The equity release and annuity giant expects to sell a further tranche of mortgages in the coming weeks.
Just announced its plan to sell off a chunk of its lifetime mortgage portfolio in its interim financial statement released last week.
In an update to the London Stock Exchange, Just said the transaction allowed the group to further reduce its exposure to UK residential property risk.
The sale of the portfolio, including the remaining tranche, is expected to result in an improvement in the group’s Solvency II capital coverage ratio by up to one percentage point. Just said it will also reduce the sensitivity of that ratio to movements in UK residential property prices by over one percentage point.
In last week’s interim statement, Just noted that a drop in residential property values could reduce amounts received from lifetime mortgage redemptions. Furthermore, regulatory capital needed to support the possible shortfall would rise if values fell.
If prices grew significantly this could increase the number of early redemptions resulting in higher cashflows and consequential reinvestment risk.
Just sold a portfolio of loans secured by residential mortgages, with a fair value of £600.8m, in December 2020.
A spokesperson from Rothesay said: “We are pleased to take on the funding of these mortgages which help older people access the value in their homes. These types of high-quality, secured assets play an important part in our over £60bn investment portfolio, providing long-term security for the pensions we protect.”
The administration of the loans will remain with the originating lender.