Just Group Annual Report 2021

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FY2021 Annual Report · Just Group

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Just group PLC
Annual Report and accounts 2021

THE RE TIREMENT SPECI ALIST

Growing
the just
way

OUR PURPOSE

We help people
achieve a better
later life

We believe that every
decision we make and
every action we take
should help us achieve
our purpose.

All Just Group plc regulatory announcements,
shareholder information and news releases
can be found on our Group website,
www.justgroupplc.co.uk

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

Homeowners
We provide the resources to improve the later
life of homeowners and their families.

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

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

The Strategic Report has been prepared in accordance
with the UK Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013.

Our purpose
Investment case
Financial and operational highlights
At a glance
Chair’s Statement
Chief Executive Officer’s Statement

Strategic Report
1
2
3
4
6
8
10 Market context
14 Business model
16 Strategic priorities
18 Sustainability and the environment
20 Sustainable investment strategy
22 Sustainability strategy: TCFD disclosure framework
30 Colleagues and culture
36 Relationship with stakeholders
38 Section 172 statement
43 Non-financial information statement
46 Key performance indicators
48 Business review
58 Risk management
60 Principal risks and uncertainties
64 Returned to growth

Governance REPORT
66 Chair’s introduction to Governance
68 Board of Directors
72 Senior leadership
74 Governance in operation
81 Nomination and Governance Committee Report
84 Group Audit Committee Report
90 Group Risk and Compliance Committee Report
93 Directors’ Remuneration Report
109 Directors’ Report
113 Directors’ Responsibilities

Financial Statements
114 Independent Auditors’ Report
123 Consolidated statement of comprehensive income
124 Consolidated statement of changes in equity
125 Consolidated statement of financial position
126 Consolidated statement of cash flows
127 Notes to the consolidated financial statements
174 Statement of changes in equity of the Company
175 Statement of financial position of the Company
176 Statement of cash flows of the Company
177 Notes to the Company financial statements
180 Additional financial information
183 Information for shareholders
185 Directors and advisers
186 Glossary
188 Abbreviations

FEATURE STORIES

INVESTING
THE JUST WAY
PAGE 20

INNOVATION
THE JUST WAY
PAGE 64

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

INVESTMENT CASE

Purpose, PRofitable
and sustainable
growth, innovation
and delivery

Deploying the capabilities of our highly effective new
business franchise to create value from leadership
positions in attractive and high-growth segments of
the UK retirement income market.

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 46

We are increasing organic
capital generation to fuel
profitable and sustainable
growth so we may reward
shareholders

DAVID RICHARDSON
Group Chief Executive Officer

FINANCIAL AND OPERATIONAL HIGHLIGHTS

KEY PERFORMANCE INDICATORS

Return on equity1

9.4%

Underlying organic capital
generation1

£51m

9.7% at 31 December 2020

£18m at 31 December 2020

Retirement Income sales1

£2,674m

New business operating profit 1

£225m

2020: £2,145m, up 25%

2020: £199m, up 13%

Adjusted operating profit before TAX 1

£238m

underlying operating profit1

£210m

2020: £239m, down less than 1%

2020: £193m, up 9%

IFRS (LOSS)/profit before TAX

£(21)m

2020: £237m, down 109%

MANAGEMENT EXPENSES1

£147m

2020: £159m, down 7%

IFRS net assets

£2,440m

Solvency II capital coverage ratio
(estimated)2

164%

2020: £2,490m, down 2%

156% at 31 December 2020

FINANCIAL STRENGTH AND OTHER INDICATORS

Fitch insurer financial strength rating

Fitch issuer default rating

for Just Retirement Limited (2020: A+)

for Just Group plc (2020: A)

AWARDED FURTHER
RECOGNITION FOR
OUTSTANDING SERVICE

FINANCIAL ADVISER:
5 STAR SERVICE AWARD

PENSIONS AGE

CONFIRMIT ACE AWARDS

1 Alternative performance measure (see glossary on page 186 for definition). Underlying organic capital generation is reconciled to Solvency II excess own funds on page 53. Return on equity,

new business operating profit, management expenses, underlying operating profit, and adjusted operating profit are reconciled to IFRS profit before tax on pages 50 and 52.
Retirement Income sales are reconciled to gross premiums written in note 6 to the consolidated financial statements on page 139.

2 Solvency II capital coverage ratio allows for a notional recalculation of transitional measures on technical provisions (“TMTP”) at 31 December 2020. In 2021, the ratio includes the estimated

impact of the biennial reset of TMTP as at 31 December 2021 and the TMTP has been calculated excluding the contribution from the LTMs that have been sold on 22 February 2022.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

AT A GLANCE
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.

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.

ADDRESSABLE MARKET

£1 trillion

MARKET VALUE OF DEFINED
CONTRIBUTION PENSION SAVINGS

£1 trillion

HOMEOWNERS:
ACCESSING PROPERTY WEALTH
People aged 55+ who want to access
wealth locked up in their property.

PROPERTY WEALTH OWNED BY PEOPLE AGED 55+

£3.5 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.

retirement-focused
solutions

…WITH PRODUCTS AND SERVICES

Competitive position:

A leader

Developing

SERVICES

BENEFIT AND COMPETITIVE POSITION

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.

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.

SECURE LIFETIME INCOME (“SLI”)
Launched in 2019, SLI is a tax-efficient 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 innovative approach and underwriting
expertise in this segment delivers better prices
for trustees.

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.

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 efficiently within a single
technology platform.

CARE PLANS (“CP”)
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 offer a tax-efficient solution to making
payments to residential care providers.

Lifetime Mortgages (“LTM”)
Solutions designed for people who want to release
some of the value of their home.

By using our unrivalled intellectual property, Just
provides an individually tailored solution providing
around six-in-ten customers with a lower interest
rate or a higher borrowing amount compared to
standard products. Just provides a range of
lifetime mortgages, enabling people to meet a
variety of needs in later life.

SERVICES

BENEFIT AND COMPETITIVE POSITION

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 homes.

HUB Financial Solutions offers an innovative
approach that provides affordable 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 efficient and robust
scheme-led defined benefit transfer programmes.

MARKETED
PRODUCTS1

1 Reported in our

Insurance segment.

PROFESSIONAL
SERVICES2

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.

2 Reported in our
Other segment.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

CHAIR’S STATEMENT

Growing
the just way

We are delivering profitable and
sustainable growth to fulfil our
purpose and create value for
shareholders.

John Hastings-Bass
Chair

ANNUAL GENERAL MEETING 2022
10.00 am
10 May 2022
at Just Group plc
Enterprise House
Bancroft Road
Reigate
Surrey RH2 7RP

I am pleased to introduce Just Group plc’s 2021
Annual Report. Our focus in this period shifted
to sustainably growing the business after we
successfully completed the programme to
strengthen our capital position in 2020.

Before commenting on the Company’s performance, on behalf of the
Board I would like to express our gratitude to Keith Nicholson who retired
from the Board at the end of December. Keith was Senior Independent
Director of Just Group since its creation, and was part of a team that
steered our Group through significant regulatory change. He has
provided me with wise counsel, for which I am grateful and he takes
with him our best wishes for the future.

OUR PRIORITY IN 2021
The primary focus of our Group in 2021 has been to capture profitable
growth opportunities. There are strong structural drivers of growth
which make our markets very attractive, including demographics and
the appetite of company directors and pension trustees to transfer
the risk of operating defined benefit pension schemes to insurance
companies. The segments of the market we choose to operate in are
growing, which enables us to be selective in the risks we take on, whilst
still enabling our Group to achieve double-digit levels of profitable and
sustainable growth.

In 2020 we successfully completed the programme to strengthen
our capital position and the Board remains content with our position.
We have continued with our management actions to reduce our
exposure to UK house price movements by selling a portfolio of
lifetime mortgages.

During the year we made good progress with the Prudential Regulation
Authority (“PRA”), receiving approval to make changes to the Group’s
Solvency II internal capital model. The UK government is seeking to
conclude its Future Regulatory Framework (“FRF”) Review to deliver the
vision for the sector set out by the Chancellor in his Mansion House
speech in July 2021. We are hopeful that the FRF will deliver opportunities
for Just Group to increase our investment in the UK economy to drive
productivity and contribute to our net zero commitments.

The Group’s financial strength and performance is explained in detail in
the Business Review.

DIVIDEND
Having met our commitment to strengthen the Group’s capital position
by attaining capital self-sufficiency and delivering positive organic
capital generation, and following a strong financial operating
performance the Board proposes restarting dividends and recommends
a final dividend of 1.0 pence per share.

BOARD COMPOSITION AND GOVERNANCE
Following Keith Nicholson’s retirement, I am pleased that Ian Cormack
has taken up the role of Senior Independent Director and that Kalpana
Shah will now Chair the Group Risk and Compliance Committee. Mary
Kerrigan was appointed a Director of the Group on 1 February 2022. Mary
is already, and will continue to be, a Non-Executive Director of Just’s
subsidiary life companies, and is Chair of the Investment Committees.
John Perks joined the Group on 1 April and became Non-Executive Chair
of the Group’s subsidiary life companies in May, following the decision
by Nick Poyntz-Wright to step down. I’d like to thank Nick for his service
to the Group over his six year tenure and his diligent work in ensuring
that the policyholders’ expectations of the insurance products are met.
Kathy Byrne was appointed as a Non-Executive Director of the Group’s
subsidiary life companies on 1 February 2022 and joined the Investment
Committees. You can read more about the Directors of the Company
on page 68.

I take great pride in leading the Board and the Group’s governance
function, and my introduction to the Corporate Governance Report on
page 66 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 2022.

CONTRIBUTING TO A MORE SUSTAINABLE FUTURE
We have an important role in helping the world transition towards
a sustainable environment and low carbon global economy. We
announced a number of new carbon net zero commitments, which
builds on the excellent progress already made to reduce the carbon
intensity of our business. We’ve also incorporated a new section into
this year’s report to provide a better understanding of climate-related
risks and opportunities. Our disclosures are consistent with those
recommended by the Taskforce on Climate-related Financial
Disclosures and you can read more on pages 22 to 29.

I was delighted that Just became the first European insurance company
to launch a Sustainability Bond. This follows our pioneering launch of the
first Green Bond by a UK insurance company in October 2020. You can
read more about this on page 18.

Growing the Just way is a theme our colleagues across the Company
want to be active in shaping and the Board has received input from our
colleagues before approving the Group’s sustainability strategy during
this period. We are on an exciting journey as a Company, as an industry,
as a country and as individuals. You can read more about our
sustainability strategy on page 20 and at justgroupplc.co.uk.

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 effectively 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 from across the Group, promote the success of the Company.

OUR PURPOSE
We are a purpose driven Company with a compelling and credible
purpose. Quite simply, we help people achieve a better later life. We
achieve this by providing competitive products, services, financial advice
and guidance to help our customers achieve security, certainty and
provide them with peace of mind in retirement. Our purpose remains as
relevant today as it did all those years ago when we created it. It’s clear,
authentic and it acts as a beacon for colleagues across the entire Group
to live the purpose every day. Our customers, existing and prospective,
are at the heart of everything we do at Just.

OUTLOOK
The fundamental drivers for growth in our core markets continue to be
strong and we have focused our leadership team on driving long-term
profitable growth. We have continued to increase the Group's balance
sheet resilience by taking actions to reduce our capital sensitivity to
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 commitment to providing award
winning services to our customers and business partners. I’d also
like to thank our business partners who have trusted us to provide
outstanding service to their clients. We are growing the Just way,
delivering profitable and sustainable growth, fulfilling our purpose and
helping contribute to a net zero economy. We are increasingly optimistic
about the future.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

CHIEF EXECUTIVE OFFICER’S STATEMENT

Purpose driven,
focused on profitable
sustainable growth

2021 has been a significant and positive
year in our history. We have built on the
foundations we put in place over the previous
two years to transform the way that we do
business. We are excited about the growth
potential for the Group.

DAVID RICHARDSON
Group Chief Executive Officer

new business operating
profit1

£225m

2020: £199m

retirement income sales1

£2,674m

2020: £2,145m

1 Alternative performance measure. IFRS loss before tax £21.4m (2020: profit before tax £236.7m).

The growth that we have achieved in 2021 is a
testament to the success of our transformation.
We are investing the increased levels of organic
capital generated into writing more new business
that delivers profitable and sustainable growth at
attractive levels of return to shareholders.

This year we have achieved record new business sales and new business
profits and more than doubled our underlying organic capital generation
a year ahead of our 2022 target. The results build on our strong track
record of delivering on our commitments. In 2020, we achieved capital
self-sufficiency more than a year earlier than originally planned. In 2021,
we have reduced our Solvency II balance sheet sensitivity to property to
a comfortable level and eliminated our cost overruns.

RETIREMENT SALES GROWTH
I am pleased to report that during 2021 we have increased Retirement
Income sales by 25% to £2.7bn.

DB sales were up 28% to £1.9bn including two transactions in the
over £250m segment. The market is becoming more focused on
Buy-out transactions and so our enhanced capability to meet the
needs of deferred members has been an important part of this
growth; almost 40% of our transactions were DB deferred. Our start
to 2022 has been encouraging and we have a £4bn pipeline of potential
DB transactions.

In our retail market, sales of £739m were up 16% on 2020 and were 8%
higher than the pre-pandemic sales of 2019.

GROWTH AND INNOVATION
We participate in retirement markets that offer long-term structural
growth and the capital which we invest in that growth is achieving high
levels of return. We are investing in all of these markets, developing our
propositions and also innovating to build improved retirement products
and services.

OUR PURPOSE AND SUSTAINABILITY
Just has a strong purpose: we help people achieve a better later life.
We help our customers achieve security, certainty and peace of mind.

We achieve our goals responsibly and are committed to a sustainable
strategy that protects our communities and the planet we live in. The
most material impact we can make to reduce carbon emissions will be
achieved through the decisions we take with our investment portfolio,
which currently exceeds £24bn. We are diversifying these investments,
investing in more sustainable assets and reducing the carbon intensity
of our entire asset portfolio. We plan to become signatories of The
Science Based Targets Initiative (“SBTi”) and we are committed to ensure
that our investment portfolio will have halved its emissions by 2030 and
will be carbon net zero by 2050. You can read more on page 20 and in our
new sustainability content available at justgroupplc.co.uk.

Our commitment to invest in sustainable assets is underscored by our
bond issuance programme. After becoming the first UK insurer to issue
a Green Bond in 2020, we continued to be a market innovator by issuing
a Sustainability RT1 Bond, the first of its kind in the UK and European
insurance sector.

Additionally we are aiming for our operations to be carbon net zero in
terms of emissions by 2025. I am very proud that over the last two years
we have reduced our operational carbon intensity per employee by
85% and that we have achieved by far the lowest intensity amongst life
insurance companies operating in the FTSE 3501. However, there is still
considerably more work to do over the next few years to reach our goal
of carbon net zero.

CUSTOMERS
We have ambitious targets to continuously improve the customer
experience we deliver and are investing to enhance our digital
capabilities. For our business partners this will make Just easier to do
business with and provide our customers with more options to engage
with us.

COLLEAGUES
During 2021 we successfully transitioned colleagues from homeworking
in light of COVID-19, to embracing hybrid ways of working. The skills and
commitments of our colleagues across the Group have achieved external
recognition from our business partners. We were delighted to be named
Company of the Year at the Financial Adviser Service Awards for 2021 in
recognition of the outstanding service we have consistently delivered
over the past decade. In addition we achieved five star awards in both
the Pensions and Protection, and Mortgages categories.

We have a key priority to build a diverse workforce and strengthen our
inclusive culture. I am proud that we have increased gender diversity
across senior roles by a further three percentage points in 2021. As a
signatory to the Women in Finance Charter we have pledged that 33%
of our senior leaders will be female by 2023 and during 2021 we have
committed to increasing the percentage of senior leaders from a Black,
Asian or Minority Ethnic background to 15%, in line with the percentage
in the broader UK population. You can read in detail how we have
supported our colleagues and achieved our highest ever Best Companies
score on page 30.

FINANCIAL PERFORMANCE
Over the last two years we have moved successfully to a profitable
and sustainable growth model, as demonstrated by the excellent 25%
sales growth which has helped us to grow new business profits by 13%.
Adjusted IFRS operating profit is slightly reduced due to a lower
assumption change compared to 2020.

Our interest rate hedging programme has successfully protected our
solvency capital position, but the rise in interest rates during the year
has resulted in an economic loss, which means we have a small overall
IFRS loss before tax of £(21)m for 2021.

The strength and resilience of our overall capital position and our
ability to improve our underlying capital generation remain extremely
important metrics for us. In 2020 we delivered £18m underlying organic
capital generation (“UOCG”) and set a target to "at least double" this
amount by 2022. We have achieved that one year early in 2021 with
£51m UOCG, helped by a new business strain of 1.5%. This is a level of
capital generation that gives us more choice over capital allocation
decisions, including the ability to pay a sustainable dividend. We are
pleased to report a Solvency II capital coverage ratio at end 2021 of
164%, up from 156% at end 2020. We continue to be comfortable with
our capital coverage.

GEOPOLITICAL VOLATILITY
As I write this report Europe is facing military aggression and we are
carefully monitoring events. Our business has very limited direct
exposure resulting from the conflict but our thoughts are with the many
people impacted.

IN CONCLUSION
During this unprecedented period of the pandemic we are continuing
to ensure we live up to our purpose. I am very grateful to my colleagues
for their resilience, commitment and adaptability during this period of
changing working patterns. With our capital base now strengthened we
have shown that we can grow the business sustainably. This means that
we are able to help more people achieve a better later life while also
rewarding shareholders.

1 The determination of carbon intensity per employee is based on published information from

peer group companies from the UK FTSE 350 for 2020.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

MARKET CONTEXT

HELPING CUSTOMERS
STRENGTHEN THEIR
FINANCIAL RESILIENCE

Structural drivers in our markets mean we can
grow profits sustainably while delivering better
outcomes for customers.

DEFINED BENEFIT DE-RISKING SOLUTIONS
Defined benefit pension schemes have an obligation to pay members
a retirement income based on their earnings history and length of
employment. Operating these schemes has become more costly for
employers and the benefits of providing them have fallen, creating an
opportunity for guaranteed income providers to fully or partially de-risk
an employer’s defined benefit obligations.

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 defined benefit 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 policyholders
of the de-risking provider.

CURRENT MARKET
The first half of 2021 was slow in comparison to recent years and this
resulted in strong competition between insurers for the small and
mid-market transactions.

In contrast, new project invitations picked up in the second half which
was busy with transactions forecast to exceed £23bn (source: WTW).
This volume is greater than the same period in 2019, pre COVID-19, but
was achieved without the contribution of the volume of megadeals
that characterised that record breaking year.

So in aggregate, 2021 achieved premiums of around £30bn for the full
year, a similar total to that achieved in 2020 which was the second
busiest on record (source: WTW).

Taking the risk out of paying
company pensions

OUTLOOK
The structural drivers of growth for the de-risking market are unchanged
and the outlook for 2022 and beyond is strong.

There are an estimated £2.3tn of defined benefit liabilities (source: PPF).
The Pension Regulator’s (“TPR”) defined benefit funding code, which is
expected to come into force by 2023, is likely to increase demand for
pension scheme de-risking, as it seeks to improve funding and reduce
reliance on sponsor contributions.

Employee benefit consultants have projected that the market will grow
to between £30-50bn per annum until 2025 with the potential for larger
volumes thereafter (sources: Aon and LCP). We expect much of this
projected growth will be delivered by mega-transactions underpinned
by continued demand for small and mid-market transactions.

While insurer capacity to write a higher volume of individual transactions
is likely to increase in the longer term, over the medium term we believe
the demand for de-risking transactions will exceed the supply available.

For the first time, Buy-out has become the preferred long-term
ambition for schemes, overtaking self-sufficiency. With improving
levels of funding, demand for Buy-outs is anticipated to continue
building (source: Aon). As a result, we believe small and medium
schemes targeting Buy-out will need to have their data and benefit
specifications in good order to secure insurer engagement.

In June 2020 TPR issued guidance for trustees and sponsoring
employers considering transacting with a defined benefit superfund
model and other similar models. These so-called superfunds are a
pension consolidation solution for schemes and sponsors to transfer
risk where they cannot achieve a Buy-out from an insurance company.

TPR has also issued guidance for those considering setting up and
running a superfund and an assessment process that TPR will use to
establish whether an application to establish a superfund has met the
required standards. Following assessment and inclusion on the TPR
approved list, superfunds will be subject to a further assessment when
TPR is notified of an intended transfer into it.

87% OF DEFINED BENEFIT PENSION SCHEMES ARE CLOSED
87% of defined benefit pension schemes are closed
to new members and increasingly to future accrual (%)
TO NEW MEMBERS AND INCREASINGLY TO FUTURE ACCRUAL (%)

100

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

2018 2019 2020 2021

Closed to new members (open to beneﬁt accrual)
Closed to future accrual

Source: The Purple Book 2021, PPF

Expected growth in DB de-risking transactions (£bn)
DB DE-RISKING TRANSACTIONS (£BN)

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Buy-in/Buy-out

Backbook acquisition

Source: Just analysis, WTW

EXTERNAL GIFL MARKET (£M)
2,500

2021
(forecast)

2,000

1,500

1,000

500

2015

2016

2017

2018

2019

2020

Source: Just analysis, ABI

Regulation by TPR 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 lower cost solution to
a Buy-out of liabilities for some pension schemes, albeit with reduced
protection for members compared to an insurance solution. This new
superfund regime could provide additional competition for parts of
the market we target. This won’t be clear until the government has
introduced legislation to replace the temporary guidance published
by TPR.

The first superfund, Clara-Pensions, completed the TPR assessment
process in late 2021 and announced they would be ready to transact
in 2022. They have been cleared as a provider but are yet to have a
transaction approved. At the time of writing, no other superfund has
been cleared as a provider.

Providing security
and peace of mind

Clara-Pensions has stated they will serve as a bridge to Buy-out for
schemes with weak or insolvent sponsors and particularly those exiting
the pension protection fund assessment. So schemes they secure will
eventually come to the insurance market. Not all superfund models may
target Buy-out, so these would be competitors for parts of the market
we target. However, we believe the scale of the market and strength of
demand for “gold standard” insurance solutions will mean that trustees
and their consultants will continue to compete for insurer attention.

The continued attractiveness of pricing offered by insurance
companies will be impacted by the availability and ability of insurers
to secure high-yielding illiquid assets such as infrastructure debt
and lifetime mortgages. The government’s reform of the financial
services legislation, Future Regulatory Framework (“FRF”) Review,
could have a positive impact in making it more efficient and
attractive for insurers to invest in a range of illiquid assets.

Heightened government, regulatory and fiduciary focus alongside
consumer activism has pushed environmental, social and governance
(“ESG”) considerations up the agenda for UK defined benefit pension
schemes. With new regulations for climate reporting introduced with
the Pensions Schemes Act 2021, we expect more trustees considering
de-risking to seek assurance that ESG considerations underpin the asset
choices in insurers’ investment portfolios.

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 offered an income payable
without reference to the individual’s health or lifestyle, and were
differentiated only by reference to a limited number of factors such
as age, premium size and, prior to 31 December 2012, gender.

An individually underwritten GIfL takes into account an individual’s
medical conditions, personal 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 offer provided by
their existing pension company to those offered 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
a comparison to best income 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

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

MARKET CONTEXT CONTINUED

customer is eligible. This has provided 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 share of the total GIfL
market, for 2021 was not published at the time of preparing this report.
In 2020 it was 50% 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 offer 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 offer 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 the last two years.
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 FCA previously announced they intend to complete further work on
the suitability of advice and associated disclosure (known as “Assessing
Suitability Review 2”). The review will focus on initial and on-going advice
to consumers on taking an income in retirement. At the time of writing
this report the FCA had paused this review and not committed to
a future date to start the work. This evolving market has changed
significantly following the Pension Freedom reforms and the FCA wants
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 sufficient sources
of sustainable income. These comments and regulatory reviews shine
a spotlight on the importance of securing a guaranteed income for life.

Enabling people to
improve their later-life
living standards

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 2021 was 20.1% 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 proportion 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 £3.5tn (source: ONS).
We estimate that the existing industry loan book including interest is just
£36bn. Increased competition stemming from the new entrants to the
marketplace has increased the availability of product variants, rising
from 525 at the end of 2019 to 1,200 at the end of December 2021
(source: Just estimates), in turn resulting in greater product choice and
flexibility for customers. The levels of activity in the market during 2021
returned to those observed prior to the pandemic as customers looked
to take advantage of the broad range of competitive solutions available.

Just Group introduced medical underwriting into a niche segment of the
lifetime mortgage market some years ago. This year we have extended
it across the Just for You mortgage range. We estimate by collecting
medical information and lifestyle factors from applicants, we are able to
provide six-in-ten a lower interest rate, or for those who need it, a higher
borrowing amount. We believe this will revolutionise how lifetime
mortgages are advised. You can read more about our disruptive
innovation on page 64.

Just is forecasting that the LTM market will grow to exceed £6bn per
annum by the end of 2024, which is a compound annual growth rate
of 7.7% from 2021. 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 around
17 million by 2040; and

• strong investment in advertising which results in people becoming
aware of LTMs, combined with people becoming more disposed to
using some of their housing equity.

In October 2020 the FCA wrote to Chief Executive Officers 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.

LIFETIME MORTGAGE MARKET SIZE AND GROWTH RATE (£M)
Lifetime mortgage market size and growth rate (£m)

C A G R 2 0 . 1 %

5,000

4,000

3,000

2,000

1,000

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

The FCA stated they would be engaging with a number of firms across
the industry and that phase of work was due to conclude in May 2021.
They 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. At the time of writing this report, we have not been advised the
FCA has started this work.

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.

Lump sum mortgage sales

New drawdown mortgages – initial advance

Existing drawdown mortgages – further advances

Source: Equity Release Council

Number of people (millions) age 65+
NUMBER OF PEOPLE (MILLIONS) AGE 65

18.3%

18.7%

19.9%

21.7%

23.2%

24.1%

2018

2020

2025

2030

2035

2040

Source: Office for National Statistics

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

On 7 September 2021, the UK Prime Minister announced plans to
substantially increase funding for health and social care over the next
three years (2022-2025), to be funded by a new tax, the Health and Social
Care Levy. From October 2023, the government plans to introduce a new
£86,000 cap on the amount anyone in England will have to spend on
their personal care over their lifetime. The cap will apply irrespective of
a person’s age or income.

% of UK
population
over age 65

The government said that the publication of the November 2021
document marked the start of a period of co-production of the statutory
guidance with the sector, building on draft regulations and guidance
published in 2015. It added that this would be followed by a public
consultation in the new year with the intention that the final regulations
and guidance will be published in spring 2022.

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 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.

A LEADER IN UK LONG-TERM

CARE FINANCIAL SOLUTIONS FOR 21 Years

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

BUSINESS MODEL

Our business model converts the growth
opportunities in our markets to deliver
positive outcomes for customers,
shareholders and colleagues.

GROWTH OPPORTUNITIES:

HOW WE CREATE VALUE:

We have a growing ageing
population with evolving needs.

People approaching and in-retirement
will have a unique set of circumstances
and be exposed to a number of risks.

These risks include:
• their defined benefit pension scheme running into financial

difficulty; running out of money;

• being unable to plan their financial affairs;
• increasing and uncertain care costs;
• not achieving the lifestyle which they could actually afford;
• being invested in inappropriate products and securities; and
• inflation outpacing their savings.

Our solutions service these needs and our scalable and sustainable
business model is built to optimise value from those solutions.

The key characteristics of our business model:

SPECIALIST FOCUS

RISK SELECTION

PRODUCT
INNOVATION

COST DISCIPLINE

SCALABLE
OPERATING MODEL

FOCUS ON
ORGANIC CAPITAL
GENERATION

We have created a sustainable business model that organically
generates capital to support growth. We assess the risks related to
the policies we sell and how much income we expect to provide to
our customers. We charge a margin on the initial amount received
in exchange for accepting the risk over the lifetime of the policy.
We invest the margin and our customers’ pension savings in high
quality assets, including the lifetime mortgages we originate.
This generates financial value whilst ensuring we are able to
pay policyholder pensions as they fall due.

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 to improve customer outcomes.
And because we operate in attractive markets that are
growing, this further allows us to be selective in the risks
we choose to write.

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. Read about our sustainable
investment strategy on page 20.

STRATEGIC REPORT

GOVERNANCE

FINANCIAL
STATEMENTS

Our products
and services are
distributed via our
multi-channel model

INNOVATION
Innovatively utilising reinsurance
tools to improve our capital position

This includes:
• Defined benefit de-risking partnering model.
• Reinsurance options on new and existing business.
• No-negative equity guarantee hedge risk transfer solution.

WHO WE CREATE VALUE FOR:

SHAREHOLDERS
By managing our resources
effectively 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
We use our medical underwriting
to fairly optimise the returns for
our customers.

PARTNERS
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.

COLLEAGUES
We develop, recognise and reward
our colleagues to secure a skilled
and motivated team.

ENVIRONMENT
We help the environment
through how we operate and the
investment decisions we make,
which align with our focused
sustainability strategy.

JUST GROUP PLC AnnuAl RepoRt And Accounts 2021

STRATEGIC PRIORITIES

over the last three years
we have worked hard
to ensure we have the
right foundations to
grow our business, and
during 2021 we started to
take advantage of that.

After achieving capital self-sufficiency in
2020, we commenced the transition to
the next phase in our strategy, growth.
2021 has been a really important
year as we reposition our business
to achieve our strategic ambitions.
We have maintained our focus on
capital whilst also strengthening
our focus on transformation, growth
and innovation across the Group.

IMPROVE OUR
CAPITAL POSITION

TRANSFORM
HOW WE WORK

FOCUS
Maintain a sustainable capital model to
maximise opportunities available to us.

FOCUS
continue to streamline and automate our
operations across the business. evolve our
workplace, making it fit for the future.

GET CLOSER TO OUR

CUSTOMERS AND PARTNERS

GENERATE GROWTH

IN NEW MARKETS

FOCUS

BE PROUD TO

WORK AT JUST

FOCUS

develop our insight and evolve our

launch our new propositions and enhance

deliver a new modern workplace post

customer strategy.

our existing services.

coVId-19 whilst maintaining engagement.

2021 PROGRESS
• capital management actions were delivered.

We have further reduced our property
exposure through asset portfolio sales.
• We have refreshed the model we use to
calculate our capital requirement and
received approval to use the model from
the pRA.

• We have made an opportunistic early

refinancing of some expensive debt to a level
commensurate to our credit rating, thus
improving underlying capital generation.
• We have eliminated our cost overrun as we
shift our business to a leaner and more
efficient model.

2021 PROGRESS
• our modern workplace trial successfully
launched this year with upgrades to
technology and our working environments.

• We have automated over 30 processes in
the year and continue to identify more to
convert in the future.

• We are appropriately evolving operations

within our business lines and functions to be
able to service our customers for the future.

2021 PROGRESS

• We have focused on enhancing the

• our dB business continues to grow and

• We successfully achieved our Best

services we provide to new and existing

customers. this focus will continue into

2022 and beyond.

evolve with a new dB partnering contract

companies goal.

completed during the year. We are also

• We successfully defined our inclusion

seeing continued growth in dB deferred

measure early in the year to emphasise

our commitment and enable us to track

• We use customer research and user-centred

and repeat business.

design techniques to explore the needs of our

• the second stage of our ltM digitisation

progress over time.

prospective and current retail customers to

programme was completed in 2021. In

• We have further embedded our new ways

determine how we might develop improved

addition to these service enhancements,

of working in response to coVId-19 with

customer solutions that solve their needs.

we have launched medical underwriting

our modern workplace programme.

this enhanced understanding will further

for ltM, ensuring we are using our expertise

• We maintained our focus in critical areas,

support the intermediaries and partners we

to provide the best possible outcome for

including leadership communication,

work with.

our customers.

facilitating colleagues to stay connected

• our secure lifetime Income proposition

with wellbeing and line manager support.

will be expanding onto additional platforms

• We successfully launched our sustainability

in 2022.

strategy, welcomed by colleagues across

• our integrated retirement service,

the Group.

Principal risks and uncertainties

A Regulatory changes
and supervision

B economic environment
C Brand and reputation
D pricing and reinsurance
E operational processes

and It systems

f chosen market environment

2022 FOCUS
• this priority will shift to "grow sustainably"

as we move into 2022. We intend to
take advantage of the multiple growth
opportunities available to us whilst being
capital generative. We will continue to
reduce our property exposure, maintain
our focus on capital and seek to grow
shareholder returns.

2022 FOCUS
• continuation of our transformation
initiatives with a focus on enabling
sufficient scalability across the Group.

2022 FOCUS

• enabling stronger relationships with our

• this priority will evolve to "grow through

• Further strengthening our capabilities across

customers and partners driven by insight.

innovation", as we focus on disrupting our

the business whilst driving progress against

markets with our newest propositions.

our diversity and inclusion targets. We will

also be focussing on and embedding a

consistent culture across the Group.

LINK TO RISKS AND UNCERTAINTIES:

destination Retirement, a financial planning

service that gives individuals tailor-made

advice about retirement within our HuB

Financial solutions business, is being scaled

up, with a significant partnership agreed

during 2021 and a number of other key

partners in the pipeline as we move

into 2022.

IMPROVE OUR

CAPITAL POSITION

FOCUS

TRANSFORM

HOW WE WORK

FOCUS

Maintain a sustainable capital model to

maximise opportunities available to us.

continue to streamline and automate our

operations across the business. evolve our

workplace, making it fit for the future.

GET CLOSER TO OUR
CUSTOMERS AND PARTNERS

GENERATE GROWTH
IN NEW MARKETS

BE PROUD TO
WORK AT JUST

FOCUS
develop our insight and evolve our
customer strategy.

FOCUS
launch our new propositions and enhance
our existing services.

FOCUS
deliver a new modern workplace post
coVId-19 whilst maintaining engagement.

2021 PROGRESS

• capital management actions were delivered.

• our modern workplace trial successfully

We have further reduced our property

exposure through asset portfolio sales.

launched this year with upgrades to

technology and our working environments.

• We have refreshed the model we use to

• We have automated over 30 processes in

calculate our capital requirement and

the year and continue to identify more to

received approval to use the model from

convert in the future.

the pRA.

• We are appropriately evolving operations

• We have made an opportunistic early

within our business lines and functions to be

refinancing of some expensive debt to a level

able to service our customers for the future.

commensurate to our credit rating, thus

improving underlying capital generation.

• We have eliminated our cost overrun as we

shift our business to a leaner and more

efficient model.

2021 PROGRESS
• We have focused on enhancing the

services we provide to new and existing
customers. this focus will continue into
2022 and beyond.

• We use customer research and user-centred

design techniques to explore the needs of our
prospective and current retail customers to
determine how we might develop improved
customer solutions that solve their needs.
this enhanced understanding will further
support the intermediaries and partners we
work with.

2021 PROGRESS
• our dB business continues to grow and

2021 PROGRESS
• We successfully achieved our Best

companies goal.

• We successfully defined our inclusion

measure early in the year to emphasise
our commitment and enable us to track
progress over time.

• We have further embedded our new ways
of working in response to coVId-19 with
our modern workplace programme.

• We maintained our focus in critical areas,
including leadership communication,
facilitating colleagues to stay connected
with wellbeing and line manager support.
• We successfully launched our sustainability
strategy, welcomed by colleagues across
the Group.

evolve with a new dB partnering contract
completed during the year. We are also
seeing continued growth in dB deferred
and repeat business.

• the second stage of our ltM digitisation
programme was completed in 2021. In
addition to these service enhancements,
we have launched medical underwriting
for ltM, ensuring we are using our expertise
to provide the best possible outcome for
our customers.

• our secure lifetime Income proposition

will be expanding onto additional platforms
in 2022.

• our integrated retirement service,

destination Retirement, a financial planning
service that gives individuals tailor-made
advice about retirement within our HuB
Financial solutions business, is being scaled
up, with a significant partnership agreed
during 2021 and a number of other key
partners in the pipeline as we move
into 2022.

2022 FOCUS

• this priority will shift to "grow sustainably"

• continuation of our transformation

as we move into 2022. We intend to

initiatives with a focus on enabling

take advantage of the multiple growth

sufficient scalability across the Group.

2022 FOCUS
• enabling stronger relationships with our
customers and partners driven by insight.

2022 FOCUS
• this priority will evolve to "grow through

innovation", as we focus on disrupting our
markets with our newest propositions.

2022 FOCUS
• Further strengthening our capabilities across
the business whilst driving progress against
our diversity and inclusion targets. We will
also be focussing on and embedding a
consistent culture across the Group.

opportunities available to us whilst being

capital generative. We will continue to

reduce our property exposure, maintain

our focus on capital and seek to grow

shareholder returns.

LINK TO RISKS AND UNCERTAINTIES:

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SUSTAINABILITY AND THE ENVIRONMENT

Sustainability
the just way

The Board approved Just Group’s new sustainability
strategy during this period. The strategy supports our
broader ESG agenda, is aligned to our strategic priorities,
our organisational behaviours and helps us fulfil our
purpose to help people achieve a better later life.

Our sustainability strategy has three pillars which you can read more
about on the opposite page and you can discover more about our
sustainability story on our Group website justgroupplc.co.uk.

We have an important role in helping the world transition towards a
sustainable environment and low carbon global economy and during
this period the Board has made a number of commitments.

OUR COMMITMENT TOWARDS NET ZERO

Operations

2025

Net zero by 2025

INVESTMENTS/
supply chain

2050

Net zero by 2050 and
50% reduction by 2030

OUR FOCUS IN 2021

Our operational priority during the year has driven
action against two of our pillars.

LEAVING A RESPONSIBLE FOOTPRINT
Our continued focus to build our modern workplace has helped us
to deliver another strong performance to reduce our scope 1 and 2
emissions. Our total emissions, including those recorded in scope 3 for
our business travel, have reduced by 20%, following a record reduction
in the prior reporting period of 75%.

This has been achieved through further decarbonisation of electricity,
rightsizing the property portfolio to align with our new hybrid working
model and delivering energy efficiency through the introduction of
new technology.

We are mindful that hybrid working moves emissions from our office
portfolio to our colleagues’ homes, and those emissions are not included
in this report. We are supporting colleagues to review their own carbon
footprint by using Pawprint (see panel).

COVID-19 restrictions have continued to play a role in lowering some
of our consumption in 2021, including business travel and print. Power
emissions have been less affected as our offices remained accessible
throughout the year. As we move towards some normality we aim to
take advantage of the positive effects of adapting to remote
working and ensure purposeful travel and print.

EMPOWER JUST COLLEAGUES
TO FIGHT CLIMATE CHANGE AT WORK,
HOME AND BEYOND.

Sustainability is a topic that we know our colleagues care
deeply about and that’s why as a business we have invested in
Pawprint for all colleagues. Through the launch of Pawprint we
provide useful tools and resources so that, together, we can make
a positive difference to our planet.

Pawprint is an app which helps us make more climate-friendly
choices. It helps us to measure, understand and reduce our carbon
footprint at work, home and beyond. We can also feed back ideas
and thoughts on corporate sustainability initiatives and get involved
in individual and team challenges to reduce CO2 emissions.

MAKING A POSITIVE IMPACT
Our primary activity within this pillar relates to how we invest our
customers' circa £25bn pension savings and the associated scope 3
emissions. We’ve created a detailed section in this report on page 20 to
provide more insight into how we are investing responsibly to deliver
progress towards achieving our net zero commitments.

PERFORMANCE DIGEST

87%

20%

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.

JUST’S SUSTAINABILITY PILLARS

LEAVING A RESPONSIBLE FOOTPRINT
We want to leave a better world for future
generations, by reducing the impact we have
on the world and its natural resources today.
Just’s goal to be net zero by 2025 in our own
emissions and the reductions required to meet
that target support this ambition.

MAKING A POSITIVE IMPACT
We invest billions of our customers' savings and
the choices we make, guided by our Responsible
Investment Framework, will have a significant
impact to improve the environment. We don’t just
want to make great choices, we also want to help
and influence others to make responsible decisions.

READ MORE ABOUT OUR WORK IN THIS PILLAR IN OUR
INVESTMENT STRATEGY SECTION ON PAGE 20.

CREATING A FAIR WORLD
We want to contribute to creating a fair world by
ensuring we have a culture that gives customers fair
value, outstanding service, simple to understand
solutions and advice that is accessible to middle
Britain. We want to create an environment where
our business activities are responsibly governed and
our colleagues feel confident to bring their whole
selves to work.

READ MORE ABOUT OUR WORK IN THIS PILLAR IN OUR
COLLEAGUES AND CULTURE SECTION ON PAGE 30.

of our purchased electricity
is from renewable sources
(REGO1 certified)

reduction in location based
emissions in 2021

42%

2,195

reduction in market based
emissions in 2021

Self-declared actions taken by our
colleagues to reduce their impact
on climate change

12%

56%

LED lighting replacement in our
Belfast office reduced our
electricity consumption by 12%

of our IT surplus materials went into
reuse and 44% was recycled

GHG EMISSIONS DATA
Emissions – tCO2e2

Scope 1 (natural gas and fugitive gas3)

Scope 2 (purchased electricity location based)

Scope 3 (business travel)

Total emissions (location based)

2021

113

267

412

20204

335

518

Intensity ratios

tCO2e per gross tCO2e2 written

tCO2e2 per full time employee

Market based

Location based

2021

0.07

0.17

20204

0.14

0.28

2021

0.15

0.40

20204

0.24

0.48

1 Renewable Energy Guarantees of Origin (“REGO”).
2 Tonnes of carbon dioxide equivalent (“tCO2e”).
3 Fugitive emissions are included in reporting for the first time in 2021. Fugitive emissions are

based on refrigerant gas escape from onsite chiller systems.

4 Restated – as part of our commitment to continuously improve the quality of carbon data we

have altered our methodology for calculating both mileage and taxi carbon.

Methodology We have used the GHG Protocol Corporate Accounting and Reporting Standard
(revised edition), and 2021 emission factors from the Department for Business, Energy &
Industrial Strategy. The boundary of our emissions reporting is Financial Control, comprising
our directly owned and leased offices and building emissions and business travel under our
control, including gas, fugitive gas, electricity, car mileage, train travel and flights. We use
both a financial emissions intensity metric (tonnes of CO2e per £m gross premiums written)
and an employee intensity metric (tonnes of CO2e per employee) to normalise our data and
provide useful performance indicators. Alphacello Ltd conduct an annual review of Just
Group plc’s data collation and calculation processes and provides verification of their GHG
Emissions Statement. At present, carbon offsets do not form part of our carbon mitigation
strategy. We are in the process of setting near and long-term targets aligned with science
based target 1.5 degrees trajectory.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SUSTAINABLE INVESTMENT STRATEGY

INVESTING
THE JUST WAY

Just has a compelling purpose:
we help people achieve a better
later life, and this purpose shapes
our approach to how we invest.

Just has developed a Sustainable Investment Framework, to formally integrate
environmental, social and governance (“ESG”) considerations into the analysis and
decision making processes that underpin the shape of our investment portfolio.
Every existing investment and all new investments are reviewed to ensure that
they meet our ESG criteria. This regular screening is now an integral part of the
credit review process.

INVESTMENT MODEL
The long-term retirement income promises we make to our customers are
backed by long-term income producing assets, which are split between liquid
public investments and illiquid private investments. We now manage the majority
of our public investments in-house. On the illiquid side these are split between
the lifetime mortgages that we originate and manage ourselves and the other
illiquids that include a diverse range of investments including infrastructure loans,
private placements, commercial real estate mortgages, ground rents and income
strips. Currently these account for £3.0bn or 12% of our £25bn investment portfolio
– but this will increase substantially over time, and in 2021, 23% of our new
investments were made into this segment. We have built a panel of 13 specialist
external asset managers to source these assets, each carefully selected to focus
on particular areas of expertise. The opportunities originated by the managers are
then assessed by our in-house investment team who select the most suitable
investments to pass through our internal screening process.

GREEN AND SOCIAL INVESTMENT CREDENTIALS, AND A COMPELLING PURPOSE
Just’s ESG credentials are already firmly established as a member of the
FTSE4Good index series. The Group has been a signatory of the UN Principles of
Responsible Investment (“UNPRI”) since September 2018, becoming the first UK
asset owner to do so. During 2020, we developed a Sustainable Bond Framework
(updated September 2021), which received a second party opinion from
Sustainalytics, on the framework’s environmental and social credentials.

SUSTAINABILITY BOND
Just Group became the first UK and European insurer to issue a Sustainability
Restricted Tier 1 bond. The Group has provided a commitment to invest the gross
issuance proceeds of £325m in eligible green and social assets. When combined
with the 2020 Green Bond commitment, the Group has committed to allocating a
minimum of £575m towards these eligible assets before September 2024. Given
the predictable nature of guaranteed income cash flows, life insurers such as Just
are ideal providers of long-term project finance.

GREEN AND SOCIAL INVESTMENTS
During 2021, we made strong progress to originate green and social assets via our
“manager of managers” investment model. We are delighted to complete the
remaining Green Bond commitment a little over a year post issuance, with eligible
green assets originated during the year totalling £110m. This comprised further
renewable energy investments via solar projects in the UK, US, Spain and Germany,
and financing the retro-fit of an existing commercial building in Reading. As an
incentive during the design phase, we collaborated with our asset originator to
include a coupon step down feature and expect to achieve a green building
20

Dedicated ESG assets (IFRS valuation basis)

31 Dec 2021
£m

31 Dec 20201
£m

31 Dec 20191
£m

Renewable energy – wind

Renewable energy – solar

Local authority

Social housing – private

Green buildings

Eligible under Sustainable
Investment Framework

Social housing – public

Emerging market social finance

334

172

221

193

941

533

105

381

146

221

121

–

869

502

Total dedicated ESG assets

1,579

1,450

308

200

–

667

106

826

Bond portfolio

15,277

12,982

11,860

As % of total bond portfolio

10.3%

11.2%

7.0%

1 Prior year figures have been restated due to re-classification.

certification when complete. In addition, Just Group invested a further
£68m in private placement social housing. Further details are available in
the inaugural Green/ Sustainability Bond allocation report, which is
available alongside the Sustainable Investment Framework at
justgroupplc.co.uk/investors/esg.

In parallel, Just has established the Green/Sustainability Bond Forum.
The forum’s function is to discuss the proposed investments and approve
their eligibility towards our bond commitments, to monitor the investment
pipeline and to provide progress updates to the Investment Committees.

As investors, Just benefits from further asset diversification, while
supporting the transition to a low carbon economy via renewable energy,
clean transportation and green building investments. Furthermore, we
expect to continue increasing 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.
We invest in emerging market social finance as a social asset to fund the
commodity value chain in second and third world countries, and the
transportation of those soft commodities to end markets.

Separately, a significant proportion of our investments are in lifetime
mortgages, which fulfil an important social purpose by helping people in
later life to release equity from their home to supplement their pension
income, finance home adaptations/improvements or to make gifts to
support children and grandchildren, typically to finance deposits for
a home.

LOOKING TO THE FUTURE
To make successful investments that deliver good economic returns
it is important to be proactive to anticipate regulatory requirements,
to ensure we protect our reputation and manage our risks. In
October 2020, the government announced that it would review
certain features of the prudential regulatory regime for insurance
firms, known as Solvency II. One of the objectives of this review
was to modify the prudential regime to support insurance firms in
providing long-term capital to underpin UK economic growth and
productivity, including investments that contribute towards the
transition to a green economy and infrastructure improvements
as part of the government’s “Build back better” programme.

Our framework will evolve over time to adapt to changing requirements.
During 2021, we refined our investment approach to the mining sector
and utilities, with no new investment going forward in companies
that use coal for the majority of their power generation. As well as
incorporating externally provided ESG ratings on investee companies,
we have developed our own internal framework to provide a
consistent approach when assessing the responsible credentials of
an investment. This scoring system is an input to the investment
decision, alongside other factors including fundamental credit quality,
pricing and liability matching. You can read about our Responsible
Investment Framework and our approach to decarbonising our
investment portfolio in the next section of this report on page 26.

CLIMATE CHANGE
To assess, map and mitigate emerging risks, including climate change,
we need accurate data and effective measurement systems. To achieve
our net zero commitments, we have invested in training to develop the
capabilities of our colleagues, developed our organisational capabilities
and are evolving our data quality and information sources.

As part of our development work going forward, we continue to explore
opportunities to enhance how we exercise our stewardship duties such
that we can influence and support market best practice. As part of this,
we are identifying opportunities to engage collaboratively and directly
with the companies we invest in and are considering other wider market
based engagements. Furthermore, we will continue to regularly engage
with our external asset managers to monitor and challenge them on the
way they consider fundamental and ESG factors as part of their
investment decision making process and stewardship activities.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SUSTAINABILITY STRATEGY: TCFD DISCLOSURE FRAMEWORK

We launched our sustainability
strategy, which includes the approach
to climate change, in 2021 with
initiatives being developed to deliver
our sustainability ambitions.

Alongside its 2021 interim results, Just announced a
commitment to reach net zero in its own emissions by
2025 and net zero in all other emissions including our
investments by 2050, with an interim target of a 50%
reduction by 2030. This commitment is aligned to
the road map published by the Association of British
Insurers (“ABI”) in summer 2021 on behalf of the
insurance industry.

The road map is available here abi.org.uk/about-the-abi/sustainability/
climate-change-roadmap/.

The sustainability strategy is guided by three key themes: leaving a
responsible footprint, making a positive impact and creating a fair
world. These themes align to Just’s overarching strategic goals to grow
sustainably, transform how we work, grow through innovation, get closer
to our customers and partners and be proud to work at Just (as shown
in table below). The strategy is also aligned to the United Nations
Sustainable Development Goals in line with other similar organisations.

OUR PILLARS

OUR COMMITMENT

HOW WILL WE ACHIEVE OUR AMBITION?

LINK TO JUST’S STRATEGIC PRIORITIES

Attain net zero in our own
operations by 2025

Continue to identify areas of efficiency and initiatives to
facilitate attainment of the net zero target.

Progress steps to decarbonise our investment portfolio.

Transform the way

we work

LEAVING A
RESPONSIBLE
FOOTPRINT

Attain net zero in our
scope 3 emissions by 2050

Responsibly manage emissions from business travel and
encourage our colleagues to find ways of reducing their
own emissions.

Encourage reductions in emissions of our supply chain
and partners through selection and on-going
interaction about their net zero plans.

Get closer to our

customers and partners

Protect our business

Grow in a sustainable way so Just is able to support
customers, colleagues and communities in the future.

Invest responsibly

Continue to integrate environmental, social
and governance (“ESG”) factors into our
investment decisions.

Increase our green
financing opportunities

Look for further opportunities to invest in green
and social assets.

Develop and offer
sustainable products

Create sustainable products for existing and
new customers.

Generate growth
in new markets

Manage with good governance

Embed sustainability through our business and
ensure it is governed to a high standard.

Ensure data is well
managed and secure

Protect our customers’ data privacy with robust
standards and controls.

Transform the way

we work

MAKING A
POSITIVE
IMPACT

OUR PILLARS

OUR COMMITMENT

HOW WILL WE ACHIEVE OUR AMBITION?

LINK TO JUST’S STRATEGIC PRIORITIES

Improve diversity and inclusion

Use progressive targets to guide our development of a
diverse and inclusive group of colleagues.

Support the health and
wellbeing of our colleagues

Maintain focus on the wellbeing of our colleagues and
encourage healthy lifestyles and working practices.

CREATING
A FAIR WORLD

Supporting our later
life community

Continue our thought leadership, helpful advice to
customers and charitable activities.

Be proud to work at Just

Get closer to our
customers and partners

Key sustainability initiatives form part of the Group’s strategic execution
plan, with progress overseen by our sustainability steering group. The
Group intends to become signatories to the Science Based Target
initiative (“SBTi”) during 2022 to help the focus on our decarbonisation
target. The Group’s plans to meet our emissions targets are being
adapted to align with the methodology set out by SBTi last autumn.

The direct costs of meeting these commitments include £800,000 to
upgrade the energy efficiency of our office properties and computer
equipment over the next few years, plus an estimated £600,000 a year
to invest in planting a tree for each new customer.

TCFD DISCLOSURES
The Taskforce on Climate-related Financial Disclosures (“TCFD”) was
established by the Financial Stability Board to develop recommendations
to enable a better understanding of climate-related risks and
opportunities. The TCFD recommend that companies provide information
about their governance, strategy, risk management, metrics and targets
in relation to climate change risks. Disclosures consistent with TCFD
recommendations about the potential implications of climate change for
Just are included in this report with the following exceptions:

Strategy recommendation disclosure (b): A methodology to model
the potential financial impacts of climate change on our illiquid credit
portfolio has not yet been established for the reasons stated in section
headed “Illiquid investments” on page 27. We are in discussion with data
providers and expect to have a methodology in place during 2022.

Metric and targets recommendation disclosure (b): At present we are
only able to estimate scope 3 emissions for the Group’s business travel,
for our lifetime mortgage property portfolio and for our liquid bond
portfolio where public data is available. The nature of illiquid investments
means that the borrowers are not required to disclose their emissions.
A methodology will be developed to estimate the emissions for these
investments, as well as for our supply chain.

We will keep stakeholders updated on the progress of these
methodologies with the aim of reporting consistently against the
recommended disclosures as soon as we have reliable data to report
on. The TCFD disclosures are in the main included in pages 24 to 29;
disclosures related to governance are set out on page 74; disclosures
related to the Group’s own emissions are on pages 18 to 19; and those
relating to risk management are on pages 58 to 63.

CLIMATE CHANGE
Why climate change is important for Just
Just’s purpose is to help people achieve a better later life. To fulfil our
purpose, Just must ensure its business model is sustainable and resilient
to the risks posed by climate change. We also seek opportunities to
reduce our impact on the environment and to help our customers and
colleagues do the same.

Just has taken steps to embed climate change into our business
governance and guidance issued so that climate risks are taken into
account in decision making, such as in product development and change
initiatives with oversight from second line functions.

As a life insurer we look at risk over the long term and recognise that we
need to keep working to understand and manage our climate-related

risks and to take advantage of the opportunities presented. There are
many uncertainties about how the impacts of climate change will
develop, with future government policy playing a significant role in the
coming years. The ways Just could be affected by climate change are
interconnected with other sustainability issues.

What climate change means for Just
Our assessment is that our lifetime mortgage and investment portfolios
are the areas with the largest potential exposure to climate transition
and physical risks.

Transition risks relate to the business impact from government policy
developments and market changes as part of the evolution to a low
carbon economy. The impacts will depend on the nature and rate of
these changes.

Physical risks could arise from the acute impacts of climate change,
such as more frequent and intensive floods or gradual chronic impacts
such as a rise in sea level.

Lifetime mortgage portfolio
Climate-related factors that cause property values to underperform the
market could lead to losses for Just if the outstanding lifetime mortgage
exceeds the sale proceeds when the property is sold.
• Transition risks: The potential requirement to transition to more

energy efficient housing could be a significant influence on our lifetime
mortgage portfolio over the coming decade. Sale prices of less energy
efficient housing could be affected by the cost of improvements to
bring them up to the government’s target of energy performance
certificate (“EPC”) rating C, where this is feasible.

• Physical risks: More properties may become exposed to a high

flood risk over time unless actions are taken to mitigate the risks.
Subsidence may also become more of a concern in some areas
than it is at present if there are prolonged droughts.

Credit investment portfolio
Our credit investments are held as long-term investments. Although the
value of the investments may be affected over time by the market’s view
of the borrower’s credit standing, it is the borrower’s ability to repay the
debt that affects us the most.
• Transition risks: The companies to which we lend could face

additional costs according to the nature and rate of transition
to a low carbon economy in their main countries of operation.

• Physical risks: These businesses may face higher costs from

asset damage and business interruption due to impacts from
weather hazards.

Material increased costs to the borrower, as a result of climate change,
may affect their ability to meet their debt repayment obligations,
increasing the risk of default.

POTENTIAL FINANCIAL IMPACT ON JUST
We have assessed the risks to our lifetime mortgage and investment
portfolios using information that is available, as explained above.
The timescales over which the risks are projected are driven by the
availability of data. This understanding of the drivers and potential
scale of the risks has provided confidence that the potential for future
financial loss appears to be very limited at present.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SUSTAINABILITY STRATEGY: TCFD DISCLOSURE FRAMEWORK CONTINUED

KEY RISKS TO JUST’S REPUTATION AND ITS LIFETIME MORTGAGE AND INVESTMENT PORTFOLIOS FROM CLIMATE CHANGE

RISK
MORE STRINGENT ENERGY
PERFORMANCE STANDARDS
– COMMERCIAL AND
RESIDENTIAL PROPERTY

INCREASED IMPACTS AND
THREATS FROM FLOODING,
SUBSIDENCE AND COASTAL
EROSION

GREEN INVESTMENTS
BECOME DIFFICULT TO
SOURCE OR PRODUCE
LOWER YIELDS
CREDIT INVESTMENTS SEEN
AS EXPOSED TO CLIMATE
RISKS LOSE MARKET VALUE

TARGETS FOR REDUCED
SCOPE 1 AND 2 EMISSIONS
ARE MISSED BY JUST
TARGETS FOR REDUCED
SCOPE 3 EMISSIONS ARE
MISSED BY JUST

IMPACT

TYPE

TIMESCALE

MITIGATIONS

Residential property values
may fall below the level of the
loan leading to losses

For commercial mortgages,
the borrower’s ability to
service and repay the loan
could be affected by increased
costs due to physical and
transition risks

Unable to meet Responsible
Investment Framework aims
while meeting investment
return needs

IFRS balance sheet loss.
Income should continue but
with increased risk of default
if issuers cannot refinance at
an affordable price

Reputational damage due to
not keeping commitments

Transition 5-10 years

Potential government assistance for property owners’
energy improvement costs.

Physical

10 years +

Transition < 5 years

Seek ways of helping lifetime mortgage borrowers improve
energy performance standards.

Take energy performance ratings into account when lending
on lifetime mortgages.
Potential government action to protect populated areas.

Vary lending policy to avoid vulnerable residential and
commercial properties.

Structure commercial loans to include key performance
indicators for energy efficiency and other climate factors.
Increase the range of sources of origination for
potential investments.

Availability of green investments expected to increase due
to government focus.

Transition < 15 years

Reduce and avoid such investments in line with the
Responsible Investment Framework (as described below).

Transition < 5 years

Commit to initiatives required to reduce emissions.

Monitor progress closely.

Transition 5-10 years

Pursue Responsible Investment Framework.

Monitor progress closely.

Manage supply chain emissions.

Regulatory capital requirements are based on a risk measure over
a 12 month period. This approach does not readily accommodate
the long-term risks associated with climate change, particularly
in the absence of any historical data to help assess probabilities
and quantification. There is no material impact on the Group as at
31 December 2021. Property transition risks will be driven by government
policy, which is unclear at present, and so will be reflected in the Group’s
Own Risk and Solvency Assessment (“ORSA”).

IFRS profit is the realisable value in excess of losses on lifetime
mortgages and credit defaults over the life of the contracts. The
relatively low loan-to-value lending policy on lifetime mortgages means
that material losses are unlikely to crystallise at present. Our projections
for the liquid credit portfolio show that bond issuers would experience
a relatively small increase in costs due to the combination of climate
physical and transition risks in a scenario in which our existing portfolio
remained unchanged to the year 2080. These costs could increase the
risk of credit rating downgrade for the bond or in extreme cases the risk
of default. In practice, this position is purely indicative as, well within this
period, the bonds we hold will be redeemed for their nominal value,
which will be re-invested in new assets in line with our Responsible
Investment Framework mitigating potential losses in the long term.

The Group’s climate risk processes focus at present on the modelling
and scenario analysis explained on page 27. We will evolve our
monitoring and management process, as the available data improves
and government policy measures become clearer, to update the tools
and processes for managing the risks of climate change to the Group.
OPPORTUNITIES
As part of our sustainability strategy, Just aims to develop innovative
products and services to meet customer needs and support a
sustainable future. We were the first later life lender to offer a green
lifetime mortgage, which incentivises energy efficient homes by offering
a discounted interest rate for a loan on a property with a high EPC rating.
We will seek to develop further lifetime mortgage products which
encourage improved energy performance for the customers’ properties.

Through HUB Financial Solutions, the Group’s corporate solutions and
advisory business, we provide both advised and non-advised services
to customers of key strategic partners looking for retirement income
and retirement lending. A range of ESG investment funds will be made
available to meet the expected customer demand for investing
responsibly in ESG-style investment options.

When investing, we take opportunities to engage directly with
commercial borrowers to bring about positive climate outcomes – such
as by offering better terms on commercial mortgage loans on buildings
with excellent energy efficiency. Through our membership of the ABI,
we seek to contribute to industry thinking about climate change.

Just does not invest in equities as we require a predictable long-term
income from our investment portfolio to provide regular payments
to our Guaranteed Income for Life and Defined Benefit customers.
Although the Group is unable to use shareholders’ votes to influence
investee companies’ sustainability policies, our corporate bond
investments are selected based on the ESG credentials of the issuer,
including environmental factors, such as the issuer’s transition plan
to achieve net zero.
CLIMATE CHANGE PROGRAMME
Over the past couple of years, we have developed our capabilities to
manage the opportunities and risks that arise for the Group due to
climate change. The project has been sponsored by the Group Chief Risk
Officer, who is responsible for climate-related financial risk under the
FCA’s Senior Managers and Certification Regime and accountable for
delivery of the Group’s sustainability strategy.

As part of the programme, training was carried out in the summer
of 2021 for Board members on climate change and its potential
implications for Just, followed by similar sessions for the Group’s senior
leadership team. Sessions on our sustainability strategy were delivered
to colleagues during the year and regular updates will be given
going forward.

CLIMATE RISK MANAGEMENT SCENARIO ANALYSIS
Scenario analysis is used to deepen understanding of the risks the Group faces and permit a
consideration of a long-term time horizon. Within each scenario events with varying degrees
of certainty can be combined, including adaptive behaviours or political action. The iterative
process for assessing climate change scenarios is illustrated by the following diagram:

Start of process

Pathway is agreed (for example UK
government legislates that UK will
achieve net zero in emissions by 2050)

Document finalised risk measurement
and monitoring outcome under each
scenario

Workshops are convened
with business experts for each
of the risk areas

Each workshop identifies
the risk drivers and transmission
channels for each risk area

Assess the impact of the scenario on
the UK and on Just

Identify management actions, both
pre-emptive and post-event

Propose amendments to the risk
appetite tolerances and management
information based on the climate
change analysis undertaken

Summary report of the analysis presented
to the Just Group plc Board/Group Risk and
Compliance Committee (“GRCC”) for
review, challenge and approval of the:
(i) scenario analysis; and
(ii) change in risk appetite.
Areas for further analysis proposed
where required

Identify early warning indicators
(“EWIs”)
for each risk area

Incorporate results in the
Group’s risk management and
reporting framework

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Climate risk drivers
represent climate-related
changes that could give
rise to financial risks

Transmission channels
are the causal chains
linking climate risk drivers
to the financial risks
faced by companies

Outputs from these
processes are used
to assess the need
for revised risk appetites
for potential climate
change impacts

Just’s climate scenarios are anchored on two parts: detailed property scenarios (please refer to
section headed “Climate risk - Lifetime mortgage portfolio” on page 28) and the wider Network for
Greening the Financial System (“NGFS”) climate scenarios:

NGFS SCENARIOS

RISK PROFILE

ASSUMPTIONS

Net Zero 2050

Relatively low physical risk combined
with relatively high transition risk.

UK, US, EU and Japan reach carbon net zero by 2050. China makes progress in
meeting its carbon net zero pledge by 2060.

This requires early and stringent implementation of climate policies and
innovative techniques but still results in projected 1.5°C rise from pre-industrial
average global temperatures.

Nationally Determined
Contributions (“NDCs”)

Moderate to severe physical risks,
but relatively low transition risks.

All pledged policies included even if not yet implemented. Emissions decline
but still lead to projected 2.5°C rise.

Divergent Net Zero
(“DNZ”)

Highest transition risks of all, more acute
in consumer sectors than industrial.

Carbon net zero reached by 2050 but with higher costs due to divergent policies
with more stringent policies in the transportation and buildings sectors.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS

JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SUSTAINABILITY STRATEGY: TCFD DISCLOSURE FRAMEWORK CONTINUED

Scenario analysis undertaken has adopted the ‘Net Zero 2050’ as the
central scenario, with NDC and DNZ as the variant scenarios to test the
key risk sensitivity. Transition and physical risks for these scenarios have
been examined to better understand Just’s exposure to risks associated
with broad areas such as transport and energy supply. Scenario
pathways were projected for 50 years to allow transition risks to fully
materialise and physical risks to begin to crystalise. The political
momentum behind climate change initiatives gave the NDC scenario
priority in the analysis. The DNZ scenario was chosen given Just’s
exposure to residential properties through lifetime mortgages.

The scenario analysis indicates that the Group’s primary exposure is to
transition risk before the carbon net zero 2050 target, with a secondary
exposure to physical risk over a more extended timescale. The DNZ
scenario associated with higher transition risks is estimated to have the
most onerous financial impact on Just (see “Transition risks to property
due to climate change” section). However, the methods used to model
the impact of climate change are expected to evolve over time, which
may change this conclusion.

Areas of climate risk have been categorised and mapped in accordance
with their potential impact on Just and event horizon as shown in the
chart below. These include transition risks as shown in the key, with
risk drivers grouped into themes linked to market changes, political,
regulatory and legal developments, and shareholder preferences. While
the probability of specific risks differ across risk areas, risk management
discussions are more focused on those with greater impact and/or
shorter event horizon. EWIs and management actions related to these
risks have been identified where appropriate.

CLIMATE RISK – CREDIT INVESTMENT PORTFOLIO
Our climate risk investment strategy for the credit portfolio is based on
the following key principles:
• understand the risks to our investments posed by climate change;
• take advantage of opportunities afforded by the transition to a lower

carbon economy;

• decarbonise our portfolio at a rate commensurate with the

need to compete in the retirement marketplace.

WHAT’S OUR APPROACH TO DECARBONISING OUR INVESTMENT PORTFOLIO?
We have developed a Responsible Investment Framework, which is
overseen by the Investment Committees and seeks to manage the risk
exposure arising from climate change by:
• increased investment in green assets, such as renewable energy,

clean technology and green buildings;

• limiting or excluding investment in fossil fuel-related and

mining companies;

• gradually divesting from the liquid corporate bonds with the

poorest Climate Value-at-Risk (“CVaR”) scores, including some utility
and energy companies over the next ten years;

• seeking opportunities in investments that will benefit from the

transition and physical effects of climate change; and

• engaging directly with borrowers where possible to bring about

positive climate outcomes.

The rate of decarbonisation of our investment portfolio has to be aligned
with the availability of investable stock and the cash flows needed to
make income payments to our customers. Investments which are
attractive from a climate change perspective are much in demand,
leading to a suppression of yields.

CLIMATE RISK AREAS – INITIAL IMPACT ASSESSMENT

M and TS: Business
and Industry

PR and L: Political

High Impact

M and TS:
Residential
Property

High Impact

M and TS:
Commercial
Property

PR and L: Green
Financing

Medium High
Impact

Physical:
Residential
Property

PR and L: Climate
Change Litigation

M and TS: Food
Production

Medium Low
Impact

Medium High
Impact

Medium Low
Impact

SP and R:
Stakeholder
Behaviours

Physical:
Mortality

Five to ten years

n years
r te

e
v
O

Monitoring

Planning

ﬁ

e
a

M and TS:
Energy Supply

M and TS:
Transport

Physical: Physical risks M and TS: Market and Transition Shifts PR and L: Political, regulatory and legal SP and R: Shareholder preference and reputation

WHICH METRICS AND TARGETS DO WE USE FOR CLIMATE RISK?
The metrics below are used for our liquid corporate bond portfolio:

CLIMATE VALUE-AT-RISK
A risk metric which is an estimation of scenario-specific
valuation impact for transition and physical impacts,
at both an issuer and portfolio level.

WARMING POTENTIAL
An impact metric which gives a portfolio’s alignment
with future climate goals based on projected business
activities of invested companies.

CARBON FOOTPRINT
An impact metric that gives the GHG emissions
at an issuer and portfolio level.

All our investments are assessed using the following BRAYG scale,
which includes ESG factors more generally, with climate risk often
a strong driver of the score:
• Black – excluded: divestment and no new investment.
• Red – restricted: no new investment.
• Amber – watchlist: invest but monitoring required.
• Yellow – no concerns: investment permitted.
• Green – positive impact: investment encouraged.

WHAT ARE OUR FUTURE PLANS FOR THE CLIMATE RISK
MANAGEMENT OF THE CREDIT INVESTMENT PORTFOLIO?
• Identify a suitable data provider for the assessment of climate

risks on our illiquid portfolio.

• Introduce a more detailed climate assessment for potential

investments to supplement our BRAYG scoring.

LIQUID INVESTMENT BOND PORTFOLIO SCENARIOS
Measurement of climate risk in our liquid corporate bond portfolio, is
well advanced. We have partnered with MSCI Carbon Delta to carry
out scenario analysis on these assets, for which quantifiable climate
data is readily available (public developed market and emerging
market corporate bond issuers – about 70% of our liquid investment
bond portfolio). The scenario analysis carried out on the portfolio uses
projected energy pathways, broadly following a 1.5°C, 2°C or 3°C
temperature rise.

It is the borrower’s ability to repay their debt that affects us as fixed
income investors. Any increased costs to the borrower, through the
physical impacts of climate change or transition risks, may affect
their ability to meet their debt repayment obligations increasing the
risk of default.

Physical climate risk scenarios estimate the costs for businesses from
asset damage and business interruption due to impacts from a range
of nine weather hazards, including extreme heat, tropical cyclones and
heavy snowfall, based on the location of the company’s headquarters.

Transition risk scenarios estimate the potential cost impact from the
transition to a low carbon economy under the three scenarios using
emission reduction targets for the main countries of operation of the
investee company.

CLIMATE VALUE-AT-RISK
The CVaR for the debt investment derived using this approach is the
aggregate of the CVaR for physical risk and transition risk over the
period to 2080. The approach has limitations: the transition risk
exposures are estimated without taking account of all the company-
specific risk factors; the location of the company headquarters alone
is used to assess the physical risk exposure rather than the location of
any other business operations; the CVaR numbers are a present value of
future costs estimated over a timeframe of nearly 60 years, while our
holding period for the bonds is much shorter, and so overestimate the
financial costs.

A range of assessments for the liquid corporate bond portfolio, where
public data is available, are shown in the table below. These illustrate
the additional costs as a result of climate physical and transition risks
that may be incurred in our existing bond portfolio if it were to remain
unchanged to 2080.

CLIMATE VALUE AT RISK BY 2080 ON LIQUID CORPORATE BOND
PORTFOLIO OF COMBINED RISK SCENARIOS

Scenario

Physical – base case

Transition
1.5°C rise

Transition
2°C rise

Transition
3°C rise

-6.0% CVaR
-£404m

-4.8% CVaR
-£321m

-3.4% CVaR
-£225m

Physical – worst case

-7.0% CVaR
-£470m

-5.8% CVaR
-£387m

-4.4% CVaR
-£296m

Results as of 31 December 2021.

This modelling suggests that transition risk may be a more material
risk to our liquid bond portfolio issuers than physical risk. A 1.5°C
temperature rise produces higher cost impacts because the rate of
decarbonisation is the greatest under this scenario. A slower rate of
decarbonisation has a lower cost impact even though the assumed
rise in temperature is higher.

WARMING POTENTIAL
The potential impact of our liquid corporate bond portfolio, where public
data is available, on the climate is illustrated using a warming potential
metric over the period to 2100. The purpose of this metric is to guide the
portfolio’s alignment with future climate goals based on the projected
business activities of invested companies. The result for our existing
portfolio suggests the bond issuers’ emissions are aligned to warming
the planet by 3.1°C by 2100 in a scenario aimed at limiting global
warming to 2°C.

CARBON FOOTPRINT
The carbon emissions of our liquid corporate bond portfolio (where public
data is available) are shown below:

Bond issuers’ financed carbon
emissions

Scope 1 + 2 emissions

Scope 3 emissions

Downstream

Upstream

Results as of 31 December 2021.

Carbon emissions
(000s CO2e/$m invested)

100

317

111

The issuer’s carbon emissions are apportioned across their shares and
bonds (enterprise value including cash). This metric allocates emissions
to the investor for each million US dollar of their investment.

The CVaR and warming potential metrics are purely illustrative as
they are projecting far into the future based on assumptions about
our existing investment portfolio. The longer the time period that
data is projected into the future, the more the uncertainty in the
results. The carbon footprint metric reflects the emissions of our
current portfolio. We expect each of these metrics to improve as the
composition of our investment portfolio changes with time through
the application of our Responsible Investment Framework, reducing
our exposure to higher carbon companies.

ILLIQUID INVESTMENTS (COMMERCIAL MORTGAGES,
INFRASTRUCTURE LOANS, OTHER PRIVATE DEBT)
Assessing the risks to our illiquid investments is particularly challenging
due to the difficulty in obtaining specific data as the borrowers are not
subject to disclosure requirements. We are engaging with data providers
to help us quantify the physical and transition risks to our illiquid
investments such as commercial mortgages, infrastructure debt and

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SUSTAINABILITY STRATEGY: TCFD DISCLOSURE FRAMEWORK CONTINUED

local authority loans. The methodologies for these risks are likely to be
analogous to those for liquid corporate bonds above and use proxies.
However, we expect some of our illiquid assets to exhibit less transitional
and physical risk than our liquid bond portfolio where these assets are
linked to renewable energy production and energy efficient buildings.

Our assessment is that physical risks will have a very small impact on the
overall value of properties in the portfolio, up to a 0.2% reduction in total
property values by 2080. This projection is based on RCP8.5, the most
severe scenario considered as it assumes that no action is taken to
reduce emissions.

The weighted average life of our commercial mortgage portfolio is
about five years, and that of our infrastructure debt investments about
12 years. Given the relatively short duration in each case, the impact of
the transition to net zero in emissions is expected to be the dominant
risk as the commercial mortgage borrowers meet the expected costs of
upgrading the energy efficiency of their properties, for example. Physical
climate risk is very unlikely to materialise over these short time frames.

Of the physical risks to which we are exposed, we expect climate change
to have the most material impact on the flood risk. Analysis suggests
that our exposure to properties classed as having a high flood risk could
increase steadily from 0.3% now to 1.5% by 2080 of properties backing
our lifetime mortgages. Under the RCP8.5 scenario, this could mean an
additional 200 properties exposed to high flood risk by 2080 out of a
portfolio of 62,000 properties.

CLIMATE RISK – LIFETIME MORTGAGE PORTFOLIO
Just Group is exposed to property risk on the lifetime mortgages held on
our IFRS balance sheet. These lifetime mortgages are secured against
residential properties located across the UK. In the event that the sale
proceeds from the property are insufficient to repay the accumulated
loan balance on the death or entry into long-term care of the customer,
Just would suffer a loss due to the no-negative equity guarantee.

Our focus has been on using scenario modelling and portfolio review to
assess the transition and physical climate risks to each property and
measure the potential impacts on property values. Climate scenarios
have been used to support analysis of the Group’s exposure over time
and considered the following property related risks: coastal erosion,
flooding, subsidence and the setting of minimum EPC ratings for
residential properties.

Following the standard metric for considering climate change by the
global greenhouse gas concentration as measured by the Representative
Concentration Pathway (“RCP”) levels, the scenarios modelled were at
four levels as shown in the table below:

Emissions scenario illustration

Increase in temperature by 2100

RCP2.6 Significant global reduction

RCP4.5 All countries implement Paris Accord

RCP6.0 All signatories implement Paris Accord

RCP8.5 Business continues unchanged

1.4 – 3.2°C

2.1 – 4.2°C

2.5 – 4.7°C

3.4 – 6.2°C

PHYSICAL RISKS TO PROPERTY DUE TO CLIMATE CHANGE
This analysis has enabled us to understand how our exposure to
physical risks due to climate change could change over time, assuming
no slowing down or mitigation of climate impacts, such as through
government action.

The projections suggest that a similar pattern of increasing risk of
subsidence over time due to climate change increasing the chances
of lengthy periods of drought. Under the most severe scenario
considered, about 100 more properties could be exposed to subsidence
by 2080. Analysis indicates that our exposure to properties where coastal
erosion is likely would remain insignificant over the period to 2080.

TRANSITION RISKS TO PROPERTY DUE TO CLIMATE CHANGE
Our analysis suggests that transition risk from the move to a low carbon
economy could be a more significant exposure in the medium term than
physical climate risk. A fast transition via government policy change,
particularly in home energy efficiency requirements, is likely to have
the most material impact on Just. This impact will be mitigated by the
extent to which government softens the blow for homeowners through
grants and subsidies.

The government’s stated aim is for as many homes as possible to be
upgraded to an EPC rating of C by 2035 and it will consult on how this
could be achieved. Other policy initiatives are expected with lenders
being expected to play their part in encouraging improved energy
performance among the properties on which they advance loans.

An estimated three-quarters of the residential properties underlying our
lifetime mortgage portfolio of our existing lifetime mortgages have an
energy rating below the government’s target of an EPC rating of C. The
lower the EPC rating, the more likely that the property’s value will be
affected by this transition risk.

Our projections suggest that a scenario in which properties were
required to transition to better energy efficiency could lead to a 2%
reduction in property values in total across our portfolio. The projection
is based on assumptions about the cost of improving the energy ratings
to a minimum level of C, before allowing for any financial support from
government that may become available. This reduction in value would
only affect Just in instances where it leads to the property sale price
being lower than the loan balance. Any impact would be incremental
over a period of years as and when repayable following the customer’s
death or entry into long-term care.

CLIMATE RISK MANAGEMENT FOR THE PROPERTY PORTFOLIO
All the metrics produced by our scenario analysis are purely illustrative
as they project forward the potential climate impacts on our existing
property portfolio over the period to 2080. The composition of the
property portfolio will change significantly over the years and so the
outturn in practice can be expected to be quite different. The metrics are
also likely to overestimate the extent of the impacts as no allowance is
made for any mitigations, such as future action by the government to
improve flood defences.

Our property underwriting assessments already allow for flood and
coastal erosion risk. The climate change scenario analysis is being used
to improve understanding of how our lending policy and underwriting
approach need to evolve to manage any exposure to climate change
risk. Key risk indicators for transition risk, such as EPC limits, are being
developed and will be tracked. Changes to data collection processes will
be used to allow quantification of a wider range of scenarios and reduce
the need for assumptions.

CARBON FOOTPRINT
The assumed carbon emissions of our lifetime mortgage property
portfolio are shown in the table below:

Average emissions per US$ million of lifetime mortgage
balance outstanding

Based on lifetime mortgage portfolio as at 1 January 2021.

tCO2e tonnes
per annum

13.1

The emissions calculation uses assumptions based on the EPC
rating that is held for the property, implied by the property postcode
or modelled (available for about 95% of the portfolio). The average
tCO2e for each property was 4.61. Total emissions were adjusted
for the proportion of the total property value represented by the
outstanding loan balance and expressed per US$ million of the
balance. The methodology differs from the Science Based Target
Initiative standards for residential mortgages as they do not provide
guidance for lifetime mortgages.

INSURANCE RISK
The Group’s primary insurance risk exposure is to longevity risk,
through products such as our Guaranteed Income for Life product.
The insurance risk exposures to climate change are highly uncertain
and have not yet been quantified in the Group’s risk scenarios. Further
development is expected in this area as more research and data
becomes available.

POTENTIAL IMPACTS OF CLIMATE CHANGE ON LONGEVITY RISK

In recent decades life expectancy has increased due to medical advances
and lifestyle changes, and that the general underlying trend is expected
to continue in the future, albeit with some short/medium term disruption
through the impact of the COVID-19 pandemic. Most deaths in this country
relate to conditions such as heart disease and cancer, with air pollution
contributing to only about 5% of all UK deaths. The overall impact of
climate change on longevity is likely to be secondary through lifestyle
changes rather than direct. Interacting factors, including government
policy and individual lifestyle choices, make it difficult to accurately predict
the extent to which climate change could impact on longevity, but the
impact can reasonably be expected to evolve gradually over the years.

DIRECT IMPACTS

Temperature variations

Periods of extreme cold or hot weather are likely to lead to a significant increase in deaths,
primarily among those in already fragile health. Much of the impact on mortality rates may
result from advancing deaths over relatively short periods with a lesser impact on long-term
mortality rates.

A warmer winter climate in the UK could in time lead to increased longevity.

Reduced air pollution

Reduced pollution from fossil fuels and vehicle emissions from increased use of renewable energy
supplies and electric vehicles should lead to improved air quality and with time a reduction in the
associated deaths.

More frequent and severe floods and storms

Increased frequency and severity of floods and storms could lead to the loss of lives through
lasting localised socio-economic harm or less likely through direct mortality events. The impact
may be moderated through risk mitigation or adaptation.

INDIRECT IMPACTS

Lifestyle changes

The transition to a low carbon economy may lead to lifestyle changes, such as lower meat
consumption, which could improve life expectancy. However, other lifestyle trends, such as alcohol
consumption, could reduce life expectancy.

Global food chain and dietary changes

Increased flooding and drought may cause significant stress to the global food chain. However,
a food supply interruption severe enough to materially impact longevity seems unlikely given
the UK’s developed economy and infrastructure.

Economic conditions

Mortality varies significantly from the lowest to the highest income groups. The economic impact
of climate transition risk could reduce wealth overall with a greater impact on lower income
groups. Lower economic activity could result in reduced tax revenue potentially impacting
government spending on healthcare.

Emergence of new diseases

Diseases, usually more prevalent in warmer conditions, may emerge for which the British
population carries no natural protection. However, a well-developed healthcare system means
that the occurrence of sustained material deaths in the UK is unlikely.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

COLLEAGUES AND CULTURE

Working
the Just way

2021 was a year in which we successfully
transitioned colleagues, from homeworking
in light of COVID-19 to embracing our trial of
hybrid ways of working.

Throughout the year we maintained high levels of
engagement, with colleagues feeling proud to work at Just.
We created new working practices aligned to improved
wellbeing, maintained excellent service to our customers, and
developed our people to support Just’s commercial ambitions.

AWARD WINNING

In 2021 we were named as one of the
UK’s 100 Best Large Companies to Work
For and accredited as a 2 Star organisation,
representing outstanding levels of
engagement. We were also recognised
as one of Financial Services’ 30 Best
Companies to Work For, London’s
75 Best Large Companies to Work For,
South East’s 100 Best Companies to
Work For and Northern Ireland’s
10 Best Companies to Work For.

We undertook further work to define our culture and identity of being Just.
Everything we do should be delivered sustainably and is underpinned by
clear behaviours which we collectively call the Just way.

THREE STRATEGIC PEOPLE PRIORITIES
During the year we maintained our focus on three strategic people
priorities to enable the delivery of the Group strategy.

EMBRACED OUR NEW WAYS OF
WORKING TRIAL ALIGNED TO
ORGANISATIONAL RESILIENCE.

STRENGTHENED TALENT,
CAPABILITIES AND INCLUSIVITY.

ENSURED COLLEAGUES FELT PROUD TO
WORK AT JUST, WITH OUTSTANDING
LEVELS OF ENGAGEMENT.

…it is good to see colleagues chatting
and collaborating – reminds me why
Just is a good place to work
Colleague comment from feedback kiosk

EMBRACING OUR NEW WAYS OF WORKING
TRIAL ALIGNED TO ORGANISATIONAL RESILIENCE
From early 2021 we began to plan a trial of new, hybrid ways of working.
This commenced in September and incorporated feedback from
colleagues across the organisation. At the heart of our approach is our
belief that spending some time regularly in the office will help colleagues
to collaborate, innovate, learn from one another and network, as well as
sustain the great culture we’ve built at Just. More broadly, we want
to supplement the virtual and remote support colleagues have provided
to each other over the past two years with real, in-person connections.
Working remotely helped to create new relationships and we are
building on this to deepen those connections by colleagues spending
time together in the office.

Creating new working practices
To support the key reasons to work from the office, our spaces have
been reconfigured including offering neighbourhoods for teams to work
together, hot desking, break out areas, work coves, phone booths and
concentration zones. Desk and car parking booking technology, and the
latest digital and cloud technologies have been implemented as part of
creating a modern workplace to ensure colleagues have the right tools
for the right job at the right time and can seamlessly transition between
office and remote working. We have continually gathered feedback on
colleagues’ experiences of using the new environment – from QR codes at
settings which colleagues scanned on their mobiles through to physical
feedback kiosks. We adopted an agile test and learn approach to
introduce new ways of working for 2022 and beyond.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

COLLEAGUES AND CULTURE CONTINUED

So far my favourite is meeting room
1.1 in Enterprise House – there are
stools, ball-shaped seats and
hexagonal tables. It’s a perfect
room to use for collaborating
and workshops…
Colleague comment from
Just Ways of Working email

Colleagues sharing their stories
During the first part of 2021 we continued with our very successful Just
Connected stories, with content supplied by colleagues to share across
the organisation. This more personal form of communication carried on
offering glimpses into people’s lives – from celebrating Nelson Mandela
Day through to gardening for National Allotment Week. To support the
launch of our trial of hybrid working, we transitioned these stories to
focus more on how colleagues are finding their new normal with hybrid
working, and balancing the buzz of the office with getting their heads
down at home.

Supporting colleagues’ wellbeing
Supporting wellbeing has continued to be a priority and we have
appointed an executive member as the wellbeing sponsor. We recognise
the role we play as a good employer in supporting colleagues in their
work and personal lives. In taking the view that one size doesn’t fit all,
we offered a range of activities and support around mental, physical,
social and financial wellbeing. We have shared these programmes with
colleagues in a variety of ways, including Just offers and support emails
and some examples of notable activities include:

Just Talk
Just Talk sessions are informal meetings where colleagues share
information and knowledge on a range of subjects associated with the
characteristics of vulnerability. In a unique blend we invite specialist
speakers to share facts and we invite colleagues to talk about their own
experience of the subject. Key topics in 2021 were thriving on change,
with colleagues sharing their stories openly of managing significant
change in their own lives and tips to help colleagues thrive on change,
embracing it rather than fearing it. Healthy thinking explored the
idea of self-awareness and sharing productive coping strategies for
managing our thoughts and feelings. Managing my money offered
facts and helpful tips on managing money, with colleagues sharing
their personal experiences.

Mental health support
We recognise the toll that the pandemic has taken on colleagues’ mental
health and have a team of fully trained mental health first aiders. Mental
Health Awareness Week was an opportunity to promote a range of
resources and events, from an “Understanding food for managing
stress” webinar and relevant content on Headspace (known as a gym
membership for the mind), through to discounted sportswear from
MyActiveDiscounts and our cycle to work scheme. Our employee
assistance programme called WeCare is also available to all colleagues,
offering a broad range of wellbeing support, and we supplemented this
with other activities such as a webinar on “How to sleep in a changed
world” to mark World Sleep Day and free weekly online yoga classes.

Financial wellbeing
There are strong links between someone’s financial wellbeing and their
mental health and we have continued to offer a broad range of financial
wellbeing support. In particular, Pension Awareness Day was an
opportunity to re-emphasise the importance of colleagues having a clear
understanding of their pensions, and aligns with our own purpose of
helping people achieve a better later life. Colleagues were invited to join
sessions with our workplace pension provider targeted at whether they
were early career, required a mid-life MOT or nearing retirement, so
that they could gather the most appropriate information for their own
situation. In addition, we supplemented our extensive benefit offering
through the launch of a new will writing benefit for all colleagues.

I have to say, the talk with Peter
was one of the best things I
have seen in 12 years working
here – thanks to you and
whoever else teed it up – it was
really valuable to me and
everyone on the call I reckon
Colleague comment
from Just Talk session

STRENGTHENING TALENT, CAPABILITIES AND INCLUSIVITY
We are committed to supporting the personal and professional
development of every colleague at Just. Everyone has access to
unlimited on-demand learning material and content via our corporate
LinkedIn Learning licence. Since we launched LinkedIn Learning in
February 2020, 80% of colleagues have activated their accounts,
engaging with over 78,000 videos and 3,500 hours of content.

All colleagues complete mandatory e-learning modules to ensure that
we comply with regulatory and best practice standards in areas such
as General Data Protection Regulation, financial crime and money
laundering. We refreshed the content of these modules this year to
ensure that it aligned with the latest regulatory requirements.

We also offer a wide range of targeted development opportunities for
colleagues across the business. For example, we sponsored 58 actuarial
students to achieve qualifications through the Institute and Faculty of
Actuaries and supported 11 colleagues to study towards Chartered
Insurance Institute qualifications. We also supported 20 colleagues
through apprenticeship programmes, utilising our apprenticeship levy.

We continue to invest significantly in leadership and management
development programmes and initiatives, recognising the crucial role
of people managers particularly in leading productive, engaged and
healthy teams. Some examples include:
• Continued to roll out our flagship leadership and management
development programmes – Just Lead and Just Engage – with
35 participants in these programmes over the past year. These
modular programmes include delivery of content aligned to key
learning objectives linked to our leadership standards, as well as
individual and group coaching sessions, with plenty of opportunity
for peer-to-peer learning.

• 31 people managers from across the business have taken part in
the level five leadership and management diploma delivered in
partnership with an external learning consultancy.

• We have engaged with external specialists to deliver leadership
development sessions for our senior leaders focused on topics
including resilience, diversity and inclusion, and storytelling.

We continued to make strong progress with respect to our commitment
to building a diverse workforce and an inclusive culture at Just.

Once again, we increased gender diversity at senior levels from 24%
to 27% and are on track to deliver against our ‘33 by 23’ pledge as
a signatory to the Women in Finance Charter that 33% of our senior
leaders will be female by 2023. As at the date of this report the
percentage of women on our Board has increased to 40% (from 30%
in March 2021). Our gender pay gap reduced between 2020 and 2021
– the mean hourly wage was down from 35.8% to 34.4% and the median
hourly pay gap reduced from 33.5% to 31.3%. These figures reflect an
increasing proportion of women at senior levels in Just.

As a signatory to the Race at Work Charter, we appointed Giles Offen,
Group Chief Digital Information Officer, as executive sponsor for Race.
Under his sponsorship, we have publicly committed to increasing the
percentage of senior leaders from a Black, Asian or Minority Ethnic
background to 15% by 2024, in line with the percentage in the broader
UK population. We have also voluntarily published our ethnicity pay
gap report alongside our gender pay gap report.

Our progress against our diversity and inclusion (“D&I”) strategy and
targets is underpinned by a wide range of initiatives with engagement
from colleagues across the business. Examples include:
• 30 colleagues have taken part in the actuarial mentoring programme,
either as a mentor or a mentee, with ten mentees/mentors in 2019,
2020 and 2021. This programme is primarily designed to support the
development and retention of women within the actuarial profession.
A further 62 colleagues have taken part in the 30% club cross
company mentoring programme, connecting female talent with
experienced mentors from outside of our company.

• As part of our executive sponsorship programme, 18 female

colleagues were matched with an executive sponsor at Just to provide
mentorship, advice and support for their development. Feedback
from this programme was excellent: “It has made me step back and
consider my own career a bit more, as in think about what I want and
think about what I need to get there.” We will expand this programme
in 2022 to include colleagues from a Black, Asian and Minority
Ethnic background.

• Every member of our executive and senior leadership team took part

in D&I workshops. The aim of these workshops was to raise awareness
and understanding of D&I more broadly and issues around race and
ethnicity at work in particular. Participants committed to individual
and shared action plans following the workshops.

• We launched a reciprocal mentoring programme whereby colleagues
from a Black, Asian and Minority Ethnic background mentor a member
of our executive team – once again, to raise the awareness and
understanding of our most senior leaders around race and ethnicity
issues at work as part of our commitment to the Race at Work Charter.

• Our executives have hosted a series of open sessions called Just
perspectives, attended by colleagues from across the business
and supported by our employee networks and D&I Champions.
These sessions have covered a wide range of D&I topics, including
race, disability, LGBT and allyship, menopause and social mobility.
These forums have provided an excellent way to engage
colleagues across the business on our D&I agenda to build
momentum to support progress.

• For the fourth year in a row, we co-hosted a session as part of DiveIn,

the festival for diversity and inclusion in the insurance industry.
Around 1,450 people attended the session which was hosted and
facilitated by Giles Offen and focused on the topic of allyship.

COLLEAGUES FEELING PROUD TO WORK AT JUST,
WITH OUTSTANDING LEVELS OF ENGAGEMENT
During the year we continued to communicate and engage with
colleagues through a range of mediums – from “Conversations with the
Board”, via Microsoft Teams (see page 30 for more details on the Board’s
approach to colleague engagement) and leadership video updates,
through to an offsite gathering for hundreds of colleagues and investing
in Pawprint, our new sustainability partner and eco companion
for colleagues.

BestFest
In January we took part in the Best Companies annual survey and were
delighted to achieve our highest level of employee engagement since
starting to take part in the survey in 2009. In September we recognised
this fantastic achievement with a festival style celebration called BestFest.
The event was held outside at Lingfield in Surrey with music, games, food,
drinks and most importantly our colleagues – some of whom had not
seen each other in person for 18 months!

This was a superb event. I am not a social
animal but I still really enjoyed myself and
mingled with lots of colleagues. Being able
to walk around freely and enjoy what was
on offer worked really well. 10/10, I wouldn’t
have changed a thing!!
Colleague comment from feedback survey

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

COLLEAGUES AND CULTURE CONTINUED

92%

of colleagues who completed our internal
feedback survey agreed that BestFest
helped them to informally reconnect face
to face with colleagues

730

The average attendance at the town
halls was approximately 730 (2020:
700) colleagues, with on average 521
(2020: 650) colleagues completing our
pulse surveys which continued to
share really positive feedback

82%

Throughout the year, at least 82% (2020:
91%) of colleagues who responded to our
internal pulse surveys felt that the town
halls were valuable and at least 89% (2020:
94%) felt informed about what was
happening in our organisation at that time

Supporting our communities and charities
As part of our approach to sustainability (see page 18), we have
continued to recognise our duty to the communities in which we
operate, as outlined in our charity and community policy. We raised
funds for our corporate charity partner Re-engage, in line with our
purpose of helping people achieve a better later life. Activities included a
virtual “Around the World in 80 days” sponsored challenge and gifting
our apprenticeship levy to Re-engage to train a data analyst for their
business. We recognised Dementia Action Week in May, providing
training to colleagues to become dementia friends, ran regular charity
bingo sessions and the Company supported employee fundraising (half
matching their funds up to £500) for a number of charities close to
colleagues’ hearts, including Cancer Research UK, Battersea Dogs and
Cats Home, The Lucy Rayner Foundation and Alzheimer’s Society.
We also worked with a local domestic abuse charity to furnish their
office, allowing them to focus their funds on the vital work they do.

We were delighted to achieve five stars in the Pensions and Protection
and Mortgages categories at the Financial Adviser Service Awards
for 2021, as well as being awarded Company of the Year. We wanted to
recognise this great success, and rather than giving our colleagues a gift
as we have in previous years, we decided to purchase one tree for every
colleague from EcoTree. As a gift for good, each tree will contribute to
the fight against global warming by capturing carbon, and will support
biodiversity over its lifetime.

Town halls
We held four CEO town halls during 2021 which provided regular
opportunities to give business updates and promote two-way
communication. After initially having to hold them fully remotely, in
October we were able to deliver them in a hybrid manner, with some
colleagues joining in person and other colleagues remotely, adding to
the interactivity of the sessions. To align with these town halls we held
three internal pulse surveys, in addition to taking part in the annual
Best Companies survey.

It was interesting to hear the Board
members’ personal experiences of
culture but more than anything it was
great to have access to the Board
members like this. I’ve never worked in a
company where employees can directly
interact like this with Board members,
normally they seem quite removed
and distant
Employee feedback from Conversation with the
Board session

OUR EMPLOYER BRAND
At the heart of being a great place to work is our employer brand, which
we’ve designed to stand out in the market and make us a company that
colleagues choose to work for. During 2021 consistently at least 82% of
colleagues who took part in our internal pulse surveys said they would
recommend working at Just to their friends and families. Our employer
brand is aligned to a number of key aspects, such as having a strong
social purpose, a flexible, hybrid work environment, a range of growth
and development opportunities and a competitive total reward offering.

Towards the end of the year we held a “Conversations with the
Board” session, with three of our Non-Executive Directors, as part
of a programme of activity to ensure that the Board directly hears
colleagues’ views on a variety of topics so that it can feed into their
decision making. The theme was the importance of our culture,
including the Board’s role in guiding our culture and being Just.
We had great feedback on the session with 96% of respondents
saying that they found the session valuable.

We continue to see a healthy level of voluntary turnover in 2021 of 11.6%
(compared to 7.8% in 2020 when turnover rates across all industries were
lower during the pandemic). We have also seen a significant proportion
(35%) of vacancies filled by internal candidates. Taken together, these
figures reflect our strong employer brand and the growth opportunities
that we offer to every colleague at Just. That’s why so many of our
talented people are committed to developing their careers within Just.

We recognise that in fast changing and uncertain environments our
purpose, behaviours and culture provide colleagues with direction and
continuity – our north star. Our culture, combined with our strong
purpose, is one of our key competitive advantages and can’t easily be
replicated. Through storytelling we have focused on bringing the words
on the page to life, demonstrating all the great examples we have in the
business of colleagues delivering sustainably and following the Just way
of being dynamic, for the customer, collaborative and always adapting.

As part of our total reward offering, we have a number of core funded
benefits available to all colleagues. 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 colleagues can select at their own cost. These are
critical illness cover, partner life assurance, will writing, cycle to work
scheme, dental insurance, travel insurance, health screening,
MyGymDiscounts and MyActiveDiscounts.

OUR CULTURE AND IDENTITY OF BEING JUST
At the heart of our business is our culture and identity of being Just.
How we do things and our behaviours are just as important as what we
do and during the year we spent a considerable amount of time distilling
this into our culture on a page. Aligned to this, the Group’s enterprise-
wide risk management strategy enables colleagues to take more
effective decisions through a better understanding of risk (see page 58
on Risk management for more information).

Underpinning everything is a
strong sense of fairness and
respect to fellow employees
and clients and customers
Employee quote from
Best Companies survey

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

RELATIONSHIPS WITH STAKEHOLDERS

The Board recognises that the long-term
sustainable success of Just is dependent on
the way it engages with our key stakeholders.

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.

• Advice they can trust.

• Good value for money.

• Product differentiation.

• Quality of service delivered.

• Reputation of the Company.

• Security and peace of mind that Just will deliver its promises.

• Behave prudently and have strong, effective governance to ensure we will always meet

the promises we make to our policyholders.

• 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

• Launched a new medically underwritten Just For You Lifetime Mortgage (“LTM”) to offer

service (see page 3).

personalised terms for customers.

• Further investment in our Just For You LTM automation initiative including the launch of

digital applications via the Just portal for use by advisers.

• Offer Destination Retirement, a financial planning service that provides tailor-made advice

to individuals starting, or transitioning into, their life after work.

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 encourage dialogue
and share knowledge.

• We have individual meetings to understand the specific

challenges facing pension scheme trustees.

• We commission surveys and other research to listen to

feedback from trustees and advisers.

COLLEAGUES
The team of colleagues at Just who
deliver outstanding service to customers
and to 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.

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.

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.

SUPPLIERS
The companies providing the services,
materials and resources to enable Just
to operate the businesses in the Group.

• On-going 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.

• Good value for money.

• Developed strong asset sourcing capability and medical underwriting that delivers

• Financial strength and strong counterparty credentials that

pricing advantage.

deliver security for advisers, trustees and their members.

• Selectively participate in bulk annuity tenders and have deployed our innovative

• Reputation of the Company and service quality.

• Access to the defined benefit de-risking market for

smaller transactions.

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

• Policyholder experience and service quality as many schemes

buy-in assets.

are targeting future buy-out transactions.

• Hosted a wide range of events for advisers to share knowledge.

• A secure asset portfolio with ESG and sustainability at its heart.

• The Group having a clear vision and purpose.

• Having the opportunity to grow and develop.

• CEO quarterly briefing sessions for all colleagues across the Group to reiterate Just’s purpose

and provide a business update on key initiatives to deliver our strategic priorities and help

• Diversity and inclusion.

• Wellbeing.

• Modern ways of working.

people achieve a better later life.

• Non-Executive Director engagement with colleagues to bring their voice into the boardroom.

• Developing colleagues through in-role experience, coaching, mentoring, online learning

• Strong community and environmental credentials.

and training.

• Continued to make strong progress with respect to our commitment to build a diverse

workforce and an inclusive culture at Just.

• Offered support and guidance for our colleagues built around mental, physical, social and

financial wellbeing.

• Trialled a new, hybrid way of working incorporating feedback from colleagues, to encourage

collaboration and innovation, and to sustain Just’s culture.

• Organised activities to involve colleagues in supporting our corporate charity and launched

Pawprint, an app to support colleagues to reduce their own carbon footprint.

• Improve returns for shareholders.

• The Chair met with various shareholders in 2021 to engage on Just’s performance and

• Assured regular interest payments and capital protection.

strategic developments, and to discuss any issues or concerns.

• Deliver a sustainable capital model.

• Further refined our strategy with clear, specific goals driven by appropriate priorities

• Operate in a socially responsible manner including

including a target to achieve greater than 10% return on equity.

greater Board diversity.

• Recommenced the payment of dividends to shareholders.

• Issued a RT1 Sustainable Bond to strengthen Just’s broader sustainability credentials.

• Continued focus and steps taken during the year to improve Board diversity.

• Boards and senior management understand the regulatory

• Continued to respond to regulators in a timely and constructive manner and engage directly

objectives, and seek to ensure good consumer outcomes

on any key regulatory matters.

are achieved and policyholder commitments are met.

• Implemented various material management actions to further reduce residential

• A culture that supports adherence to the spirit and the

property exposure.

letter of regulatory rules and principles.

• Active participation in policy development directly with regulators and via trade bodies.

• Foster open and transparent communications with

• Timely preparation and filing of regulatory returns.

our regulators.

• Positive engagement to encourage effective competition

and consumer protection which results in better

customer outcomes.

• Collaborative relationships with open, honest and

• Our Group procurement and outsourcing policy ensures that tender processes are fair and

transparent communications.

transparent, and all suppliers receive feedback on submissions. All suppliers are expected to

• Fair, transparent and objective process and evaluation

adhere to relevant legislation and regulatory regimes, and to act ethically and with integrity.

criteria when bidding for new business.

Risk-based profiling ensures all suppliers receive the relevant level of interaction with Just.

• Fair payment terms which are consistently met

• Clearly defined performance metrics are agreed with the supplier at the outset to measure

within deadlines.

• Conflicts of interest checks at on-boarding ensuring advantages are not gained through

on-going success.

personal relationships.

OUR STAKEHOLDERS

HOW WE ENGAGE

WHAT MATTERS TO THEM

HOW WE HAVE/ARE ADDRESSING THESE CHALLENGES

We recognise the role that each stakeholder group plays in our success and our responsibilities
towards them. Building strong stakeholder engagement to understand their interests is
essential. The table below describes our 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 40 to 42 within the Section 172 report.

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.

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 encourage dialogue

and share knowledge.

• We have individual meetings to understand the specific

challenges facing pension scheme trustees.

• We commission surveys and other research to listen to

feedback from trustees and advisers.

COLLEAGUES

The team of colleagues at Just who

deliver outstanding service to customers

and to 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.

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.

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.

SUPPLIERS

The companies providing the services,

materials and resources to enable Just

to operate the businesses in the Group.

• On-going 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.

• Security and peace of mind that Just will deliver its promises.
• Advice they can trust.
• Good value for money.
• Product differentiation.
• Quality of service delivered.
• Reputation of the Company.

• Behave prudently and have strong, effective governance to ensure we will always meet

the promises we make to our policyholders.

• 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).

• Launched a new medically underwritten Just For You Lifetime Mortgage (“LTM”) to offer

personalised terms for customers.

• Further investment in our Just For You LTM automation initiative including the launch of

digital applications via the Just portal for use by advisers.

• Offer Destination Retirement, a financial planning service that provides tailor-made advice

to individuals starting, or transitioning into, their life after work.

• Good value for money.
• Financial strength and strong counterparty credentials that
deliver security for advisers, trustees and their members.

• Reputation of the Company and service quality.
• Access to the defined benefit de-risking market for

smaller transactions.

• 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

• Policyholder experience and service quality as many schemes

buy-in assets.

are targeting future buy-out transactions.

• Hosted a wide range of events for advisers to share knowledge.

• A secure asset portfolio with ESG and sustainability at its heart.

• The Group having a clear vision and purpose.
• Having the opportunity to grow and develop.
• Diversity and inclusion.
• Wellbeing.
• Modern ways of working.
• Strong community and environmental credentials.

• CEO quarterly briefing sessions for all colleagues across the Group to reiterate Just’s purpose
and provide a business update on key initiatives to deliver our strategic priorities and help
people achieve a better later life.

• Non-Executive Director engagement with colleagues to bring their voice into the boardroom.
• Developing colleagues through in-role experience, coaching, mentoring, online learning

and training.

• Continued to make strong progress with respect to our commitment to build a diverse

workforce and an inclusive culture at Just.

• Offered support and guidance for our colleagues built around mental, physical, social and

financial wellbeing.

• Trialled a new, hybrid way of working incorporating feedback from colleagues, to encourage

collaboration and innovation, and to sustain Just’s culture.

• Organised activities to involve colleagues in supporting our corporate charity and launched

Pawprint, an app to support colleagues to reduce their own carbon footprint.

• Improve returns for shareholders.
• Assured regular interest payments and capital protection.
• Deliver a sustainable capital model.
• Operate in a socially responsible manner including

greater Board diversity.

• The Chair met with various shareholders in 2021 to engage on Just’s performance and

strategic developments, and to discuss any issues or concerns.

• Further refined our strategy with clear, specific goals driven by appropriate priorities

including a target to achieve greater than 10% return on equity.

• Recommenced the payment of dividends to shareholders.
• Issued a RT1 Sustainable Bond to strengthen Just’s broader sustainability credentials.
• Continued focus and steps taken during the year to improve Board diversity.

• 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

• Continued to respond to regulators in a timely and constructive manner and engage directly

on any key regulatory matters.

• Implemented various material management actions to further reduce residential

property exposure.

letter of regulatory rules and principles.

• Foster open and transparent communications with

• Active participation in policy development directly with regulators and via trade bodies.
• Timely preparation and filing of regulatory returns.

our regulators.

• Positive engagement to encourage effective competition

and consumer protection which results in better
customer outcomes.

• Collaborative relationships with open, honest and

• Our Group procurement and outsourcing policy ensures that tender processes are fair and

transparent communications.

• Fair, transparent and objective process and evaluation

criteria when bidding for new business.

• Fair payment terms which are consistently met

transparent, and all suppliers receive feedback on submissions. All suppliers are expected to
adhere to 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

within deadlines.

on-going success.

• Conflicts of interest checks at on-boarding ensuring advantages are not gained through

personal relationships.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SECTION 172 STATEMENT

HOW THE
DIRECTORS MAKE
DECISIONS

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.

On pages 36 to 37 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.

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:

the likely consequences of any decision in the long term

the interests of the Company’s employees

the need to foster the Company’s business relationships
with suppliers, customers and others

the impact of the Company’s operations on the community
and the environment

the desirability of the Company maintaining a reputation
for high standards of business conduct

the need to act fairly between members of the Company

S172 FACTOR

EXAMPLES OF MATTERS THE BOARD HAS REGARD TO

LONG TERM

COLLEAGUES

• Company’s purpose
• Strategy
• Business model
• Risks including emerging risks
• Key stakeholders
• Regulatory framework

• Colleague engagement
• Diversity and inclusion
• Education and training
• Modern workplace
• Wellbeing

BUSINESS
RELATIONSHIPS –
SUPPLIERS AND
CUSTOMERS

• Anti-bribery and anti-

corruption

• Modern slavery
• Responsible payment

practices

• Vulnerable customers

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
addressing the changing regulatory environment.

Ensuring colleagues feel proud to work at Just, with outstanding levels of engagement,
embracing our new ways of working trial aligned to organisational resilience and
strengthening our talent, capabilities and inclusivity have been key strategic focus
areas for the Board during 2021. Our Colleagues and culture report on pages 30 to 35
details Just’s commitment to colleagues’ interests, diversity and inclusion, colleague
engagement, education and training, wellbeing and building a modern workplace.

The Board is committed to fostering the Company’s business relationships with
suppliers, customers and other stakeholders. Pages 36 to 37 detail 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. Our supplier contracts are being progressively updated to ensure
suppliers are committed to ethical business practice with regard to anti-money
laundering, anti-bribery and corruption, whistleblowing and anti-slavery and human
trafficking laws.

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 during the year.

COMMUNITY AND
ENVIRONMENT

• Community programme
• Climate change
• Environmental impact
• Sustainable investments

The Board recognises Just’s place in society and has reaffirmed the Group’s purpose of
helping 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”.

HIGH STANDARDS
OF BUSINESS
CONDUCT

• Just Group brand
• Culture and values
• Awards and recognition
• Internal controls
• Whistleblowing

INVESTORS

• General meetings
• Shareholder engagement
• Dividend policy

The Board adopted Just’s sustainability strategy in 2021 with initiatives being
developed to deliver the Group’s sustainability ambitions, which includes leaving a
responsible footprint. Pages 22 to 23 outline the Group’s sustainability strategy and
how it aligns with Just’s strategic priorities.

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.

Our intention is to ensure that Just 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. Further work was undertaken in 2021
to define Just’s culture and identity. Everything Just and our colleagues do should be
delivered sustainably and is underpinned by clear behaviours of always adapting,
collaborative, dynamic and for the customer, which we collectively call the Just way.

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 effective and fit for purpose.

The Board reviews and approves Just’s whistleblowing policy annually. The Group has
a dedicated whistleblowing hotline and portal that allows colleagues who suspect
fraudulent, illegal or unethical behaviour by co-workers to report the matter through
an independent and confidential service.

We receive capital investment from shareholders and from debt investors and
without their investment we would not be able to achieve our purpose. We maintain
regular dialogue with our shareholders, potential investors and research analysts
to give them an opportunity to learn more about Just’s strategic priorities, trading
conditions and other factors affecting our business. Our Annual General Meeting
provides another opportunity for investors to meet with our Directors. See pages 36
to 37 for the various ways in which we engage with our different investor groups.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SECTION 172 STATEMENT – EXAMPLES OF DECISIONS DURING THE YEAR

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.

AREA OF DECISION

MATTER CONSIDERED

WHAT WE DID

S172 FACTOR/
KEY STAKEHOLDERS

High standards
of business
conduct,
colleagues

The Board considered and agreed the Group’s strategy execution plan for
2021 which included a strategic priority to transform how we work that
was supported by a set of key dependencies to deliver in 2021. The key
dependencies included delivering a retail transformation programme, a finance
transformation programme and modern workplace technology, environment
and processes. The Board has committed to invest in transformation and
operational improvements to enable the Group to create a business that can
scale without adding significant cost.

The Directors have provided oversight on these initiatives and regular status
updates were received at Board and Board Committee meetings. The
implementation of IFRS 17, the new insurance accounting standard, is one of
the key focus areas for the year ahead to ensure compliance with the new
requirements which are effective from 1 January 2023.

As part of the modern workplace programme, the Board engaged on plans
to trial new, hybrid ways of working and received updates from senior
management on the new working model for Just and how the changes
optimise our organisational footprint, and the impact of the programme
on our culture.

The Board engaged on culture, colleague engagement and wellbeing, and
considered the impact that more flexible models of working could have on our
culture, which is grounded firmly in our clear and compelling purpose as a
business to help people achieve a better later life. The Board also considered
the framework for measuring culture, which included active management of
performance and promoting individual accountability.

Colleagues

Diversity and inclusion remains a key focus area for the Directors both at
Board level and the wider workforce. Key initiatives included conducting
workshops to raise awareness and understanding of diversity and inclusion
more broadly and issues around race and ethnicity at work in particular. Group
inclusion measures were also defined during the year. At Board level, the Board
diversity policy was reviewed by the Nomination and Governance Committee
during the year. In line with the Board succession plan, the percentage of
female Directors has increased and currently stands at 40%.

During the year, colleagues were invited to attend a series of virtual
engagement sessions with Non-Executive Directors branded as “Conversations
with the Board”, which were framed around various themes and topics
including the impact of COVID-19, challenges and opportunities for our
business, diversity and inclusion, and our culture where the pay of Executive
Directors was discussed and its alignment with the wider workforce. 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 Officer held a series of virtual and hybrid town halls
during 2021 to reiterate the Group’s purpose and strategic objectives, and to
provide general business updates. Feedback from colleagues on matters such
as wellbeing, hybrid working and job satisfaction was gathered through various
means including surveys and focus group sessions.

During the year, Just was accredited by Best Companies as a 2 star organisation
representing outstanding levels of engagement, which is our highest level of
employee engagement since starting to take part in the survey in 2009.

TRANSFORM
HOW WE WORK

The Board considered
various initiatives to
support its strategic
priority to transform
how we work.

COLLEAGUES
AND CULTURE

Based on the strategic
priority be proud to work at
Just, the Board considered
a programme of activity
to ensure it was engaged
on key developments
impacting colleagues
and culture, and that it
had opportunities to
engage with colleagues
through meaningful,
regular dialogue.

S172 FACTOR/
KEY STAKEHOLDERS

Long term and
investors

AREA OF DECISION

MATTER CONSIDERED

WHAT WE DID

STRATEGY

The Board considered
and refined the Group’s
strategy with clear, specific
goals driven by appropriate
priorities to be delivered
sustainably and following
the Just way.

Following on from becoming capital self-sufficient in 2020, the Board has
focused on further refining the Group’s strategy by increasing its growth
ambitions, building a sustainable capital model and setting environmental
sustainability goals. The Board agreed specific goals driven by appropriate
priorities to fulfil its purpose of helping people achieve a better later life.

Key actions by the Group during the year included:
• the sale of a portfolio of lifetime mortgages to further reduce the Group’s
exposure to UK residential property risk. It also reduces the sensitivity
of the solvency capital coverage ratio to movements in UK residential
property prices;

• expanding Just’s proposition in the defined benefit de-risking market to

fully meet the needs of deferred members of pension schemes;

• building a pipeline of companies for Just’s pioneering automated financial
advice and integrated retirement service, Destination Retirement, to guide
and support customers who need help to structure their financial plans for
life after work;

• the introduction of medical underwriting on our Just for You Lifetime

Mortgage, which revolutionises the lifetime mortgage market by offering
customers the ability to secure a more competitive interest rate and/or a
higher loan-to-value mortgage; and

• progressed plans to expand our Secure Lifetime Income proposition onto

an additional platform in 2022.

Further information on the Group’s strategy can be found on pages 16 to 17.

DEBT
REFINANCING

The Board explored
potential opportunities for
the Group to reduce the
on-going cost of its debt.

Given more favourable market conditions, the Board considered whether
it should reorganise the Group’s debt and explored various options to
determine the most appropriate form of debt reorganisation. As part of
its deliberations, the Board considered and concluded that it would like to
pursue a sustainability bond classification for a new issue to broaden the
Group’s sustainability credentials.

Long term
and investors,
community and
environment

The Board took into consideration feedback from various investors on the
potential opportunity to refinance debt to reduce on-going interest costs,
lengthen the duration profile of debt to better match the cash flows in the
business and provide underlying organic capital generation.

In August 2021, the Board issued a circular to shareholders containing a notice
convening a general meeting for the purpose of seeking approval to confer on
the Directors the power to allot ordinary shares and grant rights to subscribe
for or convert any security into ordinary shares in connection with any issue of
Restricted Tier 1 (“RT1”) Bonds. The resolutions were approved by shareholders
on 31 August 2021. After considering its options, the Board approved its
refinancing arrangements, which included the issuance of a new RT1 Bond that
was designated as sustainable. The refinancing exercise reduces the pre-tax
interest costs of the Group by £12m per annum and improves the Group’s
Solvency II post-tax organic capital generation by £10m per annum.

DIVIDEND AND
CAPITAL
MANAGEMENT

The Board considered
whether to recommend
the payment of a final
dividend taking into
consideration the key
focus on delivering
profitable and sustainable
growth.

Given the stronger capital position of the Group and its focus on delivering
profitable and sustainable growth while generating capital, the Board decided
to review the dividend policy and concluded to recommence dividend
payments from May 2022. As part of its deliberations on whether to declare a
dividend for the year ended 31 December 2021, the Board considered the ability
of the Group to continue to generate capital, the impact on its solvency capital
ratio, and its stakeholders’ views.

Shareholders

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SECTION 172 STATEMENT – EXAMPLES OF DECISIONS DURING THE YEAR CONTINUED

AREA OF DECISION

MATTER CONSIDERED

WHAT WE DID

SUSTAINABILITY The Board considered and

adopted the Group’s
sustainability strategy.

PROCUREMENT
AND
OUTSOURCING

The Board considered
governance oversight and
processes for procurement
and outsourcing
arrangements.

The Board considered and adopted its sustainability strategy with particular
focus on embedding a sustainable framework and practices as part of its wider
strategy and culture. Following an assessment, the Board committed to clear
and measurable sustainability targets for the Group’s operations to be net
zero by 2025 and its investments and supply chain to be net zero by 2050,
with a reduction of 50% by 2030 in line with the Association of British Insurers
(“ABI”) climate change roadmap. The Board also appointed Steve Melcher, an
independent Non-Executive Director, as its lead on sustainability matters. Steve
Melcher will challenge and guide management in relation to our targets and
wider sustainability trends in his role as lead on sustainability matters in the
year ahead.

As part of its discussions on strategy, the Board considered how it can align the
Group’s sustainability activities to its strategic priorities. Engaging colleagues
to improve Just’s footprint and supporting them to reduce their own footprint
are examples of sustainability activities that the Board endorses in alignment
with the priority “Be proud to work at Just”. Other priorities as part of the
Group’s sustainability strategy looking forward include determining how to
score the carbon footprint of Just’s supply chain and how to engage with
customers to understand and support their requirements and expectations
with regard to climate. Executive Directors’ performance-related criteria now
include sustainability metrics to ensure their remuneration is aligned with the
Company’s long-term sustainability strategy.

Following the issuance of a Green Bond in 2020, the Group has further
strengthened its broader sustainability credentials through the issue of a new
RT1 bond which was designated sustainable and it has committed to invest the
proceeds in sustainable investments.

Each of the Board Committee’s terms of reference and Group policies have been
reviewed and, where appropriate, specific responsibilities have been included to
consider climate change matters and the impact on the Group’s targets. Board
and Committee papers now include information on the impact of any proposals
on the Group’s sustainability strategy.

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. This included the addition of a new high
level climate risk appetite, which was approved by the Board during the year.

Throughout the Annual Report you will find information on climate change
and the steps taken by the Group to strengthen its sustainability credentials.

During the year, the Board considered and approved a new investment
governance process, which allows for decisions to be taken in relation to the
approval of different types of investment outsourcings based on materiality
and risk. The process has due regard to the Group procurement and
outsourcing policy, whilst recognising that investment outsourcings are
technical and require specialist oversight in a different manner to other
outsourcings. The process was developed to recognise and place more
emphasis on the key role of the Investment Committees of Just Retirement
Limited and Partnership Life Assurance Company Limited in the review and
approval process for the Just Group entities entering into third party investment
outsourcings. It also aligned the process with the key Prudent Person Principle
requirements under the Solvency II Directive.

The Board reviewed and approved the updated Group procurement and
outsourcing policy, which ensures that high standards of honesty, impartiality
and integrity are maintained in our business relationships. Just takes a zero
tolerance approach to modern slavery and implements various measures to
prevent modern slavery and human trafficking in our supply chain as covered
in more detail in the Modern Slavery Statement approved by the Board. The
Modern Slavery Statement can be found on the Company’s website. In addition,
our supplier contracts are being progressively updated to ensure suppliers are
compliant with anti-slavery and human trafficking laws.

S172 FACTOR/
KEY STAKEHOLDERS

Community and
environment,
colleagues,
customers,
suppliers,
investors

High standards
of business
conduct,
suppliers and
partners

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
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 or in-retirement. Our business
model is centred around creating long-term value focusing on attractive
segments of the UK retirement income market. Our priority is to convert
the growth opportunities in our markets to deliver positive outcomes for
customers, shareholders and colleagues. Our business model on pages
14 to 15 sets out our growth opportunities, how we create value and who
we create value for.

OUR NON-FINANCIAL POLICIES
We have non-financial policies which govern how we do business
and how we interact with our stakeholders 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 enables us to protect our stakeholders by
growing the business sustainably.

NON-FINANCIAL KEY PERFORMANCE INDICATORS
The Board does not currently monitor any non-financial key performance
indicators, but it receives reports and management information
regarding key non-financial matters such as technology and the
investment programme, operational performance and colleagues.
The discretionary bonus plan for colleagues uses non-financial metrics
to decide part of the bonus pool which the Board and Remuneration
Committee review.

1. ENVIRONMENTAL

2. COLLEAGUES

MATERIAL AREA OF IMPACT

POLICIES

POLICY DESCRIPTIONS

• Carbon footprint
• Use of resources
• Investments

(responsible investing)

• Impact of the

operations of our
suppliers

• Sustainable

• Sustainable Investment Framework: see the report on

Investment Framework
(a framework used by
our Investment team)
• Group procurement and

outsourcing policy

sustainability 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.

• 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 charity and community policy: see “social” below.
• Board diversity policy: see the Nomination and Governance

Committee report on pages 81 to 83.

• Flexible working policy: provides support and advice to colleagues

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
effective in mitigating the risk of colleagues lacking the expertise
and knowledge required for their role and potentially resulting in
poor customer outcomes.

• Group conduct risk

• Group fitness and propriety policy: sets out a framework for

policy

• Group conflicts of

interest policy

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

• Group whistleblowing

managing operational risk.

policy

• 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, communication
with customers, skill, care and diligence, and conflicts of interest.

• Group conflicts of interest policy: sets minimum standards and
provides guidance to statutory Directors and other personnel
whose activities with customers, colleagues and third parties may
give rise to a conflict of interest or potential conflict of interest.

• 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.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NON-FINANCIAL INFORMATION STATEMENT CONTINUED

MATERIAL AREA OF IMPACT

POLICIES

POLICY DESCRIPTIONS

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 sustainability to support the
achievement of our purpose.

4. HUMAN RIGHTS

• Data protection
• Modern slavery
• Impact of our products

• Group procurement

• Group procurement and outsourcing policy: see “environmental”

and outsourcing policy

above.

• Modern Slavery

• Modern Slavery Statement: sets out our policies and processes to

and services on
vulnerable customers

Statement
• Group data

protection policy
• Group vulnerable
customer policy

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 personal data to comply
with regulatory requirements.

• Group vulnerable customer policy: defines our approach to

ensuring 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
to, by or on behalf
of Just

• Group financial crime

• Group financial crime policy: sets high level standards for the

policy

• Group compliance policy
• Gifts and hospitality

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.

procedure

• Group compliance policy: sets out the Group’s approach to

• Group whistleblowing

policy

ensuring that it operates in compliance with the relevant laws
and regulations.

• Gifts and hospitality procedure: sets out rules and guidance for all
to follow to ensure that no undue influence has been applied to an
external organisation or anyone else dealing with the Company,
and that the Company has not applied any undue influence or is
perceived to have unduly influenced a business decision.

• Group whistleblowing policy: see “colleagues” above.

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 hybrid ways of working from the office and at home.
The Group is UK based with a small operation in South Africa. During
the year we set clear and measurable sustainability targets for the
Group’s operations to be net zero by 2025 and its investments and
supply chain to be net zero by 2050, with a reduction of 50% by 2030
in line with the ABI’s climate change roadmap. During the year, the
Group reduced our office footprint in support of the goal. We also
introduced to colleagues Pawprint, our new sustainability partner
and eco companion. Pawprint is an app which will help us make
more climate-friendly choices, and assist in allowing us to measure,
better understand and reduce our carbon footprint at work.

• During the year, the Group progressed its modern ways of working
programme with all colleagues able to work from home for part of
the week. We will continue to develop our ways of working.

• We are committed to promoting good corporate environmental

2. COLLEAGUES
• Building our organisational resilience, strengthening our talent and
capabilities, and ensuring colleagues feel proud to work at Just is a
key 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 an inclusive
culture; and fostering belonging through supporting people to be
themselves. The Board sponsor for diversity and inclusion is the
Group Chief Executive Officer.

• There is an active programme to improve Board diversity in

accordance with the Board diversity policy. Further information on
this policy and the steps taken to improve Board diversity can be
found in the Nomination and Governance Committee report on
pages 81 to 83.

practice and have ISO 14001:2015 certification.

• Gender diversity across senior roles has increased by three

• The Group continued to invest the proceeds of the Green bond in

eligible green projects. Further information can be found on pages 20
to 21. The Group also issued new RT1 capital which was designated
sustainable and it has committed to invest the proceeds in sustainable
investments. Information about the Green and sustainable bonds, and
the investments that the proceeds can be invested in can be found on
our website.

• Information about our Investment team and their sustainable

investment strategy and framework is included on pages 20 to 21.
• Information on Just’s sustainability pillars including the steps we are
taking to leave a responsible footprint is set out in our Sustainability
and the environment report on pages 18 to 19.

percentage points to 27% and we remain 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. As a signatory to the Race at
Work Charter, we have committed to increasing the percentage of
senior leaders from a Black, Asian and Minority Ethnic background
to 15% by 2024, in line with the percentage in the broader UK
population. We have also published our ethnicity pay gap report
alongside our gender pay gap report.

• Some of our customers may have additional or different needs and we
want to ensure that they receive a fair outcome with the appropriate
support being provided when needed. Our Group vulnerable customer
policy defines our approach to ensuring vulnerable customers receive
consistently fair treatment across our Group. Relevant training is
provided to colleagues to help them identify the characteristics
of vulnerability and provide appropriate support to our customers.
Our policies and processes will be adapted if necessary, and where
possible, to accommodate specific customer needs.

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 gifts and hospitality procedure supports the financial crime policy,

by providing the rules and guidance to help prevent all colleagues
receiving or providing an undue influence over the making of a
business decision.

• 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.

NON-FINANCIAL RISK MANAGEMENT
The Risk management report on page 58 sets out our approach to
risk management. Our approach enables all colleagues to take more
effective business decisions through a better understanding of risk.
The Annual 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 Compliance team manages the Group’s Policy Framework. Each
Group policy has a policy owner and an executive sponsor, who
review the policy at least annually and provide an attestation as to its
adherence and any material breaches. Each Group policy is reviewed by
the GRCC and approved by the Board. Material breaches of policies are
recorded in our risk management system and escalated to the Group
Chief Risk Officer. Any serious breaches are reported to the GRCC or
Board. This on-going management of risks highlighted by breaches
enables the business to take necessary action to mitigate the risk
such as through training or improving a process or policy.

• We continued to focus on providing a wide range of wellbeing support
and guidance for our colleagues built around mental, physical, social
and financial wellbeing. Our current offering includes the support of
Mental Health First Aiders and our Employee Assistance Programme
(“EAP”) called WeCare, which is available to all colleagues offering a
broad range of wellbeing support, in addition to free access to our
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.

• Our Group whistleblowing policy, and our whistleblowing hotline,

encourage colleagues to report any wrongdoing. All such reports are
fully investigated and appropriate remedial actions are taken.
• From early 2021 we began to plan a trial of new, hybrid ways of

working. This commenced in September and incorporated feedback
from colleagues across the organisation. At the heart of our approach
is our belief that spending some time regularly in the office will help
colleagues to collaborate, innovate, learn from one another and
network, as well as sustaining the great culture we have built at Just.
More broadly, we want to supplement the virtual and remote support
colleagues have provided to each other over the past two years with
real, in-person connections. We adopted an agile test and learn
approach to introduce new ways of working for 2022 and beyond.

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 raised funds for our corporate charity partner

Re-engage, in line with our purpose of helping people achieve a better
later life, with activities including a virtual “Around the World in 80
Days” sponsored challenge and gifting our apprenticeship levy to
Re-engage to train a data analyst for its business. We recognised
Dementia Action Week in May, providing training to colleagues to
become dementia friends, and supported colleague fundraising (half
matching their funds up to £500) for a number of charities close to
colleagues’ hearts, including Cancer Research UK, Battersea Dogs and
Cats Home, The Lucy Rayner Foundation and the Alzheimer’s Society.

• 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 activities and the impacts,

see our Colleagues and culture report on page 30.

4. HUMAN RIGHTS
• While the Board considers that the risk of human rights violations is
low, we have implemented effective systems and controls to ensure
slavery and human trafficking 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 are aware of the importance that this is used
appropriately and is 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 staff of the
importance of data privacy. Rigorous steps are taken to ensure the
security of all the personal data we handle.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

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 2021 the Group introduced two new KPIs, return on equity and underlying
operating profit, and discontinued organic capital generation/(consumption).
During 2020 the Group introduced two new KPIs, management expenses and
underlying organic capital generation/(consumption), and discontinued in-force
operating profit. 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.
RETURN ON EQUITY 1 – 9%
Return on equity is adjusted operating profit after attributed tax for
the period expressed as a percentage of the average tangible net
asset value over the period, where tangible net asset value is IFRS
total equity excluding goodwill and other intangibles, net of tax,
and excluding equity attributable to Tier 1 noteholders.

MEASURED AGAINST OUR STRATEGIC PRIORITIES

Improve our capital position

Transform how we work

Get closer to our customers and partners

Generate growth in new markets

Be proud to work at Just

SEE PAGE 16 FOR OUR STRATEGIC PRIORITIES

1 Alternative performance measure. See glossary

on page 186 for definition.

2 These figures allow for a notional recalculation of
TMTP as at 31 December 2020. In 2021, the figures
include the estimated impact of the biennial
reset of the TMTP as at 31 December 2021 and
the TMTP has been calculated excluding the
contribution from the LTMs that have been sold
on 22 February 2022.

UNDERLYING ORGANIC CAPITAL GENERATION/
(CONSUMPTION)1,2 – £51M
Underlying organic capital generation/(consumption) is the net
increase/(decrease) in Solvency II excess own funds over the year,
generated from on-going business activities, and includes surplus from
in-force, net of new business strain, cost overruns and other expenses
and debt interest. It excludes economic variances, regulatory
adjustments, capital raising or repayment and impact of management
actions and other operating items. The Board believes that this
measure provides good insight into the on-going capital sustainability
of the business.

2021

2020

2019

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

RETIREMENT INCOME SALES 1 – £2,674M
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.

2021

2020

2019

(15)

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

NEW BUSINESS OPERATING PROFIT 1 – £225M
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 Business Review.

2021

2020

2019

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

2,674

2,145

1,918

2021

2020

2019

225

199

182

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

ADJUSTED OPERATING PROFIT
BEFORE TAX 1– £238M
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-off assumption changes, experience variances, results of the
other Group companies and financing costs. The Board believes that
adjusted operating profit, which excludes effects 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 52.

UNDERLYING OPERATING PROFIT1 – £210M
Underlying operating profit is calculated in the same way as adjusted
operating profit before tax but excludes operating experience and
assumption changes.

2021

2020

2019

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

238

239

219

2021

2020

2019

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

210

193

176

IFRS (LOSS)/PROFIT BEFORE TAX – £(21)M
IFRS (loss)/profit before tax represents the (loss)/profit before tax
attributable to equity holders.

MANAGEMENT EXPENSES 1 – £147M
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 4 on page 136.

237

369

2021

2020

2019

147

159

169

2021

(21)

2020

2019

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

IFRS NET ASSETS – £2,440M
IFRS net assets represents the net assets attributable to equity holders.

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

SOLVENCY II CAPITAL COVERAGE
RATIO2 – 164% (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.

2021

2020

2019

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

2,440

2,490

2,321

2021

2020

2019

LINK TO STRATEGIC PRIORITIES:
1.

2. 3. 4. 5.

164

156

141

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

BUSINESS REVIEW

Sustainable Growth
IN PROFITS

Over the past two years, we have rebuilt
the capital base and achieved capital
self-sufficiency. This, combined with the
Group’s compelling propositions in the
attractive UK retirement market provide
the foundation for the delivery of on-going
sustainable growth, which in turn delivers
value for customers and shareholders.

andy parsons
Group Chief Financial Officer

adjusted operating profit
before tax1

£238m

2020: £239m

underlying Organic capital
generation1

£51m

2020: £18m

Solvency II capital coverage
ratio (estimated)2

164%

2020: 156%

1 Alternative performance measure. IFRS loss before tax £21m (2020: profit before tax £237m).
2 The 2020 Solvency II capital coverage ratio allows for a notional recalculation of TMTP at 31 December 2020. In 2021, the ratio

includes the estimated impact of the biennial reset of TMTP as at 31 December 2021 and the TMTP has been calculated excluding the
contribution from the LTMs that have been sold on 22 February 2022.

The Business Review presents the results of the
Group for the year ended 31 December 2021,
including IFRS and Solvency II information.

The business continues to benefit from the strong positive progress
in previous years, in particular a transformed, lower capital intensity
new business model, combined with a strengthened and increasingly
resilient capital base. Our new business franchise delivered 25%
growth in Retirement Income sales during 2021, with strong momentum
continuing into the first half of 2022. We continue to maintain discipline
in pricing and risk selection as we build on our strong foundations and
the Group moves forwards in the next phase of its development to
deliver sustainable long-term growth.

We have a track record of delivering results that exceed our
commitments. After achieving the capital self-sufficiency milestone
more than a year earlier than originally planned, we have subsequently
almost trebled the underlying organic capital generation, also a year
ahead of target. This strong performance was driven by our disciplined
approach to acquiring business through our highly successful new
business franchise, which delivers low levels of capital strain. We have
eliminated the cost overrun as planned. We have also successfully
reduced our property sensitivity, and in September, took advantage of
favourable credit market conditions to lower future debt interest costs.

The strong sales growth in 2021 helped achieve a 13% increase in
new business profit, to £225m, with sales of £2,674m up 25% and a
new business margin of 8.4% (2020: 9.3%). 2021 margins reflected
adjustments made to the asset mix backing the new business, tighter
credit spreads, in particular on lifetime mortgages, and a significant
increase in the proportion of DB deferred business within the sales mix
(2021: 38% of DB sales, 2020, 2% of DB sales). DB deferred sales are more
capital efficient, but are longer duration with a lower upfront margin
than pensioner in payment DB and retail business. 2021 IFRS adjusted
operating profit was broadly unchanged at £238m (2020: £239m) as the
increased new business profit was offset by lower assumption changes
and reduced in-force profit (with 2020 boosted by increased credit
spreads). Rising interest rates led to IFRS losses from hedges we use to
protect the Solvency II balance sheet. Sales of LTM portfolios to reduce
the sensitivity of our Solvency II balance sheet to UK house prices
resulted in a loss of £161m. These two elements offset the operating
profit above, resulting in an IFRS post tax loss of £16m.

Underlying organic capital generation increased by £33m in 2021 to
£51m (2020: £18m), even after writing significantly higher new business
volumes during the year. Our target was to double the 2020 result by
2022, but we have strongly exceeded that objective one year early. The
capital strain from writing new business reduced to 1.5% (2020: 2.2%)
reflecting continued pricing discipline and risk selection, together with the
increased proportion of low capital strain DB deferred business in 2021.

Over the past 3 years we have implemented management actions to
reduce the recurring core management expense cost base by 18%. In
2021, we achieved our target to successfully eliminate the new business
expense overrun in line with target.

The £51m of underlying organic capital generation contributed towards
a further strengthening of the Group’s Solvency II capital position. During
the year, the Solvency II capital coverage ratio increased to 164%2
(2020: 156%2), a level we continue to be comfortable to operate at.

Recognising the strengthened financial position of the Group, the Board
has decided to re-introduce a dividend for the Group’s shareholders.
Over the past two years, we have demonstrated our ability to
deliver significant growth in new business, at low strain, our capital
generation is now sufficient to fund our on-going growth ambitions
and pay a distribution to shareholders, while continuing to maintain a
comfortable capital position. We now expect growth in new business
and in-force profits to deliver on average 15% growth per annum
in our IFRS underlying operating profit over the medium term.

In the second half of 2021, we completed an internal model update,
incorporating the new regulatory treatment of LTMs, which was
approved by the Prudential Regulation Authority in December 2021.
The overall impact of the new model was a £33m decrease in the
capital surplus. This was more than offset by management actions
of £16m and other operating items including positive mortality
experience, which contributed £26m towards the capital surplus.

Over the past three years, we have successfully taken action to
reduce the Group’s exposure and sensitivity of the Solvency II balance
sheet to UK house prices. This has been achieved through a combination
of NNEG hedging, LTM portfolio sales and reducing the LTM backing for
new business. We have completed three NNEG risk transfer hedges
totalling £1.4bn and with the third LTM portfolio sale announced in
February 2022, we have also completed our planned programme of
portfolio sales (totalling £1.6bn of LTMs). The LTM backing ratio for new
business in 2021 at 18% was below our 20% target. Taken together, our
various property de-risking actions have almost halved the Solvency II
UK house price sensitivity to close to 10% (for a 10% house price fall) a
level at which we are comfortable.

In 2022, we expect further clarification from HM Treasury following
its review of Solvency II and its consultation on the Future Regulatory
Framework (“FRF”) Review for financial services following the UK’s exit
from Europe. We anticipate progress in helping the insurance industry to
better support the government’s twin-pronged agenda of infrastructure
development and decarbonising the economy through an increased pool
of matching adjustment eligible assets, which we can invest in to back
our customer promises.

Financial markets have had limited impact on the Group’s capital
position over the past two years, which demonstrates the resilience of
our balance sheet. Interest rates rose during 2021, the impact of which
was hedged in relation to our Solvency II position but resulted in a loss
for our IFRS balance sheet of £226m for the year. We continue to monitor
the effect of the interest rate hedging programme on the IFRS result,
with rates being volatile on geopolitical and other macro-economic
concerns such as inflation. 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.

Credit downgrades affecting 9% of the Group’s corporate bond portfolio
were offset by credit upgrades on 8% of the portfolio as the economy
continues to recover. This led to a negligible £13m reduction in the
Solvency II surplus, which was more than offset by £49m of positive
capital impacts from portfolio management. We are committed to
further growing and diversifying the non-LTM illiquid portfolio, in
particular through continued investment in infrastructure projects,
commercial real estate, ground rents, social housing and local authority
loans. Our manager of managers investment model for non-LTM illiquid
assets has 13 active originators, which provides a healthy pipeline of
investment opportunities, both domestic and international. Typically,
going forward, we expect non-LTM illiquids to back up to 30% of new
business, with LTMs backing up to 20% and liquid bonds/cash backing
the remainder.

At this time, the outlook for the economy continues to evolve, as the
world learns to live with COVID-19 and with heightened geopolitical
tensions associated with the conflict in Ukraine. Inflation is likely to
continue to be the dominant economic theme in 2022, as central banks
commence tightening of monetary policy to combat rising prices. We
expect these macro forces to have a negligible effect on the Group’s
business model, with active hedging to protect the Solvency II capital
position and limited impact from higher interest rates/inflation on
demand for our products. With a strong, stable and more resilient capital
base and a low strain business model that is now generating substantial
on-going excess capital on an underlying basis. The foundations are
firmly in place to take advantage of the multiple growth opportunities
available in our attractive markets.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

BUSINESS REVIEW CONTINUED

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: return on
equity, organic capital generation, underlying organic capital generation,
new business operating profit, in-force operating profit, underlying
operating profit, adjusted operating profit before tax, 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 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 the second half of 2021 the Group introduced two new
KPIs, return on equity and underlying operating profit, and discontinued
organic capital generation as a KPI. During the second half of 2020 the
Group introduced two new KPIs, management expenses, and underlying
organic capital generation, and discontinued in-force operating profit 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 on the following pages.

The Group’s KPIs are shown below:

RETURN ON EQUITY
The return on equity in the year to 31 December 2021 was 9.4% (2020:
9.7%), based on adjusted operating profit after attributed tax of £193m
(2020: £194m) arising on average tangible net assets of £2,048m (2020:
£1,989m). Tangible net assets are reconciled to IFRS total equity
as follows:

IFRS total equity

Less intangible assets

Less tax on amortised intangible assets

Less equity attributable to Tier 1 noteholders

Tangible net assets

ADJUSTED OPERATING PROFIT

31 December
2021
£m

31 December
2020
£m

2,440

2,490

(120)

(322)

(134)

(294)

2,015

2,081

New business operating profit

In-force operating profit

Other Group companies’ operating
results

Development expenditure

Reinsurance and finance costs

Underlying operating profit

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

Change
%

225

(15)

(7)

(83)

210

238

199

(17)

(7)

(80)

193

239

(8)

(12)

–

(39)

–

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

Operating experience and assumption
changes

Change

Adjusted operating profit before tax1

Return on equity1

Retirement Income sales1

Underlying organic capital
generation1

New business operating profit1

Adjusted operating profit before tax1

Underlying operating profit1

IFRS (loss)/profit before tax

Management expenses1

9.4%

2,674

9.7%

(0.3)pp

2,145

25%

225

238

210

(21)

147

199

239

193

237

159

183%

13%

–

(109)%

(8)%

Solvency II capital coverage ratio2

IFRS net assets

31 December
2021
£m

31 December
2020
£m

164%

2,440

156%

2,490

Change

8pp

(2)%

1 Alternative performance measure, see glossary for definition.
2 This figure allows for a notional recalculation of TMTP as at 31 December 2020. In 2021, the
figures include the estimated impact of the biennial reset of the TMTP as at 31 December
2021 and the TMTP has been calculated excluding the contribution from the LTMs that have
been sold on 22 February 2022.

1 See reconciliation to IFRS Loss/profit before tax further in this Business Review.

Adjusted operating profit before tax
Adjusted operating profit before tax of £238m was broadly flat in
2021 (2020: £239m) as higher new business profit was offset by
lower operating experience and assumption changes and in-force
operating profit.

Underlying operating profit
Underlying operating profit, which is the same as adjusted operating
profit before tax but excludes operating experience and assumption
changes, rose 9% to £210m.

New business operating profit
New business operating profit increased by 13% to £225m (2020: £199m)
driven by a 25% increase in Retirement Income sales to £2,674m (2020:
£2,145m). The new business margin achieved on Retirement Income
sales during the year was 8.4% (2020: 9.3%), reflecting adjustments
made to the asset mix backing the new business, tighter credit spreads,
in particular on lifetime mortgages, and a significant increase in the
proportion of DB deferred business within the sales mix (2021: 38% of
DB sales, 2020: 2% of DB sales).

Management expenses
Management expenses have decreased by 8% to £147m (2020: £159m).
A formal three year cost reduction programme concluded at the end
of 2021. Going forward, we will continue to maintain a focus on cost
control, with premium and business growth to outpace costs, thus
further improving operational leverage.

In-force operating profit
In-force operating profit decreased by 8% to £90m (2020: £98m) with
2020 profit inflated due to the elevated credit spreads following the
onset of COVID-19. Aside from reduced profit emerging due to credit
spreads, the Group’s in-force operating profit benefited from a growing
in-force book of business and higher surplus assets.

Other Group companies’ operating results
The operating result for other Group companies was a loss of £15m in
2021 (2020: loss of £17m). These costs arise from the holding company,
Just Group plc, and the HUB group of businesses.

Development expenditure
Development expenditure mainly relates to product development and
new initiatives, such as LTM medical underwriting and new capital light
products. It also includes preparations for the new insurance accounting
standard IFRS 17 and distribution improvements such as online
capability and digital access.

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 year is due to a full 12 months
of coupon on the Green £250m Tier 2 notes issued in October 2020.
In September 2021, we opportunistically refinanced the 2019 issued
Restricted Tier 1 bond and issued a new £325m Sustainability Restricted
Tier 1 bond. This discrete bond refinancing will reduce the future interest
costs on the RT1 component of the capital structure by £12m pre-tax per
annum, while also lengthening the maturity by at least 7.5 years, with a
call option available from March 2031.

Operating experience and assumption changes
The Group has paid close attention to developments as the COVID-19
vaccine and subsequent booster programme rolls out across the
population, in particular with its customer base, many of whom are in
the more vulnerable category. The long-term impact of the COVID-19
pandemic on the population, including the health of those who
recovered from the disease, the future efficacy of the various vaccines
and secondary impacts such as delayed diagnosis for other illnesses
or behavioural changes continue to be difficult to assess with any
confidence. Given this on-going uncertainty over the impact of COVID-19
on longer term mortality, the Group has made no changes to its
long-term mortality assumptions at 31 December 2021, but will continue
to assess actively during 2022. Sensitivity analysis is shown in notes 17
and 23, which sets out the impact on the IFRS results from changes to
key assumptions, including mortality and property.

Overall, positive operating experience and assumption changes of
£28m were reported in 2021 (2020: £46m). The overall net £33m of
positive experience variance reflected the largely COVID-19 driven
impact of increased mortality in our annuitant customers, offset by
increased early redemptions, in part mortality driven, within our LTM
book. Assumption changes were negligible and combined to a £5m
reserve strengthening. In 2020, assumption changes driven by the
adoption of CMI_19 across our product range combined to a net
£26m release.

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 a finance
cost on an adjusted operating profit basis.

RETIREMENT INCOME SALES

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

Change
%

Defined Benefit De-risking
Solutions (“DB”)

Guaranteed Income for Life
Solutions (“GIfL”)

Care Plans (“CP”)

1,935

1,508

688

586

Retirement Income sales

2,674

2,145

Retirement Income sales for 2021 increased by 25% to £2,674m
(2020: £2,145m).

–

DB sales were £1,935m, an increase of 28%, and a record for the Group.
In early 2021 we expanded our proposition in the DB de-risking market
to meet fully the needs of schemes and trustees. As a consequence of
multi-year de-risking journeys, scheme funding levels across the industry
have improved. This has increased the deferred part of the DB market
with more schemes able to afford full scheme de-risking and buyout as
opposed to pensioner only de-risking. We expect this trend to continue.
Adding DB deferred capability to our proposition has enhanced the
opportunity available to us in the £2.3tn DB liability market, thus
increasing our ability to risk select and triage the industry pipeline. The
defined benefit de-risking market was subdued in the first half of 2021,
however activity rebounded in the second half. For the year as a whole,
we completed 29 transactions (2020: 23 transactions). Our efforts in
2021 were recognised by being named “Risk Management Provider of the
Year” at the Pensions Age awards in February 2022.

The heightened activity in the second half of 2021 has created strong
momentum in the market year to date. Willis Towers Watson are
predicting a £40bn buy-in/buy-out market in 2022 (Just estimate
£28–30bn in 2021), with the long-term growth opportunity even more
substantial. Lane Clark Peacock (“LCP”) have cumulatively forecast
£150–£250bn of buy-in/buy-out transactions over the next five years,
and thereafter rising beyond £50bn per annum, potentially to £100bn
per annum by 2030, as funding deficits amongst the largest pension
schemes are gradually closed. Up to £650bn of DB buy-in and buy-out
transactions are forecast over the decade to 2030.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

BUSINESS REVIEW CONTINUED

GIfL sales increased by 17% to £688m for 2021, recovering strongly
following the COVID-19 related sales disruption in the first half of 2020.
Retail sales (GIfL and Care) in 2021 were 8% higher than 2019 levels.
In recognition of the outstanding service we deliver, we were named
Company of the Year at the recent Financial Adviser Service Awards,
as well as achieving five stars in both the Pensions and Protection, and
Mortgages categories. Economic uncertainty has demonstrated to
customers the importance and security of a guaranteed income. We
continue to invest in our proposition, and launched a refreshed version
of our medical underwriting engine PrognoSysTM during 2021. Care sales
were subdued and remain impacted by customer behaviour changes due
to the pandemic, remaining at less than 2% of Retirement Income sales.

Other new business sales
Lifetime Mortgage advances were £528m for 2021 (2020: £512m), an
increase of 3%. The LTM backing ratio for new business was 18%, which
is below our target of 20%, and aided by the change in sales mix as DB
deferred sales are fully backed by bonds and non-LTM illiquids. 2021 also
includes £40m of LTM origination on behalf of a third party (2020: £36m).
The Group does not hold an economic exposure for these assets; instead
it earns a fee for originating and administering these loans. In line with
other assets, LTM spreads compressed somewhat during the first half
of the year as risk-free rates rose, which impacted the new business
margin. In the second half, the market repriced and LTM spreads partially
widened back out.

We continue to be selective in the mortgages we originate, as we use our
market insight and distribution to target certain sub-segments of the
market, for example shorter duration loans to older borrowers, and/or
customers with sufficient income to service interest on their borrowings.
During 2021, we introduced medical underwriting across the entire
lifetime mortgage range and also signed an exclusive distribution
agreement with Saga. Increased investment in LTM digital capabilities
and proposition has been well received by financial advisers, and
contributed to the five star awards mentioned above.

ADJUSTED EARNINGS PER SHARE
Adjusted EPS (based on adjusted operating profit after attributed tax)
has decreased from 18.8 pence for 2020, to 18.7 pence for 2021.

Adjusted earnings (£m)

Weighted average number of shares (million)

Adjusted EPS1 (pence)

1 Alternative performance measure, see glossary for definition.

EARNINGS PER SHARE

Earnings (£m)

Weighted average number of shares (million)

EPS (pence)

Year ended
31 December
2021

Year ended
31 December
2020

193

1,034

18.7

194

1,031

18.8

Year ended
31 December
2021

Year ended
31 December
2020

(35)

1,034

(3.4)

166

1,031

16.1

RECONCILIATION OF OPERATING PROFIT TO STATUTORY IFRS RESULTS
The tables on the following pages present the Group’s results on a
statutory IFRS basis.

Adjusted operating profit before tax

Non-recurring and project expenditure

Implementation of cost saving initiatives

Investment and economic (losses)/profits

Interest adjustment to reflect IFRS accounting for
Tier 1 notes as equity

Amortisation costs

IFRS (loss)/profit before tax

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

238

(15)

–

(251)

(18)

(21)

239

(13)

(8)

(18)

237

Non-recurring and project expenditure
Non-recurring and project expenditure was £15m (2020: £13m).
This included support for the internal model change to incorporate
recent regulatory changes for LTMs, and updating for best practice since
the model was first incorporated in December 2015. We plan to move
PLACL from standard formula onto a Group internal model over the next
12-18 months. There were also a number of smaller project costs such
as LTM portfolio sales. The Group continues to improve its business
processes, and increase efficiency by investing in systems, which will
lead to long-term cost and control benefits.

Investment and economic (losses)/profits

Change in interest rates

Credit spreads

Property growth experience

House price inflation assumption change

Sale of LTM portfolio

Other

Investment and economic (losses)/profits

Year ended
31 December
2021

Year ended
31 December
2020

(226)

–

(161)

(251)

360

(14)

(34)

(166)

(136)

(1)

Investment and economic losses for 2021 were £251m (2020: £9m
profit). The main driver for the large difference compared to the prior
year is the increase in risk-free rates during the year, which contributed
losses of £226m compared to a gain of £360m when interest rates fell
during 2020. The Group actively hedges its interest rate exposure to
protect the Solvency II capital position, but in doing so we accept the
accounting volatility that ensues. We have adjusted our hedging
structure during 2022 to better balance hedging of the solvency position
whilst minimising the cost in IFRS, should rates rise over 2022. Other
movements cancelled each other as the £161m cost from the second in
our planned programme of LTM portfolio sales has been offset by
positives from narrower credit spreads (£57m), positive property growth
experience (£56m) and minimal corporate bond defaults within our
portfolio during the period (2020: no defaults). In the prior year, credit
spreads widened, property growth was below our long term assumption,
and we reduced the house price inflation assumption by 0.5% to 3.3%,
which led to a £166m reserve strengthening.

Further details and sensitivities to changes in property assumptions are
given in notes 17 and 23 of the financial statements.

Amortisation of acquired intangibles
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-off of the in-force business.

CAPITAL MANAGEMENT
Just Group plc estimated Solvency II capital position
The Group’s coverage ratio was estimated at 164% at 31 December 2021
after recalculation of transitional measures on technical provisions
(“TMTP”) (31 December 2020: 156% after a notional recalculation of
TMTP). The Solvency II capital coverage ratio is a key metric and is
considered to be one of the Group’s KPIs.

Unaudited

Own funds

Solvency Capital Requirement

Excess own funds

Solvency coverage ratio1

31 December
2021
£m

31 December
2020
£m

3,004

3,014

(1,836)

(1,938)

1,168

164%

1,076

156%

1 This figure allows for a notional recalculation of TMTP as at 31 December 2020. In 2021, the
figures include the estimated impact of the biennial reset of the TMTP as at 31 December
2021 and the TMTP has been calculated excluding the contribution from the LTMs that have
been sold on 22 February 2022.

The Group has approval to apply the matching 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 funds1
The table below analyses the movement in excess own funds, in the year
ended 31 December 2021.

Unaudited

Excess own funds at 1 January

Operating

In-force surplus net of TMTP amortisation2

New business strain

Finance cost

Group and other costs

Underlying organic capital generation

Other

Total organic capital generation3

Non-operating

Accelerated TMTP amortisation

Regulatory changes

Economic movements

T2 and equity issuance, net of costs4

2021
£m

1,076

191

(40)

(71)

(29)

–

(38)

(19)

2020
£m

748

174

(48)

(66)

(42)

203

221

(24)

(19)

113

Excess own funds at 31 December

1,168

1,076

1 All figures are net of tax, and reflect the estimated impact of a TMTP recalculation as at
31 December 2021. Figures for 2020 include a notional recalculation of TMTP where
applicable.

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

shown separately.

3 Organic capital generation includes surplus from in-force, new business strain, overrun and
other expenses, interest and dividends and other operating items. It excludes economic
variances, regulatory changes, accelerated TMTP amortisation, and capital issuance.

4 2020 figure is PLACL’s Tier 2 bond which was called in March 2020.

Underlying organic capital generation
£51m of underlying organic capital generation in 2021, whilst delivering
new business premium growth of 25%, was an outstanding result.
We more than achieved our target of doubling 2020 underlying organic
capital generation of £18m by 2022, and did so a year early. At this level
of underlying organic capital generation we believe the business is
delivering sufficient on-going capital generation to support decisions on
the deployment of capital between supporting further profitable growth,
providing returns to our capital providers and further investment in the
strategic growth of the business.

The improvement in underlying organic capital generation has
benefitted from the on-going focus across the business on minimising
new business capital strain. In 2021, new business strain fell by a further
£8m to £40m, which represents 1.5% of new business premium (2020:
2.2%). This outperformance was driven by continued pricing discipline
and risk selection, together with an increased proportion of the DB
deferred business within the sales mix, following enhancements to our
proposition in 2020. Capital light DB deferred business represented 38%
of total DB sales in 2021 (2020: 2%). In-force surplus has continued to
increase as the size of the in-force book grows. Group and other costs
includes £11m (2020 £10m) of non-life costs previously within in-force
surplus. Finance costs have peaked and are expected to materially
decline in future as we gradually refinance the outstanding debt to
coupons more commensurate to our credit rating and representative of
the progress made to reduce risks and improve capital generation over
the past three years. We also completed our three year cost-base
reduction programme, which contributed towards eliminating the cost
overruns in line with our 2021 target (2020: £8m overruns).

The £18m of expenses incurred include development (£6m) and
non-recurring (£12m) costs. Management actions and other contributed
£42m to the capital surplus, leading to a total of £93m from organic
capital generation.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

BUSINESS REVIEW CONTINUED

Non-operating items
Included within regulatory changes is the impact of the major model
change (£33m) and the transition of the Solvency II prescribed risk-
free rates from LIBOR to SONIA, offset by the positive impact of the
corporation tax rate changes, which increases the Group’s deferred
tax assets.

Reconciliation of IFRS total equity to Solvency II own funds

Unaudited

31 December

20211
£m

31 December
2020
£m

Shareholders’ net equity on IFRS basis

2,440

2,490

Goodwill

Intangibles

Solvency II risk margin

Solvency II TMTP1

Other valuation differences and impact on
deferred tax

Ineligible items

Subordinated debt

Group adjustments

Solvency II own funds1

Solvency II SCR1

Solvency II excess own funds1

(34)

(86)

(759)

1,657

(34)

(100)

(846)

2,106

(987)

(1,391)

(3)

781

(5)

3,004

(1,836)

1,168

(5)

795

(1)

3,014

(1,938)

1,076

1 These figures allow for a notional recalculation of TMTP as at 31 December 2020. In 2021, the
figures include the estimated impact of the biennial reset of the TMTP as at 31 December
2021 and the TMTP has been calculated excluding the contribution from the LTMs that have
been sold on 22 February 2022.

Reconciliation from regulatory capital surplus to reported
capital surplus

31 December
2021
£m

31 December
2021
%

31 December
2020
£m

31 December
2020
%

Regulatory capital
surplus

1,168

164

1,071

Notional recalculation
of TMTP

–

Reported capital surplus

1,168

–

164

1,076

155

156

Economic movements included a positive property variance of £82m due
to actual property price growth of over 9% during 2021 being in excess of
our 3.3% long-term growth assumption, offset by an adjustment to move
to individual updated property prices calculated across our portfolio,
rather than using the ONS index. This gain was offset by a negative £76m
from higher interest rates (though largely neutral for the solvency ratio)
and the net £19m upfront cost of the RT1 refinancing, which will benefit
the Group’s underlying organic capital generation in the longer term
through lower financing costs. The cost of credit migration during the
year was £13m, significantly less than 1% reduction in the Solvency II
capital coverage ratio, as credit conditions remained benign.

The property sensitivity has reduced to 11% on a pro forma basis,
taking into account the third LTM portfolio sale completed post year
end (31 December 2020: 14% and a peak of 20% on 30 June 2019).
We expect that by maintaining a reduced LTM backing ratio of c.20%
on new business and selective NNEG hedges where commercially
attractive, we will contain the Solvency II sensitivity to house prices
to at or below this level over time. 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,
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 sensitivities1

Unaudited

£m

Solvency coverage ratio/excess own funds at
31 December 20212

164

1,168

-50 bps fall in interest rates (with TMTP
recalculation)

+100 bps credit spreads

Credit quality step downgrade (with TMTP
recalculation)3

+10% LTM early redemption

(4)

(8)

(156)

-10% property values (with TMTP recalculation)4

(12)

(197)

-10% property values post LTM sale (with TMTP
recalculation)4,5

-5% mortality

(11)

(12)

(178)

(210)

1 In all sensitivities the Effective Value Test (“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 of 0.50% as at 31 December 2021 (0% as at 31 December
2020).

2 Sensitivities are applied to the reported capital position which includes a TMTP recalculation.
3 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.

4 After application of NNEG hedges.
5 Including the impact of the February 2022 LTM portfolio sale.

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.

Gross premiums written

Reinsurance premiums ceded

Reinsurance recapture

Net premium revenue

Net investment income

Fee and commission income

Total revenue

Net claims paid

Change in insurance liabilities

Change in investment contract liabilities

Acquisition costs

Other operating expenses

Finance costs

Total claims and expenses

(Loss)/profit before tax

Income tax

(Loss)/profit after tax

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

2,676

2,148

(23)

–

2,653

(130)

2,539

(1,141)

(1,039)

(1)

(49)

(193)

(137)

(232)

940

2,856

1,778

4,645

(1,000)

(2,983)

(2)

(44)

(220)

(159)

(2,560)

(4,408)

(21)

(16)

237

(44)

193

Gross premiums written
Gross premiums written for the year were £2,676m, an increase of
25% compared to the prior period (2020: £2,148m). As discussed above,
this reflects the strong growth in Retirement Income new business
premiums, driven by growth in DB deferred and GIfL business.

Reinsurance premiums ceded
Reinsurance premiums ceded (expense of £23m) has decreased
significantly in the current period as the first six months of 2020
included a one-off reinsurance expense in relation to a pioneering
DB partnering transaction.

Reinsurance recapture
During 2020, the Group recaptured all of the remaining quota share
reinsurance arrangements held by its subsidiary Just Retirement Limited
(“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.

Net premium revenue
Net premium revenue has decreased by 7% to £2,653m (2020: £2,856m),
as the one-off reinsurance recapture and premiums ceded described
above more than offset the increase in gross premiums written.

Net investment income
Net investment income decreased to an expense of £130m (2020:
income of £1,778m). 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 an increase in
risk-free rates during the year which has resulted in unrealised losses in
relation to assets held at fair value, and hence the swing from income to
expense, as in the prior period, interest rates fell. We closely match our
assets and liabilities, hence fluctuations in interest rates will drive both
sides of the IFRS balance sheet. We actively hedge interest rate exposure
to protect the Solvency II capital position and in doing so we accept the
accounting volatility.

Net claims paid
Net claims paid increased to £1,141m (2020: £1,000m) reflecting the
continuing growth of the in-force book.

Change in insurance liabilities
Change in insurance liabilities was £1,039m for the current year (2020:
£2,983m). The decrease is principally due to an increase in the valuation
interest rate due to the rise in risk-free rates noted above. The prior
period also reflected a reinsurance recapture.

Acquisition costs
Acquisition costs have increased to £49m (2020: £44m), mainly due to a
3% increase in LTM origination to fund the 25% increase in new business
premiums, which are now backed by a reduced LTM ratio.

Other operating expenses
Other operating expenses decreased to £193m in the current year from
£220m in 2020. This reduction reflects the benefit of the cost saving
initiatives carried out over the past three years.

Finance costs
The Group’s overall finance costs decreased to £137m (2020: £159m).
The main driver relates to a reduction in reinsurance deposits, which
have fallen in line with the £940m reinsurance recaptures made at the
end of 2020, as mentioned above. This decrease was partly offset by a
full year of interest on the Tier 2 loan notes issued in October 2020. Note
that the coupon on the Group’s Restricted Tier 1 notes is recognised as a
capital distribution directly within equity and not within finance costs.

Income tax
Income tax for the year ended 31 December 2021 was a credit of £5m
(2020: charge of £44m). The effective tax rate of 26.4% (2020: 18.7%) is
7.4% higher than the standard 19% corporation tax rate. This is due to
the small base of profit/loss for 2021 compared to 2020 leading to the
impact of tax adjustments having a far more significant impact on the
effective tax rate than in 2020.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

BUSINESS REVIEW CONTINUED

HIGHLIGHTS FROM CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
The table below presents selected items from the Condensed
consolidated statement of financial position, with key line item
explanations below. The information below is extracted from the
statutory consolidated statement of financial position.

Assets

Financial investments

Reinsurance assets

Other assets

Total assets

Share capital and share premium

Other reserves

Accumulated profit and other adjustments

Total equity attributable to ordinary
shareholders of Just Group plc

Tier 1 notes

Non-controlling interest

Total equity

Liabilities

Insurance liabilities

Reinsurance liabilities

Other financial liabilities

Insurance and other payables

Other liabilities

Total liabilities

Total equity and liabilities

31 December
2021
£m

31 December
2020
£m

24,682

23,270

2,808

858

3,132

1,771

28,348

28,173

199

948

973

2,120

322

198

949

1,051

2,198

294

(2)

2,440

2,490

21,813

21,118

275

2,866

861

267

3,305

901

25,908

25,683

28,348

28,173

Financial investments
During the year, financial investments increased by £1.4bn to £24.7bn
(2020: £23.3bn), as investment of the Group’s new business premiums
and credit spread narrowing was offset by increases in risk-free rates
during the period. The credit quality of the corporate bond portfolio has
improved, with 54% of the Group’s corporate bond and gilts portfolio
rated A or above (2020: 50%), as upgrades across the portfolio and an
increase in Government investments offset downgrades. Our diversified
portfolio continues to grow and is well balanced across a range of
industry sectors and geographies. Accommodative central bank and
fiscal stimulus during 2021 led to continued credit spread tightening,
however, in 2022, we expect various government asset purchase
programmes in response to the pandemic to be gradually unwound. At
the same time, central banks are expected to raise base rates from their
historical low levels to counteract the effect of inflation, albeit inflation
momentum is expected to soften in the second half of 2022. In the
longer term, a normalisation of central bank and government fiscal
policy is welcome, as interest rates remain extremely low compared to
historical levels.

Credit rating agencies had been slow to restore previously downgraded
companies or corporates to a level our fundamental credit analysis
supports, which provides opportunities to increase our exposure to
certain sectors that will benefit from the economic growth expected.
The Group has selectively added to its consumer (staples), energy, basic
materials and infrastructure investments, with minor rotational changes
during the year as we reduced exposure to banks and real estate
including REITs.

During the year, we continued to invest in commercial mortgages,
income strips, social housing, and have separately disclosed ground
rents for the first time. These illiquid real estate investments are typically
much longer duration and very beneficial to match the DB deferred
liabilities. Government investments increased by over £1bn as the
Group temporarily invested excess cash, however this is expected to
be recycled into other corporate bonds and illiquid assets during 2022
as opportunities arise. We also received UK gilts as part of the August
2020 LTM sale proceeds and invested in both developed and emerging
market sovereign bonds.

The Group has limited exposure to those sectors that are most sensitive
to structural change, such as auto manufacturers and consumer
(cyclical), while the BBB-rated bonds are weighted towards the most
defensive sectors including utilities, communications and technology,
and infrastructure. During the year, we sold £157m 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.

At 31 December 2021, the Group had ample liquidity. We continue to
prudently manage the balance sheet by hedging all foreign exchange
and inflation exposure, while maintaining an extensive interest rate
hedging programme, which is primarily designed to protect against
movements in the Solvency II capital coverage ratio. Our interest rate
hedging has been adapted during the latter stages of 2021 and into 2022
to provide a better balance between solvency protection and IFRS cost,
in particular as rates rise.

The loan-to-value ratio of the mortgage portfolio was 36.1% (2020:
36.1%), reflecting strong property growth across our geographically
diversified portfolio, which offsets interest roll-up. Lifetime mortgages
at £7.4bn decreased by a further 5 percentage points to 30% of total
financial investments. In August 2021, we completed a second LTM
portfolio sale, and post year end completed a third LTM portfolio sale.
In total the Group has disposed of £1.6bn of lifetime mortgages as part
of our objective to reduce the sensitivity of the capital position to house
price movements, which at 11% pro forma capital ratio impact for a 10%
fall in UK house prices is now at a level at which we are comfortable. At
the present time, further portfolio sales are not envisaged as the
sensitivity is expected to be contained around 10%. The value of
LTMs post the latest portfolio sales is expected to be 27% of our
investment assets. With a lower new business backing ratio, we
anticipate the LTM proportion will fall to around 25% over time.
Furthermore, during 2021 and continuing into 2022, the increase in
long-term interest rates has decreased the value of LTMs on our
balance sheet.

Other Illiquid assets and Environmental, Social and Governance
investing
During the year, the Group originated £615m (2020: £485m) of new
investments in other illiquid assets including infrastructure, real estate
investments mentioned above and private placements. Just has
invested £3.0bn of other illiquid assets, representing 12.3% (2020: 11.2%)
of the total financial investments portfolio. We anticipate that the
upcoming Solvency II reform will broaden the matching adjustment
eligibility criteria, which will create opportunities to invest in line with the
Government “levelling up” agenda through infrastructure, decarbonising
the economy and investment in science and research. Many of the other
illiquids are invested in a range of ESG assets including renewable
energy, social housing and local authority loans. We have invested
£1.6bn in dedicated ESG assets (10.3% of £15.3bn corporate/government
bond portfolio). By the end of 2021, we had already completed our Green
bond £250m investment commitment, a little over a year after issuance,
and have completed over half of the £325m Sustainable bond
investment commitment. We are on track to complete our total £575m
investment in green and social asset commitment by the end of 2022.
The Green/Sustainability bond allocation report is available on
https://www.justgroupplc.co.uk/investors/esg.

The following table provides a breakdown by credit rating of financial
investments, including privately rated investments allocated to the
appropriate rating.

AAA1

AA1 and gilts

BBB

BB or below

Unrated/Other

Lifetime mortgages

Total2

31 December
2021
£m

31 December
2021
%

31 December
2020
£m

31 December
2020
%

2,448

3,194

4,384

6,500

388

414

7,423

24,751

100

2,197

1,989

4,136

6,024

408

255

8,261

23,270

100

1 Includes units held in liquidity funds.
2 Includes investment in trust which holds ground rent generating assets which are included

in investment properties in the IFRS consolidated statement of financial position.

The sector analysis of the Group’s financial investments portfolio is
shown below and continues to be well diversified across a variety of
industry sectors.

31 December
2021
£m

31 December
2021
%

31 December
2020
£m

31 December
2020
%

264

1,430

319

1,174

187

633

1,192

845

481

661

2,415

920

2,302

678

263

1,474

1.1

5.8

1.3

4.7

0.7

2.6

4.8

3.4

1.9

2.7

9.7

3.7

9.3

2.7

1.1

6.0

0.2

200

1,189

385

977

113

463

1,422

825

462

771

1,340

840

2,030

592

115

1,220

0.9

5.1

1.7

4.2

0.5

2.0

6.1

3.5

2.0

3.3

5.8

3.6

8.7

3.0

–

5.2

0.2

15,276

7,423

1,311

61.7

30.0

5.3

12,982

8,261

1,129

55.8

35.5

4.8

Basic materials

Communications and
technology

Auto manufacturers

Consumer (staples
including healthcare)

Consumer (cyclical)

Energy

Banks

Insurance

Financial – other

Real estate including
REITs

Government

Industrial

Utilities

Commercial mortgages

Ground rents1

Infrastructure

Other

Corporate/government
bond total

Lifetime mortgages

Liquidity funds

Derivatives and
collateral

Total1

Reinsurance assets and liabilities
Reinsurance assets decreased to £2,808m at 31 December 2021 (2020:
£3,132m) as the reinsurance quota share treaties gradually run-off. Since
the introduction of Solvency II in 2016, the Group has increased its use
of reinsurance swaps rather than quota share treaties. Reinsurance
liabilities relate to liability balances in respect of the Group’s longevity
swap arrangements.

Other assets
Other assets decreased to £858m at 31 December 2021 (2020: £1,771m).
These assets mainly comprise cash, and intangible assets. The Group
holds significant amounts of assets in cash, so as to protect against
liquidity stresses. During 2020 the Group significantly increased the
amount of assets held in cash so as to safeguard against market
volatility. The reduction in 2021 reflects a more stable operating
environment and reduced market volatility.

Insurance liabilities
Insurance liabilities increased to £21,813m at 31 December 2021
(2020: £21,118m). The increase in liabilities arose from the new business
premiums written during the year, which was offset by an increase to
the valuation rate of interest over the period.

Other financial liabilities
Other financial liabilities decreased to £2,866m at 31 December 2021
(2020: £3,305m). 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 corresponding
reduction in reinsurance assets as mentioned above and lower amounts
of derivatives and collateral, given the reduced market volatility.

Other liabilities
Other liability balances decreased to £861m at 31 December 2021 (2020:
£901m), due to reductions in the deferred tax liability and accruals.

IFRS net assets
The Group’s total equity at 31 December 2021 was £2,440m (2020:
£2,490m). Total equity includes the Restricted Tier 1 notes of £322m
(after issue costs) issued by the Group in September 2021, which
refinanced £294m of higher coupon Restricted Tier 1 notes issued
in 2019. Including the upfront cost of the refinancing, total equity
attributable to ordinary shareholders decreased from £2,198m
to £2,120m resulting in net asset value per ordinary share of
204p (2020: 212p).

DIVIDENDS
Reflecting our strong performance in 2021, improved capital position and
confidence in our future performance, the Board is recommending a
final dividend of 1.0p (£10m). In the near term, we expect to deploy the
majority of capital we generate to support the new business available to
us in the DB and GIfL markets, whilst supporting an on-going sustainable
dividend, which we would expect to grow over time.

From 2022 onwards, we intend to declare dividends twice annually with
an interim dividend to be declared at our interim results in August and
paid in September and the final dividend to be declared at the final
results in March and paid in May. In future we would expect the interim
dividend to be approximately one third of the prior year full year dividend
and if this policy had applied for 2021 as a whole the equivalent dividend
for the full year would have been 1.5p (£15m).

741

3.0

898

3.9

24,751

100.0

23,270

100.0

ANDY PARSONS
Group Chief Financial Officer

1 Includes investment in trust which holds ground rent generating assets which are included

in investment properties in the IFRS consolidated statement of financial position.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

RISK MANAGEMENT

The Group’s enterprise-wide risk management
strategy is to enable all colleagues to take more
effective business decisions through a better
understanding of risk.

PURPOSE
The Group risk management framework supports management in
making decisions that balance the competing risks and rewards. This
allows them to generate value for shareholders, deliver appropriate
outcomes for customers and provide 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 framework, owned by the Board, covers all aspects involved in
the successful management of risk, including governance, reporting and
policies. Our appetite for different types of risk is embedded across the
business to create a culture of confident risk-taking. The framework
is continually developed to reflect our risk environment and emerging
best practice. Over the past year it has been enhanced to facilitate the
identification, assessment and reporting of risks arising from climate
change (“climate risk”), with risk category definitions updated to
integrate climate risk aspects. A high-level qualitative climate risk
appetite has been added to the Group’s existing high-level appetites,
which include reputation and capital, recognising the importance of
climate risk. Group policies have been updated to draw out any climate
specific considerations for risk management.

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 Officer (“GCRO”), challenges the management team on
the effectiveness 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.

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 the risks included in the Solvency Capital Requirement
(“SCR”) and how they translate into regulatory capital needs. By applying
stress and scenario testing, we gain insights into how risks might impact
the Group in different circumstances.

The financial risks from climate change arise from property, longevity
and market risks as set out on pages 25 to 28. The associated policies
govern the exposure of the Group to a range of risks, including climate
risk, and define the risk management activities to ensure these risks
remain within appetite.

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

Quantification of the financial impact of climate risk is subject to
significant uncertainty. Risks arising from the transition risk to a
lower carbon economy are heavily dependent on government policy
developments and social responses to policy. Just’s initial focus has
therefore been placed on implementation of strategies to reduce the
likely risk exposure to this risk. Just will continue to adapt its view of
climate risk as more data and methodologies emerge.

The aggregate exposure to climate risk is assessed against existing risk
appetites, with climate risk a factor to be considered in the management
of these risks. Risk appetite tolerances will be reviewed as further
stress-testing results become available.

OWN RISK AND SOLVENCY ASSESSMENT
The Group’s Own Risk and Solvency Assessment (“ORSA”) process
embeds comprehensive risk reviews into our Group management
activities. Our annual ORSA report is a key part of our business risk
management cycle. It summarises work done through the year on
business model and strategic risks, tests the business in a variety of
quantitative scenarios and integrates findings from recovery and run-off
analysis. The report provides an opinion on the viability and sustainability
of the Group and thus informs strategic decision making. Updates
are prepared each quarter, including factors such as key risk limit
consumption as well as operational and market risk developments,
to keep the Board appraised of the Group’s evolving risk profile.

Reporting on climate risk is being integrated into the Group’s regular
reporting processes to its Risk Committees, including the Group ORSA.
Reporting will evolve as quantification of risk exposures develops and
further key risk indicators (“KRIs”) are identified.

3RD LINE

INDEPENDENT ASSURANCE
Internal Audit is the third line of defence,
offering independent challenge to the levels
of assurance provided by business operations
and oversight functions.

RISK & CONTROL
• Provide independent challenge and assurance

VIABILITY STATEMENT
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. Based on the assessment, 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.

In making the viability assessment the Group considers the Group’s
business plan approved by the Board, steps taken by the Group
over the last three years to improve capital efficiency; the projected
liquidity position of the Company and the Group, ongoing impacts of
COVID-19, current financing arrangements, contingent liabilities and
a range of forecast scenarios with differing levels of new business and
associated additional capital requirements to write anticipated levels
of new business.

Consistent with the Group’s going concern assessment, the Group’s
resilience to the solvency capital position, is tested under a range of
adverse scenarios which considers the possible impacts on the Group’s
business, including stresses to UK residential property prices, house
price inflation, the credit quality of assets, mortality, 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%. Eligible own funds exceeded the minimum
capital requirements in all stressed scenarios described above. The
scenarios considered are consistent with the going concern assessment
(see page 127 of this Annual Report and Accounts).

The review also considers mitigating actions available to the Group
should a severe stress scenario occur, with the analysis considered by
the Board including those actions deemed to be more fully within the
Group’s control.

Additionally, a scenario where the Group ceases to write new business
is considered. 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-off.

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.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

PRINCIPAL RISKS AND UNCERTAINTIES

STRATEGIC PRIORITIES

CHANGES IN THE PERIOD/RISK OUTLOOK

Improve our capital position

Transform how we work

Get closer to our customers and partners

Generate growth in new markets

No change/stable

Be proud to work at Just

Increasing

Decreasing

RISK

DESCRIPTION AND IMPACT

MITIGATION AND MANAGEMENT ACTION

The financial services industry continues to see a high
level of regulatory activity and regulatory supervision.
This is shown in the Business Plans of the Prudential
Regulation Authority (“PRA”) and the Financial Conduct
Authority (“FCA”).

The PRA has retained its focus on the use of illiquid assets
in matching adjustment portfolios (including equity
release mortgages) as insurers continue their asset
allocations in this area.

The PRA is carrying out a quantitative impact study
(“QIS”) to assess the financial impact of a variety of
potential reforms to the Solvency II regime, including
most notably for Just, reform of the matching adjustment
and the risk margin.

The Group remains exposed to the changes following
SS3/17, notably to the PRA changing the parameters used
to determine compliance with the Effective Value Test,
limiting the matching adjustment available from equity
release mortgages. These changes are partially offset by
TMTP for business written prior to the introduction of
Solvency II.

The Treasury is 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 focused on adapting
Solvency II to fit the UK insurance market. The impact
on the risk of regulatory change remains uncertain.

The PRA required firms to have fully implemented their
plans for identifying and managing the financial risks
from climate change by the end of 2021. The FCA
expected premium-listed firms (including Just Group plc)
to comply with the recommendations of the Financial
Stability Board’s Taskforce on Climate-related Financial
Disclosures (“TCFD”) in their annual reports for financial
years starting from 1 January 2021.

The PRA and FCA have issued requirements to strengthen
operational resilience in the financial services sector. This
is a key priority for the regulators.

The risk of a negative impact on the Group’s capital
position from broader financial services regulatory
change is not limited to the matters described in the
paragraphs above.

The change in accounting standard to IFRS 17 due to
be implemented in 2023 will produce a different profit
recognition profile to which market participants will
take time to adjust.

Just monitors and assesses regulatory developments on an on-going basis.
We seek to actively participate in all regulatory initiatives which may affect
or provide future opportunities for the Group. Our aims are to implement
any changes required effectively, and 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 allowing for contingencies should outcomes differ from
our expectations. The Group also keeps under review the possible need for
capital management actions, such as reducing new business volumes.

Just has an approved partial internal model to calculate the Group Solvency
Capital Requirement, which it keeps under review for continued
appropriateness. Just received approval for changes proposed as part of a
Major Model Change in December 2021 incorporating the requirements of
SS3/17 for JRL’s internal model and a regulatory treatment for the
no-negative equity guarantee risk transfer transactions already completed.

Further steps to manage our exposure to UK residential property and the
amount of capital we have to hold for lifetime mortgages continue, with a
range of actions building on the no-negative equity guarantee hedging and
lifetime mortgage portfolio sale transactions completed to date.

A revised investment risk framework and limits was adopted by the Board
in support of the Group’s on-going compliance with the Prudent Person
Principle following the PRA’s supervisory statement. The Group operates a
number of governance committees to ensure continuing compliance with
the framework and limits.

Just is reviewing the potential implications of the Treasury review of
Solvency II and the opportunities it presents. Just has participated in the
QIS related to the potential Solvency II reforms to understand the financial
impacts of the scenarios requested by the PRA.

The trade deal agreed between the UK and the EU following UK’s withdrawal
from the EU did not address the issue of UK insurers continuing payments
to EU/EEA resident customers from 1 January 2021 after the end of the
transition period. However, following engagement with EU/EEA regulators,
permanent or interim solutions are in place for jurisdictions where material
numbers of our customers reside. Just will engage with national regulators
to ensure any further measures are taken as required to allow policyholder
payments to continue.

We have identified the potential impacts of climate change on the Group’s
risks. The Group’s risk management framework has been developed to
accommodate and report on climate risks and make appropriate disclosures
in line with TCFD recommendations. Climate and environmental
considerations have been embedded in the Group’s governance and
decision making.

Just has carried out a programme of development of its operational
resilience approach to meet the regulators’ expectations ahead of the
implementation deadline at the end of March 2022.

We will endeavour to educate investors on the changes resulting from
IFRS 17 ahead of full implementation.

Risk A
RISKS FROM
REGULATORY
CHANGES AND
SUPERVISION

STRATEGIC PRIORITIES
2. 3. 4. 5.
1.

CHANGE IN THE PERIOD

RISK OUTLOOK

RISK

DESCRIPTION AND IMPACT

MITIGATION AND MANAGEMENT ACTION

Risk b
RISKS FROM
THE ECONOMIC
AND POLITICAL
ENVIRONMENT

STRATEGIC PRIORITIES
2. 3. 4. 5.
1.

CHANGE IN THE PERIOD

RISK OUTLOOK

Risk C
RISKS TO THE
GROUP’S BRAND
AND REPUTATION

STRATEGIC PRIORITIES
2. 3. 4. 5.
1.

CHANGE IN THE PERIOD

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 the Group holds and on
the income the Group receives. A deterioration in the
economic environment could impact the availability and
attractiveness of certain securities and increase the risk
of credit downgrades and defaults in our asset portfolio.

A fall in residential property values could reduce the
amounts received from lifetime mortgage redemptions
and may affect the relative attractiveness of the LTM
product to customers. The regulatory capital needed to
support the possible shortfall on the redemption of
lifetime mortgages also increases if property values drop.
Conversely, significant 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 remains possible that the Bank of England could
maintain negative real interest rates as a policy tool to
stimulate the economy. The effect that this would have
on customer behaviour or on the market for credit
investments or lifetime mortgages is unclear.

Most defined benefit pension schemes link member
benefits to inflation through indexation. As the Group’s
defined benefit de-risking business volumes grow, its
gross exposure to inflation risk increases.

The conflict in Ukraine is expected to impact energy prices
and hence increases our expectations of inflation in the
near term. Depending on how the conflict is resolved, it
may have implications for certain of the investments in
our investment portfolio.

Market risks may affect 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 or
refinance existing debt.

Just’s asset and derivative counterparties have climate
risk exposure which may impact their creditworthiness in
due course.

Our purpose is to help people achieve a better later life.
Our Group’s brands reflect the way we aim 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 and contributing
to global efforts to reduce climate change risk.

The Group’s reputation could also be threatened by
external risks such as a cyber attack, a data protection
breach, or regulatory enforcement action. Such regulatory
action could result directly from the Group’s actions or
through contagion from other companies in the sectors in
which we operate.

Damage to our reputation may adversely affect our
underlying profitability, through reducing sales volumes,
restricting access to distribution channels and attracting
increased regulatory scrutiny.

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, investment grade assets in its investment
portfolio to ensure that it has sufficient 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 assets
within concentration risk limits.

Improved returns are sought by increasing the types, geographies, industry
sectors and classes of assets into which the Group invests. This 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 counterparty exposure arising from transacting
in these instruments is mitigated by collateral arrangements and managed
to avoid concentration exposures wherever practical.

For lifetime mortgages, 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-value ratio, supported by product
design features and limiting specific property types and exposure in each
region. We also monitor the exposure to adverse house price movements
and the accuracy of our indexed valuations. While the Group’s capital
models accommodate negative interest rates, there is no historical data to
validate the behaviour of the economy in such an environment.

The Group manages its exposure to inflation risk using inflation hedges and
index-linked securities. The Group closely monitors inflationary pressures,
including energy prices, and other factors that may have implications for
our investments.

Liquidity risk is managed by ensuring that assets of a suitable maturity and
marketability are held to meet liabilities as they fall due.

There can be some short-term volatility in the Group’s cash position, which
is a consequence of its derivative hedging. Regular cash flow forecasts
predict liquidity levels over both the short-term and long-term and stress
tests help us determine the required liquidity to hold. The Group monitors
market conditions to ensure appropriate liquid resources are held at all
times to cover extreme stresses such as those seen in March 2020. The
Group’s liquidity requirements have been met over the past year and
forecasting indicates that this position can reasonably be expected to
continue for both investments and business operations.

The monitoring of climate risk exposures of counterparties is an evolving
area as climate disclosures and regulatory expectations are developing.
Assessing such exposure includes consideration of climate risk disclosures,
alongside any associated public reporting and the actions of credit rating
agencies and where appropriate regulators.

The Group actively seeks to differentiate 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. We have set sustainability targets
aiming for our operations to be carbon net zero by 2025 and for emissions
from our investment portfolio to be net zero by 2050, with a 50% reduction
in emissions from the portfolio by 2030. Performance against these targets
will be carefully monitored and reported.

Protecting the personal data of our customers and colleagues remains a key
priority. This is achieved both by high standards of information security and
keeping the use of such data under tight control. We also take care to
ensure that all data subjects can exercise their rights under GDPR, such as
the ability to make subject access requests to obtain the data we hold about
them and the right to be forgotten.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

STRATEGIC PRIORITIES

CHANGES IN THE PERIOD/RISK OUTLOOK

Improve our capital position

Transform how we work

Get closer to our customers and partners

Generate growth in new markets

No change/stable

Be proud to work at Just

Increasing

Decreasing

RISK

DESCRIPTION AND IMPACT

MITIGATION AND MANAGEMENT ACTION

Risk D
RISKS FROM
OUR PRICING AND
REINSURANCE

STRATEGIC PRIORITIES
2. 3. 4. 5.
1.

CHANGE IN THE PERIOD

RISK OUTLOOK

Writing long-term defined benefit de-risking, Guaranteed
Income for Life and lifetime mortgage business requires
a range of assumptions to be made based on historical
experience, current data and future expectations, for
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 differ materially from the Group’s
assumptions, requiring them to be recalibrated in future.
This could affect the level of reserves needed, with an
impact on profitability and the Group’s solvency position.

As part of its overall risk mitigation and capital
management strategy, the Group purchases reinsurance
from a number of reinsurance providers to cover a
significant proportion of its longevity risk exposure.
Use of reinsurance creates a counterparty default risk
exposure in the unlikely event of the failure of the
reinsurance provider.

Just’s reinsurance counterparties have climate risk
exposure which may impact their creditworthiness in
due course.

Risk E
RISKS
ARISING FROM
OPERATIONAL
PROCESSES AND
IT SYSTEMS

STRATEGIC PRIORITIES
2. 3. 4. 5.
1.

CHANGE IN THE PERIOD

RISK OUTLOOK

The Group relies on its operational processes and IT
systems to conduct its business, including the pricing and
sale of its products, managing its investments, 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 the third party
infrastructure on which it relies could lead to costs
and disruptions that could adversely affect its
business and ability to serve its customers as well
as harm its reputation.

Large organisations continue to be targeted for cyber
crime. This includes attacks by state-sponsored actors on
national infrastructure as well as criminal attacks on
particular organisations that hold customers’ personal
details. The Group is exposed to the effects of indirect and
direct attacks and these could affect customer
confidence, or lead to financial losses.

Current mortality rates are largely derived using historical experience. The
Group has the benefit of its extensive underwritten mortality data, as well
as external mortality datasets, in setting base longevity assumptions.
Experience is regularly monitored to ensure consistency with expected
levels of mortality. If there are material differences between assumptions
and emerging experience, bases are modified appropriately.

Assumptions relating to future longevity are based on our analysis of trends
and likely drivers of future change. This analysis includes the potential
impact (both direct and indirect) of COVID-19 on the longevity of customers.
Given the uncertainty around the potential impact of both COVID-19 and
climate risk on longevity, no explicit allowance is made for these in our
assumptions. Any material climate risk developments will be considered as
part of our overall basis setting.

The Group performs due diligence on our reinsurance partners, who
themselves undertake due diligence on the Group’s approach to risk
selection. The Group manages its exposure to reinsurers on an on-going
basis within the Group’s risk appetite limit, with the maximum exposure to
individual counterparties being subject to limits set by the Group Board. This
exposure is partially mitigated through the posting of collateral into third
party trusts or similar security arrangements, or the deposit of premiums
back to the Group.

The Group measures its counterparty exposure as the change in its Solvency
II SCR coverage ratio from a default of each individual counterparty
combined with simultaneous longevity and market stresses. The measures
used include the change immediately upon default and after allowing for
management actions such as re-establishing cover.

Potential increased counterparty risk in respect of the reinsurer due to
climate risk is at present difficult to assess due to the diverse nature of the
reinsurers’ business models but should become clearer over time.

The Group maintains a system of internal control, with associated policies
and operational procedures, to ensure its processes operate with a low level
of risk of failure. The Group also defines clear expectations of the standards
we expect of all colleagues.

Protecting our customers and their data remains our highest priority, while
maintaining a resilient framework on our existing, well-established business
continuity management and disaster recovery capabilities.

In parallel to this and as part of our commitment to continuous improvement,
2021 has seen some significant changes in the Group’s infrastructure, with
the migration and rationalisation of data centres forming part of a wider
network and technology transformation programme. This means that the
Group is in an even stronger position to ensure the continuity of IT service
availability, particularly for the technologies that enable important business
services to support the needs of our customers.

Group security and management of data has also seen advances in the
capability implemented, including the latest technologies to protect our
customers’ information from advanced cyber threats.

Further management and security tools have been added to the Group email
system to identify and resist malicious attacks. The newly deployed telephony
system builds security and resilience into all contact points with our
customers and partners. A specialist Security Operations Centre monitors all
Group externally facing infrastructure and services, providing real-time threat
analysis and incident management and response capabilities.

The Group continues to invest in market-leading products to protect a hybrid
workforce and to maintain our multilayered approach to information
security and resilience.

RISK

DESCRIPTION AND IMPACT

MITIGATION AND MANAGEMENT ACTION

Risk F
RISKS FROM OUR
CHOSEN MARKET
ENVIRONMENT

STRATEGIC PRIORITIES
2. 3. 4. 5.
1.

CHANGE IN THE PERIOD

RISK OUTLOOK

The Group operates in a market where changes in
pensions legislation can have a considerable effect on our
strategy and could reduce our sales and profitability or
require us to hold more capital.

The Group offers a range of retirement options, allowing it to remain agile
in this changing environment, and flexes its offerings in response to
market dynamics. Our approach to legislative change in our markets is to
participate actively and engage with policymakers.

Our chosen market of helping people approaching and
in-retirement is rightly highly regulated. While we
maintain strong controls across our services, we could fail
to meet these ever increasing standards and fail to deliver
to our core purpose of helping people achieve a better
later life. Likewise, customer needs and expectations
continue to evolve and change in profile, and we may not
optimise our professional services offering and
distribution models to suit their requirements. Failures in
these areas would raise the risk of losing one or more of
our key partners on whom we rely for customer
introductions.

Competitive pressure in the lifetime mortgage market is
strong with lenders moving to control distribution as well
as competing on rates and early repayment charges. The
range of products available in this market has increased
substantially in the last few years while average rates
have reduced, squeezing margins.

A significant fall in home prices, although not expected to
occur, could affect customer appetite for equity release.

We are well placed to adapt to changing customer demand, supported
by our brand promise, innovation credentials, digital expertise 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.

Demand from scheme trustees for defined benefit de-risking solutions is
expected to continue to grow, mitigating the impacts on Just of increased
market competition.

The automated advice service Destination Retirement is a strategic
response by the distribution business to address changing needs in the
retirement market. This service is targeted at people approaching or
in-retirement with modest pension savings who may be unable to afford
traditional financial advice.

The risk of increased competition in the lifetime mortgage market is
mitigated through continuing work to improve the customer appeal of the
Group’s products, explore new product variants and meet distributors’
digital and service needs.

Climate risk could affect Just Group’s financial risks due to
its exposure to residential property through its lifetime
mortgage portfolio and through its corporate bond and
illiquid investment portfolio.

We continue to develop stress testing capabilities to further improve
monitoring of the potential impact of climate change on our investment
and equity release portfolios. Government policy on the energy
performance of residential properties is being monitored.

For lifetime mortgages:
(i) transition risk – government policy changes may
impact the value of residential properties, such as through
the introduction of minimum energy performance
requirements at the time of sale;
(ii) physical risks – such as increased flooding, resulting
from severe rainfall, or more widespread subsidence due
to extended droughts, may affect the value of properties
not seen as having such an exposure at present.

We already take risks from flooding, coastal erosion and subsidence into
account in our lending decisions, and are keeping the lifetime mortgage
lending policy under review in light of climate risks, making adjustments
as required.

Just has enhanced its approach to ESG in its investment strategy as set
out in its Responsible Investment Framework. This has resulted in new
premium income being invested in bonds and illiquid investments with a
lower carbon footprint.

For corporate bond and illiquid investment portfolios,
the impact of climate risk on assets or business models
may affect the ability of corporate bond issuers and
commercial borrowers to service their liabilities. The
yields available from corporate bonds may also be
affected by any litigation or reputational risks associated
with the issuers’ environmental policies or adherence to
emissions targets.

The increased consideration of sustainability in
investment decisions may restrict investment choice
and the yields available; it may also create new
opportunities to invest in assets that are perceived to be
more sustainable.

The Group’s strategic priorities are explained in more detail on pages 16 and 17.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

RETURNED TO GROWTH

INNOVATION
THE JUST WAY

We are positively disrupting markets
to deliver better value for our
customers and to fulfil our purpose.

Just has become famous for its
innovation and its pioneering
credentials in the retirement market.
That’s why people describe us as the
retirement specialist.

Six-in-ten

Number of people we could help get
a better lifetime mortgage deal

20% extra

The typical amount of additional
retirement income people received
medical underwriting

Over a decade ago we started asking people about their medical
conditions and lifestyle factors. By collecting this information we
were able to provide the majority of people with more guaranteed
income for the rest of their life. We found we could help around
six-in-ten people get a better deal and this was typically an extra
20% retirement income compared to those who purchased an
income without the benefit of medical underwriting.

This innovation transformed the market and ensured we fulfilled
our purpose to help people achieve a better later life.

Today we have over 3 million person years of data that fuels our
intellectual property. More than any of our competitors.

WE ARE CREATING A NEW REVOLUTION
In the second half of 2021 we’ve taken our intellectual property and
used it to positively disrupt another retail retirement market. This time,
the lifetime mortgage market. By asking customers a few questions
about their medical conditions and lifestyle factors we’ve found a way
to provide a tailored solution for each customer. And we’ve estimated
that around six-in-ten customers will get a better deal than if they
didn’t disclose this information. A better deal means they will get a
lower interest rate, or for those that need to, be able to borrow a higher
amount. Using medical underwriting in this way can provide customers
with thousands of pounds of additional value.

By adding medical underwriting into the industry’s core technology
and sourcing systems, we’ve equipped financial advisers with the
ability to lead this revolution just like they did in the retail retirement
income market. By asking a few additional questions financial advisers
can personalise their offer and ensure their clients attain the best deal
– if they do not use medical underwriting they introduce risk to their
business as they cannot attest to their client that they are delivering
the best outcome.

We think this revolution will diffuse through the market more quickly
than the one we introduced in the retail retirement income market,
thanks to the wide use of technology in the advisory market today.
And we expect others will follow.

We continue to innovate to positively
disrupt markets so that we may
deliver fair value and better
outcomes for customers
Paul Turner
Managing Director, Retail

APPROVAL
The Strategic Report was approved by the Board of
Directors on 9 March 2022 and signed on its behalf by:

JOHN HASTINGS-BASS
Chair

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

CHAIR’S INTRODUCTION TO GOVERNANCE

I am pleased to present the
Group’s Corporate Governance
Report for 2021.

John Hastings-Bass
Chair

Dear shareholders and other stakeholders,

On behalf of the Board of Just Group plc (the “Board”), I am pleased
to present the 2021 Corporate Governance Report.

The Board is committed to underpinning all of the Group’s activities
with the highest standards of corporate governance. This section
of the Annual Report and Accounts explains how the Board seeks
to ensure that we have effective corporate governance in place to
help support the creation of long-term sustainable value for all our
shareholders and other stakeholders. The Board has adopted the UK
Corporate Governance Code 2018 (the “Code”) since 1 January 2019.
The Board considers that, for the year under review, it has complied
with the principles and provisions of the Code. Further details on how
we have applied the principles of the Code can be found on page 77.

LEADERSHIP AND PURPOSE
The Board has agreed an effective corporate governance framework,
which includes the key mechanisms through which the Group sets its
strategy and objectives, monitors performance and considers risk
management. 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, or in-
retirement. Our priority is to deliver a sustainable capital model so that
we can take advantage of the growth markets we operate in. We work
hard to ensure our customers benefit from our services and our
shareholders receive the benefit of long-term, sustainable value
creation, whilst also taking into consideration the needs of our other
stakeholders and the impact of our operations on the wider society
and environment.

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 for the Board
to understand the views of our stakeholders and we do this through a
variety of engagement activities. Steve Melcher and Michelle Cracknell
are the lead Non-Executive Directors responsible for seeking the views
of our colleagues and bringing these back into the boardroom. Further
information about how the Board engages with colleagues can be found
in the Governance in operation report on page 74.

Further details regarding our engagement with the wider stakeholder
groups and how this has impacted our decision making is included in our
Strategic Report on pages 36 to 37.

SUSTAINABILITY
In recent years, there has been an increased focus by the Directors on
the environment when making decisions, particularly in the context of
the impact of climate change. One example of key decisions made
during the year was to broaden the Group’s sustainability credentials
through the issue of an RT1 Sustainable Bond. In the Section 172 report
on page 42 you can read about the various key considerations and
decisions taken by the Board on sustainability during the year.

REPORTING OF THE IMPACT OF THE GROUP ON THE CLIMATE
The Board acknowledges that the changing climate presents risks and
opportunities to the Group’s business model. Generally, the risks fall into
two categories known as transition risks and physical risks. Transition
risks are business-related risks that follow societal and economic shifts
towards a low carbon and more climate friendly future such as policy
and regulatory risks. Physical risks are risks which arise from the changes
in weather and climate that impact the Group and the wider economy.
The Board has adopted clear and measurable sustainability targets for
the Group’s operations and investments to be net zero in terms of
emissions. The Board has also considered how it can align the Group’s
sustainability activities to its strategic priorities as covered in more detail
on page 18.

BOARD COMPOSITION AND SUCCESSION PLANNING
As previously announced, there have been various changes to the Board
and its Committees during the year. The Nomination and Governance
Committee considered plans put in place for the orderly succession to
both the Board and to members of the Group Executive Committee
and the Group Company Secretary during the year, as covered in more
detail in the Nomination and Governance Committee report on page 81.
Some Directors have long tenures with the Group or its predecessor
companies, Just Retirement Group plc and Partnership Assurance Group
plc pre-merger. It remains a key focus to refresh the Board to bring fresh
perspectives and challenge as part of the succession planning, whilst
recognising the importance of maintaining a balance of skills,
knowledge, experience and diversity.

In determining the optimal way to consider and monitor the impacts of
climate change on the Group, Just has adopted an approach whereby
climate change is considered and reported as part of the current control
framework. The sustainability targets that the Group has adopted will
frame the discussion and build on actions taken by the Group in recent
years. You can read more about the targets and our achievements to
date on pages 18 to 29.

CULTURE, DIVERSITY AND INCLUSION
Engaged colleagues are crucial to creating a strong company culture,
delivering innovative products and better customer experiences. 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. The Just culture is
also reflected in how we work. 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. We were delighted
to have been accredited as a 2 star organisation representing
outstanding levels of engagement via the Best Companies index and we
are proud to have been awarded Company of the Year at the Financial
Adviser Service Awards in 2021.

Keith Nicholson retired from the Board on 31 December 2021 after serving
as Senior Independent Director since the Group’s merger with Partnership
Assurance Group plc and prior to that as a Director of Just Retirement
Group plc.

Kalpana Shah and Mary Kerrigan were appointed as Non-Executive
Directors of Just Group plc on 1 March 2021 and 1 February 2022
respectively. Following Keith Nicholson’s retirement, Ian Cormack, an
independent Non-Executive Director of the Group, was appointed as
Senior Independent Director and Kalpana Shah took over as Chair of the
Group Risk and Compliance Committee.

BOARD EVALUATION AND EFFECTIVENESS
Board evaluation is an important annual process and this year we
have undertaken an internal evaluation which built on the externally
facilitated review performed by Value Alpha the previous year. The
review covered both Just Group plc and the two life companies (Just
Retirement Limited and Partnership Life Assurance Company Limited).
I am pleased to report that following consideration of the feedback
and findings from this year’s assessment, the Board concluded that it
continues to be effective.

In 2021, despite the difficulties presented by COVID-19, the Group
continued to work on the organisation’s culture through the three
key people priorities to enable the delivery of the Group’s strategy:
building organisational resilience through our new ways of working;
strengthening talent, capabilities and inclusivity; and maintaining
outstanding engagement with colleagues resulting in them feeling
proud to work at Just.

Diversity remains a key focus for the Board, Group Executive Committee
and senior leadership team who recognise the enhanced contributions
a set of diverse people can bring to our business and wider society.
During 2021, Just 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 bias
and developing the inclusive culture; and fostering belonging through
supporting our people to be themselves. The Board sponsor for D&I is
the Group Chief Executive Officer. In addition, members of the Group
Executive Committee have been appointed as executive sponsors of
inclusive groups. Further information on the D&I strategy can be found
in the Strategic Report on page 33.

The Board has adopted a diversity policy and remains committed to
improving both the gender and ethnic diversity of the Board in line with
the recommendations from the Hampton-Alexander and Parker Reviews.
You can read more about the Nomination and Governance Committee’s
work in relation to diversity on pages 81 to 83. I am pleased to report
that, as at the date of this report, the percentage of women on the Board
has increased to 40% (30% as at March 2021).

As part of the annual evaluation process, all Non-Executive Directors
were assessed as being independent and able to provide an effective
contribution to the Board. More information about the Board evaluation
can be found on page 80.

2022 ANNUAL GENERAL MEETING
I am pleased to confirm that the 2022 Annual General Meeting (“AGM”)
will be held at 10.00am on 10 May 2022 at our registered office, located
at Enterprise House, Bancroft Road, Reigate, Surrey RH2 7RP.

In order to facilitate the best possible engagement with shareholders,
as well as inviting shareholders to attend the Group’s Reigate office, we
also intend to broadcast the AGM through Microsoft Teams (“Teams”).
There will be an opportunity for all shareholders attending in person
or via Teams to ask questions during the meeting. There will also be
a designated email to submit questions in advance of the AGM. More
information about the 2022 AGM and the associated arrangements can
be found in the Notice of Meeting which will be published and made
available on the Group’s website separately.

JOHN HASTINGS-BASS
Chair
9 March 2022

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

BOARD OF DIRECTORS

NON-EXECUTIVE CHAIR

EXECUTIVE DIRECTORS

JOHN HASTINGS-BASS,
Chair

DAVID RICHARDSON,
Group Chief Executive Officer and Managing
Director, UK Corporate Business

ANDREW PARSONS,
(KNOWN AS ANDY PARSONS),
Group Chief Financial Officer

IAN CORMACK,

PAUL BISHOP,

MICHELLE CRACKNELL,

Senior Independent Director

Independent Non-Executive Director

Appointed: 13 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 Director of JLT Group and Chief
Executive Officer 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
Novae Group plc in May 2007 and was appointed
as 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 its Audit Committee.

Appointed: 1 January 2020

Prior to his appointment as Group Chief Financial
Officer at Just Group plc, Andy was Group Finance
Director at LV= from June 2017 until 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 officer 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.

In June 2021, Andy was appointed as a Non-
Executive Director of RSA Insurance Group Limited.

Appointed: 4 April 2016
David was Deputy Group Chief Executive
Officer of the Company from April 2016 until his
appointment as Group Chief Executive Officer
in September 2019. David is also Managing
Director of the UK Corporate Business. He was the
Interim Chief Financial Officer of the Company
from October 2018 until January 2020 and
Chief Finance Officer 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 various senior roles at Swiss Re, across
both its Admin Re and traditional reinsurance
businesses. The 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 firm,
Tillinghast. David is a Fellow of the Institute and
Faculty of Actuaries and a CFA charter holder.

Appointed: 4 April 2016

Appointed: 1 March 2020

Ian has been an independent Non-Executive

Paul previously served as a Non-Executive

Michelle was Chief Executive Officer of The

Director of the Company since April 2016 and was

Director for Partnership Assurance Group

Pensions Advisory Service between October

appointed as its Senior Independent Director on

plc from May 2014 until its merger with

2013 and December 2018. Prior to that, she held

1 January 2022. Ian previously served as Senior

Just Retirement Group plc in April 2016.

Director roles in advice firms, providers and

Independent Director for Partnership Assurance

insurance companies. She is a qualified actuary.

Group plc from May 2013 until its merger with

Prior to his appointment, Paul spent the majority

Just Retirement Group plc in April 2016.

of his career at KPMG and was a Partner from 1993

In addition to Just Group, Michelle is a Trustee of

to the end of January 2014. He has specialised in

the Lloyds Bank Pension Funds, a Non-Executive

Prior to his appointment, Ian spent over 30 years

the insurance sector for over 30 years, particularly

Director of Fidelity International Holdings Limited

at Citibank until 2000, latterly as UK Country

life insurance, and led KPMG’s insurance consulting

and Fidelity Retirement Services Limited, and a

Head and Co-Head of the Global Financial

practice for much of his time as a Partner. Paul

Non-Executive Director and Chair of the Audit

Institutions Group. From 2000 to 2002, he was Chief

also spent 18 months on secondment at Standard

and Risk Committee of PensionBee Group plc.

Executive Officer of AIG Europe. Ian has served

Life as Head of Financial Change in the period

as a Non-Executive Director on several Boards

leading up to its demutualisation and flotation.

in the UK and overseas. Previous appointments

Paul is a Chartered Accountant. Previously, Paul

include serving as Senior Independent Director

served as a Non-Executive Director of Police Mutual

of Phoenix Group Holdings Limited, Chair of

Assurance Society from 2017 to September 2020.

Maven Income & Growth VCT 4 plc and Non-

Executive Director of Hastings Group Holdings plc

Paul is currently a Non-Executive Director

and the Broadstone Acquisition Corporation.

of the National House Building Council

and Zurich Assurance Limited.

Ian is currently a Non-Executive Director

of NatWest Holdings Limited, National

Westminster Bank plc, the Royal Bank

of Scotland plc and the Foundation for

Governance Research and Education.

Current other listed directorships
None.

Current other listed directorships

None.

PensionBee Group plc.

Committee and internal directorships
Chair of the Nomination and Governance Committee
and Market Disclosure Committee.

Committee and internal directorships
Member of the Market Disclosure Committee.

Committee and internal directorships

Chair of the Remuneration Committee.

Chair of the Group and Subsidiary Audit Committees.

Member of the Nomination and Governance

Committee and Remuneration Committee.

Member of the Group Risk and Compliance Committee
and Remuneration Committee.

Director of Just Retirement Limited, Partnership Life
Assurance Company Limited, Just Retirement Money
Limited and Partnership Home Loans Limited.

Member of the Nomination and Governance

Committee, Group Risk and Compliance Committee

Committee, Group Risk and Compliance Committee,

Director of Just Retirement Limited and Partnership

and Market Disclosure Committee.

and the Just Retirement Limited and Partnership Life

Life Assurance Company Limited.

Director of Just Retirement Limited and Partnership
Life Assurance Company Limited.

Director of Just Retirement Limited, Partnership Life

Assurance Company Limited, Just Retirement Money

Chair of Just Retirement Money Limited and

Limited, Partnership Home Loans Limited and HUB

Partnership Home Loans Limited. Director of Just

Financial Solutions Limited.

Retirement Limited and Partnership Life Assurance

Assurance Company Limited Investment Committees.

Company Limited.

SENIOR INDEPENDENT DIRECTOR

NON-EXECUTIVE DIRECTORS

JOHN HASTINGS-BASS,

Chair

DAVID RICHARDSON,

Group Chief Executive Officer and Managing

Director, UK Corporate Business

ANDREW PARSONS,

(KNOWN AS ANDY PARSONS),

Group Chief Financial Officer

Appointed: 13 August 2020

Appointed: 4 April 2016

Appointed: 1 January 2020

John brings over 35 years of business experience

David was Deputy Group Chief Executive

Prior to his appointment as Group Chief Financial

in the insurance and reinsurance sectors and has

Officer of the Company from April 2016 until his

Officer at Just Group plc, Andy was Group Finance

undertaken the role of Chair in publicly quoted and

appointment as Group Chief Executive Officer

Director at LV= from June 2017 until December

privately owned businesses. He currently holds

in September 2019. David is also Managing

2019, having held executive positions at several

the role of Chair of BMS Group, the private equity

Director of the UK Corporate Business. He was the

leading financial institutions. His career in finance

backed global insurance broking group and, until

Interim Chief Financial Officer of the Company

has spanned over 25 years, with particular

2017, was Chair of publicly quoted Novae Group plc.

from October 2018 until January 2020 and

expertise in life and general insurance. Prior to

John began his career in Hong Kong with Jardine

Group plc from February 2013 until April 2016.

divisional risk officer and life, pensions and

Matheson in 1976. He moved to London and

investment director for the insurance business

was latterly a Director of JLT Group and Chief

Previously, David was Group Chief Actuary of the

of Lloyds Banking Group. He previously worked

Executive Officer of International Business

UK’s largest closed life assurance fund consolidator,

at Friends Life, AXA and Zurich Financial Services

Group. He joined Arthur J. Gallagher in 2007 as

Phoenix Group, where he was responsible for

in a number of executive financial roles.

Chief Finance Officer of Partnership Assurance

joining LV=, he held the roles of finance director,

Chairman of International Development, leading

restructuring the group’s balance sheet and

the Asia Pacific business. He joined the Board of

overall capital management. Prior to this, David

In June 2021, Andy was appointed as a Non-

Novae Group plc in May 2007 and was appointed

worked in various senior roles at Swiss Re, across

Executive Director of RSA Insurance Group Limited.

as Chair in May 2008. He was appointed Non-

both its Admin Re and traditional reinsurance

Executive Chair of BMS Group in January 2015.

businesses. The roles included Chief Actuary of

John was appointed a Trustee of the Landmark

its Life and Health business, Head of Products

Trust in 2016 and chairs its Audit Committee.

for UK and South Africa, and Global Head of its

Longevity Pricing teams. David commenced

his career at the actuarial consultancy firm,

Tillinghast. David is a Fellow of the Institute and

Faculty of Actuaries and a CFA charter holder.

IAN CORMACK,
Senior Independent Director

PAUL BISHOP,
Independent Non-Executive Director

MICHELLE CRACKNELL,
Independent Non-Executive Director

Appointed: 1 March 2020
Michelle was Chief Executive Officer 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 Just Group, Michelle is a Trustee of
the Lloyds Bank Pension Funds, a Non-Executive
Director of Fidelity International Holdings Limited
and Fidelity Retirement Services Limited, and a
Non-Executive Director and Chair of the Audit
and Risk Committee of PensionBee Group plc.

Appointed: 4 April 2016
Ian has been an independent Non-Executive
Director of the Company since April 2016 and was
appointed as its Senior Independent Director on
1 January 2022. Ian previously served as Senior
Independent Director for Partnership Assurance
Group plc from May 2013 until its merger with
Just Retirement Group plc in April 2016.

Prior to his appointment, Ian spent over 30 years
at Citibank until 2000, latterly as UK Country
Head and Co-Head of the Global Financial
Institutions Group. From 2000 to 2002, he was Chief
Executive Officer of AIG Europe. Ian has served
as a Non-Executive Director on several Boards
in the UK and overseas. Previous appointments
include serving as Senior Independent Director
of Phoenix Group Holdings Limited, Chair of
Maven Income & Growth VCT 4 plc and Non-
Executive Director of Hastings Group Holdings plc
and the Broadstone Acquisition Corporation.

Ian is currently a Non-Executive Director
of NatWest Holdings Limited, National
Westminster Bank plc, the Royal Bank
of Scotland plc and the Foundation for
Governance Research and Education.

Appointed: 4 April 2016
Paul previously served as a Non-Executive
Director for Partnership Assurance Group
plc from May 2014 until its merger with
Just Retirement Group plc in April 2016.

Prior to his appointment, Paul spent the majority
of his career at KPMG and was a Partner from 1993
to the end of January 2014. 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 flotation.
Paul is a Chartered Accountant. Previously, Paul
served as a Non-Executive Director of Police Mutual
Assurance Society from 2017 to September 2020.

Paul is currently a Non-Executive Director
of the National House Building Council
and Zurich Assurance Limited.

Current other listed directorships

None.

Current other listed directorships
None.

Current other listed directorships
PensionBee Group plc.

Committee and internal directorships

Chair of the Nomination and Governance Committee

Member of the Market Disclosure Committee.

Committee and internal directorships

Member of the Market Disclosure Committee.

Committee and internal directorships
Chair of the Remuneration Committee.

Committee and internal directorships
Chair of the Group and Subsidiary Audit Committees.

and Market Disclosure Committee.

Member of the Group Risk and Compliance Committee

Assurance Company Limited, Just Retirement Money

and Remuneration Committee.

Limited and Partnership Home Loans Limited.

Director of Just Retirement Limited, Partnership Life

Director of Just Retirement Limited and Partnership

Life Assurance Company Limited.

Member of the Nomination and Governance
Committee, Group Risk and Compliance Committee
and Market Disclosure Committee.

Director of Just Retirement Limited, Partnership Life
Assurance Company Limited, Just Retirement Money
Limited, Partnership Home Loans Limited and HUB
Financial Solutions Limited.

Member of the Nomination and Governance
Committee, Group Risk and Compliance Committee,
and the Just Retirement Limited and Partnership Life
Assurance Company Limited Investment Committees.

Chair of Just Retirement Money Limited and
Partnership Home Loans Limited. Director of Just
Retirement Limited and Partnership Life Assurance
Company Limited.

Committee and internal directorships
Member of the Nomination and Governance
Committee and Remuneration Committee.

Director of Just Retirement Limited and Partnership
Life Assurance Company Limited.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

BOARD OF DIRECTORS CONTINUED

NON-EXECUTIVE DIRECTORS CONTINUED

MARY KERRIGAN,
Independent Non-Executive Director

ANDREW STEPHEN MELCHER,
(KNOWN AS STEVE MELCHER),
Independent Non-Executive Director

KALPANA SHAH,
Independent Non-Executive Director

CLARE SPOTTISWOODE,

JOHN PERKS,

Independent Non-Executive Director

Life Companies’ Chair

KATHLEEN BYRNE,

(KNOWN AS KATHY BYRNE),

Independent Non-Executive Director

Appointed: 1 February 2022
Mary was appointed as a Non-Executive Director of
Just Group plc on 1 February 2022. She has been a
Non-Executive Director of Just Retirement Limited and
Partnership Life Assurance Company Limited, the
Group’s life company subsidiaries, since 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 plc and
Chair of its Risk Committee. She is also a Non-
Executive Director of Aegon Asset Management UK
plc, and was appointed as a Non-Executive Director of
La Banque Postale Asset Management Limited in June
2021. Mary also is a member of the Independent
Governance Committee of Prudential Assurance UK
Limited and Trustee of The London Irish Centre.

Appointed: 15 May 2015

Steve has been a Non-Executive Director of Just since
May 2015 and is the Director responsible for leading
sustainability matters.

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 Officer of Eagle Star, Allied Dunbar and
Sun Life of Canada UK. In December 2021, Steve
retired from the Board of Allianz Re in Dublin,
having served ten years as a Non-Executive
Director. Steve is currently Chair of Euler Hermes
Pension Fund. He is also an executive mentor
which takes him inside many different industries.

Appointed: 1 March 2021
Kalpana brings over 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 Group Chief Actuary and a
Partner at Hiscox plc until 2016. Kalpana 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 its
Management Board in 2021. She is also a senior
Liveryman of the Worshipful Company of Insurers
and a trustee of Unitas, a Barnet Youth Zone. In
2020, 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 Limited, Senior
Independent Director of RiverStone Insurance (UK)
Limited, and Non-Executive Director of Asta
Managing Agency Limited and Markel International.

Appointed: 4 April 2016

Appointed: 1 April 2021

Appointed: 1 February 2022

Clare was Non-Executive Director of Partnership

John was appointed as Chair of Just Retirement

Kathy Byrne has over 35 years’ experience in the

Assurance Group plc from October 2014 until its

Limited and Partnership Life Assurance Company

insurance industry and was previously Chief Executive

merger with Just Retirement Group plc in April 2016.

Limited on 5 May 2021 following his appointment

Officer of the Metropolitan Police Friendly Society.

as a Non-Executive Director on 1 April 2021.

A qualified actuary, Kathy started her career at

Clare is a mathematician and economist by

consulting actuaries Hymans Robertson & Co and was

training. In June 2010, she was appointed by Her

John has significant experience in the life and

Managing Director of Cardif Pinnacle’s investment

Majesty’s Treasury to the Independent Commission

pensions industry, with 30 years of experience in

business unit. Prior to this she was their Group

on Banking (The Vickers Commission). Her career

the sector. He was previously Chief Executive Officer

Actuarial Director.

has involved acting as Policyholder Advocate for

of Police Mutual and Managing Director of Life &

Norwich Union’s with-profits policyholders at Aviva,

Pensions at LV=. Prior to that he held senior roles at

Kathy has an MBA from Henley Management College

in which role she acted on behalf of one million

Prudential, AXA and Swiss Life. At LV=, John was a

and has served on the Institute and Faculty of

policyholders tasked with reattributing Aviva’s

“friendly competitor” of the Just Group in many of

Actuaries Council.

inherited estate, and she was Director General of

its product markets, in addition to his role as Chief

Ofgas, the UK gas regulator. Clare previously served

Executive Officer of its pension advice company,

Kathy is a co-founder and shareholder of Alpasión

as a Non-Executive Director of BW Offshore Limited

bringing important commercial and strategic

Vineyard, Mendoza, where she held a Non-Executive

and Chair of Naftogaz Group.

perspectives to the Boards.

Director role until 2020.

In addition to Just Group, Clare is Chair of Xoserve

John is a Fellow of the Institute and Faculty

Limited. She is also a Non-Executive Director of Gas

of Actuaries.

Strategies Group Limited and Gas Strategies

Holdings Limited.

Current other listed directorships
None.

Current other listed directorships

None.

Committee and internal directorships
Chair of the Just Retirement Limited and Partnership
Life Assurance Company Limited Investment
Committees.

Director of Just Retirement Limited and Partnership
Life Assurance Company Limited.

Committee and internal directorships
Member of the Group Audit Committee, Group Risk
and Compliance Committee, Remuneration
Committee and Just Retirement Limited and
Partnership Life Assurance Company Limited
Investment Committees.

Chair of HUB Financial Solutions Limited.
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.

Director of Just Retirement Limited and Partnership
Life Assurance Company Limited.

Committee and internal directorships

Member of the Group Audit Committee and Group Risk

Member of the Just Retirement Limited and

Committee and internal directorships

Member of the Just Retirement Limited and

and Compliance Committee.

Partnership Life Assurance Company Limited Audit

Partnership Life Assurance Company Limited

Committees and Investment Committees.

Investment Committees.

Director of Just Retirement Limited, Partnership Life

Assurance Company Limited and HUB Financial

Solutions Limited.

NON PLC
INDEPENDENT NON-EXECUTIVE DIRECTORS

MARY KERRIGAN,

Independent Non-Executive Director

ANDREW STEPHEN MELCHER,

(KNOWN AS STEVE MELCHER),

Independent Non-Executive Director

KALPANA SHAH,

Independent Non-Executive Director

CLARE SPOTTISWOODE,
Independent Non-Executive Director

JOHN PERKS,
Life Companies’ Chair

Appointed: 1 February 2022

Appointed: 15 May 2015

Appointed: 1 March 2021

Mary was appointed as a Non-Executive Director of

Steve has been a Non-Executive Director of Just since

Kalpana brings over 30 years of business

Just Group plc on 1 February 2022. She has been a

May 2015 and is the Director responsible for leading

experience in the insurance and investment

Non-Executive Director of Just Retirement Limited and

sustainability matters.

Partnership Life Assurance Company Limited, the

industry, having started her career at the London

Commodity Exchange and moving into insurance

Group’s life company subsidiaries, since November 2019.

Steve has worked in financial services for over

as Deputy to the Director of Underwriting at

Mary has considerable experience in the pensions, life

at JP Morgan, Marsh & McLennan and as Chief

Partner at Hiscox plc until 2016. Kalpana chaired

insurance and investment industries, and is a former

Executive Officer of Eagle Star, Allied Dunbar and

and contributed to working parties for the Bank of

partner of Willis Towers Watson.

Sun Life of Canada UK. In December 2021, Steve

England, Lloyd’s of London and the Bermuda

40 years, during which time he has held posts

Groupama Gan. She was Group Chief Actuary and a

Outside of Just Group, Mary is a Non-Executive

having served ten years as a Non-Executive

Director of New Ireland Assurance Company plc and

Director. Steve is currently Chair of Euler Hermes

Kalpana was elected to the governing body of the

Chair of its Risk Committee. She is also a Non-

Pension Fund. He is also an executive mentor

Institute and Faculty of Actuaries in 2019 and its

Executive Director of Aegon Asset Management UK

which takes him inside many different industries.

Management Board in 2021. She is also a senior

retired from the Board of Allianz Re in Dublin,

Monetary Authority.

plc, and was appointed as a Non-Executive Director of

La Banque Postale Asset Management Limited in June

2021. Mary also is a member of the Independent

Governance Committee of Prudential Assurance UK

Limited and Trustee of The London Irish Centre.

Liveryman of the Worshipful Company of Insurers

and a trustee of Unitas, a Barnet Youth Zone. In

2020, 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 Limited, Senior

Independent Director of RiverStone Insurance (UK)

Limited, and Non-Executive Director of Asta

Managing Agency Limited and Markel International.

Appointed: 4 April 2016
Clare was Non-Executive Director of Partnership
Assurance Group plc from October 2014 until its
merger with Just Retirement Group plc in April 2016.

Clare is a mathematician and economist by
training. In June 2010, she was appointed by Her
Majesty’s 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 she was Director General of
Ofgas, the UK gas regulator. Clare previously served
as a Non-Executive Director of BW Offshore Limited
and Chair of Naftogaz Group.

In addition to Just Group, Clare is Chair of Xoserve
Limited. She is also a Non-Executive Director of Gas
Strategies Group Limited and Gas Strategies
Holdings Limited.

Appointed: 1 April 2021
John was appointed as Chair of Just Retirement
Limited and Partnership Life Assurance Company
Limited on 5 May 2021 following his appointment
as a Non-Executive Director on 1 April 2021.

John has significant experience in the life and
pensions industry, with 30 years of experience in
the sector. He was previously Chief Executive Officer
of Police Mutual and Managing Director of Life &
Pensions at LV=. Prior to that he held senior roles at
Prudential, AXA and Swiss Life. At LV=, John was a
“friendly competitor” of the Just Group in many of
its product markets, in addition to his role as Chief
Executive Officer of its pension advice company,
bringing important commercial and strategic
perspectives to the Boards.

John is a Fellow of the Institute and Faculty
of Actuaries.

KATHLEEN BYRNE,
(KNOWN AS KATHY BYRNE),
Independent Non-Executive Director

Appointed: 1 February 2022
Kathy Byrne has over 35 years’ experience in the
insurance industry and was previously Chief Executive
Officer of the Metropolitan Police Friendly Society.
A qualified actuary, Kathy started her career at
consulting actuaries Hymans Robertson & Co and was
Managing Director of Cardif Pinnacle’s investment
business unit. Prior to this she was their Group
Actuarial Director.

Kathy has an MBA from Henley Management College
and has served on the Institute and Faculty of
Actuaries Council.

Kathy is a co-founder and shareholder of Alpasión
Vineyard, Mendoza, where she held a Non-Executive
Director role until 2020.

Current other listed directorships

None.

Current other listed directorships
None.

Committee and internal directorships

Chair of the Just Retirement Limited and Partnership

Member of the Group Audit Committee, Group Risk

Chair of the Group Risk and Compliance Committee.

Life Assurance Company Limited Investment

and Compliance Committee, Remuneration

Committees.

Committee and Just Retirement Limited and

Member of the Group and Subsidiary Audit

Partnership Life Assurance Company Limited

Committees.

Director of Just Retirement Limited and Partnership

Investment Committees.

Life Assurance Company Limited.

Chair of HUB Financial Solutions Limited.

Life Assurance Company Limited.

Director of Just Retirement Limited and Partnership

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 Group Audit Committee and Group Risk
and Compliance Committee.

Committee and internal directorships
Member of the Just Retirement Limited and
Partnership Life Assurance Company Limited Audit
Committees and Investment Committees.

Committee and internal directorships
Member of the Just Retirement Limited and
Partnership Life Assurance Company Limited
Investment Committees.

Director of Just Retirement Limited, Partnership Life
Assurance Company Limited and HUB Financial
Solutions Limited.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS

JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

SENIOR LEADERSHIP

DAVID RICHARDSON,
Group Chief Executive Officer
and Managing Director, UK
Corporate Business

ANDY PARSONS,
Group Chief Financial Officer

DAVID COOPER,
Group Marketing
and Distribution Director

ALEX DUNCAN,
Group Chief Risk Officer

LISA DAVIS,

Chief People Officer

PAUL FULCHER,

GILES OFFEN,

Group Capital Management &

Investment Executive

Group Chief Digital

Information Officer

PAUL TURNER,

Managing Director, Retail

Appointed: 4 April 2016
Alex joined Just Retirement Group in
September 2012 as Group Chief Risk
Officer. 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,
including mergers and acquisitions,
capital management and treasury.

Appointed: 4 April 2016
David joined Just Retirement Group
in April 2006 as Marketing Director
and his role changed to Group
Marketing and Distribution Director
in 2009. David is also Chief Executive
Officer of the group of companies
trading under the HUB brand, 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, a
software standards and services
supplier, and Criterion Tec Holdings
Limited, a not-for-profit body that
delivers professional standards
and governance services for the
UK’s financial services industry.

Appointed: 7 March 2022

Appointed: 1 February 2021

Appointed: 4 April 2016

Lisa is responsible for the people

Paul is responsible for Capital

Giles is responsible for Technology,

Paul joined Just Retirement in August

agenda at Just Group and will

Management, Investments and the

Change and Architecture as

contribute towards the organisation’s

Longevity, Medical, Group Pricing and

well as embedding modern

2014 and is responsible for all the

Group’s retail businesses in the UK

strategic plan and performance.

Reinsurance teams.

methods of change delivery.

and South Africa. Previously, Paul led

Lisa has over 20 years’ HR leadership

Paul has over 30 years’ experience in

Prior to this, he was Chief Technology

development and international

experience, working in a number of

the life insurance industry. Prior to

Officer at Partnership Assurance

divisions. Prior to Just Retirement,

regulated industries, particularly

joining Just Group, Paul was a Principal

Group plc, which he joined in January

he held various senior international

the financial services sector. Lisa

at Milliman LLP, a life and financial

2014 to transform the company’s IT

roles at Swiss Re in Asia and

joined Just Group from Skipton

service consulting firm. Before Milliman

capability and change programmes.

Australia. He has over 25 years’

Building Society Group where she

he spent six years working at Nomura

Giles has over 20 years’ of diverse

insurance industry experience.

was responsible for the people

strategy across the business.

Previously, Lisa held senior HR

as Managing Director, leading their ALM

global experience which includes

Structuring and Insurance Solutions

working at companies such as Reed

Paul is an Executive Director of Just

team for Europe, Middle East and Africa.

Elsevier, Lexis Nexis and Cashplus.

Retirement Limited, Partnership

Just Group’s mortgage, corporate

roles at Aviva, Santander and EY.

Prior to Nomura, he worked for the

Lisa is a member of the Women

Markets business as Managing Director

in Finance Board, created by Her

and Head of their Financial Institutions

Majesty’s Treasury to encourage

Risk Advisory Team.

Royal Bank of Scotland in their Global

the progression of women in

the financial services sector.

Paul is a Fellow of the Institute and

Faculty of Actuaries.

Life Assurance Company Limited,

Just Retirement Money Limited and

Partnership Home Loans Limited.

Outside of Just, Paul is a Non-

Executive Director of the Equity

Release Council and EPPARG Limited.

Current listed directorships
None.

Current listed directorships

None.

SEE DAVID’S BIOGRAPHY
ON PG. 68

SEE ANDY’S BIOGRAPHY
ON PG. 68

DAVID RICHARDSON,

ANDY PARSONS,

DAVID COOPER,

ALEX DUNCAN,

Group Chief Executive Officer

Group Chief Financial Officer

Group Marketing

Group Chief Risk Officer

LISA DAVIS,
Chief People Officer

and Managing Director, UK

Corporate Business

and Distribution Director

PAUL FULCHER,
Group Capital Management &
Investment Executive

GILES OFFEN,
Group Chief Digital
Information Officer

PAUL TURNER,
Managing Director, Retail

Appointed: 4 April 2016

David joined Just Retirement Group

Alex joined Just Retirement Group in

in April 2006 as Marketing Director

September 2012 as Group Chief Risk

and his role changed to Group

Officer. He is a Fellow of the Institute

Marketing and Distribution Director

and Faculty of Actuaries and has over

in 2009. David is also Chief Executive

30 years’ experience in the financial

Officer of the group of companies

services industry covering many

trading under the HUB brand, which

disciplines, including reinsurance,

are subsidiaries of Just Group.

consulting, banking and industry.

Prior to joining Just Retirement, Alex

David has over 35 years’ experience

spent eight years at Old Mutual,

working in financial services. He has

where he held a number of positions,

operated in a number of sectors

including mergers and acquisitions,

including retail banking, general

capital management and treasury.

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, a

software standards and services

supplier, and Criterion Tec Holdings

Limited, a not-for-profit body that

delivers professional standards

and governance services for the

UK’s financial services industry.

Appointed: 7 March 2022
Lisa is responsible for the people
agenda at Just Group and will
contribute towards the organisation’s
strategic plan and performance.

Appointed: 1 February 2021
Paul is responsible for Capital
Management, Investments and the
Longevity, Medical, Group Pricing and
Reinsurance teams.

Appointed: 4 April 2016
Giles is responsible for Technology,
Change and Architecture as
well as embedding modern
methods of change delivery.

Lisa has over 20 years’ HR leadership
experience, working in a number of
regulated industries, particularly
the financial services sector. Lisa
joined Just Group from Skipton
Building Society Group where she
was responsible for the people
strategy across the business.
Previously, Lisa held senior HR
roles at Aviva, Santander and EY.

Lisa is a member of the Women
in Finance Board, created by Her
Majesty’s Treasury to encourage
the progression of women in
the financial services sector.

Paul has over 30 years’ experience in
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 and
Faculty of Actuaries.

Prior to this, he was Chief Technology
Officer at Partnership Assurance
Group plc, 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: 4 April 2016
Paul joined Just Retirement in August
2014 and is responsible for all the
Group’s retail businesses in the UK
and South Africa. Previously, Paul led
Just Group’s mortgage, corporate
development and international
divisions. Prior to Just Retirement,
he held various senior international
roles at Swiss Re in Asia and
Australia. He has over 25 years’
insurance industry experience.

Paul is an Executive Director of Just
Retirement Limited, Partnership
Life Assurance Company Limited,
Just Retirement Money Limited and
Partnership Home Loans Limited.

Outside of Just, Paul is a Non-
Executive Director of the Equity
Release Council and EPPARG Limited.

Current listed directorships

None.

Current listed directorships
None.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE IN OPERATION
GOVERNANCE IN OPERATION

OUR GOVERNANCE STRUCTURE
The Just Group plc Board (the “Board”) is responsible for the overall leadership of
the Company and establishing the Group’s purpose, values, standards and strategy.
The Board promotes the long-term sustainable success of the Company, generating
value for customers, shareholders, other stakeholders and wider society.

The Board has agreed an effective governance framework whose structure is set out below.

JUST GROUP PLC BOARD
• Sets purpose, values and strategy for the group of companies

• Sets the Group’s sustainability strategy and CO2 emission

of which Just Group plc is the ultimate shareholder (the “Group”)
• Assesses and monitors culture ensuring behaviours and practices

targets and oversees the steps taken to achieve these targets

• Approves the capital structure of the Group and any change

are aligned with the Group’s purpose, values and strategy
• Sets risk appetite and oversees risk management including
climate-related risks, internal control systems, corporate
governance and regulatory matters

• Approves major changes to the Group’s corporate structure
including, but not limited to, major acquisitions or disposals
and its presence in various jurisdictions

• Approves the business plan including business strategy and
objectives, climate-related targets, budgets, forecasts and
any material changes, and monitors delivery against the
plan ensuring that any necessary corrective action is taken

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

• Approves matters that are recommended to it for approval

by committees of the Board

GROUP AUDIT
COMMITTEE
Chair: Paul Bishop

REMUNERATION
COMMITTEE
Chair: Ian Cormack

NOMINATION
AND GOVERNANCE
COMMITTEE
Chair: John Hastings-Bass

GROUP RISK
AND COMPLIANCE
COMMITTEE
Chair: Kalpana Shah

Oversees on behalf of the Board:
• Financial reporting including

monitoring the integrity of the
financial statements of the Company
and any other formal statements
relating to its financial performance,
such as climate-related assumptions
and disclosures

• Significant financial reporting

issues and accounting judgements,
including accounting policies
• Solvency and solvency reporting
• Relationship with the external
auditor including monitoring
independence, negotiation and
approval of their remuneration,
whether fees for audit or non-audit
services, and the annual audit plan
• External audit tender process and

appointment of a new
external auditor
• Internal controls
• Internal audit function
and internal audit plans

• Tax strategy

READ MORE ON PG.90

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 effective
controls across the Group to the Group Chief Executive Officer.

The Group Chief Executive Officer 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”).

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 effective controls to manage and mitigate risks

• Executing plans to meet the sustainability commitments that the

Board has set

• Recommending the business plan and budgets to the Board

for approval

• Monitoring the Group’s performance
• Implementing and oversight of approved policies and processes which
govern how we do business and how we interact with our stakeholders

• Development and oversight of initiatives to ensure people within the

organisation feel well led, managed and supported with opportunities
for development

• Recommending Group policies to the Board for approval

There is also an Executive Risk Committee (“ERC”), chaired by the Group
Chief Risk Officer, 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 Group Risk and Compliance Committee (“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 and
effectively. 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 when required
from time to time. All committees are established by approval of the
Board with agreed terms of reference.

Board and Board Committee governance
The matters reserved for the Board are defined and approved by the
Board. Each Board Committee has terms of reference which are approved
by the Board. All of these documents have been reviewed and are being
updated to reflect the Board and Board Committees’ responsibilities in
respect of the Group’s sustainability strategy. 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 and Governance Committee and approval by the Board.
At each scheduled 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”). 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 effectively.
JRL and PLACL both have two independent Non-Executive Directors who
are not Directors of the Group. John Perks is the Chair of the Boards of
JRL and PLACL and Kathy Byrne is a Non-Executive Director.

The Boards of JRL and PLACL have not established separate
remuneration committees, nomination and governance 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
of the investment activities within an investment management
governance framework to the JRL and PLACL Investment Committees.

The JRL and PLACL Investment Committees are responsible for:
• Recommending the investment framework, material changes to the

investment strategy and any major strategic initiatives to the JRL and
PLACL Boards for approval

• Overseeing the alignment of investment activities and performance to
the Group’s strategy, including the Group’s targets for investments to
be carbon net zero by 2050 with an interim target of a reduction of
50% by 2030

• Reviewing climate-related risks to the investment portfolio
• Reviewing the performance of external investment managers and the

effectiveness of 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. John Perks is a member
of the JRL and PLACL Audit Committees to maintain the independence
focus of the regulated life companies’ Committees. Kalpana Shah is also
a member of the JRL and PLACL Audit Committees. Further information
on the activities of the Committees is available in the Group Audit
Committee report on pages 84 to 89.

JRL and PLACL Board and Board Committee governance
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 2021, the Board focused on further refining the Group’s strategy
by increasing its growth ambitions and building a sustainable capital
model. The Board continued to monitor the development and execution
of management actions, which included the sale of a portfolio of lifetime
mortgages to further reduce the Group’s exposure to UK residential
property risk. There has also been a high level of focus on sustainability
and the development of targets to reduce the Group’s impact on the
environment. At its strategy meeting, the Board considered the Group’s
commercial resilience and the ways in which transformation, from both
a digital and operational standpoint, will aid significant growth of
the business and other future opportunities. The Group’s strategy
remains aligned with our purpose of helping people achieve a better
later life and to be the leading retirement specialist. Following the
relaxation of COVID-19 restrictions, the Board resumed holding physical
meetings while continuing to follow all health and safety precautions.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE IN OPERATION CONTINUED

A series of virtual “Conversations with the Board” sessions were held
during the year to give colleagues the opportunity to engage with
various Non-Executive Directors, including the Chair, John Hastings-Bass,
JRL and PLACL Chair, John Perks, and Group independent Non-Executive
Directors Kalpana Shah, Steve Melcher and Mary Kerrigan. The Board
lead by example and promote our values of doing the right thing. The
Section 172 report in the Strategic Report on pages 38 to 42 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.

AREA OF FOCUS

KEY BOARD ACTIVITIES

REVIEWING
STRATEGIC PROGRESS

• Held a Board strategy session to monitor progress against the Group’s strategy, and to review and agree
refinements to it. The strategy session focused on commercial resilience, transformation and growth,
and future opportunities

• Reviewed the present and target states of the Group’s business model
• Reviewed and agreed the Group’s return on equity and sales targets
• Reviewed the Group plan for change and people initiatives
• Carried out in-depth reviews into each of the Group’s business lines
• Considered and agreed the Group’s sustainability targets

• Material interaction with regulators with regard to their annual review letter and various applications

including the major model change application for the internal model, which was approved by the PRA in
December 2021

• Received Group Chief Risk Officer reports on the Group’s capital management initiatives

and other material changes

• Approved the risk policies, including specific reference to climate change where appropriate, and the risk

framework for managing risk across the Group

• Approved a new high-level climate risk appetite and updated reputational risk appetite
• 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

• Reviewed the Group’s financial performance on an on-going basis, and the Group’s half-year and annual

financial results

• Approved the Group’s business plan and forecast
• Reviewed the dividend policy and agreed to recommend to shareholders a final dividend for the financial

year ended 31 December 2021

• Reviewed and challenged reports provided by its Committees on key financial-related matters including

IFRS 17, the new insurance accounting standard, and climate change disclosures

• Assessed the Group’s capital and liquidity requirements including optimisation of its Solvency II

capital structure

• Provided oversight of changes to improve the resilience of the Group’s capital position to insurance, market

and counterparty risks

• Continued to examine underlying capital generation improvement measures
• Provided oversight of external and intra-Group financing
• Issued a £325m BBB-rated Sustainability Solvency II Restricted Tier 1 qualifying instrument with a maturity
date in September 2031 at a coupon of 5%. Features of the bond include a six month optional redemption
period to call at par from March 2031 to September 2031, and a commitment to invest an equivalent amount
in social and green assets within three years of issuance

• Completed a tender for £295m of the existing £300m Restricted Tier 1 debt due in April 2024, and

subsequently exercised a clean-up option on the remaining £5m to cancel the outstanding 2019 RT1 notes

• Received regular updates from Board Committees, management and external advisers on legal and
regulatory developments, and status updates on various projects including the finance and retail
transformation programmes and climate change project

• Reviewed activities in light of the Prudent Person Principle regulation
• Reviewed and updated the terms of reference of the principal committees of the Group Board
• Reviewed and approved updates to various Group policies
• The Chair conducted extensive shareholder engagement in addition to the normal CEO/CFO programme
• Appointed Steve Melcher as the Director responsible for leading sustainability matters
• Attended a series of workshops covering, amongst others, the major model change application for the

internal model and risk factors affected in the identified climate change scenarios

RISK MANAGEMENT

FINANCIAL REPORTING
AND CONTROLS AND
DIVIDEND POLICY

STRUCTURE
AND CAPITAL

CORPORATE
GOVERNANCE

AREA OF FOCUS

KEY BOARD ACTIVITIES

BE PROUD TO
WORK AT JUST

BOARD SUCCESSION
PLANNING

• Significant focus given to the 2021 colleague engagement strategy and wellbeing programme, in addition to

consideration of the impact of the modern workplace programme on our culture

• Held several “Conversations with the Board” sessions with colleagues to promote two-way communication

and hear views on areas of focus such as diversity and inclusion, culture, and executive remuneration

• Increased the percentage of women on the Board and made progress against the Board’s commitment to

improve diversity at senior levels across Just

• Significant focus was given to Board and executive succession planning, and good progress was made in

refreshing the Board

• Reaffirmed its commitment to Board, executive and senior management diversity
• Undertook an internally facilitated evaluation of the Board’s effectiveness and the performance

of its Committees, the Chair and individual Directors

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.

John Perks and Kathy Byrne are independent Non-Executive Directors
of JRL and PLACL. John Perks is a member of the JRL and PLACL Audit
Committees and Investment Committees. Kathy Byrne is a member of
the JRL and PLACL Investment Committees.

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
• David Richardson, Group Chief Executive Officer and Managing

Director of the UK Corporate Business

• Andy Parsons, Group Chief Financial Officer
• Paul Bishop, Independent Non-Executive Director
• Ian Cormack, Senior Independent Director
• Michelle Cracknell, Independent Non-Executive Director
• Mary Kerrigan, Independent Non-Executive Director (appointed

1 February 2022)

• Steve Melcher, Independent Non-Executive Director
• Keith Nicholson (retired on 31 December 2021)
• Kalpana Shah, Independent Non-Executive Director (appointed

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 2021. The Board held 12 meetings during the period from
1 January 2021 to 31 December 2021, of which seven were scheduled
and five were additional Board meetings called due to the needs of
the business. None of the Executive Directors hold a non-executive
directorship in a FTSE 100 company. The table below shows Directors’
attendance at scheduled Board and Board 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 sustainable success of the Company.
The regulatory framework has evolved with increased emphasis
on corporate culture, purpose, values, executive remuneration,
sustainability, stakeholder engagement and more generally a
company’s contribution to wider society.

SCHEDULED BOARD AND BOARD COMMITTEE MEETINGS ATTENDANCE

Board

Group Audit

Remuneration

Nomination and
Governance

Group Risk and
Compliance

John Hastings-Bass

David Richardson

Andy Parsons

Paul Bishop

Ian Cormack1

Michelle Cracknell

Steve Melcher 2

Keith Nicholson

Kalpana Shah3

Clare Spottiswoode

Additional meetings held

7/7

6/7

7/7

6/6

7/7

–

8/8

–

7/8

8/8

7/7

8/8

4/4

–

3/4

4/4

–

3/3

–

3/3

–

3/3

–

1 Ian Cormack was unable to attend the Board meeting on 14 October 2021 and the Remuneration Committee on 10 November 2021 due to illness.
2 Steve Melcher was unable to attend the Group Audit Committee on 8 March 2021 due to prior commitments.
3 Kalpana Shah was appointed as a Director on 1 March 2021.

6/6

–

6/6

–

6/6

5/5

6/6

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE IN OPERATION CONTINUED

Pages 74 to 80 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 81 (Nomination and
Governance Committee), 84 (Group Audit Committee), 90 (GRCC) and
93 (Remuneration Committee).

Stakeholder engagement
The Board engages with its stakeholders and shareholders in a variety
of ways.

The stakeholder engagement and Section 172 report on pages 36 to 42
sets out how the Board engages with and encourages participation from
its key stakeholders and the effect the engagement has had on the
principal decisions taken by the Board during the year. Receiving
accreditation as a 2 Star organisation by Best Companies and as one
of the UK’s Best 100 Large Companies to Work For represents the
outstanding levels of engagement overseen by the Board.

The Colleagues and culture report on page 30 outlines more information
on our culture and our approach to colleague engagement. During 2021,
the “Conversations with the Board” sessions enabled Directors of the
Board to speak to colleagues directly on specific key topics that focused
on encouraging workforce engagement. Further information on their
activities is included in the report. The report also covers diversity and
inclusion, and activities to give 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 2021 through a programme of
meetings undertaken by the Chair, Group Chief Executive Officer, Group
Chief Financial Officer and members of the Investor Relations team.
Activity was primarily through virtual means leading to greater efficiency
of Director time and increased accessibility to capital providers.
Equity-led roadshows were held in March and August/September 2021,
with dedicated debt roadshows in July and September, culminating in
the issuance of a £325m Tier 1 Sustainability Bond and £300m RT1
buyback and ultimate cancellation following the exercise of a clean-up
option. 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 group and one-to-one
meetings with existing and prospective shareholders.

There was regular engagement with shareholders during 2021 as
the Group discussed a number of important issues including taking
advantage of the growth opportunities available, the regulatory
environment and potential changes following the HM Treasury Call
for Evidence, overall capital levels and reduction of risks, in particular
residential property sensitivity, capital allocation options and the
investment strategy. Other topics included diversity and inclusion,
Board composition and responsible investing.

The Investor Relations team provides the Executive Directors with regular
analysis of shareholder movements, market and peer activity, in addition
to updates on share price performance. Analysts’ and brokers’ reports
are made available to all Directors and the Board receives detailed
feedback from our corporate brokers following the results roadshow.

The ordinary shares are covered by eight analysts. The Investor Relations
team also maintains an open dialogue with non-covering analysts,
banks, brokers, credit analysts and other market participants. Fitch
continues to maintain their A/A+ credit ratings for members of the
Group, and reaffirmed a Stable outlook in December 2021.

The Board has noted the development of new ways of engaging
shareholders, particularly small shareholders that have emerged
during the pandemic, and will keep under review the best way to
engage with shareholders.

During 2021, Just Group plc’s shares increased by 20% to 83.60 pence,
compared with the FTSE 350 life insurance index which increased by 14%.

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 Officer or other Executive Directors.
Further information for shareholders is included on page 183.

2021 AGM
I am pleased to report that all resolutions were passed at our Annual
General Meeting in May 2021 with at least 90% of those voting
supporting the resolutions.

The meeting was held in our Reigate office and was broadcast to enable
shareholders to view the meeting live online. The Board was keen that
the shareholder meeting was as normal as possible while complying
with the restrictions in place due to the COVID-19 pandemic. In order to
facilitate engagement in difficult circumstances, shareholders were
encouraged to cast their vote by proxy and to submit questions in
advance of the meeting.

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
leads the review and response from the relevant areas of the business,
and raises the matters with the Group Audit Committee Chair, who is the
whistleblowing champion. The Group Audit Committee has a regular
agenda item on whistleblowing, receiving updates on the operation of
the policy and any concerns raised.

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 subsequent Board meeting for consideration and, if appropriate,
authorisation sought by Board members in accordance with the
Company’s Articles of Association.

Climate change and the Group
During the year, the Board adopted a sustainable strategy, which
included clear and specific targets for CO2 emissions. The Group had
already adopted a sustainable investment strategy framework for its
investments, which is reviewed at least annually by the Board and the
JRL and PLACL Investment Committees. The key areas that have been
identified for which targets have been set are the reduction in CO2
emissions by the Group’s operations and the investment portfolio.

The Board is responsible for setting targets in respect of climate change.
The Group Chief Executive Officer and the senior management team are
responsible for ensuring that the targets are met and that the Board and
its Committees are aware of any risks. The Group Chief Executive Officer
is responsible for ensuring that the Group’s operations meet the zero CO2
emissions target by 2025. The JRL and PLACL Investment Committees
will oversee the progress to achieve the net zero target in the investment
portfolio by 2050. The GRCC will consider any risks that have been
identified in connection with the Group’s business and escalate to the
Board as appropriate. The Group and subsidiary Audit Committees will
consider any connected disclosures. The Group Chief Executive Officer
and the Group Executive Committee will prepare plans in order to meet
the targets set by the Board.

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). Ian
Cormack 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 Senior Independent Director, Ian Cormack, 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.

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 affect, or could appear to affect, 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 Officer, are essential elements in the
Group’s governance framework and facilitate the effective operation of
the Board.

The Chair is responsible for the effective 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 effectively 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 (with the exception of his own
succession) and chairing the Nomination and Governance Committee;
• encouraging all Directors to contribute fully to Board discussions and
decision making, and ensuring that there is constructive challenge on
major proposals;

• fostering relationships within the Board and providing a sounding
board for the Group Chief Executive Officer 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

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. Directors are requested to inform the Board of any
subsequent changes in their other significant commitments.

The Board and Nomination and Governance Committee do not consider
that any of the Non-Executive Directors have too many other
commitments which would render them unable to devote sufficient time
to the Company’s activities. The other Directorships of the Non-Executive
Directors are set out in their biographies on pages 69 to 71. 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 and Governance Committee,
to which the Board has delegated responsibility. The Nomination and
Governance Committee report on pages 81 to 83 sets out, as required
by provision 23 of the Code:
• the responsibilities delegated to the Nomination

• ensuring effective communication with major shareholders,

and Governance Committee;

regulators, and other stakeholders.

The Group Chief Executive Officer 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;

• representing the Group’s interests to external parties;
• 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 effective engagement with regulators.

• the process used for appointments of Executive

and Non-Executive Directors;

• the approach to succession planning;
• the Board’s policy on diversity and inclusion; and
• diversity of senior management.

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.

The Board remains committed to improving diversity in its membership.
While new appointments will be based on skill, experience and
knowledge, careful consideration will also be given to diversity in line
with the Board diversity policy. The Board continues to satisfy the
diversity targets as set by Hampton-Alexander and the Parker Reviews.
In accordance with the Code, the Board believes that it has the
appropriate balance of capabilities, skills, expertise, diversity,
independence and knowledge to enable it and its Committees to
discharge their duties and responsibilities effectively.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

GOVERNANCE IN OPERATION CONTINUED

The Nomination and Governance Committee regularly reviews Board
composition when considering succession planning. In line with best
practice, it includes a review of the length of tenure of Directors. Further
information regarding succession planning is included in the Nomination
and Governance Committee report on page 81.

Opportunities for continued improvement identified in the evaluation
process included:
• Board succession needs to remain a key priority to ensure that the

Board is refreshed on a rolling basis.

• Maintaining the focus on strategy, development and identifying new

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 are set
out in the explanatory notes accompanying the resolutions.

Appointment of Non-Executive Directors
The Nomination and Governance Committee has led a process to appoint
new Group independent Non-Executive Directors, Kalpana Shah and Mary
Kerrigan, who joined the Board on 1 March 2021 and 1 February 2022
respectively. More information about their appointments is included in
the Nomination and Governance 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,
members of the executive team 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 effectiveness review, the Chair discusses with each of
the Directors their training and development needs which are reflected
in the Director’s development plan.

Board evaluation
Following the external Board evaluation performed in 2020, the Board
conducted an internal evaluation. The evaluation was expanded to cover
the JRL and PLACL Life Company Boards to continue the theme of the
previous evaluation and to gain a rounded level of detail on Board
effectiveness. The Boards of the Group, JRL and PLACL as well as their
principal Committees were in scope of the evaluation.

All Board members were invited to complete online structured
questionnaires addressing the performance of the Board and principal
Committees, and a self-review of their own performance.

The review concluded that the Board is performing strongly. Levels of
skills, knowledge and experience are high across the Board and all
Committees, and the Board displays an independent mindset. Levels of
diversity continue to improve and the appointment of new Directors as
part of the Board succession plans has brought fresh ideas and challenge
to the Board discussions and decision making.

The evaluation found that despite COVID-19 restricting the level of
face-to-face interaction at the start of the year, the new Directors have
forged strong relationships with existing Board members, and the
relationship between the Chair and Group Chief Executive Officer
continues to be harmonious and constructive. The relationship between
the Chair and the Senior Independent Director was also found to be
very strong.

Board and Committee meetings were considered to be highly effective
with regard to both the running of the meetings and the content of
papers, which facilitated constructive challenge and debate during the
meetings. There was a clear forward-looking growth strategy evidenced
in the papers. The Committees provided feedback to the Board in an
effective manner, and the Group Chief Executive Officer’s report to the
Board was comprehensive. It was concluded that the Board allocated an
appropriate amount of time to the key challenges facing the business
and the Directors were comfortable that the nested Board arrangement
continues to work well.

business opportunities.

• Increasing Board visibility of the talent pipeline and strengthening

succession planning.

• Continuing to improve the quality of the Board and Committee papers.

The Group Company Secretary has devised an action plan which will be
owned by the Nomination and Governance Committee, with periodic
progress reports to the Board.

AUDIT, RISK AND INTERNAL CONTROL
The Board has constituted a Group Audit Committee and a separate
Group Risk and Compliance Committee for oversight of audit, risk and
internal controls.

Group Audit Committee
The Board has delegated responsibility for overseeing the financial
reporting (including climate-related assumptions and disclosures),
internal audit, external audit and the effectiveness of the internal
controls to the Group Audit Committee. The Group 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 Group Audit Committee,
its responsibilities and its activities during the year, including those
activities required by provision 26 of the Code, please see the Group
Audit Committee report on pages 84 to 89.

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 Group Audit Committee received a report from Group Internal Audit
regarding its review of the effectiveness of the Group’s internal controls.
Information regarding this review is set out in the Group 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 Group 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 90 to 92 and the risk management report in the
Strategic Report on page 58, 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 59.

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, are included in the Remuneration Committee report on
pages 93 to 108.

NOMINATION AND GOVERNANCE COMMITTEE REPORT

The Committee’s key priority during the year was succession planning
for the Board and its Committees, including the orderly transition of the
Board as the longer serving Non-Executive Directors come to the end of
their term. Since January 2020, there have been significant changes to
the Board including my appointment as Chair, Andy Parsons as Group
Chief Financial Officer and, more recently, Ian Cormack’s appointment
as Senior Independent Director. The Board has also welcomed new
Non-Executive Directors as part of the succession plan to refresh the
Board and said farewell to long-serving Directors over the past two
years. The transition of the Board remains a key focus for the year ahead
to ensure that there is an appropriate balance of experience and tenure
as new Directors are appointed.

ROLES AND RESPONSIBILITIES
A key role of the Committee is to regularly review the structure, size and
composition of the Board and its Committees, and where appropriate
make recommendations to the Board for the orderly succession of
Executive and Non-Executive Director appointments. It oversees the
refreshment of the Board and its Committees and, in assisting and
advising the Board, the Committee seeks to maintain an appropriate
balance of skills, knowledge, independence, experience and diversity on
the Board and its Committees, taking into account the Group’s strategic
priorities, its challenges and opportunities, all relevant corporate
governance standards, and associated guidance on Board composition.

During the year, the Committee considered its purpose and determined
that its remit should be extended to also cover corporate governance
matters. A proposal to broaden its responsibilities and rename it as the
Nomination and Governance Committee was subsequently approved by
the Board. As part of its wider remit, the Committee is now responsible
for keeping under review compliance with the UK Corporate Governance
Code 2018 (the “Code”), monitoring emerging trends in, and consultations
on, corporate governance matters, considering the potential effect on
the Group’s governance arrangements and recommending any relevant
changes to the Board, as appropriate, on matters including the corporate
governance framework of the Group. It is also responsible for overseeing
the induction, training and continuous professional development of the
Group’s Directors.

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 Committee currently comprises four independent Non-Executive
Directors. Michelle Cracknell was appointed as a member of the
Committee following Keith Nicholson’s retirement on 31 December 2021.
Biographies of the Committee members can be found on pages 68 to 71.

The Committee held three scheduled meetings during the year and one
additional meeting. The scheduled meetings focused on regular reports
on succession planning and board effectiveness. The unscheduled
meeting considered and recommended for Board approval, the
appointment of Kalpana Shah to the Group Board. The Group Chief
Executive Officer and Chief People Officer were invited to attend the
meetings during the year. Other Group executives and senior managers
were invited to attend the meetings to report, where appropriate, on
their areas of responsibility.

ACTIVITIES OF THE COMMITTEE DURING THE YEAR
The Committee follows an annual rolling forward agenda with standing
items considered at each meeting in addition to any matters arising and
topical issues which the Committee has decided to focus on.

During 2021, the Committee undertook a number of significant activities
including the following:
• Considered the right balance of skills, knowledge, experience,

independence and diversity requirements against the succession plan
of the Board and its Committees and oversaw the search for the
appointment of new Non-Executive Directors.

I am pleased to present my report
on behalf of the Nomination and
Governance Committee (the
“Committee”) for the year ended
31 December 2021.

This report outlines the main
activities carried out by the
Committee during the year.

John Hastings-Bass
Chair, Nomination and
Governance Committee

COMMITTEE MEMBERSHIP

John Hastings-Bass
Chair

Paul Bishop
Independent
Non-Executive Director

Ian Cormack
Senior Independent Director

Michelle Cracknell
Independent
Non-Executive Director

Committee meeting attendance can be found on page 77.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOMINATION AND GOVERNANCE COMMITTEE REPORT CONTINUED

• Reviewed the succession plans for Executive and Non-Executive
Directors, the Group Executive Committee and Group Company
Secretary. In the case of the Board, the Committee ensured that there
was an orderly approach to succession, taking into account each
Director’s tenure and independence, while concurrently considering
the balance between the retention of knowledge of the Group and
the importance of evolving the Board to bring fresh perspectives
and challenge.

• Reviewed the Board diversity policy taking into consideration Just’s

commitment to all aspects of diversity, including gender, race,
sexuality and disability.

• Received updates on the Group’s progress with respect to gender

diversity since signing up to the Women in Finance Charter.

• Reviewed and updated its terms of reference and agreed to rename

the Committee and broaden its remit to include governance oversight.
• Considered corporate governance developments including upcoming

changes to the Listing Rules and their impact on the Group.

• Reviewed progress made against the recommendations from the 2020

Board effectiveness review prior to the 2021 evaluation.

• Oversaw the 2021 process by which the Board, its Committees and

individual Director’s effectiveness were assessed, followed by a review
of the results obtained from the evaluation. Recommendations were
made to the Board as appropriate.

The following sections give further information about the work carried
out by the Committee.

CHANGES TO THE GROUP BOARD
There have been various changes to the Group Board and its Committees.
Kalpana Shah and Mary Kerrigan were appointed as Non-Executive
Directors on 1 March 2021 and 1 February 2022 respectively, and Keith
Nicholson retired as a Director on 31 December 2021.

Following an external 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. 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 Kalpana was appointed as a Non-Executive
Director on 1 March 2021.

Mary Kerrigan was recruited to the Boards of Just Retirement Limited
(“JRL”) and Partnership Life Assurance Company Limited (“PLACL”)
(together the “Life Companies”) on 1 November 2019 following an
extensive search utilising the services of an external consultancy firm,
Sapphire Partners. Sapphire Partners has no other connection to the
Company or any Director. Following its review of succession plans during
the year, the Committee recommended the appointment of Mary
Kerrigan as a Non-Executive Director of Just Group plc, which was

The transition of the Board remains
a key focus of the Committee to
ensure that there is an appropriate
balance of experience and tenure
as new Directors are appointed
john hastings-bass
Chair, Nomination and Governance Committee

subsequently approved by the Board. The Committee recognised Mary’s
extensive contribution to the Life Companies’ Boards and her effective
role as Chair of their respective Investment Committees, and concluded
that she has suitable skills, knowledge and experience to bring fresh
ideas and challenge to the Board.

Following Keith Nicholson’s retirement as a Director on 31 December
2021, Ian Cormack assumed the role of Senior Independent Director.
Kalpana Shah was appointed Chair of the Group Risk and Compliance
Committee. Paul Bishop was appointed as a member of the Group Risk
and Compliance Committee and Michelle Cracknell was appointed as a
member of this Committee.

CHANGES TO THE LIFE COMPANIES’ BOARDS
The Committee considered the composition of the Life Companies’
Boards during the year. To ensure independence from the Group Board,
the Chair of the Boards of the Life Companies is not a member of the Just
Group plc Board. Nick Poyntz-Wright, who had served as a Non-Executive
Director of the Life Companies since March 2016 and as Chair of the
respective companies since April 2019, retired during the year to pursue
other interests. Following a comprehensive search process utilising the
help of RRA, John Perks was appointed as a Non-Executive Director on
1 April 2021 and took over the role of Chair on 5 May 2021. John brings a
wealth of experience in the life insurance and pensions industry and has
proven to be a great asset to the Group. To further strengthen the Life
Companies’ Boards, Kathy Byrne was appointed as a Non-Executive
Director of JRL and PLACL on 1 February 2022 following a comprehensive
search of suitable candidates with the help of Ridgeway Partners,
an external search agency. Kathy also joined the Life Companies’
Investment Committees on appointment. Kalpana Shah was appointed
as a member of the Life Companies’ Audit Committees in February 2022.

BOARD COMPOSITION AND SKILLS
The Committee reviewed the composition and balance of the Board
during the year. As part of this review, the Committee considered:
• whether the balance between Executive and Non-Executive Directors

was appropriate;

• whether the structure, size and composition (including the balance
of skills, knowledge, independence, experience and diversity) of the
Board and membership of the Committees were appropriate, taking
into consideration Board tenure and the opportunities this presents,
which consequently led to the search process for additional female
Non-Executive Directors for the Group Board;

• the independence of Non-Executive Directors, considering the
judgement, thinking and constructive challenge that they
demonstrate in the Board;

• whether the Board had appropriate skills and knowledge when

considering the Group’s sustainability strategy and its impact on the
climate; and

• the progress made on the diversity and inclusion plans for the Board.

BOARD SUCCESSION PLANNING
During the year, the Committee reviewed the Board skills matrix and
capability gaps that had been identified, and agreed on the areas of
experience which would be beneficial to the composition and balance
of the Board. The Board comprises individuals with significant financial
services and actuarial experience which continues to be valuable
in supporting the complex issues that can arise from the external
regulatory environment. As the Group’s strategy has evolved towards
a greater focus on profitable and sustainable growth, the Committee
recognises the importance of having relevant skills, experience and
capabilities within the Board to support Just in achieving its strategic
objectives and priorities. The Committee has also added new metrics
to the Board skills matrix relating to sustainability and climate
change to ensure this is a consideration as part of future succession
planning reviews.

BOARD TENURE 2021

Independence

Gender diversity

0–1 years

1–3 years

3–5 years

5–7 years

7+ years

Chair

Executive Directors

Non-Executive Directors

Male

Female

The Committee considered the Board succession plans noting the
Code requirements, which states that serving more than nine years
may impair independence. The Committee considered the continued
appointment of the longer serving Directors noting their service on the
predecessor companies, Just Retirement Group plc and Partnership
Assurance Group plc pre-merger, and concluded that they continued to
meet all independence and time commitment expectations.

There has been good progress in refreshing the Board with the recent
appointments of Kalpana Shah and Mary Kerrigan as Non-Executive
Directors and the retirement of Keith Nicholson who had been a
Non-Executive Director since 2013. Clare Spottiswoode, a long serving
Non-Executive Director, has informed the Board of her intention not to
seek re-election at the 2022 Annual General Meeting in May 2022 and
therefore will retire as a Director on 10 May 2022.

The Committee has considered the tenure and balance of skills,
knowledge and experience of the Board as well as taking into
consideration proposed changes to the UK Listing Rules. The Committee
and the Board believes that the current mix of tenure is in the best
interests of our shareholders, and that the longer serving Directors
continue to challenge appropriately, act independently and provide the
newly appointed Non-Executive Directors with a wealth of experience
to avail themselves of in respect of Just’s business. Consequently, with
the exception of Clare Spottiswoode, all Directors will be standing for
election and re-election to serve on the Board to promote the long-term
success of the Company.

Succession planning will remain a key focus area for 2022 to ensure there
is a structured succession plan for the replacement of the longer serving
members over the next 18-24 months.

SENIOR MANAGEMENT SUCCESSION PLANNING
The succession plan for the Group Executive Committee and the Group
Company Secretary 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 2022.

DIVERSITY AND INCLUSION
The Board’s diversity and inclusion strategy reinforces our pledge to build
a culture at Just that has diversity and inclusion at its core. It outlines
our commitment to hiring and developing diverse talent at all levels of
the organisation. The Board’s diversity policy, which includes references
to its commitment to improve both the gender and ethnic diversity of
the Board in line with the Hampton-Alexander and Parker Reviews, was
reviewed during the year. I am pleased to report that, as at the date of
this report, female representation on the Board is 40% and minority
ethnic representation is 10%. The Committee fully supports Just’s
commitment to all aspects of diversity, including gender, race, sexuality
and disability, and welcomes Just’s strong progress with respect to
gender diversity since signing up to the Women in Finance Charter.

On behalf of the Nomination and Governance Committee

JOHN HASTINGS-BASS
Chair, Nomination and Governance Committee
9 March 2022

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS

JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

GROUP AUDIT COMMITTEE REPORT

I am pleased to present the
Group Audit Committee (the
“Committee”) Report for the year
ended 31 December 2021. The
report explains the work of the
Committee during the year.

Paul Bishop
Chair, Group Audit Committee

COMMITTEE MEMBERSHIP

Paul Bishop
Chair, Independent Non-
Executive Director

Steve Melcher
Independent Non-Executive
Director

Kalpana Shah
Independent
Non-Executive Director

Clare Spottiswoode
Independent
Non-Executive Director

Committee meeting attendance can be found on page 77.
84

ROLES AND RESPONSIBILITIES
The Board has delegated to the Committee responsibility for oversight
of the Group’s financial and regulatory reporting and the effectiveness
of the Group’s systems of internal controls and related activities. As part
of its remit, the Committee oversees the Group’s financial and non-
financial disclosures, including any climate-related financial disclosures.
The Committee is also responsible for the oversight of the work and
effectiveness of Group Internal Audit and the external auditor.

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. The Chair of the GRCC is also a member
of the Committee. 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 effectiveness of the Committee was reviewed as part of the annual
Board effectiveness review which took place in late 2021 and the Board
was satisfied with the Committee’s performance.

COMMITTEE MEMBERSHIP AND MEETINGS
The Committee currently comprises four independent Non-Executive
Directors. Its 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 effect from 1 March 2021 and Keith Nicholson retired as a Director
and member of the Committee on 31 December 2021.

The biographies of the members of the Committee are set out on
pages 68 to 71.

The Committee held eight scheduled meetings during the year and two
additional meetings were also convened. 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. The Committee regularly set aside time at the beginning
of meetings and also met separately with the Director of Group Internal
Audit without executive management being present during the year. The
Committee Chair also met separately with the external auditor without
executive management being present during the year.

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 Group Internal Audit and the
external auditor as outlined later in this report.

Key areas of focus during the year included the following matters.

Financial reporting
In 2021 and to date in 2022, 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 including new
climate-related disclosures;

• 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 existing nine key performance indicators (“KPIs”) used by

the Group to assess its financial performance and approved the
addition of a new KPI to measure return on equity to reflect the
strategic focus on this measure to create value for shareholders;
• 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 2021 Group Annual Report and Accounts

and the half-year statements to 30 June 2021;

• assessed whether the Group 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 2020, the Group
and Solo Regular Supervisory Reports and the Annual Quantitative
Reporting Templates prior to submission to the Prudential Regulation
Authority (“PRA”) in April 2021.

To assist with the execution of their duties, the Committee considered
reports from the Group Chief Financial Officer 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 Group Annual Report
and Accounts for the year ended 31 December 2021 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 2021 and
accounting amendments did not have any material impact on the Group.
The Committee continued to monitor the progress of the project to
implement IFRS 17 and received regular status updates and training on
the new requirements. The Committee also reviewed additional
disclosures on IFRS 17 developments for inclusion in the Group Annual
Report and Accounts. Work continues in parallel to develop Just’s
systems solution for computation of the new IFRS 17 accounting data.

Significant accounting judgements
The key areas of judgement considered by the Committee in relation to
the 31 December 2021 Group Annual Report and Accounts, and how
these were addressed, are set out in the following table.

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 the 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 expected impact
on future mortality rates over the short and long term was
considered. As mortality experience in 2020 and 2021 has been
distorted by the impact of COVID-19, the Committee concluded
that it does not provide any meaningful insight in respect of
future mortality trends or of base mortality. The Committee
determined that the allowance for future mortality
improvements using the CMI 2019 model source remained
appropriate as at 31 December 2021 and concluded that the
base mortality assumptions still represented a reasonable best
estimate view of medium to long-term mortality trends.

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
no-negative equity guarantee (“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.

Since the prior year, SONIA has replaced LIBOR as the
benchmark risk-free rate in the UK, which has impacted the
calculation of the current spread default allowance. The
Committee concluded to adopt the SONIA derivation of the
current spread and partially offset the lower level of SONIA rates
compared with LIBOR rates by decreasing the IFRS prudence
margin. Overall, this resulted in an immaterial increase to the
IFRS prudent credit default allowance. The Committee reviewed
the other 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 effects of COVID-19 due to sufficient prudence within
the existing methodology.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

GROUP AUDIT COMMITTEE REPORT CONTINUED

SIGNIFICANT JUDGEMENTS

APPROACH

ACTION

EXPENSE
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.

The Committee received a report on the findings from an
annual review of expenses and reviewed and approved
proposals to update maintenance expense assumptions
in line with the current expense allocation model. The
Committee also concluded to retain the expense inflation
methodology and associated weightings for the CPI, RPI
and earnings components.

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.

INVESTMENT IN
SUBSIDIARIES

Just Group plc’s investment in subsidiary
undertakings is a significant asset and underpins
the net equity reported by the Company 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 Committee reviewed the key assumptions including
detailed analyses from management. It was determined
that the assumptions for property price volatility and future
house price growth should remain unchanged from the
2020 year end. This included consideration of the potential
impact of the COVID-19 pandemic on UK property prices.

During 2021, management also assessed the
appropriateness of the existing methodology of using the
change in Office for National Statistics (“ONS”) indices to
estimate property prices at the balance sheet date. For
formal valuations or actual sales since 2019, the analysis
compared the estimates from the indexed values and
output from Hometrack’s Automated Valuation Model
(“AVM”). The analysis showed the AVM, which allows for
specific location and property characteristics as inputs, was
a more accurate predictor of the updated valuations. On
reviewing the analysis, the Committee concluded to replace
the existing methodology with the use of the most recent
property values from the latest AVM indexed to the balance
sheet date using Nationwide property indices. It was agreed
that a retrospective dilapidation allowance to the property
valuation be included to capture any residual
underperformance of individual properties over time.

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 2021 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 £188m was
recognised in respect of the investment in PLACL, largely
reflecting the dividend distribution of £169m by PLACL to its
parent during the year.

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 2021, the Committee considered the impact of COVID-19
and other uncertainties, which may impact the Group.

The Committee also considered various 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; and the findings of the Group Own
Risk and Solvency Assessment. In addition to risks, the Committee
considered the Group business plan approved by the Board in
November 2021 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. The Committee concluded based on all the
evidence it assessed, that the going concern basis is appropriate.

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 on-going publication by the PRA of supervisory statements that set
out its expectations for certain aspects of prudential regulation.

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 2021 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
affecting reporting during the year.

Finance transformation
During the year, the Committee received reports on progress against
key milestones in the Group’s finance transformation programme.
The Committee provided oversight on various workstreams, including
the replacement of the general ledger, IFRS 17 implementation and
treasury transformation and automation initiatives, which together, are
designed to enhance controls, improve efficiency and increase the value
that the Finance function provides the business.

EXTERNAL AUDIT
Appointment
The Company’s external auditor is PwC. Following a formal tender
process in 2019, PwC was formally appointed as the Company’s external
auditor by shareholders in 2020. The current lead audit engagement
partner is Lee Clarke who has just completed the second year of his five
year term.

the Company. It believes the independence and objectivity of the
external auditor and the effectiveness of the audit process are
safeguarded and remain strong.

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. There are no contractual obligations restricting the Group’s choice
of external auditor.

Oversight
The Committee approves the terms of engagement of the external
auditor and remuneration. Throughout the year, the Committee has
reviewed regular reports from the external auditor. The Chair and other
Committee members have met with the lead audit engagement partner
without the presence of management, providing an opportunity to raise
any matters in confidence and for open dialogue.

In 2021 and to date in 2022, the Committee:
• reviewed the 2021 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 2021 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
audit risks in relation to the Annual Report and Accounts were
addressed.

The Committee considered the quality and effectiveness of the external
audit plan and process. Its effectiveness 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 2021 reporting period, the significant risks
identified were broadly in line with 2020. 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 85 to 86. The Committee challenged the work
conducted by the external auditor to test management’s assumptions
and estimates around these areas. The Committee assesses the
effectiveness 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 effectiveness
of the audit process. For the 2021 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.

The Committee is responsible for recommending to the Board the
appointment, reappointment and removal of the external auditor, taking
into account independence, effectiveness, lead audit partner rotation
and any other relevant factors, and oversees the tender process for new
appointments. Following recommendation by the Committee, the Board
intends to propose the reappointment of PwC as the Company’s auditor
at the Annual General Meeting on 10 May 2022 to hold office until the
conclusion of the next general meeting at which accounts are laid before

Safeguarding independence and non-audit services
The independence of the external auditor is essential to the provision of
an objective opinion on the true and fair view presented in the financial
statements. Auditor independence and objectivity are safeguarded by
various control measures, including limiting the nature and value of
non-audit services performed by the external auditor and partner
rotation at least every five years.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

GROUP AUDIT COMMITTEE REPORT CONTINUED

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. The
policy ensures that the Group benefits from the cumulative knowledge
and experience of its external auditor while also ensuring that it
maintains the same degree of objectivity and independence. During the
year, the value of audit services to the Group was £2.4m (2020: £2.2m).
The value of non-audit services during the year amounted to £0.7m
(2020: £1.1m), comprising:

Audit-related assurance services
(audit of regulatory returns)

Audit-related assurance services (other services)

Other assurance services

£m

0.5

0.2

0.1

The ratio of non-audit services to audit services fees was 1:3.4. Non-audit
services of £0.5m were provided during 2021 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. Other assurance services of £0.1m were provided in
relation to the Group’s debt issuance during the year.

Non-audit services for 2021 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 staff, 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 offered 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 4 to the consolidated financial
statements. The Committee has approved PwC’s remuneration and
terms of engagement for 2021 and remains satisfied with the audit
quality 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 systems of internal controls are sufficient
and are operated appropriately, and measure and report on risk to the
GRCC. The third line is Group Internal Audit, who provides 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:
• clear and detailed matters reserved for the Board and terms

of reference for 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 Group has specific internal mechanisms that govern the financial
reporting process and the disclosure controls and procedures around
the approval of the Group’s financial statements. The results of the
financial disclosure process are reported to the Committee to provide
assurance that the Annual Report and Accounts is fair, balanced and
understandable, including the opportunity to challenge members
of management and the external auditor on the robustness of
those processes.

The Committee keeps under review the adequacy and effectiveness 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
Group Internal Audit is an internal function that provides independent
and objective assurance to the Committee that the Group’s risk
management, governance and internal control processes are operating
effectively.

The Committee considers and approves the Internal Audit plan annually
and any changes to the plan during the year. The Internal Audit plan
is constructed using a risk-based approach taking account of risk
assessments, input from senior management and previous external
and internal audit findings. 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 scope, extent and effectiveness of the activity
of the Group Internal Audit team are regularly considered by the
Committee.

In 2021, the Committee:
• continued to oversee the Group 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 Group Internal Audit
team on the combined internal audit assurance work to complete
the Internal Audit plan for 2021;

• 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 action plans;

• reviewed open audit actions and monitored progress against them;
• conducted an assessment of the Group Internal Audit function; and
• reviewed and approved the Internal Audit Charter, which is available

to view on the Group’s website.

The Committee regularly considers the resource requirements of the
Group Internal Audit team and oversees steps taken and any associated
contingency plans to ensure it remains adequately resourced. The
Committee remains satisfied that it has the appropriate resources and
the relevant skills and experience to fulfil its role effectively.

The Committee held private discussions with the Director of Group
Internal Audit 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 Officer.
During the year, the Committee Chair, in conjunction with the Director of
Group Internal Audit, set key actions to continue to develop the Group
Internal Audit function regarding its effectiveness, impact and influence,
and the Committee received updates on the status of these actions.

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, which is the
highest rating that can be achieved. To provide on-going assurance
to senior management and the Committee, Group Internal Audit
has developed its control framework to undertake regular external
assessments, which are supplementary to the EQA. During the year, the
Director of Group Internal Audit reported on quality assurance reviews
that had been performed. The function remains on its journey of
continuous improvement with the full support of the Committee.

WHISTLEBLOWING
The Group has a whistleblowing framework that is designed to enable
colleagues to raise concerns confidentially about conduct they consider
contrary to the Group’s values such as unsafe or unethical practices.
Any concerns can be reported anonymously by contacting an external
confidential dedicated telephone hotline or via a secure web portal.
The Committee receives regular updates on any concerns identified
and, where appropriate, what action has been taken to address the
issues raised.

The Chair of the Committee is the Group’s whistleblowing champion and
is responsible for ensuring and overseeing the integrity, independence,
autonomy and effectiveness of the Group’s policies and procedures on
whistleblowing, including the Group whistleblowing policy which is
reviewed annually.

On behalf of the Group Audit Committee

PAUL BISHOP
Chair, Group Audit Committee
9 March 2022

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

GROUP RISK AND COMPLIANCE COMMITTEE REPORT

ROLES AND RESPONSIBILITIES
The Committee’s purpose is to assist the Board in discharging its
responsibility to maintain effective systems of risk management,
compliance and internal control throughout the Group. The Committee
plays a key role in providing effective oversight and challenge on the
continued appropriateness and effectiveness of the risk management
and internal control framework and risk strategy, and of the principal
and emerging risks inherent in the business. This includes oversight of
risks associated with climate change. The Committee is also responsible
for the oversight of regulatory compliance matters.

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 efficient 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 Committee currently comprises six independent Non-Executive
Directors. I joined as a member on 1 March 2021 and succeeded as
Committee Chair following Keith Nicholson’s retirement from office
on 31 December 2021. Paul Bishop joined as a Committee member
on 31 December 2021. Biographies of the Committee members can
be found on pages 68 to 71.

Six scheduled and two unscheduled meetings were convened during
2021. Four of the scheduled meetings focused on regular risk and
compliance reports and two meetings were for in-depth reviews of
specific risk and compliance matters as well as to review certain key
risk documents. There were two unscheduled meetings to consider,
challenge and recommend for Board approval, the major model change
and matching adjustment applications to the Prudential Regulation
Authority (“PRA”) during the year. Non-Executive Directors who are not
members of the Committee were invited to attend and contributed,
at the invitation of the Chair, to the challenge and debate. There were
standing invitations for the Group Chief Executive Officer, Group Chief
Financial Officer, Group Chief Risk Officer and Group Chief Actuary
to attend the meetings during the year. Other Group executives
and senior managers were invited to attend the meetings to report,
where appropriate, on their areas of responsibility.

The Committee Chair holds regular private meetings with the Group
Chief Risk Officer to ensure that all significant areas of risk are
considered and that risk management is embedded within the
business. The effectiveness of the Committee was reviewed as part
of the annual Board effectiveness review which took place in late
2021 and the Board was satisfied with the Committee’s performance.

AREAS OF FOCUS
The Committee follows an annual rolling forward agenda with standing
items considered at each quarterly meeting including a report from the
Group Chief Risk Officer. Key areas of focus during the year included the
following matters.

I am pleased to present my first
report on behalf of the Group
Risk and Compliance Committee
(the “Committee”). This report
outlines the main activities and
areas of focus of the Committee
during the year.

Kalpana Shah
Chair, Group Risk and Compliance Committee

COMMITTEE MEMBERSHIP

Kalpana Shah
Chair, Independent Non-
Executive Director

Paul Bishop
Independent
Non-Executive Director

Ian Cormack
Senior Independent Director

John Hastings-Bass
Chair of the Board

Steve Melcher
Independent
Non-Executive Director

Clare Spottiswoode
Independent
Non-Executive Director

Committee meeting attendance can be found on page 77.
90

MATTERS CONSIDERED

HOW THE COMMITTEE ADDRESSED THE MATTER

RISK GOVERNANCE AND OVERSIGHT

RISK CULTURE,
GOVERNANCE,
CONTROLS AND
DECISION MAKING

ORSA

RECOVERY AND
RUN-OFF PLANS

RISK APPETITES

BUSINESS RESILIENCE

OPERATIONAL
RESILIENCE
FRAMEWORK

COVID-19

The Committee reviewed and approved the risk management plan for the year and 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.

During the year, the Committee carried out a review of risk management and control activities, and Just’s culture to
ensure the Group’s activities continue to evolve in line with leading practice. An external third party was engaged to
undertake an independent assurance review in order to assess the risk management controls, practices and culture in
place within the Group. The findings were presented to the Committee and the Board for consideration. Whilst many
good practices were observed including the Group’s strong sense of purpose for its customers, various matters were
identified for further development including the further delineation of Lines One and Two, and the refinement of
Board and Committee papers to ensure that they balance quantitative analysis with a qualitative overlay. The findings
from a review of the controls framework were also considered by the Committee. It was concluded that the controls
framework is fit for purpose but the Committee agreed that certain developments were required to enhance and
streamline processes. This included the implementation of a financial reporting controls framework, which will be a
key focus area for the Finance team in 2022.

The Committee requested a more formal process to be established for the reporting of lessons learnt from major
projects during the year. After considering a proposal presented by management, the Committee agreed that the
Board should receive half-yearly reports on the overall Change programme status containing sections on lessons
learnt from projects and benefits management. Any more immediate risk concerns emerging from projects continue
to be reported through the Group Chief Risk Officer to the Committee.

The Group Own Risk and Solvency Assessment (“ORSA”) is a key on-going process for identifying, assessing, controlling,
monitoring and reporting the risks to which the Group is exposed and to assess the capital adequacy of the Group and
its life companies.

The Committee considered and recommended to the Group Board for subsequent approval, the annual 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. Key areas of focus for the Committee included the management of residential
property risk, longevity risk and conduct risk. The Committee also received updates on the Group’s operational
risk position and the steps taken to ensure management seeks to move risks back within appetite in a reasonable
timeframe. The Committee also received updates on the impact of COVID-19. Further details of the Group’s principal
risks can be found on pages 60 to 63.

Each year, the Committee conducts in-depth reviews of the Group’s Recovery Plan and Run-Off Plan and the attendant
risks. As part of the review of the Run-Off Plan in 2021, the Committee discussed the philosophy behind which capital
risk appetite and liquidity risk appetite should be determined in the event of run-off. After consideration, the
Committee recommended, and the Group Board subsequently approved, the Recovery Plan and Run-Off Plan.

The Committee considered the appropriateness of the risk appetites, against which the business plan and strategy are
assessed, and concluded that they should remain unchanged in 2021. It was agreed that a comprehensive review be
undertaken in 2022 to ensure the risk appetite framework continues to align with developments in the Group’s
business plan and strategy, risk preferences and regulatory capital model.

The Committee provided oversight and challenge on the project to establish an operational resilience framework to
meet defined regulatory requirements for operational risk during the year. The Committee assessed and approved the
Important Business Services that are in scope of the framework, and debated and approved the associated impact
tolerances. The Committee also received updates on the status of the Group’s wider operational resilience framework,
business continuity planning, disaster recovery arrangements and information security position during the year.

During the year, there continued to be 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 prospect of house price movement due to economic
uncertainty was discussed given the Group’s property risk exposure. Longevity risk also received close attention due
to mortality uncertainty arising from the direct and indirect 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. Steps taken by the Group to ensure the mental and physical wellbeing of
colleagues, particularly during periods of lockdown was a key area of interest for the Committee. The Committee
also received reassurance that the necessary cyber security measures were in place for remote working and that
appropriate processes and controls were in place to mitigate the risk of fraud. Protecting vulnerable customers during
this difficult 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.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

GROUP RISK AND COMPLIANCE COMMITTEE REPORT CONTINUED

MATTERS CONSIDERED

HOW THE COMMITTEE ADDRESSED THE MATTER

EMERGING RISKS

CLIMATE CHANGE

GREEN BOND

SOLVENCY II

INTERNAL MODEL

MATCHING
ADJUSTMENT

At each regular meeting the Committee received updates on the climate change project, which was responsible for
ensuring compliance with the recommendations of the Financial Conduct Authority (“FCA”) on the Task Force on
Climate-related Financial Disclosures and the PRA’s requirements for the Group to manage its financial risks due to
climate change. The high-level climate risk appetite was considered by the Committee and recommended to the
Board who subsequently approved it. The Committee received an update on the findings of an external consultant’s
assessment of physical and transitional risks to the Group’s Lifetime Mortgages property portfolio. All policies are being
reviewed to ensure they reflect climate-related considerations, where appropriate.

Following the issuance of a £250m Tier 2 subordinated bond by the Group in October 2020, the Committee received an
in-depth review of the potential risks related to issuing further sustainable bonds with a particular focus on reputation
and financial risks, and the steps taken to mitigate such risks.

The Committee considered a major model change application for submission to the PRA for approval, which set out
proposed significant changes to the internal model of JRL to ensure that it continued to appropriately reflect the
underlying risks to the Group and to align it with the latest regulatory expectations and market practice. Prior to
assessing the proposed changes, the Directors attended various briefing sessions which focused on the technical
matters in connection with the proposed changes to the internal model and provided an opportunity for the Directors
to challenge the proposed changes in advance of the application being finalised. The Committee recommended, and
the Group Board subsequently approved, the major model change application and amendments to the scope of the
application in response to feedback received from the PRA during its review. The application was approved by the PRA
in December 2021.

During the year, a matching adjustment application was submitted to the PRA on behalf of JRL primarily to reflect the
appropriate treatment of the index no-negative equity guarantee (“NNEG”) hedging transactions in the matching
adjustment portfolio and in the Effective Value Test, as required under the PRA’s Supervisory Statement SS3/17
Solvency II: Illiquid unrated assets. Prior to submission, the Committee reviewed the proposed changes and took into
consideration the associated rationale, risks and uncertainties. The Committee recommended, and the JRL Board
subsequently approved, the application, which has now been approved by the PRA.

CONDUCT AND PRUDENTIAL COMPLIANCE AND REGULATORY RISK

CONDUCT AND
CUSTOMER RISK

COMPLIANCE
OVERSIGHT AND
POLICIES

REGULATORY RISK

The Committee regularly reviews and challenges management’s view of conduct risks across the Group. During the
year, the Committee provided oversight on the programme of work to update the conduct risk framework and related
policies to ensure that consumer outcomes are properly considered and to develop the Group’s approach to managing
conduct risk in general. Changes included updates to reflect the FCA’s guidance on vulnerable customers and the
conduct risk dashboard now includes various new metrics including skills and capabilities of colleagues as a future
focused measurement of conduct. Further work is being carried out on the conduct risk framework, management
information and reporting. Oversight of the steps taken by management to address the recommendations arising
from this review will be a key area of focus for the Committee in 2022.

The Committee considered and approved changes to various Group policies and the 2022 compliance monitoring plan
during the year. It received regular conduct and prudential compliance reports, an annual money laundering reporting
officers’ report and an annual report from the Group Data Protection Officer.

The Committee receives regular updates on key regulatory developments relevant to the Group and the associated
actions being undertaken by management. During 2021, there continued to be a high level of regulatory activity as
covered in more detail in principal risks and uncertainties on page 60. Letters from the FCA in October 2020 set out its
views of the key risks lifetime mortgage providers and mortgage intermediaries pose to their consumers or the
markets in which they operate together with the 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.

On behalf of the Group Risk and Compliance Committee

KALPANA SHAH
Chair, Group Risk and Compliance Committee
9 March 2022

DIRECTORS’ REMUNERATION REPORT

I am pleased to present the
Remuneration Committee
Report for the year ended
31 December 2021.

IAN CORMACK
Chair, Remuneration Committee

COMMITTEE MEMBERSHIP

Ian Cormack
Chair

John Hastings-Bass
Group Chair

Steve Melcher
Independent
Non-Executive Director

Michelle Cracknell
Independent
Non-Executive Director

Committee meeting attendance can be found on page 77.

IFRS NET ASSETS

NEW BUSINESS PROFIT1

£2,440m

£225m

2020: £2,490m

2020: £199m

ORGANIC CAPITAL GENERATION1

IFRS (LOSS)/PROFIT BEFORE TAX

£93m

2020: £221m

ADJUSTED OPERATING PROFIT
BEFORE TAX1

£238m

2020: £239m

1 Alternative performance measure.

£(21)m

2020: £237m

Return on Equity1

2020: 10%

STATEMENT FROM THE CHAIR OF THE REMUNERATION COMMITTEE

Dear Shareholder

The business’ focus has shifted from achieving capital self-sufficiency
to delivering profitable and sustainable growth for shareholders.
The continued commitment shown by Just’s leaders, managers
and colleagues has delivered strong performance in 2021 and the
Committee is satisfied that the approach to reward continues to
support the strategic priorities of the business.

In 2021 the business more than doubled underlying organic capital,
which provides the capital for investment in the business to accelerate
innovation and to deliver growth, benefiting our customers and
generating value for shareholders. Management made good progress
with the Group’s lead regulator, the PRA. This included receiving their
approval to make a change to the Group’s Solvency II internal capital
model, providing valuable clarity in the treatment of lifetime mortgages.

Alongside the good progress being made on the financial and
regulatory business priorities, the Group received well-deserved external
recognition for products and service to customers (see page 3 for
details), and the highest engagement survey results as reported in page
30, recognising Just as a two star organisation with Best Companies.
The entire business is immensely proud of achieving these awards.

Our “Conversations with the Board” provide colleagues with the
opportunity to meet Board members and hear their views on certain
topics, followed by questions. In 2021 these have focused on culture
and remuneration and specifically on Executive Director pay.

2021 has required agility in Just’s “ways of working” as the pandemic
ebbed and flowed in the UK and South Africa. Following investment
in our buildings, technology and people, a hybrid working trial was
undertaken at the end of the year and will be implemented and
embedded in 2022. The new hybrid approach is aligned with the
engagement priorities of the business, a better work-life balance for
colleagues and support positive customer outcomes.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

The business plan agreed by the Board in 2020 did not include the
payment of dividends in 2021. The dividend policy has not been
impacted by COVID-19.

REMUNERATION COMMITTEE 2021
The Committee is made up exclusively of Independent Non-Executive
Directors.

Short Term Incentive Plan
Page 97 details the targets and outcomes relating to 2021. For
performance in 2021 the Committee approved awards for David
Richardson and Andy Parsons at 80% of maximum. These payments
reflect their strong personal performance and financial results, which
in aggregate exceeded the challenging business plan approved by the
Board. No discretion was applied.

The terms of reference are available at www.justgroupplc.co.uk.
The focus of the Committee includes the remuneration strategy and
policy for the whole Company as well as the Executive Directors.

No payments were made to past Directors. Shares options that were
retained post-termination and vested during the year to Rodney Cook
and Simon Thomas are disclosed on page 100.

The key activities of the Committee during the year included:
• review and approval of the Directors’ Remuneration Report;
• approval of the grant of the 2021 awards and performance conditions

High level view on performance
• Management expense overrun was successfully eliminated in 2021
• Good progress with the PRA, which included receiving their approval

under the Long Term Incentive Plan (“LTIP”);

to change the Group’s Solvency II internal capital model

• approval of the grant of share options under the Sharesave scheme

• Retirement Income sales increased 25%, of which Defined Benefit

(“SAYE”);

• 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 Short Term Incentive Plan (“STIP”) or Group
LTIP Plan;

• review and approval of the all employee remuneration policy for 2022;
• review of the Company’s gender pay gap data; and
• monitoring the developments in the corporate governance

environment and investor expectations.

REMUNERATION IN 2021
At the Company’s Annual General Meeting (“AGM”) in May 2020, a new
Directors’ remuneration policy was approved with 89% of votes in favour
and an advisory vote on the Directors’ Remuneration Report for the year
ended 2020 was approved at the 2021 AGM with 94% of votes in favour
and continued to reflect the Group’s strategic priorities in 2021.

The approach to reward supports the strategic objectives of the
business. There are therefore no proposed changes to the approved
policy for 2022, however the LTIP measures and award levels will be
adjusted to provide greater alignment to profit growth and strategic
objectives in 2022. These inclusions are explained further on page 95.

The Board approved a challenging business plan for 2021. 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 Richardson and his team have delivered a strong set of
results in 2021, demonstrated by the STIP outturn of 77% of maximum,
moderated to 70.8%. This creates the overall pool from which payments
are made with individual allocations based on personal performance.

Base salaries
Salaries for Executive Directors are reviewed with effect from 1 April
each year along with those of the overall employee population. As
disclosed last year, the Executive Directors in post did not receive a
salary increase on 1 April 2021, against an average increase received
by other employees (excluding promotions) of 0.41%.

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.

De-risking sales were up 28%

• Underlying organic capital generation more than doubled the FY20

result, exceeding the 2022 target a year ahead of expectations

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 for 2021. The balanced scorecard approach determines the
core bonus opportunity through a basket of financial and strategic
performance measures, which is distributed to Executive Directors
against their achievement of their personal objectives. Details of key
achievements are provided on page 98.

Financial
performance
measure

Organic Capital
Generation (Pre
Management
Actions)

Organic Capital
Generation (Post
Management
Actions)

Management
Expenses

IFRS New
Business
Profit

IFRS Adjusted
Operating
Profit

Weighting

25%

10%

25%

15%

Outturn

£77m

£183m

£99m

£225m £238m

Achievement 25%

25%

12%

Strategic performance measure

Customer

People

Adjustment

Aggregate scores: Corporate outturn

Moderated outturn

Outturn

David Richardson

Andy Parsons

77%

70.8%

Award
Level

80%

Difference

+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 2021, awards under the LTIP were made to David Richardson
and Andy Parsons over shares worth 150% of base salary. These LTIP
awards included organic capital generation at a weighting of 37.5%,
with 25% of the LTIP measure based on total shareholder return (“TSR”)
performance compared with the constituents of the FTSE 250 and
adjusted earnings per share (“EPS”) performance for the remaining
37.5% of the LTIP.

The LTIP awards made in 2019 are due to vest in May 2022 with reference
to performance to 31 December 2021. The threshold TSR performance
target was not achieved and the adjusted EPS measure was achieved at
63.5%. Therefore 31.8% of the 2019 LTIP awards will vest in May 2022.
Further detail can be found on page 98.

The Committee felt that outturns under the STIP and LTIP in respect of
2021 were appropriate and did not exercise discretion.

Summary of remuneration for David Richardson in respect of 2021

Deferred
variablE
30%

fixed
casH
43%

variable
casH
27%

Salary

Beneﬁts

Pension

STIP – cash

STIP – deferred

LTIP

(£’000)
597

430

286

191

Summary of remuneration for Andy Parsons in respect of 2021

fixed
casH
49%

Deferred
variablE
20%

variable
casH
31%

Salary

Beneﬁts

Pension

STIP – cash

STIP – deferred

LTIP

(£’000)
415

299

199

IMPLEMENTATION OF THE REMUNERATION POLICY FOR 2022
For the reasons set out as part of the policy review, the 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 Committee agreed that David Richardson and Andy Parsons
would receive a salary increase with effect from 1 April 2022 of 2%
and 1.9% respectively. The salary increase budget available for senior
management and the general employee population eligible to be
considered for an increase was 3.2%, 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. 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.

While recent LTIP awards have been made at a reduced basis of 150%
of salary reflecting the fall in share price over recent years, given that in
the past two years the Company has achieved capital self-sufficiency,
providing the foundation to deliver sustainable growth and the share
price has increased by some 20% over the year, as permitted under the
policy, the Committee considers it appropriate to revert to its long term
approach of making grants at around the median level. The Committee
therefore anticipates making awards under the LTIP over shares worth
200% of salary to David Richardson and 175% of salary to Andy Parsons
in 2022.

Performance will continue to be measured over a three year period.

The Policy allows the Committee some discretion to make adjustments
to the performance conditions and weightings from year-to-year. For the
LTIP awards to be made in 2022, there have been some minor changes
to the measures and their weightings. There will be four performance
measures and the associated targets are disclosed on page 105. The
Committee has approved the following changes:
• the use of Underlying Organic Capital Generation (excluding

management actions), which is a similar measure to that used in the
2021 LTIP;

• replacing the current EPS measure with Return on Equity (“ROE”) to
align with the strategic KPIs being used in 2022 and beyond; and
• the inclusion of an Environmental, Social and Governance (“ESG”)

measure with a 10% weighting of ‘Investment into ‘sustainable assets’
over the 3-year period’ to reflect the strategic importance of this
measure.

As a result, the following performance conditions will apply to the 2022
LTIP award:
• Underlying Organic Capital Generation (25%)
• ROE (35%)
• Relative TSR (30%) vs FTSE 250 (excl. investment trusts)
• ESG (10%)

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.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

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 2021.

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, PricewaterhouseCoopers LLP.

Illustration of how the 2020 Remuneration Policy will be implemented in 2022
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 different 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 (50% and 43.75% of

salary for the CEO and CFO respectively)

• Maximum = fixed pay plus maximum payout of the STIP (150% of salary) and maximum vesting under the LTIP (200% and 175% of salary for the

CEO and CFO respectively)

• Maximum + 50% growth = fixed pay plus maximum payout of the STIP (150% of salary), maximum vesting under the LTIP (200% and 175% of

salary for the CEO and CFO respectively) and 50% share price growth on the LTIP

Illustration of 2020 Remuneration Policy in 2022

Minimum

On-target

Maximum

Maximum 50% growth

Group Chief Executive Officer

Group Chief Financial Officer

100%

693

Minimum

100%

48%

31% 21%

1,454

On-target

49% 32%

19%

25%

20%

32%

27%

43%

2,824

Maximum

26%

34%

40%

53% 3,433

Maximum 50% growth

22%

28%

50%

488

991

1,863

2,233

Remuneration

500

1,000

1,500

2,000

2,500

3,000

3,500

Remuneration

500

1,000

1,500

2,000

2,500

3,000

3,500

(£’000)

Fixed pay

STIP

LTIP

(£’000)

Fixed pay

STIP

LTIP

Total single figure of remuneration (audited)

Salary/fees

Benefits

Pension

STIP

LTIP 5,6

Other 7

Total

Total fixed
remuneration

Total variable
remuneration

£’000

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

2021

2020

David Richardson

Andy Parsons

John Hastings-Bass1

597

415

200

594

415

Chris Gibson-Smith2

–

155

Keith Nicholson

Clare Spottiswoode

Paul Bishop

Ian Cormack

Steve Melcher

Michelle Cracknell3

Kalpana Shah4

–

716

498

761

498

–

191

103

–

– 1587 1541

–

616

459 1594 1461

–

200

–

155

–

680

480

200

–

677

907

504 1114

864

957

155

–

1 John Hastings-Bass was appointed Chair of the Company with effect from 13 August 2020 and his remuneration for 2020 represents his fees from this date.
2 Chris Gibson-Smith retired from his role as Chair of the Company with effect from 13 August 2020 and his remuneration represents his fees up to this date.
3 Michelle Cracknell was appointed as a Non-Executive Director of the Company with effect from 01 March 2020 and her remuneration for 2020 represents her fees from this date.
4 Kalpana Shah was appointed as a Non-Executive Director of the Company with effect from 01 March 2021 and her remuneration for 2021 represents her fees from this date.
5 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 2021 includes the 2019 LTIP awards. The 2019 LTIP award was earned but did not vest during 2021. For the purposes of valuation, the 2019 LTIP has been estimated
based on a share price of £0.8642 (the average share price from 1 October to 31 December 2021). This estimate will be updated to reflect the actual valuation in next year’s report. The 2018 LTIP
award, which vested in 2021, has been updated to reflect the actual share price at the time of vesting.

6 The estimate of value vesting under the 2019 LTIP shown represents vesting of 31.8% of maximum based on achievement of performance targets. The share price used for this estimate of
£0.8642 (being the average share price from 1 October 2021 to 31 December 2021) represents an increase of 33% when measured against the share price at the time of grant of £0.6501.
‘Other’ relates to buy-out awards negotiated as part of Andy Parsons’ joining and set out on page 99 and paid to him in 2020 and 2021. The 2021 value includes cash and shares released to him
in 2021 together with the value of his Award III, which has the same performance conditions as the 2019 LTIP and will vest on 16 May 2022. For the purposes of valuation, the 2019 LTIP has been
estimated based on a share price of £0.8642 (the average share price from 1 October 2021 to 31 December 2021).

2021 FIXED PAY (AUDITED)
Base salaries
David Richardson and Andy Parsons did not receive a salary increase in 2021 and their salaries remained at £597,000 and £415,000 respectively. The
salaries of the wider employee population were reviewed and increases were awarded selectively within a budget of 0.5%.

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.

The Executive Directors each received a cash payment in lieu of the Company pension of 10% of salary, in line with the contribution rate offered to
the majority of the wider workforce.

Non-Executive Directors’ fees
The fees for the Non-Executive Directors in 2021 are as detailed in the table below:

£’000

Board Chair

Basic fee

Additional fee for Senior Independent Director

Additional fee for Committee Chair, Risk and Audit Committees

Additional fee for Committee Chair, all other Committees

The Board Chair receives a single, all-inclusive fee for the role.

Fee

200

2021 EXECUTIVE DIRECTORS’ SHORT TERM INCENTIVE PLAN (AUDITED)
The 2021 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 2021 STIP award will be deferred into nil cost options (DSBP), subject to continued employment and clawback/
malus provisions.

David Richardson

Andy Parsons

Bonus
(balanced scorecard)

80% of maximum

Cash STIP
(£’000)

Deferred STIP
(£’000)

Estimated number
of shares
deferred under DSBP1

£430

£299

£287

£199

331,589

230,502

1 The estimated number of shares deferred under the DSBP were determined using the average closing share price between 1 October 2021 and 31 December 2021, being £0.8642. 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 2021 STIP was as follows:

Core bonus (balanced scorecard)

Organic capital generation (pre
management actions)

Organic capital generation (post
management actions)

Cost base reduction

IFRS new business profit

IFRS operating profit

Total

Weighting

Threshold (25%)

On-target (50%)

Maximum (100%)

£41m

£62m

Actual

£77m

25%

10%

25%

15%

£21m

£51m

£106m

£181m

£188m

£101m

£152m

£183m

£101m

£227m

£235m

£96m

£272m

£282m

£99m

£225m

£238m

% achieved

25%

12%

77%

As explained earlier in the report, the strategic measures did not impact the financial outturn of 77%. The corporate outturn was moderated to 70.8%
and adjusted to reflect personal achievement. The bonus metrics lead to a pool setting the overall cost with individual allocations then determined
by reference to personal objectives, with individuals allocated up to 100% of their maximum. Both Executives were assessed to have outperformed
against the on-target level, having successfully achieved the majority of their objectives, with their personal outturns moderated to 80% (+3%
compared to the formulaic pool) for both the CEO and CFO.

Risk consideration
The Committee reviewed a comprehensive report from the Group Chief Risk Officer 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 Officer 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.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Personal performance

Strategic personal objective

David Richardson

80%

Key achievements

• Achieve Group business plan targets (measured using STIP targets)
• Engage with and further develop shareholder base through
demonstrating compelling value and growth proposition

• Deliver management actions to reduce LTM backing ratio below 34%
• Maintain the organisation’s focus on key regulatory issues (property

• Strong outperformance in Organic Capital Generation and Cost Savings,

on target performance against IFRS profit metrics

• Increasing Just’s profile and developing the shareholder register

continues

• Exceeded expectations with an LTM backing ratio of 30% as at

de-risking, major model change and Prudent Person Principle)

31 December 2021

• Demonstrate an increasing focus on the customer
• Develop DB deferred proposition to expand presence in market
• Deliver against HUB proof points agreed with the Board
• Increase female representation at senior management levels across
the Group to 27% and develop measures for BAME representation

• Develop a Sustainability Strategy, approved by the Board

• Achieved several key initiatives, which have continued to build an

improved relationship with the PRA

• Development of products have been focused on improving customer

outcomes e.g. DB deferred proposition, medically underwritten LTMs and
LTM digitisation

• DB deferred proposition exceeded expectations with over £700m in sales
• HUB Group proof points were not all achieved but it enters 2022 in good

shape to deliver on its strategy

• Gender targets exceeded at 28% at 31 December 2021 and measures in

place for BAME representation for 2022

• Sustainability strategy has been approved; further objectives to be

Strategic personal objectives

Andy Parsons

defined in 2022

80%

Key achievements

• Achieve Group business plan targets (measured using STIP targets)

• Andy led the successful elimination of the cost over-run and helped

with a particular focus on profit and cost targets

ensure new business return targets were beaten

• Deliver capital actions to further reduce property risk and improve

• Exceeded expectations with an LTM backing ratio of 30% as at

capital position

• Engage with and further develop shareholder base through
demonstrating compelling value and growth proposition

• Together with the CEO, maintain focus on key regulatory issues
• Lead Finance Transformation program
• Deliver improvements to reporting processes to improve analysis

and controls over key reporting periods

• Increase female representation at senior management levels across
the Group to 27% and develop measures for BAME representation

31 December 2021. Led the successful refinancing of the Group RT1 debt

• Increasing Just’s profile and developing the shareholder register

continues

• Good progress made on key regulatory issues, thereby continuing to build

an improved relationship with the PRA

• Achieved a number of key deliverables on finance transformation
• Good progress with reporting timelines set to be further improved in 2022
• Gender targets exceeded at 28% at 31 December 2021 and measures in

place for BAME representation for 2022

VESTING OF LTIP AWARDS WITH A PERFORMANCE PERIOD ENDING IN 2021 (AUDITED)
2019 awards
The 2019 LTIP award performance period ended on 31 December 2021. The award is forecast to vest at 31.8% on 16 May 2022 based on earnings per
share growth and relative TSR performance over the three year period ending 31 December 2021.

Date of grant

Type of award

Number of shares
awarded

David Richardson

16 May 2019

Nil-cost options

694,567

% vesting

31.8%

Dividend
equivalent due

Number of shares
due to vest1

Value of shares
due to vest1

nil

220,872

£190,877

1 The value shown is based on the three month average share price to the year end, being £0.8642. 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

Adjusted earnings
per share growth1

50%

Threshold: 4% p.a.

Vesting

25%

Between threshold and maximum

Between 25% and 100% on a straight-line basis

Relative TSR vs FTSE 250

50%

Threshold: median

Maximum: 8% p.a. or above

Actual: 6.1% p.a.

100%

63.5%

25%

Between threshold and maximum

Between 25% and 100% on a straight-line basis

Total

–

Maximum: upper quartile or above

Actual: Below Median

100%

31.8%

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 £16m,
thereby increasing operating profit to £251m and the number of shares to 933m, resulting in an adjusted EPS of 26.9 pence.

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 2021:
• The final payment of the first cash element of the buyout of £106,452 was paid in March 2021.
• The second tranche of award (I) and the first tranche of award (II) vested on 31 March 2021. A total of 333,734 shares were released to Andy

Parsons at a price of £1.0181. 157,407 shares were sold to cover his tax liability and 176,327 shares were retained.

Andy Parsons’ buy-out award (III) is a conditional share award of 618,024 shares, which will vest on 16 May 2022 and is subject to the same
performance conditions applied to the 2019 LTIP grant based on EPS and TSR. 196,531 shares will therefore vest on 16 May 2022. The estimated value
of £169,842 has been included in the single figure table.
2021 LTIP AWARDS GRANTED (AUDITED)
The following awards were made to the Executive Directors in 2021:

David Richardson

24 March 2021

Nil-cost options

£895,500 (150% of salary)

Andy Parsons

24 March 2021

Nil-cost options

£622,500 (150% of salary)

959,704

667,131

31 December 2023

Date of grant

Type of award

Face value of award

Number of shares1

End of performance period

1 The actual share price calculated as the average price over the five days preceding the grant was £0.9331.

Performance measures and targets applying to the 2021 LTIP awards

Measure

Weighting

Target

Vesting

Organic capital generation
including management actions

37.5%

Below £146m
Threshold: £146m
Between threshold and maximum

0%
25%
Between 25% and 100% on a straight-line basis

Solvency ratio underpin to the
capital metric

Maximum: £438m

Below 150%
Threshold: 150%

Unadjusted outcome: 164%

100%

0%
As per capital metric outturn

Adjusted earnings
per share growth

37.5%

Below 3% p.a.

Threshold: 3% p.a.

25%

Between threshold and maximum

Between 25% and 100% on a straight-line basis

Relative TSR vs FTSE 250

25%

Maximum: 10% p.a. or above

Below median

Median

100%

25%

Between median and upper quartile

Between 25% and 100% on a straight-line basis

Upper quartile or above

100%

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. 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

David Richardson2
Andy Parsons
John Hastings-Bass
Keith Nicholson3
Clare Spottiswoode
Paul Bishop
Ian Cormack
Steve Melcher
Michelle Cracknell
Kalpana Shah4
Mary Kerrigan5

Beneficially owned
shares at
31 December 2021

Interest in share awards –
subject to performance
conditions

Interest in share awards
– not subject to
performance conditions

Interest in share awards
– vested but unexercised

Shareholding guideline
(% of salary)

Shareholding
guideline met1
(% of salary)

1,112,666
299,932
210,200
59,775
20,000
36,754
130,000
154,439
–
–
61,715

3,362,588
2,472,678
–
–
–
–
–
–
–
–
–

1,151,417
760,621
–
–
–
–
–
–
–
–
–

3,030
–
–
–
–
–
–
–
–
–
–

200%
200%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a

249%
146%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a

1 Based on the average closing price of £0.8642 between 1 October 2021 and 31 December 2021.
2 334,172 of David Richardson’s shares owned outright were financed by way of a company loan, of which £404k was outstanding as at 31 December 2021. 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 off the balance and settle any taxes due on a grossed-up basis.

3 Keith Nicholson retired from the Board on 31 December 2021. His share interests shown are as at 31 December 2021.
4 Kalpana Shah was appointed to the Board on 1 March 2021.
5 Mary Kerrigan was appointed to the Board on 1 February 2022 and her interests are shown at the date of appointment and at the date of signing the accounts.

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

There have been no changes in the Directors’ interests in shares in the Company between the end of the 2021 financial year and the date of this
Annual 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

LTIP

24 Mar 2021

23 Mar 2020

16 May 2019

29 Mar 20181

28 Sep 2016

DSBP

24 Mar 2021

23 Mar 2020

28 Mar 2019

29 Mar 2018

Exercise
price

Interest
as at
31/12/20

Granted in
the year

Dividend shares
accumulating
at vesting

Vesting in
the year

Lapsed in
the year

Exercised in
the year1

Interest as at
31/12/21

Vesting date

Expiry date

Nil

–

959,704

1,708,317

694,567

520,958

3,030

–

331,305

501,548

318,564

154,135

–

959,704

24 Mar 2024

24 Mar 2031

1,708,317

23 Mar 2023

23 Mar 2030

694,567

16 May 2022

16 May 2029

102,889

418,069

102,889

29 Mar 2021

29 Mar 2028

–

3,030

28 Sep 2019

27 Sep 2026

331,305

24 Mar 2024

24 Mar 2031

501,548

23 Mar 2023

23 Mar 2030

318,564

28 Mar 2022

28 Mar 2029

156,885

–

29 Mar 2021

29 Mar 2028

2,750

156,885

1 2018 LTIP and DSBP were exercised on 28 May 2021 at a price of £1.0749.

The table below summarises the outstanding awards made to Andy Parsons:

Date of grant

LTIP

24 Mar 2021

23 Mar 2020

DSBP

24 Mar 2021

BUY-OUT AWARDS1,2

20 Mar 2020 (I)

20 Mar 2020 (II)

20 Mar 2020 (III)

Exercise
price

Interest
as at
31/12/20

Granted in
the year

Dividend shares
accumulating
at vesting

Vesting in
the year

Lapsed in
the year

Released in
the year2

Interest as at
31/12/21

Vesting date

Expiry date

Nil

–

667,131

Nil 1,187,523

–

Nil

–

247,211

630,387

618,024

216,757

–

123,605

210,129

–

667,131

24 Mar 2024

24 Mar 2031

1,187,523

23 Mar 2023

23 Mar 2030

216,757

24 Mar 2024

24 Mar 2031

123,605

210,129

123,606 31 Mar 2020-22

420,258 31 Mar 2021-23

–

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 second tranche of the 2020 March (I) and the first tranche of 20 March 2020 (II) vested on 31 March 2021. A total of 333,734 shares were released to Andy Parsons on 31 March 2021 at a

price of £1.0181. 157,407 shares were sold to cover his tax liability and 176,327 shares were retained.

Dilution
The Committee complies with the dilution levels that the Investment Association guidelines recommend. Shares relating to options granted under
the LTIP and 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 2021 was 3.5% of the total issued share capital at the time. Share options granted under the DSBP will
continue to be satisfied by the purchase of shares in the open market and therefore do not count towards the dilution limit.

PAYMENTS FOR LOSS OF OFFICE MADE DURING 2021 (AUDITED)
No payments were made for loss of office to Directors during 2021.

PAYMENTS MADE TO PAST DIRECTORS DURING 2021 (AUDITED)
No payments were made to past Directors during 2021. Share options retained post-termination of 104,079 shares in respect of the 2018 LTIP and
232,784 shares in respect of the 2018 DSBP vested for Rodney Cook during the year. Share options of 16,815 shares in respect of the 2018 LTIP and
133,703 shares in respect of the 2018 DSBP vested for Simon Thomas during the year.

100

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:

David Richardson

Andy Parsons

Date of contract

Notice period by Company

Notice period by Director

27 November 2019

1 January 2020

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 Company’s registered office 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
shareholders at a general meeting. Non-Executive Directors’ letters of appointment are available for inspection at the registered office of the
Company 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 Company’s articles of association, 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 effect if he/she is removed as a Director by
resolution at a general meeting or pursuant to the Company’s articles of association. 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 Company’s 2021 AGM, shareholders were asked to vote on the Directors’ Remuneration Report for the year ended 31 December 2020. The
current Directors’ Remuneration Policy was put to shareholders at the 2020 AGM. 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 Report (2021 AGM)

To approve the Directors’ Remuneration Policy (2020 AGM)

812,058,742

782,674,741

93.52%

89.47%

56,285,857

92,145,984

6.48%

11,584,369

10.53%

70,000

EXTERNAL ASSISTANCE PROVIDED TO THE COMMITTEE
FIT Remuneration Consultants (“FIT”) is retained as the independent adviser to the Remuneration Committee. 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 2021 to FIT were £64,000 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.

However, there are some structural differences in the Executive Directors’ remuneration policy compared to that for the broader employee base,
which the Committee believes are necessary to reflect the differing 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.

101

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

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 remunerations
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
BASE SALARY

BENEFITS

PENSION

SHORT TERM
INCENTIVE PLAN

Policy approach

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 2021, the average salary increase (excluding
promotions) for all employees awarded in April 2021 was 0.41%. This is an average figure, with individual increases varying within
a range depending on the factors above.

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.

All employees are provided with the opportunity to participate in the Group defined contribution pension plan, with a Company
contribution of up to 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.

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 variable remuneration deferred into shares for three years.

LONG TERM
INCENTIVE PLAN

OTHER SHARE
PLANS

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 2021, fewer
than 40 individuals were granted awards, under the LTIP.

The Company operates a DSBP which provides the vehicle for the deferral of the STIP award. The Company operates a SAYE which
is open to all staff to participate in. In the past the Company has offered free shares under a Share Incentive Plan 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.

200

180

160

140

120

100

3
1
0
2
r
e
b
m
e
v
o
N
1
1
t
a
0
0
1
o
t
d
e
s
a
b
e
r

x
e
d
n
I
n
r
u
t
e
R

102

11/11/2013

30/06/2014

30/06/2015

31/12/2016

31/12/2017

31/12/2018

31/12/2019

31/12/2020

31/12/2021

Just Group

FTSE 250 (excluding investment trusts)

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

Chief Executive

Total remuneration (£’000)

STIP (% of maximum)

LTIP (% of maximum)

2013

1,052

86%

n/a

2014

1,196

63%

n/a

2015

1,357

89%

n/a

20161

2,630

97.5%

39.5%

2017

2,369

95.0%

50.0%

2018

2,507

91.2%

50.0%

20192

438

50.0%

20192

1,440

83.1%

50.0%

2020

1,541

85%

19.75%

2021

1,587

80%

31.8%

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 third year in which Just Group has been required to publish its CEO pay ratio.

Year

2021

2020

20192

Method1

25th percentile pay ratio

50th percentile pay ratio

75th percentile pay ratio

Option A

47 : 1

42 : 1

44 : 1

29 : 1

26 : 1

28 : 1

17 : 1

16 : 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 2021 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.

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 2021.

£’000

25th percentile

50th percentile

75th percentile

Group Chief Executive

Total pay and benefits

Salary component of total pay

1,587

597

The Group Chief Executive Officer was paid 29 times the median employee in 2021. 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 the 2020 ratio
The changes in employee mix and the reduction of management layers across the business has reduced the average cost of total pay for employees.
The Company regularly benchmarks salaries and benefits to the market and the Committee is confident they are set at appropriate levels.

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 2020 and 2021,
compared to that for the average employee of the Group (on a per capita (FTE) basis).

The movement in the percentage change of benefits for Andy Parsons is due to his travel allowance being removed after his first 12 months
of employment.

Percentage change between 2020 and 2021

Base salary

Benefits

Annual bonus

Average employee1

2.5%

Executive Directors

David Richardson

Andy Parsons

Non-Executive Directors

John Hastings-Bass2

Keith Nicholson3

Clare Spottiswoode3

Paul Bishop

Ian Cormack

Steve Melcher

Michelle Cracknell4

Kalpana Shah5

n/a

2.2%

-2%

-51%

n/a

-7.4%

-6%

n/a

1 All permanent employees (excluding the Executive
Directors) of the Company in the UK who were in
employment during the two calendar year periods
of 2020 and 2021 were selected as the most
relevant comparator.

2 John Hastings-Bass joined Just Group with effect
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.

3 Keith Nicholson retired as Senior Independent

Director from the Board on 31 December 2021 and
Clare Spottiswoode will step down on 10 May 2022.

4 Michelle Cracknell joined Just Group with effect
from 14 May 2020. In order to compare her
remuneration year on year, her fees for 2020 have
been adjusted to reflect a full year appointment to
the Board.

5 Kalpana Shah joined Just Group with effect from

1 March 2021.

103

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS

JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Relative importance of spend on pay (unaudited)
The table below illustrates the relative importance of spend on pay compared to shareholder dividends paid.

Total personnel costs (£m)

Dividends paid (£m)

Implementation of the remuneration policy in 2022 for Executive Directors (unaudited)

BASE SALARY

• David Richardson, CEO: £609,000
• Andy Parsons, CFO: £423,000

Year ended
31 December
2021

Year ended
31 December
2020

101.5

–

107.5

–

% difference

-5.6%

David Richardson and Andy Parsons’ salaries increased by 2% and 1.9% respectively from 1 April 2022, compared to 3.2% for the
wider workforce.

NON-EXECUTIVE
DIRECTORS FEES

£’000

Board Chair

Basic fee

Additional fee for Senior Independent Director

Additional fee for Committee Chair, Risk and Audit Committees

Additional fee for Committee Chair, all other Committees

Fee

200

BENEFITS AND
PENSIONS
SHORT TERM
INCENTIVE PLAN
(“STIP”)

The Executive Directors will receive a benefits allowance of £20,000 for 2022 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.

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 2022 will be determined by a balanced scorecard of performance against financial and strategic measures. The
financial measures are:
• 40% based on Underlying Organic Capital Generation
• 40% based on IFRS New Business Profit measures
• 20% based on IFRS Operating Profit

The strategic measures, which can increase or decrease the bonus pool available (subject always to a maximum bonus pool of
100%) are:
• ‘Customer’ (customer experience, upheld complaints and customer satisfaction)
• ‘People’ (engagement and diversity - gender, ethnicity and race )

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.

104

LONG TERM
INCENTIVE PLAN
(“LTIP”)

Awards will be made over shares with a face value of 200% and 175% of salary in 2022 to the CEO and CFO respectively. The awards
made in 2022 will be subject to the measures below, calculated over the three financial years to 31 December 2024, and will be
subject to a further two year post-vesting holding period.

Performance measures and targets applying to the 2022 LTIP awards

Measure

Weighting

Target

Vesting

Underlying Organic Capital
Generation

25%

Below £90m
Threshold: £90m
Between threshold and maximum

0%
25%
Between 25% and 100% on a
straight-line basis

Maximum: £130m

100%

ESG - Investment into
‘Sustainable Assets’ (as
developed in partnership with
Sustainalytics)

10%

Below £300m
Threshold: £300m
Between threshold and maximum

Maximum: £750m

Return on Equity

35%

Below 8% p.a.

Threshold: 8% p.a.

Between threshold and maximum

Maximum: 12% p.a. or above

Relative TSR vs FTSE 250,
excluding Investment Trusts

30%

Below median

Median

Between median and upper quartile

Upper quartile or above

0%
25%
Between 25% and 100% on a
straight-line basis

100%

25%

Between 25% and 100% on a
straight-line basis
100%

25%

Between 25% and 100% on a
straight-line basis
100%

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 PRA and the FCA, on best practice.

The existing policy was approved by shareholders at the AGM held on 14 May 2020 and is available within the Directors Remuneration Report of the
2019 Annual Report and Accounts.

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 at www.justgroupplc.co.uk.

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 sufficiently
high calibre.

Reflects an individual’s
experience, performance
and responsibilities within
the Group.

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.

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 effect 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.

105

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Element

BENEFITS

Purpose and link to strategy

Operation (including framework used to assess performance)

Opportunity

Provides competitive,
appropriate and cost-effective
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.

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.

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 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.

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.

Where the annual or lifetime allowances are
exceeded, or in certain other circumstances, the
Group will pay cash in lieu of a Company
contribution.

This limit may change to reflect any changes in
the contributions available to the majority of
the workforce.

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.

SHORT TERM
INCENTIVE
PLAN (“STIP”)

Incentivises the execution of
annual goals by driving and
rewarding performance
against individual and
corporate targets.

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.

Compulsory deferral of a
proportion into Group shares
provides alignment with
shareholders.

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 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 STIP2.

106

Element

Purpose and link to strategy

Operation (including framework used to assess performance)

Opportunity

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 shares1 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.

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.

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 LTIP2.

ALL-EMPLOYEE
SHARE PLANS

SHAREHOLDING
GUIDELINES

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.

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.

Not applicable.

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.

107

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Chair and Non-Executive Directors

Element

FEES

Purpose and link to strategy

Operation (including framework used to assess performance)

Opportunity

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.

To attract and retain a
high-calibre Chair and
Non-Executive Directors
by offering 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 Officer 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.

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 9 March 2022 and signed on its behalf by:

IAN CORMACK
Chair, Remuneration Committee
9 March 2022

108

DIRECTORS’ REPORT

The Directors present their
report for the financial year
ended 31 December 2021.

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 differ
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 is a specialist UK financial services group focusing on attractive
segments of the UK retirement income market. Just Group plc (the
“Company”) 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 35.

Commentary on the Group’s performance in the financial year ended
31 December 2021 and likely future developments is included in the
Strategic Report on pages 48 to 57. Our approach to stakeholder
engagement, including our Section 172 statement, can be found on
pages 36 to 42.

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 93 to 108, all
of which is incorporated in the Directors’ Report by reference.

Requirements under Listing Rule 9.8.4C
In accordance with Listing Rule 9.8.4C, the table below sets out the
location of the information required to be disclosed, where applicable.

Information

Interest capitalised by the Group

Page number

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

Waiver of future emoluments by a director

Non pre-emptive issues of equity for cash

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

Contracts of significance involving a controlling
shareholder

Shareholder waivers of dividends

Shareholder waivers of future dividends

Agreements with controlling shareholders

Not applicable

Share plans on
page 111

Not applicable

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 trafficking statement online.

Articles of Association
The Company may make amendments to the Articles of Association
by way of special resolution of the shareholders in accordance with
the Companies Act. No changes were made to the Articles of Association
during 2021. Adoption of new Articles of Association will be proposed at
the 2022 Annual General Meeting, details of which can be found in the
Notice of Meeting which will be made available to shareholders
separately.

Business relationships
The Board is committed to foster the Company’s business relationships
with suppliers, customers and other stakeholders. Details on how the
Board engage with our principal suppliers and customers, as well as
other stakeholders can be found on pages 36 to 37.

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 UK Corporate Governance Code 2018 (the
“Code”), and also the longer-term viability of the Group in accordance
with Provision 31 of the Code.

The going concern and longer-term viability assessment includes the
consideration of the Group’s business plan approved by the Board; steps
taken by the Group over the last three years to improve capital efficiency;
the projected liquidity position of the Company and the Group; on-going
impacts of COVID-19; current financing arrangements and contingent
liabilities; and a range of forecast scenarios with differing levels of new
business and associated additional capital requirements to write
anticipated levels of new business.

The Group and its regulated insurance subsidiaries are required to
comply with the requirements established by the Solvency II Framework,
and to measure and monitor its capital resources on this basis.

It is fundamental to the Group that the Directors manage and monitor
the key risks the Group is exposed to, including longevity risk, property
risk, credit risk, and interest rate risk, so that it can protect policyholders
and meet their payments when due.

In addition, the resilience of the solvency capital position has been
tested under a range of adverse scenarios, which considers the possible
impacts on the Group’s business, including stresses to UK residential
property prices, house price inflation, the credit quality of assets,
mortality 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.

Furthermore, the Directors note that in a scenario where the Group
ceases to write new business the going concern basis would continue to
be applicable while the Group continued to service in-force policies.

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.

109

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REPORT CONTINUED

The Viability Statement as required by the Code, has been undertaken for
a period of five years to align with the Group’s business planning. It is
contained within the Strategic Report and can be found on page 59.

THE BOARD
Directors
The Directors who served during the year and up to the date of this
report are set out in the Governance Report on page 77. The biographies
of the Directors in office as at the date of this report can be found on
pages 68 to 71. The rules governing the appointment and retirement of
Directors are set out in the Company’s Articles of Association and all
appointments are made in accordance with the Code. All Directors will
retire and stand for election or re-election at the 2022 Annual General
Meeting with the exception of Clare Spottiswoode who has informed the
Board of her intention to retire as a Director on 10 May 2022.

Directors’ Powers
The Board is responsible for the management of the business of the
Company and may exercise all powers of the Company subject to the
provisions of the Company’s Articles of Association and relevant
legislation.

Directors’ insurance and indemnities
The Directors and Officers 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 affairs, 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 Officers’ 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 99 of the Directors’
Remuneration Report and details of the Directors’ long-term incentive
awards are also set out on page 100.

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. None of the 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 2021
financial year will be held at 10.00am on Tuesday 10 May 2022 at the
Company’s registered office, Enterprise House, Bancroft Road, Reigate,
Surrey RH2 7RP. More information about the 2022 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 2021 and are shown on pages 123 to 126.

The Board is recommending a final dividend for the year ended
31 December 2021 of 1.0 pence per ordinary share (2020: nil). Subject to
approval by shareholders at the Company’s 2022 AGM, the Company will

110

pay the final dividend on 17 May 2022 to shareholders on the register of
members at the close of business on 22 April 2022.

The final dividend resolution provides that the Board may cancel the
dividend and, therefore, payment of the dividend at any time before
payment, if it considers it necessary to do so for regulatory capital
purposes. You can find detailed explanations about this, as well as a
proposed amendment to the Articles of Association regarding the
cancellation of dividends by the Board in the Notice of Meeting for the
2022 AGM.

SHARE CAPITAL
Ordinary share capital
As at 31 December 2021, the Company had an issued share capital of
1,038,537,044 ordinary shares of 10 pence each, all fully paid up and
listed on the premium section of the London Stock Exchange. No shares
are held in treasury.

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 2021 was 83.60 pence.

Further information relating to the Company’s issued share capital can
be found in note 21 on page 156.

Restricted Tier 1 bonds
The Company has £325m 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.

Share capital authorities
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 authority from shareholders at a general meeting
of the Company to allot equity securities for cash, without first being
required to offer 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.

The Directors were granted the following authorities at the 2021 AGM
held on 11 May 2021 and General Meeting of the Company held on
31 August 2021 (“2021 General Meeting”):

2021 AGM
• to allot ordinary shares in the Company up to a maximum aggregate

nominal amount of £69,208,856;

• to allot equity securities for cash on a non pre-emptive basis up to an
aggregate nominal amount of £5,190,664 and further granted an
additional power to disapply pre-emption rights representing a further
5% only to be used in specified circumstances;

• to make market purchases of up to an aggregate of 103,813,285

ordinary shares, representing approximately 10% of the Company’s
issued ordinary share capital as of 26 March 2021; and

2021 General Meeting
• to allot ordinary shares in the Company and to grant rights to

subscribe for or to convert any security into shares in the Company, on
a non pre-emptive basis, up to an aggregated nominal amount of
£50,000,000 in relation to any issue(s) by the Company or any
subsidiary undertaking of the Company (together the “Group”) of
contingent convertible securities.

Details of the shares issued by the Company during 2021 and 2020 can
be found in note 21 on page 156. No shares were purchased by the
Company during the year.

On 6 September 2021, the Company made a tender offer for £300m of
Bonds in issue. Details of the tender offer can be found in the Section 172
statement on page 41. On 16 September 2021, the Company issued
£325m of Bonds which in certain circumstances can be converted into
ordinary shares with a nominal value of £41m in accordance with the
authority granted at the 2021 General Meeting. Details of the Bonds
issued during 2021 can be found in note 25 on page 162.

The Directors propose to renew these abovementioned authorities at the
2022 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 the Directors and certain employees of the
Company require clearance from 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.

Share plans
The Group operates a number of share-based incentive plans that
provide the Company’s 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
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 94 to 95.

Exercises of share options under the LTIP and DSBP are satisfied by using
newly issued 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 newly issued shares. During the 12 months
to 31 December 2021, 408,488 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
(2020: 3,046,892).

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 in the following
table was correct at the date of notification.

Shareholder

Aegon N.V.

Ordinary
shareholdings
at 31 Dec 2021

54,242,658

Credit Suisse Group AG

38,771,332

Norges Bank

31,038,322

%
of capital

5.22

3.73

2.98

Ordinary
shareholdings
at 9 Mar 20221

54,242,658

38,771,332

31,038,322

%
of capital

5.22

3.73

2.98

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, promotions 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,
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.

We are a Disability Confident Committed employer and our recruitment
process ensures we give full and fair consideration to applications made
by disabled persons and any reasonable adjustments are made as
required during the recruitment process to ensure disabled persons have
the same opportunity to demonstrate their skills as all other applicants.
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
colleagues understand our organisation’s goals and how we need to
work together to achieve them. This includes quarterly town hall
business updates, regular emails to all colleagues, videos and news
items on our internal intranet.

We consistently monitor the engagement of our colleagues and their
views on matters 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 regular pulse surveys, as well as informal approaches which
include gathering feedback via word of mouth.

2021 was a year in which we successfully transitioned colleagues
from homeworking in light of COVID-19, to embracing our trial of hybrid
ways of working. We were named as one of the UK’s 100 Best Large
Companies to Work For and accredited as a 2 Star organisation,
representing outstanding levels of engagement. We also undertook
further work to define our culture and identity of being Just. This is how
we deliver our strategy which is always sustainably and following clear
behaviours which we collectively call the “Just way”.

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.

111

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

DIRECTORS’ REPORT CONTINUED

Further information regarding colleague engagement and how the
Directors have engaged with colleagues, including the impact on decision
making, is included in the Strategic Report on page 30.

ENVIRONMENT AND EMISSIONS
Information on the Group’s greenhouse gas emissions is set out in the
Sustainability and the environment report on pages 18 to 19.

Employee diversity
We have increased gender diversity at senior levels (global grade 14+,
which includes approximately 10% of the most senior employees) by
three percentage points from 24% to 27%. 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 the end of 2023.

Group Executive
Committee members

Senior management1
(global grade 14-16)

All other employees
(global grade 1-13)

Female

Male

Total

Female
%

Male
%

12.50

87.50

113

28.32

71.68

434

482

916

47.38

52.62

Grand total

467

570

1,037

45.03

54.97

1 Of these 113 senior managers, 41 directly report to members of the Group Executive

Committee, and of these, eight (19.5%) are women.

Further information on colleagues, culture and diversity is given on
page 30.

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 he or she 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 office as the external
auditor. A resolution to reappoint PwC will be proposed at the
forthcoming AGM. An assessment of the effectiveness and
recommendation for reappointing PwC in the Group Audit Committee
Report can be found on page 87.

OTHER DISCLOSURES
Change of control provisions
There are various agreements that take effect, 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.

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 60 to 63 of the Strategic Report and in
note 33 to the financial statements.

Political donations
No political donations were made, or political expenditure incurred, by
the Company and its subsidiaries during the year (2020: £0).

POST BALANCE SHEET EVENTS
Details of post-balance sheet events are set out in note 38 to the
financial statements.

The Directors’ Report has been approved by the Board and is signed on
its behalf by:

SIMON WATSON
Group Company Secretary
9 March 2022

112

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 UK Endorsement Board and
pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union 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 affairs 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 the

Companies Act 2006 and IFRS as adopted by the UK Endorsement
Board and pursuant to Regulation (EC) No 1606/2002 as it applies in
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 sufficient 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.

DIRECTORS’ RESPONSIBILITY STATEMENT
We confirm to the best of our knowledge that:
• the financial statements, prepared in accordance with the Companies

Act 2006 and IFRS as adopted by the UK Endorsement Board and
pursuant to Regulation (EC) No 1606/2002 as it applies in 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 Officer

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 differ from legislation in other jurisdictions.

ANDY PARSONS
Group Chief Financial Officer
9 March 2022

113

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

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
affairs as at 31 December 2021 and of the Group’s loss and the Group’s
and Company’s cash flows for the year then ended;

• have been properly prepared in accordance with UK-adopted

international accounting standards; 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 2021;

• 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 Group 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 UK-adopted international accounting
standards, have 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 and Company 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 sufficient 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.

Other than those disclosed in note 4, we have provided no non-audit
services to the Group in the period under audit.

114

OUR AUDIT APPROACH
Context
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 has two regulated insurance companies, Just Retirement
Limited and Partnership Life Assurance Company Limited, in addition to
other professional services companies.

In planning our audit, we met with the Group Audit Committee and
members of management across the Group to discuss and understand
business developments during the year, and to understand their
perspectives on associated business risks. We used this insight and our
knowledge of the Group and our industry experience when forming our
own views regarding the audit risks and as part of developing our planned
audit approach to address those risks. Given the activities of the Group, we
have built a team with the relevant industry experience and technical
expertise.

As a part of our audit we have made enquiries of management to
understand the extent of the potential impact of climate change risk on
the Group’s financial statements and the Group’s preparedness for this.
We have performed a risk assessment of how the impact of commitments
made by the Group in respect of climate change may affect the financial
statements and our audit. There was no impact of this on our key audit
matters.

The COVID-19 pandemic has continued to have a significant global impact
throughout 2021. In planning our audit, we have considered the impact
of the pandemic on the Group’s business and the financial statements.
Where necessary, we have utilised virtual technologies and collaborative
workflow tools to obtain sufficient, appropriate audit evidence whilst
working in this hybrid environment.

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 three 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)

• Recoverability of the Company’s investments in Group undertakings

(Company)

Materiality
• Overall Group materiality: £24,400,000 (2020: £24,900,000) based on 1%

of Total equity.

• Overall Company materiality: £12,574,000 (2020: £13,000,000) based on

1% of Total equity.

• Performance materiality: £18,300,000 (2020: £18,700,000) (Group) and

£9,430,000 (2020: £9,800,000) (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.

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 effect
on: the overall audit strategy; the allocation of resources in the audit; and
directing the efforts 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. The impact of
uncertainties related to COVID-19 on the Group and Company, which was
a key audit matter last year, is no longer included because it is now clearer
and assessed as having limited effect on the operations or the going
concern assessment performed by the directors. We have therefore
removed this as a specific key audit matter and have, to the extent
relevant, referred to the impact of COVID-19 on our audit work within other
key audit matters. Otherwise, the key audit matters below are consistent
with last year.

Key audit matter

How our audit addressed the key audit matter

Valuation of insurance contract liabilities (Group)
Refer to Group Audit Committee Report, Accounting policy 1.21 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 as these are considered the most significant
and judgemental.

The work to address the valuation of the insurance contract liabilities
included the following procedures:
• Tested the design and, where applicable, the operating effectiveness 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, model and assumptions used against recognised
actuarial practices;

• Performed testing over the actuarial model calculations. We have

placed reliance on model baselining carried out as part of our first year
audit, whereby we independently replicated the liability cash flows for a
sample of policies in order to validate that the model calculations were
operating as intended. In 2021 we performed additional procedures
over changes in the model and tested the analysis of change in
modelled results, to assess whether the model continues to operate as
expected;

• Tested the derivation of the valuation rate of interest 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 model; 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.

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INDEPENDENT AUDITORS’ REPORT continued

Key audit matter

How our audit addressed the key audit matter

Valuation of insurance contract liabilities – Annuitant mortality assumptions (Group)
Refer to Group Audit Committee Report, Accounting policy 1.21 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 annuities. The annuitant mortality assumptions have two
main components as set out below and a margin for prudence is then
applied to these components.

Base mortality assumptions
This component of the assumption is mainly driven by internal experience
analyses. It requires expert judgement, in determining the most
appropriate granularity at which to carry out the analysis; the period used
for historic experience; 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 future mortality improvements
This component 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.

We performed the following audit procedures to test the annuitant
mortality assumptions (including base mortality assumptions, rate of
future mortality improvements and margin for prudence):
• Assessed 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 over the performance of annuitant
mortality experience analysis studies, approval of the proposed
assumptions and implementation within the actuarial model;

• Assessed 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 such as the choice of
the smoothing parameter, initial rate, long term rate and tapering at
older ages;

• Assessed the appropriateness of the margin for prudence and its

consistency over time;

• Compared the annuitant mortality assumptions selected by
management against those used by peers using our annual
benchmarking 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 over retaining the prior year assumptions for 2021
reporting.

Based on the work performed and the evidence obtained, we consider the
assumptions used for annuitant mortality to be appropriate.

116

Key audit matter

How our audit addressed the key audit matter

Valuation of insurance contract liabilities – Credit default assumptions (Group)
Refer to Group Audit Committee Report, Accounting policy 1.21 Insurance liabilities and note 23 Insurance contracts and related reinsurance.

The credit default assumptions are applied as a deduction to the
valuation rate of interest and therefore have a significant impact on the
valuation of the insurance contract liabilities. The appropriate deduction
is subjective and requires expert judgement. The Group’s investment
portfolio primarily consists of corporate bonds and a material amount of
illiquid assets, including Lifetime Mortgages, where there is greater
uncertainty.

For corporate bonds, the assumption is based upon historical observed
default rates with an additional allowance when current observed
spreads are in excess of an assumed long-term level. For Lifetime
Mortgages, the assumption is set with reference to the No Negative
Equity Guarantee (“NNEG”) and for other illiquid assets, the assumption is
set as an adjustment to the equivalent corporate bond assumption. In
addition, a margin for prudence is applied to the credit default
assumptions.

We performed the following audit procedures to test the credit default
assumptions:
• Assessed the methodologies used to derive the assumptions (including

margin for prudence) with reference to relevant rules and actuarial
guidance and by applying our industry knowledge and experience;

• Assessed significant assumptions used by management against market

observable data (to the extent available and relevant) and our
experience of market practises; Tested the controls in place over the
application of credit default assumptions within the valuation interest
rate calculation;

• Considered the impact of COVID-19, including whether any changes in

future expected default levels are appropriately reflected;

• Considered the appropriateness of any changes made to the credit

default methodology as a result of the transition from LIBOR to SONIA
as the benchmark risk-free rate in UK;

• 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 margin for prudence for each asset
class individually and in aggregate and its consistency over time; and
• Assessed the disclosure of the credit default risk assumptions and the

commentary to support the impact, 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 Group Audit Committee Report, Accounting policy 1.21 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 audit procedures to test the expense
assumptions:
• Tested the design and, where applicable, the operating effectiveness of

controls related to the expense assumption setting process;

• Tested 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 allocation of expenses between acquisition and
maintenance costs and the allocation of costs to products;

• Assessed the appropriateness of the rate at which expenses are

assumed to inflate in the future, taking into account both price and
earnings inflation;

• Assessed the appropriateness of the margin for prudence 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 impact, if any, from changes in these
assumptions over 2021.

Based on the work performed and the evidence obtained, we consider the
expense assumptions to be appropriate.

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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 Group Audit Committee Report, Accounting policy 1.17 Financial investments and note 17 Financial assets and liabilities measured at fair
value.

The valuation of investments classified as Level 3 is typically calculated
using a discounted cash flow model with significant unobservable inputs.
This is inherently complex and requires expert 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 audit procedures to test the valuation of the
investments classified as Level 3 (excluding Lifetime Mortgages):
• Tested the design and, where applicable, the operating effectiveness of

controls related to the valuation of investments; and

• Obtained independent confirmations from third party asset managers

(where relevant).

For Lifetime mortgages, an internal model which projects the future cash
flow expected to arise is used to value each mortgage. This is based on a
current valuation of the underlying property. The future cash flows allow
for expected future expenses, mortality and voluntary redemption
experience and any potential repayment shortfalls due to the existence
of the NNEG. A key judgement in the assessment of the NNEG is the best
estimate future house price growth assumption. The illiquidity premium
used within the discount rate is set at outset for each mortgage to ensure
there is no day 1 gain and it is unchanged thereon unless there are
further advances.

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 audit procedures:
• Tested the design and, where applicable, the operating effectiveness 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, including those relating to model inputs,
model operation and extraction and consolidation of results from the
valuation model;

• Assessed the appropriateness of current property prices by obtaining

evidence to support the latest property value used (based on valuations
by Hometrack AVM or property surveyors) and recalculating the
application of the Nationwide indices to property data;

• Using our actuarial specialists, applied our industry knowledge and

experience to assess the appropriateness of the methodology, model
and assumptions used to measure the NNEG component against
recognised actuarial practices;

• 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;

• 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. This includes the adjustment applied in 2021 to
reflect higher expected short term redemption rates;

• Performed testing over the actuarial model calculations. We have

placed reliance on our model baselining carried out as part of our first
year audit, whereby we independently replicated the asset cash flows
for a sample of loans in order to validate that the model calculations
were operating as intended. In 2021 we performed additional
procedures over changes in the model and tested the analysis of
change in modelled results, to assess whether the model continued to
operate as expected;

• Assessed the valuation implications (if any) from the Group’s recent

portfolio sales including the transaction after the balance sheet date; and

• Used the results of the PwC benchmarking survey to further challenge

the assumptions and modelling approach adopted, relative to the
Group’s industry peers.

We have 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 assumptions.

Based on the work performed and the evidence obtained, we consider the
valuation of level 3 assets to be appropriate.

118

Key audit matter

How our audit addressed the key audit matter

Recoverability of the Company’s investments in Group undertakings (Company)
Refer to Group 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 Group
undertakings is 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. The effect 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 audit procedures related to the recoverability
of the Company’s investments in Group undertakings:
• Assessed the reasonableness and appropriateness of the assumptions
used in the cash flows 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.

Based on the work performed and the evidence obtained, we consider the
carrying amount of the Company’s investments in Group undertakings to
be appropriate.

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 three
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 92% coverage of consolidated Total assets, 99% coverage of consolidated Total
liabilities and 85% coverage of consolidated Loss 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 effect 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

£24,400,000 (2020: £24,900,000).

£12,574,000 (2020: £13,000,000).

How we determined it

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 or loss 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 £4.8 million and £16.3 million.

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INDEPENDENT AUDITORS’ REPORT continued

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% (2020: 75%) of overall materiality, amounting to £18.3 million (2020: £18.7 million) for the consolidated financial statements and £9.4 million (2020:
£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 effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.

We agreed with the Group Audit Committee that we would report to them misstatements identified during our audit above £1.25 million (Group audit)
(2020: £1.25 million) and £0.6 million (Company audit) (2020: £0.7 million) 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 34, 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;
• Enquired and understood the actions taken by management to mitigate the impacts of COVID-19, including attendance at Group 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 directors’ 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, which includes reporting based on the Task Force on Climate-related Financial Disclosures (TCFD)
recommendations. 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 2021 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.

120

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 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 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.

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 effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Group 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined
above, 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 effect on the financial statements. We also considered those laws and
regulations that have a direct impact on 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;

121

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

INDEPENDENT AUDITORS’ REPORT continued

• 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 (PRA) 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 Group Audit Committee and Group Risk and Compliance Committee meetings;
• Reviewing relevant meeting minutes including those of the Board of Directors, Group 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.

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 Group 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. The period of total uninterrupted engagement is 2 years, covering the years ended
31 December 2020 to 31 December 2021.

OTHER MATTER
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the
ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF
Regulatory Technical Standard (“ESEF RTS”). This auditors’ report provides no assurance over whether the annual financial report has been prepared
using the single electronic format specified in the ESEF RTS.

Lee Clarke (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
9 March 2022

122

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021

Gross premiums written

Reinsurance premiums ceded

Reinsurance recapture

Net premium revenue

Net investment (expense)/income

Fee and commission income

Total revenue

Gross claims paid

Reinsurers’ share of claims paid

Net claims paid

Change in insurance liabilities:

Gross amount

Reinsurers’ share

Reinsurance recapture

Net change in insurance liabilities

Change in investment contract liabilities

Acquisition costs

Other operating expenses

Finance costs

Total claims and expenses

(Loss)/profit before tax

Income tax

(Loss)/profit for the year

Other comprehensive income:

Items that will not be reclassified subsequently to profit or loss:

Revaluation of land and buildings

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translating foreign operations

Other comprehensive loss for the year, net of income tax

Total comprehensive (loss)/income for the year

(Loss)/profit attributable to:

Equity holders of Just Group plc

Non-controlling interest

(Loss)/profit for the year

Total comprehensive income attributable to:

Equity holders of Just Group plc

Non-controlling interest

Total comprehensive (loss)/income for the year

Basic earnings per share (pence)

Diluted earnings per share (pence)

The notes are an integral part of these financial statements.

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

Note

2,676.1

2,147.8

(23.3)

(232.0)

–

940.0

2,652.8

2,855.8

(130.3)

1,777.7

15.6

11.7

2,538.1

4,645.2

(1,381.3)

(1,321.1)

239.9

320.9

(1,141.4)

(1,000.2)

(706.7)

(2,116.6)

(332.0)

73.5

–

(940.0)

(1,038.7)

(2,983.1)

(0.8)

(48.6)

(193.2)

(136.8)

(1.8)

(44.5)

(219.9)

(159.0)

(2,559.5)

(4,408.5)

(21.4)

5.6

(15.8)

236.7

(44.2)

192.5

7, 14

–

(1.1)

(0.6)

(1.7)

(16.4)

190.8

(15.0)

(0.8)

(15.8)

(15.6)

(0.8)

(16.4)

(3.42)

193.6

(1.1)

192.5

191.9

(1.1)

190.8

16.06

15.89

123

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021

Year ended
31 December 2021

Note

Share
capital
£m

Share
premium
£m

Reorganisation
reserve
£m

Merger
reserve
£m

Revaluation
reserve
£m

At 1 January 2021

Loss for the year

Other comprehensive
loss for the year, net of
income tax

Total comprehensive
loss for the year

Contributions and
distributions

Shares issued

Tier 1 notes issued
(net of costs)

Tier 1 notes
redeemed

Dividends

Interest paid on Tier 1
notes (net of tax)

Share-based
payments

Total contributions
and distributions

Changes in
ownership interest

Acquisition of
non-controlling
interest

Total changes in
ownership interests

103.8

94.5

348.4

597.1

–

0.1

–

0.1

–

3.3

–

(0.5)

–

Shares
held
by trusts
£m

Accumulated
profit1
£m

Total
shareholders’
equity
£m

Tier 1
notes
£m

Non-
controlling
interest
£m

Total
£m

(5.4)

1,056.6

2,198.3

294.0

(1.9) 2,490.4

–

1.1

–

(15.0)

(0.1)

(0.6)

(15.1)

(15.6)

–

(47.0)

–

0.2

–

322.4

(47.0)

(294.0)

(20.4)

3.7

4.8

(63.7)

(62.4)

28.4

–

(0.8)

(15.8)

–

(0.6)

(0.8)

(16.4)

–

0.2

322.4

(341.0)

–

(20.4)

4.8

(34.0)

(0.8)

–

0.8

–

At 31 December 2021

103.9

94.6

348.4

597.1

2.8

(4.3)

977.0

2,119.5

322.4

(1.9) 2,440.0

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
profit1
£m

Total
shareholders’
equity
£m

Tier 1
notes
£m

Non-
controlling
interest
£m

Total
£m

At 1 January 2020

103.5

94.5

348.4

597.1

4.4

(6.0)

885.9

2,027.8

294.0

(0.8) 2,321.0

Profit/(loss) for the
year

Other comprehensive
loss for the year, net of
income tax

Total comprehensive
income/(loss) for the
year

Contributions and
distributions

Shares issued

Dividends

Interest paid on Tier 1
notes

Share-based
payments

Total contributions
and distributions

–

0.3

–

0.3

–

(1.1)

–

At 31 December 2020

103.8

94.5

348.4

597.1

3.3

1 Includes currency translation reserve.

The notes are an integral part of these financial statements.

124

–

0.6

(5.4)

193.6

(0.6)

(1.7)

193.0

191.9

–

(0.1)

0.3

(0.1)

(28.1)

5.9

6.5

(22.3)

(21.4)

–

(1.1)

192.5

–

(1.7)

(1.1)

190.8

–

0.3

(0.1)

(28.1)

6.5

(21.4)

1,056.6

2,198.3

294.0

(1.9) 2,490.4

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021

Assets

Intangible assets

Property, plant and equipment

Investment property

Financial investments

Reinsurance assets

Deferred tax assets

Current tax assets

Prepayments and accrued income

Insurance and other receivables

Cash available on demand

Assets classified as held for sale

Total assets

Equity

Share capital

Share premium

Reorganisation reserve

Merger reserve

Revaluation reserve

Shares held by trusts

Accumulated profit

Total equity attributable to owners of Just Group plc

Tier 1 notes

Non-controlling interest

Total equity

Liabilities

Insurance liabilities

Reinsurance liabilities

Investment contract liabilities

Loans and borrowings

Lease liabilities

Other financial liabilities

Deferred tax liabilities

Other provisions

Accruals and deferred income

Insurance and other payables

Total liabilities

Total equity and liabilities

The notes are an integral part of these financial statements.

The financial statements were approved by the Board of Directors on 9 March 2022 and were signed on its behalf by:

Andy Parsons
Director

31 December
2021
£m

31 December
2020
£m

Note

119.7

14.2

69.6

133.5

20.5

–

24,681.7

23,269.8

2,808.2

3,132.6

–

30.2

75.6

35.4

11.5

2.9

74.3

32.0

510.2

1,496.3

3.1

–

28,347.9

28,173.4

103.9

94.6

348.4

597.1

2.8

(4.3)

103.8

94.5

348.4

597.1

3.3

(5.4)

977.0

1,056.6

2,119.5

2,198.3

322.4

294.0

(1.9)

2,440.0

2,490.4

21,812.9

21,118.4

274.7

33.6

774.3

3.9

267.1

42.8

773.5

6.8

2,865.6

3,305.1

5.3

1.2

43.1

93.3

22.8

1.0

53.9

91.6

25,907.9

25,683.0

28,347.9

28,173.4

125

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2021

Cash flows from operating activities

(Loss)/profit before tax

Property revaluation loss through profit and loss

Depreciation of property, plant and equipment

Impairment of property, plant and equipment

Amortisation of intangible assets

Impairment of intangible assets

Share-based payments

Interest income

Interest expense

Realised and unrealised gains on financial investments

Decrease in reinsurance assets

Increase in prepayments and accrued income

Increase in insurance and other receivables

Increase in insurance liabilities

Decrease in investment contract liabilities

Decrease in deposits received from reinsurers

Decrease/(increase) in accruals and deferred income

Increase in insurance and other payables

Decrease in other creditors

Interest received

Interest paid

Taxation paid

Net cash (outflow)/inflow from operating activities

Cash flows from investing activities

Additions to internally generated intangible assets

Acquisition of property and equipment

Acquisition of subsidiaries

Acquisition of non-controlling interest

Net cash outflow from investing activities

Cash flows from financing activities

Issue of ordinary share capital (net of costs)

Proceeds from issue of Tier 1 notes (net of costs)

Redemption of Tier 1 notes (including costs)

Increase in borrowings (net of costs)

Dividends paid

Coupon paid on Tier 1 notes

Interest paid on borrowings

Payment of lease liabilities – principal

Payment of lease liabilities – interest

Net cash (outflow)/inflow from financing activities

Net (decrease)/increase in cash and cash equivalents

Cash and cash equivalents at 1 January

Cash and cash equivalents at 31 December

Cash available on demand

Units in liquidity funds

Cash and cash equivalents at 31 December

The notes are an integral part of these financial statements.

126

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

Note

(21.4)

236.7

–

4.2

0.3

20.4

–

4.8

1.2

3.9

–

19.9

1.1

6.5

(572.1)

136.8

(631.7)

159.0

(1,103.8)

(1,039.7)

332.0

866.5

(1.3)

(3.8)

(3.7)

(6.1)

694.5

2,114.7

(9.2)

(270.3)

(10.8)

1.7

(60.4)

337.8

(78.7)

(12.7)

(11.2)

(775.3)

3.3

19.0

(162.7)

314.5

(107.7)

(60.6)

(612.0)

947.6

(6.6)

(0.7)

(70.6)

–

(0.1)

(2.3)

–

(77.9)

(2.4)

0.2

321.8

(350.6)

–

(25.2)

(56.7)

(3.6)

(0.1)

(114.2)

(804.1)

0.3

–

110.6

(0.1)

(28.1)

(49.8)

(4.1)

(0.2)

28.6

973.8

2,624.8

1,651.0

1,820.7

2,624.8

510.2

1,496.3

1,310.5

1,128.5

1,820.7

2,624.8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 SIGNIFICANT ACCOUNTING POLICIES
General information
Just Group plc (the “Company”) is a public company limited by shares, incorporated and domiciled in England and Wales. The Company’s registered
office is Enterprise House, Bancroft Road, Reigate, Surrey, RH2 7RP.

1.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with the Companies Act 2006, including application of international
accounting standards and other disclosure requirements, International Financial Reporting Standards (“IFRS”) as adopted by the UK Endorsement Board,
and IFRS adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The change in basis of preparation to UK adopted IFRS is
required by UK company law for the purposes of financial reporting as a result of the UK’s exit from the EU on 31 January 2020 and the cessation of the
transition period on 31 December 2020. This change does not constitute a change in accounting policy but a change in framework which is required to
ground the use of IFRS in company law. There is no impact on recognition, measurement or disclosure between the two frameworks in the period
reported.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings,
and financial assets and financial liabilities (including derivative instruments and investment contract liabilities) at fair value. Values are expressed to the
nearest £0.1m.

i) Going concern
A detailed going concern assessment has been undertaken and having completed this assessment, 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.

This assessment includes the consideration of the Group’s business plan approved by the Board; steps taken by the Group over the last three years to
improve capital efficiency; the projected liquidity position of the Company and the Group; on-going impacts of COVID-19; current financing
arrangements and contingent liabilities; and a range of forecast scenarios with differing levels of new business and associated additional capital
requirements to write anticipated levels of new business.

The Group has a robust liquidity framework designed to withstand 1-in-200 year stress events. The Group liquid resources includes an undrawn revolving
credit facility of up to £200m for general corporate and working capital purposes. The borrowing facility is subject to covenants that are measured
biannually in June and December, being the ratio of consolidated net debt to the sum of net assets and consolidated net debt not being greater than
45%. The ratio on 31 December 2020 was 17.5%. The facility is expected to be renewed in June 2022 for a further five years. The Group’s business plan
indicates that liquidity headroom will be maintained above the Group’s borrowing facilities and financial covenants will be met throughout the period.

The Group and its regulated insurance subsidiaries are 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 overriding objective
of the Solvency II capital framework is to ensure there is sufficient capital within the insurance company to protect policyholders and meet their
payments when due. They 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, over the next year time horizon, 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.

The resilience of the solvency capital position has been tested under a range of adverse scenarios, which considers the possible impacts on the Group’s
business, including stresses to UK residential property prices, house price inflation, the credit quality of assets, mortality, 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%. Eligible own funds exceeded the minimum capital requirements in all stressed scenarios described above.

The Group has several mitigating management actions that can be taken to manage stress, which are considered by the Board. Some of these actions
are deemed to be more fully within the Group’s control.

Furthermore the Directors note that in a scenario where the Group ceases to write new business the going concern basis would continue to be applicable
while the Group continued to service in-force policies.

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. The
Directors also considered the findings of the work performed to support the long-term viability statement of the Group on page 59 of this Annual Report
and Accounts, which is undertaken together with the going concern assessment. The Board and Audit Committee considered going concern over 12
months as well as the consistency with the longer-term viability of the Group, reviewing this over five years. Accordingly, the going concern basis has
been adopted in the valuation of assets and liabilities.

ii) New accounting standards and new significant accounting policies
The Group has applied UK-adopted IFRS from 1 January 2021. The accounting policies adopted in the preparation of these consolidated financial
statements are consistent with those followed in the preparation of the Group’s consolidated financial statements for the year ended 31 December 2020.

The following new accounting standards and amendments to existing accounting standards are effective from 1 January 2021 but do not have a
significant impact on the Group’s 2021 financial statements.

127

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS
JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

1 SIGNIFICANT ACCOUNTING POLICIES continued
1.1 Basis of preparation continued
• Amendments to IFRS 9, Financial instruments; IAS 39, Financial instruments: recognition and measurement; IFRS 7, Financial instruments: disclosures;

IFRS 4, Insurance contracts; and IFRS 16, Leases – Interest Rate Benchmark Rate (IBOR) Reform Phase 2.

During the year the London Inter Bank Offered Rate (“LIBOR”) interest rate benchmark was replaced with the Sterling Overnight Index Average
(“SONIA”). In order to avoid unintended accounting consequences from IBOR reform, the IASB made amendments to accounting standards. The
amendments address issues that arise during the reform of an interest rate benchmark rate, including the replacement of one benchmark with an
alternative one. The amendments provide relief when changing the basis for determining contractual cash flows for financial assets and liabilities
(including lease liabilities), and provide hedge accounting reliefs that will allow most hedge relationships that are directly affected by IBOR reform to
continue.

The Group does not have financial assets or liabilities or leases that are based on an interest rate benchmark, and the Group does not use hedge
accounting. Therefore there is no impact on profit and loss or equity from these amendments.

The following new accounting standards and amendments to existing accounting standards in issue and significant to the Group have not yet been
adopted by the Group.

• IFRS 9, Financial instruments (effective 1 January 2018).

Amendments to IFRS 4, Insurance Contracts, published in September 2016 and adopted by the Group with effect from 1 January 2018, permits the
deferral of the application of IFRS 9 until accounting periods commencing on 1 January 2023 for eligible insurers. Just continues to defer IFRS 9 as
explained in note 1.17.

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 2021 would be unchanged at £24,681.7m.
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 17, Insurance contracts (effective 1 January 2023, not yet endorsed).

IFRS 17 was issued in May 2017 with an effective date of 1 January 2021. In June 2020, the IASB issued an amended standard which delayed the
effective date to 1 January 2023. The amendments issued in June 2020 aimed to assist entities implementing the standard. The transition
requirements of IFRS 9 prescribe that comparative periods are not restated for certain accounting changes introduced by IFRS 9. This can result in
accounting mismatches with restated IFRS 17 comparative information. As a result the IASB published an amendment to IFRS 17 in December 2021
permitting an entity to present financial asset comparative information as if the classification and measurement requirements of IFRS 9 had been
applied to that financial asset. Once effective, IFRS 17 will replace IFRS 4 that was issued in 2005. The final standard remains subject to endorsement by
the UK Endorsement Board which has sought views of accounts preparers and users in a final consultation process that closed in February 2022. The
Group has participated actively in industry consultations to date, with implementation matters continuing to be debated, these are expected to
conclude in time for the 1 January 2023 effective date.

IFRS 17 provides a comprehensive revision of the accounting for insurance contracts including their valuation, income statement presentation and
disclosure. The main impact of the standard applicable to annuities is the deferment of premium revenues and expenses on the balance sheet within a
“contractual service margin” (“CSM”) account instead of recognition at point of sale under IFRS 4. The CSM is then recognised in the profit or loss
account over the life of contracts. The presentation of insurance revenue in the statement of comprehensive income will be based on the concept of
insurance services provided in the period rather than the value of premiums as presented under IFRS 4. The standard also requires an explicit
allowance for non-financial risk instead of the prudence margins held on an implicit basis under IFRS 4.

Given the long-term nature of the Group’s business, the impact of IFRS 17 on the measurement and presentation of insurance contracts in the Group’s
statutory reporting is expected to be significant. The transition requirements of IFRS 17 include three approaches: retrospective, modified retrospective
and fair value approach. Although the impact is not known or reasonably estimatable, there is expected to be a reduction in equity on transition as a
result of the deferment of premium revenues and expenses on the balance sheet within the CSM.

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 requirements of the new standard are complex and will require fundamental changes to accounts reporting systems and processes as
well as the application of significant judgement. A steering committee chaired by the Group Chief Financial Officer provides oversight and strategic
direction, a technical committee provides governance over the technical interpretation and accounting policies selected, with delivery of the project
managed within the Group’s broader Finance Transformation Programme. During 2021 the Group has made significant progress.

The following amendments to existing standards in issue have not been adopted by the Group and are not expected to have a significant impact on the
financial statements. The amendments include clarifications that are not inconsistent with the Group’s existing accounting treatment and other
insignificant changes.

• IAS 16, Property, plant and equipment – Amendments in respect of proceeds before intended use (effective 1 January 2022, not yet endorsed);

• IFRS 3, Business combinations – Amendments to references to the conceptual framework for financial reporting (effective 1 January 2022, not yet

endorsed);

• IAS 37, Provisions, contingent liabilities and contingent assets – Amendments in respect of costs of fulfilling a contract (effective 1 January 2022, not

yet endorsed);

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1 SIGNIFICANT ACCOUNTING POLICIES continued
1.1 Basis of preparation continued
• IAS 1, Presentation of financial statements – Amendments in respect of the classification of liabilities as current or non-current and in respect of

disclosures of accounting policies (effective 1 January 2023, not yet endorsed);

• IAS 8, Accounting policies – Amendments in respect of the definition of accounting estimates (effective 1 January 2023, not yet endorsed);

• IAS 12, Income taxes – Amendments in respect of deferred tax related to assets and liabilities arising from a single transaction (effective 1 January

2023, not yet endorsed).

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 affect 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.

1.17

Financial investments

1.17

Measurement of fair value of loans secured by
residential mortgages, including measurement
of the no-negative equity guarantees

A contract is classified as an insurance contract if it transfers significant
insurance risk from the policyholder to the insurer, or from the cedent to
the reinsurer in the case of a reinsurance contract. 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.

Any contracts that do not include the transfer of significant insurance risk
are classified as investment contracts.

Classification of financial investments and determining whether an active
market exists for a financial investment.

Financial investments classified at fair value through profit or loss include
those that are designated as such by management at initial recognition
as they are managed on a fair value basis.

Management’s assessment of the market activity of a financial
investment determines the fair value hierarchy of the valuation method
used to determine the fair value of the financial investment.

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.

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 differ significantly from those estimates. Where relevant the impact of COVID-19 has been considered and
detail included in the relevant note disclosures.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

1 SIGNIFICANT ACCOUNTING POLICIES continued
1.2 Significant accounting policies and the use of judgements, estimates and assumptions continued

The table below sets out those items the Group considers susceptible to changes in critical estimates and assumptions. Management applies judgement
in making estimates and assumptions that are applied to the balances described in the table below.

Accounting policy and notes

Item involving estimates and assumptions

Critical estimates and assumptions

1.17, 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.

1.18, 17(a) and (d), 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.

1.21, 23(b)

Measurement of insurance liabilities arising
from writing Retirement Income insurance

The key assumptions used in the valuation include discount rates, 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.

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.

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 affect 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.

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 and amortisation costs for the Group’s operating
segments.

Material product information is analysed by product line and includes DB, GIfL, Care Plans, Protection, LTM and Drawdown products.

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1 SIGNIFICANT ACCOUNTING POLICIES continued
1.4 Segments continued
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 companies

(this is referred to as the insurance segment in note 6, 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 differences 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. DB, GIfL, Care Plan and Protection policies currently written by the Group are
classified as insurance contracts.

Any contracts not considered to be insurance contracts under IFRS are classified as investment contracts. Capped Drawdown pension business is
classified as investment contracts as there is no transfer of longevity risk due to the premium protection option within these fixed term contracts.
Capped Drawdown contracts are no longer marketed by the Group.

1.7 Premium revenue
Premium revenue in respect of individual GIfL contracts is accounted for 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 effective. If a timing difference occurs between the date from which the policy is effective 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 accounted for when the insurance contract commences.

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.

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 difference between the proceeds received net
of transaction costs, and the original cost.

Unrealised gains and losses arising on financial assets and liabilities represent the difference 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.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

1 SIGNIFICANT ACCOUNTING POLICIES continued
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 commission on GIfL contracts,
commission on LTM advances and other income which includes investment management fees, administration fees and software licensing fees.

Fee income excludes facilitated adviser charges collected on behalf of advisers.

1.10 Claims paid
Claims paid includes policyholder benefits and claims handling expenses. 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 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. Issue costs are added to the loan amount and interest
expense is calculated using the effective interest rate method.

1.13 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.

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 of each scheme, based on the Group’s estimate of the equity instruments
that will eventually vest, is expensed in the Consolidated statement of comprehensive income on a straight-line basis over the vesting period, with a
corresponding credit to equity. 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.

1.14 Intangible assets
Intangible assets consist of goodwill, which is deemed to have an indefinite useful life, Present Value of In-Force business (“PVIF”), acquired and
internally generated intellectual property (including PrognoSys™), and purchased and internally developed software, 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 assessed for impairment when circumstances or events indicate there
may be uncertainty over the carrying value. 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.

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1 SIGNIFICANT ACCOUNTING POLICIES continued
1.14 Intangible assets continued
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

Intellectual property

12 – 15 years

Estimated replacement cost

The useful economic lives of intangible assets recognised by the Group other than those acquired in a business combination are as follows:

Intangible asset

PrognoSys™

Software

Estimated useful economic life

12 years

3 years

1.15 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 sufficient frequency to ensure that the fair value of the revalued asset does not differ 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 offsets 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

Furniture and fittings

3 – 4 years

2 – 10 years

1.16 Investment property
Investment property includes property that is held to earn rentals or for capital appreciation or both. Investment property is initially recognised at cost,
including any directly attributable transaction costs and subsequently measured at fair value. Fair value is the price that would be received to sell a
property in an orderly transaction between market participants at the measurement date. The measurement of fair value reflects, among other things,
rental income from current leases and other assumptions that market participants would use when pricing investment property under current market
conditions. Gains and losses arising from the change in fair value are recognised as income or an expense in the Consolidated statement of
comprehensive income. Where investment property is leased out by the Group, rental income from these operating leases is recognised as income in the
Consolidated statement of comprehensive income on a straight-line basis over the period of the lease.

1.17 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.

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.

Recognition and derecognition
Regular-way 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, “LTMs”, are recognised when cash is advanced to borrowers.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

1 SIGNIFICANT ACCOUNTING POLICIES continued
1.17 Financial investments continued
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. Cash collateral received that is not legally segregated from the Group is recognised as an asset in the Consolidated statement of financial
position with a corresponding liability for the repayment in other financial liabilities. Non-cash collateral received is not recognised in the Consolidated
statement of financial position unless it qualifies for derecognition by the transferor. Certain reinsurance arrangements involve premiums being
deposited back with the Group. The recognition of such collateral is assessed based on the terms of the arrangement, including consideration of the
Group’s exposure to the economic benefits. See note 28 for further details.

Non-cash collateral pledged continues to be recognised in the Consolidated statement of financial position within the appropriate asset classification
when the Group continues to control the collateral and receives the economic benefit.

The Group’s policy is to derecognise financial investments when our rights when the contractual cash flows expire or 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 as described
below.

Determining the fair value of financial investments when the markets are not active
The Group holds certain 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.

Fixed maturity securities, in line with market practice, are generally valued using an independent pricing service. These valuations are determined using
independent external quotations from multiple sources and are subject to a number of monitoring controls, such as monthly price variances, stale price
reviews and variance analysis. Pricing services, where available, are used to obtain the third party broker quotes. When prices are not available from
pricing services, prices are sourced from external asset managers or internal models and treated as level 3 under the fair value hierarchy. A third party
fixed income liquidity provider is used to determine whether there is an active market for a particular security.

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, discounted cash flow analysis and option pricing models. 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 three-level hierarchy described in note 17 on the basis of the lowest level of inputs
that are significant to the fair value measurement of the financial investment concerned.

Deferral of IFRS 9
IFRS 4, Insurance contracts, permits the deferral of the application of IFRS 9 until accounting periods commencing on 1 January 2023 to align with the
effective date of IFRS 17, the replacement insurance contracts standard. The option to defer the application of IFRS 9, which the Group has continued to
adopt for 2021, 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 the 90% threshold required for the carrying amount of the Group’s total
liabilities. In the statement of financial position at this date, the Group’s total liabilities were £22,283.9m and liabilities connected with insurance were
£21,497.7m, consisting of 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, giving a predominancy ratio
of 96%.

1.18 Reinsurance
Reinsurance assets and liabilities
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. Reinsurance longevity swap arrangements are classified as either reinsurance assets or reinsurance
liabilities based on the net position on the swap at the reporting date.

Financial liabilities
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 remeasured at fair value at each
balance sheet date. Fair value is determined as the amount repayable discounted from the first date that the amount is required to be paid. The resulting
gain or loss is recognised in the Consolidated statement of comprehensive income.

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1 SIGNIFICANT ACCOUNTING POLICIES continued
1.18 Reinsurance continued
Amounts receivable/payable
Where reinsurance contracts entered into by the Group 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. Amounts due on quota share reinsurance contracts are included within Insurance and other payables.

1.19 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.

1.20 Equity
The difference 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 difference 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.

Loan notes are classified as either debt or equity based on the contractual terms of the instruments. Loan notes have been classified as equity when
they do not meet the definition of a liability because they are perpetual with no fixed redemption or maturity date, they are only repayable on
liquidation, conversion is only triggered under certain circumstances of non-compliance, and the notes bear interest which is non-cumulative and
cancellable at the discretion of the Company.

1.21 Insurance liabilities
Measurement
Long-term insurance liabilities arise from the Group writing Retirement Income contracts, including Guaranteed Income for Life Solutions, 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 effect 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, and expense level and inflation assumptions. 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 sufficient to cover the current estimate of future cash
flows. Any deficiency is immediately charged to the Consolidated statement of comprehensive income.

1.22 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.

1.23 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 effective rate of interest required to recognise the discounted estimated cash flows to maturity.

1.24 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 profit 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 differences
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. The principal temporary differences
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. The deferred tax assets and liabilities are measured
using substantively enacted rates based on the timings of when they are expected to reverse.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences
can be utilised.

135

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

2 NET INVESTMENT (EXPENSE)/INCOME

Interest income:

Assets at fair value through profit or loss

Movement in fair value:

Financial assets and liabilities designated on initial recognition at fair value through profit or loss

Derivative financial instruments (note 28)

Total net investment (expense)/income

3 ACQUISITION COSTS

Commission

Other acquisition expenses

Total acquisition costs

4 OTHER OPERATING EXPENSES

Personnel costs (note 9)

Investment expenses and charges

Depreciation of property, plant and equipment

Amortisation of intangible assets

Impairment of property, plant and equipment

Impairment of intangible assets

Other costs

Total other operating expenses

Other costs include reassurance management fees, professional fees, IT and marketing costs.

Reconciliation of Other operating expenses to Management expenses

Total other operating expenses

Investment expenses and charges

Reassurance management fees

Amortisation of acquired intangible assets

Other costs

Total management expenses

136

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

572.1

631.7

(832.1)

129.7

818.3

327.7

(130.3)

1,777.7

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

17.2

31.4

48.6

14.9

29.6

44.5

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

101.5

107.5

16.8

4.2

20.4

0.3

–

50.0

193.2

17.5

3.9

19.9

–

1.1

70.0

219.9

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

193.2

219.9

(16.8)

(8.4)

(18.0)

(2.6)

(17.5)

(22.2)

(18.0)

(2.9)

147.4

159.3

4 OTHER OPERATING EXPENSES continued
During the year the following services were provided by the Group’s auditor at costs as detailed below:

Fees payable for the audit of the Parent Company and consolidated accounts

Fees payable for other services:

The audit of the Company’s subsidiaries pursuant to legislation

Audit-related assurance services

Other assurance services

Other non-audit services not covered above

Auditor remuneration

Fees payable to other audit firms:

The audit of the Company’s subsidiaries pursuant to legislation

Corporate finance services

Total

Year ended
31 December
2021
£000

Year ended
31 December
2020
£000

550

540

1,876

656

–

1,618

842

3,147

3,066

–

146

3,147

3,272

Fees payable for the audit of the Company’s subsidiaries pursuant to legislation includes fees of £455,000 for audit activities related to the
implementation of IFRS 17. Audit-related assurance services mainly include fees relating to the audit of the Group’s Solvency II regulatory returns and
review procedures in relation to the Group’s interim results. The fees payable to other audit firms during 2020 noted above includes fees paid to
KPMG in relation to the 2020 audit of the Group’s South African subsidiaries and fees paid to KPMG in relation to corporate finance services carried out
during 2019.

5 FINANCE COSTS

Interest payable on deposits received from reinsurers

Interest payable on subordinated debt

Other interest payable

Total finance costs

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

78.7

55.6

2.5

136.8

107.7

47.3

4.0

159.0

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.

6 SEGMENTAL REPORTING
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 and Protection − and invests the premiums received from these contracts in debt and other fixed income 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 sufficiently
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.

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 effects 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 long-term nature of the products. 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 different 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 the financial instruments assumed to be newly purchased to back that business after
allowances for expected movements in liabilities and deduction of 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, and corporate bond defaults.

137

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

6 SEGMENTAL REPORTING continued
Adjusted operating profit excludes the impairment and amortisation of goodwill and other intangible assets arising on consolidation, non-recurring and
project expenditure and implementation costs for cost saving initiatives, 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, including on surplus assets and on assets assumed
to back new business, and gains and losses on the revaluation of land and buildings, are also disclosed outside adjusted operating profit.

Segmental reporting and reconciliation to financial information

Year ended 31 December 2021

Year ended 31 December 2020

New business operating profit

In-force operating profit

Other Group companies’ operating results

Development expenditure

Reinsurance and financing costs

Underlying operating profit

Operating experience and assumption changes

Adjusted operating profit/(loss) before tax

Non-recurring and project expenditure

Implementation of cost saving initiatives

Investment and economic profit/(loss)

Interest adjustment to reflect IFRS accounting for Tier 1 notes as equity

Profit/(loss) before amortisation costs and tax

Amortisation of acquired intangibles

Profit/(loss) before tax

Insurance
£m

224.7

87.3

Other
£m

–

2.7

–

(15.1)

(4.2)

(89.1)

218.7

28.0

246.7

(14.8)

–

(248.6)

28.1

11.4

–

11.4

(2.6)

6.0

(9.0)

–

(9.0)

(0.2)

–

(2.6)

(3.0)

(14.8)

(18.0)

(32.8)

Total
£m

Insurance
£m

224.7

90.0

(15.1)

(6.8)

(83.1)

209.7

28.0

237.7

(15.0)

–

(251.2)

25.1

(3.4)

(18.0)

(21.4)

199.2

96.8

–

(5.9)

(79.5)

210.6

46.2

256.8

(7.1)

(7.8)

9.4

28.1

279.4

–

279.4

Other
£m

–

1.0

(17.1)

(1.4)

–

(17.5)

–

(17.5)

(5.6)

(0.7)

(0.9)

–

(24.7)

(18.0)

(42.7)

Total
£m

199.2

97.8

(17.1)

(7.3)

(79.5)

193.1

46.2

239.3

(12.7)

(8.5)

8.5

28.1

254.7

(18.0)

236.7

Additional analysis of segmental profit or loss
Revenue (other than fee and commission income presented in the disaggregation of fee and commission income below), depreciation of property, plant
and equipment, and amortisation of intangible assets (other than amortisation of acquired intangibles presented in the table above) are materially all
allocated to the insurance segment. The interest adjustment in respect of Tier 1 notes in the other segment represents the difference between interest
charged to the insurance segment in respect of Tier 1 notes and interest incurred by the Group in respect of Tier 1 notes.

Product information analysis
Additional analysis relating to the Group’s products is presented below. The Group’s gross premiums written, as shown in the Consolidated statement of
comprehensive income, is analysed by product below:

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

1,934.6

1,507.9

688.2

585.9

51.1

2.2

51.5

2.5

2,676.1

2,147.8

Defined Benefit De-risking Solutions (“DB”)

Guaranteed Income for Life contracts (“GIfL”)

Care Plans (“CP”)

Protection

Gross premiums written

138

6 SEGMENTAL REPORTING continued
Drawdown and Lifetime Mortgage (“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:

LTM loans advanced

Drawdown deposits and other investment products

Reconciliation of gross premiums written to Retirement Income sales

Gross premiums written

Protection sales not included in Retirement Income sales

Retirement Income sales

Disaggregation of fee and commission income

Product/service

GIfL commission

LTM commission and advice fees

Other

Timing of revenue recognition

Products transferred at point in time

Products and services transferred over time

Revenue from contracts with customers

All revenue from contracts with customers is from the UK.

7 INCOME TAX

Current taxation

Current year

Adjustments in respect of prior periods

Total current tax

Deferred taxation

Origination and reversal of temporary differences

Adjustments in respect of prior periods

Rate change

Total deferred tax

Total income tax recognised in profit or loss

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

528.2

1.1

511.7

1.0

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

2,676.1

2,147.8

(2.2)

(2.5)

2,673.9

2,145.3

Year ended 31 December 2021

Year ended 31 December 2020

Insurance
£m

Other
£m

Total
£m

Insurance
£m

Other
£m

Total
£m

–

3.9

–

3.9

6.1

2.0

3.6

6.1

2.0

7.5

11.7

15.6

11.4

0.3

11.7

15.3

0.3

15.6

–

2.3

–

2.3

4.5

2.1

2.8

9.4

9.0

0.4

9.4

4.5

2.1

5.1

11.7

11.3

0.4

11.7

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

0.8

(0.4)

0.4

(5.7)

–

(0.3)

(6.0)

(5.6)

46.6

1.0

47.6

(4.0)

(0.9)

1.5

(3.4)

44.2

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 was
substantively enacted on 24 May 2021, and the impact of the rate change is that the net deferred tax balances carried forward increased by £0.3m.

The deferred tax assets and liabilities at 31 December 2021 have been calculated based on the rate at which they are expected to reverse.

139

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

7 INCOME TAX continued
Reconciliation of total income tax to the applicable tax rate

(Loss)/profit on ordinary activities before tax

Income tax at 19% (2020: 19%)

Effects of:

Expenses not deductible for tax purposes

Rate change

Unrecognised deferred tax asset

Adjustments in respect of prior periods

Relief on Tier 1 interest included in equity1

Other

Total income tax recognised in profit or loss

1 Income tax relief on Tier 1 interest for the year ended 31 December 2021 is recognised directly in equity rather than in profit or loss (see below).

Income tax recognised in other comprehensive income

Deferred taxation

Revaluation of land and buildings

Total deferred tax

Total income tax recognised in other comprehensive income

Income tax recognised directly in equity

Current taxation

Relief on Tier 1 interest

Relief on cost of redeeming RT1

Other

Total current tax

Total income tax recognised directly in equity

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

(21.4)

(4.1)

236.7

45.0

1.0

(0.3)

0.1

(0.4)

–

(1.9)

(5.6)

2.0

1.5

1.3

0.1

(5.3)

(0.4)

44.2

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

–

(0.1)

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

(4.8)

(9.6)

(0.6)

(15.0)

–

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 differences arising between the two bases, which represent the differences 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 differences 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 2021 includes profits chargeable to corporation tax arising from amortisation of transitional balances of £2.5m
(2020: £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 differ from the estimated position.

8 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 £3.9m (2020: £3.6m).
Employer contributions to pensions for Executive Directors for qualifying periods were £nil (2020: £nil). The aggregate net value of share awards granted
to the Directors in the year was £2.0m (2020: £2.2m). 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 £0.6m (2020: two Directors exercised options
with an aggregate gain of £0.3m).

140

9 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:

Directors

Senior management

Staff

Average number of staff

The aggregate personnel costs were as follows:

Wages and salaries

Social security costs

Other pension costs

Share-based payment expense

Total personnel costs

Year ended
31 December
2021
Number

Year ended
31 December
2020
Number

123

944

119

949

1,076

1,077

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

82.3

9.9

4.3

5.0

87.2

9.2

4.3

6.8

101.5

107.5

10 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 (2020: £4.3m).

Employee share plans
The Group operates a number of employee share option plans. Details of those plans are as follows:

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.

The number and weighted-average remaining contractual life of outstanding options under the LTIP are as follows:

Outstanding at 1 January

Granted

Forfeited

Exercised

Expired

Outstanding at 31 December

Exercisable at 31 December

Weighted-average share price at exercise (£)

Weighted-average remaining contractual life (years)

The exercise price for options granted under the LTIP is nil.

Year ended
31 December
2021
Number of options

Year ended
31 December
2020
Number of options

19,264,506

15,196,343

6,795,784

8,951,149

(868,418)

(941,906)

(1,351,472)

(2,261,267)

(1,437,275)

(1,679,813)

22,403,125

19,264,506

3,853,927

3,119,248

1.02

1.19

0.57

1.36

141

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

10 EMPLOYEE BENEFITS continued
During the year to 31 December 2021, awards of LTIPs were made on 24 March 2021 and 17 September 2021. 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

Option pricing models used

Share price at grant date

Exercise price

Expected volatility – TSR performance

Expected volatility – holding period

Option life

Dividends

Risk-free interest rate – TSR performance

Risk-free interest rate – holding period

Black-Scholes, Stochastic, Finnerty

£0.85

£0.94

Nil

60.80%

61.54%

3 years + 2 year holding period

Nil

0.15%

0.34%

A Black-Scholes option pricing model is used where vesting is related to an earnings per share target or a solvency capital generation 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.

For awards subject to a TSR performance condition, expected volatility has been calculated using historic volatility of the Company and each company in
the TSR comparator group, where available, over the period of time commensurate with the remainder of the performance period immediately prior to
the date of grant. For awards with a holding period condition, expected volatility has been calculated using historic volatility of the Company over the
period of time commensurate with the holding period immediately prior to the date of grant. Volatility of the market in 2020 due to COVID-19 has been
considered and it has been concluded that the Company’s share price was not materially affected and no adjustment has been made.

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:

Outstanding at 1 January

Granted

Forfeited

Exercised

Outstanding at 31 December

Exercisable at 31 December

Weighted-average share price at exercise (£)

Weighted-average remaining contractual life (years)

The exercise price for options granted under the DSBP is nil.

Year ended
31 December
2021
Number of
options

Year ended
31 December
2020
Number of
options

5,094,921

4,287,693

1,432,610

1,882,472

–

(15,004)

(739,528) (1,060,240)

5,788,003 5,094,921

1,683,566

1,716,596

0.93

0.54

1.10

During the year to 31 December 2021, awards of DSBPs were made on 24 March 2021. 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

Option pricing model used

Share price at grant date

Exercise price

Expected volatility

Option life

Dividends

Risk-free interest rate

142

£0.94

Black-Scholes

£0.94

Nil

3 years

Nil

10 EMPLOYEE BENEFITS continued
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 2021

Year ended 31 December 2020

Outstanding at 1 January

Granted

Forfeited

Cancelled

Exercised

Expired

Outstanding at 31 December

Exercisable at 31 December

Weighted-average share price at exercise

Weighted-average remaining contractual life (years)

The range of exercise prices of options outstanding at the end of the year are as follows:

£0.38

£0.52

£0.74

£1.07

£1.18

Total

Number
of options

15,516,003

1,149,350

(1,081,602)

(363,145)

(408,488)

(32,565)

14,779,553

278,130

Weighted-
average
exercise
price
£

0.41

0.74

0.42

0.45

0.84

0.44

0.60

0.93

1.66

Number
of options

9,953,188

13,031,462

(603,970)

(6,609,575)

(46,892)

(208,210)

15,516,003

58,930

Weighted-
average
exercise
price
£

0.56

0.38

0.57

0.54

0.52

1.03

0.41

0.46

0.60

2.56

2021
Number of
options
outstanding

2020
Number of
options
outstanding

11,119,351

12,476,881

2,443,437

2,870,402

1,079,922

66,166

70,677

–

66,166

102,554

14,779,553

15,516,003

During the year to 31 December 2021, awards of SAYEs were made on 21 April 2021. 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

Option pricing model used

Share price at grant date

Exercise price

Expected volatility – 3 year scheme

Expected volatility – 5 year scheme

Option life

Dividends

Risk-free interest rate – 3 year scheme

Risk-free interest rate – 5 year scheme

Saving forfeit discounts

£0.53

Black-Scholes

£1.05

£0.74

56.62%

50.98%

3.36 or 5.36 years

Nil

0.17%

0.36%

Expected volatility has been calculated using historic volatility of the Company over the period of time commensurate with the expected term of the
awards immediately prior to the date of grant. Volatility of the market in 2020 due to COVID-19 has been considered and it has been concluded that the
Company’s share price was not materially affected and no adjustment has been made.

143

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

10 EMPLOYEE BENEFITS continued
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:

Equity-settled schemes

Total expense

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

5.0

6.8

11 EARNINGS PER SHARE
The calculation of basic and diluted earnings per share is based on dividing the profit or loss attributable to ordinary 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 2021

Year ended 31 December 2020

(Loss)/profit attributable to equity holders of Just Group plc

Coupon payments in respect of Tier 1 notes (net of tax)

Weighted-
average
number of
shares
million

–

Earnings per
share
pence

–

Earnings
£m

(15.0)

(20.4)

Weighted-
average
number of
shares
million

–

Earnings
£m

193.6

(28.1)

(Loss)/profit attributable to ordinary equity holders of Just Group plc (basic)

(35.4)

1,033.7

(3.42)

165.5

1,030.7

Effect of potentially dilutive share options1

–

11.1

Diluted

(35.4)

1,033.7

(3.42)

165.5

1,041.8

Earnings
per share
pence

–

16.06

(0.17)

15.89

1 The weighted-average number of share options for the year ended 31 December 2021 that could potentially dilute basic earnings per share in the future but are not included in diluted EPS because

they would be antidilutive was 21.9 million share options.

12 DIVIDENDS AND APPROPRIATIONS
Dividends and appropriations paid in the year were as follows:

Dividends paid on the vesting of employee share schemes

Total dividends paid

Coupon payments in respect of Tier 1 notes1

Total distributions to equity holders in the period

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

–

25.2

0.1

28.1

28.2

1 Coupon payments on Tier 1 notes are treated as an appropriation of retained profits and, accordingly, are accounted for when paid.

Subsequent to 31 December 2021, the Directors proposed a final dividend for 2021 of 1.0 pence per ordinary share (2020: nil), amounting to £10m (2020:
£nil) in total. Subject to approval by shareholders at the Company’s 2022 AGM, the final dividend will be paid on 17 May 2022 to shareholders on the
register of members at the close of business on 22 April 2022, and will be accounted for as an appropriation of retained earnings in year ending
31 December 2022.

144

13 INTANGIBLE ASSETS

Year ended 31 December 2021

Cost

At 1 January 2021

Additions

Disposals

Acquired intangible assets

Present
value of
in-force
business
£m

Goodwill
£m

Distribution
network
£m

Brand
£m

Intellectual
property
£m

Software
£m

Leases
£m

PrognoSys™
£m

Software
£m

Total
£m

34.9

200.0

–

26.6

–

5.6

–

(26.6)

(5.6)

At 31 December 2021

34.9

200.0

–

Amortisation and impairment

At 1 January 2021

Disposals

Charge for the year

At 31 December 2021

Net book value at 31 December 2021

Net book value at 31 December 2020

(0.8)

(107.6)

–

(17.8)

(0.8)

(125.4)

34.1

74.6

92.4

(26.6)

26.6

(5.6)

5.6

–

Acquired intangible assets

2.0

–

2.0

(0.6)

–

(0.1)

(0.7)

1.3

1.4

11.1

–

2.0

–

(11.1)

(2.0)

5.9

18.4

306.5

–

6.6

–

6.6

(45.3)

–

5.9

25.0

267.8

(11.1)

11.1

(2.0)

2.0

–

(2.6)

(16.1)

(173.0)

–

(0.5)

(3.1)

2.8

3.3

45.3

(2.0)

(20.4)

(18.1)

(148.1)

6.9

2.3

119.7

133.5

Present
value of
in-force
business
£m

Goodwill
£m

Distribution
network
£m

Brand
£m

Intellectual
property
£m

Software
£m

Leases
£m

PrognoSys™
£m

Software
£m

Total
£m

Year ended 31 December 2020

Cost

At 1 January 2020

Additions

At 31 December 2020

Amortisation and impairment

At 1 January 2020

Impairment

Charge for the year

34.9

200.0

–

34.9

200.0

26.6

–

26.6

5.6

–

5.6

(0.8)

(89.7)

(26.6)

(5.6)

–

(17.9)

–

2.0

–

2.0

(0.5)

–

(0.1)

(0.6)

1.4

1.5

11.1

–

11.1

2.0

–

2.0

5.9

–

5.9

18.3

306.4

0.1

18.4

306.5

(11.1)

(2.0)

(2.1)

(13.6)

(152.0)

–

(11.1)

(2.0)

–

(0.5)

(2.6)

3.3

3.8

(1.1)

(1.4)

(1.1)

(19.9)

(16.1)

(173.0)

2.3

4.7

133.5

154.4

At 31 December 2020

(0.8)

(107.6)

(26.6)

(5.6)

Net book value at 31 December 2020

Net book value at 31 December 2019

34.1

92.4

110.3

–

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 2021 represents £1.0m recognised on the 2018 acquisition of HUB Pension Consulting (Holdings) 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:

Period on which management approved forecasts are based

Discount rate (pre-tax)

2021

2020

5 years

10.5%

11.7%

The value-in-use of the insurance operating segment is considered by reference to the 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, including a temporary increase in mortality rates due to COVID-19. The discount rate was
determined using a weighted average cost of capital approach, with appropriate adjustments to reflect a market participant’s view. 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.

145

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

13 INTANGIBLE ASSETS continued
Any reasonably possible changes in assumptions will not cause the carrying value of the goodwill to exceed the recoverable amounts.

Present Value of In-Force business (“PVIF”) and other intangible assets with finite useful economic lives are tested for impairment when there is an
indication that the carrying value of the asset may be subject to an impairment.

The Group’s PVIF of £74.6m at 31 December 2021 represents the present value of future profits from the purchased in-force business of £60.6m
recognised on the 2016 acquisition of Partnership Assurance Group and £14.0m on the 2009 acquisition of Just Retirement (Holdings) Limited, the
holding company of Just Retirement Limited. The remaining useful economic lives of the Group’s PVIF ranges from between three to five years.
There are no indications of impairment of the carrying values of PVIF or other intangible assets with finite useful economic lives.

Freehold
land and
buildings
£m

Computer
equipment
£m

Furniture
and fittings
£m

Right-of-use
assets
£m

14.3

–

(3.5)

10.8

(0.1)

(0.3)

(0.5)

0.4

(0.5)

10.3

14.2

9.9

0.7

–

10.6

(7.2)

–

(1.4)

–

(8.6)

2.0

2.7

6.3

–

6.3

(5.9)

–

(0.2)

–

(6.1)

0.2

0.4

6.1

0.6

–

6.7

1.7

3.2

(2.9)

(16.1)

–

(2.1)

–

(0.3)

(4.2)

0.4

(5.0)

(20.2)

Freehold
land and
buildings
£m

Computer
equipment
£m

Furniture
and fittings
£m

Right-of-use
assets
£m

17.9

–

(3.6)

–

14.3

(0.7)

1.2

–

(0.6)

(0.1)

14.2

17.2

7.7

2.2

–

9.9

6.2

0.1

–

6.3

(6.2)

(5.7)

–

(1.0)

(7.2)

2.7

1.5

–

(0.2)

(5.9)

0.4

0.5

11.9

–

(5.8)

6.1

(4.3)

–

3.5

(2.1)

(2.9)

3.2

7.6

Total
£m

36.6

1.3

(3.5)

34.4

14.2

20.5

Total
£m

43.7

2.3

(3.6)

(5.8)

36.6

(16.9)

1.2

3.5

(3.9)

(16.1)

20.5

26.8

14 PROPERTY, PLANT AND EQUIPMENT

Year ended 31 December 2021

Cost or valuation

At 1 January 2021

Acquired during the year

Transfer to held for sale

At 31 December 2021

Depreciation and impairment

At 1 January 2021

Impairment

Depreciation charge for the year

Transfer to held for sale

At 31 December 2021

Net book value at 31 December 2021

Net book value at 31 December 2020

Year ended 31 December 2020

Cost or valuation

At 1 January 2020

Acquired during the year

Revaluations

Disposal cost

At 31 December 2020

Depreciation and impairment

At 1 January 2020

Eliminated on revaluation

Disposal

Depreciation charge for the year

At 31 December 2020

Net book value at 31 December 2020

Net book value at 31 December 2019

Included in freehold land and buildings is land of value £2.8m (2020: £4.0m).

146

14 PROPERTY, PLANT AND EQUIPMENT continued
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 sufficient 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 office 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 £3.6m (2020: £4.3m) and buildings of £6.1m
(2020: £10.2m).

Right-of-use assets are property assets leased by the Group (see note 26).

15 INVESTMENT PROPERTY

At 1 January

Recognised on acquisition of the Jersey Property Unit Trust (see note 35)

Net loss from fair value adjustment

At 31 December

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

–

70.6

(1.0)

69.6

–

Investment properties are leased to tenants under operating leases. Minimum lease payments receivable on leases of investment properties are as
follows:

Within 1 year

Between 1 and 2 years

Between 2 and 3 years

Between 3 and 4 years

Between 4 and 5 years

Later than 5 years

Total

2021
£m

1.1

128.8

134.3

2020
£m

–

147

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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.

Units in liquidity funds

Investment funds

Debt securities and other fixed income securities

Deposits with credit institutions

Derivative financial assets

Loans secured by residential mortgages

Loans secured by commercial mortgages

Loans secured by ground rents

Infrastructure loans

Other loans

Total

Fair value

2021
£m

2020
£m

Cost

2021
£m

2020
£m

1,310.5

1,128.5

1,310.5

1,128.5

301.8

176.1

290.5

175.2

12,924.0

11,061.4

12,141.7

10,001.9

52.9

691.2

99.7

800.0

52.9

–

99.7

–

7,422.8

8,261.1

4,328.7

4,535.7

677.8

189.7

993.1

117.9

592.1

114.9

945.0

91.0

686.3

185.9

858.0

115.0

566.9

113.2

796.6

88.9

24,681.7

23,269.8

19,969.5

17,506.6

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 very short dated liquid assets.

Deposits with credit institutions with a carrying value of £50.3m (2020: £97.8m) 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 FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE
This note explains the methodology for valuing the Group’s financial assets and liabilities measured at fair value, including financial investments, and
provides disclosures in accordance with IFRS 13, Fair value measurement, including an analysis of such assets and liabilities categorised in a fair value
hierarchy based on market observability of valuation inputs.

(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.

All Level 1 and 2 assets continue to have pricing available from actively quoted prices or 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.

148

17 FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE continued
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 cannot be used to validate broker/asset manager prices as the observability of inputs used by brokers/asset

managers is unavailable, the investment is classified as Level 3.

Debt securities held at fair value and financial derivatives are valued using independent pricing services or third party broker quotes are classified as
Level 2.

Level 3
Inputs to Level 3 fair values are unobservable inputs for the asset or liability. Unobservable inputs are 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.

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, infrastructure loans, private placement debt securities, investment funds,
investment contract liabilities, and deposits received from reinsurers. Other than freehold land and buildings included in note 14, there are no non-
recurring fair value measurements as at 31 December 2021 (2020: nil).

(b) Analysis of assets and liabilities held at fair value according to fair value hierarchy

2021

2020

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 through profit or loss

Investment property

Units in liquidity funds

Investment funds

–

1,304.9

–

5.6

69.6

–

1,310.5

1,123.2

–

68.5

233.3

301.8

–

5.3

37.1

–

1,128.5

139.0

176.1

Debt securities and other fixed income securities

4,302.5

7,172.0

1,449.5

12,924.0

809.3

8,995.3

1,256.8

11,061.4

Deposits with credit institutions

Derivative financial assets

Loans secured by residential mortgages

Loans secured by commercial mortgages

Loans secured by ground rents

Infrastructure loans

Other loans

Assets classified as held for sale

Total financial assets

50.3

–

2.6

682.7

–

8.5

52.9

691.2

–

7,422.8

677.8

189.7

993.1

89.7

3.1

677.8

189.7

993.1

117.9

3.1

15.6

–

12.6

–

97.7

–

13.1

–

2.0

796.4

–

11.8

–

3.6

99.7

800.0

8,261.1

592.1

114.9

945.0

66.1

–

592.1

114.9

945.0

91.0

–

5,673.3

7,944.0

11,137.1

24,754.4

2,043.3

9,847.9

11,378.6

23,269.8

Liabilities held at fair value through profit of loss

Investment contract liabilities

Derivative financial liabilities

–

Obligations for repayment of cash collateral received

311.7

Deposits received from reinsurers

Other financial liabilities

Fair value of loans and borrowings at amortised cost1

–

386.1

14.5

33.6

8.6

–

33.6

394.7

326.2

–

2,144.7

936.8

–

936.8

–

351.3

–

509.4

26.1

42.8

3.3

–

42.8

512.7

377.4

–

2,415.0

894.3

–

894.3

Total financial liabilities

311.7

1,337.4

2,186.9

3,836.0

351.3

1,429.8

2,461.1

4,242.2

1 The fair value disclosed for loans and borrowings for 2020 has been restated to correct the basis on which the fair value was determined – see note 25.

149

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

17 FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE continued
(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 the Group enhanced its methodology over the levelling of financial instruments, resulting in transfers of £2,820.8m from Level 2 to Level 1
(2020: nil), and £13.3m from Level 1 to Level 2 (2020: nil). Transfers from Level 2 to Level 3 in 2021 of £49.9m (2020: £62.2m) include debt securities which
no longer had observable prices.

(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 2021

At 1 January 2021

Debt
securities
and other
fixed
income
securities
£m

Derivative
financial
assets
£m

Loans
secured by
residential
mortgages
£m

Loans
secured by
commercial
mortgages
£m

Loans
secured
by
ground
rents
£m

Investment
funds
£m

Infra-
structure
loans
£m

Other
loans
£m

Investment
contract
liabilities
£m

Derivative
financial
liabilities
£m

Deposits
received
from
reinsurers
£m

139.0 1,256.8

3.6

8,261.1

592.1 114.9

945.0 66.1

(42.8)

(3.3) (2,415.0)

Purchases/advances/deposits

84.9

281.4

Transfers from Level 2

Sales/redemptions/payments

Disposal of a portfolio of LTMs1

Realised gains and losses recognised in
profit or loss within net investment
income

Unrealised gains and losses recognised
in profit or loss within net investment
income

Interest accrued

Change in fair value of liabilities
recognised in profit or loss

–

9.4

–

49.9

(87.9)

–

(37.6)

(13.1)

–

528.2

169.0 72.4

79.1 46.1

–

(508.9)

(508.8)

169.1

–

(49.4)

–

(17.7)

–

4.9

(722.8)

(34.6) 2.4

(13.4) (22.5)

–

204.9

–

0.7

–

0.1

–

(1.1)

–

11.1

–

(0.8)

–

(1.2)

–

202.9

–

(5.3)

147.3

–

(78.7)

–

At 31 December 2021

233.3 1,449.5

8.5

7,422.8

677.8 189.7

993.1 89.7

(33.6)

(8.6) (2,144.7)

1 In August 2021 the Group disposed of a portfolio of loans secured by residential mortgages with a fair value of £508.8m. 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.

Debt
securities
and other
fixed
income
securities
£m

729.2

418.9

62.2

(29.4)

–

Investment
funds
£m

111.8

27.1

–

(0.2)

Derivative
financial
assets
£m

Loans
secured by
residential
mortgages
£m

Loans
secured by
commercial
mortgages
£m

Loans
secured
by ground
rents
£m

4.0

7,980.5

494.5

–

511.7

97.9

113.2

–

(380.9)

(600.8)

111.6

Infra-
structure
loans
£m

787.3

104.3

–

Other
loans
£m

48.6

68.7

–

(15.9)

(52.3)

–

68.0

1.3

–

1.1

–

Investment
contract
liabilities
£m

Derivative
financial
liabilities
£m

Deposits
received
from
reinsurers
£m

(54.0)

(1.0)

–

14.0

–

(1.8)

–

(2,417.7)

5.0

–

(1.4)

–

212.2

–

(8.3)

(125.3)

–

(82.8)

–

(8.7)

–

7.6

0.8

–

1.7

–

0.3

80.6

(0.4)

356.3

–

(4.5)

–

282.7

–

Year ended 31 December 2020

At 1 January 2020

Purchases/advances/deposits

Transfers from Level 2

Sales/redemptions/payments

Disposal of a portfolio of LTMs1

Realised gains and losses recognised
in profit or loss within net investment
income

Unrealised gains and losses
recognised in profit or loss within net
investment income

Interest accrued

Change in fair value of liabilities
recognised in profit or loss

At 31 December 2020

139.0 1,256.8

3.6

8,261.1

592.1

114.9

945.0

66.1

(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.

For Level 1 and Level 2 assets and liabilities measured at fair value, unrealised losses during the year were £32.1m and £131.4m respectively (2020: gains
of £23.2m and £241.1m respectively).

150

17 FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE continued
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%
(2020: 7.0%).

Sensitivity analysis
Reasonably possible alternative assumptions for unobservable inputs used in the valuation model either as at the valuation date or from a suitable
recent reporting period where appropriate to do so could give rise to significant changes in the fair value of the assets. The sensitivity of the valuation of
investment funds 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:

Investment funds
net increase/(decrease) in fair value (£m)

2021

2020

Credit
spreads
+100bps

(8.9)

(4.9)

Debt securities and other fixed income securities
Debt securities classified as Level 3 are 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 2021. Due to the
nature of these assets and the sectors in which they operate, the Group has assessed that there is not any significant impact from COVID-19 on the
valuation at 31 December 2021.

Principal assumptions underlying the calculation of the debt securities and other fixed income securities classified as Level 3
Credit spreads
The valuation model discounts the expected future cash flows using a discount rate which includes a credit spread allowance associated with that asset.

Redemption and defaults
The redemption and default assumptions used in the valuation of private placement bonds are similar to the rest of the Group’s bond portfolio.

Sensitivity analysis
Reasonably possible alternative assumptions for upon observable inputs used in the valuation model either as at the valuation date or from a suitable
recent reporting period where appropriate to do so could give rise to significant changes in the fair value of the assets. The sensitivity of the valuation of
bonds 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)

2021

2020

Credit
spreads
+100bps

(124.6)

(109.2)

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 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.
As described above, these assumptions are set at outset such that the fair value of the NNEG hedge is zero. The Group has assessed the possible impact
of COVID-19 and economic uncertainty on current property assumptions. Details of the matters considered in relation to property assumptions at
31 December 2021 are noted in the section on Loans secured by residential mortgages further below. The future property price volatility assumption
used in the fair value calculation of derivative financial assets and liabilities has been updated to 11% (2020: 9%). This assumption is based on upon
property price index volatility only, consistent with protection provided by the underlying derivatives. Property growth assumptions used in the fair value
calculation of derivative financial assets and liabilities have remained unchanged from 31 December 2020, consistent with the equivalent assumptions
on loans secured by residential mortgages as noted below. The impact on derivative financial assets and liabilities from changes to property
assumptions are noted in the sensitivity analysis below.

151

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

17 FINANCIAL ASSETS AND LIABILITIES MEASURED AT 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 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)

Derivative financial assets

2021

2020

Derivative financial liabilities

2021

2020

Interest rates
+100bps

Immediate
property
price fall
-10%

Future
property
price growth
-0.5%

Future
property
price volatility
+1%

(4.6)

(6.5)

(4.1)

(1.8)

10.4

24.0

13.4

6.3

10.6

24.1

12.5

6.8

4.4

10.2

6.2

2.8

Loans secured by residential mortgages
Methodology and judgement underlying the calculation of loans secured by residential mortgages
The valuation of loans secured by residential 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 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 best estimate 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 sales of the portfolios of Just
LTMs in 2020, 2021 and 2022 represented market prices specific to the characteristics of the underlying portfolios of loans sold. In particular, loan rates,
loan-to-value and customer age. This was considered insufficient to affect the judgement of the methodology and assumptions underlying the
discounted cash flow approach used to value individual loans in the remaining portfolio. The methodology and assumptions used would be reconsidered
if any information is obtained from future portfolio sales that is relevant and applicable to the remaining portfolio.

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 4.2% (2020: 3.6%).

Mortality
Mortality assumptions have been derived with reference to England & Wales population mortality using the CMI 2019 model for mortality improvements
for 2020 onwards, and have been applied by the Group since 2020. 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 long-term mortality assumptions, but has kept these unchanged at 31 December 2021. Further details of the matters considered in
relation to mortality assumptions at 31 December 2021 are set out in note 23(b).

Property prices
The approach in place at 31 December 2021 is to calculate the value of a property by taking the latest Automated Valuation Model “AVM” result, or latest
surveyor value if more recent, indexing this to the balance sheet date using Nationwide UK house price indices and then making a further allowance for
property dilapidation since the last revaluation date. This represents a change in approach since the previous period – which was based upon the latest
valuation, indexed to the balance sheet date using the Office for National Statistics (“ONS”) monthly index for the property’s location, together with a
separate allowance for potential underperformance of individual properties relative to the indexed valuation. Allowing for the change in approach used
to calculate property values as at 31 December 2021, the value of the properties underlying the Group’s LTM portfolio grew by 6% over the year which is
3% lower than had the Group not changed the basis of determining property values at the valuation date.

Although the COVID-19 pandemic has had a very significant impact on the UK economy during 2020 and 2021, the UK property market has exhibited
strong growth over the period. The current level of price indices has been driven by high demand and a shortage of supply. While this imbalance may
reduce, our view is that current market prices are sustainable and appropriate for valuation of the properties.
152

17 FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE continued
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 price
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% (2020: 3.3%), with a volatility assumption of 13% per annum
(2020: 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. House price growth over 2021 has been strong, and
there has been an increase in market-implied RPI and CPI inflation expectations too. However, 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. In light of this the future
house price growth and property volatility assumptions have been maintained at the same level as assumed at 31 December 2020. 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 experience analyses and external benchmarking. The assumed
redemption rate varies by duration and product line between 0.5% and 4.1% for loans in JRL (2020: 0.5% and 4.1%) and between 0.6% and 6.8% for loans
in PLACL (2020: 0.6% and 6.8%). No changes are assumed with regard to the COVID-19 experience. Compared to the prior period, a separate provision for
potential higher short-term experience arising from additional remortgaging activity is also allowed for.

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. 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. Historically the liquidity premium has been set relative to LIBOR swap rates. Following the discontinuance of
LIBOR from the end of 2021 SONIA has been adopted as the risk free index. The liquidity premium at 31 December 2021 has been adjusted such that the
fair value of the loan is unchanged before and after this change in index. The average liquidity premium for loans held within JRL is 3.04% (2020: 2.87%)
and for loans held within PLACL is 3.51% (2020: 3.20%). These average rates are relative to the risk free index used in each period. The movement over
the period observed in both JRL and PLACL is therefore the effect of rebasing the liquidity premiums for the change in risk free rates, and a function of
the liquidity premiums on new loan originations compared to the liquidity premiums on those policies which have redeemed or have been included in a
portfolio sale over the period, both in reference to the average spread on the back book of business.

Sensitivity analysis
Reasonably 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)

2021

2020

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%

(6.5)

(5.9)

22.7

34.3

10.5

15.6

(114.6)

(82.3)

(136.1)

(103.7)

(53.2)

(64.5)

(5.2)

(13.2)

Liquidity
premium
+10bps

(78.0)

(93.1)

The sensitivity factors are applied via financial models either as at the valuation date or from a suitable recent reporting period where appropriate to do
so. 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.

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 some of 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
Credit spreads
The valuation model discounts the expected future cash flows using a discount rate which includes a credit spread allowance associated with that asset.

153

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

17 FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE continued
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 2021, with no significant impacts noted to fair values.

Sensitivity analysis
Reasonably possible alternative assumptions for unobservable inputs used in the valuation model either as at the valuation date or from a suitable
recent reporting period where appropriate to do so could give rise to significant changes in the fair value of the assets. The sensitivity of the valuation of
commercial mortgages 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:

Loans secured by commercial mortgages
net increase/(decrease) in fair value (£m)

2021

2020

Credit
spreads
+100bps

(25.0)

(25.2)

Loans secured by ground rents
Loans secured by ground rents 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 ground rents
Credit spreads
The valuation model discounts the expected future cash flows using a discount rate which includes a credit spread allowance associated with that asset.

Redemption and defaults
The redemption and default assumptions used in the valuation of loans secured by ground rents 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 2021, with no significant impacts noted to fair values.

Sensitivity analysis
Reasonably possible alternative assumptions for unobservable inputs used in the valuation model either as at the valuation date or from a suitable
recent reporting period where appropriate to do so could give rise to significant changes in the fair value of the assets. The sensitivity of the valuation of
ground rents 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:

Loans secured by ground rents
net increase/(decrease) in fair value (£m)

2021

2020

Credit
spreads
+100bps

(59.2)

(27.7)

Infrastructure loans
Infrastructure loans classified as Level 3 are valued using discounted cash flow analyses.

Principal assumptions underlying the calculation of infrastructure loans classified as Level 3
Credit spreads
The valuation model discounts the expected future cash flows using a discount rate which includes a credit spread allowance associated with that asset.

Redemption and defaults
The redemption and default assumptions used in the valuation of Level 3 infrastructure loans are derived from the assumptions for 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 2021.

Sensitivity analysis
Reasonably possible alternative assumptions for unobservable inputs used in the valuation model either as at the valuation date or from a suitable
recent reporting period where appropriate to do so could give rise to significant changes in the fair value of the assets. The sensitivity of the valuation of
infrastructure loans 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:

Infrastructure loans
net increase/(decrease) in fair value (£m)

2021

2020

Credit
spreads
+100bps

(96.6)

(90.7)

Other loans
Other loans classified as Level 3 are mainly commodity trade finance loans. These are valued using discounted cash flow analyses.

154

17 FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE continued
Principal assumptions underlying the calculation of other loans classified as Level 3
Credit spreads
The valuation model discounts the expected future cash flows using a discount rate which includes a credit spread allowance associated with that asset.

Redemption and defaults
The redemption and default assumptions used in the valuation of Level 3 loans are derived from the assumptions for the Group’s bond portfolio. The
impact of COVID-19 on expected defaults has been taken into account in the calculation of fair value at 31 December 2021, with no significant impacts
noted to fair values.

Sensitivity analysis
Reasonably possible alternative assumptions for unobservable inputs used in the valuation model either as at the valuation date or from a suitable
recent reporting period where appropriate to do so 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)

2021

2020

Credit
spreads
+100bps

(0.9)

(0.8)

Investment contract liabilities
Investment contracts are valued 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.

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 2.73% (2020: 2.34%).

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 2.87% and 1.03% respectively (2020:
2.21% and 0.06% respectively).

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 219bps (2020: 205bps) was applied in respect of the most significant reinsurance contract.

Sensitivity analysis
Reasonably possible alternative assumptions for unobservable inputs used in the valuation model either as at the valuation date or from a suitable
recent reporting period where appropriate to do so 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)

2021

2020

18 DEFERRED TAX

Transitional tax

Intangible assets

Land and buildings

Other provisions

Total deferred tax

Credit
spreads
+100bps

(72.4)

(80.1)

Interest rates
+100bps

(196.1)

(218.6)

Asset
£m

–

2021

Liability
£m

(1.5)

(17.0)

(0.8)

14.0

(5.3)

Total
£m

(1.5)

(17.0)

(0.8)

14.0

(5.3)

Asset
£m

–

11.5

2020

Liability
£m

(4.2)

(17.8)

(0.8)

–

(22.8)

Total
£m

(4.2)

(17.8)

(0.8)

11.5

(11.3)

155

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

18 DEFERRED TAX continued
The transitional tax liability of £1.5m (2020: £4.2m) 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 differences between the IFRS financial statements and tax deductions for statutory insurance liabilities.

The movement in the net deferred tax balance was as follows:

Net balance at 1 January

Recognised in profit or loss

Recognised in other comprehensive income

Net balance at 31 December

The Group has unrecognised deferred tax assets of £6.2m (2020: £5.3m).

19 INSURANCE AND OTHER RECEIVABLES

Receivables arising from insurance and reinsurance contracts

Finance lease receivables

Other receivables

Total insurance and other receivables

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

(11.3)

(14.8)

6.0

–

3.4

0.1

(5.3)

(11.3)

2021
£m

20.0

2.3

13.1

35.4

2020
£m

21.0

3.8

7.2

32.0

Receivables arising from insurance and reinsurance contracts, and also Other receivables are accounted for at amortised cost, which approximates fair
value. These balances are considered to have contractual terms which are solely payments of principal and interest (“SPPI”). There has been no change
in fair value recognised in the Consolidated statement of comprehensive income in the period (2020: nil). The credit rating of these balances is disclosed
in note 33.

Other than finance lease receivables of £0.7m (2020: £2.2m), insurance and other receivables of £nil (2020: £nil) are expected to be recovered more than
one year after the Consolidated statement of financial position date.

20 CASH AND CASH EQUIVALENTS

Cash available on demand

Units in liquidity funds1

Cash and cash equivalents in the Consolidated statement of cash flows

1 Units in liquidity funds are presented as a financial investment in note 16.

21 SHARE CAPITAL
The allotted, issued and fully paid ordinary share capital of Just Group plc at 31 December 2021 is detailed below:

2021
£m

2020
£m

510.2

1,496.3

1,310.5

1,128.5

1,820.7

2,624.8

At 1 January 2021

Shares issued in respect of employee share schemes

At 31 December 2021

At 1 January 2020

Shares issued in respect of employee share schemes

At 31 December 2020

Number of £0.10
ordinary shares

1,038,128,556

408,488

1,038,537,044

1,035,081,664

3,046,892

1,038,128,556

Share
capital
£m

Share
premium
£m

103.8

0.1

103.9

103.5

0.3

103.8

94.5

0.1

94.6

94.5

–

94.5

Merger
reserve
£m

597.1

–

597.1

–

597.1

Total
£m

795.4

0.2

795.6

795.1

0.3

795.4

The merger reserve is the result of a placing of 94,012,782 ordinary shares in 2019 and the acquisition of 100% of the equity of Partnership Assurance
Group plc in 2016.

The placing in 2019 was achieved by the Company acquiring 100% of the equity of a limited company for consideration of the 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. The merger reserve recognised represents the premium over the nominal value of the shares issued.

156

21 SHARE CAPITAL continued
Consideration for the acquisition in 2016 of the equity shares of Partnership Assurance Group plc 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. The merger reserve recognised represents the difference between the nominal value of the shares issued and the net assets of Partnership
Assurance Group plc acquired.

22 TIER 1 NOTES

At 1 January

Issued in the year

Issue costs, net of tax

Redeemed in the year

At 31 December

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

294.0

325.0

(2.6)

(294.0)

294.0

–

322.4

294.0

On 16 September 2021 the Group issued £325m 5.0% perpetual restricted Tier 1 contingent convertible notes, incurring issue costs of £2.6m, net of tax,
and concurrently redeemed its £300m 9.375% perpetual restricted Tier 1 contingent convertible notes issued in 2019 (£294.0m net of issue costs, net of
tax) at a cost of £341.0m, net of tax. The loss on redemption of the 2019 notes of £47.0m (net of tax) has been recognised directly in equity.

During the year, interest of £25.2m (2020: £28.1m) was paid to holders of the 2019 notes. The 2021 notes bear interest on the principal amount up to
30 September 2031 (the first reset date) at the rate of 5.0% 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 30 March and 30 September each year commencing on
30 March 2022.

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 insufficient 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

Gross insurance liabilities

Net reinsurance assets

Net insurance liabilities

2021
£m

2020
£m

21,812.9

21,118.4

(2,533.5)

(2,865.5)

19,279.4

18,252.9

Reinsurance in the table above includes reinsurance assets net of reinsurance liability positions that can arise on longevity swaps which are presented as
liabilities in the Consolidated statement of financial position.

(a) Terms and conditions of insurance contracts
The Group’s long-term insurance contracts, written by the Group’s life companies, Just Retirement Limited (“JRL”) and Partnership Life Assurance
Company Limited (“PLACL”), include Retirement Income (Guaranteed Income for Life (“GIfL”), Defined Benefit (“DB”), and Care Plans), and whole of life
and term protection insurance.

The valuation of 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 liabilities 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 liabilities 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.

(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 effects or
other economic downturn.

157

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

23 INSURANCE CONTRACTS AND RELATED REINSURANCE continued
Principal assumptions underlying the calculation of insurance contracts continued
Mortality assumptions
The COVID-19 pandemic has had a significant effect on mortality rates. There were particularly high rates in the spring of 2020, and the early part of
2021, which contributed significantly to positive mortality experience variances in the respective reporting periods.

Over the second half of 2021 there was a more modest but sustained elevation of mortality rates, relative to expected levels, for the UK population
overall. However, the extent to which mortality rates will continue to be elevated is subject to considerable uncertainty.

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 at 31 December 2021. Moreover, mortality assumptions for each future year have been
maintained at the same level as assumed 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 potential 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, and management’s own industry experience.

The standard tables which underpin the mortality assumptions are summarised in the table below.

Individually underwritten Guaranteed
Income for Life Solutions (JRL)

Individually underwritten Guaranteed
Income for Life Solutions (PLACL)

2021

Unchanged from 2020

Defined Benefit (JRL)

Unchanged from 2020

Defined Benefit (PLACL)

Unchanged from 2020

Care Plans and other annuity products
(PLACL)

Unchanged from 2020

2020

Modified E&W Population mortality, with CMI 2019
model mortality improvements

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 CMI 2019
model mortality improvements

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

Protection (PLACL)

Unchanged from 2020

TM/TF00 Select

All references to the use of the CMI 2019 model relate to improvements for calendar year 2020 onwards.

The long-term improvement rates in the CMI 2019 model are 2.0% for males and 1.75% for females (2020: 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 (2020: 7.00). The addition to initial rates (“A”) parameter in the model
varies between 0% and 0.25% depending on product (2020: between 0% and 0.25% depending on product). All other CMI model parameters are the
defaults (2020: other parameters set to defaults).

Valuation discount rates
Valuation discount rate assumptions are set by considering the yields on the assets allocated 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 2021.
The considerations around COVID-19 for property prices affecting the NNEG are as described in note 17.

158

23 INSURANCE CONTRACTS AND RELATED REINSURANCE continued

Valuation discount rates – gross liabilities

Individually underwritten Guaranteed Income for Life Solutions (JRL)

Individually underwritten Guaranteed Income for Life Solutions (PLACL)

Defined Benefit (JRL)

Defined Benefit (PLACL)

Other annuity products (PLACL)

Term and whole of life products (PLACL)

2021
%

2.73

2.87

2.73

2.87

1.03

2020
%

2.34

2.21

2.34

2.21

0.06

0.28

The overall reduction in yield to allow for the risk of defaults from all non-LTM assets (including gilts, corporate bonds, infrastructure loans, private
placements and commercial mortgages) and the NNEG from LTMs was 64bps in JRL and 63bps in PLACL (2020: 69bps and 65bps respectively).

Future expenses
Assumptions for future policy expense levels, expressed as a per plan charge for GIfL and a per scheme member charge for DB, are determined from the
Group’s recent expense analyses. The assumed future policy expense levels incorporate an annual inflation rate allowance of 4.45% (2020: 3.85%)
derived from the expected retail price and consumer price indices implied by inflation swap rates and an additional allowance for earnings inflation.

Inflation
Assumptions for annuity escalation are required for RPI and CPI index linked liabilities, the majority of which are within the Defined Benefit business. The
inflation curve assumed in each case is that which is implied by market swap rates, taking into account any escalation caps and/or floors applicable. This
methodology is unchanged compared to the previous period.

Year ended 31 December 2021

At 1 January 2021

Change due to new premiums

Change due to new claims

Unwinding of discount

Changes in economic assumptions

Changes in non-economic assumptions

Other movements

At 31 December 2021

Year ended 31 December 2020

At 1 January 2020

Change due to new premiums

Change due to new claims

Unwinding of discount

Changes in economic assumptions

Changes in non-economic assumptions

Other movements1

At 31 December 2020

Gross
£m

Reinsurance
£m

Net
£m

21,118.4

(2,865.5)

18,252.9

2,298.1

33.8

2,331.9

(1,478.1)

239.0

(1,239.1)

488.8

(62.1)

426.7

(595.1)

135.4

(459.7)

(9.8)

(9.4)

–

(14.1)

(9.8)

(23.5)

21,812.9

(2,533.5)

19,279.4

Gross
£m

Reinsurance
£m

Net
£m

19,003.7

(3,732.0)

15,271.7

1,803.0

14.1

1,817.1

(1,397.5)

323.9

(1,073.6)

565.6

(103.0)

462.6

1,360.3

(252.8)

1,107.5

(142.2)

(74.5)

96.9

787.4

(45.3)

712.9

21,118.4

(2,865.5)

18,252.9

1 Includes the impact of reinsurance recapture in 2020 (see note 29).

159

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

23 INSURANCE CONTRACTS AND RELATED REINSURANCE continued
Effect 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.

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. The movement of the discount rate includes purchases to support new business and trading for risk
management purposes. For the year to 31 December 2021, changes in discount rates resulted in a net reduction of insurance liabilities of £813m (2020:
£1,189m) which was largely due to increases in the risk-free rate and changes to the backing asset portfolio, in particular as a consequence of the LTM
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 2021, changes in inflation, driven by a rise in market-implied expectations of
future RPI and CPI inflation, resulted in a net increase of insurance liabilities of £348m (2020: £(81)m).

Non-economic assumption changes
The principal non-economic assumption changes impacting the movement in insurance liabilities during the year relate to maintenance expense
assumptions for both JRL and PLACL products. 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.

Maintenance expenses
This item primarily reflects a decrease in maintenance expense assumptions, most notably for Defined Benefit business. For the year to 31 December
2021 this resulted in a net reduction in insurance liabilities of £10m (2020: £(19)m).

(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 payments in proportion to
the policy cash flows estimated to arise during the year.

2021

Gross

Reinsurance

Net

2020

Gross

Reinsurance

Net

Expected cash flows (undiscounted)

Within
1 year
£m

1-5 years
£m

5-10 years
£m

Over
10 years
£m

Carrying
value
(discounted)
£m

Total
£m

1,435.4

5,465.3

6,356.3

16,893.6

30,150.6

21,812.9

(201.7)

(733.5)

(786.3)

(1,650.8)

(3,372.3)

(2,533.5)

1,233.7

4,731.8

5,570.0

15,242.8

26,778.3

19,279.4

Expected cash flows (undiscounted)

Within
1 year
£m

1-5 years
£m

5-10 years
£m

Over
10 years
£m

Carrying
value
(discounted)
£m

Total
£m

1,356.5

5,139.3

5,893.8

15,250.4

27,640.0

21,118.4

(211.6)

(766.6)

(818.8)

(1,815.6)

(3,612.6)

(2,865.5)

1,144.9

4,372.7

5,075.0

13,434.8

24,027.4

18,252.9

(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 to 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 also been included within the liabilities line item.

160

23 INSURANCE CONTRACTS AND RELATED REINSURANCE continued
The sensitivity factors are applied via financial models either as at the valuation date or from a suitable recent reporting period where appropriate to do
so. 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 sensitivities below cover the changes on all assets and
liabilities from the given stress. The impact on liabilities includes the net effect of the impact on reinsurance assets and liabilities. 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%

2021

Assets

(2,602.0)

3,118.9

Liabilities

2,076.3

(2,492.5)

Total

Assets

2020

(525.7)

626.4

(2,471.3)

2,955.9

Liabilities

1,974.6

(2,369.9)

Total

(496.7)

586.0

(6.5)

(33.7)

(40.2)

(5.9)

(50.5)

(56.4)

23.8

7.5

(140.6)

(104.4)

(90.8)

(67.7)

(59.2)

(67.7)

(116.8)

(96.9)

(158.5)

(126.9)

35.3

15.6

(105.8)

(149.6)

(109.4)

(88.0)

(72.8)

(83.8)

(114.3)

(93.8)

(193.8)

(156.6)

(41.2)

(22.5)

(63.7)

(51.5)

(43.9)

(95.4)

(6.2)

(64.2)

(70.4)

(14.5)

(83.8)

(98.3)

Credit
defaults
+10bps

(0.0)

(151.6)

–

(150.6)

24 INVESTMENT CONTRACT LIABILITIES

At 1 January

Deposits received from policyholders

Payments made to policyholders

Change in contract liabilities recognised in profit or loss

At 31 December

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

42.8

1.1

54.0

1.0

(11.1)

(14.0)

0.8

33.6

1.8

42.8

(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.

161

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

24 INVESTMENT CONTRACT LIABILITIES continued
(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, 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 2021.
The considerations around COVID-19 for property prices affecting the NNEG are as described in note 17.

Valuation discount rates

Investment contracts

25 LOANS AND BORROWINGS

£250m 9.0% 10 year subordinated debt 2026 (Tier 2) issued by Just Group plc

£125m 8.125% 10 year subordinated debt 2029 (Tier 2) issued by Just Group plc

£250m 7.0% 10.5 year subordinated debt 2013 non-callable 5.5 years (Green Tier 2) issued by Just
Group plc

£230m 3.5% 7 year subordinated debt 2025 (Tier 3) issued by Just Group plc

Total loans and borrowings

2021
%

2.73

2020
%

2.34

Carrying value

Fair value

2021
£m

249.2

122.2

248.4

154.5

774.3

2020
£m

249.1

121.8

248.2

154.4

773.5

2021
£m

323.5

165.6

287.2

160.5

936.8

20201
£m

316.7

144.2

277.5

155.9

894.3

1 The fair value disclosed for loans and borrowings in 2020 has been restated to correct the basis on which the fair value was determined. This resulted in a change across all loans from £802.0m to

£894.3m.

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 SONIA 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:

At 1 January

Proceeds from issue of Just Group plc Tier 2 subordinated debt

Issue costs

Repayment of Partnership Life Assurance Company Limited Tier 2 subordinated debt

Repayment of Just Group plc Tier 3 subordinated debt

Financing cash flows

Amortisation of issue costs

Non-cash movements

At 31 December

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

773.5

–

0.8

660.0

250.0

(1.9)

(62.5)

(75.0)

110.6

2.9

774.3

773.5

162

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. The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of less
than 12 months and leases of low value assets.

Movements in lease liabilities during the year were as follows:

At 1 January

Lease payments

Financing cash flows

Rent increase

Disposal

Interest

Non-cash movements

At 31 December

Lease liabilities are payable as follows:

At 31 December 2021

Less than one year

Between one and five years

Interest

Total lease liability

27 OTHER FINANCIAL LIABILITIES
The Group has the following other financial liabilities which are measured at fair value through profit or loss:

Derivative financial liabilities

Obligations for repayment of cash collateral received

Deposits received from reinsurers

Total other liabilities

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

6.9

(3.7)

0.6

–

0.1

0.7

3.9

2021
£m

3.0

1.0

4.0

(0.1)

3.9

12.4

(4.3)

–

(1.5)

0.2

(1.3)

6.8

2020
£m

3.4

3.6

7.0

(0.2)

6.8

Note

(a)

(b)

2021
£m

394.7

326.2

2020
£m

512.7

377.4

2,144.7

2,415.0

2,865.6

3,305.1

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 £1,952.7m (2020: £2,213.4m).

(a) Derivative financial liabilities and obligations for repayment of cash collateral received
Derivative financial liabilities and obligations for repayment of cash collateral received 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 unbundled from their reinsurance contract and recognised at fair value through profit or loss in accordance with
IAS 39, Financial instruments: measurement and recognition. 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.

163

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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

Foreign currency swaps

Interest rate swaps

Inflation swaps

Forward swaps

Total return swaps

Put option on property index (NNEG hedge)

Total

Asset
fair value
£m

243.4

169.9

261.8

1.8

5.8

8.5

2021

Liability
fair value
£m

Notional
amount
£m

247.2

8,069.4

44.9

92.5

3.4

5.8

0.9

9,117.7

4,580.0

213.9

–

705.0

Asset
fair value
£m

267.7

484.3

25.6

8.9

9.9

3.6

2020

Liability
fair value
£m

Notional
amount
£m

194.5

4,557.5

76.8

6,798.5

228.2

3,238.4

0.1

9.8

3.3

93.8

–

730.0

691.2

394.7

22,686.0

800.0

512.7

15,418.2

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 2021, the Group had pledged collateral of £61.3m (2020: £97.8m) in respect of derivative financial instruments, of which £11.0m were
gilts (2020: £nil) and had received cash collateral of £326.2m (2020: £377.4m).

Amounts recognised in profit or loss in respect of derivative financial instruments are as follows:

Movement in fair value of derivative instruments

Realised losses on interest rate swaps closed

Total amounts recognised in profit or loss

29 REINSURANCE
The Group uses reinsurance as an integral part of its risk and capital management activities.

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

9.2

120.5

129.7

298.7

29.0

327.7

New business is reinsured via longevity swap arrangements for DB and GIfL business and quota share for DB partnering business, as follows:
• DB was reinsured at 90% for non-underwritten schemes.
• DB Partnering was reinsured at 100% for the first scheme completed in 2020.
• GIfL was reinsured at 90% during 2021 and 2020.
• Care new business was not reinsured in 2021 or 2020.

In-force business is reinsured under longevity swap and quota share treaties. The quota share reinsurance treaties have deposit back or other collateral
arrangements to remove the majority of the reinsurer credit risk, as described below. The majority of longevity swaps also have collateral arrangements,
for the same purpose.

During 2020 the Group increased the reinsurance on JRL GIfL business written between 1 January 2016 and 31 December 2019 from 75% to 100%. The
increased cover was effective from 30 June 2020. Reinsurance on JRL DB in-force business is 100% for all schemes written between 1 January 2016 and
30 June 2019. Within JRL there were 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 was contingent upon the
emergence of surplus under the Solvency I or IFRS valuation rules. These treaties also allowed JRL to recapture business once the financing loan from
the reinsurer has been fully repaid. During 2020 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 2020 (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.

164

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 controlled by the Group, 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 reinsurer’s full obligation under the treaty are either deposited into a

ringfenced collateral account of corporate bonds, or held under a funds withheld structure of 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.

Deposits held in trust

2021
£m

2020
£m

491.7

492.0

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 2021, this reserve totalled £3.4m (2020: £3.6m).

30 INSURANCE AND OTHER PAYABLES

Payables arising from insurance and reinsurance contracts

Other payables

Total insurance and other payables

2021
£m

22.0

71.3

93.3

2020
£m

24.6

67.0

91.6

Other payables includes unsettled investment purchases. Insurance and other payables due in more than one year are £nil (2020: £nil).

31 COMMITMENTS
Capital commitments
The Group had no capital commitments as at 31 December 2021 (2020: £nil).

32 CONTINGENT LIABILITIES
There are no contingent liabilities as at 31 December 2021 (2020: £nil).

33 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 exposes the Group to insurance risk. 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.

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 effect 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.

165

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

33 FINANCIAL AND INSURANCE RISK MANAGEMENT continued
Management of insurance risk
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 different 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. 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 affect the relative
attractiveness of Retirement Income products. Changes in the value of the Group’s investment portfolio will also affect 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 offsetting 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.

2021

Investment property

Units in liquidity funds

Investment funds

Less than
one year
£m

One to five
years
£m

Five to ten
years
£m

–

1,310.5

–

68.4

233.4

–

Over ten
years
£m

69.6

–

Debt securities and other fixed income securities

733.5

1,920.0

2,345.9

7,924.6

No fixed
term
£m

–

Total
£m

69.6

1,310.5

301.8

12,924.0

52.9

691.2

52.9

8.0

–

43.4

–

0.9

–

62.7

–

96.4

–

395.0

189.8

–

25.3

108.3

–

123.5

3.2

–

524.1

–

7,422.8

49.6

189.7

844.3

5.5

–

677.8

189.7

993.1

117.9

2,217.6

2,744.7

2,758.8

9,607.4

7,422.8

24,751.3

Deposits with credit institutions

Derivative financial assets

Loans secured by residential mortgages

Loans secured by commercial mortgages

Loans secured by ground rents

Infrastructure loans

Other loans

Total

166

33 FINANCIAL AND INSURANCE RISK MANAGEMENT continued

2020

Units in liquidity funds

Investment funds

Debt securities and other fixed income securities

Deposits with credit institutions

Derivative financial assets

Loans secured by residential mortgages

Loans secured by commercial mortgages

Loans secured by ground rents

Infrastructure loans

Other loans

Total

Total
£m

1,128.5

176.1

11,061.4

99.7

800.0

–

Less than one
year
£m

One to five
years
£m

Five to ten
years
£m

Over ten
years
£m

No fixed
term
£m

1,128.5

37.0

789.3

–

139.1

–

1,823.4

2,322.7

6,126.0

99.7

11.1

–

36.0

–

0.4

–

35.0

–

84.9

–

270.5

221.2

–

81.7

–

153.9

3.2

–

669.0

–

8,261.1

64.4

114.9

791.1

5.7

–

592.1

114.9

945.0

91.0

2,102.0

2,349.7

2,785.9

7,771.1

8,261.1

23,269.8

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, including disposals, in the portfolio in line with the Group’s LTM backing ratio target, and
the establishment of the NNEG hedges. The Group has managed its property risk exposure in the year via a reduction in the LTM backing ratio, additional
LTM portfolio sales and further NNEG hedging.

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 2021.

(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. The Group invests in 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 difference 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 28).

167

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

33 FINANCIAL AND INSURANCE RISK MANAGEMENT continued
• Reinsurance – reinsurance is used to manage longevity risk and to fund new business 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 and/or through robust collateral engagements or recapture plans.

• 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 for loans secured by mortgages has been considered within “property risk” above.

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:

2021

Investment property

Units in liquidity funds

Investment funds

UK gilts
£m

–

AAA
£m

–

1,304.9

–

AA
£m

–

A
£m

69.6

–

Debt securities and other fixed income securities

741.8

894.0

2,132.3

3,279.7

5,554.2

BBB
£m

BB or below
£m

Unrated
£m

Deposits with credit institutions

Derivative financial assets

Loans secured by residential mortgages

Loans secured by commercial mortgages

Loans secured by ground rents

Infrastructure loans

Other loans

Reinsurance

Insurance and other receivables

Total

2020

Units in liquidity funds

Investment funds

–

0.3

–

11.1

519.3

39.2

171.6

–

82.4

116.6

180.9

567.5

–

214.7

277.0

–

5.1

–

741.8

2,281.3

2,463.9

4,337.6

6,337.6

388.4

8,733.4

25,284.0

UK gilts
£m

–

AAA
£m

1,123.2

–

AA
£m

–

A
£m

–

BBB
£m

BB or below
£m

Unrated
£m

Total
£m

–

Total
£m

69.6

1,310.5

301.8

12,924.0

52.9

691.2

–

301.8

–

7,422.8

677.8

189.7

–

105.4

0.5

35.4

677.8

189.7

993.1

117.9

497.3

35.4

–

5.6

–

322.0

2.6

–

45.7

12.5

–

5.3

–

342.8

1.9

–

46.6

11.8

–

1,128.5

176.1

–

11,061.4

99.7

800.0

8,261.1

592.1

114.9

–

79.2

0.5

32.0

592.1

114.9

945.0

91.0

588.8

32.0

Debt securities and other fixed income securities

205.6

838.8

1,519.3

3,030.5

5,124.4

Deposits with credit institutions

Derivative financial assets

Loans secured by residential mortgages

Loans secured by commercial mortgages

Loans secured by ground rents

Infrastructure loans

Other loans

Reinsurance

Insurance and other receivables

–

58.6

594.2

39.2

205.8

–

87.2

125.8

176.0

509.4

–

273.0

309.1

–

6.2

–

Total

205.6

2,049.2

1,918.1

4,168.4

5,885.0

408.4

9,255.9

23,890.6

There are no financial assets that are either past due or impaired.

The credit rating for Cash available on demand at 31 December 2021 was between a range of AA and BB (2020: 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 cash received from Retirement Income sales 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 sufficient 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;

• needing to realise 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.

168

33 FINANCIAL AND INSURANCE RISK MANAGEMENT continued
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 effectively
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 individually.

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 include an assessment of the impact of a 1-in-200 year event on the Group’s liquidity 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 over the last 40 years, in shorter periods up to and including one
month.

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:

2021

Investment contract liabilities

Subordinated debt

Derivative financial liabilities

Obligations for repayment of cash collateral received

Deposits received from reinsurers

2020

Investment contract liabilities

Subordinated debt

Derivative financial liabilities

Obligations for repayment of cash collateral received

Deposits received from reinsurers

34 CAPITAL
Group capital position
The Group’s estimated capital surplus position at 31 December 2021 was as follows:

Eligible Own Funds

Solvency Capital Requirement

Excess Own Funds

Solvency coverage ratio

Within one
year or
payable on
demand
£m

10.2

71.8

7.3

326.2

192.0

Within one
year or
payable on
demand
£m

9.8

66.2

53.3

377.4

201.7

One to
five years
£m

More than
five years
£m

21.1

684.2

41.9

–

1.5

899.2

344.6

–

679.8

1,924.0

One to
five years
£m

31.1

674.9

189.0

–

More than
five years
£m

2.8

595.8

1,408.6

–

712.0

2,073.3

Solvency
Capital Requirement

Minimum Group Solvency
Capital Requirement

20211
£m

20202
£m

2021
£m

3,004

3,009

2,263

(1,836)3

(1,938)

(482)3

1,1683

164%3

1,071

155%

1,7813

469%3

2020
£m

2,262

(476)

1,786

475%

1 Estimated regulatory position. These figures reflect the estimated impact of a TMTP recalculation as at 31 December 2021. The LTMs that have been sold on 22 February 2022 were originally written
to back the liabilities written pre the Solvency II regime and hence has contributed to the TMTP in the past. However, given the biennial reset of the TMTP as at 31 December 2021 and sale of these
LTMs shortly after the valuation date, these LTMs have been excluded from the determination of the TMTP as at 31 December 2021.
2 This is the reported regulatory position as included in the Group’s Solvency and Financial Condition Report as at 31 December 2020.

3 U naudited.

169

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

34 CAPITAL continued
Further information on the Group’s Solvency II position, including a reconciliation between the regulatory capital position to the reported capital surplus,
is included in the Business Review. This information is estimated and therefore subject to change. It is also unaudited.

The Group and its regulated insurance subsidiaries are 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 overriding objective
of the Solvency II capital framework is to ensure there is sufficient capital within the insurance company to protect policyholders and meet their
payments when due. They 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 over the next one year time horizon 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.

The capital requirement for Just Group plc is calculated using a partial internal model. Just Retirement Limited (“JRL”) uses a full internal model and
Partnership Life Assurance Company Limited (“PLACL”) capital is calculated using the standard formula.

Group entities that are under supervisory regulation and are required to maintain a minimum level of regulatory capital include:
• JRL and PLACL – 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.

Capital management
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 expectations;

• to safeguard the Group’s ability to continue as a going concern, and to continue to write new business;
• 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.
• to generate capital from in-force business, excluding economic variances, management actions, and dividends, that is c.£36m greater than new

business strain.

The Group regularly assesses a wide range of actions to improve the capital position and resilience of the business.

To improve resilience, we have significantly reduced the property risk exposure related to LTMs by selling two blocks of LTMs and transacting three
no-negative equity guarantee (“NNEG”) hedges. A third LTM sale completed subsequent to the year end as referred to in note 37. The Group will continue
to assess options to reduce our balance sheet exposure to UK residential property, including, but not limited to increasing the level of NNEG hedges.

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 and the on-going impact of COVID-19 or changes to financial regulations should future circumstances or events differ
from current assumptions. 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.

Regulatory developments
The PRA approved the Group’s major model change application on 1 December 2021. The updated model ensures that the model remains appropriate
for the risk profile of the business and meets regulatory expectations in respect of the Effective Value Test (“EVT”), a diagnostic validation test, relating to
the matching adjustment for liabilities that are matched with LTMs, and the requirement for it to be used in stress to validate the SCR from 31 December
2021. We are planning to apply to the PRA to approve further developments to our internal model to refine our credit risk model and to bring PLACL onto
the internal model.

At 31 December 2021, Just passed the PRA EVT with a buffer of 0.75% (unaudited) over the current minimum deferment rate of 0.5% (allowing for
volatility of 13%, in line with the requirement for the EVT). At 31 December 2020, the buffer was 0.63% (unaudited) compared to the minimum buffer for
the phase-in period of 0%.

In June 2020, the government announced that it would review certain features of Solvency II. The PRA launched a Quantitative Impact Study (“QIS”) in
H2 2021 which the Group participated in. The key features for the Group that were considered in the QIS are the risk margin and the matching
adjustment. We plan to engage with the PRA consultation, expected in 2022, on the potential changes to Solvency II.

170

35 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 office

Percentage of
nominal share
capital and voting
rights held

Direct subsidiary

Just Retirement Group Holdings Limited5

Partnership Assurance Group Limited5

Indirect subsidiary

HUB Acquisitions Limited1,5

HUB Financial Solutions Limited

HUB Pension Solutions Limited5

Just Re 1 Limited5

Just Re 2 Limited5

Just Retirement (Holdings) Limited5

Just Retirement (South Africa) Holdings (Pty) Limited

Just Retirement Life (South Africa) Limited

Just Retirement Limited

Holding company

Distribution

Software development

Investment activity

Holding company

Life assurance

Just Retirement Management Services Limited5

Management services

Reigate

South Africa

Reigate

Just Retirement Money Limited

Partnership Group Holdings Limited5

Partnership Holdings Limited5

Partnership Home Loans Limited

Partnership Life Assurance Company Limited

Partnership Services Limited5

TOMAS Online Development Limited5

Enhanced Retirement Limited

HUB Digital Solutions Limited

Provision of lifetime mortgage products Reigate

Holding company

Reigate

Provision of lifetime mortgage products Reigate

Life assurance

Management services

Software development

Dormant

Pension Buddy Limited (formerly HUB Online Development Limited) Dormant

HUB Transfer Solutions Limited

JRP Group Limited

JRP Nominees Limited

Just Annuities Limited

Just Equity Release Limited

Just Incorporated Limited

Just Management Services (Proprietary) Limited

Just Protection Limited

Just Retirement Finance plc

Just Retirement Nominees Limited

Just Retirement Solutions Limited

PAG Finance Limited

PAG Holdings Limited

PASPV Limited

PayingForCare Limited

PLACL RE 1 Limited

PLACL RE 2 Limited

TOMAS Acquisitions Limited

The Open Market Annuity Service Limited5

HUB Pension Consulting (Holdings) Limited
(formerly Corinthian Group Limited)5

HUB Pension Consulting Limited5

Spire Platform Solutions Limited2,3

Dormant

Holding company

Pension consulting

Software development

Reigate

Belfast

Reigate

Belfast

Reigate

South Africa

Reigate

Jersey

Reigate

Belfast

Reigate

100%

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 2021. 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.

171

Reigate

Portsmouth

100%

33%4

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTS

JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

35 GROUP ENTITIES continued
Registered offices

Reigate office:

Enterprise House

Bancroft Road

Reigate, Surrey RH2 7RP

Jersey office:

44 Esplanade

St Helier

Jersey JE4 9WG

Belfast office:

South Africa office:

3rd Floor, Arena Building

Office G01, Big Bay Office Park

Ormeau Road

Belfast BT7 1SH

16 Beach Estate Boulevard, Big Bay

Western Cape 7441

Portsmouth office:

Building 3000, Lakeside North Harbour

Portsmouth

Hampshire PO6 3EN

Consolidated structured entities
In 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. The Group has provided £10m financial
support in the form of a letter of credit.

In December 2021 the Group invested in a controlling interest in a Jersey Property Unit Trust (JPUT). The Group has determined that it controls the JPUT
as a result of the Group’s ability to remove the Trustees; other than the Group and the Trustees there are no other parties with decision making rights
over the JPUT. The Group has taken the option within IFRS 3, Business combinations to apply the concentration test to determine whether the JPUT
represents a business within the scope of IFRS 3. The conclusion of the concentration test is that the assets of the JPUT are concentrated in the single
identifiable asset of the investment property and as such the investment by the Group does not represent a business combination. The Group has
consolidated the results of the JPUT; any excess of investment purchase price over the fair value of the assets acquired is allocated against the
identifiable assets and liabilities in proportion to their relative fair values; goodwill is not recognised.

Unconsolidated structured entities
The Group has interests in structured entities which are not consolidated as the definition of control has not been met based on the investment
proportion held by the Group.

Interests in unconsolidated structured entities include investment funds and liquidity funds and loans granted to special purpose vehicles “SPVs”
secured by assets held by the SPVs such as commercial mortgages and ground rents.

As at 31 December 2021 the Group’s interest in unconsolidated structured entities, which are classified as investments held at fair value through profit or
loss, are shown below:

Loans secured by commercial mortgages

Loans secured by ground rents

Asset backed securities

Investment funds

Liquidity funds

Total

2021
£m

677.8

189.7

9.5

301.8

2020
£m

592.1

114.9

10.8

176.1

1,310.5

1,128.5

2,489.3

2,022.4

The Group’s exposure to financial loss from its interest in unconsolidated structured entities is limited to the amounts shown above. The Group is not
required to provide financial support to the entities, nor does it sponsor the entities.

Non-controlling interests
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 effective 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 HUB Pension Consulting (Holdings) Limited (formerly Corinthian Group
Limited). On 22 September 2021 the Group acquired the remaining 25% of the ordinary share capital at a cost of £0.1m.

The non-controlling interests of the minority shareholders of Spire Platform Solutions Limited of £(0.5)m have been recognised in the year. The non-
controlling interests of the minority shareholders of HUB Pension Consulting (Holdings) Limited of £(0.3)m have been recognised to the date of
acquisition by the Group.

172

36 RELATED PARTIES
The Group has related party relationships with its key management personnel and subsidiary undertakings detailed in note 35.

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:

Short-term employee benefits

Share-based payments

Total key management compensation

Loans owed by Directors

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

3.9

1.5

5.4

0.4

3.6

1.2

4.8

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.

37 ULTIMATE PARENT COMPANY AND ULTIMATE CONTROLLING PARTY
The Company is the ultimate Parent Company of the Group and has no controlling interest.

38 POST BALANCE SHEET EVENTS
In February 2022, the Group completed the sale of a third LTM portfolio, with a current outstanding loan balance of £537m and an IFRS value as at
31 December 2021 of £772m. The LTM assets being sold form part of the investments used to back the insurance liabilities of the Group. The
consideration is £687m, payable in cash. The proceeds received will be reinvested in a mixture of other fixed interest assets to back the insurance
liabilities of the Group. The sale will result in an IFRS net of tax loss of c.£35m which includes the impact on the insurance liabilities resulting from the
expected new asset mix.

There are no other material post balance sheet events that have taken place between 31 December 2021 and the date of this report.

173

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
FOR THE YEAR ENDED 31 DECEMBER 2021

Share
capital
£m

103.8

Share
premium
£m

93.3

Merger
reserve
£m

487.5

Shares held
by trusts
£m

Accumulated
profit
£m

Total
shareholders’
equity
£m

Tier 1 notes
£m

Total
£m

(5.4)

327.8

1,007.0

294.0

1,301.0

–

0.1

–

0.1

93.4

–

(188.0)

299.5

(9.6)

–

(9.6)

0.1

–

322.4

(9.6)

0.1

322.4

(47.0)

(294.0)

(341.0)

–

(20.4)

4.9

–

(20.4)

4.9

–

(62.4)

28.4

(34.0)

935.0

322.4

1,257.4

1.1

–

1.1

(4.3)

3.8

188.0

124.4

442.6

Share
capital
£m

103.5

Share
premium
£m

93.3

Merger
reserve
£m

501.2

Shares held
by trusts
£m

Accumulated
profit
£m

Total
shareholders’
equity
£m

Tier 1 notes
£m

Total
£m

939.1

294.0

1,233.1

–

(13.7)

247.1

89.1

–

(0.1)

(28.1)

6.1

13.7

89.1

0.3

(0.1)

(28.1)

6.7

–

(8.4)

(21.2)

–

89.1

0.3

(0.1)

(28.1)

6.7

–

(21.2)

93.3

487.5

(5.4)

327.8

1,007.0

294.0

1,301.0

–

0.3

–

0.3

103.8

–

(6.0)

–

0.6

–

0.6

At 31 December 2021

103.8

Year ended 31 December 2021

At 1 January 2021

Loss for the year

Total comprehensive loss for the year

Contributions and distributions

Shares issued

Tier 1 notes issued (net of costs)

Tier 1 notes redeemed

Dividends

Interest paid on Tier 1 notes (net of tax)

Share-based payments

Transfer from merger reserve

Total contributions and distributions

Year ended 31 December 2020

At 1 January 2020

Profit for the year

Total comprehensive income for the year

Contributions and distributions

Shares issued

Dividends

Interest paid on Tier 1 notes

Share-based payments

Transfer from merger reserve

Total contributions and distributions

At 31 December 2020

174

STATEMENT OF FINANCIAL POSITION OF THE COMPANY
AS AT 31 DECEMBER 2021

Company number: 08568957

Assets

Non-current assets

Investments in Group undertakings

Loans to Group undertakings

Current assets

Financial investments

Prepayments and accrued income

Amounts due from Group undertakings

Cash available on demand

Total assets

Equity

Share capital

Share premium

Merger reserve

Shares held by trusts

Accumulated profit

Total equity attributable to ordinary shareholders of Just Group plc

Tier 1 notes

Total equity

Liabilities

Non-current liabilities

Subordinated debt

Current liabilities

Other payables

Total liabilities

Total equity and liabilities

Note

2021
£m

2020
£m

842.5

1,024.7

1,000.0

1,842.5

2,024.7

167.7

0.2

27.0

11.5

206.4

45.0

0.6

15.7

10.4

71.7

2,048.9

2,096.4

103.8

93.4

299.5

(4.3)

442.6

935.0

322.4

103.8

93.3

487.5

(5.4)

327.8

1,007.0

294.0

1,257.4

1,301.0

777.9

13.6

777.5

17.9

791.5

795.4

2,048.9

2,096.4

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 loss arising in the year amounts to £9.6m, (2020: profit of £89.1m).

The financial statements were approved by the Board of Directors on 9 March 2022 and were signed on its behalf by:

Andy Parsons
Director

175

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSYear ended
31 December
2021
£m

Year ended
31 December
2020
£m

(7.7)

188.0

4.9

(197.1)

(55.6)

57.6

–

(8.0)

(11.3)

(29.2)

–

(5.8)

–

169.0

163.2

0.1

321.8

(350.6)

–

2.9

15.6

85.5

13.7

0.8

(118.1)

(48.1)

47.1

0.1

(73.9)

6.4

(86.5)

4.5

(90.0)

(175.0)

90.0

(170.5)

0.3

–

249.4

(0.1)

–

2.6

(10.2)

252.2

123.8

55.4

179.2

11.5

167.7

179.2

(4.8)

60.2

55.4

10.4

45.0

55.4

JUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

STATEMENT OF CASH FLOWS OF THE COMPANY
FOR THE YEAR ENDED 31 DECEMBER 2021

Cash flows from operating activities

(Loss)/profit before tax

Impairment of investments in Group undertakings

Share-based payments

Income from shares in and loans to Group undertakings

Interest income

Interest expense

Decrease in prepayments and accrued income

Decrease in other payables

Taxation paid

Net cash outflow from operating activities

Cash flows from investing activities

Decrease in financial assets

Capital injections in subsidiaries

Loans to subsidiaries

Dividends received

Net cash inflow/(outflow) from investing activities

Cash flows from financing activities

Issue of ordinary share capital (net of costs)

Proceeds from issue of Tier 1 notes (net of costs)

Redemption of Tier 1 notes

Increase in borrowings (net of costs)

Dividends paid

Net coupon received on Tier 1 notes

Net interest received on borrowings

Net cash (outflow)/inflow from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at start of year

Cash and cash equivalents at end of year

Cash available on demand

Units in liquidity funds

Cash and cash equivalents at end of year

176

NOTES TO THE COMPANY FINANCIAL STATEMENTS

1 ACCOUNTING POLICIES
General information
Just Group plc (the “Company”) is a public company limited by shares, incorporated and domiciled in England and Wales.

1.1 Basis of preparation
The financial statements have been prepared in accordance with the Companies Act 2006, including application of international accounting standards
and other disclosure requirements, and International Financial Reporting Standards (“IFRS”) as adopted by the UK Endorsement Board. The change in
basis of preparation to UK adopted IFRS is required by UK company law for the purposes of financial reporting as a result of the UK’s exit from the EU on
31 January 2020 and the cessation of the transition period on 31 December 2020. This change does not constitute a change in accounting policy but a
change in framework which is required to ground the use of IFRS in company law. There is no impact on recognition, measurement or disclosure
between the two frameworks in the period reported. 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. The financial statements comply with
IFRS as issued by the International Accounting Standards Board. 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 differences 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 sufficient taxable profits to utilise carried forward tax losses against which the reversal of underlying timing differences can be
deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary differences 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 offers 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

At 1 January 2021

Additions

Provision for impairment

At 31 December 2021

At 1 January 2020

Additions

Provision for impairment

At 31 December 2020

Shares in Group
undertakings
£m

1,024.7

5.8

(188.0)

842.5

942.5

95.9

(13.7)

1,024.7

Details of the Company’s investments in the ordinary shares of subsidiary undertakings are given in note 35 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 2021, 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.

177

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

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 2021. 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 2021 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 2021 was £460m. The recoverable amount was calculated as £272m. Accordingly, a provision for impairment of £188m in
respect of the investment in PLACL has been recognised at 31 December 2021, largely reflecting the dividend distribution of £169m by PLACL in the year.
Upon acquisition of the investment in PLACL in 2016, Just Group plc recognised a merger reserve of £532m. Since the acquisition, impairments in the
investment in PLACL totalling £298m have 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 10.5% for JRL and 8.9% 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 £134m and £32m 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 13 to the Group’s consolidated financial statements). No impairment was required
to the carrying value of the goodwill relating to JRL at 31 December 2021.

3 LOANS TO GROUP UNDERTAKINGS

At 1 January 2021

Additions

At 31 December 2021

At 1 January 2020

Additions

At 31 December 2020

Details of the Company’s loans to Group undertakings are as follows:

9.375% perpetual restricted Tier 1 contingent convertible debt (call option in April 2024) issued by
Just Retirement Limited in April 2019

9.375% perpetual restricted Tier 1 contingent convertible debt (call option in April 2024) issued by
Partnership Life Assurance Company Limited in April 2019

9.0% 10 year subordinated debt 2026 (Tier 2) issued by Just Retirement Limited in October 2016

8.125% 10 year subordinated debt 2029 (Tier 2) issued by Just Retirement Limited in October 2019

8.2% 10 year subordinated debt 2030 (Tier 2) issued by Just Retirement Limited in May 2020

7.0% 10.5 year subordinated debt 2031 (Tier 2) issued by Just Retirement Limited in November 2020

8.125% 10 year subordinated debt 2029 (Tier 2) issued by Partnership Life Assurance Company Limited in October 2019

7.0% 10.5 year subordinated debt 2031 (Tier 2) issued by Partnership Life Assurance Company Limited in November 2020

5.0% 7 year subordinated debt 2025 (Tier 3) issued by Just Retirement Limited in December 2018

Loans to Group
undertakings
£m

1,000.0

–

1,000.0

825.0

175.0

1,000.0

2021
£m

2020
£m

250.0

50.0

250.0

25.0

100.0

75.0

100.0

50.0

250.0

25.0

100.0

75.0

100.0

50.0

1,000.0

Total

4 FINANCIAL INVESTMENTS

Units in liquidity funds

Total

Fair value

Cost

2021
£m

167.7

2020
£m

45.0

2021
£m

167.7

2020
£m

45.0

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.

178

5 SHARE CAPITAL
The allotted, issued and fully paid ordinary share capital of the Company at 31 December 2021 is detailed below:

At 1 January 2021

Shares issued in respect of employee share schemes

Provision for impairment in investment in Group undertakings (see note 2)

At 31 December 2021

At 1 January 2020

Shares issued in respect of employee share schemes

Provision for impairment in investment in Group undertakings (see note 2)

Number of £0.10
ordinary shares

Share
capital
£m

Share
premium
£m

Merger
reserve
£m

Total
£m

1,038,128,556

103.8

93.3

487.5

684.6

408,488

–

1,038,537,044

1,035,081,664

3,046,892

–

103.8

103.5

0.3

–

0.1

–

93.4

93.3

–

0.1

(188.0)

299.5

501.2

–

(13.7)

487.5

496.7

698.0

0.3

(13.7)

684.6

At 31 December 2020

1,038,128,556

103.8

93.3

The merger reserve is the result of a placing of 94,012,782 ordinary shares in 2019 and the acquisition of 100% of the equity of Partnership Assurance
Group plc in 2016. The placing was achieved by the Company acquiring 100% of the equity of a limited company for consideration of the 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. The merger reserve recognised represents the premium over the nominal value of the shares issued. Consideration for the
acquisition of the equity shares of Partnership Assurance Group plc 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. The merger reserve
recognised represents the difference 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 24 to the Group financial statements.

7 RELATED PARTY TRANSACTIONS
(a) Trading transactions and balances
The following transactions were made with related parties during the year:

Staff costs, Directors’ remuneration, operating expenses and management fees charged by Just Retirement Management
Services Limited

Loan advances to Just Retirement Limited

Loan advances to Partnership Life Assurance Company Limited

Interest on loan balances charged to Just Retirement Limited

Interest on loan balances charged to Partnership Life Assurance Company Limited

Dividends from Partnership Assurance Group Limited

The following balances in respect of related parties were owed by the Company at the end of the year:

Just Retirement Limited

Just Retirement Management Services Limited

The following balances in respect of related parties were owed to the Company at the end of the year:

HUB Financial Solutions Limited

Just Retirement Group Holdings Limited

Partnership Life Assurance Company Limited

Loan to Just Retirement Limited (including interest)

Loan to Partnership Life Assurance Company Limited (including interest)

Amounts owed for Group corporation tax

(b) Key management compensation
Key management personnel comprise the Directors of the Company.

Key management compensation is disclosed in note 36 to the Group financial statements.

Year ended
31 December
2021
£m

Year ended
31 December
2020
£m

14.8

–

63.9

19.8

169.0

2021
£m

(0.1)

(1.6)

2021
£m

0.3

0.1

0.7

759.9

253.0

13.0

18.1

175.0

100.0

58.3

13.5

90.0

2020
£m

(0.2)

(4.6)

2020
£m

0.3

0.1

0.7

759.2

251.8

3.6

179

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

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 2021 of £1,168m.

The core surplus generation assumes that future property growth is in line with the best estimate assumption of 3.3%. 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 2021.

Core surplus
generation
£m

TMTP
amortisation
£m

Surplus
generation
£m

259

239

232

231

234

223

221

223

210

205

192

185

181

167

169

147

143

133

124

113

414

219

(124)

–

135

115

108

107

110

192

185

181

167

169

147

143

133

124

113

414

219

Year

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042 – 2046

2047 – 2051

2052 – 2056

180

SOLVENCY II SURPLUS GENERATION continued
New business contribution
The table below shows the expected future emergence of Solvency II surplus arising from 2021 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 2021. The amounts are shown undiscounted.

Year

Point of sale

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year 11

Year 12

Year 13

Year 14

Year 15

Year 16

Year 17

Year 18

Year 19

Year 20

Years 21 to 25

Years 26 to 30

Years 31 to 35

Surplus
generation
£m

(40.0)

11.6

11.3

11.2

11.1

10.9

11.3

11.7

11.8

11.7

11.8

11.7

11.5

11.1

10.6

10.3

10.0

9.5

9.1

8.8

36.9

22.3

7.4

181

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

ADDITIONAL FINANCIAL INFORMATION CONTINUED

FINANCIAL INVESTMENTS CREDIT RATINGS
The sector analysis of the Group’s financial investments portfolio by credit rating is shown below:

Basic materials

Communications and technology

Auto manufacturers

Consumer (staples including healthcare)

Consumer (cyclical)

Energy

Banks

Insurance

Financial – other

Real estate including REITs

Government

Industrial

Utilities

Commercial mortgages

Ground Rent

Infrastructure loans

Other

Corporate/government bond total

Lifetime mortgages

Liquidity funds

Derivatives and collateral

Total

AAA
£m

–

122

–

163

–

AA
£m

153

276

219

193

103

407

1,589

–

134

–

203

124

A
£m

198

101

281

131

392

145

102

230

204

115

BBB
£m

154

920

184

327

139

212

460

501

325

215

577

1,006

1,204

281

123

398

161

825

BB or
below
£m

Unrated
£m

–

152

–

118

–

1,143

3,195

3,860

6,286

434

358

Total
£m

264

1,430

319

1,174

187

633

1,192

845

481

661

2,415

920

2,302

678

263

1,474

15,276

7,423

1,311

741

1.1

5.8

1.3

4.7

0.7

2.6

4.8

3.4

1.9

2.7

9.7

3.7

9.3

2.7

1.1

6.0

0.2

61.7

30.0

5.3

3.0

24,751

100.0

182

INFORMATION FOR SHAREHOLDERS

The following information is unaudited.

ANNUAL GENERAL MEETING
The Company’s 2022 Annual General Meeting (“AGM”) will be held on Tuesday 10 May 2022 at 10.00am at our registered office, Enterprise House,
Bancroft Road, Reigate, Surrey RH2 7RP. More information about the 2022 AGM can be found in the Notice of Meeting, which will be made available to
shareholders separately.

SHAREHOLDER PROFILE AS AT 31 DECEMBER 2021

Holdings

1–5,000

5,001–10,000

10,001–100,000

100,001–1,000,000

1,000,001–10,000,000

10,000,001–20,000,000

20,000,001 and over

Totals

No. of
holders

538

186

132

% of
holders

51.93

5.89

17.95

12.74

8.98

1.16

1.35

No. of
shares

579,665

454,930

6,933,722

51,237,643

321,683,786

163,267,212

494,380,086

% of issued
share capital

0.06

0.04

0.67

4.93

30.98

15.72

47.60

1,036

100.00

1,038,537,044

100.00

JUST GROUP PLC SHARE PRICE
The Company’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 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 and reduce our carbon footprint, 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, please contact our Investor Relations department whose contact details can be found at
www.justgroupplc.co.uk/investors/investor-contacts. Individual shareholders with queries regarding their shareholding in the Company 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. Select the information of interest to you, such as results, Board changes and AGM and other meetings. You will then be notified
by email when this information is available to view on our website.

Digital copies of our Annual Report and Accounts are available at www.justgroupplc.co.uk and physical copies 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 the Company’s reference number 3947 to the
address below or by calling 0371 384 2787 for callers from the UK or +44 (0)121 415 0096 for callers from outside the UK. Lines are open 8.30am to
5.30pm Monday to Friday, excluding UK Bank Holidays. Shareholders can also view and manage their shareholdings online by registering at
www.shareview.co.uk.

Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA

183

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

INFORMATION FOR SHAREHOLDERS CONTINUED

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-effective 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, offering 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 on 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 Company and its subsidiaries (the “Group”) in this Annual Report involve
uncertainty since future events and circumstances can cause results and developments to differ 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 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 differ materially from those that we have estimated. Other
factors which could cause actual results to differ 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 impact from the COVID-19 outbreak or other infectious diseases and the
unfolding situation in Ukraine); 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 differ 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.

184

DIRECTORS AND ADVISERS

The following is unaudited.

DIRECTORS
Non-Executive Directors:
John Hastings-Bass, Chair
Ian Cormack, Senior Independent Director
Paul Bishop
Michelle Cracknell
Mary Kerrigan
Steve Melcher
Kalpana Shah
Clare Spottiswoode

Executive Directors:
David Richardson, Group Chief Executive Officer and Managing Director, UK Corporate Business
Andy Parsons, Group Chief Financial Officer

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

RBC Capital Markets
100 Bishopsgate
London
EC2N 4AA

CORPORATE BROKERS
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London
E14 5JP

AUDITOR
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT

CORPORATE LAWYERS
Hogan Lovells International LLP
Atlantic House
Holborn Viaduct
London
EC1A 2FG

185

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

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 dividing
adjusted operating profit after attributed tax 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 after attributed tax – the adjusted operating
profit before tax APM reduced for the standard tax rate (19% for 2021).
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-off 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 of acquired intangible assets. 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 in 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 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 acquired intangibles – relate to the
amortisation of the Group’s intangible assets arising on consolidation,
including the amortisation of intangible assets recognised in relation to
the acquisition of Partnership Assurance Group plc by Just Group plc
(formerly 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 sufficient 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 (“CP”) – 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 difference 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 effect 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 deferred (“DB deferred”) business – the part of DB
de-risking transactions that relates to deferred members of a pension

186

scheme. These members have accrued benefits in the pension scheme
but have not retired yet.
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 offering specialist knowledge
to employers on the legal, regulatory and practical issues of rewarding
staff, 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 – see Lifetime mortgage.
Finance costs – represent interest payable on reinsurance deposits
and financing and the interest on the Group’s Tier 2 and Tier 3 debt.
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, and adjusted operating profit before tax is reconciled to
IFRS profit before tax in the Business Review.
Investment and economic profits – reflect the difference 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 Return on equity,
Solvency II capital coverage ratio, Underlying organic capital generation,
Retirement Income sales, New business operating profit, Underlying
operating profit, Management expenses, Adjusted operating profit, 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.
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 impacted by external factors.
Management expenses are reconciled to IFRS other operating expenses in
note 4 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, and adjusted operating profit before
tax is reconciled to IFRS profit before tax in 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-off 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 differing 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 calculated in the
same way as Underlying organic capital generation/(consumption), but
includes economic variances, regulatory adjustments, capital raising or
repayment and impact of management actions and other operating
items.
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 & 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.
Retail sales (in reference to Just Group sales or products) – collective
term for GIfL and Care Plan.
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 6 to the consolidated financial statements.
Return on equity – an APM and one of the Group’s KPIs. Return on equity is
adjusted operating profit after attributed tax for the period divided by the
average tangible net asset value for the period. Tangible net asset value is
reconciled to IFRS total equity in the Business Review.
Secure Lifetime Income (“SLI”) – a tax efficient 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.
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.
Tangible net asset value – IFRS total equity excluding goodwill and other
intangible assets, net of tax, and excluding equity attributable to Tier 1
noteholders.
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 one of the Group’s KPIs.
Underlying profit is calculated in the same way as adjusted operating
profit before tax but excludes operating experience and assumption
changes. Underlying operating profit is reconciled to adjusted operating
profit before tax, and adjusted operating profit before tax is reconciled to
IFRS profit before tax in the Business Review.
Underlying organic capital generation/(consumption) – an APM and one
of the Group’s KPIs. Underlying organic capital generation/(consumption)
is the net increase/(decrease) in Solvency II excess own funds over the
year, generated from on-going business activities, and includes surplus
from in-force, net of new business strain, cost overruns and other
expenses and debt interest. It excludes economic variances, regulatory
adjustments, capital raising or repayment and impact of management
actions and other operating items. The Board believes that this measure
provides good insight into the on-going capital sustainability of the
business. Underlying organic capital generation/(consumption) is
reconciled to Solvency II excess own funds, and Solvency II excess own
funds is reconciled to shareholders’ net equity on an IFRS basis in the
Business Review.

187

GOVERNANCESTRATEGIC REPORTFINANCIAL STATEMENTSJUST GROUP PLC ANNUAL REPORT AND ACCOUNTS 2021

ABBREVIATIONS

ABI – Association of British Insurers

NAV – net asset value

AGM – Annual General Meeting

NNEG – no-negative equity guarantee

APM – alternative performance measure

ORSA – Own Risk and Solvency Assessment

Articles – Articles of Association

PAG – Partnership Assurance Group

CMI – Continuous Mortality Investigation

PILON – payment in lieu of notice

Code – UK Corporate Governance Code

PLACL – Partnership Life Assurance Company Limited

CP – Care Plans

PPF – Pension Protection Fund

CPI – consumer prices index

PRA – Prudential Regulation Authority

DB – Defined Benefit De-risking Solutions

PRI – United Nations Principles for Responsible Investment

DC – defined contribution

PVIF – purchased value of in-force

DSBP – deferred share bonus plan

PwC – PricewaterhouseCoopers LLP

EBT – employee benefit trust

EPS – earnings per share

REIT – Real Estate Investment Trust

RICS – The Royal Institution of Chartered Surveyors

ERM – equity release mortgage

RPI – retail price inflation

ESG – environment, social and governance

SAPS – Self-Administered Pension Scheme

EVT – effective value test

SAYE – Save As You Earn

FCA – Financial Conduct Authority

SCR – Solvency Capital Requirement

FPP – Flexible Pension Plan

SFCR – Solvency and Financial Condition Report

FRC – Financial Reporting Council

SID – Senior Independent Director

GDPR – General Data Protection Regulation

SIP – Share Incentive Plan

GHG – greenhouse gas

SLI – Secure Lifetime Income

GIfL – Guaranteed Income for Life

SME – small and medium-sized enterprise

Hannover – Hannover Life Reassurance Bermuda Ltd

STIP – Short Term Incentive Plan

IFRS – International Financial Reporting Standards

tCO2e – tonnes of carbon dioxide equivalent

IP – intellectual property

TMTP – transitional measures on technical provisions

ISA – International Standards on Auditing

TSR – total shareholder return

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

188

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THE RE TIREMENT SPECI ALIST

Just Group plc
Enterprise House
Bancroft Road
Reigate
Surrey RH2 7RP

justgroupplc.co.uk

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