 2 capital (before issue costs), £75m of which was

used to tender for part of the Group’s Tier 3 loan notes. The Group has

alsocontinued to take steps to improve its capital eciency during 2020,

including increasing the level of reinsurance for GIfl contracts, launching

new more capital-ecient products, additional no-negative equity

guarantee (“NNEG”) hedging and the sale of a portion of our lifetime

mortgages portfolio to further protect against UK residential property risk;

reduction in new business volumes and cost saving initiatives. The Group

plans to continue to strengthen its capital position in order to support the

new business franchise overthe next five years, through organic capital

generation and through further steps to de-risk the balance sheet.

The Group undertakes stress and scenario testing to consider the

Group’scapacity torespond to a series of relevant financial, insurance,

oroperational shocks or changes to financial regulations should future

circumstances or events dier fromcurrent assumptions. Such testing

includes assessment of the impact of a property price shock on the Group,

given that the Group holds a significant proportion of its assets in Lifetime

Mortgages. The review alsoconsiders mitigating actions available to the

Group should a severe stress scenario occur, such as raising further capital,

varying thevolumes of new business written and a scenario where the

Group ceases to write new business. In particular, if adequate capital is not

available to fund continued writing of material levels of new business, the

scope of the Group’s business would change. In that case, even if the

Group ceases to write new business, the Group would still be viable,

although as a Group managing its existing book of business in run-o.

The Directors note that the Group is subject to the Prudential Regulatory

Regime for Insurance Groups which monitors the Group’s compliance

withSolvency Capital Requirements. Given the inherent uncertainty

whichincreases as longer time frames are considered, the Directors

consider five years to be an appropriate time frame upon which they can

report with a reasonable degree of confidence. A five year time frame

hasbeen selected for thisstatement, although the Group, as with any

insurance group, has policyholder liabilities in excess of five years and

therefore performs its modelling and stress and scenario testing on time

frames extending to the expected settlement of these liabilities, with

results reported in the Group’s ORSA. The Directors have no reason to

believe that the Group will not be viable over a longer period.

3RD LINE

Independent assurance

Internal Audit is the third lineof defence,

oering independent challenge to the levels

ofassurance provided by business operations

and oversight functions

Risk & Control

• Provide independent challenge

andassurance

Financial risk modelling is used to assess the amount of each risk

typeagainst our capital risk appetite. This modelling is principally aligned

toour regulatory capital metrics. This modelling allows the Board

tounderstand both the risks included in the Solvency Capital Requirement

(“SCR”), and how they translate into regulatory capital needs, and those

not included in the SCR, such as liquidity risks. Byapplying stress and

scenario testing, we gain insights into how risksmight impact the Group

indierent circumstances.

OWN RISK AND SOLVENCY ASSESSMENT

The Group’s Own Risk and Solvency Assessment (“ORSA”) embeds

comprehensive risk reviews into our Group management processes.

Ourannual ORSA report is a key part of our business cycle and informs

strategic decision making. ORSA updates are prepared each quarter to

keep the Board appraised of the Group’s evolving risk profile.

34 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

RISK

DESCRIPTION

AND IMPACT

MITIGATION AND

MANAGEMENT ACTION

RISK A

RISKS FROM

REGULATORY

CHANGES AND

SUPERVISION

Strategic objective

1. 3. 4. 5.

1.

Change in the year

Risk outlook

The financial services industry continues to see a high level of

regulatory activity and intense regulatory supervision. This is shown in

the 2020/21 Prudential Regulation Authority (“PRA”) and Financial

Conduct Authority (“FCA”) Business Plans. This was also highlighted as

a result of regulatory activity relating to the COVID-19 pandemic and

the impact on financial services.

The PRA published PS19/19, which follows on from PS31/18, both of

which updated SS3/17 in respect of the valuation of no-negative

equity guarantees (“NNEG”) in equity release mortgages (“ERMs”). The

PRA’s proposals took eect on 31 December 2019, subject to a two

year phase-in period. The actions Just have taken have led to a

reduction in the Matching Adjustment (“MA”) available from ERMs and

a consequential increase in the costs of the NNEG, partially oset by

an increase in TMTP. Just has also taken action to review its ERM

investment limits, given the change in MA.

There has been significant academic and market debate concerning

the methodology and models for valuation of no-negative equity

guarantees. The approach used by the Group is in line with common

industry practice.

The PRA has published PS14/20 and SS1/20 which confirms their

expectations of firms’ compliance to the Prudent Person Principle with

regard to managing investment risk. The proposals took eect on

27 May 2020. The PRA has heightened their focus on the use of illiquid

assets as insurers expand asset allocations in this area, clarifying the

regulatory expectations of qualitative and quantitative assessments.

The Group has extensively reviewed and is further enhancing its

investment strategy, including taking steps to significantly reduce

exposure to property risk through LTMs.

In 2019 the PRA published PS11/19 and SS3/19 requiring firms to set

out plans for identifying and managing financial risks from climate

change. In July 2020 the PRA issued afollow up “Dear CEO” letter

requiring firms to have fully implemented these plans by the end of

2021. The FCA published PS20/17 in December 2020 which sets out

that premium-listed firms (which includes Just Group plc) are

expected to comply with the recommendations of the Financial

Stability Board’s Taskforce on Climate-Related Financial Disclosures

(“TCFD”). Climate change could aect Just Group’s financial risks in

two ways: (i) transitional risk – the increased consideration of

sustainability in investment decisions may restrict investment choice,

including in properties; it may also create new opportunities to invest

in assets that are perceived to be more sustainable; and (ii) increased

physical risks such as flooding, due to severe rainfall or tidal surges, or

heatwaves leading to increased subsidence, which may aect the

value of properties not seen as having such an exposure at present. A

fall in property values could aect our ability to recover the full

balances of lifetime mortgages as a result of the NNEG.

The PRA and FCA have issued several consultation papers on new

requirements to strengthen operational resilience in the financial

services sector. This is a key priority for the regulators. Just Group is

currently aligning its approach to the regulators’ expectations ahead

of the implementation deadline expected to be the end 2021.

The FCAs Mortgage Intermediaries Portfolio Strategy and Lifetime

Mortgage Providers Letters (published in October 2020 and November

2020 respectively), set out a programme of work which the FCA are

undertaking to assess whether firms and their senior managers are

taking reasonable steps to mitigate the risk of harm to customers

and/or remedy harms that have occurred. Just has reviewed the

implications of the letters and no significant gaps have been identified.

There is a potential risk to the reputation of the overall LTM market.

The risk-free rate used for valuing liabilities will be updated from

31 July 2021 to reference SONIA as opposed to LIBOR. Any dierence

between the risk-free curves on this date will have an impact on

excess own funds.

Given that the Group continues to experience a high level of regulatory

activity and intense regulatory supervision, there is also the risk of PRA

intervention, not limited to the matters described in the paragraphs

above, which could negatively impact on the Group’s capital position.

We monitor and assess regulatory developments on

anon-going basis. We actively seek to participate in all

regulatory initiatives which may aect or provide future

opportunities for the Group. Our aims are to implement any

required changes eectively, and to deliver better outcomes

for our customers and competitive advantage for the business.

We develop our strategy by giving consideration to planned

political and regulatory developments and allow for

contingencies should outcomes dier from our expectations.

The Group also keeps under regular review the possible need

to reduce new business volumes or close to new business.

A key focus for the Group has been to address the

expectations of the updates to SS3/17, whilst maintaining the

confidence of our stakeholders.

During 2020 we have completed two further NNEG hedges,

sold a portfolio of LTMs and increased GIfL longevity

reinsurance; this improved the Group’s solvency capital

position and reduced the sensitivity of the solvency balance

sheet to UK house prices.

Subject to the outcome of HMT’s review of Solvency II

launched this autumn, it is anticipated that the UK’s

withdrawal from theEU will have limited direct impact on the

Group from a regulatory change perspective due to the

on-shoring of existing EU regulatory framework into UK law.

Whilst a trade deal was agreed between the UK and the EU

before the end of the transition period, this does not address

the specific issue of UK insurers continuing payments to EU/

EEA resident customers from 1 January 2021. However,

following engagement with EU/EEA regulators over the past

12-18 months, permanent or interim solutions are in place in

jurisdictions where material numbers of our customers reside.

Just will continue to engage with national regulators as

required to ensure any further measures to allow payments to

policyholders to continue are completed.

HMT are undertaking a review of the future regulatory

framework in the UK post-Brexit. This covers the general

regulatory framework and roles of the UK regulators as well as

a review specifically focused on adapting Solvency II to fit the

UK insurance market. Just are currently reviewing the potential

implications and opportunities these reviews present.

Just has an approved partial internal model to calculate the

Group Solvency Capital Requirement, which it reviews for

continued appropriateness. Just’s regulatory priorities include

a major model change application forJRL’s internal model,

expected to be submitted in 2021 as well as agreeing the

satisfactory regulatory treatment for the NNEG risk transfer

transactions already completed.

Further actions to reduce our balance sheet sensitivity to UK

property prices and the amount of capital we have to hold for

LTMs continues to be a key focus, with a range of actions being

explored to build on the NNEG hedging and LTM portfolio sale

transactions completed to date. We intend to continue to

actively monitor the academic and market debate concerning

the valuation of no-negative equity guarantees.

Just is enhancing its ESG approach in its investment strategy

as set out in the sustainable investment framework in Just’s

Green Bond documentation. We have identified the potential

impacts of climate change on the Group’s financial risks and

are developing stress testing capabilities to further improve

monitoring of the potential impact of climate change on our

investment and equity release portfolios. The Group’s risk

management framework is being developed to accommodate

and report on climate risks and appropriate disclosures in line

with TCFD recommendations.

Principal risks and uncertainties

35SRTGC RPR

RISK OUTLOOK

 No Change/Stable

 Increasing

 Decreasing

STRATEGIC OBJECTIVES

BE PROUD TO

WORK AT JUST

GENERATE GROWTH

IN NEW MARKETS

GET CLOSER TO OUR

CUSTOMERS & PARTNERS

TRANSFORM

HOW WE WORK

IMPROVE OUR

CAPITAL POSITION

RISK

DESCRIPTION

AND IMPACT

MITIGATION AND

MANAGEMENT ACTION

RISK B

RISKS FROM

THE ECONOMIC

ENVIRONMENT

Strategic objective

1. 3. 4. 5.1.

Change in the year

Risk outlook

The premiums paid by the Group’s customers are invested to enable

future benefits to be paid when expected with a high degree of

certainty. The economic environment and financial market conditions

have a significant influence on the value of assets and liabilities and

on the income the Group receives. A further deterioration in the

economic environment (resulting, for example, from further

outbreaksof COVID-19) could impact on the availability and

attractiveness of certain securities and could increase the risk of credit

downgrades and defaults in our corporate bond portfolio.

There remains a lack of clarity regarding the UK’s future trading

arrangements with the EU for financial services which could

negatively impact the UK economy. The Group remains exposed to

impacts that the UK’s withdrawal has on the UK economy as a whole,

including residential house prices, which could stagnate or fall.

A fall in residential property values, as a result of the COVID-19

pandemic for example, could reduce the amounts received from

equity release redemptions and may also aect the relative

attractiveness of the equity release product to customers. The

regulatory capital needed to support the possible shortfall on the

redemption of equity release mortgages also increases if property

values drop. Conversely, significant future rises in property values

could increase the incidence of early mortgage redemptions, leading

to an earlier receipt of anticipated cash flows with the consequential

reinvestment risk.

It is possible that the Bank of England could employ negative interest

rates as a policy tool to stimulate the economy. It is not clear what

eect this would have on customer behaviour or on the market for

credit investments or lifetime mortgages.

Most defined benefit pension schemes link member benefits to

inflation through indexation. As the Group’s defined benefit de-risking

business volumes grow, its exposure to inflation risk increases.

Market risks may aect the liquidity position of the Group by, for

example, having to realise assets to meet liabilities during stressed

market conditions or to service collateral requirements due to the

changes in market value of financial derivatives. A lack of market

liquidity is also a riskto any need that the Group may have to

raisecapital.

Economic conditions are actively monitored and alternative

scenarios modelled to better understand the potential

impacts of significant economic changes on the amount

ofcapital required to be held to cover risks, and to inform

management action plans. The Group’s strategy is to buy and

hold high-quality, lower-risk assets in its investment portfolio

to ensure that it has sucient income to meet outgoings as

they fall due. Portfolio credit risk is managed by a combination

of Just’s internal investment team and specialist external fund

managers, overseen by Just’s own credit specialists, executing

a diversified investment strategy in investment grade assets

within counterparty limits.

In a low interest rate environment, improved returns are

sought by diversifying the types, geographies and industry

sectors and classes of investment assets. Such diversification

creates exposures to foreign exchange risk, which is controlled

using derivative instruments. Derivative instruments are also

used to reduce exposures to interest rate volatility. The credit

exposure to the counterparties with whom we transact these

instruments is mitigated by collateral arrangements.

While the Group’s capital models accommodate negative

interest rates, there is no historical data to validate their

behaviour in such an environment.

The Group’s exposure to inflation risk through the defined

benefit de-risking business is managed with inflation hedges.

Liquidity risk is managed by ensuring that assets of a suitable

maturity and marketability are held to meet liabilities as they

fall due. Sucient liquid assets are maintained so the Group

can readily access the cash it needs should business cash

inflows unexpectedly reduce.

There can be some short-term volatility in the Group’s cash

flows, which is a consequence of Just’s derivative hedging.

Regular cash flow forecasts predict liquidity levels over both

the short term and long term and stress tests help us

understand any potential periods of strain. Following the

extreme market volatility in March and April 2020, Just

amended its ultra (onemonth or less) short-term liquidity

requirements to be cashand cash equivalents only, and to

keep reserves to cover the worst stresses that have occurred.

The Group’s liquidity requirements have been met over the

past year and forecasting confirms that this position can

reasonably be expected to continue for both investments and

business operations.

1. 1. 1. 5.1.

36 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Principal risks and uncertainties continued

RISK

DESCRIPTION

AND IMPACT

MITIGATION AND

MANAGEMENT ACTION

RISK C

RISKS FROM

OUR PRICING AND

REINSURANCE

Strategic objective

1. 3. 4. 5.1.

Change in the year

Risk outlook

Writing long-term DB de-risking, GIfL and equity release

business requires a range of assumptions to be made based on

market data and historical experience, including customers’

longevity, corporate bond yields, interest and inflation rates,

property values and expenses. These assumptions are applied

to the calculation of the reserves needed for future liabilities and

solvency margins using recognised actuarial approaches.

Experience may dier materially from the Group’s assumptions

on these risk factors, requiring them to be recalibrated. This

could aect the level of reserves needed, with an impact on

profitability and the Group’s solvency position.

To manage the risk of our longevity assumptions being

incorrect, the Group has the benefit of its extensive

underwritten mortality data, as well as external mortality data

sets, to provide insights and enhanced understanding of the

longevity risks that the Group chooses to take.

The Group has monitored experience following the outbreak of

COVID-19 and systematically reviewed external evidence

related to the potential impact onassumptions. The Group

continues to analyse possible direct and indirect impacts of the

pandemic, including the possibility of an enduring eect on the

longevity of customers.

Longevity and other decrement experience is analysed to identify

any outcomes materially dierent from our assumptions and is

used for the regular review of the reserving assumptions for all

products.

A significant proportion of longevity risk exposure is transferred to

reinsurers. The Group performs due diligence on our reinsurance

partners and they undertake due diligence on the Group’s

approach to risk selection. The Group monitors its exposure to

reinsurers on an on-going basis. Exposure is partially mitigated

through the posting and receipt of collateral into third party trusts

or similar security arrangements, or the deposit of premiums back

to the Group, and is managed within the Group risk appetite limit.

The Group measures its counterparty exposure as the change in

excess own funds above Solvency II SCR from a default of each

individual counterparty combined simultaneously with both

longevity and market stresses. The measures used include the

change immediately upon default and after the Group has

re-established cover. The Group’s exposure to individual

counterparties is subject to limits set by the Board.

For equity release, the Group underwrites the properties against

which it lends using valuations from expert third parties. The

Group’s property risk is controlled by limits to the initial loan-to-

property value ratio, supported by product design features, limiting

specific property types and exposure to each region. We also

monitor the exposure to adverse house price movements and the

accuracy of our indexed valuations.

RS D

RISKS ARISING FROM

OPERATIONAL

PROCESSES AND IT

SYSTEMS

Strategic objective

1. 3. 4. 5.1.

Change in the year

Risk outlook

The Group relies on its operational processes and IT systems to

conduct its business, including the pricing and sale of its

products, measuring and monitoring its underwriting liabilities,

processing applications and delivering customer service and

maintaining accurate records. These processes and systems

may not operate as expected, may not fulfil their intended

purpose or may be damaged or interrupted by human error,

unauthorised access, natural disaster or similarly disruptive

events. Any failure of the Group’s IT and communications

systems and/or third party infrastructure on whichit relies could

lead to costs and disruptions that could adversely aect its

business as well as harm its reputation.

Large organisations continue to be targets for cyber-crime,

particularly those organisations that hold customers’ personal

details and have implemented remote working arrangements

for sta. The Group is no exception and a cyber-attack could

aect customer confidence, or lead to financial losses.

The Group maintains plans and controls to minimise the risk of

business disruption due to information security or resilience

related events including civil unrest and pandemics. Detailed

incident and crisis management plans exist to ensure eective

responses, and these are supported by specialist third parties,

including remote data centres. Protecting our customers’ interests

is our top priority. Agile working arrangements enable the Group to

protect customers, sta and business partners from operational

shocks, ensuring that no one experiences any material detriment.

A formal but flexible resilience framework, supplemented by our

modern working capabilities, enables Group continuity of service.

Just’s ability to remain operational is dependent upon a resilient

technology platform, which allows usto switch our business from a

central to a remote operating model. Risks associated with remote

working have been assessed and addressed on an on-going basis.

Privacy by design and sta awareness of their responsibilities

underpins our commitment to protecting our customers’ data.

Strong data protection controls support this philosophy, with all

sta trained in data handling and the high standards that are

expected to protect it. We operate a Group-wide network of Data

Protection Champions topromote awareness, good practice and

identify improvements within their teams.

To support this commitment, the Group invests in tools to help

identify, manage and report on data and cyber threats, including

tools to monitor user access to sensitive data sets and the

movement of data across the network.

Using artificial intelligence and machine learning, these tools

provide early warning of suspicious activity on IT systems.

In 2020 the Group continued to spend on market leading products

to protect a mobile workforce and to complete our multi-layered

approach to information security. Further investment has been

made on core infrastructure to help support the transition to

remote and future hybrid working models.

37SRTGC RPR

RISK

DESCRIPTION

AND IMPACT

MITIGATION AND

MANAGEMENT ACTION

RISK E

RISKS FROM OUR

CHOSEN MARKET

ENVIRONMENT

Strategic objective

1. 3. 4. 5.1.

Change in the year

Risk outlook

The Group operates in a market where changes in pensions

legislation can have a considerable eect on our strategy and

could reduce our sales and profitability or require us to hold

more capital.

Markets have been disrupted by the COVID-19 pandemic; the full

market impact will not be fully clear for some time. Investment

volatility has emphasised the benefit of a secure income in

retirement for customers and the Group expects that demand

for Guaranteed Income for Life solutions will continue.

The defined benefit de-risking market is expected tocontinue to

grow strongly.

The equity release market has been dominated by alimited

number of specialist providers, but new entrants– both

providers and funders – have emerged along with new product

launches. The market was significantly disrupted by the

COVID-19 pandemic; providers, distributors, solicitors,

conveyancers and valuers have adapted processes to continue

to serve customers safely. House price growth observed in the

second half of 2020 is expected to slow in 2021, which may

impact appetite for equity release.

Customer needs and expectations continue to evolve and

change in profile, and there is a risk that we fail tocustomise

and tailor our professional services and distribution models to

suit their specific requirements. Poor management of customer

or distributor relationships as well as misleading customers or

misrepresenting products to customers are also risks which

could lead to regulatory censure as well as loss ofcustomers.

Our approach to legislative change is to participate actively and

engage with policymakers.

The Group oers a range of retirement options, allowing it to

remain agile in this changing environment, and has flexed its

oerings in response to market dynamics. We believe we are well

placed to adapt to changing customer demand, supported by

ourbrand promise, innovation credentials and financial strength.

The most influential factors in the successful delivery of the

Group’s plans are closely monitored to help inform the business.

The factors include market forecasts and market share, supported

by insights into customer and competitor behaviour.

Work continues to improve the customer appeal of the Group’s

equity release products, explore new product variants and meet

distributors’ digital and service needs.

We continue to review and enhance our services to ensure they

remain fully compliant, demonstrate best practices and deliver

good customer outcomes. During the COVID-19 pandemic,

allservices were quick to adapt and continued to provide

customers with products and services in our chosen markets. Any

required operational changes received rigorous review ahead of

implementation to ensure robust customer controls remained.

At the start of 2020 we launched a new, pioneering and exciting

fully advised online financial planning service, “Destination

Retirement”, targeted at people close to or in retirement with

modest pension savings. The service provides the opportunity

toreceive tailor-made regulated financial advice without paying

the costs associated with a traditional financial adviser. Following

this launch, we successfully joined the FCA’s regulatory sandbox as

part of our on-going close engagement with the regulator.

The defined benefit pension transfer advice market has remained

under close regulatory scrutiny through the year. We continue

tooperate in this market, demonstrating the high advice standards

expected.

RISK F

RISKS TO THE

GROUP’S BRAND

ANDREPUTATION

Strategic objective

1. 3. 4. 5.1.

Change in the year

Risk outlook

Our purpose is to help people achieve a better later life.Our

Group’s brands reflect the way we intend to conduct our

business and treat our customers and widerstakeholder groups.

The Group’s reputation could be damaged if the Group is

perceived to be acting, even unintentionally, below the

standards we set for ourselves. This could include, for example,

failing to achieve the goals we have set for enhancing our

sustainability framework. Additionally, the Group’s reputation

could be threatened by external risks such as a cyber-attack

orregulatory intervention or enforcement action, eitherdirectly

or as a result of contagion from other companies in the sectors

in which we operate.

Damage to our reputation may adversely aect our underlying

profitability, through reducing sales volumes, restricting access

to distribution channels and attracting increased regulatory

scrutiny.

The Group actively seeks to dierentiate its business from

competitors by investing in brand-enhancing activities. Fairness

tocustomers and high service standards are at the heart of the

Justbrand, and we encourage our colleagues to take pride in the

quality of service they provide. Engaging our colleagues in the Just

brand and its associated values has been, and remains, a critical

part of our internal activity. Just is proactive in pursuing its

sustainability responsibilities and recognises the importance of its

social purpose. The Group maintains a system of internal control,

and associated policies and operational procedures, which define

the standards we expect of all colleagues.

RISK OUTLOOK

 No Change/Stable

 Increasing

 Decreasing

STRATEGIC OBJECTIVES

BE PROUD TO

WORK AT JUST

GENERATE GROWTH

IN NEW MARKETS

GET CLOSER TO OUR

CUSTOMERS & PARTNERS

TRANSFORM

HOW WE WORK

IMPROVE OUR

CAPITAL POSITION

1. 1. 1. 5.1.

38 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

environment

We have an important role in helping the

worldtransition towards a sustainable

environment and low carbon global economy

MODERNISING OUR WORKPLACE, SUPPORTING OUR COLLEAGUES AND

CUSTOMERS, AND RECOGNISING OUR RESPONSIBILITY TO SOCIETY

BYREDUCING OUR IMPACT ON THE ENVIRONMENT

We accelerated our investment to create a modern and sustainable

workplace, equipping all our colleagues across the Group with improved

technology, improving our infrastructure and security so we could

provideresilient remote working capabilities. Our progress towards

attaining a complete modern workplace provides opportunities to use

ourbuildings more eciently, make additional reductions to our property

footprint andcontinue to improve energy eciency to further reduce our

environmental impact. Digitising and optimising processes has reduced

our paper usage and helped us better serve our vulnerable customerbase.

The actions we took to reduce our property footprint in 2019 and our

decision this year to switch our electricity at our head oce to a 100%

renewable tari, has resulted in our Scope 1 and 2 (gas and electricity)

emissions reducing by 69% whilst remaining fully operational across

allsites. We have commissioned a further energy audit to identify

additional areas of improvement. We’ve used technology to digitise

processes which has allowed us to scale back our business travel and

significantly improve our Scope 3 position.

Greater levels of engagement with our colleagues has occurred via

focused workshops to elicit ideas and future participation in our modern

workplace improvement programmes.

We recognise environmental impact and climate change among the

keyrisks to our business and society and the impact it has on economic

stability, ecology and vulnerable communities. We are committed to

making positive changes in how we operate our businessto reduce our

impact on the environment.

We have reported on all of the emission sources required under

TheCompanies (Directors’ Report) and Limited Liability Partnerships

(Energy and Carbon Report) Regulations 2018, which includes the

Streamlined Energy and Carbon Reporting (“SECR”) requirements.

Thesesources fall within our Annual Report.

FOUNDATIONS

FOR A

SUSTAINABLE

FUTURE

We accelerated the investment

in our modern workplace to help

our colleagues respond to the

COVID-19 pandemic and bring

forward the positive impact of

emission reductions, which in

total fell by 75% during2020

1

1 Does not include any allowance for carbon emissions generated by colleagues working from

home during this period.

39SRTGC RPR

GHG EMISSIONS DATA

Tonnes of CO

2

e (tCO

2

e)

Year ended

31 December

2020

Year ended

31 December

2019

Scope 1 – Gas consumption 97 144

Scope 2 – Purchased electricity 125 579

Scope 3 – Business travel 170 824

Total emissions 392 1,547

Intensity measurement

“tCO

2

e per full time employee” 0.36 1.42

Intensity measurement

“tCO

2

e per £m gross premiums written” 0.18 0.81

1. Approach

We have used the GHG Protocol Corporate Accounting and Reporting

Standard (revised edition), and emission factors from the UK Government’s

GHG Conversion Factors for Company Reporting Standard Set 2020.

2. Organisational boundary

We have used the financial control approach to identify the GHG

emissions for which Just Group have responsibility. The boundaries of

thereported emissions comprise oce and building related emissions

ofour directly owned and leased oces, including business travel,

covering car, train and flights (long haul and domestic).

3. Operational scopes

We have identified and measured our Scope 1 and 2 emissions, and

significant Scope 3 emissions.

4. Targets

We are setting short, medium and long-term climate change targets to

reduce our impact on the environment. These are set in accordance with

the Sustainable Development Goals (“SDG’s”) and ESOS objectives.

5. Intensity measurement

We use both a financial emissions intensity metric (tonnes of CO

2

e per

£mgross premiums written) and an employee intensity metric (tonnes

ofCO

2

e per employee) to normalise our data and provide useful

performance indicators.

6. Approach to assurance

Alphacello Ltd conduct an annual review of Just Group plc’s data collation

and calculation processes and provide verification of their GHG Emissions

Statement.

1. Carbon osets

At present, carbon osets do not form part of our carbon mitigation

strategy. We have commissioned a sustainability audit to identify

energy-saving initiatives throughout our buildings. We have switched

toa100% renewable electricity tari for our head oce campus.

DIGITAL JOURNEY

We are transforming the way

we work to provide the tools

and techniques that empower

our colleagues to adopt modern

flexible working practices, digitising

our processes and reducing paper

consumption. We will strive to

use technological expertise to

help improve energy eciency

in our buildings, enabling sound

building management practices.

SUSTAINABLE OPERATIONS

It is imperative that we

conduct business eciently.

Our internal energy-saving

programme supports the

principles of sustainable

operations and aims to improve

the environmental performance

of our oces and facilities.

ENVIRONMENTAL AWARENESS

We promote environmental

awareness across the Group,

actively encouraging colleague

participation in contributing to

a sustainable workplace. Our

environmental focus includes

recycling, conserving resources

and preventing pollution. Our

operational planning and

processes take into account

environmental considerations

such as energy consumption,

travel emissions and ecient

use of oce space.

ENVIRONMENTAL GOVERNANCE

We are committed to continual

improvement, delivering an

environmental programme with

robust policies, procedures,

governance and reporting.

CARBON FOOTPRINT down

1

75

%

392 tonnes of CO

2

e (2019: 1,547 tonnes of CO

2

e)

40 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

We entered 2020 with a focus on three

strategic people priorities to enable the

delivery of the Group’s strategy

demonstrating

resilience,

Maintaining

productivity,

Strengthening

culture

FOCUS AREAS

1.

Building our

organisational

resilience

2.

Strengthening

our talent

and capabilities

3.

Ensuring colleagues

feel proud to work

at Just

The frequency and warmth

of the communication from

the top was exceptional.

It made me proud to work here

Colleague comment from a

“ways of working” focus group session

Colleagues and culture

41SRTGC RPR

I THINK THAT JUST

HAS SHOWN A GENUINE

INTEREST IN THE HEALTH

AND WELLBEING OF STAFF

COLLEAGUE COMMENT FROM PULSE

SURVEY

By the end of March, and in light of COVID-19, 99% of our colleagues

wereworking remotely, a significant transition for a predominantly

oce-based organisation. We were able to provide colleagues withnew

technology and other equipment to enable them to work productively

within a two to three week period. Maintaining resilience, our teams

delivered allcritical services to customers, whilst implementing changes

to servicedesign and product features to help customers– particularly

our vulnerable ones – navigate the impact of lockdown. You can read how

wehelped our customers on page 21.

During the following nine months we increased our focus in five areas

critical to continue to support our people and deliver our Group-wide

strategy. These remained aligned to our three strategic people priorities.

“Turning up the dial” allowed us to take people challenges and turn them

into great opportunities to successfully engage and develop colleagues

inways that we would not have envisaged 12months previously.

In January 2021 we took part in the annual Best Companies survey and as

a result of this focus, we were delighted to achieve our highest level of

employee engagement since starting to take part in the survey in 2009.

INCREASED LEADERSHIP COMMUNICATION AND DEVELOPMENT

Having entered the year with good levels of employee engagement, we

already had an established programme of non-executive and executive

leadership communication and engagement activities in place. See page

48 for more details on theBoard’s approach to colleague engagement.

We have been accredited as a 2 star organisation (representing

outstanding levels ofengagement) via the Best Companies index. We

achieved a 7% increase in our Best Companies score in comparison to

2019 and had an 86% response rate. We also held three pulse

engagement surveys highlighting extremely positive results, with an

average response rate of approximately 650 colleagues.

As well as increasing the volume and channels used for leadership

communication, in particular with a greater use of video, we also focused

on ensuring that our messages clearly addressed issues that were

important to colleagues in a clear and transparent way. Our quarterly

colleague town halls were delivered remotely, with 91% of respondents

who completed October’s short internal pulse survey agreeing that they

found them valuable. Through the same survey mechanism, we also

sawa significant increase in colleague advocacy, with the number of

colleagues agreeing that they would recommend working at the

Company to friends and family reaching 85%.

During 2020 we held four CEO town halls to provide business updates

andpromote two-way communication, with an average attendance

ofapproximately 700 colleagues. We also held three Conversations

with theBoard sessions for colleagues’ views to feed into Board

decision making, with approximately 250 attendees in total.

We continued to invest in the development of our leadership population,

migrating our quarterly “osites” and our leadership development

programme – “Just Lead” – toa virtual solution. As part of our focus on

building organisational resilience, we delivered a “Resilient Leader”

programme for our 50 most senior leaders. The programme was part of

our commitment to equipping our leaders with the psychological

knowledge and skills to optimise their own wellbeing and performance

and to help them promote the resilience and health of their teams.

60 managers took part in our core leadership and management

development programmes (Just Lead and Just Engage) across seven

cohorts, all delivered virtually. We also updated succession plans to

keyleadership (including executive) and technical roles – identifying

emergency cover, near-term and longer-term successors.

FACILITATING COLLEAGUES TO STAY CONNECTED

At the end of March we introduced “Just Connected” emails, with content

supplied by colleagues, to share across the organisation. Thisprovided a

more personal style of communication and oered glimpses into people’s

lives – from how they were coping with the challenges of home schooling

and structuring their work days, throughto their views on Black Lives

Matter and celebrating a socially distanced Diwali. With almost 100 Just

Connected stories over the course of the year, as well as regular business

updates and videos on our company intranet, 95% of colleagues who

responded to our last quarterly pulse survey in October agreed that they

felt informed about what was happening in our Company.

We also recognised the important part chats in the corridors, catch ups in

the kitchen and after work gatherings play in maintaining a connected

culture. We therefore ensured emphasis was placed on more informal

activities – from lunch breaks and pub socials to a comedian night and

Escape Room – all delivered virtually. In the run up to the holiday season in

December we celebrated the Twelve Days of Christmas with a whole host

of virtual activities, including fun videos, live quizzes and competitions.

SUPPORT FOR COLLEAGUES’ WELLBEING AND OUR COMMUNITIES

Early on in the pandemic we realised that colleagues’ experiences of

working remotely, and the challenges of their particular circumstances,

meant that we needed to oer an increased range of wellbeing support

and guidance. At the centre of how we managed business decision

making in relation to COVID-19, we strived to protect the wellbeing of our

colleagues. Our people highly valued this approach, and again in gauging

views through our internal pulse survey, 91% of respondents agreed

thatthe Company was taking their health and wellbeing seriously. This

approach meant that our people continued to go above and beyond to

look after our customers, we saw no drop o in productivity and everyone

was committed to continuing to successfully run our business.

In taking the view that “one size doesn’t fit all” we put in place a range of

initiatives built around mental, physical, social and financial wellbeing.

Toshare some examples:

• In April we launched the corporate version of the Headspace App for

allcolleagues, described as a “gym membership for the mind”. With

science-backed benefits aligned to reducing feelings of stress and

assisting with greater focus, content such as “stress release” and a

“switching o” visualisation to relax the body and mind, supported

relevant challenges for our workforce.

• In May we recognised Mental Health Awareness Week and in particular

promoted the 20 Mental Health First Aiders we have atJust. These

individuals are on hand for colleagues who may be experiencing

emotional distress or a mental health issue and can oer initial support

and guidance to the relevant services available.

• Understanding the strong link between mental health and financial

wellbeing, in June we teamed up with Mercer, our benefit broker, to

provide a series of financial webinars on various topics including tax,

budgeting, prioritising debt, savings, investments, borrowing, wills and

powers of attorney. This was supported with our internal “Just Talk”

programme, designed to share learnings from our vulnerable customer

programme with colleagues to help them and their families achieve a

better life now and in the future.

42 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

As part of our total reward oering, we have a number of core funded

benefits available to all employees. These are a group personal pension,

group income protection, employee assistance programme, life

assurance, single level private medical insurance, health cash plan,

Headspace App, childcare vouchers (for those who joined the scheme

prior to 4 October 2018) and holiday buy/sell.

We also have a range of flexible benefits that employees can select at

their own cost. These are critical illness cover, partner life assurance,

cycle to work scheme, dental insurance, travel insurance, leisure/dining

card, health screening, MyGymDiscounts and MyActiveDiscounts.

Whilst focusing on the wellbeing of our own colleagues, early on in

thepandemic we recognised our duty to the communities in which we

operate, as outlined in our charity and community policy. The Company

pledged support to the COVID-19 Support Fund, teaming up with a

number of other businesses from the UK insurance and long-term savings

industry to help support some of the people hardest hit by the COVID-19

crisis. The key aim was to provide immediate relief to charities that had

been aected as well as a longer-term programme of support for people,

communities and issues where there is the greatest need.

We also continued to raise funds for our corporate charity Re-engage,

who had to completely change the way they supported elderly guests

during this period of enforced separation. Activities included our Just

World Oce Tour which has seen colleagues virtually covering the

distance from our Belfast oce to our Cape Town oce, via London,

Reigate andTunbridge Wells as many times as possible, totalling a

massive 58,975 miles. We also rounded o the year by giving all

colleagues an Advent for Change calendar. With so many charities

suering from a lack of fundraising due to COVID-19, each door of the

advent calendar highlighted a dierent great cause – including our own

corporate charity Re-engage – and represented a 50 pence donation that

the Company made to each charity on behalf of every colleague.

Company and employee fundraising and donations raised a six figure

sum for our corporate charity partner Re-engage, the COVID-19 Support

Fund and a range of charities including Redhill Corps of Drum

Fundraising, Papyrus, Loveworks, Save our Spaniels, Merstham Mix,

Wiltshire Air Ambulance Charitable Trust, St. Nicolas PTA, YMCA East

Surrey, Versus Arthritis, Little Princess Trust, Alzheimer’s Society, St.

John Ambulance, The British Red Cross Society, 40tude Curing Colon

Cancer, Macmillan Cancer Support, Royal British Legion Poppy Appeal,

MND Scotland, Lothian Health Board Endowment Fund and Advent

ofChange.

LINE MANAGER DEVELOPMENT AND SUPPORT

We recognise the critical role that line managers play in ensuring that

colleagues across Just are healthy, engaged and productive. This was

especially true over the past 12 months as people and teams adjusted

tonew ways of working and the personal pressures and challenges

presented by COVID-19.

Some examples of the ways in which we have supported and developed

our people managers over the last year include:

• Quickly moving our flagship management development programme –

Just Engage – to a virtual context, rolling out five cohorts over the year

with participation from 40 managers.

• Over 30 people managers from across the business have taken part in

the level 5 leadership and management diploma delivered in

partnership with an external learning consultancy.

Colleagues and culture continued

THE COMPANY’S RESPONSE

TOTHIS DIFFICULT SITUATION

HASBEEN IMPRESSIVE.

PLEASECONTINUE TO KEEP

USWELL INFORMED

COLLEAGUE COMMENT FROM PULSESURVEY

43SRTGC RPR

• As part of our focus on ensuring that we keep people connected

acrossthe organisation when working remotely, we established “Just

Connected for people managers”. These were regular, peer-to-peer

60minute coaching sessions for small groups of up to six people

managers at a time. The sessions provided a supportive space for

people managers to share experiences, hear from others, oer ideas

and receive support.

• Partnered with MIND, a mental health charity, to deliver training for

ourline managers across the business to help them to have healthy

and open conversations about mental health and wellbeing at work.

We oer a range of targeted learning and development opportunities.

During 2020 this has included sponsoring 52 actuarial students to

achieve qualifications through the Institute and Faculty of Actuaries

and supporting 21 colleagues to study towards CIIqualifications. We

also supported 26 colleagues through apprenticeship programmes,

which were funded through our apprenticeship levy.

60 colleagues took part in external mentoring programmes over

thelast two years, either as a mentor or as a mentee – 20 through the

Actuarial Mentoring Programme (“AMP”) and 40 through the Moving

Ahead cross-company mentoring programme. We have identified our

pool of key talent reporting to our senior leadership team with tailored

development.

Finally, as part of our commitment to supporting the development and

growth of every colleague at Just, everyone has access to unlimited

on-demand learning material and resources via our corporate LinkedIn

Learning licence. We integrate this content into our leadership and

management development programmes and initiatives and encourage

our people managers to champion and promote the use of this online

content within their own teams.

Since the launch of LinkedIn Learning in February 2020 we have had

a72% activation rate (817 people activated). 1,835 hours of content

has been viewed and 649 people have consistently viewed content.

1,298 courses and 34,276 videos have been completed.

All colleagues have also completed mandatory e-learning modules to

ensure that we comply with regulatory and best practice standards in

areas such as GDPR, financial crime and anti-money laundering. You

can also read further details around how we support and embed a

culture of good risk management across the Group on page 77.

WIDENING OUR LENS ON DIVERSITY AND INCLUSION

During 2020 we focused on broadening our diversity and inclusion (“D&I”)

strategy, with five clear areas of focus:

• Increasing diverse representation, particularly at senior levels within

the organisation. We made strong progress towards our Women in

Finance target that 33% of our senior leaders will be female by 2023.

Anexample of an initiative to support this area is our participation in a

number of mentoring programmes. These include the 30% Club

cross-company mentoring programme and the Actuarial Mentoring

Programme for qualified actuaries. These programmes enable

ourfemale employees to gain broad business experience, senior

cross-company networks and support with their career progression.

Over 60 people across Just have taken part in one of these

programmes.

We have increased gender diversity at senior levels (grade 14+,

approximately top 10% of employees) by five percentage points (from

19% to 24%). We are on track to achieve the “33 by 23” target in line

with our pledge as a signatory to the Women in Finance Charter that

33% of our senior leaders will be female by 2023. The percentage of

women on the Board has also increased from 12% to 30% at 1 March

2021. Our gender pay gap reduced between 2019 and 2020 – mean

hourly pay gap was down from 39.2% to 35.8% and median hourly

paygap reduced from 39.0% to 33.5%. This reflects an increasing

proportion of women at senior levels in Just.

• Strengthening leadership focus and accountability for D&I. Just is a

signatory to the Race at Work charter which is designed to foster a

public commitment to improving outcomes of BAME (Black, Asian and

Minority Ethnic) employees in the workplace. Giles Oen, our Chief

Digital Information Ocer, was appointed as executive sponsor for

race, focused on delivering our commitments as a signatory to the

charter. Furthermore, every member of the executive team has a

personal objective to support our D&I agenda so there is clear

accountability and ownership at senior levels. We were also pleased

tohave established a network of D&I champions to drive forward our

strategy in each business area.

• Ensuring all groups have equal opportunity for progression and

development – as an example, we gathered voluntary diversity data

from colleagues which is being used anonymously to helpus track and

monitor progression from a diversity perspective andultimately ensure

that everyone has access to opportunities for careerdevelopment and

progression.

• Educating on unconscious bias and helping to strengthen our inclusive

culture with a series of events and communications to raiseawareness

of D&I more broadly and to help us to strengthen our inclusive culture.

• Fostering belonging through supporting our people to be themselves

– in addition to our D&I champions, we now have a number of support

networks for diverse groups – these are the Just Black Network, the

GenderEquality@Just network, the BAME@Just network and the Pride@

Just network.

These areas of focus have been supported with a range of communication

activities – from a D&I video update from our Group CEO, who is the Board

sponsor for D&I, through to individuals sharing their personal stories, as

part of our commitment to listen, learn and do the right thing together.

LOOKING TO THE FUTURE AND BUILDING A MODERN WORKPLACE

We recognise that COVID-19 has presented us with a unique opportunity

to accelerate positive change in our business and build on our key

behaviours of being dynamic, always adapting and collaborative to

strengthen our culture. We have taken important steps in the critical

areas of building a modern workplace and we have engaged with

colleagues to share their views on what they “loved” and “lacked” during

this period of remote working. We now have a clear picture of what

colleagues would like our ways of working to be in the future, so we can

create an environment in which our people can thrive. Ultimately, we want

all colleagues to feel proud to work at Just and deliver our purpose of

helping our customers achieve a better later life.

There has been a significant decrease in voluntary turnover, with

anannual rate of turnover of 8% (2019: 14%). Turnover of males

was8.4% and turnover of females was 7.1%. Age 50+ turnover was

5.6%, age 30-50 was 6.4% and under 30s 12.1%. In addition, 33% of

allvacancies were filled internally, compared to 29% in 2019.

In 2021 our aim is to continue to improve employee engagement and

productivity, transitioning to more blended, flexible and agile ways of

working. This will be underpinned by optimal organisational structures

and increased operating eciency to enhance our business sustainability

and operational resilience. This will allow us to continue to achieve our key

people priorities, as part of enabling the delivery of the wider strategy of

the Group.

FROM A SET-UP

AND CONNECTIVITY

VIEWPOINT THE COMPANY

HAS BEEN EXCELLENT

COLLEAGUE COMMENT FROM

PULSESURVEY

44 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Relationships with stakeholders

The Board recognises the importance

ofeective engagement with our

keystakeholders in the long-term

sustainable success of Just

OUR STAKEHOLDERS HOW WE ENGAGE WHAT MATTERS TO THEM HOW WE HAVE/ARE ADDRESSING THESE CHALLENGES

individuals

People approaching, at or in retirement

wantinghelp with their retirement finances.

• We engage directly when we provide regulated financial

advice, guidance and other forms of help and customer

service.

• We engage indirectly via financial intermediaries and other

organisations such as pension schemes and corporates.

• We engage with research companies who collect the

thoughts and opinions of individuals. This helps the Board to

understand how Just is delivering its services and meeting

the needs of our target customers.

• Quality of service delivered.

• Good value for money.

• Advice they can trust.

• Reputation of the Company.

• Security and peace of mind that Just will deliver its

promises.

• Continued to invest in our colleagues and infrastructure to ensure we maintain our

reputation for service design and delivery, evidenced by our awards for outstanding

service (see page 3).

• Invested in our Just For You Lifetime Mortgage (“LTM”) digital initiative for LTM advisers

to obtain rates and quotes.

• Launched “Destination Retirement”, a financial planning service that gives individuals

tailor-made advice about retirement within our HUB Financial Solutions business.

• We behave prudently and have strong, eective governance to ensure we will always

meet the promises we make to our policyholders.

Pension scheme

trustees/

FINANCIAL ADVISERS

Individuals accountable for securing good

outcomes for pension scheme members

andclients.

• We convene industry events to bring together trustees,

advisers and subject matter experts to create dialogue and

listen.

• We have individual meetings to understand the specific

challenges facing the pension schemes of the trustees.

• We commission surveys and other research to listen to

feedback from trustees and advisers.

• Reputation of the Company and service quality.

• Financial strength and strong counterparty credentials that

deliver security for advisers, trustees and their members.

• Good value for money.

• A secure asset portfolio with ESG and sustainability at its

heart.

• Access to the defined benefit de-risking market for smaller

transactions.

• Policyholder experience and service quality as many

schemes are targeting future Buy-out.

• Developed strong asset sourcing capability and medical underwriting that delivers

pricing advantage.

• Selectively participate in bulk annuity tenders and have deployed our innovative

defined benefit partnering solution to preserve capital and help maintain our secure

counterparty credentials.

• Regular attendance at client trustee board meetings to update them on their Just

Buy-in assets.

• Invested in new technology to improve digital services.

• Hosted a wide range of virtual events for advisers to share knowledge.

colleagues

The team of colleagues at Just who deliver

outstanding service to customers and the people

who support those that deliver the services.

• Directly, day to day through line management and using a

variety of communications channels.

• We gather feedback using a range of techniques such as

structured surveys and through more informal channels.

• Being clear on the Company’s vision and purpose.

• Working for a company that gives something back to its

communities.

• Having the opportunity to grow and develop.

• Diversity and inclusion.

• Wellbeing.

• CEO quarterly briefing sessions for all colleagues across the Group to reiterate

theCompany’s purpose and provide a business update on key initiatives.

• Non-Executive Director engagement with colleagues to bring their voice into

theboardroom.

• Organised events to involve colleagues in supporting our corporate charity.

• Developing colleagues through in-role experience.

• Coaching, mentoring, online learning and training.

• Broadened our diversity and inclusion strategy to, amongst others, increase

diverserepresentation, educate on unconscious bias and develop an inclusive culture.

• Increased the range of support and guidance for our colleagues built aroundmental,

physical, social and financial wellbeing.

investors

The equity and debt investors who invest the

capital to finance the business.

• Direct meetings with members of the Board.

• Shareholder communications.

• Annual General Meetings and results presentations.

• Improve returns for shareholders.

• Deliver a sustainable capital model.

• Make progress achieving greater Board diversity.

• Designed and implemented a number of material management actions in

responsetoPRA changes to the treatment of lifetime mortgages.

• Further management actions identified to support our commitment to deliver

asustainable capital model.

• There is an active programme underway to improve Board diversity.

Regulators

Organisations who regulate the conduct of

firmsand their financial stability.

• Direct meetings with members of the Board and the

leadership team.

• Written responses to consultation documents.

• Participation in workshops directly with regulators and via

trade associations.

• Boards and senior management understand the regulatory

objectives, and seek to ensure good consumer outcomes are

achieved and policyholder commitments are met.

• A culture that supports adherence to the spirit and the letter

of regulatory rules and principles.

• Dealing with the regulators in an open and cooperative way.

• Positive engagement to encourage eective competition

and consumer protection which results in better customer

outcomes.

• Continued to respond to regulators in a timely and constructive manner and engage

directly on any key regulatory matters.

• Implemented various material management actions in response tothe PRA changes

to the treatment of lifetime mortgages.

• Active participation in policy development directly and via trade bodies.

• Timely preparation and filing of regulatory returns.

Suppliers

The companies providing the services, materials

and resources to enable Just to operate the

businesses in the Group.

• Ongoing direct communication through a variety of

channels to inform on workloads, challenges and potential

innovations.

• Regular performance reviews enable all parties to

understand expectations and support each other to

optimise delivery.

• Written feedback following each tender process to explain

the outcomes.

• Collaborative relationships with open, honest and

transparent communications.

• Fair, transparent and objective process and evaluation

criteria when bidding for new business.

• Fair payment terms which are consistently met within

deadlines.

• We introduced a Group procurement and outsourcing policy, ensuring tender processes

are fair and transparent and all suppliers receive feedback on submissions. All suppliers

are expected to adhere with relevant legislation and regulatory regimes, and to act

ethically and with integrity.

• Risk-based profiling ensures all suppliers receive the relevant level of interaction with

Just.

• Clearly defined performance metrics are agreed with the supplier at the outset to

measure ongoing success.

• Conflict of interest checks at onboarding ensure advantages are not gained through

personal relationships.

45SRTGC RPR

OUR STAKEHOLDERS HOW WE ENGAGE WHAT MATTERS TO THEM HOW WE HAVE/ARE ADDRESSING THESE CHALLENGES

individuals

People approaching, at or in retirement

wantinghelp with their retirement finances.

• We engage directly when we provide regulated financial

advice, guidance and other forms of help and customer

service.

• We engage indirectly via financial intermediaries and other

organisations such as pension schemes and corporates.

• We engage with research companies who collect the

thoughts and opinions of individuals. This helps the Board to

understand how Just is delivering its services and meeting

the needs of our target customers.

• Quality of service delivered.

• Good value for money.

• Advice they can trust.

• Reputation of the Company.

• Security and peace of mind that Just will deliver its

promises.

• Continued to invest in our colleagues and infrastructure to ensure we maintain our

reputation for service design and delivery, evidenced by our awards for outstanding

service (see page 3).

• Invested in our Just For You Lifetime Mortgage (“LTM”) digital initiative for LTM advisers

to obtain rates and quotes.

• Launched “Destination Retirement”, a financial planning service that gives individuals

tailor-made advice about retirement within our HUB Financial Solutions business.

• We behave prudently and have strong, eective governance to ensure we will always

meet the promises we make to our policyholders.

Pension scheme

trustees/

FINANCIAL ADVISERS

Individuals accountable for securing good

outcomes for pension scheme members

andclients.

• We convene industry events to bring together trustees,

advisers and subject matter experts to create dialogue and

listen.

• We have individual meetings to understand the specific

challenges facing the pension schemes of the trustees.

• We commission surveys and other research to listen to

feedback from trustees and advisers.

• Reputation of the Company and service quality.

• Financial strength and strong counterparty credentials that

deliver security for advisers, trustees and their members.

• Good value for money.

• A secure asset portfolio with ESG and sustainability at its

heart.

• Access to the defined benefit de-risking market for smaller

transactions.

• Policyholder experience and service quality as many

schemes are targeting future Buy-out.

• Developed strong asset sourcing capability and medical underwriting that delivers

pricing advantage.

• Selectively participate in bulk annuity tenders and have deployed our innovative

defined benefit partnering solution to preserve capital and help maintain our secure

counterparty credentials.

• Regular attendance at client trustee board meetings to update them on their Just

Buy-in assets.

• Invested in new technology to improve digital services.

• Hosted a wide range of virtual events for advisers to share knowledge.

colleagues

The team of colleagues at Just who deliver

outstanding service to customers and the people

who support those that deliver the services.

• Directly, day to day through line management and using a

variety of communications channels.

• We gather feedback using a range of techniques such as

structured surveys and through more informal channels.

• Being clear on the Company’s vision and purpose.

• Working for a company that gives something back to its

communities.

• Having the opportunity to grow and develop.

• Diversity and inclusion.

• Wellbeing.

• CEO quarterly briefing sessions for all colleagues across the Group to reiterate

theCompany’s purpose and provide a business update on key initiatives.

• Non-Executive Director engagement with colleagues to bring their voice into

theboardroom.

• Organised events to involve colleagues in supporting our corporate charity.

• Developing colleagues through in-role experience.

• Coaching, mentoring, online learning and training.

• Broadened our diversity and inclusion strategy to, amongst others, increase

diverserepresentation, educate on unconscious bias and develop an inclusive culture.

• Increased the range of support and guidance for our colleagues built aroundmental,

physical, social and financial wellbeing.

investors

The equity and debt investors who invest the

capital to finance the business.

• Direct meetings with members of the Board.

• Shareholder communications.

• Annual General Meetings and results presentations.

• Improve returns for shareholders.

• Deliver a sustainable capital model.

• Make progress achieving greater Board diversity.

• Designed and implemented a number of material management actions in

responsetoPRA changes to the treatment of lifetime mortgages.

• Further management actions identified to support our commitment to deliver

asustainable capital model.

• There is an active programme underway to improve Board diversity.

Regulators

Organisations who regulate the conduct of

firmsand their financial stability.

• Direct meetings with members of the Board and the

leadership team.

• Written responses to consultation documents.

• Participation in workshops directly with regulators and via

trade associations.

• Boards and senior management understand the regulatory

objectives, and seek to ensure good consumer outcomes are

achieved and policyholder commitments are met.

• A culture that supports adherence to the spirit and the letter

of regulatory rules and principles.

• Dealing with the regulators in an open and cooperative way.

• Positive engagement to encourage eective competition

and consumer protection which results in better customer

outcomes.

• Continued to respond to regulators in a timely and constructive manner and engage

directly on any key regulatory matters.

• Implemented various material management actions in response tothe PRA changes

to the treatment of lifetime mortgages.

• Active participation in policy development directly and via trade bodies.

• Timely preparation and filing of regulatory returns.

Suppliers

The companies providing the services, materials

and resources to enable Just to operate the

businesses in the Group.

• Ongoing direct communication through a variety of

channels to inform on workloads, challenges and potential

innovations.

• Regular performance reviews enable all parties to

understand expectations and support each other to

optimise delivery.

• Written feedback following each tender process to explain

the outcomes.

• Collaborative relationships with open, honest and

transparent communications.

• Fair, transparent and objective process and evaluation

criteria when bidding for new business.

• Fair payment terms which are consistently met within

deadlines.

• We introduced a Group procurement and outsourcing policy, ensuring tender processes

are fair and transparent and all suppliers receive feedback on submissions. All suppliers

are expected to adhere with relevant legislation and regulatory regimes, and to act

ethically and with integrity.

• Risk-based profiling ensures all suppliers receive the relevant level of interaction with

Just.

• Clearly defined performance metrics are agreed with the supplier at the outset to

measure ongoing success.

• Conflict of interest checks at onboarding ensure advantages are not gained through

personal relationships.

We recognise the role that each stakeholder group plays inour success and our

responsibilities towards them. Building strong stakeholder engagement based

ondialogue and participation is essential. The table below identifies those key

stakeholders and sets out how the Board and colleagues across the Group engage

with them. The principal decisions taken by the Board impacting stakeholders are

contained on pages 48 to 50 within the Section 172 report.

46

Section 172 Statement

JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

The Board has direct engagement principally with

ourcolleagues, shareholders, debt investors and

regulators, and is also kept fully appraised of the

material issues of other stakeholders through reports

from the Executive Directors, senior management

andexternal advisers.

how the

directors

make decisions

Directors’ Statement

The Directors consider, both individually and

collectively, that they have acted in the way

they consider, in good faith, would be most

likely to promote the long-term success of

the Company for the benefit of its members

as a whole, whilst having due regard to the

matters set out in section 172(1)(a) to (f) of

the Companies Act 2006 in the decisions

taken during the year being:

a.

the likely consequences of any decision

in the long term

b.

the interests of the Company’s

employees

c.

the need to foster the Company’s

business relationships with suppliers,

customers and others

d.

the impact of the Company’s operations

on the community and the environment

e.

the desirability of the Company

maintaining a reputation for high

standards of business conduct

f.

the need to act fairly between members

of the Company

On pages 44 to 45 we outline the ways in

whichwe have engaged with key stakeholders,

what matters to them and how we have/are

addressing these challenges.

Through stakeholder engagement, the Board is

able to understand the impact of its decisions

on key stakeholders and to ensure it keeps

abreast of any significant developments in the

market, including the identification of emerging

trends and risks, which need to be factored into

its strategy discussions and decision making.

47SRTGC RPR

S172 FACTOR

EXAMPLES OF MATTERS

THE BOARD HAS REGARD TO

LONG TERM

• Company’s purpose

• Strategy

• Business model

• Risks including emerging risks

• Key stakeholders

• Regulatory framework

The Board has regard to all our stakeholders when developing and executing

ourstrategy. Our business model is reviewed at least annually taking into

consideration our company’s purpose, strategy, key stakeholders and emerging

risks, and to address the changing regulatory environment.

COLLEAGUES

• Colleague engagement

• Diversity and inclusion

• Education and training

• Modern workplace

• Wellbeing

Ensuring colleagues feel proud to work at Just, building our organisational

resilience and strengthening our talent and capabilities have been key strategic

focus areas for the Board during 2020. “Colleagues and Culture” on pages 40 to 43

details Just’s commitment to colleagues’ interests, including widening our lens on

diversity and inclusion, employee engagement, education and training, wellbeing

and building a modern workplace.

BUSINESS

RELATIONSHIPS –

SUPPLIERS AND

CUSTOMERS

• Anti-bribery and anti-

corruption

• Modern slavery

• Responsible payment practices

• Vulnerable customers

The Board is committed to fostering the Company’s business relationships with

suppliers, customers and other stakeholders. Pages 44 to 45 details our

relationships with our principal suppliers and customers, as well as other

stakeholders, and how we engage, what matters to them and how we have

addressed any challenges they have raised with us.

Ensuring the fair treatment of vulnerable customers continues to be an important

area of focus for the Board. As part of our Vulnerable Customer programme, the

Group vulnerable customer policy was updated and adopted by the Board.

COMMUNITY AND

ENVIRONMENT

• Community programme

• Climate change

• Environmental impact

• Sustainable investments

The Board recognises Just’s place in society and has rearmed the Group’s

purpose “we help people achieve a better later life”. The Group has invested in our

communities and promoted helping older adults get active for a healthier life

through our programme, “Just Get Active”.

The Board recognises the risks to society presented by climate change and is

committed to the Group executing plans to support a sustainable environment.

Page 18 outlines the Group’s sustainable investment strategy and the

Environment report on page 38 details the progress we are making to reduce our

impact on the environment.

We understand that we operate in society and it sets its expectations and

requirements through legislation and regulation. We receive feedback from

stakeholders including our regulators, the PRA and FCA, as well as other relevant

bodies. The Board listens actively to them, taking stakeholders’ feedback into

account when making judgements and taking decisions.

HIGH STANDARDS OF

BUSINESS CONDUCT

• Just Group brand

• Culture and values

• Awards and recognition

• Internal controls

• Whistleblowing

Our intention is to ensure that we and our colleagues operate the business in an

ethical and responsible way. A healthy corporate culture is the cornerstone of high

standards of business conduct and governance. Our culture is at the heart of how

we “get things done” and we understand the importance of leaders setting,

communicating and challenging the Company’s culture.

For our suppliers we have a Group procurement and outsourcing policy, ensuring

tender processes are fair and transparent and suppliers receive feedback on

submissions.

The Board has overall responsibility for establishing and maintaining the Group’s

systems of internal control and for undertaking an annual review of the control

systems in place to ensure they are eective and fit for purpose.

The Board reviews and approves our whistleblowing policy annually and the

Group has a dedicated whistleblowing hotline that allows sta who suspect

fraudulent, illegal or unethical behaviour by co-workers to discuss the matter

withan independent and confidential service.

INVESTORS

• Annual General Meeting

• Shareholder engagement

• Dividend policy

We receive capital investment from shareholders and from debt investors and

without their investment we would not be able to achieve our purpose. We

recognise that at certain times conditions impact our stakeholders dierently.

Like any business, there may be times when we have to take decisions that

adversely aect one or more of these groups and, in such cases, we always look

to ensure that those impacted are treated fairly. See pages 44 to 45 for the

various ways in which we engage with our dierent investor groups.

48 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Section 172 – Examples of decisions during the year

AREA OF DECISION MATTER CONSIDERED WHAT WE DID

S172 FACTOR/

KEY STAKEHOLDERS

DIVERSITY AND

INCLUSION

The Board considered and

pledged to build a culture

at Just which has

diversity and inclusion at

its core.

The Board is responsible for the ongoing oversight and challenge of the

actions taken to fulfil its pledge on diversity and inclusion.

Just has prioritised gender diversity since signing up to the Women in Finance

Charter in 2018, pledging that 33% of our senior leaders will be female by

2023. Further details on the progress can be found on page 70.

During the year, a key focus was on broadening our diversity and inclusion

strategy. This included increasing diverse representation, particularly at

senior levels within the organisation, strengthening leadership focus and

accountability for diversity and inclusion, ensuring all groups have equal

opportunity for progression and development, educating on unconscious bias

and helping to strengthen our inclusive culture, and fostering belonging

through supporting colleagues to be themselves. These areas of focus are

based on recommendations from external bodies and insights from

colleague focus groups held during the year. Details of this strategy can be

found on page 43.

The Board adopted a new diversity policy which includes references to the

Board’s commitment to improve both the gender and ethnic diversity of the

Board which is in line with the Hampton-Alexander and Parker Reviews.

COLLEAGUES

COLLEAGUE

ENGAGEMENT

Based on the strategic

priority “Be proud to work

at Just”, the Board

considered a programme

of activity to ensure that

it had opportunities to

engage with colleagues

through meaningful,

regular dialogue.

During the year Michelle Cracknell assumed joint responsibility for

championing colleague engagement activities with Steve Melcher. Colleagues

were invited to attend a series of virtual engagement sessions with Non-

Executive Directors branded as “Conversations with the Board” during the

year, which were framed around various themes and topics including the

impact of COVID-19, diversity and inclusion, and the challenges and

opportunities for our business. At all sessions, colleagues had the opportunity

to provide feedback and ask questions on any matters of interest to them to

give the Directors visibility of any “hot topics” which required the attention of

the Board.

The Group Chief Executive Ocer held a series of town halls during 2020 to

reiterate the Group’s purpose and strategic objectives, and to provide general

business updates. Feedback from colleagues on matters such as wellbeing

and job satisfaction was gathered through various means including surveys

and focus group sessions during the year. We have been accredited as a 2

star organisation (representing outstanding levels of engagement) via the

Best Companies Index, which is our highest level of employee engagement

since starting to take part in the survey in 2009.

COLLEAGUES

DIRECTORS’

REMUNERATION

POLICY

Every three years the

Group is required to ask

shareholders to approve

the policy for Directors’

remuneration.

The Remuneration Committee, on behalf of the Board, considered the

remuneration policy and changes to it from the perspective of the Group’s

purpose and aligning the interests of management with that of stakeholders.

In particular whether the new policy would drive behaviours and help meet

the strategic objectives especially with regard to organic capital generation.

The new policy has been developed based on guidance from UK regulators on

best practice and after extensive interaction with major investors, who were

consulted on the proposed changes.

A resolution was passed by shareholders at the Annual General Meeting in

May 2020 to approve the policy recommended by the Remuneration

Committee.

SHAREHOLDERS

This report assesses how the Directors have taken into consideration the

Company’s business relationships with various key stakeholders. It also

explores how the Directors have engaged with colleagues across the Group

and how the principal decisions taken by the Board may impact them.

49SRTGC RPR

AREA OF DECISION MATTER CONSIDERED WHAT WE DID

S172 FACTOR/

KEY STAKEHOLDERS

COVID-19

The impact of COVID-19

was a key consideration

for the Board in many

decisions taken during

the year.

The Board considered the operational, commercial and financial implications

of COVID-19 on the business both over the short term and longer term during

the year. Protecting the welfare of colleagues and ensuring the delivery of

critical services to customers was at the forefront of the Board’s decision

making.

The Board oversaw the steps taken to ensure colleagues had the right

resources and support to work remotely with colleague wellbeing being a key

focus area for the Directors. The Board also took the decision not to furlough

any employees during this challenging time.

The business model was reviewed to determine what potential management

actions were required to oset the impacts of any downturn of the UK

economy on the Group and its life companies’ capital positions.

To support customers through this dicult period, the Board approved

various changes to our products and services. This included a reduction in

interest rates on our lifetime mortgages for customers who had passed away

or moved into long-term care and were unable to sell their property because

the housing market was eectively closed for a number of weeks. Other

examples are covered in more detail on page 21.

The Board was kept appraised of any potential impacts on customer services

and performance arising due to issues experienced across the supply chain.

The Board continues to monitor developments and potential longer-term

impacts of COVID-19 on the business, such as the future direction of UK

residential property prices to which the Group’s solvency position is exposed.

The Group’s exposure to UK residential property risk has reduced due to

various management actions that have been executed over the year.

CUSTOMERS,

COLLEAGUES

ANDSUPPLIERS

STRATEGY

ANDCAPITAL

The Board considered the

Group’s strategy and

concluded that improving

the Group’s capital

position remained its key

priority.

Following on from 2019 activities, the Group continued to make significant

progress on the delivery of strong capital generation with various

management actions executed throughout the year.

The Group achieved its goal of delivering a self-sucient sustainable capital

model more than a year earlier than originally planned, which is a significant

achievement given the particularly dicult economic environment. The

increase in our Solvency II capital coverage ratio reflects a sustained

improvement in organic capital generation and the benefits arising from the

successful execution of various management actions. Key actions by the

Group included:

• entering into further no-negative equity guarantee (“NNEG”) hedging

transactions to manage negative interest rate exposure;

• signing its first defined benefit partnering deal enabling Just to expand

its market presence;

• releasing capital through more longevity insurance on the Guaranteed

Income for Life portfolio; and

• further reducing the Group’s exposure to UK residential property risk by

completing the sale of a book of £540m of lifetime mortgages.

Further information on the Group’s focus on capital, sustainability and

purpose can be found on pages 8 to 9.

LONG TERM

ANDINVESTORS

STRATEGY AND

CAPITAL –

GREEN BOND

The Board considered

innovative capital raising

opportunities and

approved the issue of a

Green Bond.

The Group completed its £250m Green Tier 2 capital raise via a 7% sterling

denominated BBB rated 10.5 year, non-call 5.5 year issue, which was the first

issue of a Green Bond by a UK insurer.

The Green Bond issue underscores the Group’s commitment to diversifying

our illiquid portfolio and also to support the transition to a low-carbon global

economy as all the proceeds are earmarked to be invested in green

infrastructure projects.

INVESTORS,

COMMUNITY AND

ENVIRONMENT

50 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

AREA OF DECISION MATTER CONSIDERED WHAT WE DID

S172 FACTOR/

KEY STAKEHOLDERS

CAPITAL AND

DIVIDEND

POLICY

The Board considered

whether to recommend

the payment of a final

dividend taking into

consideration the key

focus on capital

self-suciency along with

regulatory and economic

uncertainty.

The Board reviewed the dividend policy taking into account feedback received

from shareholders and the Board’s commitment to achieve capital self-

suciency. The Board concluded that, given the importance of improving the

Group’s capital position, it was not in the best interests of shareholders as a

whole to recommence dividend payments at this time.

SHAREHOLDERS

SUSTAINABILITY

Environmental, Social and

Governance (“ESG”)

factors are a growing

focus for the Board.

In addition to the Board’s diversity and inclusion strategy covered separately,

one of the key engagement priorities agreed by the Board is to become a

greener business and implement plans to support a more sustainable

environment. Key focus areas have been the continuation to modernise the

workplace to reduce the Group’s carbon footprint by integrating the Group’s

property and technology strategies, and the development of policies and

programmes to ensure business is conducted in a safe, environmentally

sound way and in line with relevant legislation and regulations.

The oversight of a climate change project has been a key focus area for the

Group Risk and Compliance Committee on behalf of the Board, which focuses

on the steps taken to better understand the longer-term climate risks to the

Group’s investment and property portfolio, and toembed climate risk factors

in the risk management framework. The scope of the project has been

extended to ensure compliance with climate change disclosure requirements

and to ensure that climate risks and opportunities are embedded into

decision-making at every level including the Group Board.

During the year, we launched our first Green Mortgage, which is an example

of a retail product encouraging energy improvements in customers’ homes.

In addition, debt investors subscribed £250m to theGroup’s first Green Bond.

COMMUNITY AND

ENVIRONMENT,

EMPLOYEES,

CUSTOMERS,

INVESTORS

PROCUREMENT

AND

OUTSOURCING

The Board considered

how the Group deals with

suppliers.

During the year, the Board assessed whether COVID-19 has had an impact on

the business in terms of the risk of modern slavery in the supply chains and

operations, and concluded that there had been noimpact in this respect. The

Board reviewed and approved the Group’sModern Slavery Statement, which

is available to view at www.justgroupplc.co.uk.

As more fully detailed on pages 44 to 45 in our report on relationships with

stakeholders, we have a fair, open and collaborative relationship withour

suppliers and business partners. During the year, the Board reviewed and

approved the Group procurement and outsourcing policythat requires

prospective suppliers to provide evidence of theirenvironmental

management processes. We use environmental performance as a criteria

when appointing new suppliers.

HIGH STANDARDS

OF BUSINESS

CONDUCT,

SUPPLIERS AND

PARTNERS,

ENVIRONMENT

Section 172 – Examples of decisions during the year continued

51SRTGC RPR

non-financial information statement

This statement sets out how we comply with the non-financial reporting requirements set out in sections 414CA to 414CB of the Companies Act 2006

and where you can find further information on those matters in the Annual Report.

OUR BUSINESS MODEL

The business model remains largely unchanged

with the key focus being to make the Group

more capital ecient and to ensure we deliver

long-term value for shareholders and great

value for customers. Our business model on

pages 14 to 15 sets out our strengths and how

they are the foundation of our sustainable

success. Our business model impacts on our

colleagues and our customers as well as having

wider impacts on the environment and society.

OUR NON-FINANCIAL POLICIES

We have non-financial policies which govern

how we do business and how we interact

with each other and with the community to

help ensure that we have a positive impact

and fulfil our purpose. Our policies reflect

our commitment to acting ethically and with

integrity in all of our business relationships. We

are also mindful and focused on our financial

and capital position. This in turn also enables

us to protect our policyholders, customers and

colleagues by growing the business sustainably.

NON-FINANCIAL KEY PERFORMANCE INDICATORS

The Board does not currently monitor any

non-financial performance indicators, but it

receives reports and management information

regarding key non-financial matters such as

colleagues’ wellbeing and job satisfaction. The

discretionary bonus plan for employees uses

non-financial metrics to decide part of the

bonus pool which the Board and Remuneration

Committee review.

MATERIAL AREA OF IMPACT POLICIES POLICY DESCRIPTIONS

1. ENVIRONMENTAL

• Carbon footprint

• Use of resources

• Investments (responsible

investing)

• Impact of the operations

of our suppliers

• Sustainable

Investment Framework

(a framework used by

our Investment team)

• Group procurement

and outsourcing policy

• Sustainable Investment Framework: see the report on sustainable

investment strategy on page 18.

• Group procurement and outsourcing policy – ensures that high

standards of honesty, impartiality and integrity are maintained in

our business relationships. It ensures that contractual

arrangements with third parties are undertaken with due regard

for the associated risks.

2. COLLEAGUES

• Wellbeing of colleagues,

including mental health,

fulfilment, work-life

balance, career and

development

opportunities

• Ensuring our colleagues’

actions do not have a

detrimental impact on

customers, suppliers or

other stakeholders

• Group charity and

community policy

• Board diversity policy

• Flexible working policy

• Group training and

competence policy

• Group fitness and

propriety policy

• Group operational

riskpolicy

• Group conduct

riskpolicy

• Group charity and community policy: see “social” below.

• Board diversity policy: see the Nomination Committee Report on

page 68.

• Flexible working policy: provides support and advice to employees

regarding our approach to flexible working requests.

• Group training and competence policy: sets out the standards and

requirements to ensure the training and competency framework

is eective in mitigating the risk of colleagues lacking the

expertise and knowledge required for their role and potentially

resulting in poor customer outcomes.

• Group fitness and propriety policy: sets out a framework for

appropriate processes and procedures to ensure compliance

withthe Senior Managers and Certification Regime.

• Group operational risk policy: sets out the Group’s framework for

managing operational risk.

• Group conduct risk policy: sets out the framework of principles,

systems and controls around the management of conduct risk

bythe Group and encompasses regulatory requirements such

asintegrity, market conduct, customer interests, skill, care and

diligence, and conflicts of interest.

3. SOCIAL

• Volunteering

• Charity partners

• Local community

engagement

• Group charity and

community policy

• Group charity and community policy: defines the minimum

standards for managing opportunities and risks relating to the

conduct of charitable and community activities as part of the

Group’s overall approach to corporate social responsibility to

support the achievement of our purpose.

4. HUMAN RIGHTS

• Data protection

• Modern slavery

• Impacts of our products

and services on

vulnerable customers

• Group procurement

and outsourcing policy

• Modern Slavery

Statement

• Group data

protectionpolicy

• Group vulnerable

customer policy

• Group procurement and outsourcing policy: see “environmental”

above.

• Modern Slavery Statement: sets out our policies and processes to

combat modern slavery in all its forms.

• Group data protection policy: sets out a framework of high level

controls and processes to enable the Group to safeguard personal

data and manage the risks of processing individuals’ personal

data to comply with regulatory requirements.

• Group vulnerable customer policy: defines our approach to ensure

vulnerable customers receive consistently fair treatment across

our Group and experience outcomes as good as those of other

customers.

5. ANTI-CORRUPTION

AND ANTI-BRIBERY

• Preventing corruption or

bribery from happening

by or on behalf of Just

• Financial crime policy

• Group compliance

policy

• Group whistleblowing

policy

• Financial crime policy: sets standards for the Group and

colleagues to meet to manage the risks from financial crime. All

colleagues are trained to understand what constitutes financial

crime, the regulatory requirements and their obligations.

• Group compliance policy: sets out the Group’s approach to

ensuring that it operates in compliance with the relevant laws

andregulations.

• Group whistleblowing policy: sets out the framework to encourage

colleagues to feel safe in raising any suspicions of wrongdoing to

the attention of the Board and senior management.

52 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

3. Social

• We give back to the communities in which we operate and are

committed to good corporate citizenship, supporting charity and

community initiatives which are relevant to our business, colleagues,

customers and other stakeholders. Our colleagues alsobenefit from

participating in our social activities. The risk to thebusiness from our

social impacts is considered to be low.

• During the year, Just pledged support to the COVID-19 Support Fund,

teaming up with a number of other businesses from the UK insurance

industry, to help support some ofthe people hardest hit by the

COVID-19 crisis.

• We have been investing in our communities to help older adults get

active for a happier, healthier life through our programme, Just Get

Active. Further information about our community programme can be

found on our website www.justgetactive.co.uk.

• For further information about our social and volunteering activities and

the impacts, see our Colleagues and culture report on page 40.

4. Human rights

• While the Board considers that the risk of human rights violations is low,

we have implemented eective systems and controls to ensure slavery

and human tracking is not taking place anywhere in our supply chains

or in any part of our business anywhere we operate. Our Modern

Slavery Statement available on our Group website provides further

information. We conduct due diligence on potential suppliers, impose

obligations on those suppliers and monitor their compliance with those

obligations.

• We have a responsibility to protect our customers’ privacy when

processing and using their data. We handle our customers’ sensitive

personal data and it is important that this is used appropriately and

protected. All of our colleagues, including those who arenot customer

facing, are trained on data protection and internal communications

campaigns are used to remind sta of the importance ofdata privacy.

Rigorous steps are taken to ensure the security of all the personal data

we handle.

• We are cognisant that a number of our customers could be vulnerable

and we want to ensure that all of our customers receive the right

support, the right outcome and an appropriate level of care. Our policy

defines our approach to ensuring vulnerable customers receive

consistently fair treatment across our Group. Relevant training and

support is provided to our colleagues to enable them to identify and

give support to vulnerable customers.

5. Anti-corruption and anti-bribery

• We have a Group financial crime policy which is a zero tolerance policy.

This policy helps us to prevent and detect financial crime. Our Group

whistleblowing policy, and our whistleblowing hotline, encourages

colleagues to report any wrongdoing. All such reports are fully

investigated and appropriate remedial actions taken.

• We have a comprehensive mandatory compliance training programme

which covers the above policies as well as other important areas of

compliance which all colleagues must complete on an annual basis.

Completion is monitored by the Compliance team and reported to the

Board, with repeated failure to complete the training being a

disciplinary matter.

THE OUTCOME OF OUR POLICIES ON OUR MATERIAL AREAS OF IMPACT

1. Environment

• The direct impact of our operations on the environment is relatively low

due to the oce based nature of our work. The Group is UK based with

a small operation in South Africa. We are committed to reducing our

environmental impact, including: the amount of travel undertaken

byall of our colleagues; reducing our oce footprint; and applying

environmental standards through our Group procurement and

outsourcing policy.

• During the year, the majority of colleagues have worked remotely in

accordance with government guidance due to COVID-19. The Group

ensured that its technology was fit for purpose to enable secure remote

working, which supports the wider initiative to modernise our

workplace and reduce our carbon footprint over the medium to longer

term.

• We are committed to promoting good corporate environmental

practice and have ISO 14001:2015 certification.

• During the year the Group issued a Green Bond, the first insurance

company in the UK to do so. The Group has committed to invest the

proceeds of the bond in eligible green projects. Further information can

be found on page 18.

• Information about our Investment team and their sustainable

investment strategy and framework is included on page 18.

• Information on the steps we are taking to reduce our impact on the

environment, including the greenhouse gas emissions for which we are

responsible, is set out in our Environment report on page 38.

2. Colleagues

• Building our organisational resilience, strengthening our talent and

capabilities, and ensuring colleagues feel proud to work at Just is a

strategic priority for us.

• The Group has broadened its diversity and inclusion strategy in five

areas: increasing diverse representation, particularly at senior levels;

strengthening leadership focus and accountability for diversity and

inclusion; ensuring all groups have equal opportunity for progression

and development; educating on bias and developing the inclusive

culture; and fostering belonging through supporting people to be

themselves. The Board sponsor for diversity and inclusion is the Group

Chief Executive Ocer.

• There is an active programme under way to improve Board diversity.

The Board adopted a new Board diversity policy during the year. Further

information on this policy and the steps taken to improve Board

diversity can be found in the Nomination Committee report on pages

68 to 70.

• Gender diversity across senior roles has increased by five percentage

points to 24% and we are on track to achieve our pledge as a signatory

to the Women in Finance Charter that 33% of senior leaders will be

female by 2023. Just has also signed up to the Race at Work Charter

which is designed to foster a public commitment to improving

outcomes of Black, Asian and Minority Ethnic employees in the

workplace.

• We have increased the range of wellbeing support and guidance for our

colleagues built around mental, physical, social and financial wellbeing.

This includes the support of Mental Health First Aiders and the launch of

the corporate version of the Headspace App, described as a “gym

membership for the mind”.

• We have policies and provide training to help ensure that our

colleagues act ethically and do the right thing in the performance of

their work. Our activities to help our colleagues feel proud to work at

Just and our compliance policies work together to help mitigate against

colleagues acting unethically.

• We have taken important steps in the critical areas of building a

modern workplace and we have engaged with colleagues to obtain

their views on what they would like our ways of working to be in the

future.

non-financial information statement continued

53SRTGC RPR

NON-FINANCIAL RISK MANAGEMENT

The risk management report on page 32 sets out our approach to

riskmanagement. Our approach enables all colleagues to take more

eective business decisions through a better understanding of risk. The

report sets out our principal risks and uncertainties including non-financial

risks and how we mitigate those risks. The Group Risk and Compliance

Committee (“GRCC”) hasconsidered various non-financial risks during

the year. These include risks arising from people, operational processes

and IT systems, conduct risk and the current and future business and

operational impacts of COVID-19 on the Group. The GRCC also received

regular reports onthe status of the Group’s climate change project, which

covers various workstreams including risk management and financial

risks. The aim is to prevent non-financial risks from materialising and

having a detrimental impact on our business (including our reputation),

our colleagues, our customers, our suppliers and other stakeholders.

Our Risk team sets and manages the Group’s Policy Framework.

Each Group policy has a policy owner and an executive sponsor. The

policies are reviewed by the policy owner and executive sponsor at

least annually and an attestation is provided. Changes to policies

arereviewed by the GRCC and approved by the Board. Breaches

of policies are monitored and reported, andrecorded in our risk

management system. These are escalated to the Group Chief Risk

Ocer. Serious breaches are reported to the GRCC or Board. This

ongoing management of risks enables the business to take necessary

action to remove or mitigate the risk where breaches have occurred.

This could be through training or improving a process or policy. In

serious or repeated cases, disciplinary action may be taken.

APPROVAL

The Strategic Report was approved by the Board of Directors on 15 March

2021 and signed on its behalf by:

JOHN HASTINGS-BASS

Chair

54 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

I am pleased to present the

Group’sCorporate Governance

Report for 2020

chair’s introduction to governance

Dear Shareholder

On behalf of the Board of Just Group plc (the “Board”) I am pleased to

present the 2020 Corporate Governance Report, my first since becoming

Chair in August 2020.

The UK Corporate Governance Code 2018 (the “Code”) was adopted by the

Board from 1 January 2019. The Board considers that it has complied

withthe provisions of the Code. Our Governance Report explains further

how we have applied the principles of the Code.

LEADERSHIP AND PURPOSE

The Board has agreed an eective corporate governance model for the

Group, based on the principles and provisions of the Code. The Group has

astrong social purpose, “we help people achieve a better later life” and

aims to generate long-term, sustainable value for shareholders, aswell

asconsideration for other stakeholders and the impact of the business’s

operations on wider society. In order to achieve these aims our recent

priority has been to deliver a sustainable capital model. During 2020 the

combination of management actions and increasing levels of organic

capital generation has led to both improved capital resilience and

increased overall capital strength.

The Board continued to engage in discussions with the Prudential

Regulation Authority throughout 2020 and although our solvency position

continues to strengthen, regulatory scrutiny remains high and some

uncertainty and risk remains. However, the Group is in a much stronger

position now, ending the year with a solvency capital ratio of 156%

(allowing for a notional recalculation of TMTP as at 31 December 2020).

Additionally, the sale of a portion ofLTMs and two further NNEG hedge

transactions have further reduced the Group’s property exposure.

Through our commitment to good governance, the refocus of our strategy

to ensure our business model remained economically attractive, and

taking actions to achieve capital self-suciency, the Board believes that

the outlook for the business isimproving.

Before the COVID-19 pandemic, the share price was recovering from

fallsin 2019. With the advent of COVID-19, concerns about the Group’s

exposure to residential property and the general economic environment

impacted the share price again. The share price recovered somewhat

towards the end of 2020 – management actions led to a strengthened

solvency position, whilst the economic outlook improved and the UK

residential property market remained robust.

2020 AGM

I am pleased to report that at our 2020 Annual General Meeting (“AGM”)

all resolutions were passed with at least 89% of those voting supporting

the resolutions. This included the resolution for the new Directors’

Remuneration Policy.

Due to COVID-19, the meeting was held in our Reigate oce with only

theGroup Chief Executive Ocer and the Group Company Secretary

present. The meeting wasbroadcast and shareholders could dial in

tolisten. The Board was disappointed that the usual shareholder

engagement could not take place. In order to facilitate engagement in

thedicult circumstances, shareholders were encouraged to cast their

vote by proxy and to submit questions in advance ofthe meeting.

2021 AGM

I am pleased to confirm that the 2021 AGM will be held on 11 May 2021

at10.00 am at our registered oce, Enterprise House, Bancroft Road,

Reigate, Surrey, RH2 7RP. At the time of writing, it is not clear what

COVID-19 restrictions will be in place at that time. In order to facilitate the

best possible engagement with shareholders, given the circumstances,

we intend to broadcast the AGM through Microsoft Teams and there will

be an opportunity for shareholders to ask the Board questions should you

wish to join the meeting online. Unfortunately there is no facility to vote

online during the AGM and so your Board recommends that you vote via

proxy in advance of the meeting. There will be a designated email to

submit questions in advance of the AGM. More information about the

2021 AGM the associated arrangements can be found in the Notice of

Meeting and on the Group’s website.

John Hastings-Bass

Chair

55GVRAC RPR

STAKEHOLDERS

Stakeholder engagement is of key importance to the Board. We take

intoaccount the interests of a wide range of stakeholders including

investors, customers, colleagues, pension scheme trustees, financial

advisers, regulators and suppliers. Of prime importance is the requirement

to understand the views of our stakeholders and we dothis through a

variety of engagement activities. Steve Melcher was appointed as the

Non-Executive Director responsible for seeking the views of our colleagues

and bringing these back into the boardroom. This year we appointed

Michelle Cracknell to also carry out this role for the Board. Further

information about how the Board engages with colleagues can be found

in the Governance in operation report on page 62 .

Further details regarding our engagement with the wider stakeholder

groups and how this has impacted on our decision making is included

inour Strategic Report on pages 44 to 45.

Since my appointment, I have had meetings with nearly all of the

Group’smajor shareholders and I engaged with colleagues as part

ofthe“Conversations with the Board” programme.

BOARD COMPOSITION AND SUCCESSION PLANNING

As previously announced, there have been a number of changes to

theBoard during the year. Succession planning at both the Board and

senior management level has continued to be a primary focus of the

Board and the Nomination Committee.

The Board has been further strengthened by the appointment of Andy

Parsons as the Group’s Chief Financial Ocer. Andy joined on 1 January

2020 and was also appointed to the Board on that date.

Michelle Cracknell and Kalpana Shah were appointed as Non-Executive

Directors of JustGroup plc on 1 March 2020 and 1 March 2021

respectively. I was appointed as the Chair on 13 August2020.

A number of the Directors have long tenures with the Group or its

predecessor companies, Just Retirement Group plc and Partnership

Assurance Group plc pre-merger. There has been a focus on succession

planning during the year and further information is available in our

Nomination Committee Report on pages 68 to 70.

CULTURE, DIVERSITY AND INCLUSION

We want our people to be proud to work at Just. Engaged colleagues are

crucial to delivering innovative products and services to our customers.

The Board is committed to having a culture where our people feel proudto

work at Just, where our people can thrive and arewell led, well managed

and have opportunities for growth and development. This culture is also

reflected in how we work. We are proud of our award-winning customer

service. This is enabled by the strong values underpinning our behaviour:

we do the right thing so we can deliver our purpose of helping people

achieve a better later life.

In 2020, despite the diculties presented by COVID-19, the Group has

continued to work on the organisation’s culture through the three key

people priorities to enable the delivery of the Group’s strategy of: building

organisational resilience; strengthening talent and capabilities; and

ensuring colleagues feel proud to work at Just.

Diversity remains a key focus for the Board and Group Executive team

who recognise the enhanced contributions a set of diverse people can

bring to our business and wider society. During 2020, the Group focused

on broadening the diversity and inclusion (“D&I”) strategy with five

clearareas of focus: increasing diverse representation, particularly at

senior levels; strengthening leadership focus and accountability for

D&I;ensuring all groups have equal opportunity for progression and

development; educating on unconscious bias and developing the

inclusiveculture; andfostering belonging through supporting people to

bethemselves. TheBoard sponsor for D&I is the Group Chief Executive

Ocer. Further information on the D&I strategy can be found in the

Strategic Report onpage 43.

The Board also adopted a new diversity policy which includes references

to the Board’s commitment to improve both the gender andethnic

diversity of the Board which is in line with the Hampton-Alexander

andParker Reviews. The updated policy references the Group’s wider

fivepointdiversity strategy. You can read more about the Nomination

Committee’s work in the area of diversity in the Nomination Committee

Report on pages 68 to 70. A copy of the Board diversity policy can be

found on our Group website.

In accordance with the Board diversity policy but whilst ensuring that

people with the appropriate skills were appointed, the appointment of

Michelle Cracknell and Kalpana Shah improved the gender balance on

theBoard from 12% to 30%. The Board and the Nomination Committee

recognise that there is more to be done, as covered in more detail in the

Nomination Committee Report on pages 68 to 70.

BOARD EVALUATION

The Board evaluation is an important annual process. This year we have

had an externally facilitated Board evaluation. The review covered both

Just Group plc and the two life companies (Just Retirement Limited and

Partnership Life Assurance Company Limited). The process was facilitated

by Value Alpha Limited, an independent specialist board evaluation

company, whoattended the Board and committee meetings as well as

interviewing the chairs of the Boards and each of the Directors. Value

Alpha also interviewed other key stakeholders. I am pleased to report that

following consideration of this year’s report, theBoard concluded that it

was eective. More information about theBoard evaluation is on page 67.

AUDIT TENDER

During 2019 the Board and Audit Committee carried out an audit

tenderto select a new external auditor for the year ended 31 December

2020. PricewaterhouseCoopers LLP (“PwC”) were appointed the Group’s

external auditor at the 2020 AGM. Further information is included in the

Audit Committee Report on pages 71 to 75.

John Hastings-Bass

Chair

15 March 2021

56 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

board of directors

JOHN HASTINGS-BASS,

Group Chair

DAVID RICHARDSON,

Group Chief Executive Ocer and Managing

Director of the UK Corporate Business

ANDY PARSONS,

Group Chief Financial Ocer

KEITH NICHOLSON,

Senior Independent Director

PAUL BISHOP,

Independent Non-Executive Director

Appointed: 13 August 2020

John Hastings-Bass was appointed Chair

of Just Group plc in August 2020.

John brings over 35 years of business experience

in the insurance and reinsurance sectors and has

undertaken the role of Chair in publicly quoted and

privately owned businesses. He currently holds

the role of Chair of BMS Group, the private equity

backed global insurance broking group, and until

2017, was Chair of publicly quoted Novae Group plc.

John began his career in Hong Kong with Jardine

Matheson in 1976. He moved to London and was

latterly a JLT Group Board Director and CEO of

International Business Group. He joined Arthur J.

Gallagher in 2007, as Chairman of International

Development, leading the Asia Pacific business.

He joined the Board of the FTSE 350 listed Novae

Group plc in May 2007 and became Chair in

May 2008. He was appointed Non-Executive

Chair of BMS Group in January 2015. John was

appointed a Trustee of the Landmark Trust

in 2016 and chairs the Audit Committee.

Appointed: 4 April 2016

David Richardson was appointed as

Group Chief Executive Ocer of Just

Group plc on 19 September 2019.

He previously held the role of Deputy Group Chief

Executive Ocer and Managing Director of the

UK Corporate Business from April 2016. David was

the Interim Chief Financial Ocer of Just Group

from 31 October 2018 until 1 January 2020. He

was Chief Finance Ocer of Partnership Assurance

Group plc from February 2013 until April 2016.

Previously, David was Group Chief Actuary of the

UK’s largest closed life assurance fund consolidator,

Phoenix Group, where he was responsible for

restructuring the group’s balance sheet and overall

capital management. Prior to this, David worked

in a number of senior roles at Swiss Re, across

both its Admin Re and traditional reinsurance

businesses. Those roles included Chief Actuary

of its Life and Health business, Head of Products

for UK and South Africa and Global Head of its

Longevity Pricing teams. David commenced his

career at the actuarial consultancy Tillinghast.

David is a Fellow of the Institute and Faculty

of Actuaries and a CFA charter holder.

Appointed: 1 January 2020

Andy Parsons was appointed as Group Chief Financial

Ocer of Just Group plc on 1 January 2020.

Previously, Andy was Group Finance Director at LV=

from June 2017 to December 2019, having held

executive positions at several leading financial

institutions. His career in finance has spanned over

25 years, with particular expertise in life and general

insurance. Prior to joining LV=, he held the roles

of finance director, divisional risk ocer and life,

pensions and investment director for the insurance

business of Lloyds Banking Group. He previously

worked at Friends Life, AXA and Zurich Financial

Services in a number of executive financial roles.

Appointed: 9 October 2013

Keith Nicholson was appointed as Senior

Independent Director of Just Group plc in April

1. He was previously Senior Independent

Director of Just Retirement Group plc

from October 2013 until April 2016.

Keith previously served as Chair of Liberty Corporate

Capital Limited, Liberty Mutual Managing Agency

Limited and Liberty Mutual Insurance Europe SE

from 2011 to September 2020. He was Deputy

Chair of The Equitable Life Assurance Society

from August 2009 until December 2019, and was

Deputy Chair of Wesleyan Assurance Society until

September 2014. Keith was previously a partner

at KPMG, where he led their UK insurance practice

until he retired from the firm in March 2009.

Appointed: 4 April 2016

Paul Bishop was appointed as a Non-Executive

Director of Just Group plc in April 2016. He previously

served as a Non-Executive Director for Partnership

Assurance Group plc from May 2014 until April 2016.

Paul spent the majority of his career at KPMG, and

from 1993 to the end of January 2014 was a Partner,

apart from a brief period when he was employed

at Atos KPMG Consulting as a Managing Director.

He has specialised in the insurance sector for over

30 years, particularly life insurance, and led KPMG’s

insurance consulting practice for much of his time as

a Partner. Paul also spent 18 months on secondment

at Standard Life as Head of Financial Change in the

period leading up to its demutualisation and IPO.

Paul is a Chartered Accountant. He is currently a

Non-Executive Director of the National House Building

Council and Zurich Assurance Limited. Previously, Paul

served as Non-Executive Director of Police Mutual

Assurance Society from 2017 to September 2020.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Committee and internal directorships

Chair of the Nomination Committee.

Member of the Market Disclosure Committee, Group

Risk and Compliance Committee and Remuneration

Committee.

Director of Partnership Life Assurance Company

Limited and Just Retirement Limited.

Committee and internal directorships

Member of the Market Disclosure Committee.

Director of Just Retirement Limited, Partnership Life

Assurance Company Limited, Just Retirement Money

Limited and Partnership Home Loans Limited.

Committee and internal directorships

Member of the Market Disclosure Committee.

Director of Just Retirement Limited, Partnership Life

Assurance Company Limited, Just Retirement Money

Limited and Partnership Home Loans Limited.

Committee and internal directorships

Chair of the Group Risk and Compliance Committee.

Member of the Group and subsidiary Audit

Committees, Nomination and Market Disclosure

Committees.

Director of Just Retirement Limited, Partnership Life

Assurance Company Limited, HUB Financial Solutions

Limited and HUB Pension Solutions Limited.

Committee and internal directorships

Chair of the Group and subsidiary Audit Committees,

Just Retirement Money Limited Board and the

Partnership Home Loans Limited Board.

Member of the Nomination Committee and the Just

Retirement Limited & Partnership Life Assurance

Company Limited Investment Committees.

Director of Just Retirement Limited and Partnership

Life Assurance Company Limited.

NON-EXECUTIVE CHAIR EXECUTIVE DIRECTORS

57GVRAC RPR

JOHN HASTINGS-BASS,

Group Chair

DAVID RICHARDSON,

Group Chief Executive Ocer and Managing

Director of the UK Corporate Business

ANDY PARSONS,

Group Chief Financial Ocer

KEITH NICHOLSON,

Senior Independent Director

PAUL BISHOP,

Independent Non-Executive Director

Appointed: 13 August 2020

John Hastings-Bass was appointed Chair

of Just Group plc in August 2020.

John brings over 35 years of business experience

in the insurance and reinsurance sectors and has

undertaken the role of Chair in publicly quoted and

privately owned businesses. He currently holds

the role of Chair of BMS Group, the private equity

backed global insurance broking group, and until

2017, was Chair of publicly quoted Novae Group plc.

John began his career in Hong Kong with Jardine

Matheson in 1976. He moved to London and was

latterly a JLT Group Board Director and CEO of

International Business Group. He joined Arthur J.

Gallagher in 2007, as Chairman of International

Development, leading the Asia Pacific business.

He joined the Board of the FTSE 350 listed Novae

Group plc in May 2007 and became Chair in

May 2008. He was appointed Non-Executive

Chair of BMS Group in January 2015. John was

appointed a Trustee of the Landmark Trust

in 2016 and chairs the Audit Committee.

Appointed: 4 April 2016

David Richardson was appointed as

Group Chief Executive Ocer of Just

Group plc on 19 September 2019.

He previously held the role of Deputy Group Chief

Executive Ocer and Managing Director of the

UK Corporate Business from April 2016. David was

the Interim Chief Financial Ocer of Just Group

from 31 October 2018 until 1 January 2020. He

was Chief Finance Ocer of Partnership Assurance

Group plc from February 2013 until April 2016.

Previously, David was Group Chief Actuary of the

UK’s largest closed life assurance fund consolidator,

Phoenix Group, where he was responsible for

restructuring the group’s balance sheet and overall

capital management. Prior to this, David worked

in a number of senior roles at Swiss Re, across

both its Admin Re and traditional reinsurance

businesses. Those roles included Chief Actuary

of its Life and Health business, Head of Products

for UK and South Africa and Global Head of its

Longevity Pricing teams. David commenced his

career at the actuarial consultancy Tillinghast.

David is a Fellow of the Institute and Faculty

of Actuaries and a CFA charter holder.

Appointed: 1 January 2020

Andy Parsons was appointed as Group Chief Financial

Ocer of Just Group plc on 1 January 2020.

Previously, Andy was Group Finance Director at LV=

from June 2017 to December 2019, having held

executive positions at several leading financial

institutions. His career in finance has spanned over

25 years, with particular expertise in life and general

insurance. Prior to joining LV=, he held the roles

of finance director, divisional risk ocer and life,

pensions and investment director for the insurance

business of Lloyds Banking Group. He previously

worked at Friends Life, AXA and Zurich Financial

Services in a number of executive financial roles.

Appointed: 9 October 2013

Keith Nicholson was appointed as Senior

Independent Director of Just Group plc in April

1. He was previously Senior Independent

Director of Just Retirement Group plc

from October 2013 until April 2016.

Keith previously served as Chair of Liberty Corporate

Capital Limited, Liberty Mutual Managing Agency

Limited and Liberty Mutual Insurance Europe SE

from 2011 to September 2020. He was Deputy

Chair of The Equitable Life Assurance Society

from August 2009 until December 2019, and was

Deputy Chair of Wesleyan Assurance Society until

September 2014. Keith was previously a partner

at KPMG, where he led their UK insurance practice

until he retired from the firm in March 2009.

Appointed: 4 April 2016

Paul Bishop was appointed as a Non-Executive

Director of Just Group plc in April 2016. He previously

served as a Non-Executive Director for Partnership

Assurance Group plc from May 2014 until April 2016.

Paul spent the majority of his career at KPMG, and

from 1993 to the end of January 2014 was a Partner,

apart from a brief period when he was employed

at Atos KPMG Consulting as a Managing Director.

He has specialised in the insurance sector for over

30 years, particularly life insurance, and led KPMG’s

insurance consulting practice for much of his time as

a Partner. Paul also spent 18 months on secondment

at Standard Life as Head of Financial Change in the

period leading up to its demutualisation and IPO.

Paul is a Chartered Accountant. He is currently a

Non-Executive Director of the National House Building

Council and Zurich Assurance Limited. Previously, Paul

served as Non-Executive Director of Police Mutual

Assurance Society from 2017 to September 2020.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Committee and internal directorships

Chair of the Nomination Committee.

Member of the Market Disclosure Committee, Group

Risk and Compliance Committee and Remuneration

Committee.

Director of Partnership Life Assurance Company

Limited and Just Retirement Limited.

Committee and internal directorships

Member of the Market Disclosure Committee.

Director of Just Retirement Limited, Partnership Life

Assurance Company Limited, Just Retirement Money

Limited and Partnership Home Loans Limited.

Committee and internal directorships

Member of the Market Disclosure Committee.

Director of Just Retirement Limited, Partnership Life

Assurance Company Limited, Just Retirement Money

Limited and Partnership Home Loans Limited.

Committee and internal directorships

Chair of the Group Risk and Compliance Committee.

Member of the Group and subsidiary Audit

Committees, Nomination and Market Disclosure

Committees.

Director of Just Retirement Limited, Partnership Life

Assurance Company Limited, HUB Financial Solutions

Limited and HUB Pension Solutions Limited.

Committee and internal directorships

Chair of the Group and subsidiary Audit Committees,

Just Retirement Money Limited Board and the

Partnership Home Loans Limited Board.

Member of the Nomination Committee and the Just

Retirement Limited & Partnership Life Assurance

Company Limited Investment Committees.

Director of Just Retirement Limited and Partnership

Life Assurance Company Limited.

SENIOR INDEPENDENT DIRECTOR NON-EXECUTIVE DIRECTORS

58 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

IAN CORMACK,

Independent Non-Executive Director

MICHELLE CRACKNELL,

Independent Non-Executive Director

STEVE MELCHER,

Independent Non-Executive Director

KALPANA SHAH,

Independent Non-Executive Director

CLARE SPOTTISWOODE,

Independent Non-Executive Director

MARY KERRIGAN

Appointed: 4 April 2016

Ian Cormack was appointed as a Non-Executive

Director of Just Group plc in April 2016. He previously

served as Senior Independent Director for Partnership

Assurance Group plc from May 2013 to April 2016.

Prior to his appointment, Ian spent over 30 years at

Citibank up until 2000, latterly as UK Country Head

and Co-Head of the Global Financial Institutions

Group. From 2000 to 2002, he was Chief Executive

Ocer of AIG Europe. He was previously a Non-

Executive Director of Pearl Group from 2005-2009,

Aspen Insurance Holdings from 2002-2012, Qatar

Financial Centre Authority from 2006-2012,

Bloomsbury Publishing from 2011-2015, Xchanging

from 2012-2016, and previously Chair of the CHAPS

hi-value payment system. Ian is a former Chair of

the LSE Taurus Review Committee, and a former

member of the board of Cedel, the Executive

Committee of the European Securities Committee,

the settlement board of the London Stock Exchange,

the Council of the British Bankers’ Association

and a former member of APACS. In addition, Ian

previously served as Senior Independent Director

of Phoenix Group Holdings Limited, Chair of Maven

Income & Growth VCT 4 plc, and was a Non-

Executive Director of Hastings Group Holdings plc.

Ian is currently a Non-Executive Director of NatWest

Holdings Limited, National Westminster Bank plc ,

the Royal Bank of Scotland plc, Ulster Bank Limited,

and Non-Executive Director of the Foundation

for Governance Research and Education. On

11 August 2020, Ian was appointed as a Director

of the Broadstone Acquisition Corporation.

Appointed: 1 March 2020

Michelle Cracknell was appointed as a Non-Executive

Director of Just Group plc on 1 March 2020.

Michelle was Chief Executive Ocer of The

Pensions Advisory Service between October

2013 and December 2018. Prior to that, she

held Director roles in advice firms, providers and

insurance companies. She is a qualified actuary.

In addition to the Just Group, Michelle is a

Trustee of the Lloyds Bank Pension Funds, a

Non-Executive Director of Fidelity International

Holdings and a Non-Executive Director and Chair

of the Audit & Risk Committees of Pension Bee.

Appointed: 15 May 2015

Steve Melcher was appointed as a Non-Executive

Director of Just Group plc in April 2016. He was

Non-Executive Director of Just Retirement

Group plc from May 2015 until April 2016.

Steve has worked in financial services for over 40 years,

during which time he has held posts at JP Morgan, Marsh

& McLennan and as Chief Executive Ocer of Eagle

Star, Allied Dunbar and Sun Life of Canada UK. He now

has a portfolio of roles, including as a Non-Executive

Director of Allianz Re in Dublin and as Chair of Euler

Hermes Pension Fund. He is also an executive mentor

which takes him inside many dierent industries.

Appointed: 1 March 2021

Kalpana Shah was appointed as a Non-Executive

Director of Just Group plc on 1 March 2021.

Kalpana brings 30 years of business experience in the

insurance and investment industry having started

her career at the London Commodity Exchange and

moving into insurance as Deputy to the Director of

Underwriting at Groupama Gan. She was longstanding

Group Chief Actuary and a Partner at Hiscox plc

until 2016. Kalpana has chaired and contributed to

working parties for the Bank of England, Lloyd’s of

London, and the Bermuda Monetary Authority.

Kalpana was elected to the governing body of the

Institute and Faculty of Actuaries in 2019 and is

a member of its Audit and Risk Committee. She is

also a senior Liveryman of the Worshipful Company

of Insurers and a trustee of Unitas, a Barnet Youth

Zone. Last year, she headed up a voluntary team

of actuaries helping the NHS with analytics and

planning in the height of the COVID-19 pandemic.

In addition to Just Group, Kalpana is Chair

of RiverStone Managing Agency, Senior

Independent Director of RiverStone Insurance

(UK), and Non-Executive Director of Asta

Managing Agency and Markel International.

Appointed: 4 April 2016

Clare Spottiswoode was appointed as a Non-Executive

Director of Just Group plc in April 2016. She was

Non-Executive Director of Partnership Assurance

Group plc from October 2014 to April 2016.

Clare is a mathematician and economist by

training; in June 2010, she was appointed by HM

Treasury to the Independent Commission on

Banking (The Vickers Commission). Her career

has involved acting as Policyholder Advocate for

Norwich Union’s with-profits policyholders at Aviva,

in which role she acted on behalf of one million

policyholders tasked with reattributing Aviva’s

inherited estate, and included time as Director

General of Ofgas, the UK gas regulator. Clare

previously served as a Non-Executive Director of BW

Oshore Limited from August 2013 to May 2020.

In addition to the Just Group, Clare is Chair of

Xoserve Limited and Naftogaz Group. She is also a

Non-Executive Director of the British Management

Data Foundation, Gas Strategies Group Limited

and Gas Strategies Holdings Limited.

Appointed: 1 November 2019

Mary Kerrigan was appointed as a Non-Executive

Director of Just Retirement Limited and Partnership

Life Assurance Company Limited, the Group’s

life company subsidiaries, in November 2019.

Mary has considerable experience in the pensions,

life insurance and investment industries, and

is a former partner of Willis Towers Watson.

Outside of Just Group, Mary is a Non-Executive

Director of New Ireland Assurance Company

and Chair of its Risk Committee. She is also

a member of the Independent Governance

Committee of Prudential Assurance UK.

Mary was appointed as a Non-Executive Director

ofAegon Asset Management Limited on

24 September 2020.

Mary is Chair of the Just Retirement Limited &

Partnership Life Assurance Company Limited

Investment Committees.

NICK POYNTZ-WRIGHT

Appointed: 8 March 2016

Nick Poyntz-Wright was appointed as Chair of Just

Retirement Limited and Partnership Life Assurance

Company Limited on 30 April 2019, having previously

held the role of Non-Executive Director of Just

Retirement Limited since March 2016 and Partnership

Life Assurance Company Limited since April 2016.

Nick has significant experience of both insurance

and retail financial services. He is a Fellow of the

Institute of Actuaries and was previously Chief

Executive Ocer of Skandia UK and Director of

Long-Term Savings and Pensions at the Financial

Conduct Authority. Outside of Just Group, Nick is a

Non-Executive Director with the Phoenix Group, sitting

on the boards of its life subsidiaries as well as Chair

of its Investment Committee. He is a Non-Executive

Director of Unum Limited and Unum European

Holding Company Limited. In July 2020, Nick also was

appointed as a Non-Executive Director and Chair of

the Investment Committee of ReAssure Limited.

Nick is a member of the Just Retirement Limited &

Partnership Life Assurance Company Limited

Investment Committees and the subsidiary Audit

Committees.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Committee and internal directorships

Chair of the Remuneration Committee.

Member of the Nomination Committee and Group Risk

and Compliance Committee.

Director of HUB Financial Solutions Limited, HUB

Pension Solutions Limited, Just Retirement Money

Limited, Partnership Home Loans Limited, Just

Retirement Limited and Partnership Life Assurance

Company Limited.

Committee and internal directorships

Member of the Remuneration Committee.

Committee and internal directorships

Chair of HUB Financial Solutions Limited and HUB

Pension Solutions Limited.

Member of the Group Audit Committee, Group Risk

and Compliance Committee, Remuneration

Committee, and the Just Retirement Limited &

Partnership Life Assurance Company Limited

Investment Committees.

Director of Just Retirement Money Limited and

Partnership Home Loans Limited, Just Retirement

Limited and Partnership Life Assurance Company

Limited.

Committee and internal directorships

Member of the Group Audit Committee and Group Risk

and Compliance Committee.

Director of Just Retirement Limited and Partnership

Life Assurance Company Limited.

Committee and internal directorships

Member of the Group Audit Committee and Group Risk

and Compliance Committee.

Director of HUB Financial Solutions Limited, HUB

Pension Solutions Limited, Just Retirement Limited

and Partnership Life Assurance Company Limited.

NON-EXECUTIVE DIRECTORS

CONTINUED

59GVRAC RPR

IAN CORMACK,

Independent Non-Executive Director

MICHELLE CRACKNELL,

Independent Non-Executive Director

STEVE MELCHER,

Independent Non-Executive Director

KALPANA SHAH,

Independent Non-Executive Director

CLARE SPOTTISWOODE,

Independent Non-Executive Director

MARY KERRIGAN

Appointed: 4 April 2016

Ian Cormack was appointed as a Non-Executive

Director of Just Group plc in April 2016. He previously

served as Senior Independent Director for Partnership

Assurance Group plc from May 2013 to April 2016.

Prior to his appointment, Ian spent over 30 years at

Citibank up until 2000, latterly as UK Country Head

and Co-Head of the Global Financial Institutions

Group. From 2000 to 2002, he was Chief Executive

Ocer of AIG Europe. He was previously a Non-

Executive Director of Pearl Group from 2005-2009,

Aspen Insurance Holdings from 2002-2012, Qatar

Financial Centre Authority from 2006-2012,

Bloomsbury Publishing from 2011-2015, Xchanging

from 2012-2016, and previously Chair of the CHAPS

hi-value payment system. Ian is a former Chair of

the LSE Taurus Review Committee, and a former

member of the board of Cedel, the Executive

Committee of the European Securities Committee,

the settlement board of the London Stock Exchange,

the Council of the British Bankers’ Association

and a former member of APACS. In addition, Ian

previously served as Senior Independent Director

of Phoenix Group Holdings Limited, Chair of Maven

Income & Growth VCT 4 plc, and was a Non-

Executive Director of Hastings Group Holdings plc.

Ian is currently a Non-Executive Director of NatWest

Holdings Limited, National Westminster Bank plc ,

the Royal Bank of Scotland plc, Ulster Bank Limited,

and Non-Executive Director of the Foundation

for Governance Research and Education. On

11 August 2020, Ian was appointed as a Director

of the Broadstone Acquisition Corporation.

Appointed: 1 March 2020

Michelle Cracknell was appointed as a Non-Executive

Director of Just Group plc on 1 March 2020.

Michelle was Chief Executive Ocer of The

Pensions Advisory Service between October

2013 and December 2018. Prior to that, she

held Director roles in advice firms, providers and

insurance companies. She is a qualified actuary.

In addition to the Just Group, Michelle is a

Trustee of the Lloyds Bank Pension Funds, a

Non-Executive Director of Fidelity International

Holdings and a Non-Executive Director and Chair

of the Audit & Risk Committees of Pension Bee.

Appointed: 15 May 2015

Steve Melcher was appointed as a Non-Executive

Director of Just Group plc in April 2016. He was

Non-Executive Director of Just Retirement

Group plc from May 2015 until April 2016.

Steve has worked in financial services for over 40 years,

during which time he has held posts at JP Morgan, Marsh

& McLennan and as Chief Executive Ocer of Eagle

Star, Allied Dunbar and Sun Life of Canada UK. He now

has a portfolio of roles, including as a Non-Executive

Director of Allianz Re in Dublin and as Chair of Euler

Hermes Pension Fund. He is also an executive mentor

which takes him inside many dierent industries.

Appointed: 1 March 2021

Kalpana Shah was appointed as a Non-Executive

Director of Just Group plc on 1 March 2021.

Kalpana brings 30 years of business experience in the

insurance and investment industry having started

her career at the London Commodity Exchange and

moving into insurance as Deputy to the Director of

Underwriting at Groupama Gan. She was longstanding

Group Chief Actuary and a Partner at Hiscox plc

until 2016. Kalpana has chaired and contributed to

working parties for the Bank of England, Lloyd’s of

London, and the Bermuda Monetary Authority.

Kalpana was elected to the governing body of the

Institute and Faculty of Actuaries in 2019 and is

a member of its Audit and Risk Committee. She is

also a senior Liveryman of the Worshipful Company

of Insurers and a trustee of Unitas, a Barnet Youth

Zone. Last year, she headed up a voluntary team

of actuaries helping the NHS with analytics and

planning in the height of the COVID-19 pandemic.

In addition to Just Group, Kalpana is Chair

of RiverStone Managing Agency, Senior

Independent Director of RiverStone Insurance

(UK), and Non-Executive Director of Asta

Managing Agency and Markel International.

Appointed: 4 April 2016

Clare Spottiswoode was appointed as a Non-Executive

Director of Just Group plc in April 2016. She was

Non-Executive Director of Partnership Assurance

Group plc from October 2014 to April 2016.

Clare is a mathematician and economist by

training; in June 2010, she was appointed by HM

Treasury to the Independent Commission on

Banking (The Vickers Commission). Her career

has involved acting as Policyholder Advocate for

Norwich Union’s with-profits policyholders at Aviva,

in which role she acted on behalf of one million

policyholders tasked with reattributing Aviva’s

inherited estate, and included time as Director

General of Ofgas, the UK gas regulator. Clare

previously served as a Non-Executive Director of BW

Oshore Limited from August 2013 to May 2020.

In addition to the Just Group, Clare is Chair of

Xoserve Limited and Naftogaz Group. She is also a

Non-Executive Director of the British Management

Data Foundation, Gas Strategies Group Limited

and Gas Strategies Holdings Limited.

Appointed: 1 November 2019

Mary Kerrigan was appointed as a Non-Executive

Director of Just Retirement Limited and Partnership

Life Assurance Company Limited, the Group’s

life company subsidiaries, in November 2019.

Mary has considerable experience in the pensions,

life insurance and investment industries, and

is a former partner of Willis Towers Watson.

Outside of Just Group, Mary is a Non-Executive

Director of New Ireland Assurance Company

and Chair of its Risk Committee. She is also

a member of the Independent Governance

Committee of Prudential Assurance UK.

Mary was appointed as a Non-Executive Director

ofAegon Asset Management Limited on

24 September 2020.

Mary is Chair of the Just Retirement Limited &

Partnership Life Assurance Company Limited

Investment Committees.

NICK POYNTZ-WRIGHT

Appointed: 8 March 2016

Nick Poyntz-Wright was appointed as Chair of Just

Retirement Limited and Partnership Life Assurance

Company Limited on 30 April 2019, having previously

held the role of Non-Executive Director of Just

Retirement Limited since March 2016 and Partnership

Life Assurance Company Limited since April 2016.

Nick has significant experience of both insurance

and retail financial services. He is a Fellow of the

Institute of Actuaries and was previously Chief

Executive Ocer of Skandia UK and Director of

Long-Term Savings and Pensions at the Financial

Conduct Authority. Outside of Just Group, Nick is a

Non-Executive Director with the Phoenix Group, sitting

on the boards of its life subsidiaries as well as Chair

of its Investment Committee. He is a Non-Executive

Director of Unum Limited and Unum European

Holding Company Limited. In July 2020, Nick also was

appointed as a Non-Executive Director and Chair of

the Investment Committee of ReAssure Limited.

Nick is a member of the Just Retirement Limited &

Partnership Life Assurance Company Limited

Investment Committees and the subsidiary Audit

Committees.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Current other listed directorships

None.

Committee and internal directorships

Chair of the Remuneration Committee.

Member of the Nomination Committee and Group Risk

and Compliance Committee.

Director of HUB Financial Solutions Limited, HUB

Pension Solutions Limited, Just Retirement Money

Limited, Partnership Home Loans Limited, Just

Retirement Limited and Partnership Life Assurance

Company Limited.

Committee and internal directorships

Member of the Remuneration Committee.

Committee and internal directorships

Chair of HUB Financial Solutions Limited and HUB

Pension Solutions Limited.

Member of the Group Audit Committee, Group Risk

and Compliance Committee, Remuneration

Committee, and the Just Retirement Limited &

Partnership Life Assurance Company Limited

Investment Committees.

Director of Just Retirement Money Limited and

Partnership Home Loans Limited, Just Retirement

Limited and Partnership Life Assurance Company

Limited.

Committee and internal directorships

Member of the Group Audit Committee and Group Risk

and Compliance Committee.

Director of Just Retirement Limited and Partnership

Life Assurance Company Limited.

Committee and internal directorships

Member of the Group Audit Committee and Group Risk

and Compliance Committee.

Director of HUB Financial Solutions Limited, HUB

Pension Solutions Limited, Just Retirement Limited

and Partnership Life Assurance Company Limited.

non plc

INDEPENDENT NON-EXECUTIVE

DIRECTORS

60

DAVID RICHARDSON,

Group Chief Executive Ocer

and Managing Director UK

Corporate Business

ANDY PARSONS,

Group Chief Financial Ocer

DAVID COOPER,

Group Marketing

and Distribution Director

ALEX DUNCAN,

Group Chief Risk Ocer

KATHRYN GRAY,

Chief People Ocer

PAUL FULCHER,

Group Capital Management &

Investment Executive

GILES OFFEN,

Group Chief Digital

Information Ocer

PAUL TURNER,

Managing Director, Retail

See biography on page 56. See biography on page 57. Appointed: 4 April 2016

David Cooper was appointed Group

Marketing and Distribution Director

of Just Group in April 2016.

David joined Just Retirement in April

2006 as Marketing Director, his role

then changed to Group Marketing

and Distribution Director in 2009.

David is also Chief Executive Ocer

of the group of companies trading

under the HUB Group brands, which

are subsidiaries of Just Group.

David has over 35 years’ experience

working in financial services. He has

operated in a number of sectors

including retail banking, general

insurance, personal credit, actuarial

consulting and the retirement

industry. He has worked for a variety

of large organisations including GE

Capital, Centrica, Bradford & Bingley

and Hymans Robertson as well as

much smaller growth businesses

such as the founder of enhanced

annuities, Stalwart Assurance.

David is a Non-Executive Director of

Origo Services Limited, the software

standards and services supplier, and

Criterion Tech Holdings Limited, a not-

for-profit body that delivers professional

Standards and Governance services for

the UK’s Financial Services industry.

Appointed: 4 April 2016

Alex Duncan was appointed Group Chief

Risk Ocer of Just Group in April 2016.

Alex joined Just Retirement in

September 2012 as Group Chief Risk

Ocer. He is a fellow of the Institute

and Faculty of Actuaries and has over

30 years’ experience in the financial

services industry covering many

disciplines, including reinsurance,

consulting, banking and industry. Prior

to joining Just Retirement, Alex spent

eight years at Old Mutual, where he

held a number of positions, many

involving mergers and acquisitions, and

was most latterly Director of Finance -

Capital, where he was responsible for

capital management and treasury.

Appointed: 3 August 2017

Kathryn Gray was appointed

Chief People Ocer of Just

Group in August 2017.

Kathryn has held a number of senior

HR leadership roles, working in a range

of sectors including pharmaceutical,

retail, telecoms and, for the last ten

years, financial services. Prior to

joining Just Group she spent six years

at Legal and General where she was

Divisional HR Director for the Protection

and Savings business and Group

Director for Reward, Performance and

Leadership and Talent. Prior to that

she worked for RBS in Edinburgh.

Kathryn holds an MSc in Organisation

and People Development and is a

member of the Chartered Institute

of Personnel and Development.

Kathryn is a Board Trustee of

the charitable organisation

Greensleeves Care and a member of

the Police & National Crime Agency

Remuneration Review Body.

Appointed: 1 February 2021

Paul Fulcher was appointed

Group Capital Management &

Investment Executive of Just

Group in February 2021.

Paul is responsible for Investments,

Capital Management and Group

Underwriting, including the Longevity,

Medical, Pricing and Reinsurance teams.

Paul has 30 years’ experience working

across the life insurance industry.

Prior to joining Just Group, Paul was

a Principal at Milliman LLP, a life and

financial service consulting firm. Before

Milliman he spent six years working at

Nomura as Managing Director, leading

their ALM Structuring and Insurance

Solutions team for Europe, Middle East

and Africa. Prior to Nomura he worked

for the Royal Bank of Scotland in their

Global Markets business as Managing

Director and Head of their Financial

Institutions Risk Advisory Team.

Paul is a Fellow of the Institute of

Actuaries.

Appointed: 4 April 2016

Giles Oen was appointed Group

Chief Digital Information Ocer

of Just Group in April 2016.

Giles is responsible for Technology,

Change and Architecture as

well as embedding modern

methods of change delivery.

Prior to this, he was Chief Technology

Ocer at Partnership Assurance

Group, which he joined in January

2014 to transform the company’s IT

capability and change programmes.

Giles has over 20 years of diverse

global experience which includes

working at companies such as Reed

Elsevier, Lexis Nexis and Cashplus.

Appointed: 1 February 2019

Paul Turner was appointed

Managing Director, Retail of Just

Group in February 2019.

Paul is responsible for all of

the Group’s retail businesses

in the UK and South Africa.

Previously, Paul led Just Group’s

mortgage, corporate development

and international divisions. Paul joined

Just Retirement in August 2014. Prior

to Just Retirement, he held various

senior international roles at Swiss Re

in Asia and Australia. He has over 25

years of insurance industry experience.

Paul is a Director of Just Retirement

Limited and Partnership Life

Assurance Company Limited.

Paul is a Non-Executive Director

of the Equity Release Council

and EPPARG Limited.

Current listed directorships

None.

Current listed directorships

None.

Current listed directorships

None.

Current listed directorships

None.

Current listed directorships

None.

Current listed directorships

None.

JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

senior leadership

61

DAVID RICHARDSON,

Group Chief Executive Ocer

and Managing Director UK

Corporate Business

ANDY PARSONS,

Group Chief Financial Ocer

DAVID COOPER,

Group Marketing

and Distribution Director

ALEX DUNCAN,

Group Chief Risk Ocer

KATHRYN GRAY,

Chief People Ocer

PAUL FULCHER,

Group Capital Management &

Investment Executive

GILES OFFEN,

Group Chief Digital

Information Ocer

PAUL TURNER,

Managing Director, Retail

See biography on page 56. See biography on page 57. Appointed: 4 April 2016

David Cooper was appointed Group

Marketing and Distribution Director

of Just Group in April 2016.

David joined Just Retirement in April

2006 as Marketing Director, his role

then changed to Group Marketing

and Distribution Director in 2009.

David is also Chief Executive Ocer

of the group of companies trading

under the HUB Group brands, which

are subsidiaries of Just Group.

David has over 35 years’ experience

working in financial services. He has

operated in a number of sectors

including retail banking, general

insurance, personal credit, actuarial

consulting and the retirement

industry. He has worked for a variety

of large organisations including GE

Capital, Centrica, Bradford & Bingley

and Hymans Robertson as well as

much smaller growth businesses

such as the founder of enhanced

annuities, Stalwart Assurance.

David is a Non-Executive Director of

Origo Services Limited, the software

standards and services supplier, and

Criterion Tech Holdings Limited, a not-

for-profit body that delivers professional

Standards and Governance services for

the UK’s Financial Services industry.

Appointed: 4 April 2016

Alex Duncan was appointed Group Chief

Risk Ocer of Just Group in April 2016.

Alex joined Just Retirement in

September 2012 as Group Chief Risk

Ocer. He is a fellow of the Institute

and Faculty of Actuaries and has over

30 years’ experience in the financial

services industry covering many

disciplines, including reinsurance,

consulting, banking and industry. Prior

to joining Just Retirement, Alex spent

eight years at Old Mutual, where he

held a number of positions, many

involving mergers and acquisitions, and

was most latterly Director of Finance -

Capital, where he was responsible for

capital management and treasury.

Appointed: 3 August 2017

Kathryn Gray was appointed

Chief People Ocer of Just

Group in August 2017.

Kathryn has held a number of senior

HR leadership roles, working in a range

of sectors including pharmaceutical,

retail, telecoms and, for the last ten

years, financial services. Prior to

joining Just Group she spent six years

at Legal and General where she was

Divisional HR Director for the Protection

and Savings business and Group

Director for Reward, Performance and

Leadership and Talent. Prior to that

she worked for RBS in Edinburgh.

Kathryn holds an MSc in Organisation

and People Development and is a

member of the Chartered Institute

of Personnel and Development.

Kathryn is a Board Trustee of

the charitable organisation

Greensleeves Care and a member of

the Police & National Crime Agency

Remuneration Review Body.

Appointed: 1 February 2021

Paul Fulcher was appointed

Group Capital Management &

Investment Executive of Just

Group in February 2021.

Paul is responsible for Investments,

Capital Management and Group

Underwriting, including the Longevity,

Medical, Pricing and Reinsurance teams.

Paul has 30 years’ experience working

across the life insurance industry.

Prior to joining Just Group, Paul was

a Principal at Milliman LLP, a life and

financial service consulting firm. Before

Milliman he spent six years working at

Nomura as Managing Director, leading

their ALM Structuring and Insurance

Solutions team for Europe, Middle East

and Africa. Prior to Nomura he worked

for the Royal Bank of Scotland in their

Global Markets business as Managing

Director and Head of their Financial

Institutions Risk Advisory Team.

Paul is a Fellow of the Institute of

Actuaries.

Appointed: 4 April 2016

Giles Oen was appointed Group

Chief Digital Information Ocer

of Just Group in April 2016.

Giles is responsible for Technology,

Change and Architecture as

well as embedding modern

methods of change delivery.

Prior to this, he was Chief Technology

Ocer at Partnership Assurance

Group, which he joined in January

2014 to transform the company’s IT

capability and change programmes.

Giles has over 20 years of diverse

global experience which includes

working at companies such as Reed

Elsevier, Lexis Nexis and Cashplus.

Appointed: 1 February 2019

Paul Turner was appointed

Managing Director, Retail of Just

Group in February 2019.

Paul is responsible for all of

the Group’s retail businesses

in the UK and South Africa.

Previously, Paul led Just Group’s

mortgage, corporate development

and international divisions. Paul joined

Just Retirement in August 2014. Prior

to Just Retirement, he held various

senior international roles at Swiss Re

in Asia and Australia. He has over 25

years of insurance industry experience.

Paul is a Director of Just Retirement

Limited and Partnership Life

Assurance Company Limited.

Paul is a Non-Executive Director

of the Equity Release Council

and EPPARG Limited.

Current listed directorships

None.

Current listed directorships

None.

Current listed directorships

None.

Current listed directorships

None.

Current listed directorships

None.

Current listed directorships

None.

GVRAC RPR

0000000000000000000000000000

62 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

GOVERNANCE IN OPERATION

JUST GROUP PLC BOARD

• Sets purpose, values and strategy for the group of companies of

which Just Group plc is the ultimate shareholder (the “Group”)

• Monitors culture and ensures behaviours and practices are aligned

with the Group’s purpose, values and strategy

• Sets risk appetite and oversees risk management, internal control

systems, corporate governance and regulatory matters

• Approves major changes to the Group’s business activities including,

but not limited to, major acquisitions or disposals and its presence in

various jurisdictions

• Approves the business plan including objectives, budgets, forecasts

and material changes, and monitors delivery against the plan

• Approves the capital structure of the Group and any changes to

capital, and monitors capital risk appetite

• Approves major changes to the operational structure of the Group

• Approves the financial statements, half-year reports and regulatory

reports

• Delegates oversight for some of its activities to committees of the

Board

GROUP AUDIT

COMMITTEE

Chair: Paul Bishop

Oversees on behalf of the Board:

• Financial reporting

• Significant accounting

judgements and accounting

policies

• Solvency reporting

• Relationship with the external

auditor including monitoring

independence, non-audit

services and the audit plan

• Audit tender process

• Appointment of the new auditor

• Internal controls

• Internal audit function and

internal audit plans

REMUNERATION

COMMITTEE

Chair: Ian Cormack

Oversees on behalf of the Board:

• Remuneration policy

• Within the terms of the

remuneration policy sets

remuneration, benefits, pension

and total compensation of the

Chair of the Board, Executive

Directors, members of the Group

Executive Committee, the Group

Company Secretary and other

senior management and

Solvency II sta

• Share schemes including SAYE,

LTIPs, STIPs and DSBP schemes

and approval of awards under

the schemes

• Alignment of workforce reward

and incentives

NOMINATION

COMMITTEE

Chair: John Hastings-Bass

Oversees on behalf of the Board:

• Board appointments process

• Structure, size and composition

of the Board

• Succession planning for

appointments to the Board and

Group Executive Committee

• Balance of skills, experience and

knowledge of the Board

• Diversity and inclusion matters;

monitoring the impact of

initiatives (for Board, senior

management and wider

initiatives)

• Independence of Directors

GROUP RISK AND

COMPLIANCE

COMMITTEE (“GRCC”)

Chair: Keith Nicholson

Oversees on behalf of the Board:

• Mandates of the Risk,

Compliance and Chief Actuary

functions

• Material changes to the risk

management and internal

control framework, including

Group policies, which support

the framework and risk strategy

• Principal and emerging risks

relative to risk appetite

tolerances

• Solvency II compliance and the

internal model including

changes to the internal model

• Regulatory matters (other than

Group Solvency II reporting)

• Compliance monitoring plan

READ MORE ON PG.71 READ MORE ON PG.76READ MORE ON PG.78 READ MORE ON PG.68

OUR GOVERNANCE STRUCTURE

The Just Group plc Board (the “Board”) is responsible for the strategic direction and risk appetite

of the Company. The Board promotes the long-term sustainable success of the Company,

generating value for shareholders and wider society.

The Board has agreed an eective governance framework whose structure is set out below.

63GVRAC RPR

CHIEF EXECUTIVE OFFICER AND THE GROUP EXECUTIVE COMMITTEE

The Board has delegated responsibility for implementing the strategy and

business plans and for managing risk and operating eective controls

across the Group to the Group Chief Executive Ocer.

The Group Chief Executive Ocer has established a committee of senior

executives to assist him with the discharge of the duties delegated to

himby the Board.

The Group Executive Committee is responsible for:

• Day-to-day leadership of the Group in accordance with the

purpose,values and culture set by the Board

• Implementing the strategy set by the Board and recommending

strategic development to the Board

• Business risk management and the oversight of the implementation

ofeective controls to manage and mitigate risks

• Recommending the business plan and budgets to the Board for

approval

• Monitoring the Group’s performance

• Implementing policies and processes to ensure that people within

theorganisation feel well led and managed with opportunities for

development

There is also an Executive Risk Committee (“ERC”), chaired by the Group

Chief Risk Ocer, which focuses on risk management across theGroup.

This includes oversight of risk appetite, risk controls, and regulatory and

compliance matters. The ERC reviews reports from management before

they are presented to the GRCC.

Other Group committees

The Board has also established a Market Disclosure Committee which

oversees the disclosure of information by the Company to fulfil its

listingobligations under the Market Abuse Regulation. This ensures

thatdecisions in relation to those regulations can be made quickly.

TheCommittee’s role is to approve disclosures, determine whether

thereis inside information and whether such information needs to

bedisclosed, when to make an announcement and the contents of

theannouncement.

The Board may establish other committees of the Board or sub-

committees of those committees when required from time to time.

Allcommittees are established by approval of the Board with agreed

terms of reference.

Terms of reference

The matters reserved for the Board are defined and approved bythe

Board. Each Group committee has terms of reference which areapproved

by the Board. The matters reserved for the Board and the main Board

committees’ terms of reference can be found at www.justgroupplc.co.uk.

Composition of committees

The main Board committees comprise independent Non-Executive

Directors of the Company. The committee members were appointed

toeach committee following review and recommendation by the

Nomination Committee and approval by the Board. At each

Boardmeeting the chairs of each committee report on the activities

ofpreceding committee meetings. The Group Company Secretary

supports the chairs of all the committees and is available to provide

corporate governance advice to all Directors.

SUBSIDIARY GOVERNANCE – LIFE COMPANY BOARDS

The Board holds its meetings on a nested basis together withthe Boards

of the Group’s regulated life companies, Just Retirement Limited (“JRL”)

and Partnership Life Assurance Company Limited (“PLACL”). The

governance structure is operated in this way due to synergies between

their strategies and operations. JRL is the principal operating company in

the Group and, therefore, its activities also have a strategic and material

impact on the consolidated Group performance.

Each Board considers matters put before it from its own perspective, led

by the independent chair ofeach Board. Holding the meetings together

ensures good communication and governance across the Group. The

approach ensures the strategy is aligned and implemented eectively.

JRL and PLACL both have two independent Non-Executive Directors who

are not Directors of Group. Nick Poyntz-Wright is the Chair of the Boards of

JRL and PLACL. Mary Kerrigan is an independent Non-Executive Director of

both life companies.

The Boards of JRL and PLACL have not established separate remuneration

committees, nomination committees or risk and compliance committees.

These matters are overseen by the respective Group Board committees to

the extent relevant and necessary, for the regulated life companies.

JRL and PLACL Investment Committees

Chair: Mary Kerrigan

The Boards of JRL and PLACL have delegated responsibility for oversight

and management of investment management activities within an

investment management governance framework to the JRL and PLACL

Investment Committees. Thecommittees assist the Group Board with

oversight of these activities.

The JRL and PLACL Investment Committees are responsible for:

• Overseeing the investment framework

• Overseeing the performance of the investment portfolio

• Reviewing performance of external investment managers and

eectiveness of the reporting procedures

• Approving entry into investment management agreements and other

documentation within the remit of their terms of reference

JRL and PLACL Audit Committees

Chair: Paul Bishop

The Boards of JRL and PLACL have established independent subsidiary

audit committees. The JRL and PLACL Audit Committees are mainly

heldon a nested basis, together with the Group Audit Committee. The

committees consider topics of mutual interest at the same time, but from

each committee’s perspective. Time is also set aside for each committee

to consider matters relevant to its respective company. Paul Bishop is

Chair of all three audit committees. Nick Poyntz-Wright is a member of the

JRL and PLACL Audit Committees to ensure their independence from the

Group Audit Committee. Senior Independent Director, Keith Nicholson,

isalso a member of the JRL and PLACL Audit Committees. Further

information is available in the Audit Committee Report on pages 71 to 75.

JRL and PLACL terms of reference

The matters reserved for the JRL and PLACL Boards are defined and

approved by each Board. They work in synergy with the Group Board.

TheJRL and PLACL Investment Committees and the JRL and PLACL

AuditCommittees have approved terms of reference which set out

theirresponsibilities.

BOARD ACTIVITIES

During 2020 the Board monitored the capital light strategy, the

development and execution of management actions to improve

thecapital position of the Group and the resilience of the Group by

reducing property exposure. At the strategy meeting in October the

Boardconsidered how the sustainability of the Group in a capital light

environment could be improved. The strategy remains aligned with our

purpose of helping people achieve a better later life. Due to restrictions

arising from COVID-19, the majority of Board meetings were held as

virtual meetings throughout the year. A series of virtual “Conversations

with the Board” sessions were held during the year to give employees the

opportunity to engage with various Non-Executive Directors, including

both the Group Chair, John Hastings-Bass, and independent Non-

Executive Director, Michelle Cracknell.

The Board lead by example and promote our values of doing the right

thing. The Section 172 Report in the Strategic Report on pages 46 to 50

looks at some of the principal decisions taken by the Board and how the

factors listed in Section 172(1) of the Companies Act 2006 were taken into

account in making those decisions.

64 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

GOVERNANCE IN OPERATION continued

AREA OF FOCUS KEY BOARD ACTIVITIES

REVIEWING STRATEGIC PROGRESS

• Held a Board strategy session in October 2020 to monitor progress against the Group’s strategy, and to

review and agree refinements to it. The strategy session focused on business viability, transformation and

growth, and future opportunities

• Reviewed the sustainability of the Group’s business model

• Reviewed and agreed the Group’s capital plan and updates to the capital plan

• Reviewed progress on a range of cost saving initiatives

• Carried out in-depth reviews into each of the Group’s business lines

RISK MANAGEMENT

• Material interaction with regulators

• Received Group Chief Risk Ocer reports and assessed the Group’s significant risks, regulatory issues and

emerging risks

• Approved the risk policies and risk framework for managing risk across the Group

• Monitored the Group’s capital and liquidity position

• Approved the Group’s Own Risk and Solvency Assessment (“ORSA”)

• Reviewed risks to the Group’s strategy and business plan

FINANCIAL REPORTING

AND CONTROLS AND DIVIDEND POLICY

• Reviewed the Group’s financial performance on an ongoing basis, and the Group’s half-year and annual

financial results

• Reviewed the dividend policy and agreed not to pay interim or final dividends for the financial year ended

31 December 2020

• Reviewed and challenged reports provided by its committees on key financial-related matters

STRUCTURE AND CAPITAL

• Assessed the Group’s capital and liquidity requirements including its Solvency II position

• Oversight of changes to improve the resilience of the Group’s capital position to insurance, market and

counterparty risks

• Continued examination of capital eciency improvement measures

• Oversight of external and intra-Group financing

• Called the remaining £63m 9.5% PLACL Tier 2 debt in March 2020

• Issued a £250m BBB rated Green Solvency II Tier 2 qualifying instrument with a maturity date in April

2031, an optional redemption period from October 2025 to April 2026 and a coupon of 7% in October 2020

• Completed a tender for £75m of the existing £230m Subordinated Tier 3 debt due in October 2020

CORPORATE GOVERNANCE

• Received regular updates from committees, management and external advisers on legal and regulatory

developments

• Reviewed activities in light of the Prudent Person Principle regulation

• Reviewed and updated the schedule of matters reserved for the Group Board

• Reviewed and updated the terms of reference of the principal committees of the Group Board

• Reviewed and approved updates to various Group policies

• Extensive shareholder engagement by the Chair and Senior Independent Director in addition to the

normal CEO/CFO programme

BE PROUD TO WORK AT JUST

• Reviewed outcomes and plans from the “Best Companies” survey, as part of a colleague engagement

strategy

• Held “Conversations with the Board” to promote two-way communication and hear views on areas of

focus, such as diversity and inclusion

• Introduced John Hastings-Bass to colleagues via an interactive Teams session, with extremely positive

feedback from colleagues

• Increased the percentage of women on the Board and made progress against the Board’s commitment

to improve gender diversity more generally at senior levels across Just

BOARD SUCCESSION PLANNING

• Significant focus was given to Board and executive succession planning (including the appointment of

new Group Chair and two independent Non-Executive Directors)

• Rearmed its commitment to Board and senior management diversity

• Undertook an externally facilitated evaluation of the Board’s eectiveness and the performance of the

Group Chair and individual Directors

65GVRAC RPR

Corporate Governance Code compliance statement

The Board considers that during the year, the Company has applied the

main principles of the UK Corporate Governance Code 2018 (the “Code”).

The Board considers that it has complied with the provisions of the Code

during the year and up to the date of the Directors’ Report.

The Corporate Governance Report sets out how we have applied the

principles of the Code.

Directors

Directors on the Board during the year and up to the date of this report

are as follows:

• John Hastings-Bass, Chair (appointed on 13 August 2020)

• Chris Gibson-Smith (retired on 13 August 2020)

• David Richardson, Group Chief Executive Ocer and Managing Director

of the UK Corporate Business

• Andy Parsons, Group Chief Financial Ocer (appointed on 1 January

2020)

• Paul Bishop, Independent Non-Executive Director

• Ian Cormack, Independent Non-Executive Director

• Michelle Cracknell, Independent Non-Executive Director (appointed on

1 March 2020)

• Steve Melcher, Independent Non-Executive Director

• Keith Nicholson, Senior Independent Director

• Kalpana Shah, Independent Non-Executive Director (appointed on

1 March 2021)

• Clare Spottiswoode, Independent Non-Executive Director

Commitment

The Non-Executive Directors have made a significant contribution and

commitment to ensuring the long-term sustainable success of the

business during 2020. The Board held ten meetings during the period from

1 January 2020 to 31 December 2020, of which eight were scheduled and

two were additional Board meetings called due to the needs of the

business. The table below shows Directors’ attendance at Board and

committee meetings for theperiod.

BOARD LEADERSHIP AND COMPANY PURPOSE

Leadership, purpose, values

Governance, good corporate behaviour and stakeholder engagement

arecritical to the long-term success of the Company. The regulatory

framework has evolved with the Code placing increased emphasis on

corporate culture, purpose, values, stakeholder engagement and more

generally a company’s contribution to widersociety.

Pages 62 to 67 on “Governance in operation” set out how the Board is led,

how it establishes the Company’s purpose and how it has monitored

performance, including delegation to the Board committees. Each of the

committees have set out their activities in their reports on pages 68

(Nomination Committee), 71 (Audit Committee), 76 (GRCC) and 78

(Remuneration Committee).

Board

4

Audit

5

Remuneration Nomination

6

Group Risk and

Compliance

JRL & PLACL

Investment

John Hastings-Bass 2/2 – 3/3 2/2 2/2 –

Chris Gibson-Smith 7/7 - 4/4 3/3 4/4 -

David Richardson 10/10 – – – – –

Andy Parsons 10/10 - - - - -

Paul Bishop

7

10/10 11/11 – 5/5 – 5/6

Ian Cormack 10/10 – 7/7 5/5 6/6 –

Michelle Cracknell 8/9 – 3/3 – – –

Steve Melcher 10/10 11/11 7/7 – 6/6 6/6

Keith Nicholson 10/10 11/11 – 5/5 6/6 –

Clare Spottiswoode 10/10 11/11 – – 6/6 –

1 John Hastings-Bass was appointed as a Director and Group Chair on 13 August 2020.

2 Chris Gibson-Smith retired as a Director and Group Chair on 13 August 2020.

3 Michelle Cracknell was appointed as a Director on 1 March 2020 and as a member of the Remuneration Committee on 14 May 2020. Michelle Cracknell was unable to attend the Board meeting on

26 November 2020 due to prior commitments.

4 Two additional Board meetings were held to approve discrete items of business between 1 January and 31 December 2020.

5 Two additional Audit Committee meetings were held between 1 January and 31 December 2020.

6 One additional Nomination Committee meeting was held to approve discrete items of business between 1 January and 31 December 2020.

7 Paul Bishop was unable to attend the JRL & PLACL Investment Committee on 25 March 2020 due to prior commitments.

Nick Poyntz-Wright and Mary Kerrigan are independent members of the JRL and PLACL Investment Committees but not the Just Group plc Board. None

of the Executive Directors hold a non-executive directorship in a FTSE 100 company.

Stakeholder engagement

The Board engages with its stakeholders and shareholders in a variety

ofways.

The stakeholder engagement and Section 172 Report on pages 44 to 50

sets out how the Board engages with and encourages participation from

these parties and the eect the engagement has had on the principal

decisions taken by the Board during the year.

The Colleagues and culture report on page 40 outlines more about our

culture and our approach to colleague engagement. During 2020, going

above the requirements of the Code, Michelle Cracknell was appointed to

join Steve Melcher as the independent Non-Executive Directors responsible

for championing workforce engagement activities. Further information on

their appointment and activities is included in the report. The report also

covers diversity and inclusivity and giving something back to our local and

wider communities, topics on which the Board receives frequent updates.

Shareholder engagement

The Group maintained an open dialogue with its major institutional

shareholders and debt investors during 2020 through a programme of

meetings undertaken by both the new Group Chair, Senior Independent

Director, Group Chief Executive Ocer, Group Chief Financial Ocer, and

members of the Investor Relations team. Activity seamlessly switched to

virtual means leading to greater eciency of Director time and increased

accessibility to capital providers. Equity led roadshows were held in March

and September 2020, with dedicated debt roadshows in June and

October, culminating in the issuance of a £250m Tier 2 Green Bond and

concurrent Tier 3 £75m buyback. Management also virtually attended

anumber of investor conferences and seminars, provided broker and

non-broker salesforce briefings, and throughout the year, hosted adhoc

meetings with both existing and prospective shareholders.

There was continuous engagement during 2020 as the Group discussed a

number of important issues including management actions in response to

prior regulatory change, capital levels and reduction of risks, diversity, and

the various strategic options available. The programme included major

shareholder meetings with the Group Chair following his appointment in

August 2020.

The Investor Relations team provides the Board with regular analysis

ofshareholder movements, market and peer activity, in addition to share

price performance. Analysts’ and brokers’ reports are made available to

all Directors, while the Board receives detailed feedback from our

corporate brokers following the results roadshow.

The ordinary shares are covered by nine analysts. The Investor Relations

team also maintains an open dialogue with non-covering analysts,

banks,brokers, credit analysts and other market participants. Fitch have

maintained their A/A+ credit ratings for members of the Group, but moved

the outlook to Negative from Stable following a COVID-19 related UK life

sector review in May 2020.

66 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

GOVERNANCE IN OPERATION continued

During 2020 Just Group plc’s shares fell by 12% to 69.9 pence, compared

withthe FTSE 350 life insurance index which fell by 11%.

The Senior Independent Director is available for consultation with

shareholders if theyhave concerns which are inappropriate to raise with

the Chair, Group Chief Executive Ocerorother Executive Directors.

Further information for shareholders isincluded on page 164.

Whistleblowing

There is a Group whistleblowing policy which has been approved by the

Board. Colleagues across the Group are able to raise any matters of

concern through our dedicated and independent whistleblowing hotline.

Reports are sent anonymously to the Group Company Secretary who

thenraises them with the Group Audit Committee Chair, who is the

Whistleblowing Champion and leads the review and response from the

relevant areas of the business. The Audit Committee has a regular agenda

item on whistleblowing, receiving updates on the operation of the policy

and any concerns raised.

2020 AGM resolutions

The 2020 AGM saw all resolutions passed with at least 89% of those voting

supporting the resolutions.

Conflicts of interest

A Group policy and process is in place to address possible conflicts of

interest of Directors. Any relevant conflicts and potential conflicts with the

interests of the Company that arise must be disclosed at the next Board

meeting for consideration and, if appropriate, authorisation by relevant

Board members in accordance with the Company’s Articles of Association.

DIVISION OF RESPONSIBILITIES

Board balance and independence

As at the date of this report there are ten members of the Board: the Chair

(independent on appointment), two Executive and seven Non-Executive

Directors (all of whom are considered independent). Keith Nicholson is the

Senior Independent Director. The Board considers that the current mix of

Executive and Non-Executive Directors is appropriate, preventing the

Board from being too large and ensuring that the Board remains

predominantly independent.

The Code recommends that at least half the Board, excluding the Chair,

should comprise Non-Executive Directors determined by the Board to

beindependent in character and judgement and free from relationships

or circumstances which may aect, or could appear to aect, their

judgement. The Board is comprised of more than half (excluding the Chair)

Non-Executive Directors, all of whom are independent in the manner

required by the Code.

Clear division of roles and responsibilities

The Board believes that documented roles and responsibilities for Directors,

with a clear division of key responsibilities between the Chair and the

Group Chief Executive Ocer, are essential elements in the Group’s

governance framework and facilitate the eective operation of the Board.

The Chair is responsible for the eective leadership and governance of the

Board but takes no part in the day-to-day running of the business. His key

responsibilities include:

• leading the Board eectively to ensure it is primarily focused on

strategy, performance, long-term value creation and accountability in

line with the Group’s purpose, values and culture;

• ensuring the Board determines the significant risks the Group is willing

to embrace in the implementation of its strategy;

• leading the succession planning process and chairing the Nomination

Committee;

• encouraging all Directors to contribute fully to Board discussions and

ensuring that sucient challenge applies to major proposals;

• fostering relationships within the Board and providing a sounding board

for the Group Chief Executive Ocer on important business issues;

• identifying development needs for the Board and Directors;

• leading the process for evaluating the performance of the Board, its

committees and individual Directors; and

• ensuring eective communication with major shareholders, regulators,

and other stakeholders.

The Group Chief Executive Ocer is responsible for leadership of the

Group’s business and managing it within the authorities delegated by

theBoard. His key responsibilities include:

• proposing and developing the Group’s strategy and significant

commercial initiatives;

• leading the executive team in the day-to-day running of the Group;

• ensuring the Group’s operations are in accordance with the business

plan approved by the Board, including the Board’s overall risk appetite,

the policies established by the Board, and applicable laws and

regulations;

• representation of the Group’s interests in the UK and abroad;

• maintaining dialogue with the Chair on important business and

strategy issues;

• recommending budgets and forecasts for Board approval;

• providing recommendations to the Remuneration Committee on

remuneration strategy for Executive Directors and other senior

management;

• leading the communication programme with shareholders and

ensuring the appropriate and timely disclosure of information to the

stock market; and

• leading and ensuring eective engagement with the regulator.

The Senior Independent Director, Keith Nicholson, provides a sounding

board for the Chair, and serves as an intermediary for the other Directors

when necessary. The Senior Independent Director also meets annually

with the Non-Executive Directors without the Chair being present to

appraise the Chair’s performance, and address any other matters which

the Directors might wish to raise. The Senior Independent Director

conveys the outcome of their discussions to the Chair. The Non-Executive

Directors of the Board will meet at least twice per year without the

Executive Directors being present.

Non-Executive Directors’ time commitments

Non-Executive Directors’ appointments are subject to review every

threeyears. Their letters of appointment set out the expected time

commitment. The need for availability in exceptional circumstances is

recognised. We request that the Board is informed of any subsequent

changes in the other significant commitments of the Directors.

The Board and Nomination Committee do not consider that any of the

Non-Executive Directors have too many other commitments which would

render them unable to devote sucient time to the Company’s activities.

The other Directorships of the Non-Executive Directors, are set out in their

biographies on pages 56 to 59. None of the Directors hold directorships in

FTSE 100 companies.

Information and support

Directors may seek independent professional advice at the Company’s

expense where they consider it appropriate in relation to their duties. All

Directors have access to the advice and services of the Group Company

Secretary and the Group General Counsel.

The role of the Group Company Secretary is to support the Chair and the

Board, which includes bringing all governance matters to the attention

ofthe Board and delivering a programme of Board and committee

meetings, training and senior management presentations to ensure

thateach Director has the information required in a timely manner to

discharge their statutory duties.

COMPOSITION, SUCCESSION AND EVALUATION

The principles of section 3 of the Code are applied in practice through the

activities undertaken by the Nomination Committee, to which the Board

has delegated responsibility. The Nomination Committee Report on pages

68 to 70 sets out, as required by provision 23 of the Code:

• the responsibilities delegated to the Nomination Committee;

• the process used for appointments of Executive and Non-Executive

Directors;

• the approach to succession planning;

• the Group’s policy on diversity and inclusion; and

• the gender balance of those in senior management.

67GVRAC RPR

Composition and succession planning

The Board is satisfied that there is the right balance of skills and

experience on the Board and its committees to support the Group’s

challenges ahead.

During the year the Board adopted a new Board diversity policy and

isworking via the Nomination Committee to achieve the Hampton-

Alexander diversity targets. The appointments of Michelle Cracknell and

Kalpana Shah have improved the gender balance of Directors on the

Board. More information can be found in the Nomination Committee

Report on page 70. In accordance with the Code, the Board believes that it

has the appropriate balance of capabilities, skills, expertise, independence

and knowledge to enable it and its committees to discharge their duties

and responsibilities eectively.

The Nomination Committee regularly reviews Board composition when

considering succession planning. In line with best practice, it reviews the

length of tenure of those Directors who have served on the Board for

overtwo three-year periods. Further information regarding succession

planning is included in the Nomination Committee Report on page 68.

All Directors’ appointments are subject to annual re-election by

shareholders and the reasons why their contribution is and continues to

be important to the Company’s long-term sustainable success is set out

inthe explanatory notes accompanying the resolutions.

Appointment of Chair and Non-Executive Directors

During the year the Nomination Committee led a process to appoint a

new Chair of the Group Board, John Hastings-Bass, who joined the Board

on 13 August 2020. The Nomination Committee also led a process to

appoint new Group Non-Executive Directors, Michelle Cracknell and

Kalpana Shah, who joined the Board on 1 March 2020 and 1 March 2021

respectively. More information about the appointments is included in the

Nomination Committee Report.

Development

All new Directors receive a formal induction on joining the Board and a

tailored training plan. Their induction includes discussions with the Chair

and Executive Directors as well as one-to-one briefings and presentations

from senior management on matters relating to the Group’s business, its

procedures and regulatory developments. As part of the annual Board

eectiveness review, the Chair discusses with each of the Directors their

training and development needs.

Board evaluation

Following the internal Board evaluation performed in 2020, the Board

conducted an external evaluation using Value Alpha Limited. Value Alpha

Limited is an advisory firm which specialises in evaluating board and

director eectiveness. Value Alpha Limited has no other connections with

the Group.

The evaluation was conducted on the basis of two-hour face-to-face

interviews, based around a structured questionnaire, with the Board’s

Directors, as well as the Directors of the life companies. Key stakeholders

were also interviewed during the process. Value Alpha observed a Board

meeting and, separately, meetings of the GRCC and the JRL and PLACL

Investment Committees. Two meetings of the Audit Committee were

observed.

The review concluded that the Board is performing strongly. Levels of

skills, knowledge and experience are high, and the Board displays an

independent mindset. Levels of diversity are improving with the

appointment of two female Directors.

The leadership of the Company has changed, with relatively recent

arrivals of a new Chair, Group Chief Executive Ocer and Group Chief

Financial Ocer. The evaluation found that the new Board members were

settling in well, and that the relationship between the Chair and Group

Chief Executive Ocer was healthy. The relationship between the Chair

and the Senior Independent Director was also found to be strong.

The Board meeting was considered to be highly eective, as were the

meetings of the committees. All meetings involved a Non-Executive

Director-only session at the beginning, with management and advisers

absent. Levels of constructive challenge was evident in all the meetings

observed, and there was a strong sense of teamwork. The committees

provided feedback to the Board in an eective manner, and the Group

Chief Executive Ocer’s report to the Board was comprehensive. The

Board allocated an appropriate amount of time to the key challenges

facing the business. The nested board arrangement was working well.

Opportunities for continued improvement identified in the evaluation

process included:

• Board refreshment - As Directors approach their term limits, this has

grown in importance

• Maintaining the focus on strategy, development, and identifying new

business opportunities

• Increasing Board visibility of the talent pipeline and strengthening

succession planning

• Continuing to improve the quality of the Board and committee packs

The Group Company Secretary has devised an action plan which will be

owned by the Nomination Committee, with periodic progress reports to

the Board.

AUDIT, RISK AND INTERNAL CONTROL

The Board has established an Audit Committee and a separate Group

Riskand Compliance Committee for oversight of audit, risk and internal

controls.

Audit Committee

The Board has delegated responsibility for overseeing financial reporting,

internal audit, external audit and the eectiveness of the internal controls

to the Audit Committee. The Audit Committee conducts a review of the

financial and non-financial statements to satisfy itself of the integrity of

the Annual Report and Accounts and reports its findings to the Board.

For information on the composition of the Audit Committee, its

responsibilities and its activities during the year, including those

activitiesrequired by provision 26 of the Code, please see the Audit

Committee Report on pages 71 to 75.

The Board takes care to present a fair, balanced and understandable

assessment of the Group’s position and prospects. The Board believesthat

the Annual Report and Accounts are fair, balanced and understandable

and provide the information necessary for shareholders to assess the

Group’s position, performance, business model and strategy.

The Audit Committee received a report from the internal auditor regarding

its review of the eectiveness of the Group’s internal controls. Information

regarding this review is set out in the Audit Committee Report.

The going concern statement and a review of whether there are any

material uncertainties to the Group’s ability to continue to adopt the

goingconcern basis of accounting in respect of the accounts is set out

inthe Audit Committee Report and Directors’ Report.

Group Risk and Compliance Committee

The Group’s risk management, including oversight of risk appetite and

therisk management framework, is the responsibility of the GRCC.

The information regarding management of risk can be found in the

GRCCReport on pages 76 and 77 and the risk management report in

theStrategic Report on page 32, which sets out the assessment of

principal and emerging risks including the procedures in place to

identifyemerging risks.

The Viability Statement is on page 33.

REMUNERATION

The Board has delegated oversight of remuneration policy and practices

to the Remuneration Committee. The way in which the principles have

been applied during the year and the information required by the Code in

accordance with provision 41 of the Code, including a description of how

executive pay policy was determined in accordance with provision 40 of

the Code, is included in the Remuneration Committee Report on pages

78to 92.

68 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Nomination Committee Report

I am pleased to present the

Committee’s report for the

year ended 31 December 2020

John Hastings-Bass

Chair

The report details the activities carried

outbythe Nomination Committee (the

“Committee”) during the year.

A significant amount of Committee time was focused on succession

planning for the Group Board, and in particular my own appointment,

aswell as the recruitment of Michelle Cracknell and Kalpana Shah who

joined the Board in March 2020 and March 2021 respectively. We reviewed

the Group Executive Committee (“GEC”) and senior leadership team

succession plans. We considered the Board diversity policy and progress

on diversity and inclusion across the Group, noting that the Group’s plan is

extending beyond its initial focus on gender to include more on the wider

aspects of diversity and inclusion, which wewelcomed.

ROLE AND RESPONSIBILITIES

A key role of the Committee is to keep under review the leadership

needs of the Company, and regularly review the size and

composition of the Board. Where appropriate, the Committee

makes recommendations for the orderly succession of Executive

and Non-Executive Director appointments. In addition, it oversees

the refreshment of the Board and its committees. In assisting and

advising the Board, the Committee seeks to maintain an appropriate

balance of capabilities, skills, knowledge, independence, experience

and diversity on the Board, taking into account the Group’s strategy

and the challenges and opportunities facing the Group.

The full responsibilities of the Committee are set out in the terms

ofreference, which are reviewed annually and can be found at

www.justgroupplc.co.uk.

COMMITTEE MEMBERSHIP AND MEETINGS

The members of the Committee as at 31 December 2020 are shown in

thetable below. I replaced Chris Gibson-Smith as Chair following our

respective appointment and retirement as Directors in August 2020.

Biographies of the Committee members can be found on pages 56 to 59.

The Committee meets at least twice a year and the Group Chief Executive

Ocer and Chief People Ocer are normally invited to attend meetings.

The Group Company Secretary also acts as Secretary to the Committee.

Attendance

scheduled

meetings

Committee members

John Hastings-Bass (Chair) 2/2

Chris Gibson-Smith 3/3

Paul Bishop 5/5

Ian Cormack 5/5

Keith Nicholson 5/5

1 Appointed as a Director on 13 August 2020.

2 Resigned as a Director on 13 August 2020.

In addition to the members of the Committee, members of the executive

team and senior management team were invited to attend meetings

andsubmit reports on their areas of responsibility. Other Non-Executive

Directors were also invited to attend and contribute to the challenge

anddebate.

69

Male 7

Female 3

Chair 1

Executive Directors 2

Non-Executive Directors 7

0–1 years 2

1–3 years 2

3–5 years 0

5–7 years 3

7+ years 3

GVRAC RPR

BOARD TENURE 2020 (INCLUDES PARTNERSHIP & JUST RETIREMENT)

INDEPENDENCE

GENDER DIVERSITY

ACTIVITIES OF THE COMMITTEE DURING THE YEAR

The Committee followed an annual rolling forward agenda which reflects

the duties and responsibilities set out in its terms of reference. In addition,

there were a number of standing items as well as topical business issues

to which the Committee gave its attention.

During 2020, the Committee undertook a number of significant activities,

including:

• Considered the skills and requirements of the Board and led the search

for the appointment of an additional independent Non-Executive

Director and new Group Chair.

• Reviewed the succession plans for both Executive and Non-Executive

Directors.

• Considered and reviewed an updated Board diversity policy, noting the

recommendation from the Parker review (2020) to have at least one

BAME (black, Asian and minority ethnic) director by 2024.

• Reviewed and updated its terms of reference.

The following sections give further information about the work carried out

by the Committee.

CHANGES TO THE GROUP BOARD

During 2020 there were changes to the Group Executive Directors and

Non-Executive Director roles. Andy Parsons joined the Board as Group

Chief Financial Ocer on 1 January 2020 and Michelle Cracknell was

appointed as a Non-Executive Director on 1 March 2020. On 12 May

2020, Chris Gibson-Smith informed the Board that it was his intention

to retire as Chair of the Group as soon as a suitable successor had

been identified. During the summer the Committee was heavily

involved in the Chair search and a full external process was instigated.

My appointment as Chair was eective as of 13 August 2020.

Following an external search consultancy selection exercise, Russell

Reynolds Associates (“RRA”) were engaged for the recruitment of an

independent Non-Executive Director. RRA has no other connection

to the Company or any Director. The Committee initially considered a

long and varied list of candidates prepared by RRA and, having agreed

a shortlist, interviewed candidates. Following a thorough interview

programme and due diligence checks, the Committee recommended

Kalpana Shah as its preferred candidate. The Board accepted the

Committee’s recommendation and agreed to appoint Kalpana Shah

with eect from 1 March 2021. Kalpana brings over 25 years of business

experience in the insurance and investment industry and was elected

to the governing body of the Institute and Faculty of Actuaries in

2019, where she is also a member of its Audit and Risk Committee.

BOARD COMPOSITION AND SKILLS

The Committee reviewed the composition and balance of the Board in

light of some of the changes described above. Aspart of this review, the

Committee considered:

• whether the balance between Executive and Non-Executive Directors

was appropriate;

• the membership of the Board committees and Board tenure. The

Committee renewed the search process for an additional female

Non-Executive Director for the Group Board;

• the independence of Non-Executive Directors, considering the

judgement, thinking and constructive challenge that they demonstrate

in their role;

• the business strategy and how the executive and Board skills and

capability mix aligns with the current composition. This is discussed

further in a separate section below;

• succession for the Group Board in light of tenure of the current

members; and

• the progress made on the diversity and inclusion plans for the Board

and senior leadership.

70 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

APPOINTMENT OF

JOHN HASTINGS-BASS AS CHAIR

The Senior Independent Director (“SID”), assisted

by members of the Committee (excluding the

incumbent Chair) and the Chief People Ocer,

led the process that resulted in the appointment

of John Hastings-Bass as the Chair for the Group.

Keysteps in the process are outlined below.

When the final results for 2019 were announced,

the Board Chair, Chris Gibson-Smith, announced

his intention to stand down as Chair when the

half year results were announced in 2020.

Ridgeway Partners, whoare signatories to the

Voluntary Code ofConduct for Executive Search

Firms, were appointed to support the Group on

the appointment. They are accredited by the

Hampton-Alexander Review for compliance with

the gender diversity code. Ridgeway Partners has

no other connection to the Board or any Director.

The Committee confirmed to the search

consultancy the key criteria for the role along

with a person specification. Due to the nature of

the role and the importance of it to the success

of the Group, the search focused primarily on

candidates with Chair experience, ideally of a

listed company, with retail and commercial

financial services experience.

The process involved a full map of the external

market, a shortlisting process led by the SID,

reviewing candidate backgrounds and

experience against the key criteria and

specification. Interviews were conducted by the

SID and members of the Committee. For the final

shortlisted candidates there were interviews

with the Group Chief Executive Ocer before a

recommendation was made to the Group Board.

The Board approved the appointment of John

Hastings-Bass which was announced on

12 August 2020 to take eect from the close

ofbusiness the following day following the

announcement of the Group’s half year results.

The SID kept shareholders updated on progress.

Nomination Committee Report continued

SUCCESSION PLANNING

The Board comprises individuals with significant financial services

experience, which has been valuable in supporting a challenging external

regulatory environment, enabling it to have good oversight of these

complex issues.

The Committee considered both the GEC and Board succession plans.

The GEC plan identified immediate emergency successors for critical roles,

to mitigate risk events, and candidates with a longer-term development

trajectory. The Committee remained satisfied that the plans were robust

and requested a further review in the second quarter of 2021. It was

noted that for future senior vacancies, the Group needed to continue to

have balanced shortlists to enable the diversity targets to be reached

by2023.

The Committee also considered the Board succession plans, noting the UK

Corporate Governance Code which states that serving more than nine

years may impair independence. As a number of the Non-Executive

Directors have more than six years’ service, the Committee has embarked

on an active Board refresh in order to ensure orderly succession. This will

remain a key priority and an opportunity to continue to evolve the Board’s

skills, experience and diversity in line with the Just strategy.

The Committee looked at the strategic challenges and the balance of skills

and experience across the current members and concluded that, with any

future additional appointments in 2021, it should look to strengthen the

expertise in the areas of digital technology and business/customer

process transformation. The Committee noted that some of the current

Non-Executive Directors may retire from the Board over the next 18

months. To ensure the continuation of the right depth of financial acumen

they may have to be replaced with people with similar skills.

DIVERSITY AND INCLUSION

The Board’s diversity and inclusion strategy has pledged to build a culture

at Just that has diversity and inclusion at its core, and we are committed

to hiring and developing diverse talent at all levels of the organisation.

Anew Board diversity policy was adopted during the year. The updated

policy:

• references the commitment to improving both gender and ethnic

diversity at Board level. This includes an aim to have at least one BAME

Director by 2024;

• links to the Group’s wider five point diversity and inclusion strategy; and

• includes reference to a consideration of diversity in succession plans for

leadership positions.

More information on the Group’s diversity and inclusion strategy can be

found on page 43. We are pleased that our Board is 30% women and 10%

BAME because we believe that a diverse and inclusive culture supports

and promotes better business performance, growth and innovation. The

Committee and the Board acknowledge that there is more to be done in

order to meet the Hampton-Alexander target of 33% of women on the

Board. We are making progress towards this target and, as part of its

succession planning to refresh the Board, the Committee will endeavour

to meet the target by the 2022 AGM.

On behalf of the Nomination Committee

John Hastings-Bass

Chair, Nomination Committee

15 March 2021

71GVRAC RPR

Paul Bishop

Chair, Audit Committee

I am pleased to present the

Audit Committee Report for the

year ended 31 December 2020

audit Committee Report

The report explains the work of the Group Audit

Committee (the“Committee”) during the year.

ROLES AND RESPONSIBILITIES, COMMITTEE MEMBERSHIP AND MEETINGS

The Board has delegated to the Committee responsibility for oversight of

the Group’s financial and regulatory reporting and the eectiveness of the

Group’s systems of internal controls and related activities. The Committee

is also responsible for maintaining an appropriate relationship with the

external auditor and monitoring audit activities.

The full responsibilities of the Committee are set out in the terms

ofreference, which are reviewed annually and can be found at

www.justgroupplc.co.uk.

The Committee operates separately from, but alongside, the Group Risk

and Compliance Committee (“GRCC”), with close cooperation between the

Chairs of these committees. This ensures that the audit work is focused on

higher risk areas and the results of internal and external audit work can be

used to inform the work of the GRCC.

The eectiveness of the Committee was reviewed as part of the annual

Board eectiveness review which took place in February 2021 and the

Board was satisfied with the Committee’s performance.

COMMITTEE MEMBERSHIP AND MEETINGS

The Committee members bring a wide range of financial and commercial

expertise necessary to fulfil the Committee’s duties and include

appropriate life insurance accounting expertise. The Board is satisfied

thatthe Committee Chair has recent and relevant financial experience as

required by the UK Corporate Governance Code 2018 (the “Code”). As a

whole the Committee has competence relevant to the sector in which the

Groupoperates. Kalpana Shah joined as a member of the Committee with

eect from 1 March 2021.

The biographies of the members of the Committee are set out on pages

56 to 59.

The Committee had nine scheduled meetings during the year and also

held two additional meetings.

Attendance was as follows during 2020:

Attendance

scheduled

meetings

Attendance

unscheduled

meetings

Committee members

Paul Bishop (Chair) 9/9 2/2

Steve Melcher 9/9 2/2

Keith Nicholson 9/9 2/2

Clare Spottiswoode 9/9 2/2

In addition to the members of the Committee, members of the executive

and senior management teams attended the meetings to submit reports

in their areas of responsibility. Other Non-Executive Directors were also

invited to attend and contributed to the challenge and debate. The

Group’s external auditor, PricewaterhouseCoopers LLP (“PwC”), attended

all meetings during the year. Their predecessor, KPMG LLP, attended all

meetings from January through to March 2020 in respect of the audit of

the 2019 Annual Report and Accounts. The Committee set aside time at

the beginning of each meeting without management present. The Chair

also met separately with the external auditor and the Director of Group

Internal Audit without executive management being present during

theyear.

72 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

audit Committee Report continued

AREAS OF FOCUS

The Committee follows an annual rolling forward agenda with standing

items considered at each meeting in addition to any matters arising and

topical business or financial items which the Committee has decided to

focus on. Regular reporting is received from Internal Audit and External

Audit as outlined later in this report.

Key areas of focus during the year included the following matters.

Financial reporting

In 2020 and to date in 2021, the Committee:

• reviewed the quality and acceptability of accounting policies

andpractices;

• reviewed the appropriateness and clarity of the disclosures and

compliance with financial reporting standards and relevant financial

and governance reporting requirements;

• reviewed material areas in which significant judgements have been

applied or there has been discussion with the external auditor;

• reviewed the assumptions critical to assessing the value of assets and

liabilities, in particular insurance liabilities and lifetime mortgages;

• reviewed documentation prepared in support of the going concern

basis and longer-term viability assessment, including the impact

ofCOVID-19;

• reviewed the nine key performance indicators (“KPIs”) used by

theGroup to assess its financial performance and approved the

replacement of the current KPI “in-force operating profit” with

“management expenses” and “underlying organic capital generation/

(consumption)” to reflect the focus on management expenses and

controlling costs and growing capital;

• reviewed the alternative performance measures (“APMs”) used bythe

Group and how these are disclosed within the Annual Report and

Accounts;

• reviewed the 31 December 2020 Group Annual Report and Accounts

and the half-year statements to 30 June 2020;

• assessed whether the Annual Report and Accounts, taken as a whole,

isfair, balanced and understandable and provides the information

necessary for shareholders to assess the Group’s performance,

business model and strategy and concluded that they are; and

• oversaw the preparation and review of the Group Solvency and

Financial Condition Report (“SFCR”) as at 31 December 2019, theGroup

and Solo Regular Supervisory Reports and the Annual Quantitative

Reporting Templates for the PRA submission in April2020.

To assist with the execution of their duties, the Committee considered

reports from the Group Chief Financial Ocer and the Group Chief

Actuary. It also reviewed reports from the external auditor on the

outcomes of their half-year review and year-end audit. The Committee

encouraged the external auditor to display the necessary professional

scepticism its role requires throughout the year.

The Committee was pleased to advise the Board that the judgements and

assumptions are appropriate and that the Annual Report and Accounts

are fair, balanced and understandable, and provide the necessary

information for shareholders to assess the Group’s position, prospects,

business model and strategy.

Accounting standards

No new accounting standards were introduced during 2020. The

Committee continued to monitor the progress towards being in a

positionto implement IFRS 17 and received regular status updates.

Workcontinues in parallel to develop Just’s systems solution for

computation of the new IFRS 17 accounting data.

There were amendments to IFRS 3 “Business Combinations”, IAS 1 and

IAS 8 “Definition of Material”, and IFRS 9, IAS 39 and IFRS 7 “Interest Rate

Benchmark Reform” during the year. These amendments do not have any

material impact on the Group.

Significant accounting judgements

The key areas of judgement considered by the Committee in relation

tothe 2020 accounts, and how these were addressed, are set out in the

following table.

73GVRAC RPR

Significant judgements Approach Action

LONGEVITY

ASSUMPTIONS

The length of time the Group’s Retirement Income

customers and Lifetime Mortgage customers will live, and

therefore the projected cash flows for Retirement Income

and Lifetime Mortgage assets, are key assumptions when

valuing the Group’s insurance liabilities and Lifetime

Mortgages.

Longevity experience is a key area of focus for the Board

and the Committee, and the Board receives regular reports

on the actual against expected number of deaths and the

likely causes, by condition, of any positive or negative

divergence as well as the output of industry studies. The

Committee reviewed the longevity assumptions and

determined that the mortality improvements basis should

be updated to replace the CMI 2017 model source with

CMI 2019 for reporting as at 31 December 2020. The

expected impact on future mortality rates (over both the

short and long term) was considered and it was concluded

that, given the level of uncertainty for the impact of

COVID-19, future mortality improvement assumptions

would not be adjusted for the impact of COVID-19 for the

year ended 31 December 2020.

CREDIT DEFAULT

ASSUMPTIONS

Credit default assumptions are used to determine the

valuation rate of interest used in the calculation of

insurance contract liabilities. The Group’s asset portfolio

includes a material amount of illiquid assets. For corporate

bonds, credit default assumptions are calculated taking into

account both historical default experience for each rating

class and the current spread on the asset. For Lifetime

Mortgages it is captured using the expected NNEG

shortfalls. For other illiquid assets including infrastructure

and ground rents, credit default assumptions are set to a

proportion of the equivalent corporate bond default

allowance.

The Committee reviewed the key assumptions and

determined that they should remain unchanged. The

potential impact of COVID-19 was considered and it was

concluded that no adjustment was required for any

elevated rate of default or downgrade from the economic

eects of COVID-19 due to sucient prudence within the

existing methodology.

EXPENSE AND EXPENSE

INFLATION

ASSUMPTIONS

Future maintenance expenses are used in the

measurement of the insurance contract liabilities. The

assumptions reflect the expected future expenses that will

be required to maintain the in-force policies at the balance

sheet date, including an allowance for project costs and a

margin for prudence (IFRS only).

The Committee reviewed and approved proposals to

update maintenance expense assumptions in line with the

latest expense forecasts provided by management, which

included apportionment by categories of maintenance,

acquisition, development and non-recurring, and by entity,

and to revise the inflation rate to explicitly allow for

expected increases linked to CPI, RPI and earnings to

determine a weighted average inflation rate.

PROPERTY

ASSUMPTIONS USED TO

VALUE THE GROUP’S

LIFETIME MORTGAGES

The values of the Group’s Lifetime Mortgages are reliant on

a range of assumptions, of which the key ones are future

house price growth and house price volatility. These

assumptions determine the expected shortfall on

redemption in respect of the NNEG which is given to all

lifetime mortgage customers. Small changes in these

assumptions (particularly future house price volatility) can

have a significant impact on the overall asset valuation.

Management use the Oce of National Statistics (“ONS”)

indices to determine current property prices. TheONS

indices uses publicly available sales information.

The Committee reviewed both these key assumptions

including detailed analyses from management. It was

determined that the assumption for property price volatility

should remain unchanged from the 2019 year end and that

the assumption for property price inflation should reduce

by 50 basis points. This included consideration of the

potential impact of the UK’s withdrawal from the European

Union and the COVID-19 pandemic on UK property prices.

The Committee reviewed, and challenged as appropriate,

the detailed analysis and agreed with the proposals.

During 2020 management also assessed the

appropriateness of using the ONS indices to determine

property prices and on reviewing the analysis the

Committee concluded that it was appropriate to continue

to use the ONS indices to determine property prices at the

valuation date.

INVESTMENT IN

SUBSIDIARIES

Just Group plc’s investment in subsidiary undertakings is a

significant asset and underpins the net equity reported by

Just Group plc in its individual Parent Company financial

statements.

The Group’s policy is to hold investments at cost and assess

annually for indicators of impairment.

The carrying value of this asset is assessed through the

consideration of the in-force and new business cash flows

of the underlying subsidiary companies. The Committee

reviews assessments, the recoverability of the balances

reported and appropriateness of accounting policies, as

part of its work on financial reporting. As part of the

preparation of the 2020 accounts, the Committee

considered whether any of the investment in subsidiaries

should be impaired. After reviewing the recoverable

amounts for the Group’s investments in subsidiaries, an

impairment of £14m was recognised in respect of the

investment relating to PLACL as a result of a dividend

distribution to its parent, during the year.

74 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

AUDIT Committee REPORT continued

Alternative Performance Measures

The Committee considered the APMs used by the Group and whether

these remained appropriate and useful measures. The Committee

reviewed the disclosures in the Annual Report and Accounts in relation

tothe APMs used by the Group and also considered compliance

withtheguidance on APMs set out by the European Securities and

MarketsAuthority.

Going concern

As part of the assessment of going concern and longer-term

viability for December 2020, the Committee considered the

impact of COVID-19 and the regulatory position of the Group.

The Committee also considered other risks in stressed scenarios for

the going concern assessment including the risks associated with

capital requirements to write anticipated levels of new business which

form part of the Group’s business plan; the projected liquidity position

of the Group; eligible own funds being in excess of minimum capital

requirements in stressed scenarios; the findings of the Group Own

Risk and Solvency Assessment; risks arising from the UK’s withdrawal

from the European Union; and the risk of regulatory intervention. In

addition to risks, the Committee considered the Group business plan

approved by the Board in November 2020 and the forecast regulatory

solvency position calculated on a Solvency II basis, which includes

scenarios setting out possible adverse trading and economic conditions

as a result of the COVID-19 pandemic. Steps taken by the Group

during 2020 to improve capital eciency were also considered.

Regulatory reporting oversight

The Committee receives regular updates on the Group’s regulatory

reporting matters, including the oversight and preparation of the

Group’sannual SFCR. The Committee also receives regular updates

relating to the ongoing publication by the Prudential Regulation

Authorityof supervisory statements that set out its expectations

forcertain aspects of prudential regulation.

The Committee received and discussed reports from Group Internal

Auditon the Group’s processes in accordance with the PRA Supervisory

Statement, SS3/17, Solvency II: matching adjustment - illiquid unrated

assets and equity release mortgages (“SS3/17”). The Committee received

assurance that the restructuring of the lifetime mortgages into matching

adjustment eligible notes had been designed to satisfy the requirements

as set out in SS3/17.

The Committee has responsibility for overseeing the recalculation of

Transitional Measures on Technical Provisions (“TMTP”). The Committee

reviewed and approved changes to the TMTP methodology for inclusion in

the SFCR at 31 December 2020 to reflect refinements in the methodology.

The implementation of Solvency II in practice has continued toevolve and

is expected to do so in the future. There was regular engagement with the

PRA on the changes proposed to the TMTP and other matters aecting

reporting during the year.

EXTERNAL AUDIT

Appointment

Following the tender process in 2019, the Board approved the

appointment of PwC as external auditor for the year ended 31 December

2020 and a resolution put to the shareholders at the 2020 AGM was

subsequently approved. KPMG resigned as external auditor following

thecompletion of the audit for the year ended 31 December 2019.

Shareholders were notified that there were no matters that needed to

bebrought to their attention. The lead audit engagement partner who

was appointed for the 2020 audit is Lee Clarke. This being the first year

since appointment, there are no current plans to re-tender the service

oftheexternal auditor, which was last undertaken in 2019. There are no

contractual obligations restricting the Group’s choice of external auditor.

The Committee confirms it has complied with The Statutory Audit Services

for Large Companies Market Investigation (Mandatory Use of Competitive

Process and Audit Committee Responsibilities) Order 2014, published by

the Competition and Markets Authority on26 September 2014.

Oversight

The Committee is responsible for recommending to the Board the

appointment, remuneration and terms of engagement letter of the

external auditor. It also ensures that appropriate audit plans are in place

and that an eective relationship is maintained with the auditor. This

isachieved through regular reports from the auditors and by holding

meetings with the lead audit engagement partner, Lee Clarke, without

thepresence of management. Private meetings were also held with Lee

Clarke and the Chair of the Committee on a regular basis.

In 2020 and to date in 2021, the Committee:

• reviewed the 2020 year-end audit work plan including the scope of

theaudit and the materiality levels adopted by the external auditor;

• reviewed the Group’s policy on the use of the external auditor for

non-audit work and concluded that further work commissioned during

the year was in compliance with the policy. It also evaluated: a) the

independence and objectivity of the external auditor having regard to

the report from the external auditor describing the general procedures

to safeguard independence and objectivity; b) the level, nature and

extent of non-audit services provided by the external auditor; c)

whether the external audit firm was the most suitable supplier of the

non-audit services; and d) the fees for the non-audit services, both

individually and in aggregate;

• agreed the terms of engagement and fees to be paid to the external

auditor for the audit of the 2020 Annual Report and Accounts;

• reviewed recommendations made by the external auditor in their

management letters and on the adequacy of management’s response;

and

• reviewed the external auditor’s explanation of how the significant risks

to accounts were addressed.

The Committee received regular updates from management and PwC on

preparations for completing the year-end close process and audit in light

of the challenges posed to our usual processes, and those of PwC, by the

COVID-19 pandemic. The Committee was reassured by the actions that

management and PwC had taken to ensure that there was minimal

impact on the year-end timetable.

The Committee considered the quality and eectiveness of the external

audit process. Its eectiveness is dependent on appropriate audit risk

identification at the start of the audit cycle. TheCommittee receives a

detailed audit plan from PwC, identifying itsassessment of these key risks.

For the 2020 reporting period the significant risks identified were broadly

in line with 2019. The key risks identified were in relation to the valuation

of insurance liabilities, the valuation of loans secured by residential

mortgages, recoverability of investment in subsidiaries and the valuation

of hard tovalueinvestments. The significant judgements made in

connection with these risks are set out in the table on page 73. The

Committee challenged the work done by the auditor to test management’s

assumptions and estimates around these areas. The Committee assesses

the eectiveness of the audit process in addressing these matters through

the reporting received from PwC at the interim and year end. In addition,

the Committee seeks feedback from management on the eectiveness

ofthe audit process. For the 2020 reporting period, management were

satisfied that there had been appropriate focus and challenge on the

primary areas of audit risk and assessed the quality of the audit process

tobegood. The Committee concurred with the view of management.

During the year, the FRC’s Audit Quality Review team (“AQR”) completed a

review of the audit of the Group’s financial statements for the year ended

31 December 2018. The AQR routinely monitors the quality of the work of

certain UK audit firms through inspections of sample audits and related

procedures. One finding was raised as a limited improvement in relation

to work performed by KPMG, the previous external auditor. Having

considered the report and discussed it with the KPMG Lead Audit Partner,

the Committee was satisfied that the finding was addressed.

Independence and non-audit services

The Group has a policy in relation to the provision of non-audit services by

our external auditor. All non-audit services provided by the external

auditor are subject to review and approval by the Committee.

75GVRAC RPR

The policy ensures that the Group benefits from the cumulative knowledge

and experience of its auditor while ensuring at the same timethat the

auditor maintains the same degree of objectivity and independence.

During the year, the value of audit services to the Group was £2.2m (2019:

£1.26m), which included first year audit costs. The value of non-audit

services during the year amounted to £1.1m (2019: £1.13m), comprising:

£m

Audit-related assurance services (audit of regulatory returns) 0.6

Audit-related assurance services (other services) 0.2

Other assurance services 0.1

The ratio of non-audit services to audit services fees was 1:2.4. Non-audit

services of £0.6m were provided during 2020 in relation to the audit of the

Group’s Solvency II regulatory returns and a further £0.2m of non-audit

services were provided in relation to the review of the Group’s interim

report and IFRS 17 assurance. Other assurance services of £0.1m were

provided in relation to the Group’s debt issuance during the year.

Non-audit services for 2020 were similar to the previous year. These

non-audit services are considered to be closely related to the work

performed by the external auditor of the Group and the Committee

determined that the services provided would not impact the

independence of the external auditor.

As part of the evaluation of the objectivity and independence of the

external auditor, the Committee has received and reviewed written

confirmation that PwC has performed their own assessment of

independence within the meaning of all UK regulatory and professional

requirements and of the objectivity of the audit engagement partner

andaudit sta and have also concluded that the independence is not

impaired by the nature of the non-audit engagements undertaken during

the year, the level of non-audit fees charged or any other facts or

circumstances.

The level of non-audit services oered reflects the external auditor’s

knowledge and understanding of the Group. The Group has also

appointed other accountancy firms to provide certain non-audit services

in connection with internal audit, governance, tax and regulatory advice,

and with regard to the implementation of IFRS 17. An analysis of auditor

remuneration is shown in note 5 to the consolidated financial statements.

The Committee has approved PwC’s remuneration and terms of

engagement for 2020 and remains satisfied with PwC’s work and that

PwC continues to remain independent and objective.

RISK MANAGEMENT AND INTERNAL CONTROL

The Board has overall responsibility for establishing and maintaining the

Group’s systems of internal control and for undertaking an annual review

of the control systems in place. The Group operates a three lines of

defence model. The first line of defence is line management who devise

and operate the controls over the business. The second line functions are

Risk Management, Compliance and Actuarial Assurance, which oversee

the first line, ensure that the system of controls are sucient and are

operated appropriately, and also measure and report on risk to the Group

Risk and Compliance Committee. The third line is Internal Audit, who

provide independent assurance to the Board and its committees that the

first and second lines are operating appropriately.

The Group’s internal control systems comprise the following key features:

• establishment of clear and detailed terms of reference for the Board

and each of its committees;

• a clear organisational structure, with documented delegation of

authority from the Board to senior management;

• a Group policy framework, which sets out risk management and control

standards for the Group’s operations; and

• defined procedures for the approval of major transactions and capital

allocation.

The Committee keeps under review the adequacy and eectiveness of the

Group’s internal controls. It is the view of the Committee that the Group’s

system of risk management and internal controls is currently appropriate

to the Group’s needs.

INTERNAL AUDIT

The Committee receives an annual plan from the Director of Group

Internal Audit, regular updates on internal audit work carried out during

the year and the internal audit end of year report.

In 2020, the Committee:

• continued to oversee the Internal Audit function with the Director

ofGroup Internal Audit reporting directly to the Committee Chair;

• oversaw the engagement of EY to work with the Internal Audit team on

the combined internal audit assurance work to complete the audit plan

for 2020;

• reviewed and approved the rolling 12 month internal audit plan

ensuring the alignment to the key risks of the business;

• reviewed results from audits performed, including any unsatisfactory

audit findings and related actions plans;

• reviewed open audit actions and monitored progress against them;

• conducted an assessment of the Internal Audit function;

• considered and approved the implementation of an updated

ratingsystem for findings identified by the Group’s internal assurance

providers;

• reviewed and approved the Internal Audit Charter, which is available to

view on the Group’s website; and

• reviewed and approved the Internal Audit calendar for 2021.

Monitoring and review of the scope, extent and eectiveness of the

activity of the Group Internal Audit team is an agenda item at each

regular Committee meeting. The Committee considers and approves the

Internal Audit plan annually and looks to ensure its alignment withthe

external audit and the Group’s risk management approach. Reports from

the Director of Group Internal Audit include updates on audit activities,

progress of the Internal Audit plan, the results of any unsatisfactory

audits and the action plans to address these areas. TheCommittee

regularly considers the resource requirements of the Internal Audit team

and remains satisfied that it has the appropriate resources and the

relevant skills and experience to fulfil its roleeectively.

The Committee held private discussions with the Director of Group

Internal Audit as necessary during the year. The Committee Chair

alsomeets with the Director of Group Internal Audit regularly outside

theformal Committee process and is accountable for the setting

andappraisal of his objectives and performance with input from the

Group ChiefExecutive Ocer.

An External Quality Assessment (“EQA”) of Internal Audit is carried

outevery three to five years, with the last one being undertaken at the

end of 2019. The EQA was completed by an independent firm which

assessed the function against the Chartered Institute of Internal Auditors’

standards with an overall rating of Generally Conforms. Thisisthe highest

rating that can be achieved. The function remains on its journey of

continuous improvement with the full sponsorship ofthe Committee.

WHISTLEBLOWING

The Committee receives regular whistleblowing updates. During the

year,no incidents of whistleblowing were reported. The whistleblowing

framework was revisited and enhancements were made to the process.

The Group has in place an external confidential dedicated telephone

hotline for employees to use and whistleblowing training was provided

toemployees during the year.

The Chair of the Committee is the Group’s whistleblowing champion and

isresponsible for ensuring and overseeing the integrity, independence,

autonomy and eectiveness of the Group’s policies and procedures on

whistleblowing including the Group whistleblowing policy which is

reviewed annually.

On behalf of the Audit Committee

Paul Bishop

Chair, Audit Committee

15 March 2021

76 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

GROUP RISK AND COMPLIANCE COMMITTEE REPORT

I am pleased to present the

Group Risk and Compliance

Committee Report for the year

ended 31 December 2020

The report outlines the work of the Group Risk

and Compliance Committee (the “Committee”)

during the year.

ROLES AND RESPONSIBILITIES

The Committee’s purpose is to assist the Board in discharging its

responsibility to maintain eective systems of risk management,

compliance and internal control throughout the Group. The Board has

delegated responsibility to the Committee for overseeing the risk

management and internal control frameworks of the Group, and

regulatory compliance. The Committee plays a key role in providing

eective oversight and challenge on the continued appropriateness and

eectiveness of the risk management and internal control framework

andrisk strategy, and the principal and emerging risks inherent in the

business. The Committee also oversees the results of capital and liquidity

modelling and assesses how these may aect the likely achievement of

the Group’s strategic objectives and continued viability of the business.

The Committee is responsible for considering the above matters from

theperspectives of the Company and each of the Group’s life companies,

JustRetirement Limited (“JRL”) and Partnership Life Assurance

CompanyLimited (“PLACL”), as well as from the perspective of any other

Group entity as appropriate. The Committee works closely with other

committees, in particular the Group, JRL and PLACL Audit Committees,

and the JRL and PLACL Investment Committees. The cross membership

between Board committees promotes a good understanding of issues

and ecient communication. The full responsibilities of the Committee

are set out in the terms ofreference, which are reviewed annually and can

be found at www.justgroupplc.co.uk.

COMMITTEE MEMBERSHIP AND MEETINGS

The members of the Committee during the year are shown in the table

below. John Hastings-Bass replaced Chris Gibson-Smith as a member

following their respective appointment and retirement as Directors in

August 2020. Kalpana Shah joined as a member on 1 March 2021.

Biographies of the Committee members can be found on pages 56 to 59.

Non-Executive Directors who are not members of the Committee were

also invited to attend and contributed, at the invitation of the Chair, to

thechallenge and debate. The Group Chief Executive Ocer, Group Chief

Financial Ocer, Group Chief Risk Ocer and Group Chief Actuary attend

all meetings. Other Group executives and senior managers were invited

toattend the meetings to report, where appropriate, on their areas

ofresponsibility.

Attendance

scheduled

meetings

Committee members

Keith Nicholson (Chair) 6/6

Ian Cormack 6/6

Chris Gibson-Smith 4/4

John Hastings-Bass 2/2

Steve Melcher 6/6

Clare Spottiswoode 6/6

1 Resigned as a Director on 13 August 2020.

2 Appointed as a Director on 13 August 2020.

There were four quarterly meetings for regular risk and compliance

reports and two meetings for in-depth reviews of specific risk issues

during 2020. The Chair of the Committee holds regular private meetings

with the Group Chief Risk Ocer to ensure that all significant areas of

riskare considered and that risk management is embedded within

thebusiness. At each quarterly meeting the Committee sets aside time

tomeet without management present or with only the Group Chief

RiskOcer present, as necessary. The eectiveness of the Committee

was reviewed as part of the annual Board eectiveness review which

tookplace in February 2021 and the Board was satisfied with the

Committee’s performance.

KEITH NICHOLSON

Chair, Group Risk and

Compliance Committee

77GVRAC RPR

AREAS OF FOCUS

The Committee follows an annual rolling forward agenda with standing

items considered at each quarterly meeting in addition to any matters

arising and risk or compliance matters which the Committee has decided to

focus on. Key areas of focus during the year included the following matters.

Deep dive reports

The Committee carried out in depth reviews of key risks to the business

during the year. This helps the Committee gain a thorough understanding

of dierent aspects of the Group’s risks and consider whether the risk

management framework adequately monitors and reports on the risk

exposures in each business area. The deep dives also allow a fuller

discussion of the approaches taken by management in mitigating the risks

and enable appropriate challenge from the Committee. Deep dive reviews

in 2020 included an overview of reinsurance counterparty risk exposure

and how it is managed, and an update of the primary elements of property

risks impacting the Group, how they are measured, where property risk is

relative to risk appetite and options available to manage the risks.

Risk governance and oversight

The Committee ensured that the risk framework continued to be

developed in line with the business needs, and that policies and practices

were kept up to date. It reviewed and approved the risk management

planfor the year. It considered the appropriateness of the risk appetites,

against which the business plan and strategy are assessed, and

concluded that they should remain unchanged following a significant

update the previous year. Contingency arrangements were also

considered and approved during the year.

Following an external review of the eectiveness of the Group’s risk

management in 2019, the Committee has overseen the progress in

implementing the recommendations from this review, which have now

been addressed.

During the year, the Committee approved a statement of risk culture

expectations for the Group. The Committee also considered and agreed

an initiative to assess the Group’s existing risk culture through line

manager and employee surveys, and to implement remedial action

where appropriate. Positive progress on further improvements to risk

culture was reported to the Committee later in the year.

The Committee considered and approved the Group’s annual Own Risk and

Solvency Assessment (“ORSA”) report during the year, which provided a

risk review of the Group as at a specific date together with a forward

looking assessment of the key risks it faces. The Committee also received

quarterly updates on the Group’s evolving risk profile for review and

discussion. A key area of focus for the Committee was on the actions being

taken by management to ensure the Group’s residential property risk

exposure is within appetite and to achieve greater diversification of

investment risk in accordance with the PRA’s Prudent Person Principle.

Further details of the Group’s principal risks can be found on pages 34 to 37.

Emerging risks

Various emerging risks were considered by the Committee during the year

with particular focus on the potential impacts of a failure to conclude a

post-Brexit trade deal, climate change and COVID-19.

The Committee received reports on the status of the Group’s climate

changeproject, which covered primary workstreams on risk

management, sustainable investments and property risk. The Committee

concluded that good progress had been made on this initiative. It was

agreed that there needed to be continued focus on managing this risk

with ongoing development of the Group’s climate change strategy,

disclosures and modelling capabilities for climate risks.

The Committee considered the potential impact on the Group’s business

of the UK failing to conclude a trade deal with the EU by the end of the

post-Brexit transition period. A key area of focus was the steps taken

toensure that the Group could continue to discharge its contractual

obligations to make payments to its policyholders resident in an EEA state

from 1 January 2021.

Business resilience

Operational resilience, including cyber security, continued to be an area

offocus during the year. The Committee received regular updates on the

status of the Group’s business continuity planning, disaster recovery

arrangements and information security position. As part of its review, the

Committee considered steps taken by the Group to remain resilient in a

remote working model for its operations following the introduction of

lockdown restrictions. The Committee was also responsible for monitoring

the Group’s progress in developing its operational resilience arrangements

to meet future regulatory requirements.

During the year there was a focus on the key financial risks and

operational risks to the Group arising due to the COVID-19 pandemic.

Financial risks considered included, amongst others, short and long-term

liquidity risk, property risk, investment credit risk and interest rate risk.

Theimpact of market participants’ risk aversion, economic slowdown

andextensive quantitative easing on interest rate risk was an area that

received close attention by the Committee during the year. The prospect

of house price movement due to economic uncertainty was discussed

given the Group’s property risk exposure. Longevity risk also received close

attention in light of the potential significant increase in mortality over

long-term expectations due to the impact of COVID-19.

Operational risks due to the COVID-19 pandemic were reviewed including

the impacts on our people, productivity, technology and third party

providers. The Committee was particularly interested in gaining comfort

that the appropriate steps were being taken by the Group to ensure the

mental and physical wellbeing of employees, particularly during the

periods of lockdown, and that the necessary cyber security measures

were in place for remote working. Protecting vulnerable customers during

this dicult period was also a key area of concern for the Committee. The

Committee was satisfied with the steps taken by the Group to protect its

key stakeholders’ needs, and to assess the direct and indirect risks

impacting the business, including property risk. The direct and indirect

impacts of COVID-19 continue to be a key focus area for the Committee.

Regulatory risk

During 2020, there continued to be a high level of regulatory activity as

covered in more detail in principal risks and uncertainties on page 34.

Thisincluded engagement with the regulators concerning the potential

impact of COVID-19. The regulation of lifetime mortgages both in terms of

prudential regulation and customer outcomes featured significantly in the

work of the Committee. The Committee reviewed the approach adopted

on the treatment of lifetime mortgages in solvency capital in light of the

significant fall in interest rates during the year. It concluded that no

change was necessary.

Letters from the FCA in October 2020 set out its view of the key risks

lifetime mortgage providers and mortgage intermediaries pose to their

consumers or the markets in which they operate together with the FCA’s

expectations including how firms should be mitigating these risks. In

response, the Committee assessed the Group’s current position and

concluded that there were appropriate systems and controls in place to

mitigate the significant risks.

Compliance and conduct risk

The Committee regularly reviews and challenges management’s view

ofconduct risks across the Group. The risk to appropriate customer

outcomes is considered against a dashboard of measures in general, and

against the quality of advice provided by advisers in the HUB Group and the

number and root cause of complaints arising within the Group. During the

year, the Committee received an update on the programme of work to

update the conduct risk framework to ensure that consumer outcomes are

properly considered and to develop the Group’s approach to managing

conduct risk in general. This included proposed changes to the conduct risk

dashboard to incorporate lessons learned during the COVID-19 pandemic.

The Committee considered and approved changes to various Group

policies and the 2021 compliance monitoring plans during the year. It

received regular conduct and prudential compliance reports, money

laundering reporting ocers’ reports and an annual report from the

Group Data Protection Ocer. The Committee also received regulatory

updates to assess whether there were any matters that required specific

attention and to oversee the Group’s actions to ensure compliance with

regulatory changes relevant to the business.

On behalf of the Group Risk and Compliance Committee

Keith Nicholson

Chair, Group Risk and Compliance Committee

15 March 2021

78 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Directors’ remuneration report

I am pleased to present the

Remuneration Committee

Reportfor the year ended

31December 2020

IFRS net assets

£

2,490.4

M

2019: £2,321.0m

Organic capital

generation

£

221

M

2019: £36m

STATEMENT FROM THE CHAIR OF THE REMUNERATION COMMITTEE

Dear Shareholder

2020 has presented our business with tremendous challenges, the likesof

which no one anticipated when budgets and business plans were set at

the end of 2019. COVID-19 has required our business leaders, managers

and colleagues to operate within a fast-changing and uncertain

environment to focus on the delivery of business priorities, as set out in

the Strategic Report. The short-term reduction in some business activity

was limited and the majority of the business was able to continue

operating remotely as eectively as they had been prior to lockdown. As

shareholders will be interested in this context, itis helpful to note that:

• no employees were put on furlough;

• while there is continual minor restructuring, no redundancies were

made as a result of COVID-19;

• no government or other COVID-19 related loans have been received;

and

• the Company has completed its journey to become capital self-

sucient and has achieved this key milestone well ahead of its original

target date of 2022.

Support to our customers remained a priority and we have not seen any

drop in customer experience scores as a result of COVID-19 and the

requirement for all colleagues to work from home at very short notice.

Thegovernment lockdown eectively closed the housing market, which

meant many people were unable to buy or sell properties. To help, Just

reduced Lifetime Mortgage interest rates during this period on the

properties of many customers who had died, or moved into long-term

care. This reduced the amount of interest due. To read more about how

we helped our customers turn to page 21.

The focus has been on building capital self-suciency and the business

plan agreed by the Board in 2019 did not include the payment of dividends

in 2020. The dividend policy has not been impacted by COVID-19.

PROGRESS ON CAPITAL

Capital has been included in the Short Term Incentive Plan (“STIP”) since

2019 and was a new measure in the shareholder approved Long Term

Incentive Plan (“LTIP”) for 2020. The actions taken by David and his

management team during the course of 2020 in pursuit of capital

generation have been supported by shareholders. Organic capital

generation continues to be an important strategic focus in 2021, as it

provides management with additional options to accelerate innovation

togrow the business to benefit our customers and generate value

forshareholders.

adjusted operatinG profit

before tax

£

239.3

M

2019: £218.6m

NEW BUSINESS

PROFIT

£

199.2

M

2019: £182.3m

IFRS Profit Before Tax

£

236.7

M

2019: £368.6m

IAN CORMACK

Chair, Remuneration Committee

1 Alternative performance measure.

79GVRAC RPR

The Remuneration Committee, on the recommendation of David

Richardson, applied its discretion to moderate the bonus pool, however

were careful to ensure that the incentive schemes rewarded strong

underlying performance. In addition, awards under the LTIP in 2020 were

the first to be granted with a reduced normal award level for the CEO of

150% of salary, in line with best practice.

2020 has been David Richardson’s first full financial year as Group Chief

Executive Ocer and Andy Parsons’ first financial year as Group Chief

Financial Ocer.

As Remuneration Committee Chair, I would like to extend my thanks

toChris Gibson-Smith, who was a valued member of the Committee in

addition to his role as Group Chair, prior to his resignation from the Board

during the year. I was pleased to welcome both Michelle Cracknell and

John Hastings-Bass to the Committee in 2020.

Remuneration Committee membership in 2020

Member Appointment period Meetings attended

Ian Cormack (Chair) 4 April 2016 – present 7/7

John Hastings-Bass 13 August 2020 – present 3/3

Chris Gibson-Smith 4 April 2016 – 13 August 2020 4/4

Steve Melcher 15 May 2016 – present 7/7

Michelle Cracknell 14 May 2020 – present 3/3

REMUNERATION COMMITTEE 2020

The Committee is made up exclusively of independent Non-Executive

Directors.

The terms of reference are available on the Company website. The focus

of the Committee includes the remuneration strategy and policy for the

whole Company as well as the Executive Directors.

The key activities of the Committee during the year included:

• review and approval of the Directors’ Remuneration Report;

• approval of the grant of the 2020 awards and performance conditions

under the Long Term Incentive Plan;

• assessment of the performance of the Executive Directors against the

2020 corporate financial, non-financial and personal performance

outturns, in relation to their annual bonus, in the context of wider

Company performance and approving the payments;

• approval of the list of colleagues with responsibilities categorised

underSolvency II and the treatment of their variable pay under the

regulations;

• review and approval of bonus plans across the Group, where they are

not aligned to the Group STIP Plan or Group LTIP Plan;

• review and approval of the all employee remuneration policy for 2021;

• review of the Company’s gender pay gap data; and

• monitoring the developments in the corporate governance

environment and investor expectations.

REMUNERATION IN 2020

At the AGM in May 2020, a new Directors’ remuneration policy was

approved with 89% of votes in favour and our advisory vote on the

Directors’ Remuneration Report was approved with 91% of votes in

favour.Given Just Group’s resilience through the challenges of 2020, the

Remuneration Committee believes the policy operated well in 2020 and is

not suggesting any changes to the approved policy for 2021. In particular,

the increased focus on the Group’s capital position within the Executives’

pay arrangements continues to reflect the Group’s priorities for 2021.

The Board approved a challenging business plan for 2020, before

COVID-19 emerged. The measures for the STIP and LTIP were not

adjustedduring the year to take account of the impact on the economic

environment. Despite these external challenges David and his team have

delivered an exceptional set of results in 2020, demonstrated by the STIP

outturn of 87.3% of maximum. The financial performance measures were

achieved at 89.8% of maximum and the strategic performance measures,

which provide a neutral or downward modifier to the financial outturn,

reduced the final STIP outturn by 2.5%.

Executive Director changes

From 1 January 2020, we welcomed Andy Parsons to the Board as

theGroup Chief Financial Ocer. Andy was appointed with a base

salaryof £415,000, broadly in line with his predecessor. The Committee

believed this reflected Andy’s extensive experience. Details of Andy’s

buyout arrangements were disclosed in last year’s Directors’

Remuneration Report.

Base salaries

Salaries for Executive Directors are reviewed with eect from 1 April each

year along with those of the overall employee population. As disclosed

last year, the Executive Directors in post received an average salary

increase of 2.05% with eect from 1 April 2020, which was below the

2.42% average increase received by other employees.

Pension

The Executive Directors received cash payments in lieu of the Company

pension of 10% of salary, aligned to the contribution available to the

majority of the wider workforce.

Short Term Incentive Plan

Page 82 details the targets and outcomes relating to 2020. For

performance in 2020 the Committee approved awards for David

Richardson at 85% of maximum and for Andy Parsons at 80% of

maximum. These payments reflect their strong personal performance

and delivery of solid financial results in a challenging year for the business.

In line with the policy, 60% of the Executive Directors’ STIP will be paid

incash and 40% will be deferred into Just Group shares for three years

under the Deferred Share Bonus Plan (“DSBP”).

The table below illustrates performance against the STIP performance

measures. From 2020, the Committee aligned the operation of the

balanced scorecard in the new policy with the wider business, where the

core bonus opportunity is determined through a basket of financial and

strategic performance measures and is then distributed to Executive

Directors against their achievement of their personal objectives. Details

ofkey achievements are provided on page83.

Financial

performance

measure

Organic

capital

generation

Cost base

reduction

New

business

profit

Adjusted

operating

profit

Weighting 50% 20% 15% 15%

Outturn £221m £17m £199m £239m

Achievement 100% 87% 49% 100%

Strategic

performance

measure

Business

transformation

Customer People

Adjustment 0 –2.5% 0

Aggregate scores: Corporate outturn 87. 3%

David Richardson 85.0% -2.3%

Andy Parsons 80.0% -7.3%

The Committee is satisfied that this level of bonus payout is reflective of

the financial performance delivered and the significant progress made

against the Company’s strategic objectives, balanced with the significant

external challenges.

Long Term Incentive Plan

In March 2020, awards under the LTIP were made to David Richardson

and Andy Parsons over shares worth 150% of base salary, in line withthe

normal award level under the new policy. This reflected the reduced

normal award level for the CEO from 200% of salary under the previous

policy. For the first time, these LTIP awards included capital self-

suciency measures, with 25% of the LTIP measure based on theGroup’s

solvency capital ratio and 25% based on organic capital generated.

Thebalance will be measured based on total shareholder return (“TSR”)

performance compared with the constituents of the FTSE 250 and

adjusted earnings per share (“EPS”) performance (each for 25% of

theLTIP).

80 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

The LTIP awards made in 2018 are due to vest in March 2021 with

reference to performance to 31 December 2020. The threshold TSR

performance target was not achieved and the adjusted EPS measure was

achieved at 39.5%. 19.75% of the 2018 LTIP awards will therefore vest in

March 2021. Further detail can be found on page 83.

The Committee felt that outturns under the STIP and LTIP in 2020 were

appropriate and did not exercise discretion.

CEO loan

Our Group CEO originally joined Partnership Assurance Group in 2012

when it was a privately owned, private equity-backed company, prior

toitsinitial public oering in 2013. These long-standing arrangements

involved the company making loans to the executives to enable them

topurchase shares in Partnership Assurance Group. On the merger of

Partnership Assurance Group and Just Retirement Group in 2016 to form

the current Group, this loan was assumed and the related shares were

converted into shares in the Company. The loan accrues interest at a rate

of 4% per annum, which is added each year to the principal owed, with

£389k due as at 31 December 2020. The loan relates to 334,712 shares in

the Company, with David required to repay any proceeds of sale from such

shares up to the amount due. Arrangements require the balance of the

loan to be written o if sale proceeds are insucient to repay the loan,

which would generate a taxable (if notional) receipt for David which the

Company would settle on a grossed-up basis.

This has been reported in the accounts since 2016 as a Directors’

loan.However, it has not been reported in the Directors’ Remuneration

Report as a potential liability or a qualification to the number of shares in

which David has an interest. To ensure full disclosure, details of the loan

have been disclosed in the remuneration report and a footnote to

Directors’ interests on page 85 of thisreport.

Summary of remuneration for David Richardson in respect of 2020

Salary 594

Benefits 24

Pension 59

LTIP 57

STIP – deferred 304

STIP – cash 457

Deferred

variablE

24%

fixed

casH

45%

variable

casH

31%

(£’000)

Summary of remuneration for Andy Parsons in respect of 2020

Salary 415

Benefits 47

Pension 42

STIP – deferred 199

STIP – cash 299

Deferred

variablE

20%

fixed

casH

50%

variable

casH

30%

(£’000)

This chart excludes buy-out awards, as those relate to compensation

forawards lost on leaving a former employer and do not relate to 2020

remuneration at Just Group.

IMPLEMENTATION OF THE REMUNERATION POLICY FOR 2021

For the reasons set out as part of the policy review, the Remuneration

Committee considers that the arrangements remain clear, simple,

predictable, proportionate, aligned to culture and mitigate risk

(particularly through the emphasis on surplus capital), as required by

paragraph 40 of the Corporate Governance Code. This will be kept under

periodic review.

The Remuneration Committee agreed that David Richardson and Andy

Parsons would not receive a salary increase with eect from 1 April 2021.

The salary increase budget available for senior management andthe

general employee population eligible to be considered for an increase was

0.5%, with individual increases varying within a range, depending on a

number of factors.

The maximum STIP opportunity continues to be 150% of base salary

forExecutive Directors, subject to stretching corporate financial and

personal non-financial measures. From 2020 the element of the STIP

which is deferred was increased to 40%. The core bonus opportunity is

determined through a basket of financial and strategic performance

measures and is then distributed to Executive Directors against

theirachievement of their personal objectives. This means personal

objectives are no longer weighted separately within the scorecard. While

not expected in the normal course, the Committee retains the flexibility to

pay up to 20% of the maximum bonus opportunity based onpersonal

performance only.

The Committee anticipates making awards under the LTIP over shares

worth 150% of salary in 2021, although the Committee will take into

consideration the prevailing share price at the time of grant when

finalising its decision on award levels.

Performance will continue to be measured over a three year period.

The Policy allows the Remuneration Committee some discretion to make

adjustments to the performance conditions and weightings from

year-to-year but, for awards made in 2021, it is intended that three

performance conditions will continue to apply and the associated targets

will be disclosed at the time of the LTIP vest. The weightings have been

amended for the 2021 LTIP award:

• Organic capital generation (37.5%), with a solvency ratio underpin for

this measure.

• Adjusted earnings per share (37.5%).

• Relative TSR (25%) vs FTSE 250.

This combination of measures is felt to reflect the business strategy and

objectives over the next three year period.

I hope that you will be able to support the resolution to approve the

Annual Report on Remuneration at the forthcoming AGM.

Directors’ remuneration report continued

81GVRAC RPR

Illustration of how the 2020 Remuneration Policy will be implemented

in 2021

Under the Directors’ remuneration policy, a significant proportion of

totalremuneration is linked to Group performance. The following charts

illustrate how the Executive Directors’ total pay package varies under

fourdierent performance scenarios:

• Minimum = fixed pay only (salary + benefits + pension allowance)

• On-target = fixed pay plus 50% payout of the maximum STIP

opportunity (75% of salary) and 25% vesting under the LTIP (37.5%

ofsalary)

• Maximum = fixed pay plus maximum payout of the STIP (150% of

salary) and maximum vesting under the LTIP (150% of salary)

• Maximum + 50% growth = fixed pay plus maximum payout of the

STIP(150% of salary), maximum vesting under the LTIP (150% of

salary) and 50% share price growth on the LTIP

Illustration of 2020 Remuneration Policy in 2021

Minimum

On-

target

Maximum

Maximum 50% g

rowth

R

emuneration

(£’000)

Fixed pay

STIP LTIP

1,000 1,500 2,000 2,500 3,000 3,5005000

Group Chief Executive Ocer

23% 31% 46% 2,919

28% 36% 36% 2,472

50% 33%

17%

1,352

100% 681

Group Chief Financial Ocer

100%

23% 31%

28% 36%

51% 33%

2,035

1,724

945

479

46%

36%

16%

Minimum

On-

target

Maximum

Maximum 50% g

rowth

R

emuneration

(£’000)

Fixed pay

STIP LTIP

1,000 1,500 2,000 2,500 3,000 3,5005000

ANNUAL REPORT ON REMUNERATION

This report describes the remuneration for our Executive Directors and

Non-Executive Directors and sets out how the remuneration policy has

been used and, accordingly, the amounts paid relating to the year ended

31 December 2020.

The report has been prepared in accordance with the provisions of the

Companies Act 2006, the FCA’s Listing Rules and The Large and Medium-

Sized Companies and Groups (Accounts and Reports) Regulations 2008,

asamended. The report has also been prepared in line with the

recommendations of the UK Corporate Governance Code.

Various disclosures of the detailed information about the Directors’

remuneration set out below have been audited by the Group’s

independent auditor, PwC LLP.

Total single figure of remuneration (audited)

Salary/fees Benefits Pension STIP

5

LTIP

6,7

Other

8

Total fixed

remuneration

Total variable

remuneration Total

£’000 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

David Richardson 594 545 24 23 59 62 761 680 57 130 – – 677 630 818 810 1,495 1,440

Andy Parsons

1

415 – 47 – 42 – 498 – – – 459 – 504 – 957 – 1,461 –

John Hastings-Bass

2

93 – – – – – – – – – – – 93 – – – 93 –

Chris Gibson-Smith

3

155 250 – – – – – – – – – – 155 250 – – 155 250

Keith Nicholson 90 89 – – – – – – – – – – 90 89 – – 90 89

Clare Spottiswoode 60 60 – – – – – – – – – – 60 60 – – 60 60

Paul Bishop 80 79 – – – – – – – – – – 80 79 – – 80 79

Ian Cormack 75 75 – – – – – – – – – – 75 75 – – 75 75

Steve Melcher 75 75 – – – – – – – – – – 75 75 – – 75 75

Michelle Cracknell

4

50 – – – – – – – – – – – 50 – – – 50 –

1 Andy Parsons was appointed as Chief Financial Ocer with eect from 1 January 2020 and so the 2020 data represents a full year’s employment.

2 John Hastings-Bass was appointed Chair of the Company with eect from 13 August 2020 and his remuneration for 2020 represents his fees from this date.

3 Chris Gibson-Smith retired as Chair of the Group with eect from 13 August 2020 and his remuneration for 2020 represents his fees to this date.

4 Michelle Cracknell was appointed as a Non-Executive Director of the Company with eect from 14 May 2020 and her remuneration for 2020 represents her fees from this date.

5 From 2020, 40% of bonus payments (one-third in 2019) have been deferred into awards over shares under the Deferred Share Bonus Plan (“DSBP”) and will vest after three years.

6 Awards made under the LTIP in the period and the respective values will be reported on vesting in the respective Annual Report on Remuneration section. The LTIP in respect of the period 1 January

to 31 December 2020 includes the 2018 LTIP awards. The 2018 LTIP award was earned but did not vest during 2020. For the purposes of valuation, the 2018 LTIP has been estimated based on a

share price of £0.5271 (the average share price from 1 October to 31 December 2020) and includes the cash value of dividend equivalent shares. This estimate will be updated to reflect the actual

valuation in next year’s report. The 2017 LTIP award, which vested in 2019, has been updated to reflect the actual share price at the time of vesting.

7 The estimate of value vesting under the 2018 LTIP shown represents vesting of 19.75% of maximum based on achievement of performance targets together with the cash dividend equivalent due.

The share price used for this estimate of£0.5271 represents a decrease of 61% when measured against the original grant price of £1.336.

8 ‘Other’ relates to buy-out awards negotiated as part of Andy Parsons’ joining and set out on page 84 and paid to him in 2020.

Benefits include an executive allowance for which the executives can purchase their own benefits, for example private medical cover, together with

Company paid benefits of life assurance, permanent health insurance and a health assessment every two years.

82 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

2020 FIXED PAY (AUDITED)

Base salaries

David Richardson’s base salary was increased by 2.05% with eect from 1 April 2020 from £585,000 to £597,000. This increase was lower than the

average salary increments paid in April 2020 for the wider workforce of 2.42%.

Andy Parsons was appointed Group Chief Financial Ocer with a base salary of £415,000 with eect from 1 January 2020 and this was not reviewed in

theyear.

Benefits and pension

Benefits include an executive allowance for which the executives can purchase their own benefits, for example private medical cover. The Company also

provides permanent health insurance, life assurance and biennial health screening benefits.

In addition, Andy Parsons received a travel allowance of £25,000 in 2020 as part of his first year’s remuneration package.

The Executive Directors each received a cash payment in lieu of the Company pension of 10% of salary, in line with the contribution rate oered to the

majority of the wider workforce.

Non-Executive Directors’ fees

The fees for the Non-Executive Directors in 2020 are as detailed in the table below:

£’000 Fee

Board Chair 200

Basic fee 60

Additional fee for Senior Independent Director 10

Additional fee for Committee Chair, Risk and Audit Committees 20

Additional fee for Committee Chair, all other Committees 15

The Board Chair receives a single, all-inclusive fee for the role.

2020 EXECUTIVE DIRECTORS’ SHORT TERM INCENTIVE PLAN (AUDITED)

The 2020 bonus outturn was calculated on corporate financial performance measures, split across four measures, and moderated by non-financial

performance measures. The bonus is distributed on personal performance based on objectives agreed with the Remuneration Committee each year.

Inline with our policy, 40% of the 2020 STIP award will be deferred into nil cost options (DSBP), subject to continued employment and clawback/malus

provisions.

Bonus

(balanced scorecard)

Cash STIP

(£’000)

Deferred STIP

(£’000)

Estimated number

of shares

deferred under DSBP

1

David Richardson 85% of maximum £457 £304 577,632

Andy Parsons 80% of maximum £299 £199 377,916

1 The estimated number of shares deferred under the DSBP were determined using the average closing share price between 1 October 2020 and 31 December 2020, being £0.5271. The actual

number of shares will be confirmed in the RNS at the time of grant and updated in next year’s Directors’ Remuneration Report.

The performance outcome against the targets set for the 2020 STIP was as follows:

Core bonus (balanced scorecard)

Weighting Threshold (25%) On-target (50%) Maximum (100%) Actual % achieved

Organic capital generation 50% £20m £65m £110m £221m 50.0%

Cost base reduction 20% £8m £13m £18m £17m 17.4%

IFRS new business profit 15% £170m £200m £230m £199m 7.4%

IFRS operating profit 15% £140m £185m £220m £239m 15.0%

Total – – – – 89.8%

As explained earlier in the report, the strategic measures reduced the financial outturn by 2.5% to a corporate outturn of 87.3%. The corporate outturn

was then adjusted to reflect personal achievement. Both Executives were assessed to have substantially met all of their objectives and their individual

outturns were modestly moderated to 85% (-2.3%) for the Chief Executive and 80% (-7.3%) for the Chief Financial Ocer.

Risk consideration

The Committee reviewed a comprehensive report from the Group Chief Risk Ocer to ascertain that the Executive Directors’ objectives had been fulfilled

within the risk appetite of the Group. In addition, the Committee received feedback from the Group Chief Risk Ocer that there were no material issues to

consider around regulatory breaches, customer outcomes or litigation that would prevent payment of any STIP award or trigger any malus provisions.

Taking into account the risk assessment and the wider context in the year, including the experience of customers, employees and shareholders, the

Committee was satisfied that the STIP awards should be paid.

Directors’ remuneration report continued

83GVRAC RPR

Personal performance

Strategic personal objective 85%

David Richardson Key achievements

• Deliver a combination of actions over 2020, which transforms the

business and delivers the actions required to improve the capital

position of the Company

• Engage with the Board on building the strategic direction of the

Company and the key initiatives to support future growth

• Ensure the organisation remains focused on key regulatory issues

and continue to build closer relationships with the PRA

• Maintain focus on customers during the business transformation

• People leadership: increase engagement and gender diversity and

promote and embed a healthy risk culture across the Company.

David has shown strong leadership in all areas, in particular:

• Capital self-suciency has been achieved more than a year in advance

ofthe original target

• A strong foundation has been established on which the Company is

abletopursue progressive growth plans over the next five years

• David’s relationship with the regulators has continued to strengthen

through the delivery of key initiatives and his collaborative approach

• Targeted investment has been made to develop new propositions that

willsupport growth in the medium term including an extended deferred

proposition in the DB market, SLI and Destination Retirement

• In an exceptionally dicult year, employee engagement has improved

significantly as David has led a comprehensive engagement strategy with

employees, which has included a significant focus on employee wellbeing

• The gender diversity target to increase female employees at Global Grade

14+ by 5% has been achieved

• A healthy risk culture continues to be embedded at all levels of the business.

Strategic personal objective 80%

Andy Parsons Key achievements

• Deliver key actions during 2020 to transform the business by

improving the capital position and addressing property risk

• Together with the CEO, identify and implement the key initiatives to

support future growth

• Build internal profile and relationships; focus on leadership and

engagement of the team and assess future talent and succession for

key functions

• Promote and embed a healthy risk culture through role modelling

• Deliver transformation plan to deliver cost and process eciencies.

Andy has shown strong leadership in all areas, in particular:

• Capital self-suciency has been achieved more than a year in advance

ofthe original target

• A strong foundation has been established on which the Company is able

topursue progressive growth plans over the next five years

• Invested significant time in fostering strong relationships with external

stakeholders

• Built his profile and relationships internally, proactively engaging with key

stakeholders and has strengthened the talent in his key functions

• Has delivered stretching cost and process eciencies across all areas of

thebusiness.

VESTING OF LTIP AWARDS WITH A PERFORMANCE PERIOD ENDING IN 2020 (AUDITED)

2018 awards

The 2018 LTIP award performance period ended on 31 December 2020. The award is forecast to vest at 19.75% on 29 March 2021 based on earnings per

share growth and relative TSR performance over the three year period ending 31 December 2020.

Date of grant Type of award

Number of shares

awarded % vesting

Dividend

equivalent due

Number of shares

due to vest

1

Value of shares

due to vest

1

David Richardson 29 March 2018 Nil-cost options 520,958 19.75% £2,624 102,889 £54,233

1 The 2018 LTIP is due to vest on 29 March 2021. The value shown is based on the three month average share price to the year end, being £0.5271. This value will be trued up to reflect the actual share

price at vesting in next year’s single total figure table.

Summary of performance

Measure Weighting Target Vesting

Adjusted earnings

per share growth

50% Threshold: 6% p.a. 25%

Between threshold and maximum Between 25% and 100% on a straight-line basis

Maximum: 12% p.a. or above 100%

Actual: 7.2% p.a. 39.5%

Relative TSR vs FTSE 250 50% Threshold: median 25%

Between threshold and maximum Between 25% and 100% on a straight-line basis

Maximum: upper quartile or above 100%

Actual: Below median 0%

Total – – 19.75%

1 Adjusted EPS is calculated as adjusted operating profit before tax divided by the weighted average number of shares in issue by the Group for the period.

Consistent with past practice, the adjustment to the interest and number of shares reduced the reinsurance and bank financing costs by £42m, thereby

increasing operating profitto £272m and the number of shares to 933m, resulting in an adjusted EPS of 29.2 pence.

84 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Buy-out awards

In line with the disclosure in the 2019 Directors’ Remuneration Report, cash buy-out awards of £265,428 and £238,680, and share buy-out awards with

a value of £1,191,528 were granted to Andy Parsons and the following were paid to him in 2020.

• A cash payment of £8,768 was made on appointment together with a cash payment of £150,208 in March 2020 in respect of certain deferred bonus

awards forfeited on joining the Company.

• A cash payment made in respect of the forfeited 2019 bonus at LV= of £238,680 was paid in April 2020.

• The first tranche of share buy-out awards vested on 1 April and 123,605 shares were released.

2020 LTIP AWARDS GRANTED (AUDITED)

The following awards were made to the Executive Directors in 2020:

Date of grant Type of award Face value of award Number of shares End of performance period

David Richardson 23 March 2020 Nil-cost options £895,500 (150% of salary) 1,708,317 31 December 2022

Andy Parsons 23 March 2020 Nil-cost options £622,500 (150% of salary) 1,187,523 31 December 2022

1 The actual share price calculated as the average price over the five days preceding the grant was £0.5242.

Performance measures and targets applying to the 2020 LTIP awards

Measure Weighting Target Vesting

Solvency capital ratio

25% Below 145% 0%

Threshold: 145% 25%

Between threshold and maximum Between 25% and 100% on a straight-line basis

Maximum: 150% 100%

Organic capital generation

25% Below £80m 0%

Threshold: £80m 25%

Between threshold and maximum Between 25% and 100% on a straight-line basis

Maximum: £230m

100%

Adjusted earnings

per share growth

25%

Below 2% p.a. 0%

Threshold: 2% p.a. 25%

Between threshold and maximum Between 25% and 100% on a straight-line basis

Maximum: 8% p.a. or above 100%

Relative TSR vs FTSE 250

25%

Below median 0%

Median 25%

Between median and upper quartile Between 25% and 100% on a straight-line basis

Upper quartile or above 100%

Directors’ remuneration report continued

85GVRAC RPR

DIRECTORS’ BENEFICIAL SHAREHOLDINGS (AUDITED)

To align the interests of the Executive Directors with shareholders, each Executive Director must build up and maintain a shareholding in the Group

equivalent to 200% of base salary, in line with the Policy. Until the guideline is met, Executive Directors are required to retain 50% of any LTIP and DSBP

share awards that vest (and are exercised), net of tax and national insurance contributions (“NICs”).

Details of the Directors’ interests in shares of the Company are shown in the table below. “Beneficially owned shares” include shares owned outright by

the Directors and their connected persons and for the Executive Directors only, shares acquired under the SIP. For the purpose of calculating whether

the shareholding guideline has been met, awards vested but not exercised and awards unvested under the DSBP (detailed in the “Directors’ outstanding

incentive scheme interests” section following), net of tax and NIC, are included.

Director

Beneficially owned

shares at

31 December 2020

Interest in share awards –

subject to performance

measures

Interest in share awards

– not subject to

performance conditions

Interest in share awards

– vested but unexercised

Shareholding guideline

(% of salary)

Shareholding

guideline met

1

(% of salary)

David Richardson

3

1,058,306 2,923,842 974,247 3,030 200% 139%

Andy Parsons 123,605 1,805,547 877,598 0 200% 75%

John Hastings-Bass 210,200 – – – n/a n/a

Chris Gibson-Smith

2

782,787 – – – n/a n/a

Keith Nicholson 59,775 – – – n/a n/a

Clare Spottiswoode 20,000 – – – n/a n/a

Paul Bishop 36,754 – – – n/a n/a

Ian Cormack 130,000 – – – n/a n/a

Steve Melcher 154,439 – – – n/a n/a

Michelle Cracknell – – – – n/a n/a

1 Based on the average closing price of £0.5271 between 1 October 2020 and 31 December 2020.

2 Chris Gibson-Smith retired as Chair of the Group with eect from 13 August 2020. The beneficial shareholding shown is as at that date.

3 As referred to in the Committee Chair’s statement, 334,172 of David Richardson’s shares owned outright were financed by way of a company loan, of which £389k was outstanding as at

31 December 2020. This loan accrues interest at 4% p.a. and will be repaid out of any sale proceeds on such shares. To the extent a shortfall remains, the Company will write o the balance and

settle any taxes due on a grossed-up basis.

There have been no changes in the Directors’ interests in shares in the Company between the end of the 2020 financial year and the date of this report.

DIRECTORS’ OUTSTANDING INCENTIVE SCHEME INTERESTS (AUDITED)

The below tables summarise the outstanding awards made to David Richardson and Andy Parsons. All awards under the LTIP schemes are granted

under options with performance conditions. Awards granted under the DSBP schemes are granted under options with no performance conditions.

The table below summarises the outstanding awards made to David Richardson:

Date of grant

Exercise

price

Interest

as at

31/12/19

Granted in

the year

Dividend shares

accumulating

at vesting

Vesting in

the year

Lapsed in

the year

Exercised in

the year

1

Interest as at

31/12/20 Vesting date Expiry date

LTIP

23 Mar 2020 Nil – 1,708,317 – – – – 1,708,317 23 Mar 2023 23 Mar 2030

16 May 2019 Nil 694,567 – – – – 694,567 16 May 2022 16 May 2029

29 Mar 2018 Nil 520,958 – – – – – 520,958 29 Mar 2021 29 Mar 2028

17 May 2017 Nil 521,759 – – 260,879 260,880 260,879 Nil 17 May 2020 16 May 2027

28 Sep 2016 Nil 3,030 – – – – – 3,030 28 Sep 2019 27 Sep 2026

DSBP

23 Mar 2020 Nil – 501,548 – – – – 501,548 23 Mar 2023 23 Mar 2030

28 Mar 2019 Nil 318,564 – – – – – 318,564 28 Mar 2022 28 Mar 2029

29 Mar 2018 Nil 154,135 – – – – – 154,135 29 Mar 2021 29 Mar 2028

17 Mar 2017 Nil 147,001 – 6,354 153,355 – 153,355 Nil 17 Mar 2020 16 Mar 2027

1 153,335 shares exercised on 17 March 2020 at a price of £0.5620 and 260,879 shares exercised on 17 May 2020 at a price of £0.5792.

The table below summarises the outstanding awards made to Andy Parsons:

Date of grant

Exercise

price

Interest

as at

31/12/19

Granted in

the year

Dividend shares

accumulating

at vesting

Vesting in

the year

Lapsed in

the year

Released in

the year

2

Interest as at

31/12/20 Vesting date Expiry date

LTIP

23 Mar 2020 Nil – 1,187,523 – – – – 1,187,523 23 Mar 2023 23 Mar 2030

BUY-OUT AWARDS

1

20 March 2020 (I) Nil – 370,816 – 123,605 – 123,605 247,211 31 Mar 2020-22 n/a

20 March 2020 (II) Nil – 630,387 – – – – 630,387 31 Mar 2021-23 n/a

20 March 2020 (III) Nil – 618,024 – – – – 618,024 16 May 2022 n/a

1 As detailed in the 2019 Directors’ Remuneration Report, Andy Parsons’ buy-out awards (20 March 2020 (I) and (II)) are conditional share awards with no performance conditions, whereby the

Company will release the shares to Andy as soon as reasonably practicable after the vesting of the awards. Award 20 March 2020 (III) is a conditional share award with performance conditions.

2 The first tranche of award 20 March 2020 (I) vested on 31 March 2020 and 123,605 shares were released to Andy on 1 April 2020 at a price of £0.539. He kept all the 123,605 shares and settled the

tax liability from his own funds.

86 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Dilution

The Committee complies with the dilution levels that the Investment Association guidelines recommend. Shares relating to options granted under the

Just Retirement Group plc 2013 Long Term Incentive Plan (“LTIP”) and the Just Retirement Group plc Sharesave Scheme (“SAYE”) are satisfied by using

new issue shares rather than purchasing shares in the open market. The combined dilution from all outstanding share options at 31 December 2020

was 3.2% of the total issued share capital at the time. Share options granted under the Just Retirement Group plc Deferred Share Bonus Plan (“DSBP”)

will continue to be satisfied by the purchase of shares in the open market and therefore do not count towards the dilution limit. Andy Parsons’ buy-out

awards are to be satisfied by existing shares only, therefore those awards do not count towards the dilution limit.

PAYMENTS FOR LOSS OF OFFICE MADE DURING 2020 (AUDITED)

No payments were made for loss of oce to Directors during 2020.

SERVICE CONTRACTS AND LETTERS OF APPOINTMENT

Executive Directors are on rolling service contracts with no fixed expiry date. The contract dates and notice periods for each Executive Director are

asfollows:

Date of contract Notice period by Company Notice period by Director

David Richardson 27 November 2019 6 months 6 months

Andy Parsons 1 January 2020 6 months 6 months

The Executive Directors have entered into service agreements with an indefinite term that may be terminated by either party on six months’ written

notice. Contracts for new appointments will normally be terminable by either party on a maximum of six months’ written notice. In certain

circumstances the notice period may be 12 months, reducing to six months within 18 months of appointment.

An Executive Director’s service contract may be terminated summarily without notice and without any further payment or compensation, except for

sums accrued up to the date of termination, if they are deemed to be guilty of gross misconduct or for any other material breach of the obligations

under their employment contract.

If the employment of an Executive Director is terminated in other circumstances, compensation is limited to base salary due for any unexpired notice

period and any amount assessed by the Committee as representing the value of other contractual benefits which would have been received during

theperiod.

Executive Directors’ service contracts are available for inspection at the Group’s registered oce during normal business hours and will be available for

inspection at the AGM.

All Non-Executive Directors have letters of appointment with the Group for an initial period of three years, subject to annual re-election by the Group

ata general meeting. Non-Executive Directors’ letters of appointment are available for inspection at the registered oce of the Group during normal

business hours and will be available for inspection at the AGM.

The Chair’s appointment may be terminated by either party with six months’ notice. It may also be terminated at any time if he is removed as aDirector

by resolution at a general meeting or pursuant to the Articles, provided that in such circumstances the Group will (except where the removal is by

reason of his misconduct) pay the Chair an amount in lieu of his fees for the unexpired portion of his notice period.

The appointment of each Non-Executive Director may be terminated at any time with immediate eect if he/she is removed as a Director by resolution

at a general meeting or pursuant to the Articles. The Non-Executive Directors (other than the Chair) are not entitled to receive any compensation on

termination of their appointment.

STATEMENT OF VOTING AT THE ANNUAL GENERAL MEETING (UNAUDITED)

At the Just Group AGM held on 14 May 2020, shareholders were asked to vote on both the Directors’ Remuneration Report (other than the part

containing the Directors’ remuneration policy) for the year ended 31 December 2019 and the new Directors’ remuneration policy. The resolutions

received significant votes in favour by shareholders. The votes received were:

Resolution Votes for % of votes Votes against % of votes Votes withheld

To approve the Directors’ remuneration policy 782,674,741 89.5% 92,145,984 10.5% 70,000

To approve the Directors’ Remuneration Report 796,632,603 91.1% 78,258,122 8.9% 0

EXTERNAL ASSISTANCE PROVIDED TO THE COMMITTEE

FIT Remuneration Consultants (“FIT”) is retained as the independent adviser to the Remuneration Committee. They were appointed by the Committee

in 2020, following a tendering exercise and replaced the Executive Compensation practice of Aon (“Aon”). FIT has no other connection with the

Company or its Directors. Directors may serve on the Remuneration Committee of other companies for which FIT acts as Remuneration Consultants.

The Committee is satisfied that all advice was objective and independent. FIT is a member of the Remuneration Consultants Group and subscribes to its

Code of Conduct.

Fees paid for services to the Committee in 2020 to Aon were £79,503 and to FIT were £30,281 and were charged on a “time spent” basis in accordance

with the terms of engagement.

REMUNERATION FOR EMPLOYEES BELOW THE BOARD (UNAUDITED)

General remuneration policy

In setting Executives’ pay, the Committee seeks to ensure that the underlying principles, which form the basis for decisions on Executive Directors’ pay,

are consistent with those on which pay decisions for the rest of the workforce are taken. For example, the Committee takes intoaccount the general

salary increases for the broader employee population when conducting the salary review for the Executive Directors.

Directors’ remuneration report continued

87GVRAC RPR

However, there are some structural dierences in the Executive Directors’ remuneration policy compared to that for the broader employee base,which

the Committee believes are necessary to reflect the diering levels of seniority and responsibility. A greater weight is placed on performance-based pay

through the quantum and participation levels in incentive schemes. Deferral is greater for Executive Directors than for other regulated employees. This

ensures the remuneration of the Executive Directors is aligned with the performance of the Group and therefore the interests of shareholders.

In the 2020 remuneration policy renewal, the structure of the STIP for Executive Directors was aligned with the balanced scorecard approach

established for the wider workforce in 2019.

The remuneration policy for the wider Group is designed to attract, retain and motivate new and existing employees. It is in line with the sector inwhich

we operate and our overall total remuneration approach is to pay a market competitive level of remuneration that is structured to appropriately reward

employees, align them with the interests of our shareholders and customers, be compliant with Solvency II remuneration regulation and be relevant to

the markets/geographies in which we operate. We define total remuneration as base salary, annual incentive (STIP) and any benefits, for example

pensions. For those eligible to participate in the LTIP, this will also be included.

Summary of the remuneration structure for employees below Executive Director

Element Policy approach

BASE SALARY

To attract and retain key employees we pay salaries which deliver market competitive total remuneration. We take into account

thefollowing when determining the base salary: the size of the role and its scope, the required skills, knowledge and experience,

relevant pay in terms of the wider organisation and market comparative data. For 2020, the average salary increase for all

employees awarded in April 2020 was 2.42%. This is an average figure, with individual increases varying within a range depending

on the factors above.

BENEFITS

All employees participate in the permanent health insurance and life assurance schemes. They can choose to participate in the

private medical cover scheme and the health cash plan.

PENSION

All employees are provided with the opportunity to participate in the Group defined contribution pension plan, with a Company

contribution of 15% of salary for the executive team (excluding Executive Directors) and 10% of salary for Executive Directors and

all other employees. New members of the executive team are provided with a Company contribution of 10% of salary, in line with

the wider workforce. Employees who have reached HMRC annual or lifetime allowance limits can be paid a cash allowance in lieu of

pension contributions.

SHORT TERM

INCENTIVE PLAN

Most of our employees participate in a discretionary bonus plan unless an alternative plan is in operation. This plan is based on

corporate performance and distributed based on personal performance based on objectives, behaviours in line with our culture

andconduct in the role. The Group also operates bonus plans for certain types of roles, for example sales, based on objectives,

behaviours in line with our culture and conduct in the role.

For regulated roles, for example in risk, audit or compliance roles, the financial performance may be replaced by functional

performance.

The Remuneration Committee has the ultimate discretion on all incentive plans and these are reviewed on an annual basis.

Bonuses for all of the executive team who are not Board members and employees categorised under Solvency II have an element

of bonus deferred into shares for three years.

LONG TERM

INCENTIVE PLAN

Participation in the LTIP plan is for a small number of executives and key roles each year in recognition of the strategic and critical

roles that they hold in supporting the strategic direction of the business and delivering Company performance. In 2020, fewer than

40 individuals were granted awards, under the LTIP.

OTHER SHARE

PLANS

The Company operates a Deferred Share Bonus Plan (“DSBP”) which provides the vehicle for the deferral of the STIP award. The

Company operates a Save As You Earn Plan (“SAYE”) which is open to all sta to participate in. In the past the Company has oered

free shares under a Share Incentive Plan (“SIP”) and may choose to do so in the future.

TOTAL SHAREHOLDER RETURN (UNAUDITED)

Group’s share performance compared to the FTSE 250 Index

The following graph shows a comparison of the Group’s total shareholder return (share price growth plus dividends paid) with that of the FTSE 250 Index

(excluding investment trusts). The Group has selected this index as it comprises companies of a comparable size and complexity across the period and

provides a good indication of the Group’s relative performance.

180

160

140

120

100

80

60

40

20

11/11/2013 30/06/2014 30/06/2015 31/12/2016 31/12/2017 31/12/2018 31/12/202031/12/2019

Return Index, rebased to 100 at 11 November 2013

Just Group FTSE 250 (excluding investment trusts)

88 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Total remuneration of the CEO during the same period (unaudited)

The total remuneration of the CEO over the last eight years is shown in the table below.

Year ended 30 June Year ended 31 December

2013 2014 2015 2016

1

2017 2018 2019

2

2019

2

2020

Chief Executive RC RC RC RC RC RC RC DR DR

Total remuneration (£’000) 1,052 1,196 1,357 2,630 2,369 2,507 438 1,440 1,495

STIP (% of maximum) 86% 63% 89% 97.5% 95.0% 91.2% 0% 83.1% 85%

LTIP (% of maximum) n/a n/a n/a 39.5% 50.0% 50.0% 50.0% 50.0% 19.75%

1 The year ended 31 December 2016 covered 18 months following the change of year end from 30 June. The total single figure of remuneration for the 12 month period ended 31 December 2016 was

£1,870,000.

2 Rodney Cook stood down as CEO from 30 April 2019 and David Richardson assumed the role of CEO from this date (initially on an interim basis). The total single figure remuneration for Rodney Cook

in 2019 represents four months to 30 April 2019 and the full vesting value of the 2017 LTIP and for David Richardson represents 8/12ths of his pay in 2019.

CEO pay ratio

This is the second year in which Just Group has been required to publish its CEO pay ratio.

Year Method

1

25th percentile pay ratio 50th percentile pay ratio 75th percentile pay ratio

2020 Option A 42 : 1 26 : 1 16 : 1

2019

2,3

Option A 44 : 1 28 : 1 17 : 1

1 Option A was selected as it provided a full picture of pay across the Group. The Company determined the single figure remuneration for all UK employees on a FTE basis by reference to the financial

year ended 31 December 2020 and used this to identify the three employees who represent the 25th percentile, 50th percentile and 75th percentile by total pay. FTE remuneration was determined

by reference to pay across 260 working days per year over a 35 hour week. Cases where employees were on maternity leave have been excluded as their remuneration in the year was not felt to be

an accurate reflection of their ordinary pay levels. This did not have a material impact on the ratios and so the Committee is satisfied that the three individuals are reflective of the three percentiles.

2 The total pay and benefits for the role of CEO in 2019 was calculated using Rodney Cook’s base salary, benefits and pension contributions for the four months to 30 April 2019 and David Richardson’s

base salary, benefits and pension contributions for the remainder of the year, full year 2019 annual bonus and 2017 LTIP award which vests based on performance to 31 December 2019.

3 The calculation has been updated to reflect the actual share price of the 2017 LTIP at vest and to correct a calculation error.

The table below shows the total pay and benefits and the salary component of this for the employees who sit at each of the three quartiles in 2020.

£’000 Total pay and benefits Salary component of total pay

25th percentile 35 28

50th percentile 57 42

75th percentile 94 70

Group Chief Executive 1,495 594

The Group Chief Executive Ocer was paid 26 times the median employee in 2020. The Remuneration Committee is confident that this is consistent

with the pay, reward and progression policies for the Company’s UK employees. The Committee will continue to monitor the CEO pay ratio and gender

pay gap statistics as part of its overview of all employee pay.

Comparison with 2019 ratio

The movement in the ratio is attributable to a reduction in CEO remuneration between 2019 and 2020. The 2019 data included Rodney Cook’s

remuneration for the first four months of 2019 and David Richardson’s remuneration for the remainder of 2019.

Percentage annual change in remuneration of Directors and employees of Just Group plc (unaudited)

The table below shows the percentage change in salary, taxable benefits and STIP in respect of each Director earned between 2019 and 2020,

compared to that for the average employee of the Group (on a per capita basis).

Percentage change between 2019 and 2020

Base salary Benefits Annual bonus

Average employee

1

4.62% 4.79% 0.48%

Executive Directors David Richardson

2

8.91% 2.69% 11.94%

Andy Parsons

3

n/a n/a n/a

Non-Executive Directors John Hastings-Bass

4

n/a n/a n/a

Chris Gibson-Smith

5

0% n/a n/a

Keith Nicholson 1.4% n/a n/a

Clare Spottiswoode 0% n/a n/a

Paul Bishop 1.6% n/a n/a

Ian Cormack 0% n/a n/a

Steve Melcher 0% n/a n/a

Michelle Cracknell

6

n/a n/a n/a

1 All permanent employees of the Company in the UK who were in employment during the two calendar year periods of 2019 and 2020 were selected as the most relevant comparator.

2 David Richardson undertook the role of CEO from 1 May 2019 and so 2019 remuneration includes a portion of the year where he undertook the role of Deputy CEO and Interim CFO.

3 Andy Parsons joined Just Group with eect from 1 January 2020.

4 John Hastings-Bass joined Just Group with eect from 13 August 2020.

5 Chris Gibson-Smith retired from Just Group with eect from 13 August 2020. In order to compare his remuneration year on year, his fees for 2020 have been adjusted to reflect a full-year

appointment to the Board.

6 Michelle Cracknell joined Just Group with eect from 14 May 2020.

Directors’ remuneration report continued

89GVRAC RPR

Relative importance of spend on pay (unaudited)

The table below illustrates the relative importance of spend on pay compared to shareholder dividends paid.

Year ended

31 December

2020

Year ended

31 December

2019 % dierence

Total personnel costs (£m) 107.5 108.1 -0.6%

Dividends paid (£m) 0 0 0%

Implementation of the remuneration policy in 2021 for Executive Directors (unaudited)

BASE SALARY

• David Richardson, CEO: £597,000

• Andy Parsons, CFO: £415,000

David Richardson and Andy Parsons’ salaries will not increase from 1 April 2021, compared to 0.35% for the wider workforce.

BENEFITS AND

PENSIONS

The Executive Directors will receive a benefits allowance of £20,000 for 2021 and a Company pension contribution or cash in lieu

of 10% of salary. All employees are enrolled into the Company Group Life Assurance and Group Income Protection schemes.

SHORT TERM

INCENTIVE PLAN

(“STIP”)

Maximum STIP opportunity remains unchanged at 150% of salary for Executive Directors. 50% of maximum will pay out for

on-target performance.

The core bonus for 2021 will be determined by a balanced scorecard of performance against financial and strategic measures,

being:

• 50% based on organic capital generation (25% pre management actions and 25% post management actions)

• 25% based on new business profit measures

• 15% based on adjusted operating profit

• 10% based on management expenses.

The core bonus is modified based on personal performance during the year. While not expected in the normal course, the

Committee retains the flexibility to pay up to 20% of the maximum bonus opportunity based on personal performance only.

The Committee has chosen not to disclose in advance details of the STIP performance targets for the forthcoming year as these

include items which the Committee considers commercially sensitive. An explanation of bonus payouts and performance

achieved will be provided in next year’s Annual Report on Remuneration.

40% of any bonus earned will be deferred for three years into awards over shares under the Deferred Share Bonus Plan.

LONG TERM

INCENTIVE PLAN

(“LTIP”)

Awards will be made over shares with a face value of 150% of salary in 2021 to both the CEO and CFO. The awards made in 2021

will be subject to the measures below, calculated over the three financial years to 31 December 2023, and will be subject to a

further two year post-vesting holding period. Targets will be confirmed in next year’s Annual Report on Remuneration.

Measures will be as follows:

• 37.5% based on organic capital generation including management actions with a solvency ratio underpin for this measure

• 25% on relative TSR – subject to TSR performance relative to FTSE 250 companies, excluding investment trusts

• 37.5% on adjusted EPS - calculated as adjusted operating profit before tax divided by the weighted average number of shares in

issue by the Group for the period.

90 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

DIRECTORS’ REMUNERATION report continued

SUMMARY OF THE DIRECTORS’ REMUNERATION POLICY

The Directors’ remuneration policy was developed taking into account the principles of the UK Corporate Governance Code, guidelines from

majorinvestors and guidance from the UK regulators, the Prudential Regulation Authority (“PRA”) and the Financial Conduct Authority (“FCA”),

onbestpractice.

The existing policy was approved by shareholders at the 2020 AGM.

Components of remuneration

The tables below summarise the Directors’ remuneration policy for Executive Directors and Non-Executive Directors. The full Directors’

remunerationpolicy, as approved by shareholders, is available on the Company website.

Executive Directors

Element Purpose and link to strategy Operation (including framework used to assess performance) Opportunity

BASE SALARY

Provides a competitive and

appropriate level of basic fixed

pay to help recruit and retain

Directors of a suciently high

calibre.

Reflects an individual’s

experience, performance and

responsibilities within the

Group.

Set at a level which provides a fair reward for the

role and which is competitive amongst relevant

peers.

Normally reviewed annually with any changes

taking eect from 1 April.

Set taking into consideration individual and

Group performance, the responsibilities and

accountabilities of each role, the experience of

each individual, his or her marketability and the

Group’s key dependencies on the individual.

Reference is also made to salary levels amongst

relevant insurance peers and other companies

of equivalent size and complexity.

The Committee considers the impact of any

basic salary increase on the total remuneration

package.

In normal circumstances, base salaries for

Executive Directors will not increase by more

than the average increase for the broader

employee population.

More significant increases may be awarded

from time to time to recognise, for example,

development in role or a change in position

orresponsibilities.

BENEFITS

Provides competitive,

appropriate and cost-eective

benefits.

Each Executive Director currently receives an

annual benefits allowance in lieu of a company

car, private medical insurance and other benefits.

In addition, each Executive Director receives life

assurance and permanent health insurance.

The benefits provided may be subject to minor

amendment from time to time by the Committee

within this policy.

Travel and/or relocation benefits (and any tax

thereon) may normally be paid up to a period of

12 months following the recruitment of a new

Executive Director.

The benefits allowance is subject to an annual

cap of £20,000, although this may be subject

to minor amendment to reflect changes in

market rates.

The cost of the other insurance benefits varies

from year to year and there is no prescribed

maximum limit. However, the Committee

monitors annually the overall cost of the

benefits provided to ensure that it remains

appropriate.

The cost of any travel and relocation benefits

will vary based on the particular circumstances

of the recruitment.

PENSION

Provides for retirement

planning, in line with the

provisions available to the

broader employee population.

The Group operates a money purchase pension

scheme into which it contributes, having regard

to government limits on both annual amounts

and lifetime allowances.

Where the annual or lifetime allowances are

exceeded, or in certain other circumstances, the

Group will pay cash in lieu of a Company

contribution.

The maximum Company contribution (or cash

in lieu) is 10% of base salary. This is aligned to

the contribution available to the majority of

the workforce.

This limit may change to reflect any changes

in the contributions available to the majority

of the workforce.

91GVRAC RPR

Element Purpose and link to strategy Operation (including framework used to assess performance) Opportunity

SHORT TERM

INCENTIVE

PLAN (“STIP”)

Incentivises the execution of

annual goals by driving and

rewarding performance

against individual and

corporate targets.

Compulsory deferral of a

proportion into Group shares

provides alignment with

shareholders.

Paid annually, any bonus under the STIP is

discretionary and subject to the achievement of

a combination of stretching corporate financial,

non-financial and personal performance

measures.

The core bonus opportunity is determined

through a basket of financial performance

measures, which is then modified by the

achievement of strategic performance

measures. It is then distributed to Executive

Directors against achievement of their personal

objectives. While not expected in the normal

course, the Committee retains the flexibility to

pay up to 20% of the maximum bonus

opportunity based on personal performance

only.

40% (or such higher proportion as has been

determined by the Committee) of any bonus

earned will be deferred into awards over shares

under the Deferred Share Bonus Plan (“DSBP”),

with awards normally vesting after a three year

period.

The Committee has the discretion to adjust the

deferral percentage if required to comply with

future regulatory requirements relevant to the

insurance industry.

Malus and clawback apply to both the cash and

deferred elements of the STIP

2

.

The on-target bonus payable to Executive

Directors is 75% of base salary, with 150% of

base salary the maximum payable.

The bonus payable at the minimum level of

performance varies from year to year and is

dependent on the degree of stretch and the

absolute level of budgeted profit.

Dividends will accrue on DSBP awards over the

vesting period and be paid out either as cash

or as shares on vesting and in respect of the

number of shares that have vested.

LONG TERM

INCENTIVE

PLAN (“LTIP”)

Rewards the achievement of

sustained long-term

operational and strategic

performance and is therefore

aligned with the delivery of

value to shareholders.

Facilitates share ownership to

provide further alignment

with shareholders.

Granting of annual awards

aids retention.

Annual awards of performance shares

1

normally vest after three years subject to

performance conditions and continued service.

Performance is normally tested over a period of

at least three financial years.

A post-vesting holding period is applied to

Executive Directors for awards made in 2018

and beyond. Executive Directors are required to

retain the LTIP shares that vest (net of tax and

NICs) for a period of two years. The two year

holding requirement will continue if they leave

employment during the holding period.

Awards are normally subject to a combination

of measures which may include financial

and/or strategic measures and/or total

shareholder return relative to the constituents

of a relevant comparator index or peer group.

The Committee retains the flexibility to vary the

performance measures and/or weightings for

future awards. However, the Committee will

consult in advance with major shareholders

prior to any significant changes being made.

Malus and clawback apply to the LTIP

2

.

The maximum annual opportunity is 250% of

base salary. However, in the normal course,

awards will be made to Executive Directors

over shares with a face value of 150% of base

salary.

Dividends will accrue on LTIP awards over the

vesting period and be paid out either as cash

or as shares on vesting and in respect of the

number of shares that have vested.

ALL-EMPLOYEE

SHARE PLANS

Encourages employee share

ownership and therefore

increases alignment with

shareholders.

The Group may from time to time operate

tax-approved share plans (such as HMRC-

approved Save As You Earn plans and Share

Incentive Plans), for which Executive Directors

could be eligible.

The schemes are subject to the limits set by

HMRC from time to time.

92 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Directors’ remuneration report continued

Element Purpose and link to strategy Operation (including framework used to assess performance) Opportunity

SHAREHOLDING

GUIDELINES

Encourages Executive

Directors to build a

meaningful shareholding in

the Group so as to further

align interests with

shareholders.

Each Executive Director must build up and

maintain a shareholding in the Group

equivalent to 200% of base salary.

Until the guideline is met, Executive Directors

are required to retain 50% of any LTIP or DSBP

awards that vest (or are exercised), net of tax

and NICs.

For these purposes, deferred bonuses and

shares under the LTIP which have vested but

are subject to a holding period would count

towards these guidelines.

The guideline extends post-cessation

shareholding, with the lower of the holding on

cessation or the full guideline applying for two

years. The post-cessation guideline only

applies to any share awards granted (or any

other shares acquired) after the date on which

the new policy is approved by shareholders.

Not applicable.

Chair and Non-Executive Directors

Element Purpose and link to strategy Operation (including framework used to assess performance) Opportunity

FEES

To attract and retain a

high-calibre Chair and

Non-Executive Directors

by oering market-

competitive fee levels.

The Chair is paid a single fixed fee. The

Non-Executive Directors are paid a basic fee,

with additional fees paid to the Chairs of the

main Board Committees and the Senior

Independent Director to reflect their extra

responsibilities.

In exceptional circumstances, additional

feesmay be paid where the normal time

commitment of the Chair or a Non-Executive

Director is significantly exceeded in any year.

Fees are reviewed periodically by the

Committee and Group Chief Executive Ocer

for the Chair, and by the Chair and Executive

Directors for the Non-Executive Directors.

Fees are set taking into consideration market

levels amongst relevant insurance peers and

other companies of equivalent size and

complexity, the time commitment and

responsibilities of the role, and to reflect

theexperience and expertise required.

The Chair and the Non-Executive Directors are

entitled to the reimbursement of reasonable

business-related expenses (including any tax

thereon). They may also receive limited travel or

accommodation-related benefits in connection

with their role as a Director.

The Company’s Articles of Association place

alimit on the aggregate fees of the Non-

Executive Directors of £1m per annum.

Any changes to fee levels are guided by the

general increase for the broader employee

population, but on occasions may need

torecognise, for example, changes in

responsibility and/or time commitments.

1 Awards may be structured as nil-cost options which will be exercisable until the tenth anniversary of the grant date.

2 The Committee has the authority to apply a malus adjustment to all, or a portion of, an outstanding STIP or LTIP award in specific circumstances. The Committee also has the authority to recover

(clawback) all, or a portion of, amounts already paid in specific circumstances and within a defined time frame. These provisions apply to both the cash and deferred elements of the STIP.

APPROVAL

This report was approved by the Board of Directors on 15 March 2021 and signed on its behalf by:

Ian Cormack

Chair, RemunerationCommittee

15 March 2021

93GVRAC RPR

The Directors present their report for the

financial year ended 31 December 2020.

The Strategic Report, the Governance Report and the Remuneration

Report include information that would otherwise be included in the

Directors’ Report.

The Annual Report contains forward-looking statements, which are not

guarantees of future performance. Rather, they are based on current

views and assumptions and involve known and unknown risks,

uncertainties and other factors that may cause actual results to dier

from any future results or developments expressed in, orimplied by, the

forward-looking statements. Each forward-looking statement speaks only

as of the date of that particular statement.

GOVERNANCE

Principal activities and performance

Just Group is a specialist UK financial services group focusing on attractive

segments of the UK retirement income market. Just Group plc is a public

company limited by shares and was incorporated in England and Wales

with the registered number 8568957. The Company is a holding company.

Details of the Company’s subsidiaries are set out in note 36.

Commentary on the Group’s performance in the financial year ended

31 December 2020 and likely future developments is included in the

Strategic Report on pages 24 to 31. Our approach to stakeholder

engagement, including our Section 172 statement, can be found on pages

44 to 50.

Corporate governance statement

The FCA’s Disclosure Guidance and Transparency Rules require a corporate

governance statement in the Directors’ Report to include certain

information. You can find information that fulfils this requirement in this

Directors’ Report, the Corporate Governance Report, Committee Reports,

and the Directors’ Remuneration Report on pages 78 to 92, all of which is

incorporated in the Director’s Report by reference.

Listing Rule LR 9.8.4C

In accordance with LR 9.8.4C, the table below sets out the location of the

information required to be disclosed, where applicable.

Listing Rule Description Location

Interest capitalised by the Group Not applicable

Publication of unaudited financial

information

Not applicable

Long-term incentive schemes

involving one director only

Not applicable

Waiver of emoluments by a director Not applicable

Waiver of future emoluments by a

director

Not applicable

Non pre-emptive issues of equity for

cash

Not applicable

Non pre-emptive issues of equity for

cash in relation to major subsidiary

undertakings

Not applicable

Parent participation in a placing by a

listed subsidiary

Not applicable

Contracts of significance involving a

director

Not applicable

Contracts of significance involving a

controlling shareholder

Not applicable

Shareholder waivers of dividends Refer to Share Plans on page 95

Shareholder waivers of future

dividends

Refer to Share Plans on page 95

Agreements with controlling

shareholders

Not applicable

Directors’ Report

Both the Directors’ Report and the Strategic Report have been drawn up

and presented in accordance with, and in reliance upon, applicable English

company law. The liabilities of the Directors in connection with those

reports shall be subject to the limitations and restrictions provided by

such law.

Overseas branches

The Company does not have any overseas branches within the meaning

of the Companies Act 2006.

Modern slavery

In compliance with section S4(1) of the Modern Slavery Act 2015, the

Group published its slavery and human tracking statement online.

Amendment of Articles of Association

The Company may make amendments to the Articles of Association by

way of special resolution in accordance with the Companies Act.

GOING CONCERN AND VIABILITY STATEMENT

The Directors are required to assess the prospect of the Company and the

Group as a going concern over the next 12 months in accordance with

Provision 30 of the 2018 UK Corporate Governance Code (the “Code”), and

also the longer-term viability of the Group in accordance with Provision 31

of the Code.

The 2020 Viability Statement is contained within the Strategic Report and

can be found on page 33.

Under the Code, the Directors are required to state whether, in their

assessment, the business is a going concern. In considering this

requirement, the Directors have taken into account the following:

• the benefit of £250m new Tier 2 capital raised during 2020, £75m of

which was used to repurchase part of the Group’s Tier 3 loan notes, via

a tender oer;

• steps taken over the last two years to improve capital eciency,

including during the current period: increasing the level of reinsurance

for GIfL contracts, launching new more capital-ecient products, such

as our defined benefit de-risking partnering deals; additional no-

negative equity guarantee hedging to further protect against property

risk; reductions in new business volumes; and cost saving initiatives;

• the projected liquidity position of the Company and the Group, current

financing arrangements and contingent liabilities;

• a range of forecast scenarios with diering levels of new business and

associated additional capital requirements to write anticipated levels of

new business;

• eligible own funds being in excess of minimum capital requirements in

stressed scenarios, including reduced new business volumes;

• the findings of the Group’s Own Risk and Solvency Assessment

(“ORSA”);

• risks arising from the UK’s withdrawal from the European Union;

• scenario testing to consider the possible impacts of the COVID-19

pandemic on the Group’s business, including stresses to property prices,

house price inflation, credit quality of assets, and risk-free rates,

together with a reduction in new business levels. In addition, the results

of extreme property stress tests were considered, including a property

price fall in excess of 40% and a sensitivity analysis was performed to

assess the impact from falling interest rates, including an assessment

of the impact of negative interest rates. The possible impact on liquidity

from the pandemic was considered through applying significant

stresses to exchange rates and interest rates, and assessing the impact

this would have on the Group’s cash collateral requirements;

• scenarios, including those in the ORSA, where the Group ceases to write

new business. However, in such a run-o scenario the going concern

basis would continue to be applicable because the Group would be

continuing to trade with its existing business (for example, collect

premiums and administer policies) rather than ceasing to trade;

• a regulatory intervention scenario; and

• the Group business plan, which was approved by the Board in

November 2020, and in particular the forecast regulatory solvency

position for the period to 2022 calculated on a Solvency II basis, which

includes scenarios setting out possible adverse trading and economic

conditions as a result of the COVID-19 pandemic.

94 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Directors’ Report continued

Having due regard to these matters and after making appropriate

enquiries, the Directors confirm that they consider it appropriate to

prepare the financial statements on the going concern basis.

THE BOARD

The Directors who served during the year and up to the date of this report

are set out in the Governance Report, including biographies for the

Directors in oce as at the date of this report.

Directors’ insurance and indemnities

The Directors and Ocers of the Company benefit from an indemnity

provision in the Company’s Articles of Association against any liability

they may incur in relation to the Company’s aairs, subject to the

provisions ofthe Companies Act 2006 as amended. Each Director of the

Company benefits from a deed of indemnity in respect of the costs of

defending claims against him or her and third party liabilities (the terms of

which are in accordance with the Companies Act 2006 as amended). Such

qualifying third party indemnity provision remains inforce at the date of

this report.Directors’ and Ocers’ liability insurance cover was

maintained throughout the year at the Company’sexpense and remains

in force at the date of this report.

Directors’ interests

The interests of Directors and their connected persons in the ordinary

shares of the Company as disclosed in accordance with the Listing Rules

of the UK Listing Authority are as set out on page 85 of the Directors’

Remuneration Report and details of the Directors’ long-term incentive

awards are also set out on page 85.

Conflicts of interest

The Board has established procedures for the management of potential

oractual conflicts of interest of the Directors in accordance with the

Companies Act 2006 and the Company’s Articles of Association. All

Directors are responsible for notifying the Group Company Secretary and

declaring at each Board meeting any new actual or potential conflicts

ofinterest. The Directors are also responsible for declaring any existing

conflicts of interest which are relevant to transactions to be discussed

ateach Board meeting. No Directors hada material interest in any

significant contract with the Company orwith any Group undertaking

during the year.

SHAREHOLDERS

Annual General Meeting

The Company’s Annual General Meeting (“AGM”) in respect of the 2020

financial year will be held at the Company’s registered oce, Enterprise

House, Bancroft Road, Reigate, Surrey RH2 7RP. More information about

the 2021 AGM can be found in the Notice of Meeting which will be made

available to shareholders separately.

Results and dividends

The financial statements set out the results of the Group for the year

ended 31 December 2020 and are shown on page 107.

Whilst the Group has made significant progress to build its capital base to

accommodate the regulations on equity release mortgages and to start

to grow its underlying capital generation, the external environment as we

emerge from the pandemic continues to be uncertain. The Board

therefore considers that it would not be appropriate to recommend

recommencing dividend payments (total 2019 dividend: nil).

SHARE CAPITAL

Ordinary share capital

As at the date of this report, the Company had an issued share capital of

1,038,132,850 ordinary shares of 10 pence each. No shares are held in

treasury. The ordinary shares are listed on the premium section of the

London Stock Exchange.

The holders of the ordinary shares are entitled to receive notice of, attend

and speak at general meetings including the AGM, to appoint proxies and

to exercise voting rights. The shares are not redeemable.

The share price on 31 December 2020 was 69.90 pence.

Further information relating to the Company’s issued share capital can be

found in note 21 on page 137.

Restricted Tier 1 bonds

The Company has £300m of Restricted Tier 1 bonds (“Bonds”) in issue.

TheBonds are convertible into equity in certain circumstances. The

circumstances in which the Bonds may convert into ordinary shares would

be limited to a “trigger event.” A trigger event may only occur if the Board

determines in consultation with the Prudential Regulation Authority that

it has ceased to comply with its capital requirements under Solvency II in

a significant way. This may occur if the amount of capital held by the

Group fails to comply with its capital requirements for a continuous period

of three months or more or ifthe Group fails to comply with other

minimum capital requirements applicable to it. Only if a trigger event

occurs would any Bonds convert into ordinary shares. The holders of the

Bonds do not have the right or option to require conversion of the Bonds.

On a change of control, the Bonds may also be convertible into equity in

an entity other than the Company where the acquiror is an approved

entity (being an entity which has in issue ordinary share capital which is

listed or admitted to trading on a regulated market) and the new

conversion condition (as set out therein) is satisfied. Otherwise the Bonds

may be written-down to zero.

Authority to allot

The Company’s Articles of Association specify that, subject to the

authorisation of an appropriate resolution passed at a General Meeting of

the Company, Directors can allot relevant securities under Section 551 of

the Companies Act up to the aggregate nominal amount specified by the

relevant resolution. In addition, the Articles of Association state that the

Directors can seek the authority of shareholders at a General Meeting to

allot equity securities for cash, without first being required to oer such

shares to existing ordinary shareholders in proportion to their existing

holdings under Section 561 of the Companies Act, in connection with a

rights issue and in other circumstances up to the aggregate nominal

amount specified by the relevant resolution.

At the AGM held on 14 May 2020, the Directors were (i) authorised to allot

ordinary shares in the Company up to amaximum aggregate nominal

amount of £69,006,904 and (ii) empowered to allot equity securities for

cash on a non pre-emptive basis up to an aggregate nominal amount of

£5,175,518 and furthergranted an additional power to disapply pre-

emption rights representing a further 5% only to be used in specified

circumstances, and (iii) authorised to make market purchases ofup to an

aggregate of 103,510,357 ordinary shares, representing approximately

10% of the Company’s issued ordinary share capital as of 9 April 2020. No

shares were purchased by the Company during the year. The Directors

propose to renew these authorities at the 2021 AGM for a further year.

Other securities carrying special rights

No person holds securities in the Company carrying special rights with

regard to control of the Company.

Restrictions on transfer of shares and voting

The Company’s Articles of Association do not contain any specific

restrictions on the size of a holding or on the transfer of shares, except

that certain restrictions may from time to time be imposed by laws and

regulations (for example by the Market Abuse Regulation (“MAR”) and

insider trading law) or pursuant to the Listing Rules of theFinancial

Conduct Authority whereby certain employees of theCompany require

the approval of the Company to deal in the Company’s ordinary shares.

The Directors are not aware of any agreements between holders of the

Company’s shares that may resultin restrictions on the transfer of

securities or voting rights.

No person has any special rights with regard to the control of the

Company’s share capital and all issued shares are fully paid. This is a

summary only and the relevant provisions of the Articles of Association

should be consulted if further information is required.

95GVRAC RPR

Share plans

The Group operates a number of share-based incentive plans that provide

Just Group plc shares to participants at exercise of share optionsupon

vesting or maturity. The plans in operation include the JustRetirement

Group plc 2013 Long Term Incentive Plan (“LTIP”), theJustRetirement

Group plc Deferred Share Bonus Plan (“DSBP”), theJust Retirement Group

plc Sharesave Scheme (“SAYE”), and the JustRetirement Group plc Share

Incentive Plan. Details of these plans areset out on pages 124 to 127.

Exercises of share options under the LTIP and DSBP are satisfied byusing

new issue shares or market purchased shares held in the employee

benefit trust (“EBT”). The trustee does not register votes inrespect of

these shares and has waived the right to receive anydividends.

Shares relating to options granted under the LTIP and SAYE are intended

to be satisfied by new issue shares. During the 12 months to 31 December

2020, 3,046,892 ordinary shares of 10 pence each were issued to

employees and the EBT in satisfaction of the exercise of share options

under the terms of these employee share plans (2019: nil).

Major shareholders

The Company had been notified in accordance with DTR 5 of the

Disclosure and Transparency Rules of the following interests of 3% or

more of its issued ordinary share capital. The information below was

correct at the date of notification.

Shareholder

Ordinary

shareholdings at

31 December 2020

%

of capital

Ordinary

shareholdings at

15 March 2021

1

%

of capital

Standard Life

Aberdeen plc 84,646,819 8.15 84,646,819 8.15

Fidelity

International 57,253,6 43 5.51 57,253,643 5.51

Credit Suisse Group

AG 50,103,223 4.84 40,054,845 3.85

Norges Bank 39,399,214 3.81 39,399,214 3.81

1 Being the last practical date prior to publication of the Annual Report.

EMPLOYEES

Equal opportunities employment

Just Group plc is an equal opportunities employer and has policies in place

to ensure decisions on recruitment, development, training and promotion,

and other employment-related issues are made solely on the grounds of

individual ability, achievement, expertise and conduct. These principles

are operated on a non-discriminatory basis, without regard to race,

colour,nationality, culture, ethnic origin, religion, belief, gender, sexual

orientation, age, disability or any other reason not related to job

performance or prohibited by applicable law. If an employee were to

become disabled during their employment with the Group, support for

continued employment would be provided and workplace adjustments

made as appropriate in respect of their duties and working environment.

Employee engagement and communication

We want all colleagues to feel proud to work at Just and communication

and engagement is critical to our success. We have a well-defined

communication and engagement programme in place so that all

employees understand our organisation’s goals and how we need to work

together to achieve them. This includes regular emails to all employees,

news items on our intranet, videos, “town hall” business updates and

focus group sessions.

We consistently monitor the engagement of our colleagues and their

views on things that are important to them, including their views on the

leadership team, their wellbeing and opportunities for personal growth.

This is achieved through the formal methods of an annual survey and

quarterly pulse checks, as well as informal approaches which include

gathering feedback via word of mouth.

During 2020, and in light of the majority of our colleagues working

remotely, weincreased our engagement focus on supporting the

wellbeing of ouremployees and enabling them to be there for our

customers. Ourapproach was to take people challenges and turn them

into great opportunities to successfully engage and develop colleagues in

ways that we would not have envisaged 12 months previously. We have

alsotaken important steps in the critical areas of building a modern

workplace so that we have an environment in which our people can thrive

now and in the future.

Performance-related pay rewards colleagues for the achievement of

strategic business objectives and upholding our cultural, conduct and

behavioural expectations. In addition, alignment with shareholder

interest is provided through the use of employee share plans for

allemployees.

Further information regarding employee engagement and how

theDirectors have engaged with employees, including the impact

ondecision making, is included in the Strategic Report.

Employee diversity

We have increased gender diversity at senior levels (global grade 14+,

which includes approximately 10% of the most senior employees) by five

percentage points from 19% to 24%. We are on track to achieve the “33 by

23” target in line with our pledge as a signatory to the Women in Finance

Charter that 33% of our senior leaders will be female by 2023.

Female Male Total

Female

%

Male

%

Group Executive

Committee members 1 7 8 12.50 87.50

Senior management

1

(global grade 14-16) 27 84 111 24.32 75.68

All other employees

(global grade 1-13) 449 470 919 48.86 51.14

Grand total 477 561 1,038 49.95 54.05

1 Of these 111 senior managers, 42 directly report to members of the Group Executive

Committee, and of these, 8 (19%) are women.

Further information on employee communications, development and

diversity is given on page 40.

AUDITOR

Disclosure of information to the auditor

Each Director of the Company at the date of approval of this Directors’

Report has confirmed that, so far as the Director is aware, there is no

relevant audit information of which the Company’s external auditor is

unaware. Each Director has taken all the steps that he or she ought to

have taken as a Director in order to make himself or herself aware of any

relevant audit information and to establish that the Company’s external

auditor is aware of that information. This confirmation is given and should

be interpreted in accordance with the provisions of Section 418 of the

Companies Act 2006.

Auditor appointment

PwC has expressed its willingness to continue in oce as the external

auditor. A resolution to reappoint PwC will be proposed at the forthcoming

AGM. An assessment of the eectiveness and recommendation for

reappointing PwC in the Audit Committee report can be found on page 74.

ENVIRONMENT AND EMISSIONS

Information on the Group’s greenhouse gas emissions is set out in the

Environment report on pages 38 to 39.

OTHER DISCLOSURES

Change of control provisions

There are a number of agreements that take eect, alter or terminate

upon a change of control of the Company, such as commercial contracts,

bank loan agreements, property lease arrangements and employee share

plans. In the context of the Group as a whole, none of these are deemed

to be significant in terms of their potential impact. All the reinsurance

treaties previously disclosed, which could have been terminated by the

Company on a change of control, have been recaptured.

96 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

The Company does not have any agreements with any Non-Executive

Director, Executive Director or employee that would provide

compensation for loss of oce or employment resulting from a change

ofcontrol.

Financial instruments

Derivatives are used to manage the Group’s capital position which entails

a surplus of long dated fixed interest assets when liabilities aremeasured

on a realistic basis. Details of these derivatives are contained in note 28

tothe financial statements. Disclosure with respect to financial risk is

included on pages 34 to 37 of the Strategic Report and in note 34 to the

financial statements.

Political contributions

No political contributions were made, or political expenditure incurred,

bythe Company and its subsidiaries during the year (2019: £nil).

POST BALANCE SHEET EVENTS

4,294 ordinary shares of 10 pence were allotted out of the block listing in

respect of exercises of share options under the Group SAYE share scheme.

The Directors’ Report has been approved by the Board and is signed on its

behalf by:

SIMON WATSON

Group Company Secretary

15 March 2021

Directors’ Report continued

97GVRAC RPR

Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report and

financial statements in accordance with applicable law andregulations.

Company law requires the Directors to prepare Group and Parent

Company financial statements for each financial year. Under that law

they have elected to prepare both the Group and Parent Company

financial statements in accordance with International Financial Reporting

Standards as adopted by the European Union (“IFRS” as adopted by the

“EU”) and applicable law, and have elected to prepare the Parent

Company financial statements on the same basis.

Under company law the Directors must not approve the financial

statements unless they are satisfied that they give a true and fair view of

the state of aairs of the Group and Parent Company and of their profit or

loss for that period. In preparing each of the Group and Parent Company

financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable, relevant and

reliable;

• state whether they have been prepared in accordance with IFRS as

adopted by the EU;

• assess the Group and Parent Company’s ability to continue as a going

concern, disclosing, as applicable, matters related to going concern;

and

• use the going concern basis of accounting unless they either intend to

liquidate the Group or the Parent Company or to cease operations, or

have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting

recordsthat are sucient to show and explain the Parent Company’s

transactions and disclose with reasonable accuracy at any time the

financial position of the Parent Company, and enable them to ensure that

its financial statements comply with the Companies Act 2006. They are

responsible for such internal control as they determine is necessary to

enable the preparation of financial statements that are free from material

misstatement, whether due to fraud or error, and have general

responsibility for taking such steps as are reasonably open to them to

safeguard the assets of the Group and to prevent anddetect fraud and

other irregularities.

Under applicable law and regulations, the Directors are also responsible

for preparing a Strategic Report, Directors’ Report, Directors’

Remuneration Report and Corporate Governance Statement that

complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of

thecorporate and financial information included on the Company’s

website. Legislation in the UK governing the preparation and

dissemination of financial statements may dier from legislation in other

jurisdictions.

DIRECTORS’ RESPONSIBILITY STATEMENT

We confirm to the best of our knowledge that:

• the financial statements, prepared in accordance with IFRS as adopted

by the EU, give a true and fair view of the assets, liabilities, financial

position and comprehensive income of the Company and the

undertakings included in the consolidation taken as a whole;

• the Strategic Report includes a fair review of the development and

performance of the business and the position of the Company and the

undertakings included in the consolidation taken as a whole, together

with a description of the principal risks and uncertainties that they face;

and

• the Annual Report and Accounts, taken as a whole, is fair, balanced and

understandable and provides the information necessary for

shareholders to assess the Company’s position and performance

business model and strategy.

The Strategic Report contains certain forward-looking statements

providing additional information to shareholders to assess the potential

for the Company’s strategies to succeed. Such statements are made by

the Directors in good faith, based on the statements available to them up

to the date of their approval of this report, and should be treated with

caution due to the inherent uncertainties underlying forward-looking

information.

Neither the Company nor the Directors accept any liability to any person in

relation to the Annual Report and Accounts except to the extent that such

liability could arise under English law. Accordingly, any liability to a person

who has demonstrated reliance on any untrueor misleading statement or

omission shall be determined inaccordance with Section 90A and

Schedule 10A of the Financial Services and Markets Act 2000.

By order of the Board

DAVID RICHARDSON

Group Chief Executive Ocer

ANDY PARSONS

Group Chief Financial Ocer

15 March 2021

98 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF JUST GROUP PLC

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

OPINION

In our opinion, Just Group plc’s consolidated financial statements and

Company financial statements (the “financial statements”):

• give a true and fair view of the state of the Group’s and of the Company’s

aairs as at 31 December 2020 and of the Group’s profit and the Group’s

and Company’s cash flows for the year then ended;

• have been properly prepared in accordance with international

accounting standards in conformity with the requirements of the

Companies Act 2006; and

• have been prepared in accordance with the requirements of the

Companies Act 2006.

We have audited the financial statements, included within the Annual

Report and Accounts (the “Annual Report”), which comprise:

• the Consolidated statement of financial position and Statement of

financial position of the Company as at 31 December 2020;

• the Consolidated statement of comprehensive income for the year then

ended;

• the Consolidated statement of changes in equity and the Statement of

changes in equity of the Company for the year then ended;

• the Consolidated statement of cash flows and the Statement of cash

flows of the Company for the year then ended; and

• the notes to the financial statements, which include a description of the

significant accounting policies.

Our opinion is consistent with our reporting to the Audit Committee.

SEPARATE OPINION IN RELATION TO INTERNATIONAL FINANCIAL

REPORTING STANDARDS ADOPTED PURSUANT TO REGULATION (EC)

NO1606/2002 AS IT APPLIES IN THE EUROPEAN UNION

As explained in note 1 to the consolidated financial statements, the Group,

in addition to applying international accounting standards in conformity

with the requirements of the Companies Act 2006, has also applied

international financial reporting standards adopted pursuant to

Regulation (EC) No 1606/2002 as it applies in the European Union.

In our opinion, the consolidated financial statements have been properly

prepared in accordance with international financial reporting standards

adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the

European Union.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on

Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under

ISAs (UK) are further described in the Auditors’ responsibilities for the audit

of the financial statements section of our report. We believe that the audit

evidence we have obtained is sucient and appropriate to provide a basis

for our opinion.

Independence

We remained independent of the Group in accordance with the ethical

requirements that are relevant to our audit of the financial statements in

the UK, which includes the FRC’s Ethical Standard, as applicable to listed

public interest entities, and we have fulfilled our other ethical

responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit

services prohibited by the FRC’s Ethical Standard were not provided to

theGroup.

Other than those disclosed in note 5 to the financial statements, we have

provided no non-audit services to the Group in the period under audit.

EMPHASIS OF MATTER – CAPITAL

In forming our opinion on the consolidated financial statements, which is

not modified, we draw attention to note 35, which explains that the

Group’s capital position can be adversely aected by a number of factors,

in particular factors that erode the Group’s capital resources and / or which

impact the quantum of risk to which the Group is exposed. Note 35 also

explains that the Group is enhancing its investment strategy in part to

respond to the Prudential Regulation Authority’s expectations of firms’

compliance with the Prudent Person Principle, that the Group continues to

engage in discussions with the Prudential Regulation Authority (“PRA”)

around a major model change application for Just Retirement Limited’s

internal model and that uncertainty remains as to how the introduction of

an Eective Value Test in stress will ultimately be implemented by the

Group. Note 35 further explains that given that the Group continues to

experience a high level of regulatory activity and intense regulatory

supervision, there is also the risk of PRA intervention, not limited to the

aforementioned matters, which could negatively impact on the Group’s

capital position.

OUR AUDIT APPROACH

Context

Following the recommendation of the Audit Committee, we were

appointed by the members on 14 May 2020. In planning for our first year

audit of Just Group plc, we met with the Audit Committee and members of

management across the business to discuss and understand significant

changes during the year, and to understand their perspectives on

associated business risks. We used this insight, in addition to our

assessment of the previous auditors’ approach, when forming our own

views regarding the business, as part of developing our audit plan and

when scoping and performing our audit procedures.

Due to the COVID-19 pandemic, the audit for the year ended 31 December

2020 has been carried out remotely; we have utilised virtual technologies

and collaborative workflow tools to obtain sucient, appropriate audit

evidence whilst working in this environment. The impact of COVID-19 has

also been part of our risk assessment and incorporated into the “Key Audit

Matters” included below, where relevant.

Overview

Audit scope

• Our audit scope has been determined to provide coverage of all material

financial statement line items.

• Three reporting components were subject to full scope audits and we

performed a limited scope audit covering specific financial statement

line items for a further four components.

Key audit matters

• Valuation of insurance contract liabilities (Group)

• Valuation of insurance contract liabilities – Annuitant mortality

assumptions (Group)

• Valuation of insurance contract liabilities – Credit default assumptions

(Group)

• Valuation of insurance contract liabilities – Expense assumptions (Group)

• Valuation of investments classified as Level 3 under IFRS 13, including

Lifetime Mortgages (Group)

• Impact of uncertainties related to COVID-19 (Group and Company)

• Recoverability of Company’s investment in subsidiaries (Company)

99

FNNIL SAEET

Materiality

• Overall Group materiality: £24.9 million based on 1% of Total equity.

• Overall Company materiality: £13.0 million based on 1% of Total equity.

• Performance materiality: £18.7 million (Group) and £9.8 million

(Company).

The scope of our audit

As part of designing our audit, we determined materiality and assessed

the risks of material misstatement in the financial statements.

Capability of the audit in detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws

and regulations. We design procedures in line with our responsibilities,

outlined in the Auditors’ responsibilities for the audit of the financial

statements section, to detect material misstatements in respect of

irregularities, including fraud. The extent to which our procedures are

capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the Group and industry, we identified that

the principal risks of non-compliance with laws and regulations related to

breaches of UK regulatory principles, such as those governed by the

Prudential Regulation Authority and the Financial Conduct Authority, and

we considered the extent to which non-compliance might have a material

eect on the financial statements. We also considered those laws and

regulations that have a direct impact on the preparation of the financial

statements such as the Companies Act 2006. We evaluated

management’s incentives and opportunities for fraudulent manipulation

of the financial statements (including the risk of override of controls), and

determined that the principal risks were related to management bias in

accounting estimates and judgemental areas as shown in our Key Audit

Matters. Audit procedures performed by the engagement team included:

• Discussions with the Board, management, Internal Audit, senior

management involved in the Risk and Compliance functions and the

Group’s legal function, including consideration of known or suspected

instances of non-compliance with laws and regulation and fraud;

• Assessment of matters reported on the Group’s whistleblowing register

and the results of management’s investigation of such matters where

applicable;

• Reviewing correspondence with the Prudential Regulation Authority and

the Financial Conduct Authority in relation to compliance with laws and

regulations;

• Meeting with the PRA supervisory team to discuss matters in relation to

compliance with laws and regulations;

• Attendance at Audit Committee and Group Risk and Compliance

Committee meetings;

• Reviewing relevant meeting minutes including those of the Board of

Directors, Audit, Group Risk and Compliance, Investment and

Remuneration Committees;

• Reviewing data regarding policyholder complaints, the Group’s register

of litigation and claims, Internal Audit reports, and Compliance reports in

so far as they related to non-compliance with laws and regulations and

fraud;

• Procedures relating to the valuation of life insurance contract liabilities,

in particular annuitant mortality, credit default and expense

assumptions, and the valuation of investments classified as Level 3

under IFRS 13, including Lifetime Mortgages, described in the related Key

Audit Matters;

• Validating the appropriateness of journal entries identified based on our

fraud risk criteria;

• Designing audit procedures to incorporate unpredictability around the

nature, timing or extent of our testing; and

• Assessing the impact of COVID-19 on the inherent risk of fraud, including

potential opportunities for fraud with more remote working and where

internal controls may not be operating the way they usually do.

There are inherent limitations in the audit procedures described above. We

are less likely to become aware of instances of non-compliance with laws

and regulations that are not closely related to events and transactions

reflected in the financial statements. Also, the risk of not detecting a

material misstatement due to fraud is higher than the risk of not detecting

one resulting from error, as fraud may involve deliberate concealment by,

for example, forgery or intentional misrepresentations, or through

collusion.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional

judgement, were of most significance in the audit of the financial

statements of the current period and include the most significant

assessed risks of material misstatement (whether or not due to fraud)

identified by the auditors, including those which had the greatest eect

on: the overall audit strategy; the allocation of resources in the audit; and

directing the eorts of the engagement team. These matters, and any

comments we make on the results of our procedures thereon, were

addressed in the context of our audit of the financial statements as a

whole, and in forming our opinion thereon, and we do not provide a

separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

100 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

INDEPENDENT AUDITORS’ REPORT continued

Key audit matter How our audit addressed the key audit matter

Valuation of insurance contract liabilities (Group)

Refer to Audit Committee Report, Accounting policy 1.22 Insurance liabilities and note 23 Insurance contracts and related reinsurance.

The inherent uncertainty involved in setting the assumptions used to

determine the insurance liabilities represents a significant area of

management judgement for which small changes in assumptions can

result in material impacts to the valuation of these liabilities. As part of

our consideration of the entire set of assumptions we focused particularly

on longevity assumptions, credit default risk assumptions and expense

assumptions given they are the most significant and judgemental

assumptions.

The work to address the valuation of the insurance contract liabilities

included the following procedures:

• Validated the design and operating eectiveness of controls related to

the completeness and accuracy of policyholder data used in the

valuation of insurance contract liabilities;

• For a sample, agreed data used in the actuarial model to source

documentation;

• Using our actuarial specialist team members, we applied our industry

knowledge and experience to assess the appropriateness of the

methodology, models and assumptions used against recognised

actuarial practices;

• Performed detailed audit testing of the actuarial model calculations or

‘model baselining’ as part of our first year audit. For the most material

products, we used our own modelling tools to replicate the liability cash

flows for a sample of policies in order to validate that the models’

calculations are operating as intended;

• Tested the derivation of the valuation interest rate used to discount the

insurance contract liabilities;

• Used the results of an independent PwC annual benchmarking survey of

assumptions to further challenge the assumption setting process by

comparing certain assumptions used relative to the Group’s industry

peers;

• Understood the process and tested controls in place over the

determination of the insurance contract liabilities, including those

relating to model inputs, model operation and extraction and

consolidation of results from the actuarial models; and

• Assessed the disclosures in the financial statements.

Further testing was also conducted on the annuitant mortality, credit

default and expense assumptions as set out below.

Valuation of insurance contract liabilities – Annuitant mortality assumptions (Group)

Refer to Audit Committee Report, Accounting policy 1.22 Insurance liabilities and note 23 Insurance contracts and related reinsurance.

Annuitant mortality assumptions are an area of significant management

judgement, due to the inherent uncertainty involved. Whilst the Group

manages the extent of its exposure to annuitant mortality risk through

reinsurance, we consider these assumptions underpinning gross

insurance contract liabilities to be a key audit matter given the Group’s

exposure to a large volume of annuity business. The annuitant mortality

assumption has two main components:

Base mortality assumption

This part of the assumption is mainly driven by internal experience

analyses, but judgement is also required. For example, in determining the

most appropriate granularity at which to carry out the analysis; the time

window used for historic experience, or whether data should be excluded

from the analysis; and in selecting an appropriate industry mortality table

to which management overlays the results of the experience analysis.

Rate of mortality improvements

This part of the assumption is more subjective given the lack of data and

the uncertainty over how life expectancy will change in the future. The

allowance for future mortality improvements is inherently subjective, as

improvements develop over long timescales and cannot be captured by

analysis of internal experience data. The Continuous Mortality

Investigation Bureau (CMIB) provides mortality projection models which

are widely used throughout the industry and contain a standard core set

of assumptions including initial rates of improvement, calculated by the

CMIB based on the most recent available population data.

In addition, a margin for prudence is applied to the annuitant mortality

assumptions.

We performed the following to test the annuitant mortality assumptions

(including base mortality assumptions, future mortality improvements

and IFRS prudential margins):

• Validated the appropriateness of the methodology used to perform the

annual experience studies. This involved the assessment of key

judgements with reference to relevant rules, actuarial guidance and by

applying our industry knowledge and experience;

• Tested the controls in place around the performance of annuitant

mortality experience analysis studies, approval of the proposed

assumptions and implementation within actuarial models;

• Validated the appropriateness of areas of expert judgments used in the

development of the mortality improvement assumptions, including the

selection and parameterisation of the CMI model including the choice of

the smoothing parameter, initial rate, long term rate and tapering at

older ages. In particular we considered the alignment of bases for

improvements between Just Retirement Limited and Partnership Life

Assurance Company Limited;

• Assessed the appropriateness of the IFRS prudence margin and its

consistency over time;

• Compared the annuitant mortality assumptions selected by

management against those used by peers using our annual survey of

the market;

• In respect of COVID-19, assessed management’s considerations and

any allowances made for changes in current and future expected rates

of annuitant mortality; and

• Assessed the disclosure of the annuitant mortality assumptions and the

commentary to support the profit arising, if any, from changes in these

assumptions over 2020.

Based on the work performed and the evidence obtained, we consider the

assumptions used for annuitant mortality to be appropriate.

101

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Key audit matter How our audit addressed the key audit matter

Valuation of insurance contract liabilities – Credit default assumptions (Group)

Refer to Audit Committee Report, Accounting policy 1.22 Insurance liabilities and note 23 Insurance contracts and related reinsurance.

The Group’s portfolio consists of annuities in payment or deferral and

therefore the credit default assumptions have a significant impact on the

insurance contract liabilities and requires expert judgement. The Group’s

asset portfolio also includes a material amount of illiquid assets, including

Lifetime Mortgages.

We performed the following to test the credit default assumptions:

• Assessed the methodologies used to derive the assumptions (including

prudential margin) with reference to relevant rules and actuarial

guidance and by applying our industry knowledge and experience;

• Validated significant assumptions used by management against market

observable data (to the extent available and relevant) and our

experience of market practices (including developments from the

Prudential Regulation Authority in the context of holdings in illiquid

assets);

• Considered the impact of COVID-19, including whether recent defaults

and downgrades are appropriately allowed for in data used by

management, and whether any changes in future expected levels are

appropriately reflected;

• Compared the assumptions selected against those adopted by peers

using our annual survey of the market (to the extent available);

• Assessed the appropriateness of the IFRS prudence margin for each

asset class individually and its consistency over time; and

• Assessed the disclosure of the credit default risk assumptions and the

commentary to support the profit arising, if any, from changes in these

assumptions over the period.

Based on the work performed and the evidence obtained, we consider the

assumptions used for credit default risk to be appropriate.

Valuation of insurance contract liabilities – Expense assumptions (Group)

Refer to Audit Committee Report, Accounting policy 1.22 Insurance liabilities and note 23 Insurance contracts and related reinsurance.

Future maintenance expenses and expense inflation assumptions are

used in the measurement of the insurance contract liabilities. The

assumptions reflect the expected future expenses that will be required to

maintain the in-force policies at the balance sheet date, including an

allowance for unavoidable project costs and a margin for prudence. The

assumptions used require judgement, particularly with respect to the

allocation of expenses to future maintenance.

We performed the following to test the expense assumptions:

• Validated the completeness and accuracy of the total cost base and

allocation of expenses to the appropriate cost centre;

• Assessed the methodology used by management to derive the

assumptions with reference to relevant rules and actuarial guidance

and by applying our industry knowledge and experience;

• Assessed the appropriateness of significant judgements in application

of the methodology, including excluded costs (for example, due to costs

either not relating to the insurance business or being non-recurring in

nature), the split of expenses between acquisition and maintenance

costs and the allocation of costs to products;

• Assessed the appropriateness of the IFRS prudence margin and its

consistency over time;

• Tested the policy counts used in the derivation of per policy expense

assumptions and considered whether any adjustments are required to

reflect changes in future expected policy volumes, for example, to allow

for diseconomies of scale; and

• Assessed the disclosure of the maintenance assumptions and the

commentary to support the profit arising, if any, from changes in these

assumptions over 2020.

Based on the work performed and the evidence obtained, we consider the

expense assumptions to be appropriate.

102 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

INDEPENDENT AUDITORS’ REPORT continued

Key audit matter How our audit addressed the key audit matter

Valuation of investments classified as Level 3 under IFRS 13, including Lifetime Mortgages (Group)

Refer to Audit Committee Report, Accounting policy 1.18 Financial investments and note 17 Fair value.

The valuation of investments classified as Level 3 is typically based on

either inputs into a valuation model or observable prices for proxy

positions. This is inherently complex and requires the use of significant

management judgement. Furthermore, the balances are material to the

financial statements. This comprises investments in certain illiquid debt

instruments, commercial mortgages and Lifetime Mortgages.

We performed the following procedures to tests the valuation of the

investments classified as level 3 (excluding Lifetime Mortgages):

• Validated the design adequacy and operating eectiveness of

management’s controls, including the dual pricing control;

• Obtained independent confirmations from third party asset managers

(where relevant);

For a sample of positions, we performed the following procedures:

• Engaged our valuation experts to assess the reasonableness and

appropriateness of the internal or external valuation methodology

applied;

• Performed an independent revaluation and investigated any variances

outside of our tolerable threshold; and

• Tested inputs into the valuation to external sources, where possible.

For Lifetime Mortgages, we performed the following procedures:

• Validated the design and operating eectiveness of controls related to

the accuracy and completeness of data used in the modelling of

Lifetime Mortgages;

• For a sample of mortgages, agreed data used in the modelling of

Lifetime Mortgages to policyholder documentation;

• Understood the process and tested controls in place over the

determination of the valuation of loans secured by residential

mortgages, including those relating to model inputs, model operation

and extraction and consolidation of results from the valuation models;

• Using our actuarial specialists, applied our industry knowledge and

experience to assess the appropriateness of the methodology, models

and assumptions used against recognised actuarial practices;

• Performed detailed audit testing of the model calculations or ‘model

baselining’ as part of our first year audit. We used our own modelling

tools to replicate the asset cash flows for a sample of policies in order to

validate that the models calculations are operating as intended;

• Evaluated the appropriateness of significant economic assumptions,

including the property price inflation assumption and property price

volatility assumptions used within the valuation process, with reference

to market data and industry benchmarks where available;

• Assessed the appropriateness of current property prices by obtaining

management’s recent external surveyor reports for a sample of

properties and recomputing the application of the ONS indices to

property data;

• Tested the key judgements involved in the preparation of the manually

calculated components of the asset balance, and the accuracy of the

calculations;

• Evaluated the Group’s historic redemptions data used to prepare the

Group’s mortality, morbidity and voluntary redemptions experience

analysis, together with industry data on expectations of future

mortality improvements and assessed whether this supports the

assumptions adopted; and

• Used the results of an independent PwC benchmarking survey on the

valuation of Lifetime Mortgages to further challenge the assumptions

and modelling approach adopted, relative to the Group’s industry peers.

We also considered the adequacy of the Group’s disclosures in relation to

the valuation of those assets designated Level 3, in particular the

sensitivity of the valuations adopted to alternative outcomes and details

of the sale of a tranche of mortgages during the year.

Based on the work performed and the evidence obtained, we consider the

valuation of level 3 assets to be appropriate.

103

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Key audit matter How our audit addressed the key audit matter

Impact of uncertainties related to COVID-19 (Group and Company)

Refer to Strategic Report, Going Concern and Viability Statement in the Directors’ Report, Audit Committee Report, note 17 Fair value and note 23

Insurance contracts and related reinsurance.

The impacts of the global pandemic due to the Coronavirus COVID-19

continue to cause significant social and economic disruption up to the

date of reporting. In our audit we have identified the following key

impacts of COVID-19:

Ability of the entity to continue as a going concern

There are a number of potential matters in relation to COVID-19 which

could impact on the going concern status of the Group and Company.

Using downside scenarios driven by the required Own Risk and Solvency

Assessment (ORSA) process, the Directors have considered the ability of

the Group and the Company to remain solvent with sucient liquidity to

meet future obligations. The Directors have also considered its

requirements in respect of regulatory capital under Solvency II, including

performing reverse stress testing on property exposure. The Directors

have concluded that the Group and Company is a going concern.

Impact on Estimation Uncertainty in the Financial Statements

The pandemic has increased the level of estimation uncertainty in the

financial statements. The Directors have therefore considered how

COVID-19 has impacted the key estimates that determine the valuation

of material balances, particularly insurance contract liabilities and

financial investments.

Qualitative Disclosures in the Annual Report and Financial Statements

In addition, the Directors have considered the qualitative disclosures

included in the Annual Report in respect of COVID-19 and the impact that

the pandemic has had, and continues to have, on the Group and

Company.

In assessing management’s consideration of the impact of COVID-19 on

the Group and Company we have performed the following procedures:

• Obtained management’s updated going concern assessment and

challenged the rationale for the downside scenarios adopted and

material assumptions made using our knowledge of performance,

review of regulatory correspondence and obtaining further

corroborating evidence;

• Considered information obtained during the course of the audit and

publicly available market information to identify any evidence that

would contradict management’s assessment of the impact of

COV ID-19;

• Inquired and understood the actions taken by management to mitigate

the impacts of COVID-19, including attendance at all Audit Committee

and Group Risk and Compliance Committee meetings;

• Assessed the impact of COVID-19 on the design and operating

eectiveness of the control environment;

• Challenged management’s judgements in the valuation of the

insurance contract liabilities, including annuitant mortality, credit

default and expense assumptions, in light of the emerging COVID-19

experience and by comparing these relative to industry peers; and

• Reviewed the appropriateness of disclosures within the Annual Report

with respect to COVID-19 and, where relevant, considered the material

consistency of this other information to the audited financial

statements and the information obtained in the audit.

Based on the work performed, we consider the impact of COVID-19 has

been appropriately reflected in the Annual Report.

Recoverability of investment in subsidiaries (Company)

Refer to Audit Committee Report, Company accounting policy 1.4 Investments in Group undertakings and note 2 to the Company’s financial

statements – Investments in Group undertakings.

The carrying amount of the Company’s investments in subsidiaries are

significant and in excess of the market capitalisation of the Group. This

gives rise to an indicator of impairment. The estimated recoverable

amount of these balances is subjective due to the inherent uncertainty in

forecasting trading conditions and discounting future cash flows used in

the budgets. The eect of these matters is that, as part of our risk

assessment, we determined that the carrying value of the cost of

investment in subsidiaries has a high degree of estimation uncertainty,

with a potential range of reasonable outcomes greater than our

materiality for the financial statements as a whole.

We performed the following procedures related to the recoverability of

the Company’s investment in subsidiaries:

• Assessed the reasonableness and appropriateness of the assumptions

used in the cash flows included in the budgets based on our knowledge

of the Group and the markets in which the subsidiaries operate;

• Assessed the reasonableness of the budgets by considering the

historical accuracy of the previous forecasts;

• Evaluated the current level of trading, including identifying any

indications of a downturn in activity, by examining the post year end

management accounts and considering our knowledge of the Group

and the market;

• Reviewed the methodology used in determining the discount rate

applied, including engaging our valuation experts to assess the

appropriateness of the inputs into the discount rate; and

• Assessed the adequacy of the Company’s disclosures in respect of the

associated impairment.

Based on the work performed and the evidence obtained, we consider the

carrying amount of the Company’s investment in subsidiaries to be

appropriate.

104 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking

into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate.

Decisions regarding scoping require a significant degree of professional judgement based on quantitative and qualitative considerations, including the

size and nature of business activities in each operating entity.

The Group is predominantly based in the United Kingdom and writes business across four main product lines, being Defined Benefit risk transfers,

Individual Annuities, Lifetime Mortgages and Long-term Care Plans. The Group consists of the parent Company, Just Group plc, and a number subsidiary

companies, of which the most significant are Just Retirement Limited and Partnership Life Assurance Company Limited, which conduct substantially all

the insurance business on behalf of the Group.

We have determined three components which were subject to full scope audits. This included Just Group plc, Just Retirement Limited and Partnership

Life Assurance Company Limited. In addition, we performed a limited scope audit covering specific financial statement line items for a further four

components. For the residual components, we performed analysis at an aggregated group level to re-examine our assessment that there were no

significant risks of material misstatements. Our scoping resulted in 90% coverage of consolidated Total assets, 98% coverage of consolidated Total

liabilities and 93% coverage of consolidated Profit before tax.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with

qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual

financial statement line items and disclosures and in evaluating the eect of misstatements, both individually and in aggregate, on the financial

statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows

Financial statements – Group Financial statements – Company

Overall materiality £24.9 million £13.0 million

How we determined it 1% of Total equity 1% of Total equity

Rationale for benchmark

applied

Based on the benchmarks used in the Annual Report,

we consider total equity to be the most appropriate

benchmark for our materiality. It represents the

residual interest that can be ascribed to shareholders

after policyholder assets and corresponding liabilities

have been accounted for and is aligned to the

primary focus of the business and users of the

financial statements, being the capital position of the

Group. We compared our materiality against other

relevant benchmarks, such as total assets, total

revenue and profit before tax to ensure the

materiality selected was appropriate for our audit.

In determining our materiality, we considered financial

metrics which we believed to be relevant and concluded

that total equity was the most appropriate benchmark. The

primary use of the financial statements is to determine the

entity’s ability to pay dividends and the users will therefore

be focussed on distributable reserves, a balance captured

using a total equity benchmark.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality

allocated across components was between £5.7 million and £17.8 million.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected

misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent

of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was

75% of overall materiality, amounting to £18.7 million for the consolidated financial statements and £9.8 million for the Company financial statements.

In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk

and the eectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £1.25 million (Group audit) and £0.7

million (Company audit) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

CONCLUSIONS RELATING TO GOING CONCERN

Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of accounting

included:

• Obtained the directors’ going concern assessment and challenged the rationale for downside scenarios adopted and material assumptions made

using our knowledge of the Group’s business performance, review of regulatory correspondence and obtaining further corroborating evidence;

• Considered management’s assessment of the regulatory solvency coverage and liquidity position in the forward looking scenarios considered;

• Assessed the impact of severe, but plausible, downside scenarios which removed certain actions which are not necessarily within management’s

control;

• Assessed the impact of the factors outlined in note 35, which could erode the Group’s capital resources and / or the quantum of risk to which the Group

is exposed;

• Assessed liquidity of the Group and Company, including the Group’s ability to pay policyholder obligations, suppliers and creditors as amounts fall due;

• Assessed the ability of the Group and the Company to comply with covenants;

INDEPENDENT AUDITORS’ REPORT continued

105

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• Enquired and understood the actions taken by management to mitigate the impacts of COVID-19, including attendance at all Audit Committee and

Group Risk and Compliance Committee meetings; and

• Reviewed the disclosures included in the financial statements, including the Basis of Preparation.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively,

may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at least twelve months from when the

financial statements are authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the

financial statements is appropriate.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the Company’s ability to

continue as a going concern.

In relation to the Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention

to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern

basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

REPORTING ON OTHER INFORMATION

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The

directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do

not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other

information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially

misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether

there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have

performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report

based on these responsibilities.

With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have

been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described

below.

Strategic report and Directors’ Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ Report for the year

ended 31 December 2020 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not identify

any material misstatements in the Strategic report and Directors’ Report.

Directors’ Remuneration

In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

CORPORATE GOVERNANCE STATEMENT

The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate

governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our

additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information

section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement,

included within the Governance Report, is materially consistent with the financial statements and our knowledge obtained during the audit, and we have

nothing material to add or draw attention to in relation to:

• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;

• The disclosures in the Annual Report and Accounts that describe those principal risks, what procedures are in place to identify emerging risks and an

explanation of how these are being managed or mitigated;

• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in

preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue to do so over a period of at least

twelve months from the date of approval of the financial statements;

• The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and why the period is

appropriate; and

• The directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its

liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or

assumptions.

Our review of the directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit and only consisted of

making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant

provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge

and understanding of the Group and Company and their environment obtained in the course of the audit.

106 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance

statement is materially consistent with the financial statements and our knowledge obtained during the audit:

• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information

necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy;

• The section of the Annual Report that describes the review of eectiveness of risk management and internal control systems; and

• The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance with the Code

does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.

RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT

Responsibilities of the directors for the financial statements

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements in

accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal

control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud

or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate

the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether

due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users

taken on the basis of these financial statements.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it

typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items

for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population

from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the

Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other

person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

OTHER REQUIRED REPORTING

COMPANIES ACT 2006 EXCEPTION REPORTING

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not obtained all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited

by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records

and returns.

We have no exceptions to report arising from this responsibility.

APPOINTMENT

Following the recommendation of the Audit Committee, we were appointed by the members on 14 May 2020 to audit the financial statements for the

year ended 31 December 2020 and subsequent financial periods. This is therefore our first year of uninterrupted engagement.

Lee Clarke (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

16 March 2021

INDEPENDENT AUDITORS’ REPORT continued

107

FNNIL SAEET

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

Note

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Gross premiums written 7 2 , 1 4 7. 8 1, 921. 0

Reinsurance premiums ceded (2 32 . 0) 2. 8

Reinsurance recapture 940.0 43 6 . 8

Net premium revenue 2 , 8 55. 8 2,36 0. 6

Net investment income 3 1,777.7 1,4 51.7

Fee and commission income 7 11 . 7 12.7

Total revenue 4, 645 . 2 3, 825. 0

Gross claims paid (1 , 321 . 1) ( 1 , 2 4 7. 5)

Reinsurers’ share of claims paid 320 . 9 38 6.4

Net claims paid (1,000.2) ( 8 61 .1)

Change in insurance liabilities:

Gross amount (2 , 116 . 6) (1 ,730.6)

Reinsurers’ share 73. 5 ( 7 0 .4)

Reinsurance recapture (94 0 .0) (436.8)

Net change in insurance liabilities (2,983.1) ( 2 , 2 37. 8)

Change in investment contract liabilities 24 (1 . 8) 92 . 2

Acquisition costs 4 (4 4 . 5) ( 35. 2)

Other operating expenses 5 (219. 9) (227.8)

Finance costs 6 (159.0) (18 6 .7)

Total claims and expenses (4 ,4 0 8 . 5) (3,456.4)

Profit before tax 7 236 .7 36 8 .6

Income tax 8 (4 4 . 2) (6 6 . 2)

Profit for the year 192 . 5 302 .4

Other comprehensive income:

Items that will not be reclassified subsequently to profit or loss:

Revaluation of land and buildings 8,15 (1 .1) –

Items that may be reclassified subsequently to profit or loss:

Exchange dierences on translating foreign operations (0.6) ( 0. 2)

Other comprehensive loss for the year, net of income tax (1 .7) (0 . 2)

Total comprehensive income for the year 19 0. 8 302 . 2

Profit attributable to:

Equity holders of Just Group plc 193. 6 302. 6

Non-controlling interest 35 (1. 1) ( 0. 2)

Profit for the year 192 . 5 302 .4

Total comprehensive income attributable to:

Equity holders of Just Group plc 191 . 9 3 02 .4

Non-controlling interest 36 (1 .1) (0 . 2)

Total comprehensive income for the year

19 0. 8 302 . 2

Basic earnings per share (pence) 12 1 6.06 2 8 . 37

Diluted earnings per share (pence) 12 15.89 28 .0 0

The notes are an integral part of these financial statements.

108 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

Year ended

31 December 2020 Note

Share

capital

£m

Share

premium

£m

Reorganisation

reserve

£m

Merger

reserve

£m

Revaluation

reserve

£m

Shares

held

by trusts

£m

Accumulated

profit

£m

Total

shareholders’

equity

£m

Tier 1

notes

£m

Non-

controlling

interest

£m

Total

£m

At 1 January 2020 103. 5 94.5 34 8 .4 5 9 7. 1 4.4 (6.0) 885. 9 2 ,0 27. 8 294.0 (0. 8) 2 , 321 . 0

Profit for the year – – – – – – 193 .6 193 . 6 – ( 1 .1) 192 . 5

Other comprehensive

loss for the year, net

of income tax – – – – ( 1 .1) – (0 .6) (1 .7) – – (1.7)

Total comprehensive

income/(loss) for the

year – – – – ( 1 .1) – 193 . 0 191 . 9 – (1 . 1) 19 0. 8

Contributions and

distributions

Shares issued 21 0.3 – – – – – – 0. 3 – – 0. 3

Dividends 13 – – – – – – (0 .1) (0.1) – – (0.1)

Interest paid on Tier

1 notes 22 – – – – – – ( 28 .1) (28 . 1) – – ( 28 .1)

Share-based

payments – – – – – 0 .6 5. 9 6.5 – – 6. 5

Total contributions

and distributions

0.3 – – – – 0.6 ( 22 . 3) ( 21 . 4) – – ( 21 . 4)

At 31 December

2020

103. 8 94. 5 34 8. 4 5 9 7. 1 3. 3 (5. 4) 1 ,0 56.6 2 ,19 8 . 3 294.0 (1 .9) 2, 49 0 . 4

Year ended

31 December 2019 Note

Share

capital

£m

Share

premium

£m

Reorganisation

reserve

£m

Merger

reserve

£m

Revaluation

reserve

£m

Shares

held

by trusts

£m

Accumulated

profit

£m

Total

shareholders’

equity

£m

Tier 1

notes

£m

Non-

controlling

interest

£m

Total

£m

At 1 January 2019 9 4 .1 94.5 3 48 .4 532 .7 4.4 (6 . 2) 596 . 5 1,6 64 .4 – (0. 6) 1,663. 8

Profit for the year – – – – – – 302 . 6 3 02. 6 – (0 . 2) 302 .4

Other comprehensive

loss for the year, net

of income tax – – – – – – ( 0. 2) ( 0 . 2) – – (0 . 2)

Total comprehensive

income/(loss) for the

year – – – – – – 3 02. 4 302 .4 – (0 . 2) 302 . 2

Contributions and

distributions

Shares issued 21 9. 4 – – 64.4 – – – 73. 8 – – 73.8

Tier 1 notes issued

(net of costs) 22 – – – – – – – – 294.0 – 29 4. 0

Dividends 13 – – – – – – (0 . 2) (0 . 2) – – ( 0. 2)

Interest paid on Tier

1 notes – – – – – – (16 . 8) ( 16 . 8) – – (16 . 8)

Share-based

payments

– – – – – 0. 2 4.0 4.2 – – 4.2

Total contributions

and distributions

9.4 – – 64.4 – 0. 2 (13. 0) 61 . 0 294.0 – 355. 0

At 31 December

2019

103 . 5 94. 5 348 .4 597 .1 4.4 (6. 0) 885 . 9 2 ,0 2 7. 8 294.0 ( 0. 8) 2, 321 . 0

1 Includes currency translation reserve.

The notes are an integral part of these financial statements.

109

FNNIL SAEET

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020

Note

31 December

2020

£m

31 December

2019

Restated

(note 2)

£m

1 January

2019

Restated

(note 2)

£m

Assets

Intangible assets 14 133 . 5 154 .4 17 1 . 0

Property, plant and equipment 15 20. 5 26 . 8 21.4

Financial investments 16 23, 269.8 21 , 6 0 6 . 0 19, 252 .5

Investment in joint ventures and associates – – 0. 3

Reinsurance assets 23 3,13 2.6 3, 86 0.6 4,350.8

Deferred tax assets 18 11 . 5 11 . 5 18 .6

Current tax assets 2.9 – 42 .1

Prepayments and accrued income 74 . 3 70 .6 6 7. 9

Insurance and other receivables 19 32 . 0 25 .5 18 . 9

Cash and cash equivalents 20 1 , 49 6 . 3 2 6 7. 0 11 3 . 9

Total assets 28,1 73.4 26 , 022 . 4 24 , 05 7. 4

Equity

Share capital 21 10 3. 8 10 3. 5 94 .1

Share premium 21 94 .5 94.5 94. 5

Reorganisation reserve 348 .4 34 8.4 34 8.4

Merger reserve 21 5 97. 1 597 .1 532 .7

Revaluation reserve 15 3. 3 4 .4 4 .4

Shares held by trusts (5 . 4) (6 .0) (6 . 2)

Accumulated profit

1, 056. 6 885 . 9 59 6 . 5

Total equity attributable to owners of Just Group plc

2 ,19 8 . 3 2 , 027. 8 1, 66 4.4

Tier 1 notes

22 29 4 .0 29 4.0 –

Non-controlling interest

36 (1 .9) (0 . 8) (0.6)

Total equity

2 , 49 0 . 4 2 , 32 1. 0 1, 663. 8

Liabilities

Insurance liabilities 23 21 , 11 8 . 4 19,0 03 .7 17, 27 3 . 8

Reinsurance liabilities 23 2 6 7. 1 128. 6 111 . 6

Investment contract liabilities 24 42 . 8 54. 0 1 9 7. 8

Loans and borrowings 25 773. 5 66 0.0 57 3. 4

Lease liabilities 26 6.8 12.4 –

Other financial liabilities 27 3,305.1 3,678 . 9 4 ,0 63. 3

Deferred tax liabilities 18 22 . 8 26 . 3 32 . 2

Other provisions 30 1.0 1. 8 0 .7

Current tax liabilities – 10 . 2 3. 5

Accruals and deferred income 53. 9 52. 9 59. 0

Insurance and other payables

31 91 .6 72. 6 78 . 3

Total liabilities

25,6 83. 0 23, 701.4 22, 393 . 6

Total equity and liabilities

28,1 73.4 26 , 022 . 4 24 , 0 5 7. 4

The notes are an integral part of these financial statements.

The financial statements were approved by the Board of Directors on 15 March 2021 and were signed on its behalf by:

Andy Parsons

Director

110 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

Note

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Cash flows from operating activities

Profit before tax 236.7 36 8 .6

Property revaluation loss through profit and loss 15 1. 2 –

Depreciation of property, plant and equipment 15 3.9 4.5

Amortisation of intangible assets 14 19. 9 19.9

Impairment of property, plant and equipment 15 – 4.0

Impairment of intangible assets 14 1.1 –

Loss on disposal of associated undertaking 36 – 0.3

Share-based payments 6.5 4. 2

Interest income 3 ( 631 . 7) (66 3.0)

Interest expense 6 1 59. 0 18 6. 7

Realised and unrealised gains on financial investments (1, 039.7) (1, 4 0 4 . 0)

Decrease in reinsurance assets 866. 5 5 0 7. 2

Increase in prepayments and accrued income (3.7) (2.7)

Increase in insurance and other receivables (6. 1) (4 . 2)

Increase in insurance liabilities 2,1 1 4.7 1,729.9

Decrease in investment contract liabilities ( 11 . 2) ( 143 . 8)

Decrease in deposits received from reinsurers ( 775 . 3) (4 8 9. 5)

Increase/(decrease) in accruals and deferred income 3. 3 (5 .7)

Increase/(decrease) in insurance and other payables 19. 0 (5.7)

Decrease in other creditors (1 62. 7) (4 4 . 3)

Interest received 314 . 5 36 4. 3

Interest paid ( 1 0 7. 7) (13 9.1)

Taxation paid (60 .6) (14 . 9)

Net cash inflow from operating activities 9 4 7. 6 272 . 7

Cash flows from investing activities

Additions to internally generated intangible assets 14 (0.1) ( 3. 3)

Acquisition of property and equipment 15 (2 . 3) (1.4)

Net cash outflow from investing activities ( 2 . 4) (4 .7)

Cash flows from financing activities

Issue of ordinary share capital (net of costs) 21 0.3 73. 8

Proceeds from issue of Tier 1 notes (net of costs) 22 – 292 .7

Increase in borrowings (net of costs) 25 110 . 6 83.9

Dividends paid 13 (0 .1) ( 0. 2)

Coupon paid on Tier 1 notes 13 (28 .1) ( 16 . 8)

Interest paid on borrowings (49. 8) (43.7)

Payment of lease liabilities – principal 26 (4. 1) (2 . 8)

Payment of lease liabilities – interest 26 ( 0 . 2) ( 0. 3)

Net cash inflow from financing activities 28 .6 386 .6

Net increase in cash and cash equivalents 973. 8 65 4. 6

Cash and cash equivalents at 1 January 1, 651 . 0 9 96.4

Cash and cash equivalents at 31 December 2,6 24.8 1 , 6 51 . 0

Cash available on demand 1 , 49 6 . 3 26 7. 0

Units in liquidity funds 1,128 . 5 1,38 4. 0

Cash and cash equivalents at 31 December 20 2,6 24.8 1 , 6 51 . 0

The notes are an integral part of these financial statements.

111

FNNIL SAEET

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 SIGNIFICANT ACCOUNTING POLICIES

General information

Just Group plc (formerly JRP Group plc) (the “Company”) was incorporated and registered in England and Wales on 13 June 2013 as a public company

limited by shares. The Company’s registered oce is Enterprise House, Bancroft Road, Reigate, Surrey, RH2 7RP.

1.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with international accounting standards in conformity with the requirements

of the Companies Act 2006 and in accordance with International Financial Reporting Standards (“IFRS”) adopted pursuant to Regulation (EC) No

1606/2002 as it applies in the European Union.

As part of their assessment of going concern, the Directors are required to undertake an assessment of the Company and the Group’s ability to continue

to adopt the going concern basis of accounting, and to disclose any material uncertainties identified. Having completed this assessment, which included

consideration of the possible impacts on the Group’s business from the COVID-19 pandemic, the Directors are satisfied that the Group has adequate

resources to continue to operate as a going concern for a period of not less than 12 months from the date of this report, and that there is no material

uncertainty in relation to going concern. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

The Directors have considered the following in their assessment:

• The benefit of £250m new Tier 2 capital raised during 2020, £75m of which was used to repurchase part of the Group’s Tier 3 loan notes, via a tender

oer.

• Steps taken over the last two years to improve capital eciency, including during the current period: increasing the level of reinsurance for GIfL

contracts, launching new more capital-ecient products, such as our Defined Benefit De-risking partnering deals; additional NNEG hedging and the

sale of a portion of our lifetime mortgages portfolio to further protect against UK residential property risk; reductions in new business volumes; and

cost saving initiatives.

• The projected liquidity position of the Company and the Group, current financing arrangements and contingent liabilities.

• A range of forecast scenarios with diering levels of new business and associated additional capital requirements to write anticipated levels of

newbusiness.

• Eligible own funds being in excess of minimum capital requirements in stressed scenarios, including reduced new business volumes.

• The findings of the Group Own Risk and Solvency Assessment (“ORSA”).

• Risks arising from the UK’s withdrawal from the European Union.

• Scenario testing to consider the possible impacts of the COVID-19 pandemic on the Group’s business, including stresses to UK residential property

prices, house priceinflation, credit quality of assets, and risk-free rates, together with a reduction in new business levels. In addition, the results of

extreme propertystress tests were considered, including a property price fall in excess of 40%, and a sensitivity analysis was performed to assess the

impact from falling interest rates, including an assessment of the impact of negative interest rates. The possible impact on liquidity from the pandemic

was considered through applying significant stresses to exchange rates and interest rates, and assessing the impact this would have on the Group’s

cash collateral requirements.

• Scenarios, including those in the ORSA and potential regulatory intervention, where the Group ceases to write new business. However, in such a run-o

scenario the going concern basis would continue to be applicable because the Group would be continuing to trade with its existing business (for

example, collect premiums and administer policies) rather than ceasing to trade.

• The Group Business Plan, which was approved by the Board in November 2020, and in particular the forecast regulatory solvency position for the period

to 31 December 2022 calculated on a Solvency II basis, which includes scenarios setting out possible adverse trading and economic conditions as a

result of the COVID-19 pandemic.

The Directors’ assessment concluded that it remains appropriate to value assets and liabilities on the assumption that there are adequate resources

tocontinue in business and meet obligations as they fall due for the foreseeable future, being at least 12 months from the date of signing this report,

including in the event of the run-o scenarios considered above. Accordingly, the going concern basis has been adopted in the valuation of assets

andliabilities.

There are no new accounting standards or amendments to existing accounting standards eective from 1 January 2020 that have an impact on

theGroup.

The following new accounting standards, interpretations and amendments to existing accounting standards in issue are being assessed but have not

yetbeen adopted by the Group:

• IFRS 9, Financial Instruments.

Amendments to IFRS 4, Insurance Contracts, published in September 2016 and adopted by the Group with eect from 1 January 2018, allowed the

deferral of the application of IFRS 9 until accounting periods commencing on 1 January 2021. This was intended to align with the eective date of

IFRS17, the replacement insurance contracts standard. In June 2020, the IASB issued a further amendment to IFRS 4 to extend the deferral of the

application of IFRS 9 until accounting periods commencing on 1 January 2023, to align with the amended eective date of IFRS 17 also issued in

June2020. The option to defer the application of IFRS 9, which the Group has continued to adopt for 2020, is subject to meeting criteria relating to the

predominance of insurance activity. Eligibility for the deferral approach was based on an assessment of the Group’s liabilities as at 31 December 2016,

the end of the annual period during which the acquisition of Partnership Assurance Group plc took place and the most recent period of significant change

in the magnitude of the Group’s activities. At this date the Group’s liabilities connected with insurance exceeded 90% of the carrying amount of the

Group’s total liabilities. The Group’s total liabilities were £22,283.9m and liabilities connected with insurance in the statement of financial position at this

date primarily included insurance contracts within the scope of IFRS 4 of £15,748.0m, investment contract liabilities of £222.3m, and certain amounts

within other financial liabilities and insurance payables which arise in the course of writing insurance business of £5,527.4m.

112 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

1 SIGNIFICANT ACCOUNTING POLICIES continued

1.1 Basis of preparation continued

If the Group had adopted IFRS 9 it would continue to classify financial assets at fair value through profit or loss. Therefore, under IFRS 9 all financial

assets would continue to be recognised at fair value through profit or loss and the fair value at 31 December 2020 would be unchanged at £23,269.8m.

As well as financial assets, the Group also holds Insurance and other receivables and Cash and cash equivalent assets, with contractual terms that give

rise to cash flows on specified dates; the fair value of these investments is considered to be materially consistent with their carrying value, as disclosed in

notes 19 and 20.

IFRS 9 information relating to non-insurance entities within the Group which have applied IFRS 9 can be found in the entities’ publicly available individual

financial statements.

• IFRS 17, Insurance Contracts (eective 1 January 2023, not yet endorsed by the EU).

IFRS 17 was issued in May 2017 with an eective date of 1 January 2021. In June 2020, the IASB issued an amended standard which delayed the

eective date to 1 January 2023. The amendments issued in June 2020 aimed to assist entities implementing the standard.

IFRS 17 provides a comprehensive approach for accounting for insurance contracts including their valuation, income statement presentation and

disclosure. The Group initiated a project in 2017 to develop measurement and reporting systems and processes which will apply to all of the Group’s

insurance business. The main features of the standard applicable to annuities is the deferment of premium revenues on the balance sheet and with

revenue recognition in the profit or loss account over the life of contracts. The impact of IFRS 17 continues to be assessed but it is anticipated there is

likely to be a significant change relating to the measurement and presentation of insurance contracts in the Group’s statutory reporting.

• UK-adopted IFRS

As part of its exit from the European Union, the UK has been in a transition period up to 31 December 2020. From 1 January 2021, the Group is required to

apply UK-adopted IFRS. In the short term, UK and EU-adopted IFRS are expected to be identical as all existing EU-adopted IFRS are brought into UK law

and become UK-adopted IFRS as at 31 December 2020. Going forwards any changes to IFRS will be applied once adopted by the UK.

1.2 Significant accounting policies and the use of judgements, estimates and assumptions

The preparation of financial statements requires the Group to select accounting policies and make estimates and assumptions that aect items

reported in the Consolidated statement of comprehensive income, Consolidated statement of financial position, other primary statements and Notes to

the consolidated financial statements.

The major areas of judgement used as part of accounting policy application are summarised below.

Accounting policy Item involving judgement Critical accounting judgement

1.6 Classification of insurance and investment

contracts

Assessment of significance of insurance risk transferred.

1.18 Financial investments Classification of financial investments, including assessment of market

observability of valuation inputs.

1.18 Measurement of fair value of loans secured by

residential mortgages, including measurement

of the no-negative equity guarantees

The use of a variant of the Black-Scholes option pricing formula with real

world assumptions.

The measurement of the no-negative equity guarantee underlying the fair

value of loans secured by mortgages uses a variant of the Black-Scholes

option pricing formula, which has been adapted to use real world

assumptions instead of risk neutral assumptions due to the lack of

relevant observable market inputs to support a risk neutral valuation

approach. This approach is in line with common industry practice and

there does not appear to be an alternative approach that is widely

supported in the industry. We acknowledge that there has been

significant recent academic and market debate concerning the valuation

of no-negative equity guarantees and we intend to continue to actively

monitor this debate.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

113

FNNIL SAEET

1 SIGNIFICANT ACCOUNTING POLICIES continued

1.2 Significant accounting policies and the use of judgements, estimates and assumptions continued

All estimates are based on management’s knowledge of current facts and circumstances, assumptions based on that knowledge and predictions of

future events and actions. Actual results may dier significantly from those estimates. Where relevant the impact of COVID-19 has been considered and

detail included in the relevant note disclosures.

The table below sets out those items the Group considers susceptible to changes in critical estimates and assumptions together with the relevant

accounting policy.

Accounting policy and notes Item involving estimates and assumptions Critical estimates and assumptions

1.18, 17(a) and (d) Measurement of fair value of loans

secured by residential mortgages,

including measurement of the no-

negative equity guarantees

The critical estimates used in valuing loans secured by residential mortgages

include the projected future receipts of interest and loan repayments, and the

future costs of administering the loan portfolio.

The key assumptions used as part of the valuation calculation include future

property prices and their volatility, mortality, the rate of voluntary redemptions

and the liquidity premium added to the risk-free curve and used to discount the

mortgage cash flows.

Further details can be found in note 17 under ‘Loans secured by residential

mortgages’.

1.19, 23, 27 Measurement of reinsurance assets and

deposits received from reinsurers arising

from reinsurance arrangements

The critical estimates used in measuring the value of reinsurance assets include

the projected future cash flows arising from reinsurers’ share of the Group’s

insurance liabilities.

The key assumptions used in the valuation include discount rates and mortality

experience, as described below, and assumptions around the reinsurers’ ability to

meet its claim obligations.

Deposits received from reinsurers are measured in accordance with the

reinsurance contract and taking account of an appropriate discount rate for the

timing of the expected cash flows of the liabilities.

For deposits received from reinsurers measured at fair value through profit or

loss, the key assumption used in the valuation is the discount rate.

For deposits received from reinsurers measured using insurance rules under

IFRS4, the key assumptions used in the valuation include discount rates and

mortality experience.

1.22, 23(b) Measurement of insurance liabilities

arising from writing Retirement Income

insurance

The critical estimates used in measuring insurance liabilities include the projected

future Retirement Income payments and the cost of administering payments

topolicyholders.

The key assumptions are the discount rates and mortality experience used in

thevaluation of future Retirement Income payments, and level and inflation of

costs of administration.

The valuation discount rates are derived from yields on supporting assets after

deducting allowances fordefault. Mortality assumptions are derived from the

appropriate standard mortality tables, adjusted to reflect the future expected

mortality experience ofthe policyholders. Maintenance expenses are determined

from expense analyses and are assumed to inflate at market-implied rates.

Further detail can be found in note 23.

1.3 Consolidation principles

The consolidated financial statements incorporate the assets, liabilities, results and cash flows of the Company and its subsidiaries.

Subsidiaries are those investees over which the Group has control. The Group has control over an investee if all of the following are met: (1) it has power

over the investee; (2) it is exposed, or has rights, to variable returns from its involvement with the investee; and (3) it has the ability to use its power over

the investee to aect its own returns. Subsidiaries are consolidated from the date on which control is transferred to the Group and are excluded from

consolidation from the date on which control ceases. All inter-company transactions, balances and unrealised surpluses and deficits on transactions

between Group companies are eliminated. Accounting policies of subsidiaries are aligned on acquisition to ensure consistency with Group policies.

The Group uses the acquisition method of accounting for business combinations. Under this method, the cost of acquisition is measured as the

aggregate of the fair value of the consideration at date of acquisition and the amount of any non-controlling interest in the acquiree. The excess of the

consideration transferred over the identifiable net assets acquired is recognised as goodwill. The Group uses the equity method to consolidate its

investments in joint ventures and associates. Under the equity method of accounting the investment is initially recognised at fair value and adjusted

thereafter for the post-acquisition change in the Group’s share of net assets of the joint ventures and associates.

114 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

1 SIGNIFICANT ACCOUNTING POLICIES continued

1.4 Segments

The Group’s segmental results are presented on a basis consistent with internal reporting used by the Chief Operating Decision Maker (“CODM”) to assess

the performance of operating segments and the allocation of resources. The CODM has been identified as the Group Executive Committee.

The internal reporting used by the CODM includes product information (which comprises analysis of product revenues, LTM advances and amounts

written under investment contracts) and information on adjusted operating profit and profit before tax for the Group’s operating segments.

Product information is analysed by product line and includes DB, GIfL, Care Plans, Protection, LTM and Capped Drawdown products.

An operating segment is a component of the Group that engages in business activities from which it earns revenues and incurs expenses.

The operating segments from which the Group derives revenues and incurs expenses are as follows:

• the writing of insurance products for distribution to the at- or in-retirement market, which is undertaken through the activities of the life company (this

is referred to as the insurance segment in note 7, Segmental reporting);

• the arranging of guaranteed income for life contracts and lifetime mortgages through regulated advice and intermediary services; and

• the provision of licensed software to financial advisers, banks, building societies, life assurance companies and pension trustees.

Operating segments, where certain materiality thresholds in relation to total results from operating segments are not exceeded, are combined when

determining reportable segments. For segmental reporting, the arranging of guaranteed income for life contracts, providing intermediary mortgage

advice and arranging, plus the provision of licensed software, are included in the Other segment along with Group activities, such as capital and liquidity

management, and investment activities.

The information on adjusted operating profit and profit before tax used by the CODM is presented on a combined product basis within the insurance

operating segment and is not analysed further by product.

1.5 Foreign currencies

Transactions in foreign currencies are translated to sterling at the rates of exchange ruling at the date of the transaction. Monetary assets and liabilities

denominated in foreign currencies are translated into sterling at the rates of exchange ruling at the end of the financial year. Foreign exchange gains and

losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies

are recognised in profit or loss.

The assets and liabilities of foreign operations are translated to sterling at the rates of exchange at the reporting date. The revenues and expenses are

translated to sterling at the average rates of exchange for the year. Foreign exchange dierences arising on translation to sterling are accounted for

through other comprehensive income.

1.6 Classification of insurance and investment contracts

The measurement and presentation of assets, liabilities, income and expenses arising from life and pensions business contracts issued and associated

reinsurance contracts held is dependent upon the classification of those contracts as either insurance or investment contracts.

A contract is classified as insurance only if it transfers significant insurance risk. Insurance risk is significant if an insured event could cause an insurer

topay significant additional benefits to those payable if no insured event occurred. A contract that is classified as an insurance contract remains an

insurance contract until all rights and obligations are extinguished or expire.

Any contracts not considered to be insurance contracts under IFRS are classified as investment contracts. Capped Drawdown pension business and

Flexible Pension Plan contracts are classified as investment contracts as there is no transfer of longevity risk due to the fixed term and unit-linked natures

of these respective contracts.

1.7 Premium revenue

Premium revenue in respect of individual GIfL contracts is accounted for when the premiums are received, which coincides with when the liability to pay

the GIfL contract is established.

Premium revenue in respect of Defined Benefit De-risking contracts is accounted for when the Company becomes “on risk”, which is the date from which

the policy is eective. If a timing dierence occurs between the date from which the policy is eective and the receipt of payment, the amount due for

payment but not yet received is recognised as a receivable in the Consolidated statement of financial position.

Premium revenue in respect of Care Plans and Protection policies is recognised in the accounting period in which the insurance contract commences.

Facilitated adviser charges are not accounted for within premium revenue, and do not represent a charge on the Group.

Deposits collected under investment contracts are not accounted for through the Consolidated statement of comprehensive income, except for fee

income and attributable investment income, but are accounted for directly through the Consolidated statement of financial position as an adjustment to

the investment contract liability.

Reinsurance premiums payable in respect of reinsurance treaties are accounted for when the reinsurance premiums are due for payment under the

terms of the contract. Reinsurance premiums previously incurred can be recaptured under certain conditions, notably once reinsurance financing for an

underwriting year is fully repaid.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

115

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1 SIGNIFICANT ACCOUNTING POLICIES continued

1.8 Net investment income

Investment income consists of interest receivable for the year and realised and unrealised gains and losses on financial assets and liabilities at fair value

through profit or loss.

Interest income is recognised as it accrues.

Realised gains and losses on financial assets and liabilities occur on disposal or transfer and represent the dierence between the proceeds received net

of transaction costs, and the original cost.

Unrealised gains and losses arising on financial assets and liabilities represent the dierence between the carrying value at the end of the year and the

carrying value at the start of the year or purchase value during the year, less the reversal of previously recognised unrealised gains and losses in respect

of disposals made during the year.

1.9 Revenue from contracts with customers

The Group recognises revenue from contracts with customers in accordance with IFRS 15, in an amount that reflects the consideration to which the

Group expects to be entitled in exchange for the services provided. Revenue from contracts with customers comprises fee income on initial advances

made on loans secured by residential mortgages, investment management fees, administration fees, software licensing fees and commission.

1.10 Claims paid

Policyholder benefits are accounted for when due for payment. Reinsurance paid claim recoveries are accounted for in the same period as the

relatedclaim.

Death claims are accounted for when notified.

1.11 Acquisition costs

Acquisition costs comprise direct costs such as commission and indirect costs of obtaining and processing new business. Acquisition costs are not

deferred as they relate to single premium business.

1.12 Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract involves the use

of an identified asset and conveys the right to control the use of the asset for a period of time in exchange for consideration.

Where the Group is a lessee, a right-of-use asset and a lease liability are recognised at the commencement date of the lease. The right-of-use asset is

initially measured at cost, which comprises the amount of lease liability, any lease payments made at or before the commencement date, any initial

direct costs incurred and an estimate of the costs to dismantle and remove the underlying asset or to restore the underlying asset or site on which it is

located, less any lease incentives received. The lease liability is initially measured at the present value of the lease payments that are not paid at the

commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental

borrowing rate. The Group generally uses its incremental borrowing rate as the discount rate.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful

life of the right-of-use asset or the end of the lease term. The carrying amount of the right-of-use asset is reduced by any impairment losses and adjusted

for certain remeasurements of the lease liability.

The lease liability is subsequently measured at amortised cost using the eective interest method. It is remeasured to reflect any lease modifications

orreassessments.

The Group presents its right-of-use assets in “Property, plant and equipment” in the Consolidated statement of financial position.

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and

leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the

leaseterm.

Where the Group is a lessor, which is the case when it sub-lets leased properties to a third party, the leases are classified as finance leases because

substantially all the risks and rewards of ownership of the underlying assets are transferred to the third party. The right-of-use asset is derecognised

anda lease receivable from the third party is recognised. Income from the sublease and interest on the original lease are recognised in the Consolidated

statement of comprehensive income.

1.13 Finance costs

Finance costs on deposits received from reinsurers are recognised as an expense in the period in which they are incurred. Interest on reinsurance

financing is accrued in accordance with the terms of the financing arrangements.

Interest on loans and borrowings is accrued in accordance with the terms of the loan agreement. Loan issue costs are capitalised and amortised on a

straight-line basis over the term of the loan issued. Interest expense is calculated using the eective interest rate method.

1.14 Employee benefits

Defined contribution plans

The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Group in funds managed

bya third party. Obligations for contributions to the defined contribution pension scheme are recognised as an expense in profit or loss when due.

116 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

1 SIGNIFICANT ACCOUNTING POLICIES continued

1.14 Employee benefits continued

Share-based payment transactions

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at grant date, determined using stochastic

and scenario-based modelling techniques where appropriate. The fair value is expensed in the Consolidated statement of comprehensive income on

astraight-line basis over the vesting period, with a corresponding credit to equity, based on the Group’s estimate of the equity instruments that will

eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments that will eventually vest as a result

ofchanges in non-market-based vesting conditions, and recognises the impact of the revision of original estimates in the Consolidated statement of

comprehensive income over the remaining vesting period, with a corresponding adjustment to equity. Where a leaver is entitled to their scheme

benefits, this is treated as an acceleration of the vesting in the period they leave. Where a scheme is modified before it vests, any change in fair value as

a result of the modification is recognised over the remaining vesting period. Where a scheme is cancelled, this is treated as an acceleration in the period

of the vesting of all remaining options.

1.15 Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted-average number of ordinary

shares outstanding during the year. The calculation of the weighted-average number of ordinary shares excludes ordinary shares held in trusts on behalf

of employee share schemes.

For diluted earnings per share, the weighted-average number of ordinary shares outstanding during the year, excluding ordinary shares held in trusts on

behalf of employee share schemes, is adjusted to assume conversion of potential ordinary shares, such as share options granted to employees, if their

conversion would dilute earnings per share.

1.16 Intangible assets

Intangible assets consist of goodwill, which is deemed to have an indefinite useful life, Purchased Value of In-Force (“PVIF”), brand and purchased and

internally developed software (including PrognoSys™), which are deemed to have finite useful lives.

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary and

represents the future economic benefit arising from assets that are not capable of being individually identified and separately recognised. Goodwill is

measured at initial value less any accumulated impairment losses. Goodwill is not amortised, but assessed for impairment annually or when

circumstances or events indicate there may be uncertainty over the carrying value.

For the purpose of impairment testing, goodwill has been allocated to cash-generating units and an impairment is recognised when the carrying value

of the cash-generating unit exceeds its recoverable amount. Impairment losses are recognised directly in the Consolidated statement of comprehensive

income and are not subsequently reversed.

Other intangible assets are recognised if it is probable that the relevant future economic benefits attributable to the asset will flow to the Group, and are

measured at cost less accumulated amortisation and any impairments.

PVIF, representing the present value of future profits from the purchased in-force business, is recognised upon acquisition and is amortised over its

expected remaining economic life up to 16 years on a straight-line basis. PVIF is within the scope of IFRS 4.

PrognoSys™ is the Group’s proprietary underwriting engine. The Group has over two million person-years of experience collected over 20 years of

operations. It is enhanced by an extensive breadth of external primary and secondary healthcare data and medical literature.

Costs that are directly associated with the production of identifiable and unique software products controlled by the Group are capitalised and

recognised as an intangible asset. Direct costs include the incremental software development team’s employee costs. All other costs associated with

researching or maintaining computer software programmes are recognised as an expense as incurred.

Intangible assets with finite useful lives are amortised on a straight-line basis over their useful lives, which range from two to 16 years. The useful lives

are determined by considering relevant factors, such as usage of the asset, potential obsolescence, competitive position and stability of the industry.

For intangible assets with finite useful lives, impairment testing is performed where there is an indication that the carrying value of the assets may be

subject to an impairment. An impairment loss is recognised where the carrying value of an intangible asset exceeds its recoverable amount.

The significant intangible assets recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles

acquired in a business combination are as follows:

Intangible asset Estimated useful economic life Valuation method

PVIF Up to 16 years Estimated value in-force using European embedded value model

Brand 2 – 5 years Estimated royalty stream if the rights were to be licensed

Distribution network 3 years Estimated discounted cash flow

Software 2 – 3 years Estimated replacement cost

Intellectual property 12 – 15 years Estimated replacement cost

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

117

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1 SIGNIFICANT ACCOUNTING POLICIES continued

1.16 Intangible assets continued

The useful economic lives of intangible assets recognised by the Group other than those acquired in a business combination are as follows:

Intangible asset Estimated useful economic life

PrognoSys™ 12 years

Software 3 years

1.17 Property, plant and equipment

Land and buildings are measured at their revalued amounts less subsequent depreciation, and impairment losses are recognised at the date of

revaluation. Valuations are performed with sucient frequency to ensure that the fair value of the revalued asset does not dier materially from its

carrying value.

A revaluation surplus is recognised in other comprehensive income and credited to the revaluation reserve in equity. However, to the extent that it

reverses a revaluation deficit of the same asset previously recognised in profit or loss, the increase is recognised in profit or loss. A revaluation deficit is

recognised in profit or loss, except to the extent that it osets an existing surplus on the same asset recognised in the revaluation reserve.

Buildings are depreciated on a straight-line basis over the estimated useful lives of the buildings of 25 years.

Equipment is stated at cost less accumulated depreciation and impairment losses. Depreciation is calculated on a straight-line basis to write down the

cost to residual value over the estimated useful lives as follows:

Plant and equipment Estimated useful economic life

Computer equipment 3 – 4 years

Furniture and fittings 2 – 10 years

1.18 Financial investments

Classification

The Group classifies financial investments in accordance with IAS 39 whereby, subject to specific criteria, they are accounted for at fair value through

profit and loss. This comprises assets designated by management as fair value through profit or loss on inception, as they are managed on a fair value

basis, and derivatives that are classified as held for trading. These investments are measured at fair value with all changes thereon being recognised in

investment income in the Consolidated statement of comprehensive income.

Purchases and sales of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the assets. Amounts

payable or receivable on unsettled purchases or sales are recognised in other payables or other receivables respectively. Transaction costs are expensed

through profit or loss.

Loans secured by residential mortgages are recognised when cash is advanced to borrowers.

The Group receives and pledges collateral in the form of cash or securities in respect of derivative, reinsurance or other contracts such as securities

lending. Collateral received is recognised as an asset in the Consolidated statement of financial position with a corresponding liability for the repayment

in other financial liabilities and collateral pledged is recognised in the Consolidated statement of financial position within the appropriate asset

classification when the collateral is controlled by the Group and receives the economic benefit.

Derivatives are recognised at fair value through profit or loss. All derivatives are carried as assets when the fair value is positive and liabilities when the

fair values are negative. The Group does not use hedge accounting.

The Group’s policy is to derecognise financial investments when it is deemed that substantially all the risks and rewards of ownership have been

transferred.

Use of fair value

The Group uses current bid prices to value its investments with quoted prices. Actively traded investments without quoted prices are valued using prices

provided by third parties. If there is no active established market for an investment, the Group applies an appropriate valuation technique such as

discounted cash flow analysis, or option pricing models for derivatives.

Determining the fair value of financial investments when the markets are not active

The Group holds certain financial investments for which the markets are not active. These comprise financial investments which are not quoted in active

markets and include loans secured by residential mortgages, derivatives and other financial investments for which markets are not active. When the

markets are not active, there is generally no or limited observable market data that can be used in the fair value measurement of the financial

investments. The determination of whether an active market exists for a financial investment requires management’s judgement.

118 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

1 SIGNIFICANT ACCOUNTING POLICIES continued

1.18 Financial investments continued

If the market for a financial investment of the Group is not active, the fair value is determined using valuation techniques. The Group establishes fair

value for these financial investments by using quotations from independent third parties or internally developed pricing models. The valuation technique

is chosen with the objective of arriving at a fair value measurement which reflects the price at which an orderly transaction would take place between

market participants on the measurement date. The valuation techniques include the use of recent arm’s length transactions, reference to other

instruments that are substantially the same, and discounted cash flow analysis. The valuation techniques may include a number of assumptions relating

to variables such as credit risk and interest rates and, for loans secured by mortgages, mortality, future expenses, voluntary redemptions and house price

assumptions. Changes in assumptions relating to these variables impact the reported fair value of these financial instruments positively or negatively.

The financial investments measured at fair value are classified into the following three-level hierarchy on the basis of the lowest level of inputs that are

significant to the fair value measurement of the financial investment concerned:

Level 1: Quoted price (unadjusted) in active markets for identical assets and liabilities;

Level 2: Inputs other than quoted prices included within Level 1 that are observable either directly or indirectly (i.e. derived from prices); and

Level 3: Significant inputs for the asset or liability that are not based on observable market data (unobservable inputs).

1.19 Reinsurance

Reinsurance assets

Amounts recoverable from reinsurers are measured in a consistent manner with insurance liabilities or relevant financial liabilities and are classified as

reinsurance assets. If a reinsurance asset is impaired, the carrying value is reduced accordingly and that impairment loss is recognised in the

Consolidated statement of comprehensive income.

Financial liabilities

Where reinsurance contracts entered into by the Group are structured to provide financing, with financing components to be repaid in future years, such

amounts are classified as “reinsurance finance” and included in other financial liabilities in the Consolidated statement of financial position.

Where reinsurance contracts entered into by the Group require deposits received from reinsurers to be repaid, such amounts are classified as “deposits

received from reinsurers” and included in other financial liabilities in the Consolidated statement of financial position. Where the liability carries no

insurance risk, it is initially recognised at fair value at the date the deposited asset is recognised and subsequently re-measured at fair value at each

balance sheet date. The resulting gain or loss is recognised in the Consolidated statement of comprehensive income. Fair value is determined as the

amount payable discounted from the first date that the amount is required to be paid.

All other deposits received from reinsurers are valued in accordance with the terms of the reinsurance contracts under IFRS 4, which take into account an

appropriate discount rate for the timing of expected cash flows. It should be noted that the reinsurance recoverable amount is set equal to the value of

the deposit in line with the financing nature of this reinsurance and anticipating that underwriting years will eventually be recaptured. See note 29 for

further information on reinsurance recaptures.

Amounts receivable/payable

Where reinsurance contracts the Group has entered into include longevity swap arrangements, such contracts are settled on a net basis and amounts

receivable from or payable to the reinsurers are included in the appropriate heading under either Insurance and other receivables or Insurance and

otherpayables.

1.20 Cash and cash equivalents

Cash and cash equivalents consist of cash at bank and in hand, deposits held at call with banks, and other short-term highly liquid investments with less

than 90 days’ maturity from the date of acquisition.

1.21 Equity

The dierence between the proceeds received on issue of the shares, net of share issue costs, and the nominal value of the shares issued is credited to

the share premium account.

Interim dividends are recognised in equity in the year in which they are paid. Final dividends are recognised when they have been approved by

shareholders.

Where the Company purchases shares for the purposes of employee incentive plans, the consideration paid, net of issue costs, is deducted from equity.

Upon issue or sale, any consideration received is credited to equity net of related costs.

The reserve arising on the reorganisation of the Group represents the dierence in the value of the shares in the Company and the value of shares in Just

Retirement Group Holdings Limited for which they were exchanged as part of the Group reorganisation in November 2013.

1.22 Insurance liabilities

Measurement

Long-term insurance liabilities arise from the Group writing Retirement Income contracts, including Defined Benefit De-risking Solutions, long-term care

insurance, and whole of life and term protection insurance. Their measurement uses estimates of projected future cash flows arising from payments to

policyholders plus the costs of administering them. This is in accordance with the SORP on Accounting for Insurance Business issued by the ABI in

December 2005 (amended in December 2006) and withdrawn with eect for accounting periods beginning on or after 1 January 2015, but which

continues to apply to the Group as the grandfathered existing accounting policy under IFRS 4. Valuation of insurance liabilities is derived using discount

rates, adjusted for default allowance, and mortality assumptions, taken from the appropriate mortality tables and adjusted to reflect actual and

expected experience. The assumptions in the valuation are set on a prudent basis.

Liability adequacy test

The Group performs adequacy testing on its insurance liabilities to ensure the carrying amount is sucient to cover the current estimate of future cash

flows. Any deficiency is immediately charged to the Consolidated statement of comprehensive income.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

119

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1 SIGNIFICANT ACCOUNTING POLICIES continued

1.23 Investment contract liabilities

Investment contracts are measured at fair value through profit or loss in accordance with IAS 39. The fair value of investment contracts is estimated

using an internal model and determined on a policy-by-policy basis using a prospective valuation of future Retirement Income benefit and expense

cashflows.

1.24 Loans and borrowings

Loans and borrowings are initially recognised at fair value, net of transaction costs, and subsequently amortised through profit or loss over the period to

maturity at the eective rate of interest required to recognise the discounted estimated cash flows to maturity.

1.25 Other provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of

economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The amount recorded

asa provision is the best estimate of the expenditure required to settle the obligation at the balance sheet date. Where the eect of the time value of

money is material, the provision is the present value of the expected expenditure.

1.26 Taxation

The current tax expense is based on the taxable profits for the year, using tax rates substantively enacted at the Consolidated statement of financial

position date, and after any adjustments in respect of prior years. Tax, including tax relief for losses if applicable, is allocated over profits before taxation

and amounts charged or credited to components of other comprehensive income and equity as appropriate.

Provision is made for deferred tax liabilities, or credit taken for deferred tax assets, using the liability method, on all material temporary dierences

between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. The principal temporary dierences

arise from the revaluation of certain financial assets and liabilities, including technical provisions and other insurance items and tax losses carried

forward, and include amortised transitional tax adjustments resulting from changes in tax basis.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary dierences

can be utilised.

2 PRIOR YEAR RESTATEMENT

A reclassification has been made regarding the presentation of the Group’s longevity reinsurance swaps at 31 December 2019 and 1 January 2019.

Thelongevity swaps relate to DB, GIfL and Care business in Just Retirement Limited. Under the swap arrangements the Group is committed to pay the

reinsurer a schedule of fixed payments for each relevant scheme and the reinsurer undertakes to reimburse the actual cost of the claims to the Group.

The Group’s policy is to recognise claim recoveries on longevity swap contracts as the net amounts due as a result of comparing the actual payments

made to policyholders with the fixed contractual payments where settlement of the contract is on a net basis. Reinsurance premium expenses represent

swap management fees and are included under Outward reinsurance premiums. Reinsurance assets and Reinsurance liabilities are recognised on a net

basis where the Group has legal right of set-o. Amounts receivable from or payable to reinsurers are recognised on a net basis and included under the

appropriate heading under Insurance and other receivables or Insurance and other payables. At 31 December 2019 and 1 January 2019 the longevity

swaps showed a liability position which was reported as a reduction to reinsurance assets. However, the Group does not have a legal right of set-o

against other reinsurance assets in respect of these liabilities, since the longevity reinsurance swaps are held with dierent counterparties to those of the

reinsurance assets. Accordingly, in line with the requirements of IAS 32, Financial instruments: Presentation, these balances have been reclassified to

reinsurance liabilities on the face of the Statement of Financial Position at 31 December 2019 and at 1 January 2019. The impact of this reclassification at

31 December 2019 is an increase to reinsurance assets of £128.6m and an increase to reinsurance liabilities of the same amount. There is no impact to

total equity or to comprehensive income (1 January 2019: increase to reinsurance assets of £111.6m and increase to reinsurance liabilities of the same

amount, no impact to total equity or to comprehensive income).

3 NET INVESTMENT INCOME

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Interest income:

Assets at fair value through profit or loss 631.7 663.0

Movement in fair value:

Financial assets and liabilities designated on initial recognition at fair value through profit or loss 818.3 658.8

Derivative financial instruments (note 28) 327.7 129.9

Total net investment income 1,777.7 1,451.7

4 ACQUISITION COSTS

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Commission 14.9 14.8

Other acquisition expenses 29.6 20.4

Total acquisition costs 44.5 35.2

120 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

5 OTHER OPERATING EXPENSES

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Personnel costs (note 10) 107.5 108.0

Investment expenses and charges 17.5 13.9

Depreciation of property, plant and equipment 3.9 4.5

Amortisation of intangible assets 19.9 19.9

Impairment of property, plant and equipment – 4.0

Impairment of intangible assets 1.1 –

Other costs 70.0 77.5

Total other operating expenses 219.9 227.8

Other costs include reassurance management fees, professional fees, IT and marketing costs.

Reconciliation of Other operating expenses to Management expenses

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Total other operating expenses 219.9 227.8

Investment expenses and charges (17.5) (13.9)

Reassurance management fees (22.2) (26.1)

Amortisation of acquired intangible assets (18.0) (18.8)

Other costs (2.9) –

Total management expenses 159.3 169.0

During the year the following services were provided by the Group’s auditor at costs as detailed below:

Year ended

31 December

2020

£000

Year ended

31 December

2019

£000

Fees payable for the audit of the Parent Company and consolidated accounts 540 250

Fees payable for other services:

The audit of the Company’s subsidiaries pursuant to legislation 1,618 950

Corporate finance services – 95

Audit-related assurance services 842 710

Other assurance services 65 218

Other non-audit services not covered above 1 –

Auditor remuneration

3,066 2,223

Fees payable to other audit firms:

The audit of the Company’s subsidiaries pursuant to legislation

60 –

Corporate finance services 146 –

Total 3,272 2,223

Audit-related assurance services mainly include fees relating to the audit of the Group’s Solvency II regulatory returns. Other assurance services mainly

include fees relating to review procedures in relation to the Group’s interim results. Corporate finance services relate to due diligence and reporting

accountant services. The fees payable to other audit firms during 2020 noted above relate to £60,000 paid to KPMG in relation to the 2020 audit of the

Group’s South African subsidiaries and £146,000 paid to KPMG in relation to corporate finance services carried out during 2019.

6 FINANCE COSTS

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Interest payable on deposits received from reinsurers 107.7 139.0

Interest payable on subordinated debt 47. 3 44.0

Other interest payable 4.0 3.7

Total finance costs 159.0 186.7

The interest payable on deposits received from reinsurers is as defined by the respective reinsurance treaties and calculated with reference to the

risk-adjusted yield on the relevant backing asset portfolio.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

121

FNNIL SAEET

7 SEGMENTAL REPORTING

Adjusted operating profit

The Group reports adjusted operating profit as an alternative measure of profit which is used for decision making and performance measurement.

TheBoard believes that adjusted operating profit, which excludes eects of short-term economic and investment changes, provides a better view of

thelonger-term performance and development of the business and aligns with the longer-term nature of the products. The underlying operating profit

represents a combination of both the profit generated from new business written in the year and profit expected to emerge from the in-force book of

business based on current assumptions. Actual operating experience, where dierent from that assumed at the start of the year, and the impacts of

changes to future operating assumptions applied in the year, are then also included in arriving at adjusted operating profit.

New business profits represent expected investment returns on financial instruments backing shareholder and policyholder funds after allowances

forexpected movements in liabilities and acquisition costs. Profits arising from the in-force book of business represent the expected return on surplus

assets, the expected unwind of prudent reserves above best estimates for mortality, expenses, corporate bond defaults and, with respect to lifetime

mortgages, no-negative equity guarantee and early redemptions.

Adjusted operating profit excludes the impairment and amortisation of goodwill and other intangible assets arising on consolidation, non-recurring and

project expenditure, implementation costs for cost saving initiatives, and investment and economic profits, since these items arise outside the normal

course of business in the year. Adjusted operating profit also excludes exceptional items. Exceptional items are those items that, in the Directors’ view,

are required to be separately disclosed by virtue of their nature or incidence to enable a full understanding of the Group’s financial performance.

Variances between actual and expected investment returns due to economic and market changes, and gains and losses on the revaluation of land and

buildings, are also disclosed outside adjusted operating profit.

Segmental analysis

The insurance segment writes insurance products for the retirement market – which include Guaranteed Income for Life Solutions, Defined Benefit

De-risking Solutions, Care Plans, Flexible Pension Plans and Protection − and invests the premiums received from these contracts in debt securities,

gilts,liquidity funds and Lifetime Mortgage advances.

The professional services business, HUB, is included with other corporate companies in the Other segment. This business is not currently suciently

significant to separate from other companies’ results. The Other segment also includes the Group’s corporate activities that are primarily involved in

managing the Group’s liquidity, capital and investment activities.

The Group operates in one material geographical segment, which is the United Kingdom.

Segmental reporting and reconciliation to financial information

Year ended 31 December 2020 Year ended 31 December 2019

Insurance

£m

Other

£m

Total

£m

Insurance

£m

Other

£m

Total

£m

New business operating profit 199.2 – 199.2 182.0 – 182.0

In-force operating profit 96.8 1.0 97.8 82.6 1.8 84.4

Underlying operating profit 296.0 1.0 297.0 264.6 1.8 266.4

Operating experience and assumption changes 46.2 – 46.2 42.2 – 42.2

Other Group companies’ operating results – (17.1) (17.1) – (13.1) (13.1)

Development expenditure (5.9) (1.4) (7.3) (7.1) (3.2) (10.3)

Reinsurance and financing costs (79.5) – (79.5) (61.5) (5.1) (66.6)

Adjusted operating profit before tax 256.8 (17. 5) 239.3 238.2 (19.6) 218.6

Non-recurring and project expenditure (7.1) (5.6) (12.7) (3.8) (4.5) (8.3)

Implementation of cost saving initiatives (7.8) (0.7) (8.5) (13.3) (0.2) (13.5)

Investment and economic profits/(losses) 9.4 (0.9) 8.5 173.7 0.1 173.8

Interest adjustment to reflect IFRS accounting for Tier 1 notes as equity 28.1 – 28.1 14.0 2.8 16.8

Profit/(loss) before amortisation costs and tax 279.4 (24.7) 254.7 408.8 (21.4) 387.4

Amortisation costs (18.0) (18.8)

Profit/(loss) before tax 236.7 368.6

Segmental revenue

All net premium revenue arises from the Group’s insurance segment. Net investment income of £1,777.6m arose from the insurance segment and £0.1m

arose from other segments (2019: £1,450.2m and £1.5m respectively). Segmental fee and commission income is presented in the disaggregation of fees

and other income below.

122 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

7 SEGMENTAL REPORTING continued

Product information analysis

Additional analysis relating to the Group’s products is presented below. The Group’s products are from one material geographical segment, which is the

United Kingdom. The Group’s gross premiums written, as shown in the Consolidated statement of comprehensive income, is analysed by product below:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Defined Benefit De-risking Solutions (“DB”) 1,507.9 1,231.3

Guaranteed Income for Life contracts (“GIfL”) 585.9 615.7

Care Plans (“CP”) 51.5 71.1

Protection 2.5 2.9

Gross premiums written 2,147.8 1,921.0

Drawdown and Lifetime Mortgages (“LTM”) products are accounted for as investment contracts and financial investments respectively in the statement

of financial position. An analysis of the amounts advanced during the year for these products is shown below:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Drawdown deposits and other investment products 1.0 26.7

LTM loans advanced 511.7 415.8

Reconciliation of gross premiums written to Retirement Income sales

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Gross premiums written 2,147.8 1,921.0

Protection sales not included in Retirement Income sales (2.5) (2.9)

Retirement Income sales 2,145.3 1,918.1

Disaggregation of fees and other income

Year ended 31 December 2020 Year ended 31 December 2019

Insurance

£m

Other

£m

Total

£m

Insurance

£m

Other

£m

Total

£m

Product/service

LTM set-up fees – – – 0.2 – 0.2

LTM commission and advice fees – 2.1 2.1 – 1.7 1.7

GIfL commission – 4.5 4.5 – 4.4 4.4

FPP fees – – – 0.7 0.2 0.9

DB fees – – – 0.6 – 0.6

Other 2.3 2.8 5.1 0.5 4.4 4.9

2.3 9.4 11.7 2.0 10.7 12.7

Timing of revenue recognition

Products transferred at point in time 2.3 9.0 11.3 1.3 10.3 11.6

Products and services transferred over time – 0.4 0.4 0.7 0.4 1.1

Revenue from contracts with customers 2.3 9.4 11.7 2.0 10.7 12.7

All revenue from contracts with customers is from the UK.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

123

FNNIL SAEET

8 INCOME TAX

Income tax recognised in profit or loss

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Current taxation

Current year 46.6 67.9

Adjustments in respect of prior periods 1.0 (2.9)

Total current tax 47.6 65.0

Deferred taxation

Origination and reversal of temporary dierences (4.0) 1.8

Adjustments in respect of prior periods (0.9) (0.5)

Rate change 1.5 (0.1)

Total deferred tax (3.4) 1.2

Total income tax recognised in profit or loss 44.2 66.2

The current taxation adjustment in respect of prior periods relates to the conclusion of the transfer pricing enquiry with HMRC.

A change to the main UK corporation tax rate, announced in the Budget on 11 March 2020, was substantively enacted on 17 March 2020. The rate

applicable from 1 April 2020 now remains at 19%, rather than the previously enacted reduction to 17%. The eect of this change is that the net deferred

tax balances carried forward increased by £1.5m. On 3 March 2021, the Government announced an increase in the rate of corporation tax rate to 25%

from 1 April 2023. The change in rate has yet to be substantively enacted, and the impact of the rate change will not be material for the financial

statements.

The deferred tax assets and liabilities at 31 December 2020 have been calculated based on the rate at which they are expected to reverse.

Reconciliation of total income tax to the applicable tax rate

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Profit/(loss) on ordinary activities before tax

236.7 368.6

Income tax at 19% (2019: 19%) 45.0 70.0

Eects of:

Expenses not deductible for tax purposes 2.0 1.1

Rate change 1.5 (0.2)

Higher rate for overseas income (0.1) (0.3)

Unrecognised deferred tax asset 1.3 1.8

Adjustments in respect of prior periods 0.1 (3.4)

Relief on Tier 1 interest included in equity (5.3) (3.2)

Other (0.3) 0.4

Total income tax recognised in profit or loss 44.2 66.2

Income tax recognised in other comprehensive income

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Deferred taxation

Revaluation of land and buildings (0.1) –

Total deferred tax (0.1) –

Total income tax recognised in other comprehensive income (0.1) –

124 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

8 INCOME TAX continued

Taxation of life insurance companies was fundamentally changed following the publication of the Finance Act 2012. Since 1 January 2013, life insurance

tax has been based on financial statements; prior to this date, the basis for profits chargeable to corporation tax was surplus arising within the Pillar 1

regulatory regime. Cumulative dierences arising between the two bases, which represent the dierences in retained profits and taxable surplus which

are not excluded items for taxation, are brought back into the computation of taxable profits. However, legislation provides for transitional arrangements

whereby such dierences are amortised on a straight-line basis over a ten year period from 1 January 2013. Similarly, the resulting cumulative

transitional adjustments for tax purposes in adoption of IFRS will be amortised on a straight-line basis over a ten year period from 1 January 2016. The

tax charge for the year to 31 December 2020 includes profits chargeable to corporation tax arising from amortisation of transitional balances of £2.5m

(2019: £2.5m).

Tax balances included within these financial statements include the use of estimates and assumptions which are based on management’s best

knowledge of current circumstances and future events and actions. This includes the determination of tax liabilities and recoverables for uncertain tax

positions. The actual outcome may dier from the estimated position.

9 REMUNERATION OF DIRECTORS

Information concerning individual Directors’ emoluments, interests and transactions is given in the Directors’ Remuneration Report. For the purposes of

the disclosure required by Schedule 5 to the Companies Act 2006, the total aggregate emoluments of the Directors in the year was £3.6m (2019: £2.7m).

Employer contributions to pensions for Executive Directors for qualifying periods were £nil (2019: £nil). The aggregate net value of share awards granted

to the Directors in the year was £2.2m (2019: £1.1m). The net value has been calculated by reference to the closing middle-market price of an ordinary

share at the date of grant. Two Directors exercised share options during the year with an aggregate gain of £0.3m (2019: two Directors exercised options

with an aggregate gain of £0.3m).

10 STAFF NUMBERS AND COSTS

The average number of persons employed by the Group (including Directors) during the financial year, analysed by category, was as follows:

Year ended

31 December

2020

Number

Year ended

31 December

2019

Number

Directors 9 7

Senior management 119 118

Sta 949 955

Average number of sta 1,077 1,080

The aggregate personnel costs were as follows:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Wages and salaries 87.2 89.7

Social security costs 9.2 8.9

Other pension costs 4.3 4.2

Share-based payment expense 6.8 5.2

Total personnel costs 107.5 108.0

The Company does not have any employees.

11 EMPLOYEE BENEFITS

Defined contribution pension scheme

The Group operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable to the fund and

amounted to £4.3m (2019: £4.2m).

Employee share plans

The Group operates a number of employee share option and share award plans. Details of those plans are as follows:

Share options

Just Retirement Group plc 2013 Long Term Incentive Plan (“LTIP”)

The Group has made awards under the LTIP to Executive Directors and other senior managers. Awards are made in the form of nil-cost options which

become exercisable on the third anniversary of the grant date, subject to the satisfaction of service and performance conditions set out in the Directors’

Remuneration Report. Options are exercisable until the tenth anniversary of the grant date. Options granted since 2018 are subject to a two year holding

period after the options have been exercised.

The options are accounted for as equity-settled schemes.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

125

FNNIL SAEET

11 EMPLOYEE BENEFITS continued

The number and weighted-average remaining contractual life of outstanding options under the LTIP are as follows:

Year ended

31 December

2020

Number of

options

Year ended

31 December

2019

Number of

options

Outstanding at 1 January 15,196,343 17,595, 308

Granted 8,951,149 4,755,178

Forfeited (941,906) (2,402,172)

Exercised (2,261,267) (2,567, 282)

Expired (1,679,813) (2,184,689)

Outstanding at 31 December 19,264,506 15,196,343

Exercisable at 31 December 3,119,248 3,255,678

Weighted-average share price at exercise (£) 0.57 0.54

Weighted-average remaining contractual life (years) 1.36 1.15

The exercise price for options granted under the LTIP is nil.

During the year to 31 December 2020, awards of LTIPs were made on 23 March 2020. In addition, one-o awards with similar features to LTIPs were

made on 20 March 2020 to the incoming Group Chief Financial Ocer to compensate him for incentive awards forfeited on leaving his previous

employer.The weighted-average fair value and assumptions used to determine the fair value of the LTIPs and the buy-out options granted during the

year are as follows:

Fair value at grant date £0.39

Option pricing models used Black-Scholes, Stochastic, Finnerty

Share price at grant date £0.44

Exercise price Nil

Expected volatility – TSR performance 53.20-62.82%

Expected volatility – holding period 60.44%

Option life 2-3 years + 2 year holding period

Dividends Nil

Risk-free interest rate – TSR performance 0.05-0.11%

Risk-free interest rate – holding period 0.17%

A Black-Scholes option pricing model is used where vesting is related to an earnings per share target, a Stochastic model is used where vesting is related

to a total shareholder return target, and a Finnerty model is used to model the holding period.

Deferred share bonus plan (“DSBP”)

The DSBP is operated in conjunction with the Group’s short-term incentive plan for Executive Directors and other senior managers of the Company or any

of its subsidiaries, as explained in the Directors’ Remuneration Report. Awards are made in the form of nil-cost options which become exercisable on the

third anniversary, and until the tenth anniversary, of the grant date.

The options are accounted for as equity-settled schemes.

The number and weighted-average remaining contractual life of outstanding options under the DSBP are as follows:

Year ended

31 December

2020

Number of

options

Year ended

31 December

2019

Number of

options

Outstanding at 1 January 4,287,693 3,864,558

Granted 1,882,472 1,635,528

Forfeited (15,004) (503,412)

Exercised

(1,060,240) (708,981)

Outstanding at 31 December 5,094,921 4,287,693

Exercisable at 31 December 1,716,596 1,656,365

Weighted-average share price at exercise (£) 0.54 0.60

Weighted-average remaining contractual life (years) 1.10 0.94

The exercise price for options granted under the DSBP is nil.

126 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

11 EMPLOYEE BENEFITS continued

During the year to 31 December 2020, awards of DSBPs were made on 23 March 2020. The weighted-average fair value and assumptions used to

determine the fair value of options granted during the year under the DSBP are as follows:

Fair value at grant date £0.44

Option pricing model used Black-Scholes

Share price at grant date £0.44

Exercise price Nil

Expected volatility Nil

Option life 3 years

Dividends Nil

Risk-free interest rate Nil

Save As You Earn (“SAYE”) scheme

The Group operates SAYE plans for all employees, allowing a monthly amount to be saved from salaries over either a three or five year period which

canbe used to purchase shares in the Company at a predetermined price. The employee must remain in employment for the duration of the saving

period and satisfy the monthly savings requirement (except in “good leaver” circumstances). Options are exercisable for up to six months after the

saving period.

The options are accounted for as equity-settled schemes.

The number, weighted-average exercise price, weighted-average share price at exercise, and weighted-average remaining contractual life of

outstanding options under the SAYE are as follows:

Year ended 31 December 2020 Year ended 31 December 2019

Number

of options

Weighted-

average

exercise

price

£

Number

of options

Weighted-

average

exercise

price

£

Outstanding at 1 January 9,953,188 0.56 4,556,383 1.12

Granted 13,031,462 0.38 10,313,555 0.52

Forfeited (603,970) 0.57 (366,991) 0.74

Cancelled (6,609,575) 0.54 (4,146,082) 0.99

Exercised (46,892) 0.52 – –

Expired (208,210) 1.03 (403,677) 1.20

Outstanding at 31 December 15,516,003 0.41 9,953,188 0.56

Exercisable at 31 December 58,930 0.46 189,815 0.73

Weighted-average share price at exercise 0.60 –

Weighted-average remaining contractual life (years) 2.56 2.61

The range of exercise prices of options outstanding at the end of the year are as follows:

2020

Number of

options

outstanding

2019

Number of

options

outstanding

£0.38

12,476,881 –

£0.52

2,870,402 9,242,042

£1.07

66,166 387,498

£1.13 – 36,135

£1.18 102,554 268,604

£1.27 – 12,791

£1.47 – 6,118

Total 15,516,003 9,953,188

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

127

FNNIL SAEET

11 EMPLOYEE BENEFITS continued

During the year to 31 December 2020, awards of SAYEs were made on 22 April 2020. The weighted-average fair value and assumptions used to

determine the fair value of options granted during the year under the SAYE are as follows:

Fair value at grant date £0.25

Option pricing model used Black-Scholes

Share price at grant date £0.55

Exercise price £0.38

Expected volatility – 3 year scheme 51.70%

Expected volatility – 5 year scheme 37.48%

Option life 3.36 or 5.36 years

Dividends Nil

Risk-free interest rate – 3 year scheme 0.10%

Risk-free interest rate – 5 year scheme 0.16%

Saving forfeit discounts 5%

Share-based payment expense

The share-based payment expense recognised in the Consolidated statement of comprehensive income for employee services receivable during the

year is as follows:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Equity-settled schemes 6.8 5.2

Total expense 6.8 5.2

12 EARNINGS PER SHARE

The calculation of basic and diluted earnings per share is based on dividing the profit or loss attributable to equity holders of the Company by the

weighted-average number of ordinary shares outstanding, and by the diluted weighted-average number of ordinary shares potentially outstanding at

the end of the year. The weighted-average number of ordinary shares excludes shares held by the Employee Benefit Trust on behalf of the Company to

satisfy future exercises of employee share scheme awards.

Year ended 31 December 2020 Year ended 31 December 2019

Earnings

£m

Weighted-

average

number of

shares

million

Earnings per

share

pence

Earnings

£m

Weighted-

average

number of

shares

million

Earnings per

share

pence

Profit attributable to equity holders of Just Group plc 193.6 302.6

Coupon payments in respect of Tier 1 notes (net of tax) (28.1) (16.8)

Profit attributable to ordinary equity holders of Just Group plc (basic) 165.5 1,030.7 16.06 285.8 1,007.5 28.37

Eect of potentially dilutive share options – 11.1 (0.17) – 13.1 (0.37)

Diluted 165.5 1,041.8 15.89 285.8 1,020.6 28.00

13 DIVIDENDS

Dividends paid in the year were as follows:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Dividends paid on the vesting of employee share schemes 0.1 0.2

Total dividends paid 0.1 0.2

Coupon payments in respect of Tier 1 notes 28.1 16.8

Total distributions to equity holders in the period 28.2 17.0

1 Coupon payments on Tier 1 notes issued in March 2019 are treated as an appropriation of retained profits and, accordingly, are accounted for when paid.

The Board considers that it is not appropriate to recommend paying a dividend for 2020 (2019: nil).

128 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

14 INTANGIBLE ASSETS

Year ended 31 December 2020

Goodwill

£m

Present value

of in-force

business

£m

Distribution

network

£m

Brand

£m

PrognoSys™

and other

intellectual

property

£m

Software

£m

Leases

£m

Total

£m

Cost

At 1 January 2020 34.9 200.0 26.6 5.6 7.9 29.4 2.0 306.4

Additions – – – – – 0.1 – 0.1

At 31 December 2020 34.9 200.0 26.6 5.6 7.9 29.5 2.0 306.5

Amortisation and impairment

At 1 January 2020 (0.8) (89.7) (26.6) (5.6) (2.6) (24.7) (2.0) (152.0)

Impairment – – – – – (1.1) – (1.1)

Charge for the year – (17.9) – – (0.6) (1.4) – (19.9)

At 31 December 2020 (0.8) (107.6) (26.6) (5.6) (3.2) (27.2) (2.0) (173.0)

Net book value at 31 December 2020 34.1 92.4 – – 4.7 2.3 – 133.5

Net book value at 31 December 2019 34.1 110.3 – – 5.3 4.7 – 154.4

Year ended 31 December 2019

Goodwill

£m

Present value

of in-force

business

£m

Distribution

network

£m

Brand

£m

PrognoSys™

and other

intellectual

property

£m

Software

£m

Leases

£m

Total

£m

Cost

At 1 January 2019 34.9 200.0 26.6 5.6 7.9 26.1 2.0 303.1

Additions – – – – – 3.3 – 3.3

At 31 December 2019 34.9 200.0 26.6 5.6 7.9 29.4 2.0 306.4

Amortisation and impairment

At 1 January 2019 (0.8) (71.9) (25.7) (5.6) (2.0) (24.1) (2.0) (132.1)

Charge for the year – (17.8) (0.9) – (0.6) (0.6) – (19.9)

At 31 December 2019 (0.8) (89.7) (26.6) (5.6) (2.6) (24.7) (2.0) (152.0)

Net book value at 31 December 2019 34.1 110.3 – – 5.3 4.7 – 154.4

Net book value at 31 December 2018 34.1 128.1 0.9 – 5.9 2.0 – 171.0

Amortisation and impairment charge

The amortisation and impairment charge is recognised in other operating expenses in profit or loss.

Impairment testing

Goodwill is tested for impairment in accordance with IAS 36, Impairment of Assets, at least annually.

The Group’s goodwill of £34.1m at 31 December 2020 represents £1.0m recognised on the 2018 acquisition of Corinthian Group Limited, £0.3m

recognised on the 2016 acquisition of the Partnership Assurance Group and £32.8m on the 2009 acquisition by Just Retirement Group Holdings Limited

of Just Retirement (Holdings) Limited, the holding company of Just Retirement Limited (“JRL”).

The existing goodwill has been allocated to the insurance segment as the cash-generating unit. The recoverable amounts of goodwill have been

determined from value-in-use. The key assumptions of this calculation are noted below:

2020 2019

Period on which management approved forecasts are based 5 years 5 years

Discount rate (pre-tax) 11.7% 10.3%

The value-in-use of the insurance operating segment is considered by reference to latest business plans over the next five years, which reflect

management’s best estimate of future cash flows based on historical experience, expected growth rates and assumptions around market share,

customer numbers, expense inflation and mortality rates. The discount rate was determined using a weighted average cost of capital approach,

adjusted for specific risks attributable to the business. The outcome of the impairment assessment is that the goodwill in respect of the insurance

operating segment is not impaired and that the value-in-use is higher than the carrying value of goodwill.

Any reasonably possible changes in assumption will not cause the carrying value of the goodwill to exceed the recoverable amounts.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

129

FNNIL SAEET

15 PROPERTY, PLANT AND EQUIPMENT

Year ended 31 December 2020

Freehold

land and

buildings

£m

Computer

equipment

£m

Furniture and

fittings

£m

Right-of-use

assets

£m

Total

£m

Cost or valuation

At 1 January 2020 17.9 7.7 6.2 11.9 43.7

Acquired during the year – 2.2 0.1 – 2.3

Revaluations (3.6) – – – (3.6)

Disposal cost – – – (5.8) (5.8)

At 31 December 2020 14.3 9.9 6.3 6.1 36.6

Depreciation and impairment

At 1 January 2020 (0.7) (6.2) (5.7) (4.3) (16.9)

Eliminated on revaluation 1.2 – – – 1.2

Disposal – – – 3.5 3.5

Depreciation charge for the year (0.6) (1.0) (0.2) (2.1) (3.9)

At 31 December 2020 (0.1) (7.2) (5.9) (2.9) (16.1)

Net book value at 31 December 2020 14.2 2.7 0.4 3.2 20.5

Net book value at 31 December 2019 17.2 1.5 0.5 7.6 26.8

Year ended 31 December 2019

Freehold land

and buildings

£m

Computer

equipment

£m

Furniture and

fittings

£m

Right-of-use

assets

£m

Total

£m

Cost or valuation

At 1 January 2019 17.9 6.8 5.7 – 30.4

Recognition of right-of-use assets on initial application of IFRS 16 – – – 9.6 9.6

Adjusted balance at 1 January 2019 17.9 6.8 5.7 9.6 40.0

Acquired during the year – 0.9 0.5 5.7 7.1

Disposal cost – – – (3.4) (3.4)

At 31 December 2019 17.9 7.7 6.2 11.9 43.7

Depreciation

At 1 January 2019

(0.1) (5.6) (3.3) – (9.0)

Disposal

– – – 0.6 0.6

Impairment

– – (1.9) (2.1) (4.0)

Depreciation charge for the year (0.6) (0.6) (0.5) (2.8) (4.5)

At 31 December 2019 (0.7) (6.2) (5.7) (4.3) (16.9)

Net book value at 31 December 2019 17. 2 1.5 0.5 7.6 26.8

Net book value at 31 December 2018 17.8 1.2 2.4 – 21.4

Included in freehold land and buildings is land of value £4.0m (2019: £4.4m).

The Company’s freehold land and buildings are stated at their revalued amounts, being the fair value at the date of revaluation less any subsequent

accumulated depreciation and subsequent accumulated impairment losses. The fair value measurements of the Company’s freehold land and buildings

as at 5 October 2020 were performed by Hurst Warne & Partners Surveyors Ltd, independent valuers not related to the Company. Hurst Warne &

Partners Surveyors Ltd is registered for regulation by the Royal Institution of Chartered Surveyors (“RICS”). The valuation process relies on expert

judgement which is heightened due to the macroeconomic related COVID-19 uncertainty. The valuer has sucient current local knowledge of the

particular market, and the knowledge, skills and understanding to undertake the valuation competently. The fair value of the freehold land was

undertaken using a residual valuation assuming a new build oce on each site to an exact equivalent size as currently and disregarding the possibility of

developing any alternative uses or possible enhancements. The fair value of the buildings was determined based on open market comparable evidence

of market rent. The fair value measurement of revalued land and buildings has been categorised as Level 3 within the fair value hierarchy based on the

non-observable inputs to the valuation technique used.

Revaluations during 2020 comprise a loss of £1.2m recognised in profit or loss, a loss of £1.2m recognised in other comprehensive income (gross of tax of

£0.1m) partially reversing previously recognised gains of £5.3m (gross of tax of £0.9m), and the elimination of depreciation on the revaluations of £1.2m.

If freehold land and buildings were stated on the historical cost basis, the carrying values would be land of £4.3m (2019: £4.3m) and buildings of £10.2m

(2019: £10.6m).

Right-of-use assets are property assets leased by the Group (see note 26). Impairments arising in the prior year relate to onerous property leases

resulting from the Group’s rationalisation of its oce locations.

130 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

16 FINANCIAL INVESTMENTS

All of the Group’s financial investments are measured at fair value through the profit or loss, and are either designated as such on initial recognition or,

inthe case of derivative financial assets, classified as held for trading.

Fair value Cost

2020

£m

2019

£m

2020

£m

2019

£m

Units in liquidity funds 1,128.5 1,384.0 1,128.5 1,384.0

Investment funds 176.1 137. 3 175.2 137.2

Debt securities and other fixed income securities 11,061.4 10,387. 8 10,001.9 9,696.8

Deposits with credit institutions 99.7 104.6 99.7 104.6

Derivative financial assets 800.0 237.0 – –

Loans secured by residential mortgages 8,261.1 7,980.5 4,535.7 4,778.3

Loans secured by commercial mortgages 707.0 494.5 680.1 477.8

Other loans 1,036.0 880.3 885.5 795.0

Total 23,269.8 21,606.0 17,506.6 17, 373.7

The majority of investments included in debt securities and other fixed income securities are listed investments.

Units in liquidity funds comprise wholly of units in funds which invest in cash and cash equivalents.

Deposits with credit institutions with a carrying value of £97.8m (2019: £103.1m) have been pledged as collateral in respect of the Group’s derivative

financial instruments. Amounts pledged as collateral are deposited with the derivative counterparty.

17 FAIR VALUE

(a) Determination of fair value and fair value hierarchy

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy described

as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

In determining the assessment of the fair value hierarchy at 31 December 2020, the impact of COVID-19 on market activity and on the availability of

actively quoted prices has been taken into consideration, since a lack of availability of quoted prices or other observable market data might necessitate a

transfer of assets from Level 1 to Level 2, or from Level 2 to Level 3. Although market disruption was experienced at the end of the first quarter and the

beginning of the second quarter of 2020 as a result of the development of the COVID-19 pandemic in the UK and globally, there has subsequently been a

return to pre-COVID-19 levels of market activity and therefore we have maintained valuation methodologies. There have been no changes to hierarchy

levels at 31 December 2020 as a result of considering the impacts from COVID-19.

All Level 1 and 2 assets continue to have pricing available from actively quoted prices and observable market data.

Level 1

Inputs to Level 1 fair values are unadjusted quoted prices in active markets for identical assets and liabilities that the entity can access at the

measurement date.

Level 2

Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or

indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the instrument.

Level 2 inputs include the following:

• quoted prices for similar assets and liabilities in active markets;

• quoted prices for identical assets or similar assets in markets that are not active, the prices are not current, or price quotations vary substantially either

over time or among market makers, or in which very little information is released publicly;

• inputs other than quoted prices that are observable for the asset or liability; and

• market-corroborated inputs.

Where the Group uses broker/asset manager quotes and no information as to observability of inputs is provided by the broker/asset manager, the

investments are classified as follows:

• where the broker/asset manager price is validated by using internal models with market-observable inputs and the values are similar, the investment is

classified as Level 2; and

• in circumstances where internal models are not used to validate broker/asset manager prices, or the observability of inputs used by brokers/asset

managers is unavailable, the investment is classified as Level 3.

The majority of the Group’s debt securities held at fair value and financial derivatives are valued using independent pricing services or third party broker

quotes, and therefore classified as Level 2.

Level 3

Inputs to Level 3 fair values are unobservable inputs for the asset or liability. Unobservable inputs may have been used to measure fair value to the

extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the

measurement date. However, the fair value measurement objective remains the same, i.e. an exit price at the measurement date from the perspective

of a market participant that holds the asset or owes the liability. Unobservable inputs reflect the same assumptions as those that the market participant

would use in pricing the asset or liability.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

131

FNNIL SAEET

17 FAIR VALUE continued

The Group’s assets and liabilities held at fair value which are valued using valuation techniques for which significant observable market data is not

available and classified as Level 3 include loans secured by mortgages, asset-backed securities, investment contract liabilities, and deposits received

from reinsurers. There are no non-recurring fair value measurements as at 31 December 2020 (2019: nil).

(b) Analysis of assets and liabilities held at fair value according to fair value hierarchy

2020 2019

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Level 1

£m

Level 2

£m

Level 3

£m

Total

£m

Assets held at fair value

Units in liquidity funds 1,123.2 5.3 – 1,128.5 1,378.0 6.0 – 1,384.0

Investment funds – 37.1 139.0 176.1 – 25.5 111.8 137.3

Debt securities and other fixed income securities 809.3 8,995.3 1,256.8 11,061.4 984.5 8,674.1 729.2 10,387.8

Deposits with credit institutions 97.7 2.0 – 99.7 103.1 1.5 – 104.6

Derivative financial assets – 796.4 3.6 800.0 – 233.0 4.0 237.0

Loans secured by residential mortgages – – 8,261.1 8,261.1 – – 7,98 0.5 7,98 0.5

Loans secured by commercial mortgages – – 707.0 707.0 – – 494.5 494.5

Other loans 13.1 11.8 1,011.1 1,036.0 4.1 40.3 835.9 880.3

Total 2,043.3 9,847.9 11,378.6 23,269.8 2,469.7 8,980.4 10,155.9 21,606.0

Liabilities held at fair value

Investment contract liabilities – – 42.8 42.8 – – 54.0 54.0

Derivative financial liabilities – 509.4 3.3 512.7 – 248.4 – 248.4

Obligations for repayment of cash collateral received 351.3 26.1 – 377.4 62.8 – – 62.8

Deposits received from reinsurers – – 2,415.0 2,415.0 – – 2,417.7 2,417.7

Other financial liabilities

Loans and borrowings at amortised cost – 802.0 – 802.0 – 690.2 – 690.2

Total 351.3 1,337.5 2,461.1 4,149.9 62.8 938.6 2,471.7 3,473.1

(c) Transfers between levels

The Group’s policy is to assess pricing source changes and determine transfers between levels as of the end of each half-yearly reporting period. During

the year there were no transfers from Level 2 to Level 1 (2019: £570.7m). Transfers from Level 2 to Level 3 include debt securities for which there are no

longer observable prices and, in 2019, derivative financial assets for which current market values after the initial trade were not available.

(d) Level 3 assets and liabilities measured at fair value

Reconciliation of the opening and closing recorded amount of Level 3 assets and liabilities held at fair value.

Year ended 31 December 2020

Investment

funds

£m

Debt

securities

and other

fixed income

securities

£m

Derivative

financial

assets

£m

Loans

secured by

residential

mortgages

£m

Loans

secured by

commercial

mortgages

£m

Other

loans

£m

Investment

contract

liabilities

£m

Derivative

financial

liabilities

£m

Deposits

received

from

reinsurers

£m

At 1 January 2020 111.8 729.2 4.0 7,980.5 494.5 835.9 (54.0) – (2,417.7)

Purchases/advances/deposits 27.1 418.9 – 511.7 211.1 173.0 (1.0) 5.0 (1.4)

Transfers from Level 2 – 62.2 – – – – – – –

Sales/redemptions/payments – (29.4) – (380.9) (8.7) (68.2) 14.0 – 212.2

Disposal of a portfolio of LTMs – – – (600.8) – – – – –

Realised gains and losses recognised in

profit or loss within net investment

income

(0.2) (0.2) – 111.6 – – – – –

Unrealised gains and losses recognised

in profit or loss within net investment

income

0.3 80.6 (0.4) 356.3 9.3 69.1 – (8.3) (125.3)

Interest accrued – (4.5) – 282.7 0.8 1.3 – – (82.8)

Change in fair value of liabilities

recognised in profit or loss – – – – – – (1.8) – –

At 31 December 2020 139.0 1,256.8 3.6 8,261.1 707.0 1,011.1 (42.8) (3.3) (2,415.0)

1 In December 2020 the Group disposed of a portfolio of loans secured by residential mortgages with a fair value of £600.8m. The transaction is part of the Group’s strategy to reduce exposure and

sensitivity of the balance sheet to the UK property market following changes in the regulatory environment in 2018.

2 Includes £945.0m of infrastructure loans (2019: £787.3m)

132 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

17 FAIR VALUE continued

Year ended 31 December 2019

Investment

funds

£m

Debt

securities and

other fixed

income

securities

£m

Derivative

financial

assets

£m

Loans

secured by

residential

mortgages

£m

Loans

secured by

commercial

mortgages

£m

Other

loans

£m

Recoveries

from

reinsurers on

investment

contracts

£m

Investment

contract

liabilities

£m

Deposits

received from

reinsurers

£m

At 1 January 2019 69.8 616.0 – 7,191.5 392.3 723.2 102.2 (197.8) (2,443.5)

Purchases/advances/deposits 68.2 72.7 – 415.8 97.7 76.7 51.3 (26.7) (1.5)

Transfers from Level 2 – 50.4 3.3 – – – – – –

Sales/redemptions/payments (26.0) (4.3) – (337.9) (5.8) (11.0) (160.4) 78.3 221.1

Realised gains and losses recognised in

profit or loss within net investment

income

0.1 0.3 – 102.1 – – – – –

Unrealised gains and losses recognised

in profit or loss within net investment

income

(0.3) (1.4) 0.7 338.1 9.8 47.0 6.9 – (107.3)

Interest accrued – (4.5) – 270.9 0.5 – – – (86.5)

Change in fair value of liabilities

recognised in profit or loss – – – – – – – 92.2 –

At 31 December 2019 111.8 729.2 4.0 7,980.5 494.5 835.9 – (54.0) (2,417.7)

1 Includes the impact of property growth experience changes, a charge of £33m.

For Level 1 and Level 2 assets measured at fair value, unrealised gains during the year were gains of £23.2m and £241.1m respectively (2019: gains of

£15.7m and £284.8m respectively).

Investment funds

Investment funds classified as Level 3 are structured entities that operate under contractual arrangements which allow a group of investors to invest in

a pool of corporate loans without any one investor having overall control of the entity. There have not been any significant impacts to these investments

in relation to COVID-19.

Principal assumptions underlying the calculation of investment funds classified as Level 3

Discount rate

Discount rates are the most significant assumption applied in calculating the fair value of investment funds. The average discount rate used is 7.0%

(2019: 7.0%).

Sensitivity analysis

Reasonable possible alternative assumptions for unobservable inputs used in the valuation model could give rise to significant changes in the fair value

of the assets. The sensitivity of the valuation of bonds to the default assumption is determined by reference to movement in credit spreads. The Group

has estimated the impact on fair value to changes to these inputs as follows:

Investment funds

net increase/(decrease) in fair value (£m)

Credit

spreads

+100bps

2020 (4.9)

2019 (3.9)

Debt securities and other fixed income securities

Debt securities classified as Level 3 are infrastructure private placement bonds and asset-backed securities. Such securities are valued using discounted

cash flow analyses. The impact of COVID-19 has been taken into account in the assessment of the future cash flows default risk at 31 December 2020.

Due to the nature of these assets and the sectors in which they operate, being primarily utilities and universities sectors, the Group has assessed that

there is no significant impact from COVID-19 on the valuation at 31 December 2020.

Principal assumptions underlying the calculation of the debt securities and other fixed income securities classified as Level 3

Redemption and defaults

The redemption and default assumptions used in the valuation of infrastructure private placement bonds are similar to the rest of the Group’s bond

portfolio.

For asset-backed securities, the assumptions are that the underlying loans supporting the securities are redeemed in the future in a similar profile to

theexisting redemptions on an average rate of 3% per annum, and that default levels on the underlying basis remain at the current level of the Group’s

bond portfolio.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

133

FNNIL SAEET

17 FAIR VALUE continued

Sensitivity analysis

Reasonable possible alternative assumptions for unobservable inputs used in the valuation model could give rise to significant changes in the fair value

of the assets. The sensitivity of the valuation of bonds to the default assumption is determined by reference to movement in credit spreads. The Group

has estimated the impact on fair value to changes to these inputs as follows:

Debt securities and other fixed income securities

net increase/(decrease) in fair value (£m)

Credit

spreads

+100bps

2020 (109.2)

2019 (52.5)

Derivative financial assets and liabilities

Derivative financial assets and liabilities classified as Level 3 are the put options on property index (also referred to as no-negative equity guarantee

(“NNEG”) hedges). The value of each NNEG hedge is made up of premiums payable to the counterparty less expected claims back from the option where

losses are made. The expected claims are calculated through the Black-Scholes framework, with parameters set such that at outset the fair value of the

NNEG hedge iszero.

Principal assumptions underlying the calculation of the derivative financial assets and liabilities classified as Level 3

Property prices and interest rates are the most significant assumption applied in calculating the fair value of the derivative financial assets and liabilities.

The Group has assessed the possible impact of COVID-19 restrictions and economic uncertainty on current property assumptions, and has retained its

existing property valuation assumptions at 31 December 2020. Details of the matters considered in relation to property assumptions at 31 December

2020 are noted in the section on Loans secured by residential mortgages further below. The impact on derivative financial assets and liabilities from

changes to property assumptions are noted in the sensitivity analysis below.

Sensitivity analysis

Reasonable possible alternative assumptions for unobservable inputs used in the valuation model could give rise to significant changes in the fair value

of the assets and liabilities. The Group has estimated the impact on fair value to changes to these inputs as follows:

Net increase/(decrease) in fair value (£m)

Interest rates

+100bps

Immediate

property

price fall

-10 %

Future

property

price growth

-0.5%

Future

property price

volatility

+1%

Derivative financial assets

2020 (6.5) 24.0 24.1 10.2

2019 (1.9) 5.9 6.4 2.2

Derivative financial liabilities

2020 (1.8) 6.3 6.8 2.8

2019 n/a n/a n/a n/a

Loans secured by residential mortgages

Methodology and judgement underlying the calculation of loans secured by residential mortgages

The valuation of loans secured by mortgages is determined using internal models which project future cash flows expected to arise from each loan.

Future cash flows allow for assumptions relating to future expenses, future mortality experience, voluntary redemptions and repayment shortfalls on

redemption of the mortgages due to the no-negative equity guarantee (“NNEG”). The fair value is calculated by discounting the future cash flows at a

swap rate plus a liquidity premium.

Under the NNEG, the amount recoverable by the Group on eligible termination of mortgages is generally capped at the net sale proceeds of the property.

A key judgement is with regard to the calculation approach used. We have used the Black 76 variant of the Black-Scholes option pricing model in

conjunction with an approach using best estimate future house price growth assumptions. There has been significant academic and market debate

concerning the valuation of no-negative equity guarantees in recent years, including proposals to use risk-free based methods rather than best estimate

assumptions to project future house price growth. We continue to actively monitor this debate. In the absence of any widely supported alternative

approach, we have continued in line with the common industry practice to value no-negative equity guarantees using best estimate assumptions.

The real world assumptions used include future property growth and future property price volatility.

Cash flow models are used in the absence of a deep and liquid market for loans secured by residential mortgages. The sale of the portfolio of

LTMs represents a single market price but this is insucient to aect the judgement of the appropriateness of the methodology and assumptions used

by the cash flow approach for individual loans.

Principal assumptions underlying the calculation of loans secured by residential mortgages

All gains and losses arising from loans secured by mortgages are largely dependent on the term of the mortgage, which in turn is determined by the

longevity of the customer. Principal assumptions underlying the calculation of loans secured by mortgages include the items set out below. These

assumptions are also used to provide the expected cash flows from the loans secured by residential mortgages which determines the yield on this asset.

This yield is used for the purpose of setting valuation discount rates on the liabilities supported, as described in note 23(b).

Maintenance expenses

Assumptions for future policy expense levels are based on the Group’s recent expense analyses. The assumed future expense levels incorporate an

annual inflation rate allowance of 3.6% (2019: 3.9%).

134 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

17 FAIR VALUE continued

Mortality

Mortality assumptions have been derived with reference to England & Wales population mortality using the CMI 2017 data set and model mortality

tables for base table rates and improvements for years up to 2019 and CMI 2019 for mortality improvements for calendar year 2020 onwards (2019: CMI

2017 mortality tables for both base table rates and mortality improvements). These base mortality and improvement tables have been adjusted to

reflect the expected future mortality experience of mortgage contract holders, taking into account the medical and lifestyle evidence collected during

the sales process and the Group’s assessment of how this experience will develop in the future. This assessment takes into consideration relevant

industry and population studies, published research materials and management’s own experience. The Group has considered the possible impact of the

COVID-19 pandemic on its mortality assumptions, but has kept these unchanged at 31 December 2020 save for the change in underlying reference

tables to CMI 2019. Further details of the matters considered in relation to mortality assumptions at 31 December 2020 are set out in note 23(b).

Property prices

The COVID-19 pandemic has had a very significant impact on the UK economy during 2020, and has created uncertainty in the UK property market,

which was eectively closed to transactions through a period in quarters one and two of the year.

The Group’s policy is to calculate the value of a property by taking the latest valuation and indexing this value using the Oce for National Statistics

(“ONS”) monthly index for the property’s location. As a result of COVID-19, the publication of these indices was temporarily suspended in the early part of

2020. However, this was resumed in the second half of 2020 such that the approach in place at 31 December 2020 is unchanged from previous periods.

In addition, the Group applies adjustments to allow for potential underperformance of individual properties relative to the indexed valuation.

The appropriateness of this valuation basis is regularly tested on the event of redemption of mortgages. The sensitivity of loans secured by mortgages to

a fall in property prices is included in the table of sensitivities below.

Future property prices

In the absence of a reliable long-term forward curve for UK residential property price inflation, the Group has made an assumption about future

residential property price inflation based upon available market and industry data. These assumptions have been derived with reference to the

long-term expectation of the UK consumer price inflation, “CPI”, plus an allowance for the expectation of house price growth above CPI (property risk

premium) less a margin for a combination of risks including property dilapidation and basis risk. An additional allowance is made for the volatility of

future property prices. This results in a single rate of future house price growth of 3.3% (2019: 3.8%), with a volatility assumption of 13% per annum

(2019: 13%). The setting of these assumptions includes consideration of future long and short-term forecasts, the Group’s historical experience,

benchmarking data, and future uncertainties including the possible impact of Brexit on the UK property market. As noted above, the Group has

considered the uncertainties in relation to the property market as a result of the COVID-19 pandemic. The impact of the pandemic on long-term property

prices is uncertain at the current time without consensus that the pandemic will alter the long-term prospects of the housing market. However, in light of

the additional short-term uncertainty introduced and having considered the available benchmarking data available over 2020, the Group has reduced its

future house price growth assumption by 0.5% at 31 December 2020 compared to previous periods. The property volatility assumption has been

maintained at the same level as assumed at 31 December 2019. The sensitivity of loans secured by mortgages to changes in future property price

growth, and to future property price volatility, are included in the table of sensitivities below.

Voluntary redemptions

Assumptions for future voluntary redemption levels are based on the Group’s recent analyses and external benchmarking. The assumed redemption

rate varies by duration and product line between 0.5% and 4.1% for loans in JRL (2019: 0.5% and 4.1%) and between 0.6% and 6.8% for loans in PLACL

(2019: 0.6% and 6.8%). No changes are assumed with regard to the COVID-19 experience.

Liquidity premium

The liquidity premium at initial recognition is set such that the fair value of each loan is equal to the face value of the loan. The liquidity premium partly

reflects the illiquidity of the loan and also spreads the recognition of profit over the lifetime of the loan. The liquidity premiums are determined at an

individual loan level. Once calculated, the liquidity premium remains unchanged at future valuations except when further advances are taken out. In this

situation, the single liquidity premium to apply to that loan is recalculated allowing for all advances. The average liquidity premium for loans held within

JRL is 2.87% (2019: 2.85%) and for loans held within PLACL is 3.20% (2019: 3.21%). The movement over the period observed in JRL is driven by new loan

originations more than osetting the sold portfolio, both having a higher liquidity premium than the average spread on the back book of business.

Sensitivity analysis

Reasonable possible alternative assumptions for unobservable inputs used in the valuation model could give rise to significant changes in the fair value

of the assets. The Group has estimated the impact on fair value to changes to these inputs as follows:

Loans secured by residential mortgages

net increase/(decrease) in fair value (£m)

Maintenance

expenses

+10%

Base

mortality

-5%

Mortality

improvement

+0.25%

Immediate

property

price fall

-10 %

Future

property

price growth

-0.5%

Future

property price

volatility

+1%

Voluntary

redemptions

+10%

Liquidity

premium

+10bps

2020

(5.9) 34.3 15.6 (136.1) (103.7) (64.5) (13.2) (93.1)

2019 (6.6) 28.7 14.0 (110.4) (86.6) (57.7) (11.7) (91.5)

These sensitivity factors are determined via financial models. The analysis has been prepared for a change in each variable with other assumptions

remaining constant. In reality such an occurrence is unlikely due to correlation between the assumptions and other factors. It should be noted that some

of these sensitivities are non-linear and larger or smaller impacts should not be simply interpolated or extrapolated from these results. For example, the

impact from a 5% fall in property prices would be slightly less than half of that disclosed in the table above.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

135

FNNIL SAEET

17 FAIR VALUE continued

The sensitivities above only consider the impact of the change in these assumptions on the fair value of the asset. Some of these sensitivities would

alsoimpact the yield on this asset and hence the valuation discount rate used to determine liabilities. For these sensitivities, the impact on the value

ofinsurance liabilities and hence profit before tax is included in note 23(e).

Other limitations in the above sensitivity analysis include the use of hypothetical market movements to demonstrate potential risk that only

representsthe Group’s view of reasonably possible near-term market changes that cannot be predicted with any certainty.

Loans secured by commercial mortgages

Loans secured by commercial mortgages are valued using discounted cash flow analysis using assumptions based on the repayment of the

underlyingloan.

Principal assumption underlying the calculation of loans secured by commercial mortgages

Redemption and defaults

The redemption and default assumptions used in the valuation of loans secured by commercial mortgages are derived from the assumptions for the

Group’s bond portfolio. Theimpact of COVID-19 on the timing of future cash flows, and on expected defaults, has been taken into account in the

calculation of fair value at 31 December 2020, with no significant impacts noted to fair values.

Sensitivity analysis

Reasonable possible alternative assumptions for unobservable inputs used in the valuation model could give rise to significant changes in the fair value

of the assets. Interest rates are the most significant assumption applied in calculating the fair value of the loans secured by commercial mortgages.

Thesensitivity of the valuation of commercial mortgages to changes in interest rates is determined by reference to the movement in credit spreads.

TheGroup has estimated the impact on fair value to changes to these inputs as follows:

Loans secured by commercial mortgages

net increase/(decrease) in fair value (£m)

Credit

spreads

+100bps

2020 (52.9)

2019 (22.9)

Other loans

Other loans classified as Level 3 are infrastructure loans and commodity trade finance loans. These are valued using discounted cash flow analyses.

Principal assumptions underlying the calculation of other loans classified as Level 3

Redemption and defaults

The redemption and default assumptions used in the valuation of Level 3 loans are similar to the Group’s bond portfolio. Due to the nature of these

assets and the sectors in which they operate, being primarily local authorities, renewable energy generation and housing associations sectors, the Group

has assessed that there is no significant impact from COVID-19 on the valuation at 31 December 2020.

Sensitivity analysis

Reasonable possible alternative assumptions for unobservable inputs used in the valuation model could give rise to significant changes in the fair value

of the assets. The sensitivity of the valuation of other loans to the default assumption is determined by reference to movement in credit spreads.

The Group has estimated the impact on fair value to changes to these inputs as follows:

Other loans

net increase/(decrease) in fair value (£m)

Credit

spreads

+100bps

2020 (91.5)

2019 (75.7)

Recoveries from reinsurers on investment contracts

Recoveries from reinsurers on investment contracts represent fully reinsured funds invested under the Flexible Pension Plan. During 2019 the Group

closed its Flexible Pension Plan product to new business and completed the transfer of the business to an external provider.

Investment contract liabilities

Principal assumptions underlying the calculation of investment contract liabilities

Valuation discount rates

The valuation model discounts the expected future cash flows using a contractual discount rate derived from the assets hypothecated to back the

liabilities. The discount rate used for the fixed term annuity product treated as investment business is 2.34% (2019: 3.01%).

Sensitivity analysis

The sensitivity of fair value to changes in the discount rate assumptions in respect of investment contract liabilities is not material.

Deposits received from reinsurers

Deposits from reinsurers which have been unbundled from their reinsurance contract and recognised at fair value through profit or loss are measured in

accordance with the reinsurance contract and taking into account an appropriate discount rate for the timing of expected cash flows of the liabilities.

Principal assumptions underlying the calculation of deposits received from reinsurers

Discount rate

The valuation model discounts the expected future cash flows using a contractual discount rate derived from the assets hypothecated to back the

liabilities at a product level. The discount rates used for individual retirement and individual care annuities were 2.21% and 0.06% respectively (2019:

2.89% and 0.92% respectively).

136 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

17 FAIR VALUE continued

Credit spreads

The valuation of deposits received from reinsurers includes a credit spread derived from the assets hypothecated to back these liabilities. A credit spread

of 205bps (2019: 181ps) was applied in respect of the most significant reinsurance contract.

Sensitivity analysis

Reasonable possible alternative assumptions for unobservable inputs used in the valuation model could give rise to significant changes in the fair value

of the liabilities (see note 27 (b)). The Group has estimated the impact on fair value to changes to these inputs as follows:

Deposits received from reinsurers

net increase/(decrease) in fair value (£m)

Credit

spreads

+100bps

Interest rates

+100bps

2020

(80.1) (218.6)

2019 (81.2) (200.9)

18 DEFERRED TAX

2020 2019

Asset

£m

Liability

£m

Total

£m

Asset

£m

Liability

£m

Total

£m

Transitional tax – (4.2) (4.2) – (6.0) (6.0)

Intangible assets – (17.8) (17.8) – (19.0) (19.0)

Land and buildings – (0.8) (0.8) – (0.9) (0.9)

Other provisions 11.5 – 11.5 11.5 (0.4) 11.1

Total deferred tax 11.5 (22.8) (11.3) 11.5 (26.3) (14.8)

The transitional tax liability of £4.2m (2019: £6.0m) represents the adjustment arising from the change in the tax rules for life insurance companies which

is amortised over ten years from 1 January 2013 and the transitional adjustments for tax purposes in adopting IFRS which is amortised over ten years

from 1 January 2016.

Other provisions principally relate to temporary dierences between the IFRS financial statements and tax deductions for statutory insurance liabilities.

The movement in the net deferred tax balance was as follows:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Net balance at 1 January (14.8) (13.6)

Recognised in profit or loss 3.4 (1.2)

Recognised in other comprehensive income 0.1 –

Net balance at 31 December (11.3) (14.8)

The Group has unrecognised deferred tax assets of £5.3m (2019: £3.9m).

19 INSURANCE AND OTHER RECEIVABLES

2020

£m

2019

£m

Receivables arising from insurance and reinsurance contracts 21.0 11.1

Finance lease receivables 3.8 2.7

Other receivables 7.2 11.7

Total insurance and other receivables 32.0 25.5

Finance lease receivables are due as follows:

2020

£m

2019

£m

Less than one year 1.6 0.8

Between one and two years 1.6 0.8

Between two and three years 0.7 0.8

Between three and four years – 0.4

Total undiscounted lease payments receivable 3.9 2.8

Unearned finance income (0.1) (0.1)

Net investment in leases 3.8 2.7

Other than finance lease receivables, insurance and other receivables of £nil (2019: £nil) are expected to be recovered more than one year after the

Consolidated statement of financial position date.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

137

FNNIL SAEET

20 CASH AND CASH EQUIVALENTS

2020

£m

2019

£m

Cash available on demand 1,496.3 267.0

Units in liquidity funds 1,128.5 1,384.0

Cash and cash equivalents in the Consolidated statement of cash flows 2,624.8 1,651.0

21 SHARE CAPITAL

The allotted and issued ordinary share capital of the Group at 31 December 2020 is detailed below:

Number of £0.10

ordinary shares

Share

capital

£m

Share

premium

£m

Merger

reserve

£m

Total

£m

At 1 January 2020 1,035,081,664 103.5 94.5 597.1 795.1

Shares issued in respect of employee share schemes 3,046,892 0.3 – – 0.3

At 31 December 2020 1,038,128,556 103.8 94.5 597.1 795.4

At 1 January 2019 941,068,882 94.1 94.5 532.7 721.3

Shares issued 94,012,782 9.4 – 64.4 73.8

At 31 December 2019 1,035,081,664 103.5 94.5 597.1 795.1

On 14 March 2019, the Company completed the placing of 94,012,782 ordinary shares of 10 pence each at a price of 80 pence per share to both existing

and new ordinary equity shareholders, raising gross proceeds of £75m. The placing price represents a discount of 6.7% on the market price of 85.3 pence

per share at the time of the placing. The placing was achieved by the Company acquiring 100% of the equity of a limited company for consideration of

the 94,012,782 new ordinary shares issued. Accordingly, merger relief under section 612 of the Companies Act 2006 applies, and share premium has

notbeen recognised in respect of this issue of shares. A merger reserve has been recognised representing the premium over the nominal value of the

shares issued.

Consideration for the acquisition of 100% of the equity shares of Partnership Assurance Group plc in 2016 consisted of a new issue of shares in the

Company. Accordingly, merger relief under section 612 of the Companies Act 2006 applies, and share premium has not been recognised in respect

ofthisissue of shares. A merger reserve has been recognised representing the dierence between the nominal value of the shares issued and the

netassets of Partnership Assurance Group plc acquired.

22 TIER 1 NOTES

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

At 1 January 294.0 –

Issued in the period – 300.0

Issue costs, net of tax – (6.0)

At 31 December 294.0 294.0

In March 2019, the Group completed the issue of £300m fixed rate perpetual restricted Tier 1 contingent convertible notes, incurring issue costs of

£6.0m, net of tax.

The notes bear interest on the principal amount up to 26 April 2024 (the first call date) at the rate of 9.375% per annum, and thereafter at a fixed rate of

interest reset on the first call date and on each fifth anniversary thereafter. Interest is payable on the notes semi-annually in arrears on 26 April and

26 October each year, commencing on 26 April 2019. During the year, interest of £28.1m (2019: £16.8m) was paid to noteholders.

The Group has the option to cancel the coupon payment at its discretion and cancellation of the coupon payment becomes mandatory upon non-

compliance with the solvency capital requirement or minimum capital requirement or where the Group has insucient distributable items. Cancelled

coupon payments do not accumulate or become payable at a later date and do not constitute a default. In the event of non-compliance with specific

solvency requirements, the conversion of the Tier 1 notes into ordinary shares could be triggered.

The Tier 1 notes are treated as a separate category within equity and the coupon payments are recognised outside of the profit after tax result and

directly in shareholders’ equity.

23 INSURANCE CONTRACTS AND RELATED REINSURANCE

Insurance liabilities

2020

£m

2019

£m

Gross insurance liabilities 21,118.4 19,003.7

Net reinsurance assets (2,865.5) (3,732.0)

Net insurance liabilities 18,252.9 15,271.7

138 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

23 INSURANCE CONTRACTS AND RELATED REINSURANCE continued

(a) Terms and conditions of insurance contracts

The Group’s long-term insurance contracts include Retirement Income (Guaranteed Income for Life (“GIfL”), Defined Benefit (“DB”), and immediate

needs and deferred Care Plans), and whole of life and term protection insurance.

The insurance liabilities are agreed by the Board using recognised actuarial valuation methods proposed by the Group’s Actuarial Reporting Function.

Inparticular, a prospective gross premium valuation method has been adopted for major classes of business.

Although the process for the establishment of insurance liabilities follows specified rules and guidelines, the provisions that result from the process

remain uncertain. As a consequence of this uncertainty, the eventual value of claims could vary from the amounts provided to cover future claims. The

Group seeks to provide for appropriate levels of contract liabilities taking known facts and experiences into account but nevertheless such provisions

remain uncertain.

The estimation process used in determining insurance liabilities involves projecting future annuity payments and the cost of maintaining the contracts.

For non-annuity contracts, the liability is determined as the sum of the discounted value of future benefit payments and future administration

expensesless the expected value of premiums payable under the contract. The key sensitivities are the assumed level of interest rates and the

mortalityexperience.

(b) Principal assumptions underlying the calculation of insurance contracts

The principal assumptions underlying the calculation of insurance contracts are explained below. This includes any areas sensitive to COVID-19 eects or

other economic downturn.

Mortality assumptions

The impact of the COVID-19 pandemic on UK mortality has been significant, and the understanding of excess deaths continues to develop as more data

becomes available and is analysed.

The Group experienced mortality levels in 2020 which were around 10% higher than expected. This was broadly in line with the wider UK experience

(adjusted for the demographic profile of our customers relative to the population as a whole) and primarily reflects the impact of COVID-19. This

contributed to the £21.7m of positive mortality experience variance for GIfL, Care and DB reported in 2020, which was partly oset by the negative

mortality experience variance for LTM business.

The total number of registered deaths in the UK in January and February 2021 has been much higher than normal for the time of year. However, we note

that the weekly total has reduced significantly in recent weeks and the number of non-COVID deaths has remained relatively low despite the drop in

COVID deaths. At this stage, there is considerable uncertainty as to the degree to which mortality rates might exceed current expectations over the

course of 2021. The scale of the variance will depend on factors such as the eectiveness of the vaccine programme and the potential emergence of new

variants. However, the experience variance noted for 2020 is a reference point for the potential impact of elevated mortality experience in the short-

term.

The Group considers that it is still too early to judge the longer-term impact of COVID-19 on mortality and therefore no explicit allowance for the

pandemic has been included in future mortality assumptions as at 31 December 2020. The Group will continue to follow closely the actual and potential

future impact of COVID-19 on mortality as further information becomes available, and will review its mortality assumptions should credible evidence

emerge. In particular, the Group continues to analyse possible direct and indirect impacts of the pandemic, including the possibility there will be

enduring influences on the longevity of customers.

Mortality assumptions have been set by reference to appropriate standard mortality tables. These tables have been adjusted to reflect the future

mortality experience of the policyholders, taking into account the medical and lifestyle evidence collected during the underwriting process, premium

size, gender and the Group’s assessment of how this experience will develop in the future. The assessment takes into consideration relevant industry

andpopulation studies, published research materials, input from the Group’s lead reinsurer and management’s own industry experience.

The standard tables which underpin the mortality assumptions are summarised in the table below.

2020 2019

Individually underwritten Guaranteed

Income for Life Solutions (JRL)

Modified E&W Population mortality, with CMI 2019

model mortality improvements for both Merica and

PrognoSys™ underwritten business

Modified E&W Population mortality, with modified CMI

2017 model mortality improvements for both Merica

and PrognoSys™ underwritten business

Individually underwritten Guaranteed

Income for Life Solutions (PLACL)

Modified E&W Population mortality, with CMI 2019

model mortality improvements

Modified E&W Population mortality, with modified CMI

2017 model mortality improvements

Defined Benefit (JRL) Modified E&W Population mortality, with CMI 2019

model mortality improvements for standard

underwritten business; Reinsurer supplied tables

underpinned by the Self-Administered Pension Scheme

(“SAPS”) S1 tables, with modified CMI 2009 model

mortality improvements for medically underwritten

business

Modified E&W Population mortality, with modified CMI

2017 model mortality improvements for standard

underwritten business; Reinsurer supplied tables

underpinned by the Self-Administered Pension Scheme

(“SAPS”) S1 tables, with modified CMI 2009 model

mortality improvements for medically underwritten

business

Defined Benefit (PLACL) Modified E&W Population mortality, with CMI 2019

model mortality improvements

Modified E&W Population mortality, with modified CMI

2017 model mortality improvements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

139

FNNIL SAEET

2020 2019

Care Plans and other annuity products

(PLACL)

Modified PCMA/PCFA and with CMI 2019 model

mortality improvements for Care Plans;

Modified PCMA/PCFA or modified E&W Population

mortality with CMI 2019 model mortality

improvements for other annuity products

Modified PCMA/PCFA and with modified CMI 2017

model mortality improvements for Care Plans;

Modified PCMA/PCFA or modified E&W Population

mortality with modified CMI 2017 model mortality

improvements for other annuity products

Protection (PLACL) TM/TF00 Select TM/TF00 Select

All references to the use of the CMI 2019 model relate to improvements for calendar year 2020 onwards. The modified CMI 2017 model has been used to

derive base mortality rates and improvements for years up to and including 2019.

The long-term improvement rates in the CMI 2019 model are 2.0% for males and 1.75% for females (2019: 2.0% for males and 1.75% for females). The

period smoothing parameter in the modified CMI 2019 model has been set to 7.00 (2019: 7.25). The addition to initial rates (‘A’) parameter in the model

varies between 0% and 0.25% depending on product (2019: n/a). All other CMI model parameters are the defaults (2019: other parameters set to

defaults). For 31 December 2020, full mortality improvements have been applied to all components of the mortality basis for Merica GIfL business in JRL.

Previously a proportion of full improvements was applied to excess mortality. This strengthening of the assumption ensures the application of

improvements for Merica is aligned with the approach more generally used for other products.

Valuation discount rates

Valuation discount rate assumptions are set by considering the yields on the assets available to back the liabilities. The yields on lifetime mortgage

assets are derived using the assumptions described in note 17 with allowance for risk through the deductions related to the NNEG. An explicit allowance

for credit risk is included by making an explicit deduction from the yields on debt and other fixed income securities, loans secured by commercial

mortgages, and other loans based on an expectation of default experience of each asset class and application of a prudent loading. Allowances vary by

asset category and by rating. Economic uncertainty surrounding COVID-19 increases the risk of credit defaults. Our underlying default methodology

allows for the impact of credit rating downgrades and spread widening and hence we have maintained the same methodology at 31 December 2020.

The considerations around COVID-19 for property prices aecting the NNEG and corresponding changed to assumption for the valuation discount rate

are as described in note 17.

Valuation discount rates – gross liabilities

2020

%

2019

%

Individually underwritten Guaranteed Income for Life Solutions (JRL) 2.34 3.01

Individually underwritten Guaranteed Income for Life Solutions (PLACL) 2.21 2.89

Defined Benefit (JRL) 2.34 3.01

Defined Benefit (PLACL) 2.21 2.89

Other annuity products (PLACL) 0.06 0.92

Term and whole of life products (PLACL) 0.28 0.98

The overall reduction in yield to allow for the risk of defaults from all non-LTM assets (to include gilts, corporate bonds, infrastructure loans, private

placements and commercial mortgages) and NNEG from LTMs was a reduction in yield of 69bps in JRL and 65bps in PLACL (2019: 58bps and 60bps

respectively).

Future expenses

Assumptions for future policy expense levels are determined from the Group’s recent expense analyses. The JRL GIfL maintenance expense assumption

used at 31 December 2020 was £28.58 per plan (2019: £28.50), whilst the JRL DB maintenance assumption used at 31 December 2020 was £111.64 per

scheme member (2019: £112.71). The PLACL GIfL maintenance expense assumption used at 31 December 2020 was £32.70 per plan (2019: £28.50),

whilst the PLACL DB maintenance assumption used at 31 December 2020 was £220.70 per scheme member (2019: £175.40). The assumed future policy

expense levels incorporate an annual inflation rate allowance of 3.85% (2019: 4.4%) derived from the expected retail price and consumer price indices

implied by inflation swap rates and an additional allowance for earnings inflation. The assumption change includes the revision to the proportions

assumed to increase at each RPI, CPI and earnings and reduction in the prudent margin applied.

(c) Movements

The following movements have occurred in the insurance contract balances for Retirement Income products during the year.

Year ended 31 December 2020

Gross

£m

Reinsurance

£m

Net

£m

At 1 January 2020 19,003.7 (3,732.0) 15,271.7

Increase in liability from premiums 1,803.0 14.1 1,817.1

Release of liability due to recorded claims (1,397.5) 323.9 (1,073.6)

Unwinding of discount 565.6 (103.0) 462.6

Changes in economic assumptions 1,360.3 (252.8) 1,107. 5

Changes in non-economic assumptions (142.2) 96.9 (45.3)

Other movements (74.5) 787.4 712.9

At 31 December 2020 21,118.4 (2,865.5) 18,252.9

1 Includes the impact of reinsurance recapture (see note 29).

23 INSURANCE CONTRACTS AND RELATED REINSURANCE continued

140 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

23 INSURANCE CONTRACTS AND RELATED REINSURANCE continued

Year ended 31 December 2019

Gross

£m

Reinsurance

£m

Net

£m

At 1 January 2019 17,273.8 (4,239.2) 13,034.6

Increase in liability from premiums 1,586.2 8.4 1,594.6

Release of liability due to recorded claims (1,265.1) 354.1 (911.0)

Unwinding of discount 599.7 (138.2) 461.5

Changes in economic assumptions 886.5 (193.1) 693.4

Changes in non-economic assumptions (44.3) 14.6 (29.7)

Other movements (33.1) 461.4 428.3

At 31 December 2019 19,003.7 (3,732.0) 15,271.7

1 Includes the impact of reinsurance recapture (see note 29).

Reinsurance in the tables above is the net position of reinsurance assets and reinsurance liabilities. There is no impact on the analysis above of the

restatement of reinsurance asset and reinsurance liability comparatives discussed in note 2.

Eect of changes in assumptions and estimates during the year

Economic assumption changes

The principal economic assumption changes impacting the movement in insurance liabilities during the year relates to discount rates and inflation for

both JRL andPLACL.

Discount rates

The movement in the valuation interest rate captures the impact of underlying changes in risk-free curves and spreads and cash flows arising on backing

assets held over the course of the year. This includes the eect of the reduced property growth rate assumed for lifetime mortgages. The movement of

the discount rate includes purchases to support new business and trading for risk management purposes. For the year to 31 December 2020, the

contribution from the decrease in discount rate of £1,189m was largely due to falls in the risk free rate and changes to the backing asset portfolio

including the lifetime mortgage portfolio sale.

Inflation

Insurance liabilities for inflation-linked products, most notably Defined Benefit business and expenses on all products are impacted by changes in future

expectations of RPI, CPI and earnings inflation. For the year to 31 December the contribution was £(81)m from changes in market-implied inflation. A fall

in inflation reduces the carrying value of the Group’s insurance liabilities.

Non-economic assumption changes

The principal non-economic assumption changes impacting the movement in insurance liabilities during the year relate to mortality and maintenance

expenses assumptions for both JRL and PLACL. Note that impacts quoted below relate specifically to the liability cash flow impact of these changes; any

resulting change to the discount rate is captured above.

Mortality

The mortality bases applied are outlined above in note 23(b). For the year to 31 December 2020, this resulted in a net reduction in insurance liabilities of

£(27)m. A decrease in future expectations of longevity reduces the carrying value of the Group’s insurance liabilities.

Maintenance expenses and inflation methodology

This item primarily includes a reduction in the expense inflation arising from the changes to the calculation method of expense inflation, which included

a reduction in the margin over the best estimate. For the year to 31 December 2020 this resulted in a net reduction in insurance liabilities of £(19)m. A

decrease in maintenance expense assumptions decreases the carrying value of the Group’s insurance liabilities.

(d) Estimated timing of net cash outflows from insurance contract liabilities

The following table shows the insurance contract balances analysed by duration. The total balances are split by duration of Retirement Income

payments in proportion to the policy cash flows estimated to arise during the year.

2020

Expected cash flows (undiscounted)

Carrying

value

(discounted)

£m

Within

1 year

£m

1-5 years

£m

5-10 years

£m

Over

10 years

£m

Total

£m

Gross 1,356.5 5,139.3 5,893.8 15,250.4 27,640.0 21,118.4

Reinsurance (211.6) (766.6) (818.8) (1,815.6) (3,612.6) (2,865.5)

Net 1,144.9 4,372.7 5,075.0 13,434.8 24,027.4 18,252.9

2019

Expected cash flows (undiscounted)

Carrying

value

(discounted)

£m

Within

1 year

£m

1-5 years

£m

5-10 years

£m

Over

10 years

£m

Total

£m

Gross 1,303.4 4,929.4 5,620.4 14,945.3 26,798.5 19,003.7

Reinsurance (295.9) (1,085.2) (1,152.5) (2,474.4) (5,008.0) (3,732.0)

Net 1,007.5 3,844.2 4,467.9 12,470.9 21,790.5 15,271.7

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

141

FNNIL SAEET

23 INSURANCE CONTRACTS AND RELATED REINSURANCE continued

(e) Sensitivity analysis

The Group has estimated the impact on profit before tax for the year in relation to insurance contracts and related reinsurance from reasonably possible

changes in key assumptions relating to financial assets and liabilities. The sensitivities capture the liability impacts arising from the impact on the yields

of the assets backing liabilities in each sensitivity. The impact of changes in the value of assets and liabilities has been shown separately to aid the

comparison with the change in value of assets for the relevant sensitivities in note 17. To further assist with this comparison, any impact on reinsurance

assets has been included within the liabilities line item.

The sensitivity factors are applied via financial models. The analysis has been prepared for a change in each variable with other assumptions remaining

constant. In reality, such an occurrence is unlikely, due to correlation between the assumptions and other factors. It should also be noted that these

sensitivities are non-linear, and larger or smaller impacts cannot necessarily be interpolated or extrapolated from these results. The extent of non-

linearity grows as the severity of any sensitivity is increased. For example, in the specific scenario of property price falls, the impact on IFRS profit before

tax from a 5% fall in property prices would be slightly less than half of that disclosed in the table below. Furthermore, in the specific scenario of a

mortality reduction, a smaller fall than disclosed in the table below or a similar increase in mortality may be expected to result in broadly linear impacts.

However, it becomes less appropriate to extrapolate the expected impact for more severe scenarios. The sensitivity factors take into consideration that

the Group’s assets and liabilities are actively managed and may vary at the time that any actual market movement occurs. The impacts indicated below

for insurance contracts also reflect movements in financial derivatives, which are impacted by movements in interest rates. Related reinsurance assets

are not impacted by financial derivatives. The sensitivities below cover the changes on all assets and liabilities from the given stress. The impact of these

sensitivities on IFRS net equity is the impact on profit before tax as set out in the table below less tax at the current tax rate.

Sensitivity factor Description of sensitivity factor applied

Interest rate and investment

return

The impact of a change in the market interest rates by +/- 1% (e.g. if a current interest rate is 5%, the impact of

animmediate change to 4% and 6% respectively). The test consistently allows for similar changes to both assets

andliabilities

Expenses The impact of an increase in maintenance expenses by 10%

Base mortality rates The impact of a decrease in base table mortality rates by 5% applied to both Retirement Income liabilities and loans

secured by residential mortgages

Mortality improvement rates The impact of a level increase in mortality improvement rates of 0.25% for both Retirement Income liabilities and

loans secured by residential mortgages

Immediate property price fall The impact of an immediate decrease in the value of properties by 10%

Future property price growth The impact of a reduction in future property price growth by 0.5%

Future property price volatility The impact of an increase in future property price volatility by 1%

Voluntary redemptions The impact of an increase in voluntary redemption rates on loans secured by residential mortgages by 10%

Credit defaults The impact of an increase in the credit default assumption of 10bps

Impact on profit before tax (£m)

Interest

rates

+1%

Interest

rates

-1%

Maintenance

expenses

+10%

Base

mortality

-5%

Mortality

improvement

+0.25%

Immediate

property

price fall

-10 %

Future

property

price growth

-0.5%

Future

property price

volatility

+1%

Voluntary

redemptions

+10%

Credit

defaults

+10bps

2020 Assets (2,471.3) 2,955.9 (5.9) 35.3 15.6 (105.8) (72.8) (51.5) (14.5) –

Liabilities 1,974.6 (2,369.9) (50.5) (149.6) (109.4) (88.0) (83.8) (43.9) (83.8) (150.6)

Total (496.7) 586.0 (56.4) (114.3) (93.8) (193.8) (156.6) (95.4) (98.3) (150.6)

2019 Assets (2,139.5) 2,551.3 (6.6) 29.8 14.0 (104.5) (80.2) (55.6) (12.8) –

Liabilities 1,744.3 (2,077.5) (42.9) (128.0) (78.5) (76.8) (72.7) (38.3) (87.7) (85.8)

Total (395.2) 473.8 (49.5) (98.2) (64.5) (181.3) (152.9) (93.9) (100.5) (85.8)

24 INVESTMENT CONTRACT LIABILITIES

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

At 1 January 54.0 197.8

Deposits received from policyholders 1.0 26.7

Payments made to policyholders (14.0) (78.3)

Change in contract liabilities recognised in profit or loss 1.8 (92.2)

At 31 December 42.8 54.0

During 2019 the Group closed its Flexible Pension Plan product to new business and completed the transfer of the business to an external provider.

142 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

24 INVESTMENT CONTRACT LIABILITIES continued

(a) Terms and conditions of investment contracts

The Group has written Capped Drawdown products for the at-retirement market. These products are no longer available to new customers. In return for

a single premium, these contracts pay a guaranteed lump sum on survival to the end of the fixed term. There is an option at outset to select a lower sum

at maturity and regular income until the earlier of death or maturity. Upon death of the policyholder and subject to the option selected at the outset,

there may be a return of premium less income received or income payable to a dependant until the death of that dependant.

(b) Principal assumptions underlying the calculation of investment contracts

Valuation discount rates

Valuation discount rate assumptions for investment contracts are set with regard to yields on supporting assets. The yields on lifetime mortgage assets

are derived using the assumptions described in note 17 with allowance for risk through the deductions related to the NNEG. An explicit allowance for

credit risk isincluded by making an explicit deduction from the yields on debt and other fixed income securities based on historical default experience of

each assetclass.

Valuation discount rates

2020

%

2019

%

Investment contracts 2.34 3.01

25 LOANS AND BORROWINGS

Carrying value Fair value

2020

%

2019

%

2020

%

2019

%

£100m 9.5% 10 year subordinated debt 2025 non-callable 5 years (Tier 2) issued by Partnership Life

Assurance Company Limited (call option in March 2020) – 60.7 – 67.2

£250m 9.0% 10 year subordinated debt 2026 (Tier 2) issued by Just Group plc 249.1 248.9 260.0 255.8

£125m 8.125% 10 year subordinated debt 2029 (Tier 2) issued by Just Group plc 121.8 121.4 127.0 127.5

£250m 7.0% 10.5 year subordinated debt 2013 non-callable 5.5 years (Green Tier 2) issued by Just

Group plc 248.2 – 253.9 –

£230m 3.5% 7 year subordinated debt 2025 (Tier 3) issued by Just Group plc 154.4 229.0 161.1 239.7

Total loans and borrowings 773.5 660.0 802.0 690.2

On 2 October 2019, the Group completed the issue of £125m Tier 2 capital via an 8.125% sterling denominated BBB rated 10 year bonds issue, interest

payable semi-annually in arrears. The proceeds of the issue have been used to refinance the £100m 9.5% Partnership Life Assurance Company Limited

subordinated notes due 2025 (“PLACL notes”), a proportion of which were tendered for and subsequently cancelled in October 2019, the remainder being

called at the first call option date in March 2020.

On 15 October 2020, the Group completed the issue of £250m Green Tier 2 capital via a 7.0% sterling denominated BBB rated 10.5 year, non-callable 5.5

year bonds issue, interest payable semi-annually in arrears. The bonds have a reset date of 15 April 2026 with optional redemption any time from

15 October 2025 up to the reset date. The proceeds of the issue have been used in part to finance the purchase of £75m of the £230m 3.5% 7 year

subordinated debt 2025 (Tier 3) issued by the Group in 2018.

The Group also has an undrawn revolving credit facility of up to £200m for general corporate and working capital purposes available until 15 May 2022.

Interest is payable on any drawdown loans at a rate of LIBOR plus a margin of between 1.50% and 2.75% per annum depending on the Group’s ratio of

net debt to net assets.

Movements in borrowings during the year were as follows:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

At 1 January 660.0 573.4

Proceeds from issue of Just Group plc Tier 2 subordinated debt 250.0 125.0

Issue costs (1.9) (3.6)

Repayment of Partnership Life Assurance Company Limited Tier 2 subordinated debt (62.5) (37.5)

Repayment of Just Group plc Tier 3 subordinated debt (75.0) –

Financing cash flows 110.6 83.9

Amortisation of issue costs 2.9 2.7

Non-cash movements 2.9 2.7

At 31 December 773.5 660.0

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

143

FNNIL SAEET

26 LEASE LIABILITIES

Lease liabilities are in respect of property assets leased by the Group recognised as right-of-use assets within Property, plant and equipment on the

Consolidated statement of financial position.

Movements in lease liabilities during the year were as follows:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

At 1 January 12.4 –

Recognition of lease liabilities on initial application of IFRS 16 – 9.6

Lease payments

(4.3)

(3.1)

Financing cash flows

(4.3)

(3.1)

New lease – 5.6

Disposal (1.5) –

Interest 0.2 0.3

Non-cash movements (1.3) 5.9

At 31 December 6.8 12.4

Lease liabilities are payable as follows:

Future

minimum

lease

payments

£m

Interest

£m

Present value

of minimum

lease

payments

£m

At 31 December 2020

Less than one year 3.4 (0.1) 3.3

Between one and five years 3.6 (0.1) 3.5

Total 7.0 (0.2) 6.8

At 31 December 2019

Less than one year 4.4 (0.2) 4.2

Between one and five years 8.4 (0.2) 8.2

Total 12.8 (0.4) 12.4

27 OTHER FINANCIAL LIABILITIES

The Group has other financial liabilities which are measured at either amortised cost, fair value through profit or loss, or in accordance with relevant

underlying contracts (“insurance rules”), summarised as follows:

Note

2020

£m

2019

£m

Fair value through profit or loss

Derivative financial liabilities (a) 512.7 248.4

Obligations for repayment of cash collateral received (a) 377.4 62.8

Deposits received from reinsurers (b) 2,415.0 2,417.7

Liabilities measured using insurance rules under IFRS 4

Deposits received from reinsurers (b) – 772.6

Reinsurance finance (c) – 14.5

Reinsurance funds withheld (d) – 162.9

Total other liabilities 3,305.1 3,678.9

The amount of deposits received from reinsurers and reinsurance funds withheld that is expected to be settled more than one year after the

Consolidated statement of financial position date is £2,213.4m (2019: £3,068.0m).

(a) Derivative financial liabilities and obligations for repayment of cash collateral received

The derivative financial liabilities are classified at fair value through profit or loss. All financial liabilities at fair value through profit or loss are designated

as such on initial recognition or, in the case of derivative financial liabilities, are classified as held for trading.

(b) Deposits received from reinsurers

Deposits received from reinsurers are either unbundled from their reinsurance contract and recognised at fair value through profit or loss in accordance

with IAS 39, Financial instruments: measurement and recognition; or they are recognised in accordance with IFRS 4, Insurance contracts. All deposits

received from reinsurers are measured in accordance with the reinsurance contract and taking into account an appropriate discount rate for the timing

of expected cash flows of the liabilities. During the year the Group recaptured all of the business recognised in accordance with IFRS 4 resulting in a nil

balance at the end of the year (see note 29).

144 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

27 OTHER FINANCIAL LIABILITIES continued

(c) Reinsurance finance

The reinsurance finance has been established in recognition of the loan obligation to the reinsurers under the Group’s reinsurance financing

arrangements, the repayment of which are contingent upon the emergence of surplus under either the old Solvency I or IFRS valuation rules. During the

year the Group repaid all of the outstanding loan obligation under the reinsurance financing arrangements (see note 29).

(d) Reinsurance funds withheld

Reinsurance funds withheld are measured and valued in accordance with the reinsurance contract, which takes into account an appropriate discount

rate for the timing of expected cash flows. During the year the Group recaptured all of the business reinsured on a funds withheld basis resulting in a nil

balance at the end of the year (see note 29).

28 DERIVATIVE FINANCIAL INSTRUMENTS

The Group uses various derivative financial instruments to manage its exposure to interest rates, counterparty credit risk, property risk, inflation and

foreign exchange risk.

Derivatives

2020 2019

Asset

fair value

£m

Liability

fair value

£m

Notional

amount

£m

Asset

fair value

£m

Liability

fair value

£m

Notional

amount

£m

Foreign currency swaps 267.7 194.5 4,557.5 54.8 96.3 2,035.1

Interest rate swaps 484.3 76.8 6,798.5 157.3 30.7 3,644.8

Inflation swaps 25.6 228.2 3,238.4 10.7 120.6 2,165.8

Forward swaps 8.9 0.1 93.8 10.1 0.8 612.4

Put option on property index (NNEG hedge) 3.6 3.3 730.0 4.0 – 80.0

Total return swaps 9.9 9.8 – 0.1 – 66.9

Total 800.0 512.7 15,418.2 237.0 248.4 8,605.0

The Group’s derivative financial instruments are not designated as hedging instruments and changes in their fair value are included in profit or loss.

All over-the-counter derivative transactions are conducted under standardised International Swaps and Derivatives Association Inc. master agreements,

and the Group has collateral agreements between the individual Group entities and relevant counterparties in place under each of these market

masteragreements.

As at 31 December 2020, the Company had pledged collateral of £97.8m (2019: £103.1m) of which £nil were gilts and European Investment Bank bonds

(2019: £nil) and had received cash collateral of £377.4m (2019: £62.8m).

Amounts recognised in profit or loss in respect of derivative financial instruments are as follows:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Movement in fair value of derivative instruments 298.7 85.2

Realised losses on interest rate swaps closed 29.0 44.7

Total amounts recognised in profit or loss 327.7 129.9

29 REINSURANCE

The Group uses reinsurance as an integral part of its risk and capital management activities. New business is reinsured via longevity swap arrangements

for DB small schemes and GIfL business and quota share for DB partnering business, as follows:

• DB was reinsured at 75% for underwritten schemes, and 90% for non-underwritten schemes during 2020. From 1 January to 30 June 2019, DB was

initially reinsured at 55% for underwritten schemes, and 75% for non-underwritten schemes and was part of a subsequent increase in reinsurance on

1 July 2019, as detailed below. From 1 July 2019 the DB reinsurance share for new business was increased to 75% for underwritten schemes, and 90%

for non-underwritten schemes.

• DB partnering: The Group completed its first DB partnering transaction during 2020 which was 100% reinsured.

• GIfL was reinsured at 90% during 2020. New business in 2019 was reinsured at 75% but was part of a subsequent increase in reinsurance on 30 June

2020, as detailed below.

• Care new business was not reinsured in 2020 or 2019.

In-force business is reinsured under longevity swap and quota share treaties. The quota share reinsurance treaties have deposit back or premium

withheld arrangements to remove the majority of the reinsurer credit risk. During 2020 the Group increased the reinsurance on certain JRL GIfL business

written between 1 January 2016 and 31 December 2019 from 75% to 100%. The increased cover was eective from 30 June 2020. In 2019 the Group

increased the reinsurance on JRL DB in-force business to 100% (from 55% for underwritten schemes and 75% for non-underwritten schemes) for all

schemes written between 1 January 2016 and30 June 2019. The increased cover was eective from 1 July 2019. Within the Group’s subsidiary, JRL,

there are a number of quota share treaties with financing arrangements, which were originally entered into for thecapital benefits under the old

Solvency I regime (the financing formed part of available capital). The repayment of this financing is contingent uponthe emergence of surplus under

the Solvency I or IFRS valuation rules. These treaties were closed to new business prior to the introduction of Solvency II on 1 January 2016 but the Group

retained a capital benefit under Solvency II from the financing arrangements as these form part of the transitional calculations. Under IFRS the financing

element is included within other financial liabilities (see note 27(c)). These treaties also allow JRL to recapture business once the financing loan from the

reinsurer has been fully repaid. Once a recapture becomes eective, JRL retains 100% of the risk onbusiness recaptured. During the year the Group

made additional repayments so as to fully repay all financing loans and trigger the recapture of all remaining financing treaties. In aggregate, recaptures

during the year (including those occurring as a result of these additional repayments) resulted in a decrease of reinsurance assets of £940.0m and a

reduction of equal amount in the deposits received from reinsurers recognised within other financialliabilities.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

145

FNNIL SAEET

29 REINSURANCE continued

In addition to the deposits received from reinsurers recognised within other financial liabilities (see note 27(b)), certain reinsurance arrangements give

rise to deposits from reinsurers that are not included in the Consolidated statement of financial position of the Group as described below:

• The Group has an agreement with two reinsurers whereby financial assets arising from the payment of reinsurance premiums, less the repayment of

claims, in relation to specific treaties, are legally and physically deposited back with the Group. Although the funds are managed by the Group (as the

Group controls the investment of the asset), no future benefits accrue to the Group as any returns on the deposits are paid to reinsurers. Consequently,

the deposits are not recognised as assets of the Group and the investment income they produce does not accrue to the Group.

• The Group has an agreement with one reinsurer whereby assets equal to the reinsurer’s full obligation under the treaty are deposited into a ringfenced

collateral account. The Group has first claim over these assets should the reinsurer default, but as the Group has no control over these funds and does

not accrue any future benefit, this fund is not recognised as an asset of the Group.

• The Group has an agreement with one reinsurer whereby assets equal to the reinsurers full obligation under the treaty are either deposited into a

ringfenced collateral account if corporate bonds or held under a funds withheld structure if Lifetime Mortgages. The latter are legally and physically

held by the Group. Although the funds are managed by the Group (as the Group controls the investment of the asset), no future benefits accrue to the

Group as returns on the assets are paid to reinsurers. Consequently, the lifetime mortgages are not recognised as assets of the Group and the

investment income they produce does not accrue to the Group. The reinsurer also deposits cash into a bank account held legally by the Group to fund

future lifetime mortgages but as this cash is ringfenced for issued lifetime mortgage quotes agreed by the reinsurer, it is also not recognised as an

asset by the Group.

2020

£m

2019

£m

Deposits managed by the Group 249.0 194.5

Deposits held in trust 492.0 283.4

Total deposits not included in the Consolidated statement of financial position 741.0 477.9

The Group is exposed to a minimal amount of reinsurance counterparty default risk in respect of the above arrangements and calculates a counterparty

default reserve accordingly. At 31 December 2020, this reserve totalled £3.6m (2019: £2.5m) and largely relates to the Hannover Re and Pacific Life Re

reinsurance treaties in PLACL.

30 OTHER PROVISIONS

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

At 1 January 1.8 0.7

Amounts utilised (1.1) (1.7)

Amounts charged to profit and loss 0.3 2.8

At 31 December 1.0 1.8

The amount of provisions that is expected to be settled more than 12 months after the Consolidated statement of financial position date is £0.5m (2019:

£1.2m).

31 INSURANCE AND OTHER PAYABLES

2020

£m

2019

£m

Payables arising from insurance and reinsurance contracts

24.6 22.4

Other payables 67.0 50.2

Total insurance and other payables 91.6 72.6

Other payables includes unsettled investment purchases. Insurance and other payables due in more than one year are £nil (2019: £nil).

32 COMMITMENTS

Capital commitments

The Group had no capital commitments as at 31 December 2020 (2019: £nil).

33 CONTINGENT LIABILITIES

There are no contingent liabilities as at 31 December 2020.

34 FINANCIAL AND INSURANCE RISK MANAGEMENT

This note presents information about the major financial and insurance risks to which the Group is exposed, and its objectives, policies and processes for

their measurement and management. Financial risk comprises exposure to market, credit and liquidity risk.

(a) Insurance risk

The writing of long-term insurance contracts requires a range of assumptions to be made and risk arises from these assumptions being materially

inaccurate.

The Group’s main insurance risk arises from adverse experience compared with the assumptions used in pricing products and valuing insurance

liabilities, and in addition its reinsurance treaties may be terminated, not renewed, or renewed on terms less favourable than those under existing

treaties.

146 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

34 FINANCIAL AND INSURANCE RISK MANAGEMENT continued

Insurance risk arises through exposure to longevity, mortality and morbidity and exposure to factors such as withdrawal levels and management and

administration expenses.

Individually underwritten GIfL are priced using assumptions about future longevity that are based on historic experience information, lifestyle and

medical factors relevant to individual customers, and judgements about the future development of longevity improvements. In the event of an increase

in longevity, the actuarial reserve required to make future payments to customers may increase.

Loans secured by mortgages are used to match some of the liabilities arising from the sale of GIfL and DB business. In the event that early repayments in

a given period are higher than anticipated, less interest will have accrued on the mortgages and the amount repayable will be less than assumed at the

time of sale. In the event of an increase in longevity, although more interest will have accrued and the amount repayable will be greater than assumed

at the time of the sale, the associated cash flows will be received later than had originally been anticipated. In addition, a general increase in longevity

would have the eect of increasing the total amount repayable, which would increase the LTV ratio and could increase the risk of failing to be repaid in

full as a consequence of the no-negative equity guarantee. There is also morbidity risk exposure as the contract ends when the customer moves into

long-term care.

Underpinning the management of insurance risk are:

• the development and use of medical information including PrognoSys™ for both pricing and reserving to provide detailed insight into longevity risk;

• adherence to approved underwriting requirements;

• controls around the development of suitable products and their pricing;

• review and approval of assumptions used by the Board;

• regular monitoring and analysis of actual experience;

• use of reinsurance to minimise volatility of capital requirement and profit; and

• monitoring of expense levels.

Concentrations of insurance risk

Concentration of insurance risk comes from improving longevity. Improved longevity arises from enhanced medical treatment and improved

lifecircumstances. Concentration risk is managed by writing business across a wide range of dierent medical and lifestyle conditions to avoid

excessiveexposure.

(b) Market risk

Market risk is the risk of loss or of adverse change in the financial situation resulting, directly or indirectly, from fluctuations in the level and in the

volatility of market prices of assets, liabilities and financial instruments, together with the impact of changes in interest rates. Significant market risk is

implicit in the insurance business and arises from exposure to interest rate risk, property risk, inflation risk and currency risk. TheGroup is not exposed to

any equity risk or material currency risk. Market risk represents both upside and downside impacts but the Group’s policy to manage market risk is to limit

downside risk. Falls in the financial markets can reduce the value of pension funds available to purchase Retirement Income products and changes in

interest rates can aect the relative attractiveness of Retirement Income products. Changes in the value of the Group’s investment portfolio will also

aect the Group’s financial position.

In mitigation, Retirement Income product monies are invested to match the asset and liability cash flows as closely as practicable. In practice, it is not

possible to eliminate market risk fully as there are inherent uncertainties surrounding many of the assumptions underlying the projected asset and

liability cash flows.

For each of the material components of market risk, described in more detail below, the market risk policy sets out the risk appetite and management

processes governing how each risk should be measured, managed, monitored and reported.

(i) Interest rate risk

The Group is exposed to interest rate risk through its impact on the value of, or income from, specific assets, liabilities or both. It seeks to limit its

exposure through appropriate asset and liability matching and hedging strategies. The Group’s strategy is to actively hedge the interest rate risk to

whichits Solvency II balance sheet is exposed; some exposure remains on an IFRS basis.

The Group’s exposure to changes in interest rates is concentrated in the investment portfolio, loans secured by mortgages and its insurance obligations.

Changes in investment and loan values attributable to interest rate changes are mitigated by corresponding and partially osetting changes in the value

of insurance liabilities. The Group monitors this exposure through regular reviews of the asset and liability position, capital modelling, sensitivity testing

and scenario analyses. Interest rate risk is also managed using derivative instruments e.g. swaps.

The following table indicates the earlier of contractual repricing or maturity dates for the Group’s significant financial assets.

2020

Less than

one year

£m

One to five

years

£m

Five to ten

years

£m

Over ten

years

£m

No fixed

term

£m

Total

£m

Units in liquidity funds 1,128.5 – – – – 1,128.5

Investment funds 37.0 139.1 – – – 176.1

Debt securities and other fixed income securities 789.3 1,823.4 2,322.7 6,126.0 – 11,061.4

Deposits with credit institutions 99.7 – – – – 99.7

Derivative financial assets 11.1 35.0 84.9 669.0 – 800.0

Loans secured by residential mortgages – – – – 8,261.1 8,261.1

Loans secured by commercial mortgages 36.0 270.5 221.2 179.3 – 707.0

Other loans 0.4 81.7 157.1 796.8 – 1,036.0

Total 2,102.0 2,349.7 2,785.9 7,771.1 8,261.1 23,269.8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

147

FNNIL SAEET

34 FINANCIAL AND INSURANCE RISK MANAGEMENT continued

2019

Less than

one year

£m

One to five

years

£m

Five to ten

years

£m

Over ten

years

£m

No fixed

term

£m

Total

£m

Units in liquidity funds 1,384.0 – – – – 1,384.0

Investment funds 25.5 111.8 – – – 137. 3

Debt securities and other fixed income securities 950.3 2,734.4 2,819.3 3,883.8 – 10,387.8

Deposits with credit institutions 104.6 – – – – 104.6

Derivative financial assets 10.9 15.3 63.8 147.0 – 237.0

Loans secured by residential mortgages – – – – 7,980.5 7,980.5

Loans secured by commercial mortgages 29.0 202.5 198.0 65.0 – 494.5

Other loans 55.9 13.8 133.5 677.1 – 880.3

Total 2,560.2 3,077.8 3,214.6 4,772.9 7, 980.5 21,606.0

A sensitivity analysis of the impact of interest rate movements on profit before tax is included in note 23(e).

(ii) Property risk

The Group’s exposure to property risk arises from indirect exposure to the UK residential property market through the provision of lifetime mortgages.

A substantial decline or sustained underperformance in UK residential property prices, against which the Group’s lifetime mortgages are secured, could

result in proceeds on sale being exceeded by the mortgage debt at the date of redemption. Demand may also reduce for lifetime mortgage products

through reducing consumers’ propensity to borrow and by reducing the amount they are able to borrow due to reductions in property values and the

impact on loan-to-value limits.

The risk is mitigated by ensuring that the advance represents a low proportion of the property’s value at outset and independent third party valuations

are undertaken on each property before initial mortgages are advanced. Lifetime mortgage contracts are also monitored through dilapidation reviews.

House prices are monitored and the impact of exposure to adverse house prices (both regionally and nationally) is regularly reviewed. Further mitigation

is through management of the volume of lifetime mortgages in the portfolio and the establishment of the NNEG hedges.

A sensitivity analysis of the impact of property price movements is included in note 17 and note 23(e). These notes also discuss the Group’s consideration

of the impact of COVID-19 on property assumptions at 31 December 2020.

(iii) Inflation risk

Inflation risk is the risk of fluctuations in the value of, or income from, specific assets or liabilities or both in combination, arising from relative or absolute

changes in inflation or in the volatility of inflation.

Exposure to inflation occurs in relation to the Group’s own management expenses and its matching of index-linked Retirement Income products. Its

impact is managed through the application of disciplined cost control over its management expenses and through matching its index-linked assets and

index-linked liabilities for the inflation risk associated with its index-linked Retirement Income products.

(iv) Currency risk

Currency risk arises from fluctuations in the value of, or income from, assets denominated in foreign currencies, from relative or absolute changes in

foreign exchange rates or in the volatility of exchange rates.

Exposure to currency risk could arise from the Group’s investment in non-sterling denominated assets. From time to time, the Group acquires fixed

income securities denominated in US dollars or other foreign currencies for its financial asset portfolio. All material Group liabilities are in sterling. As the

Group does not wish to introduce foreign exchange risk into its investment portfolio, derivative or quasi-derivative contracts are entered into to eliminate

the foreign exchange exposure as far as possible.

(c) Credit risk

Credit risk arises if another party fails to perform its financial obligations to the Group, including failing to perform them in a timely manner.

Credit risk exposures arise from:

• Holding fixed income investments where the main risks are default and market risk. The risk of default (where the counterparty fails to pay back the

capital and/or interest on a corporate bond) is mitigated by investing only in higher quality or investment grade assets. Market risk is the risk of bond

prices falling as a result of concerns over the counterparty, or over the market or economy in which the issuing company operates. This leads to wider

spreads (the dierence between redemption yields and a risk-free return), the impact of which is mitigated through the use of a “hold to maturity”

strategy. Concentration of credit risk exposures is managed by placing limits on exposures to individual counterparties and limits on exposures to credit

rating levels.

• The Group also manages credit risk on its corporate bond portfolio through the appointment of specialist fund managers, who execute a diversified

investment strategy, investing in investment-grade assets and imposing individual counterparty limits. Current economic and market conditions are

closely monitored, as are spreads on the bond portfolio in comparison with benchmark data.

• Counterparties in derivative contracts – the Group uses financial instruments to mitigate interest rate and currency risk exposures. It therefore has

credit exposure to various counterparties through which it transacts these instruments, although this is usually mitigated by collateral arrangements

(see note 27).

• Reinsurance – reinsurance is used to manage longevity risk but, as a consequence, credit risk exposure arises should a reinsurer fail to meet its claim

repayment obligations. Credit risk on reinsurance balances is mitigated by the reinsurer depositing back more than 100% of premiums ceded under the

reinsurance agreement.

• Cash balances – credit risk on cash assets is managed by imposing restrictions over the credit ratings of third parties with whom cash is deposited.

• Credit risk – credit risk for loans secured by mortgages has been considered within “property risk” above.

148 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

34 FINANCIAL AND INSURANCE RISK MANAGEMENT continued

The following table provides information regarding the credit risk exposure for financial assets of the Group, which are neither past due nor impaired at

31 December:

2020

UK gilts

£m

AAA

£m

AA

£m

A

£m

BBB

£m

BB or below

£m

Unrated

£m

Total

£m

Units in liquidity funds – 1,123.2 – – – 5.3 – 1,128.5

Investment funds – – – – – – 176.1 176.1

Debt securities and other fixed income securities 205.6 838.8 1,519.3 3,030.5 5,124.4 342.8 – 11,061.4

Deposits with credit institutions – – – 58.6 39.2 1.9 – 99.7

Derivative financial assets – – – 594.2 205.8 – – 800.0

Loans secured by residential mortgages – – – – – – 8,261.1 8,261.1

Loans secured by commercial mortgages – – – – – – 707.0 707.0

Other loans – 87.2 125.8 176.0 509.4 58.4 79.2 1,036.0

Reinsurance – – 273.0 309.1 6.2 – 0.5 588.8

Insurance and other receivables – – – – – – 32.0 32.0

Total 205.6 2,049.2 1,918.1 4,168.4 5,885.0 408.4 9,255.9 23,890.6

2019

UK gilts

£m

AAA

£m

AA

£m

A

£m

BBB

£m

BB or below

£m

Unrated

£m

Total

£m

Units in liquidity funds – 1,378.0 6.0 – – – – 1,384.0

Investment funds – – – – – – 137.3 137.3

Debt securities and other fixed income securities 198.1 941.3 1,254.0 3,058.4 4,293.5 156.3 486.2 10,387.8

Deposits with credit institutions – – 1.5 63.9 39.2 – – 104.6

Derivative financial assets – – 0.4 152.0 38.7 – 45.9 237.0

Loans secured by residential mortgages – – – – – – 7,980.5 7,980.5

Loans secured by commercial mortgages – – – – – – 494.5 494.5

Other loans – – 40.4 70.7 419.7 – 349.5 880.3

Reinsurance – – 69.5 303.3 5.5 – 0.5 378.8

Insurance and other receivables – – – – – – 25.5 25.5

Total 198.1 2,319.3 1,371.8 3,648.3 4,796.6 156.3 9,519.9 22,010.3

The credit rating for Cash and cash equivalents assets at 31 December 2020 was between a range of AA and BB.

The carrying amount of those assets subject to credit risk represents the maximum credit risk exposure.

(d) Liquidity risk

The investment of Retirement Income cash in corporate bonds, gilts and lifetime mortgages, and commitments to pay policyholders and other

obligations, requires liquidity risks to be taken.

Liquidity risk is the risk of loss because the Group, although solvent, either does not have sucient financial resources available to it in order to meet its

obligations as they fall due, or can secure them only at excessive cost.

Exposure to liquidity risk arises from:

• deterioration in the external environment caused by economic shocks, regulatory changes, reputational damage, or an economic shock resulting from

the COVID-19 pandemic or from Brexit;

• realising assets to meet liabilities during stressed market conditions;

• increasing cash flow volatility in the short term giving rise to mismatches between cash flows from assets and requirements from liabilities;

• needing to support liquidity requirements for day-to-day operations;

• ensuring financial support can be provided across the Group; and

• maintaining and servicing collateral requirements arising from the changes in market value of financial derivatives used by the Group.

Liquidity risk is managed by ensuring that assets of a suitable maturity and marketability are held to meet liabilities as they fall due. The Group’s

short-term liquidity requirements are predominantly funded by advance Retirement Income premium payments, investment coupon receipts, and bond

principal repayments out of which contractual payments need to be made. There are significant barriers for policyholders to withdraw funds that have

already been paid to the Group in the form of premiums. Cash outflows associated with Retirement Income liabilities can be reasonably estimated and

liquidity can be arranged to meet this expected outflow through asset-liability matching and new business premiums.

The cash flow characteristics of the lifetime mortgages are reversed when compared with Retirement Income products, with cash flows eectively

representing an advance payment, which is eventually funded by repayment of principal plus accrued interest. Policyholders are able to redeem

mortgages, albeit at a cost. The mortgage assets are considered illiquid, as they are not readily saleable due to the uncertainty about their value and the

lack of a market in which to trade them.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

149

FNNIL SAEET

34 FINANCIAL AND INSURANCE RISK MANAGEMENT continued

Cash flow forecasts over the short, medium and long term are regularly prepared to predict and monitor liquidity levels in line with limits set on the

minimum amount of liquid assets required. Cash flow forecasts have been updated to take into account the possible impacts from COVID-19 on the

Group’s liquidity position and include assessing the impact of a 1 in 200 year event on the Group’s liquidity. Updates to cash flow forecasting include

amending projected inflows based on revised GIfL and DB volumes, reducing LTM volumes and redemptions, and increasing the minimum cash and cash

equivalent levels to cover enhanced stresses. Derivative stresses have been revised to take into account the market volatility caused by COVID-19, and

focus on the worst observed movements in shorter periods up to and including one month.

Market volatility in the second half of March 2020, in reaction to the developing COVID-19 pandemic situation in the UK, led to a significant temporary

increase in the Group’s collateral requirements, which have subsequently reversed. The Group experienced collateral calls for an additional c.£500m,

which it was able to meet from existing available liquidity balances and facilities.

The table below summarises the maturity profile of the financial liabilities, including both principal and interest payments, of the Group based on

remaining undiscounted contractual obligations:

2020

Within one

year or

payable on

demand

£m

One to

five years

£m

More than

five years

£m

No fixed

term

£m

Subordinated debt 66.2 674.9 595.8 –

Derivative financial liabilities 53.3 189.0 1,408.6 –

Obligations for repayment of cash collateral received 377.4 – – –

Deposits received from reinsurers 201.7 712.0 2,073.3 –

Reinsurance finance – – – –

Reinsurance funds withheld – – – –

2019

Within one

year or

payable on

demand

£m

One to

five years

£m

More than

five years

£m

No fixed

term

£m

Subordinated debt 74.8 585.0 773.3 –

Derivative financial liabilities 10.2 115.0 871.2 –

Obligations for repayment of cash collateral received 62.8 – – –

Deposits received from reinsurers 270.5 975.3 3,002.7 –

Reinsurance finance – – – 14.5

Reinsurance funds withheld 15.7 57.3 134.9 –

35 CAPITAL

The net assets of the Group at 31 December 2020 on an IFRS basis were £2,490.4m (2019: £2,321.0m). The Group manages capital on a regulatory basis.

Since 1 January 2016, the Group has been required to comply with the requirements established by the Solvency II Framework directive as adopted by

the Prudential Regulation Authority (“PRA”) in the UK, and to measure and monitor its capital resources on this basis. The Group and its regulated

subsidiaries are required to maintain eligible capital, or “Own Funds”, in excess of the value of their Solvency Capital Requirements (“SCR”). The SCR

represents the risk capital required to be set aside to absorb 1 in 200 year stress tests of each risk type that the Group is exposed to, including longevity

risk, property risk, credit risk and interest rate risk. These risks are all aggregated with appropriate allowance for diversification benefits.

In December 2015, Just Retirement Group plc and JRL received approval to calculate their Solvency II capital requirements using a full internal model.

The capital requirement for the ex-Partnership business is assessed using the standard formula. Following the merger of Just Retirement and

Partnership, the capital requirement for Just Group plc is calculated using a partial internal model.

The surplus of Own Funds over the SCR is called “Excess Own Funds” and this eectively acts as working capital for the Group. The overriding objective of

the Solvency II capital framework is to ensure there is sucient capital within the insurance company to protect policyholders and meet their payments

when due.

In managing its capital the Group undertakes stress and scenario testing to consider the Group’s capacity to respond to a series of relevant financial,

insurance, or operational shocks or changes to financial regulations should future circumstances or events dier from current assumptions. These

include scenarios and shocks due to possible impacts from the COVID-19 pandemic. The review also considers mitigating actions available to the Group

should a severe stress scenario occur, such as raising capital, varying the volumes of new business written and a scenario where the Group does not write

new business. The Group’s capital position can be adversely aected by a number of factors, in particular factors that erode the Group’s capital resources

and/or which impact the quantum of risk to which the Group is exposed. In addition, any event which erodes current profitability and is expected to

reduce future profitability and/or make profitability more volatile could impact the Group’s capital position, which in turn could have a negative eect on

the Group’s results of operations.

The Group has a significant investment in LTMs, in particular in JRL. The regulatory environment for LTMs has evolved since the adoption of Solvency II,

primarily through the publication of SS3/17 “Solvency II: Equity Release Mortgages” in July 2017 (and subsequent revisions in December 2018, December

2019 and April 2020). SS3/17 introduced the Eective Value Test (“EVT”), a regulatory diagnostic validation test, which the PRA expects firms to conduct

as a means of monitoring compliance with Solvency II requirements relating to the Matching Adjustment (“MA”) for liabilities that are matched with

restructured LTMs. In 2019 JRL updated the LTM note valuation and rating methodology and restructured the internal LTM securitisation to better meet

the revised regulatory expectations. The restructure was eected on 31 December 2019. The internal securitisation was restructured at 31 December

2020 to remove the sold block of LTMs.

150 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

35 CAPITAL continued

At 31 December 2020, Just passed the PRA EVT with a buer (0.63%) (unaudited) (2019: 0.67%) over the current minimum deferment rate of zero

(allowing for a volatility of 13%, in line with the requirement for the EVT). From 31 December 2021, when SS3/17 is fully phased-in, firms will be expected

to meet the EVT with a deferment rate above 0%, as specified by the PRA and reviewed twice a year. The minimum deferment rate (to apply from

31 December 2021) was 0.5% at 31 December 2020 (as published by the PRA on 30 September 2020). As at the end of February, we estimate that Just

passed the PRA EVT with a buer of more than 1% (unaudited) over a deferment rate of zero. The increase in buer from year end is driven by the

increase in long-term rates since 31 December 2020. We note that the increase in real rates could lead the PRA to increase the minimum deferment rate

when it is reviewed. JRL received PRA approval for an updated MA application in December 2020. The updated approval captures changes since our

original application in 2015 and provides greater flexibility to invest a wider range of asset classes going forward.

The Group is exploring ways to reduce its exposure to UK residential property risk, with hedging transactions and a sale of a portfolio of LTMs completed

during 2020 and further action anticipated in the future.

There are remaining areas of uncertainty that could impact the capital position of the Firm:

• The PRA has published PS 14/20 and SS 1/20 which confirms their expectations of firms’ compliance to the Prudent Person Principle with regard to

managing investment risk. The proposals took eect on 27 May 2020. The Group has reviewed and is further enhancing its investment strategy,

including taking steps to reduce exposure to property risk through LTMs.

• The minimum deferment rate within the EVT, published by the PRA, could increase from 0.5%. The PRA reviews the minimum deferment rate every six

months and publishes the result of the review in March and September. Increasing JRL’s deferment rate by 0.5% would lead to a c.6 percentage point

(unaudited) reduction in the solvency coverage ratio.

• JRL is preparing a major model change application for updates to its internal model. We plan to submit this to the PRA for approval in 2021. The

purpose of model change is to ensure that the capital requirement produced from the model remains appropriate for the risk profile of the business

and is in line with latest regulatory expectations and emerging best practice. At this stage, we do not expect that the internal model change will have a

significant impact on the capital requirement. However, we note there is uncertainty on the final outcome. In particular, the approach to assessing the

EVT in stress, as required from 31 December 2021, and agreeing appropriate treatment of NNEG risk transfer transactions remain uncertain.

• The PRA issued CP 1/21 – Solvency II: Deep, liquid and transparent assessments, and GBP transition to SONIA, on 7 January 2021. This proposes that

the change in the reference rate used for valuing liabilities, from LIBOR to SONIA, is implemented on 31 July 2021. Any dierence between the risk-free

curves on this date will have an impact on Excess Own Funds.

• The PRA published a Dear Chief Actuary letter in February 2021 setting out the application of the EVT, in particular setting expectations of current

balance sheet values of property and allowance for other risks. The recommendations should be incorporated by 31 December 2021.

Given that the Group continues to experience a high level of regulatory activity and intense regulatory supervision, there is also the risk of PRA

intervention, not limited to the matters described in the paragraphs above, which could negatively impact on the Group’s capital position.

The Group has completed a number of actions in relation to capital during the year:

• Continued reduction in new business strain through a planned reduction in new business volumes, re-pricing and cost reductions.

• Launch of DB partner business which is much less capital intensive.

• Completion of additional reinsurance of existing GIfL business to release risk margin and SCR in respect of that business, and to increase resilience to

future variations in longevity experience.

• Completion of the second and third NNEG hedges in March and December 2020 and a sale of £540m of LTMs to increase the firm’s resilience to adverse

property market events.

• Increased interest rate hedging early in 2020, helping to protect the Group from the adverse impact of falling interest rates, particularly the impact on

the value of MA derived from LTMs given the EVT’s sensitivity to nominal interest rates.

• In October 2020, the Group raised £175m of net new capital, through the issue of £250m 7% Tier 2 loan notes (before issue costs) and tender for £75m

of its existing £230m 3.5% Tier 3 loan notes.

The Group has planned actions to improve the resilience of the balance sheet. These include:

• On-going cost savings with a target to eliminate expense overruns by the end of 2021.

• Further NNEG hedging transactions and continuing review of opportunities to dispose of blocks of LTMs, aligned to the strategy to increase the

resilience of the Solvency II balance sheet to property risk.

• Additional reinsurance or longevity swaps on the Group’s existing book of GIfL business.

• New business strain could be further reduced by limiting the volume of new business written or by changing the mix of new business.

• The Board continues to review the optimal capital mix, subject to market liquidity and availability.

The Board recognises that the successful implementation of some of these potential or planned actions are not wholly within the control of the Group.

In June 2020, the Government announced that it would review certain features of Solvency II. The review will ensure that Solvency II properly reflects

the specific features of the UK insurance sector. The call for evidence to support the review, issued by HM Treasury in October 2020, states that “The

Government intends to work with the PRA to reform the risk margin. Reform could reduce the volatility and pro-cyclicality of insurance firms’ balance

sheets”. The PRA has indicated that the risk margin is too sensitive to interest rates and higher than needed in the current interest rate environment

(letter from Sam Woods to the Chair of the Treasury Committee, June 2018, reiterated in Anna Sweeney’s speech given at the Westminster Business

Forum, February 2021). Any reduction in magnitude or volatility in the risk margin would be expected to support the Group’s capital position. The Group’s

risk margin was £846m (unaudited) at 31 December 2020, of which £762m (unaudited) is backed by TMTP.

Further information on the matters considered by the Directors at 31 December 2020 in relation to capital and going concern is included in note 1.1, Basis

of preparation.

The Group’s objectives when managing capital for all subsidiaries are:

• to comply with the insurance capital requirements required by the regulators of the insurance markets where the Group operates. The Group’s policy is

to manage its capital in line with its risk appetite and in accordance with regulatory requirements;

• to safeguard the Group’s ability to continue as a going concern;

• to ensure that in all reasonable foreseeable circumstances, the Group is able to fulfil its commitment over the short term and long term to pay

policyholders’ benefits;

• to continue to provide returns for shareholders and benefits for other stakeholders; and

• to provide an adequate return to shareholders by pricing insurance and investment contracts commensurately with the level of risk.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

151

FNNIL SAEET

35 CAPITAL continued

Group entities that are under supervisory regulation and are required to maintain a minimum level of regulatory capital include:

• Just Retirement Limited and Partnership Life Assurance Company Limited – authorised by the PRA, and regulated by the PRA and FCA.

• HUB Financial Solutions Limited, Just Retirement Money Limited and Partnership Home Loans Limited – authorised and regulated by the FCA.

The Group and its regulated subsidiaries complied with their regulatory capital requirements throughout the year.

Group capital position (unaudited)

The Group’s estimated capital surplus position at 31 December 2020, which is unaudited, was as follows:

Solvency

Capital Requirement

Minimum Group Solvency

Capital Requirement

2020

1

£m

2019

£m

2020

£m

2019

£m

Eligible Own Funds 3,009 2,562 2,262 1,928

Solvency Capital Requirement (1,938) (1,814) (476) (444)

Excess Own Funds 1,071 748 1,786 1,484

Solvency coverage ratio 155% 141% 475% 434%

1 Estimated regulatory position. These figures do not allow for any notional recalculation of TMTP as at 31 December 2020. The estimated solvency coverage ratio including a notional recalculation of

TMTP as at 31 December 2020 is 156%.

2 As reported in the Group’s Solvency and Financial Condition Report as at 31 December 2019.

36 GROUP ENTITIES

The Group holds investment in the ordinary shares (unless otherwise stated) of the following subsidiary undertakings and associate undertakings, which

are all consolidated in these Group accounts. All subsidiary undertakings have a financial year end at 31 December (unless otherwise stated).

Principal activity Registered oce

Percentage of

nominal share

capital and voting

rights held

Direct subsidiary

Just Retirement Group Holdings Limited Holding company Reigate 100%

Partnership Assurance Group Limited Holding company Reigate 100%

Indirect subsidiary

HUB Acquisitions Limited

1,5

Holding company Reigate 100%

HUB Financial Solutions Limited Distribution Reigate 100%

HUB Pension Solutions Limited Software development Belfast 100%

Just Re 1 Limited

5

Investment activity Reigate 100%

Just Re 2 Limited

5

Investment activity Reigate 100%

Just Retirement (Holdings) Limited Holding company Reigate 100%

Just Retirement (South Africa) Holdings (Pty) Limited Holding company South Africa 100%

Just Retirement Life (South Africa) Limited Life assurance South Africa 100%

Just Retirement Limited Life assurance Reigate 100%

Just Retirement Management Services Limited Management services Reigate 100%

Just Retirement Money Limited Provision of lifetime mortgage products Reigate 100%

Partnership Group Holdings Limited Holding company Reigate 100%

Partnership Holdings Limited Holding company Reigate 100%

Partnership Home Loans Limited Provision of lifetime mortgage products Reigate 100%

Partnership Life Assurance Company Limited Life assurance Reigate 100%

Partnership Life US Company Management services USA 100%

Partnership Services Limited

5

Management services Reigate 100%

The Open Market Annuity Service Limited

5

Software solutions Reigate 100%

TOMAS Online Development Limited

5

Software development Belfast 100%

Enhanced Retirement Limited Dormant Reigate 100%

HUB Digital Solutions Limited Dormant Reigate 100%

HUB Online Development Limited Dormant Belfast 100%

HUB Transfer Solutions Limited Dormant Reigate 100%

JRP Group Limited Dormant Reigate 100%

JRP Nominees Limited Dormant Reigate 100%

Just Annuities Limited Dormant Reigate 100%

Just Equity Release Limited Dormant Reigate 100%

152 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

Principal activity Registered oce

Percentage of

nominal share

capital and voting

rights held

Just Incorporated Limited Dormant Reigate 100%

Just Management Services (Proprietary) Limited Dormant South Africa 100%

Just Protection Limited Dormant Reigate 100%

Just Retirement Finance plc Dormant Reigate 100%

Just Retirement Nominees Limited Dormant Reigate 100%

Just Retirement Solutions Limited Dormant Reigate 100%

PAG Finance Limited Dormant Jersey 100%

PAG Holdings Limited Dormant Jersey 100%

PASPV Limited Dormant Reigate 100%

PayingForCare Limited Dormant Reigate 100%

PLACL RE 1 Limited Dormant Reigate 100%

PLACL RE 2 Limited Dormant Reigate 100%

TOMAS Acquisitions Limited Dormant Reigate 100%

Corinthian Group Limited Holding company Reigate 75%

HUB Pension Consulting Limited Pension consulting Reigate 75%

Spire Platform Solutions Limited

2,3

Software development Portsmouth 33%

4

1Class “A” and Class “B” ordinary shares. 2Class “B” ordinary shares. 330 June year end. 4Control is based on Board representation rather than percentage holding.

5 The financial statements of these subsidiary undertakings have not been audited for the year ended 31 December 2020. These subsidiary undertakings are exempt from the requirements of the

Companies Act 2006 relating to the audit of individual financial statements by virtue of Section 479A of the Companies Act 2006.

Registered oces

Reigate oce: Belfast oce: South Africa oce:

Enterprise House 3rd Floor, Arena Building Oce G01, Big Bay Oce Park

Bancroft Road Ormeau Road 16 Beach Estate Boulevard, Big Bay

Reigate, Surrey RH2 7RU Belfast BT7 1SH Western Cape 7441

Jersey oce: United States oce: Portsmouth oce:

44 Esplanade 2711 Centerville Road, Suite 400 Building 3000, Lakeside North Harbour

St Helier Wilmington Portsmouth

Jersey JE4 9WG Delaware Hampshire PO6 3EN

On 25 November 2020 the Parent Company invested in a cell of a Protected Cell Company, White Rock Insurance (Gibraltar) PCC Limited. Financial

support provided by the Group is limited to amounts required to cover transactions between the cell and the Group. At 31 December 2020 the Group had

provided £10m financial support in the form of a letter of credit.

On 24 July 2019 the Group disposed of its 33% interest in associated undertaking Eldercare Group Limited. At disposal, the Group’s share of the net assets

of Eldercare Group Limited recognised on the Consolidated statement of financial position under the equity method of accounting was £0.3m.

On 4 July 2018 the Group subscribed to 33% of the ordinary share capital of Spire Platform Solutions Limited. The Group has majority representation on

the Board of the company, giving it eective control, and therefore consolidates the company in full in the results of the Group.

On 17 August 2018 the Group acquired 75% of the ordinary share capital of Corinthian Group Limited.

The non-controlling interests of the minority shareholders of Spire Platform Solutions Limited and Corinthian Group Limited totalling £(0.2)m have been

recognised in the year.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

36 GROUP ENTITIES continued

153

FNNIL SAEET

37 RELATED PARTIES

The Group has related party relationships with its key management personnel and associated undertakings. All transactions with related parties are

carried out on an arm’s length basis.

Key management personnel comprise the Directors of the Company. There were no material transactions between the Group and its key management

personnel other than those disclosed below.

Key management compensation is as follows:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Short-term employee benefits 3.6 2.2

Share-based payments 1.2 1.0

Total key management compensation 4.8 3.2

Loans owed by Directors 0.4 0.4

The loan advances to Directors accrue interest fixed at 4% per annum and are repayable in whole or in part at any time.

38 LTIMATE PARENT COMPANY AND ULTIMATE CONTROLLING PARTY

The Company is the ultimate Parent Company of the Group and has no controlling interest.

39 POST BALANCE SHEET EVENTS

There are no material post balance sheet events that have taken place between 31 December 2020 and the date of this report.

154 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

STATEMENT OF CHANGES IN EQUITY OF THE COMPANY

FOR THE YEAR ENDED 31 DECEMBER 2020

Year ended 31 December 2020

Share

capital

£m

Share

premium

£m

Merger

reserve

£m

Shares held

by trusts

£m

Accumulated

profit

£m

Total

shareholders’

equity

£m

Tier 1 notes

£m

Total

£m

At 1 January 2020 103.5 93.3 501.2 (6.0) 247.1 939.1 294.0 1,233.1

Profit for the year – – – – 89.1 89.1 – 89.1

Total comprehensive income for the year – – – – 89.1 89.1 – 89.1

Contributions and distributions

Shares issued 0.3 – – – – 0.3 – 0.3

Dividends – – – – (0.1) (0.1) – (0.1)

Interest paid on Tier 1 notes – – – – (28.1) (28.1) – (28.1)

Share-based payments – – – 0.6 6.1 6.7 – 6.7

Transfer from merger reserve – – (13.7) – 13.7 – – –

Total contributions and distributions 0.3 – (13.7) 0.6 (8.4) (21.2) – (21.2)

At 31 December 2020 103.8 93.3 487.5 (5.4) 327.8 1,007.0 294.0 1,301.0

Year ended 31 December 2019

Share

capital

£m

Share

premium

£m

Merger

reserve

£m

Shares held

by trusts

£m

Accumulated

profit

£m

Total

shareholders’

equity

£m

Tier 1 notes

£m

Total

£m

At 1 January 2019 94.1 93.3 532.7 (6.2) 260.6 974.5 – 974.5

Loss for the year – – – – (96.3) (96.3) – (96.3)

Total comprehensive income for the year – – – – (96.3) (96.3) – (96.3)

Contributions and distributions

Shares issued 9.4 – 64.4 – – 73.8 – 73.8

Tier 1 notes issued (net of costs) – – – – – – 294.0 294.0

Dividends – – – – (0.2) (0.2) – (0.2)

Interest paid on Tier 1 notes – – – – (16.8) (16.8) – (16.8)

Share-based payments – – – 0.2 3.9 4.1 – 4.1

Transfer from merger reserve – – (95.9) – 95.9 – – –

Total contributions and distributions 9.4 – (31.5) 0.2 82.8 60.9 294.0 354.9

At 31 December 2019 103.5 93.3 501.2 (6.0) 247.1 939.1 294.0 1,233.1

155

FNNIL SAEET

STATEMENT OF FINANCIAL POSITION OF THE COMPANY

AS AT 31 DECEMBER 2020

Company number: 08568957 Note

2020

£m

2019

£m

Assets

Non-current assets

Investments in Group undertakings

2 1,024.7 942.5

Loans to Group undertakings 3 1,000.0 825.0

2,024.7 1,767.5

Current assets

Financial investments 4 45.0 101.8

Prepayments and accrued income 0.6 1.1

Amounts due from Group undertakings 15.7 24.2

Cash and cash equivalents 10.4 4.4

71.7 131.5

Total assets 2,096.4 1,899.0

Equity

Share capital 5 103.8 103.5

Share premium 5 93.3 93.3

Merger reserve 487.5 501.2

Shares held by trusts (5.4) (6.0)

Accumulated profit 327.8 247.1

Total equity attributable to ordinary shareholders of Just Group plc 1,007.0 939.1

Tier 1 notes 294.0 294.0

Total equity 1,301.0 1,233.1

Liabilities

Non-current liabilities

Subordinated debt

6 777.5 602.3

777.5 602.3

Current liabilities

Financial liabilities

7 – 45.9

Other payables 17.9 17.7

17.9 63.6

Total liabilities 795.4 665.9

Total equity and liabilities 2,096.4 1,899.0

The Company has taken advantage of the exemption in Section 408 of the Companies Act 2006 not to present its own income statement and

statement of comprehensive income. The profit arising in the year amounts to £89.1m (2019: loss of £96.3m).

The financial statements were approved by the Board of Directors on 15 March 2021 and were signed on its behalf by:

Andy Parsons

Director

156 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

STATEMENT OF CASH FLOWS OF THE COMPANY

FOR THE YEAR ENDED 31 DECEMBER 2020

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Cash flows from operating activities

Profit/(loss) before tax 85.5 (101.0)

Impairment of investments in Group undertakings 13.7 95.9

Share-based payments 0.8 (1.0)

Income from shares in and loans to Group undertakings (118.1) (14.1)

Interest income (48.1) (34.3)

Interest expense 47.1 35.5

Decrease in prepayments and accrued income 0.1 3.6

Decrease in other payables (73.9) (6.0)

Taxation paid 6.4 –

Net cash outflow from operating activities (86.5) (21.4)

Cash flows from investing activities

Decrease in financial assets 4.5 70.3

Capital injections in subsidiaries (90.0) (90.0)

Loans to subsidiaries (175.0) (425.0)

Dividends received 90.0 –

Net cash outflow from investing activities (170.5) (444.7)

Cash flows from financing activities

Issue of ordinary share capital (net of costs) 0.3 73.8

Proceeds from issue of Tier 1 notes (net of costs) – 292.7

Increase in borrowings (net of costs) 249.4 124.5

Dividends paid (0.1) (0.2)

Coupon paid on Tier 1 notes – (2.8)

Net interest received/(paid) on borrowings

2.6 (3.0)

Net cash inflow from financing activities

252.2 485.0

Net increase/(decrease) in cash and cash equivalents (4.8) 18.9

Cash and cash equivalents at start of year 60.2 41.3

Cash and cash equivalents at end of year 55.4 60.2

Cash available on demand 10.4 4.4

Units in liquidity funds 45.0 55.8

Cash and cash equivalents at end of year 55.4 60.2

157

FNNIL SAEET

NOTES TO THE COMPANY FINANCIAL STATEMENTS

1 ACCOUNTING POLICIES

General information

Just Group plc (formerly JRP Group plc) (the “Company”) was incorporated and registered in England and Wales on 13 June 2013 as a public company

limited by shares.

1.1 Basis of preparation

The financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the

Companies Act 2006. The accounting policies followed in the Company financial statements are the same as those in the consolidated accounts with

the exception that the Company applies IFRS 9 in its separate financial statements. Values are expressed to the nearest £0.1m.

1.2 Net investment income

Investment income is accrued up to the balance sheet date. Investment expenses and charges are recognised on an accruals basis.

1.3 Taxation

Taxation is based on profits for the year as determined in accordance with the relevant tax legislation, together with adjustments to provisions

forprior periods. Deferred taxation is provided on temporary dierences that have originated but not reversed at the balance sheet date, where

transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance

sheet date. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can

beregarded as more likely than not that there will be sucient taxable profits to utilise carried forward tax losses against which the reversal of

underlying timing dierences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which

the temporary dierences are expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance

sheet date. Deferred tax is measured on an undiscounted basis.

1.4 Investments in Group undertakings

Shares in subsidiary undertakings are stated at cost less any provision for impairment.

1.5 Loans to Group undertakings

Investments in subordinated debt issued by subsidiary companies are valued at amortised cost net of impairment for expected credit losses.

Expected credit losses are calculated on a 12 month forward-looking basis where the debt has low credit risk or has had no significant increase in

credit risk since the debt originated.

1.6 Financial investments

Financial investments are designated at fair value through profit or loss on initial recognition.

1.7 Share-based payments

The Group oers share award and option plans for certain key employees and a Save As You Earn scheme for all employees. The share-based payment

plans operated by the Group are all equity-settled plans. Under IFRS 2, Share-based payment, where the Company, as the Parent Company, has the

obligation to settle the options or awards of its equity instruments to employees of its subsidiary undertakings, and such share-based payments are

accounted for as equity-settled in the Group financial statements, the Company records an increase in the investment in subsidiary undertakings for

the value of the share options and awards granted with a corresponding credit entry recognised directly in equity. The value of the share options and

awards granted is based upon the fair value of the options and awards at the grant date, the vesting period and the vesting conditions.

2 INVESTMENTS IN GROUP UNDERTAKINGS

Shares in

Group

undertakings

£m

At 1 January 2020 942.5

Additions 95.9

Provision for impairment (13.7)

At 31 December 2020 1,024.7

At 1 January 2019 943.3

Additions 95.1

Provision for impairment (95.9)

At 31 December 2019 942.5

Details of the Company’s investments in the ordinary shares of subsidiary undertakings are given in note 36 to the Group financial statements.

Additions to shares in Group undertakings relate to shares issued by Just Retirement Group Holdings Limited and the cost of share-based payments

for services provided by employees of subsidiary undertakings to be satisfied by shares issued by the Company.

Investments in Group undertakings are assessed annually to assess whether there is any indication of impairment.

As at 31 December 2020, the market capitalisation of the Group was less than its net assets. The shortfall between the market capitalisation and net

assets of the Group was an indicator of possible impairment of Just Group plc’s investments in its life company subsidiaries, JRL and PLACL.

158 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

2 INVESTMENTS IN GROUP UNDERTAKINGS continued

Impairment testing was therefore carried out to assess the recoverable amount of the investments in JRL and PLACL at 31 December 2020. The

testing assessed the recoverable amount for each subsidiary through a value-in-use calculation based on the expected emergence of excess capital

under Solvency II for each subsidiary.

The carrying amount of the investment in JRL at 31 December 2020 was £513m. The recoverable amount was calculated to be in excess of this

amount, indicating that no impairment of the Group’s investment in JRL was required.

The carrying amount of the investment in PLACL at 31 December 2020 was £474m. The recoverable amount was calculated as £460m. Accordingly, a

provision for impairment of £14m in respect of the investment in PLACL has been recognised at 31 December 2020.

Upon acquisition of the investment in PLACL in 2016, Just Group plc recognised a merger reserve of £532m. Following the impairment in the

investment in PLACL recognised at 31 December 2020, an amount of £14m has been transferred from the merger reserve to the accumulated profit

reserve.

The calculation of value in use for JRL and PLACL uses cash flow projections based on the emergence of surplus for in-force business on a Solvency II

basis, over a 25 year period, together with new business cash flows on a Solvency II basis set out in the Group’s business plan approved by the Board.

The pre-tax discount rates used were 11.7% for JRL and 9.3% for PLACL. The discount rates were determined using a weighted average cost of capital

approach, adjusted for specific risks attributable to the businesses, with the lower rate used for PLACL reflecting that it is largely closed to new

business.

A one percentage point increase in the discount rates used would reduce the value in use of JRL and PLACL by £132m and £36m respectively.

The Directors have not identified a reasonably possible change in assumptions which would result in the carrying amount of the Group’s investment

in JRL to exceed its recoverable amount. For PLACL, future distributions to the Company are expected to reduce the value in use.

The discount rate used to determine the recoverable amount of Just Group plc’s investment in JRL is consistent with the discount rate used to assess

the recoverable amount of goodwill in relation to JRL recognised in the Group’s consolidated financial statements (see note 14 to the Group’s

consolidated financial statements). No impairment was required to the carrying value of the goodwill relating to JRL at 31 December 2020.

3 LOANS TO GROUP UNDERTAKINGS

Loans to

Group

undertakings

£m

At 1 January 2020 825.0

Additions 175.0

At 31 December 2020 1,000.0

At 1 January 2019 400.0

Additions 425.0

At 31 December 2019 825.0

Details of the Company’s loans to Group undertakings are as follows:

2020

£m

2019

£m

9.375% perpetual restricted Tier 1 contingent convertible debt (call option in April 2024) issued by

Just Retirement Limited in April 2019 250.0 250.0

9.375% perpetual restricted Tier 1 contingent convertible debt (call option in April 2024) issued by

Partnership Life Assurance Company Limited in April 2019 50.0 50.0

9.0% 10 year subordinated debt 2026 (Tier 2) issued by Just Retirement Limited in October 2016 250.0 250.0

8.125% 10 year subordinated debt 2029 (Tier 2) issued by Just Retirement Limited in October 2019 25.0 25.0

8.2% 10 year subordinated debt 2030 (Tier 2) issued by Just Retirement Limited in May 2020 100.0 –

7.0% 10.5 year subordinated debt 2031 (Tier 2) issued by Just Retirement Limited in November 2020 75.0 –

8.125% 10 year subordinated debt 2029 (Tier 2) issued by Partnership Life Assurance Company Limited in October 2019 100.0 100.0

7.0% 10.5 year subordinated debt 2031 (Tier 2) issued by Partnership Life Assurance Company Limited in November 2020 100.0 –

3.519% 7 year subordinated debt 2025 (Tier 3) issued by Just Retirement Limited in May 2018 – 100.0

5.0% 7 year subordinated debt 2025 (Tier 3) issued by Just Retirement Limited in December 2018 50.0 50.0

Total 1,000.0 825.0

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

159

FNNIL SAEET

4 FINANCIAL INVESTMENTS

Fair value Cost

2020

£m

2019

£m

2020

£m

2019

£m

Units in liquidity funds 45.0 55.8 45.0 55.8

Deposits with credit institutions – 0.1 – 0.1

Derivative financial assets – 45.9 – –

Total 45.0 101.8 45.0 55.9

All financial investments are measured at fair value through the profit or loss and designated as such on initial recognition. All assets for which fair

value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, based on the lowest level input that is

significant to the fair value measured as a whole.

In the fair value hierarchy, units in liquidity funds are all classified as Level 1 and derivative financial assets, are all classified as Level 2. There have

been no transfers between levels during the year.

5 SHARE CAPITAL

The allotted and issued ordinary share capital of the Company at 31 December 2020 is detailed below:

Number of £0.10

ordinary shares

Share

capital

£m

Share

premium

£m

Merger

reserve

£m

Total

£m

At 1 January 2020 1,035,081,664 103.5 93.3 501.2 698.0

Shares issued 3,046,892 0.3 – – 0.3

Provision for impairment in investment in Group undertakings (see note 2) – – – (13.7) (13.7)

At 31 December 2020 1,038,128,556 103.8 93.3 487.5 684.6

At 1 January 2019 941,068,882 94.1 93.3 532.7 720.1

Shares issued 94,012,782 9.4 – 64.4 73.8

Provision for impairment in investment in Group undertakings (see note 2) – – – (95.9) (95.9)

At 31 December 2019 1,035,081,664 103.5 93.3 501.2 698.0

On 14 March 2019, the Company completed the placing of 94,012,782 ordinary shares of 10 pence each at a price of 80 pence per share to both

existing and new ordinary equity shareholders, raising gross proceeds of £75m. The placing price represents a discount of 6.7% on the market price of

85.3 pence per share at the time of the placing. The placing was achieved by the Company acquiring 100% of the equity of a limited company for

consideration of the 94,012,782 new ordinary shares issued. Accordingly, merger relief under Section 612 of the Companies Act 2006 applies, and

share premium has not been recognised in respect of this issue of shares. A merger reserve has been recognised representing the premium over the

nominal value of the shares issued.

Consideration for the acquisition of 100% of the equity shares of Partnership Assurance Group plc in 2016 consisted of a new issue of shares in the

Company. Accordingly, merger relief under Section 612 of the Companies Act 2006 applies, and share premium has not been recognised in respect of

this issue of shares. A merger reserve has been recognised representing the dierence between the nominal value of the shares issued and the net

assets of Partnership Assurance Group plc acquired.

6 SUBORDINATED DEBT

Details of the Company’s subordinated debt are shown in note 25 to the Group financial statements.

7 FINANCIAL LIABILITIES

The Company had a cash flow swap derivative financial liability with subsidiary undertaking, Just Retirement Limited, which was closed out in 2020.

160 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

8 RELATED PARTY TRANSACTIONS

All transactions with related parties are carried out on an arm’s length basis.

(a) Trading transactions and balances

The following transactions were made with related parties during the year:

Year ended

31 December

2020

£m

Year ended

31 December

2019

£m

Sta costs, Directors’ remuneration, operating expenses and management fees charged by Just Retirement Management

Services Limited 18.1 15.9

Loan advances to Just Retirement Limited 175.0 275.0

Loan advances to Partnership Life Assurance Company Limited 100.0 150.0

Interest on loan balances charged to Just Retirement Limited 58.3 38.1

Interest on loan balances charged to Partnership Life Assurance Company Limited 13.5 3.9

Dividends from Partnership Assurance Group Limited 90.0 –

The following balances in respect of related parties were owed by the Company at the end of the year:

2020

£m

2019

£m

Just Retirement Limited (0.2) (0.7)

Just Retirement Management Services Limited (4.6) (7.7)

The following balances in respect of related parties were owed to the Company at the end of the year:

2020

£m

2019

£m

HUB Financial Solutions Limited 0.3 –

Just Retirement Group Holdings Limited 0.1 –

Partnership Life Assurance Company Limited 0.7 –

TOMAS Online Development Limited – 0.1

Loan to Just Retirement Limited (including interest) 759.2 681.9

Loan to Partnership Life Assurance Company Limited (including interest) 251.8 151.6

Amounts owed for Group corporation tax 3.6 9.8

(b) Key management compensation

Key management personnel comprise the Directors of the Company.

Key management compensation is disclosed in note 37 to the Group financial statements.

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

161

FNNIL SAEET

ADDITIONAL FINANCIAL INFORMATION

The following additional financial information is unaudited.

SOLVENCY II SURPLUS GENERATION

The table below shows the expected future emergence of Solvency II surplus from the in-force book in excess of 100% of SCR over the next 35 years.

The amounts are shown undiscounted and exclude Excess Own Funds at 31 December 2020 of £1,076m.

The core surplus generation assumes that future property growth is in line with the best estimate assumption of 3.8%. The cash flow amounts shown

are before the interest and principal payments on all debtobligations.

The projection does not allowfor the impact of future new business, and return on surplus assets held or dividends from 31 December 2020. This is a

change from prior year disclosure that had any surplus emerging assumed to roll up and earn an investment return, contributing to further surplus,

which reduces the surplus emerging presented below.

Year

Core surplus

generation

£m

TMTP

amortisation

£m

Surplus

generation

£m

2021 319 (155) 164

2022 319 (157) 162

2023 303 (157) 146

2024 283 (157) 126

2025 273 (157) 116

2026 270 (157) 113

2027 253 (157) 96

2028 245 (157) 88

2029 242 (157) 85

2030 227 (157) 70

2031 222 (157) 65

2032 210 - 210

2033 199 - 199

2034 194 - 194

2035 180 - 180

2036 177 - 177

2037 162 - 162

2038 152 - 152

2039 144 - 144

2040 135 - 135

2041 – 2045 498 - 498

2046 – 2050 265 - 265

2051 – 2055 92 - 92

162 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

SOLVENCY II SURPLUS GENERATION continued

New business contribution

The table below shows the expected future emergence of Solvency II surplus arising from 2020 new business in excess of 100% of SCR over 35 years

from the point of sale. It shows the initial Solvency II capital strain in 2020. The amounts are shown undiscounted.

Year

Surplus

generation

£m

Point of sale (48.0)

Year 1 15.3

Year 2 14.9

Year 3 14.5

Year 4 14.4

Year 5 13.1

Year 6 12.9

Year 7 12.3

Year 8 12.2

Year 9 12.0

Year 10 12.2

Year 11 10.7

Year 12 10.8

Year 13 10.5

Year 14 10.1

Year 15 9.6

Year 16 10.3

Year 17 9.9

Year 18 9.5

Year 19 8.8

Year 20 8.5

Years 21 to 25 35.4

Years 26 to 30 20.0

Years 31 to 35 6.5

ADDITIONAL FINANCIAL INFORMATION CONTINUED

163

FNNIL SAEET

FINANCIAL INVESTMENTS CREDIT RATINGS

The sector analysis of the Group’s financial investments portfolio by credit rating is shown below:

Total

£m %

AAA

£m

AA

£m

A

£m

BBB

£m

BB or

below

£m

Unrated

£m

Basic materials 199.9 0.9 – – 104.7 90.6 4.6 –

Communications and technology 1,188.9 5.1 37.6 82.9 179.6 850.8 38.0 –

Auto manufacturers 385.0 1.7 – 43.3 84.1 234.9 22.7 –

Consumer (staples including healthcare) 976.6 4.2 77.2 261.2 238.7 334.1 43.5 21.9

Consumer (cyclical) 112.8 0.5 – – 3.1 80.8 0.5 28.4

Energy 462.7 2.0 – 167.4 93.0 132.1 70.2 –

Banks 1,422.5 6.1 158.0 150.3 568.1 455.8 85.4 4.9

Insurance 824.9 3.5 – 109.6 184.9 530.4 – –

Financial – other 462.5 2.0 80.2 140.9 58.1 111.8 12.7 58.8

Real estate including REITs 771.3 3.3 43.5 18.0 353.9 301.0 54.9 –

Government 1,340.4 5.8 442.2 687.1 132.0 79.1 – –

Industrial 839.6 3.6 – 35.0 100.7 538.1 24.1 141.7

Utilities 2,029.9 8.7 – 29.3 837.2 1,163.4 – –

Commercial mortgages 707.0 3.0 148.1 138.1 276.2 144.6 – –

Infrastructure loans 1,220.5 5.2 87. 2 125.8 230.1 730.8 46.6 –

Other 38.0 0.2 – – 38.0 – – –

Corporate/government bond total 12,982.5 55.8 1,074.0 1,988.9 3,482.4 5,778.3 403.2 255.7

Lifetime mortgages 8,261.1 35.5

Liquidity funds 1,128.5 4.8

Derivatives and collateral 897.7 3.9

Total 23,269.8 100.0

164 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

INFORMATION FOR SHAREHOLDERS

ANNUAL GENERAL MEETING

The 2021 AGM will be held on Tuesday 11 May 2021 at 10am at our registered oce, Enterprise House, Bancroft Road, Reigate, Surrey RH2 7RP. More

information about the 2021 AGM can be found in the Notice of Meeting. Due to the impact of COVID-19, the exact form of the AGM will not be known

until closer to the time. Please look out for regulatory announcements and/or information on the Group website.

SHAREHOLDER PROFILE AS AT 31 DECEMBER 2020

Holdings

No. of

holders

% of

holders

No. of

shares

% of issued

share capital

1–5,000 521 50.58 549,957 0.05

5,001–10,000 71 6.89 538,200 0.05

10,001–100,000 167 16.21 6,852,125 0.66

100,001–1,000,000 144 13.98 57,10 6,6 01 5.50

1,000,001–10,000,000 98 9.52 321,756,462 30.99

10,000,001–20,000,000 17 1.65 217,861,246 20.99

20,000,001 and over 12 1.17 433,463,965 41.76

Totals 1,030 100.00 1,038,128,556 100.00

JUST GROUP PLC SHARE PRICE

Just’s ordinary shares have a premium listing on the London Stock Exchange’s main market for listed securities and are listed under the symbol Just. Current

and historical share price information is available on our website http://www.justgroupplc.co.uk/investors/data-and-share-information/Share-monitor and

also on many other websites.

ELECTRONIC COMMUNICATIONS

Shareholders are encouraged to elect to receive shareholder documents electronically to receive shareholder information quickly and securely, and

to help us save paper, by registering with Shareview at www.shareview.co.uk.

Shareholders who have registered will be sent an email notification whenever shareholder documents are available on the Company’s website. When

registering, shareholders will need their shareholder reference number which can be found on their share certificate or Form of Proxy.

INVESTOR RELATIONS ENQUIRIES

For all institutional investor relations enquiries about the Group, please contact our Investor Relations department, whose contact details can be

found at https://www.justgroupplc.co.uk/investors/investor-contacts. Individual shareholders with queries regarding their shareholding in Just Group

plc should contact our Registrar, Equiniti Limited.

Shareholders can keep up to date with all the latest Just Group plc news and events by registering with our Alert Service http://justgroupplc.co.uk/

investors/alert-service. Just select the information of interest to you, such as results, trading updates, AGM and other meetings, and you will then be

notified by email when this information is available to view on our website.

Copies of our Annual Report and Accounts can be obtained by contacting our Registrar, Equiniti Limited.

REGISTRAR

The Company’s register of shareholders is maintained by our Registrar, Equiniti Limited. All enquiries regarding shareholder administration, including

dividends, lost share certificates or changes of address, should be communicated in writing, quoting Just Group plc’s Company reference number

3947 to the address below or by calling 0371 384 2787 for callers from the UK. Lines are open 8.30am to 5.30pm Monday to Friday, excluding UK Bank

Holidays, or +44 (0)121 415 0096 for callers from outside the UK. Shareholders can also view and manage their shareholdings online by registering at

www.shareview.co.uk/myportfolio.

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex

BN99 6DA

165

FNNIL SAEET

DIVIDEND MANDATES

We strongly encourage all shareholders to receive their cash dividends by direct transfer to a bank or building society account. This ensures that

dividends are credited promptly to shareholders without the cost and inconvenience of having to pay in dividend cheques at a bank. If you wish to

use this cost-eective and simple facility, please elect via www.shareview.co.uk or contact our Registrar, Equiniti Limited.

WARNING ABOUT UNSOLICITED APPROACHES TO SHAREHOLDERS AND “BOILER ROOM” SCAMS

In recent years, many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning

investment matters. These are typically from overseas based “brokers” who target UK shareholders, oering to sell them what often turn out to be

worthless or high risk shares in UK investments. These operations are commonly known as “boiler rooms”. These “brokers” can be very persistent and

persuasive. Just Group plc shareholders are advised to be extremely wary of such approaches and to only deal with firms authorised by the FCA. You

can check whether an enquirer is properly authorised and report scam approaches by contacting the FCA on www.fca.org.uk/consumers or by calling

the FCA Consumer Helpline: 0800 111 6768.

CAUTIONARY STATEMENT AND FORWARD-LOOKING STATEMENTS

This Annual Report has been prepared for, and only for, the members of Just Group plc (the “Company”) as a body, and for no other persons. The

Company, its Directors, employees, agents and advisers do not accept or assume responsibility to any other person to whom this document is shown

or into whose hands it may come and any such responsibility or liability is expressly disclaimed.

By their nature, the statements concerning the risks and uncertainties facing the Group in this Annual Report involve uncertainty since future events

and circumstances can cause results and developments to dier materially from those anticipated. This Annual Report contains, and we may make

other statements (verbal or otherwise) containing, forward-looking statements in relation to the current plans, goals and expectations of Just Group

plc and its subsidiaries (the “Group”) relating to its or their future financial condition, performance, results, strategy and/or objectives. Statements

containing the words: “believes”, “intends”, “expects”, “plans”, “seeks”, “targets”, “continues” and “anticipates” or other words of similar meaning are

forward-looking (although their absence does not mean that a statement is not forward-looking). Forward-looking statements involve risk and

uncertainty because they are based on information available at the time they are made, based on assumptions and assessments made by the

Company in light of its experience and its perception of historical trends, current conditions, future developments and other factors which the

Company believes are appropriate and relate to future events and depend on circumstances which may be or are beyond the Group’s control. For

example, certain insurance risk disclosures are dependent on the Group’s choices about assumptions and models, which by their nature are

estimates. As such, although the Group believes its expectations are based on reasonable assumptions, actual future gains and losses could dier

materially from those that we have estimated. Other factors which could cause actual results to dier materially from those estimated by forward-

looking statements include, but are not limited to: domestic and global political, economic and business conditions (such as the UK’s exit from the EU

and the terms of any trade deal which may be negotiated between the UK and the EU; or arising from the COVID-19 outbreak or other infectious

diseases); asset prices; market-related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets

generally; the policies and actions of governmental and/or regulatory authorities including, for example, new government initiatives related to the

provision of retirement benefits or the costs of social care; the impact of inflation and deflation; market competition; changes in assumptions in

pricing and reserving for insurance business (particularly with regard to mortality and morbidity trends, gender pricing and lapse rates); risks

associated with arrangements with third parties, including joint ventures and distribution partners and the timing, impact and other uncertainties

associated with future acquisitions, disposals or other corporate activity undertaken by the Group and/or within relevant industries; inability of

reinsurers to meet obligations or unavailability of reinsurance coverage; default of counterparties; information technology or data security breaches;

the impact of changes in capital, solvency or accounting standards; and tax and other legislation and regulations in the jurisdictions in which the

Group operates (including changes in the regulatory capital requirements which the Company and its subsidiaries are subject to). As a result, the

Group’s actual future financial condition, performance and results may dier materially from the plans, goals and expectations set out in the

forward-looking statements. The forward-looking statements only speak as at the date of this document and reflect knowledge and information

available at the date of preparation of this Annual Report. The Group undertakes no obligation to update these forward-looking statements or any

other forward-looking statement it may make (whether as a result of new information, future events or otherwise), except as may be required by law.

Persons receiving this Annual Report should not place undue reliance on forward-looking statements. Past performance is not an indicator of future

results. The results of the Company and the Group in this Annual Report may not be indicative of, and are not an estimate, forecast or projection of,

the Group’s future results. Nothing in this Annual Report should be construed as a profit forecast.

166 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

DIRECTORS AND ADVISERS

DIRECTORS

Non-Executive Directors:

John Hastings-Bass, Chair

Keith Nicholson, Senior Independent Director

Paul Bishop

Ian Cormack

Michelle Cracknell

Steve Melcher

Kalpana Shah

Clare Spottiswoode

Executive Directors:

David Richardson, Group Chief Executive Ocer and Managing Director, UK Corporate Business

Andy Parsons, Group Chief Financial Ocer

GROUP COMPANY SECRETARY

Simon Watson

JUST GROUP REGISTERED OFFICE AND REIGATE OFFICE

Enterprise House

Bancroft Road

Reigate

Surrey RH2 7RP

Website: www.justgroupplc.co.uk

Tel: +44 (0)1737 233296

Registered in England and Wales number 08568957

CORPORATE BROKERS

J.P. Morgan Cazenove Numis Securities Ltd

25 Bank Street The London Stock Exchange Building

Canary Wharf 10 Paternoster Square

London London

E14 5JP EC4M 7LT

AUDITOR

PricewaterhouseCoopers LLP

7 More London Riverside

London

SE1 2RT

CORPORATE LAWYERS

Hogan Lovells International LLP

Atlantic House

Holborn Viaduct

London

EC1A 2FG

167

FNNIL SAEET

GLOSSARY

Acquisition costs – comprise the direct costs (such as commissions) of

obtaining new business.

Adjusted earnings per share (adjusted EPS) – an APM, this measures

earnings per share based on adjusted operating profit after attributed

tax, rather than IFRS profit before tax. This measure is calculated by

taking the adjusted operating profit APM, reduced for the eective tax

rate (19% for 2020), and dividing this result by the weighted average

number of shares in issue by the Group for the period. For remuneration

purposes (see Directors Remuneration Report), the measure is calculated

as adjusted operating profit before tax divided by the weighted average

number of shares in issue by the Group for the period.

Adjusted operating profit before tax – an APM and one of the Group’s

KPIs, this is the sum of the new business operating profit and in-force

operating profit, operating experience and assumption changes, other

Group companies’ operating results, development expenditure and

reinsurance and financing costs. The Board believes it provides a better

view of the longer-term performance of the business than profit before

tax because it excludes the impact of short-term economic variances

and other one-o items. It excludes the following items that are included

in profit before tax: non-recurring and project expenditure,

implementation costs for cost saving initiatives, investment and

economic profits and amortisation and impairment costs. In addition, it

includes Tier 1 interest (as part of financing costs) which is not included

in profit before tax (because the Tier 1 notes are treated as equity rather

than debt in the IFRS financial statements). Adjusted operating profit is

reconciled to IFRS profit before tax on page 28 of the Business Review.

Alternative performance measure (“APM”) – in addition to statutory

IFRS performance measures, the Group has presented a number of

non-statutory alternative performance measures (“APMs”) within the

Annual Report and Accounts. The Board believes that the APMs used give

a more representative view of the underlying performance of the Group.

APMs are identified in this glossary together with a reference to where

the APM has been reconciled to its nearest statutory equivalent.

APMs which are also KPIs are indicated as such.

Amortisation and impairment of intangible assets – relate to the

amortisation of the Group’s intangible assets, including the amortisation

of intangible assets recognised in relation to the acquisition of

Partnership Assurance Group plc by Just Retirement Group plc.

Auto-enrolment – new legal duties being phased in that require

employers to automatically enrol workers into a workplace pension.

Buy-in – an exercise enabling a pension scheme to obtain an insurance

contract that pays a guaranteed stream of income sucient to cover the

liabilities of a group of the scheme’s members.

Buy-out – an exercise that wholly transfers the liability for paying

member benefits from the pension scheme to an insurer which then

becomes responsible for paying the members directly.

Capped Drawdown – a non-marketed product from Just Group

previously described as Fixed Term Annuity. Capped Drawdown products

ceased to be available to new customers when the tax legislation

changed for pensions in April 2015.

Care Plan – a specialist insurance contract contributing to the costs of

long-term care by paying a guaranteed income to a registered care

provider for the remainder of a person’s life.

Change in insurance liabilities – represents the dierence between the

year-on-year change in the carrying value of the Group’s insurance

liabilities and the year-on-year change in the carrying value of the

Group’s reinsurance assets including the eect of the impact of

reinsurance recaptures.

Combined Group/Just Group – following completion of the merger with

Partnership Assurance Group plc, Just Group plc and each of its

consolidated subsidiaries and subsidiary undertakings comprising the

Just Retirement Group and the Partnership Assurance Group.

Defined benefit de-risking partnering (“DB partnering”) – a DB

de-risking transaction in which a reinsurer has provided reinsurance in

respect of the asset and liability side risks associated with one of our DB

Buy-in transactions.

Defined benefit (“DB”) pension scheme – a pension scheme, usually

backed or sponsored by an employer, that pays members a guaranteed

level of retirement income based on length of membership and earnings.

Defined contribution (“DC”) pension scheme – a work-based or personal

pension scheme in which contributions are invested to build up a fund

that can be used by the individual member to provide retirement benefits.

De-risk/de-risking – an action carried out by the trustees of a pension

scheme with the aim of transferring investment, inflation and longevity

risk from the sponsoring employer and scheme to a third party such as

an insurer.

Development expenditure – captures costs relating to the development

of new products and new initiatives, and is included within adjusted

operating profit.

Drawdown (in reference to Just Group sales or products) – collective

term for Flexible Pension Plan and Capped Drawdown.

Employee benefits consultant – an adviser oering specialist knowledge

to employers on the legal, regulatory and practical issues of rewarding

sta, including non-wage compensation such as pensions, health and

life insurance and profit sharing.

Equity release – products and services enabling homeowners to

generate income or lump sums by accessing some of the value of the

home while continuing to live in it.

Finance costs – represent interest payable on reinsurance deposits and

financing, the interest on the Group’s Tier 2 debt, and, in the prior year,

bank finance costs.

Flexi-access drawdown – the option introduced in April 2015 for DC

pension savers who have taken tax-free cash to take a taxable income

directly from their remaining pension with no limit on withdrawals.

Gross premiums written – total premiums received by the Group in

relation to its Retirement Income and Protection sales in the period,

gross of commission paid.

Guaranteed Guidance – see Pensions Wise.

Guaranteed Income for Life (“GIfL”) – retirement income products

which transfer the investment and longevity risk to the company and

provide the retiree a guarantee to pay an agreed level of income for as

long as a retiree lives. On a “joint-life” basis, continues to pay a

guaranteed income to a surviving spouse/partner. Just provides modern

individually underwritten GIfL solutions.

IFRS net assets – one of the Group’s KPIs, representing the assets

attributable to equity holders.

IFRS profit before tax – one of the Group’s KPIs, representing the profit

before tax attributable to equity holders.

In-force operating profit – an APM capturing the expected margin to

emerge from the in-force book of business and free surplus, and results

from the gradual release of prudent reserving margins over the lifetime

of the policies. In-force operating profit is reconciled to adjusted

operating profit before tax on page 27 of the Business Review, and

adjusted operating profit before tax is reconciled to IFRS profit before tax

on page 28 of the Business Review.

Investment and economic profits – reflect the dierence in the period

between expected investment returns, based on investment and

economic assumptions at the start of the period, and the actual returns

earned. Investment and economic profits also reflect the impact of

assumption changes in future expected risk-free rates, corporate bond

defaults and house price inflation and volatility.

Key performance indicators (“KPIs”) – KPIs are metrics adopted by the

Board which are considered to give an understanding of the Group’s

underlying performance drivers. The Group’s KPIs are Solvency II capital

coverage ratio, Organic capital generation, Underlying organic capital

generation, Retirement Income sales, New business operating profit,

Management expenses, Adjusted operating profit before tax, IFRS profit

before tax and IFRS net assets.

Lifetime mortgage (“LTM”) – an equity release product that allows

homeowners to take out a loan secured on the value of their home,

typically with the loan plus interest repaid when the homeowner has

passed away or moved into long-term care.

168 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

LTM notes – structured assets issued by a wholly owned special purpose

entity, Just Re1 Ltd. Just Re1 Ltd holds two pools of lifetime mortgages,

each of which provides the collateral for issuance of senior and

mezzanine notes to Just Retirement Ltd, eligible for inclusion in its

matching portfolio.

Management expenses – an APM and one of the Group’s KPIs, and are

business as usual costs incurred in running the business, including all

operational overheads. Management expenses are other operating

expenses excluding investment expenses and charges; reassurance

management fees which are largely driven by strategic decisions;

amortisation of acquired intangible assets relating to merger and

acquisition activity; and other costs consisting of movements in the

value of property owned by the Group and SAYE cancellation charges as

both of these are impacted by external factors. Management expenses

are reconciled to IFRS other operating expenses in note 5 to the

consolidated financial statements.

Medical underwriting – the process of evaluating an individual’s current

health, medical history and lifestyle factors, such as smoking, when

pricing an insurance contract.

Net claims paid – represents the total payments due to policyholders

during the accounting period, less the reinsurers’ share of such claims

which are payable back to the Group under the terms of the reinsurance

treaties.

Net investment income – comprises interest received on financial assets

and the net gains and losses on financial assets designated at fair value

through profit or loss upon initial recognition and on financial derivatives.

Net premium revenue – represents the sum of gross premiums written

and reinsurance recapture, less reinsurance premium ceded.

New business margin – the new business operating profit divided by

Retirement Income sales. It provides a measure of the profitability of

Retirement Income sales.

New business operating profit – an APM and one of the Group’s KPIs,

representing the profit generated from new business written in the

yearafter allowing for the establishment of prudent reserves and for

acquisition expenses. New business operating profit is reconciled to

adjusted operating profit before tax on page 27 of the Business Review,

and adjusted operating profit before tax is reconciled to IFRS profit

before tax on page 28 of the Business Review.

New business strain – represents the capital strain on new business

written in the year after allowing for acquisition expense allowances

andthe establishment of Solvency II technical provisions and solvency

capital requirements.

No-negative equity guarantee (“NNEG”) hedge – a derivative

instrument designed to mitigate the impact of changes in property

growth rates on both the regulatory and IFRS balance sheets arising

from the guarantees on lifetime mortgages provided by the Group

whichrestrict the repayment amounts to the net sales proceeds of the

property on which the loan is secured.

Non-recurring and project expenditure – includes any one-o

regulatory, project and development costs. This line item does not

include acquisition integration, or acquisition transaction costs, which

are shown as separate line items.

Operating experience and assumption changes – captures the impact

of the actual operating experience diering from that assumed at the

start of the period, plus the impact of changes to future operating

assumptions applied during the period. It also includes the impact of

anyexpense reserve movements, and other sundry operating items.

Organic capital generation/(consumption) – an APM and one of the

Group’s KPIs. Organic capital generation/(consumption) is the net

increase/(decrease) in Solvency II excess own funds over the year, and

includes surplus from in-force, new business strain, costs overruns and

other expenses, interest and other operating items. It excludes economic

variances, regulatory adjustments, accelerated TMTP amortisation and

capital raising or repayment. The Board believes that this measure

provides a good insight into our objective to improve our capital position.

Organic capital generation/(consumption) is reconciled to Solvency II

excess own funds on page 25 of the Business Review, and Solvency II

excess own funds is reconciled to shareholders’ net equity on an IFRS

basis on page 26 of the Business Review.

Other Group companies’ operating results – the results of Group

companies including our HUB group of companies, which provides

regulated advice and intermediary services, and professional services to

corporates, and corporate costs incurred by Group holding companies

and the overseas start-ups.

Other operating expenses – represent theGroup’s operational

overheads, including personnel expenses, investment expenses and

charges, depreciation of equipment, reinsurance fees, operating leases,

amortisation of intangibles, andotherexpenses incurred in running the

Group’s operations.

Pension Freedoms/Pension Freedom and Choice/Pension Reforms –

theUK Government’s pension reforms, implemented in April 2015.

Pensions Wise – the free and impartial service introduced in April 2015

to provide “Guaranteed Guidance” to defined contribution pension

savers considering taking money from their pensions.

PrognoSys™ – a next generation underwriting system, which is based on

individual mortality curves derived from Just Group’s own data collected

since its launch in 2004.

Regulated financial advice – personalised financial advice for retail

customers by qualified advisers who are regulated by the Financial

Conduct Authority.

Reinsurance and finance costs – the interest on subordinated debt,

bank loans and reinsurance financing, together with reinsurance fees

incurred.

Retirement Income sales (in reference to Just Group sales or products)

– an APM and one of the Group’s KPIs and a collective term for GIfL, DB

andCare Plan. Retirement Income sales are reconciled to IFRS gross

premiums in note 7 to the consolidated financial statements.

Retirement sales (in reference to Just Group sales or products) –

collective term for Retirement Income sales and Drawdown.

Solvency II – an EU Directive that codifies and harmonises the EU

insurance regulation. Primarily this concerns the amount of capital that

EU insurance companies must hold to reduce the risk of insolvency.

Solvency II capital coverage ratio – one of the Group’s KPIs. Solvency II

capital is the regulatory capital measure and is focused on by the Board

in capital planning and business planning alongside the economic capital

measure. It expresses the regulatory view of the available capital as a

percentage of the required capital.

Trustees – individuals with the legal powers to hold, control and

administer the property of a trust such as a pension scheme for the

purposes specified in the trust deed. Pension scheme trustees are

obliged to act in the best interests of the scheme’s members.

Underlying operating profit – an APM and the sum of the new business

operating profit and in-force operating profit. As this measure excludes

the impact of one-o assumption changes and investment variances,

the Board considers it to be a key indicator of the progress of the

business and a useful measure for investors and analysts when

assessing the Group’s financial performance. Underlying operating profit

is reconciled to adjusted operating profit before tax on page 27 of the

Business Review, and adjusted operating profit before tax is reconciled to

IFRS profit before tax on page 28 of the Business Review.

Underlying organic capital generation/(consumption) – an APM and

one of the Group’s KPIs. Underlying organic capital generation/

(consumption) is calculated in the same way as organic capital

generation/(consumption), but also excludes other operating items.

GLOSSARY CONTINUED

169

FNNIL SAEET

ABBREVIATIONS

ABI – Association of British Insurers

AGM – Annual General Meeting

APM – alternative performance measure

Articles – Articles of Association

CMI – Continuous Mortality Investigation

Code – UK Corporate Governance Code

CP – Care Plans

DB – Defined Benefit De-risking Solutions

DC – defined contribution

DSBP – deferred share bonus plan

EBT – employee benefit trust

EPS – earnings per share

ERM – equity release mortgage

ESG – environment, social and governance

EVT – eective value test

FCA – Financial Conduct Authority

FPP – Flexible Pension Plan

FRC – Financial Reporting Council

GDPR – General Data Protection Regulation

GHG – greenhouse gas

GIfL – Guaranteed Income for Life

Hannover – Hannover Life Reassurance Bermuda Ltd

IFRS – International Financial Reporting Standards

IP – intellectual property

ISA – International Standards on Auditing

JRL – Just Retirement Limited

KPI – key performance indicator

LCP – Lane Clark & Peacock LLP

LTIP – Long Term Incentive Plan

LTM – lifetime mortgage

MA – matching adjustment

MAR – Market Abuse Regulation

NAV – net asset value

NNEG – no-negative equity guarantee

ORSA – Own Risk and Solvency Assessment

PAG – Partnership Assurance Group

PILON – payment in lieu of notice

PLACL – Partnership Life Assurance Company Limited

PPF – Pension Protection Fund

PRA – Prudential Regulation Authority

PRI – United Nations Principles for Responsible Investment

PVIF – purchased value of in-force

PwC – PricewaterhouseCoopers LLP

RICS – The Royal Institution of Chartered Surveyors

RPI – retail price inflation

SAPS – Self-Administered Pension Scheme

SAYE – Save As You Earn

SCR – Solvency Capital Requirement

SFCR – Solvency and Financial Condition Report

SID – Senior Independent Director

SIP – Share Incentive Plan

SLI – Secure Lifetime Income

SME – small and medium-sized enterprise

STIP – Short Term Incentive Plan

tCO

2

e – tonnes of carbon dioxide equivalent

TMTP – transitional measures on technical provisions

TSR – Total shareholder return

170 JUST GROUP PLC

ANNUAL REPORT AND ACCOUNTS 2020

NOTES

We can achieve more when we

work together, and that’s why

we’ve donated to the COVID-19

support fund

Just Group plc

Enterprise House

Bancroft Road

Reigate

Surrey RH2 7RP

justgroupplc.co.uk

Js Gop PC Ana Rpr ad Acut 2020