Just sells portfolio of lifetime mortgages to Rothesay
The portfolio comprises an outstanding loan balance of £537m and an International Financial Reporting Standards (IFRS) value of £772m, as of 31 December 2021. The lifetime mortgages being sold form part of the investments which will be used to back the insurance liabilities of Just.
The consideration is around £687m and payable in cash. The deal affects 4,600 properties.
The proceeds will be reinvested into other fixed interest assets and will result in an IFRS net of tax loss of around £35m, which includes the impact on the insurance liabilities as a result of the new asset mix.
It added that Just Group is and will continue to be the customer-facing lender of record and servicer. Rothesay will take ownership of the beneficial interest in underwriting of these loans. There will be no changes to the terms of the loans for borrowers.
This is the third lifetime mortgage portfolio sale by Just in the last 15 months and further reduces its exposure to risk in the UK residential property market.
It is the second sale to Rothesay, which purchased a lifetime mortgage portfolio for £334m in August last year.
This current sale of mortgages will be the final one, Just said.
Just will announce its financial results for the year ending 31 December 2021 on 10 March and will update the market on its Solvency II position and reduced sensitivity to moves in the UK property market at that time. The impact of the sale on the group’s Solvency II capital ratio will be broadly neutral, the firm said.
David Richardson, group chief executive at Just, said: “I am very pleased to have completed our third lifetime mortgage portfolio sale, which, together with the three no negative equity guarantee hedges we have completed and the reduction in new business lifetime mortgage backing ratio we have achieved over the last two years, leaves our solvency position much more resilient to stresses in the UK housing market.
“This, alongside both our improved capital base and organic capital generation, has established a strong foundation for the business, from which to deliver profitable and sustainable growth.”