Just Group Regulatory News (JUST)

JRP Group plc ("the Group") announces its interim results for the six months ended 30 June 2016.

Highlights

Rodney Cook, Group Chief Executive, said:

"We were delighted to have completed the merger of Just Retirement and Partnership at the beginning of April and I am pleased to announce we are ahead of schedule in delivering synergy benefits. In addition we have raised our synergy target from £40m and now expect to achieve annualised savings of at least £45m by the end of 2018. Our new business margin is starting to demonstrate the opportunity we have for potential further improvement as we deliver the cost synergies.

We have seen a considerable increase in Guaranteed Income for Life sales, which demonstrates the capability of the combined organisation and our competitive positioning in the open market. Our progress in DB is also strong, with sales of over £330m since the end of June, more than double the amount we completed in the whole of the first half. We continue to see a large and increasing pipeline of DB opportunities. Mortgage advances have also performed strongly, which positions the Group well for a strong second half in retirement product sales.

We are successfully adapting our business model to the new capital environment. The combination of increased margins, synergy delivery and a current coverage ratio of 134%, together with low gearing, gives us confidence in the long term growth prospects of the Group.

We look forward to giving you more detail on JRP, the attractiveness of our growing markets, competitive strengths and capital model at our capital markets day planned on 5th October."

The merger of Just Retirement and Partnership is required for accounting purposes to be treated as an acquisition by Just Retirement of Partnership with an effective date of the beginning of April 2016. Accordingly the statutory information only includes the results of Partnership for the three months from April 2016. As a consequence pro-forma financial performance measures as though the merger took place at the beginning of January 2015 have been presented to give the market an understanding of the business of the merged group.

These interim results comprise the second set of interim results for the period from 1 July 2015 to 30 June 2016. The commentary above focuses on the half year from 1 January 2016 to 30 June 2016.

Enquiries

A presentation for analysts will take place at 9.30am today at Numis Securities Limited, The London Stock Exchange Building, 10 Paternoster Square, London EC4M 7LT

UK FreeCall: 08006940257

United States FreeCall: 18669669439

Std International Dial-In: +44 (0) 1452 555566

Conference ID: 69388382

A copy of this announcement, the presentation slides and a transcript of the conference call will be available on the Group's website www.jrpgroup.com

JRP GROUP PLC

GROUP COMMUNICATIONS

Vale House, Roebuck Close

Bancroft Road, Reigate

Surrey RH2 7RU

FINANCIAL CALENDAR:

Chief Executive Officer's Report

Introduction

I am pleased to present the inaugural half year report for the new JRP Group plc, which was formed at the beginning of April 2016 following the completion of the merger between Just Retirement Group plc ("Just Retirement") and Partnership Assurance Group plc ("Partnership").

The completion of the merger represents the culmination of a significant amount of hard work over the last year and I would like to thank those people who contributed to bringing the two groups together successfully. On behalf of the Chairman I would like to welcome the new members of the Board and to thank those directors who have stepped down from both the Just Retirement and Partnership Boards.

I am excited about the opportunities that the merger opens up for our larger and stronger business as we begin to demonstrate our combined strength and expertise in our chosen markets.

We have made a good start to integrating the two businesses, with progress helped by the significant similarities between the two and by the strong management team that we have appointed to help deliver the opportunities before us.

It will take time to complete the integration with some significant complexities to overcome, but we have managed to deliver £15m of annualised savings in the first five months following completion of the merger. As we have been able to review the potential for the integration in greater detail, we are upgrading our target savings to at least £45m pa with the full run-rate being achieved by 2018.

I am pleased to be able to report continued progress in 2016 in our key GIfL and DB markets. This has been achieved after allowing for changes in pricing driven by the Solvency II capital requirements which became effective at the beginning of the period.

Our distribution franchise across our retail and wholesale markets is well developed and continues to strengthen. Our corporate solutions business has deepened its penetration to reach over 20 per cent of FTSE 100 companies through our innovative worksite offering of retirement focused member services. Additionally we have extended the services we provide to a range of existing corporate clients and secured new mandates to provide a range of outsourced product, software and administration solutions to banks, life insurance companies and affinity partners.

Performance review

The merger of Just Retirement and Partnership is required for accounting purposes to be treated as an acquisition by Just Retirement of Partnership with an effective date of the beginning of April 2016. As a consequence pro-forma financial performance measures, as though the merger took place at the beginning of January 2015, have been presented to give the market an understanding of the business of the merged group. Pro-forma financial information is shown in the commentary below and at the front of the Business review section.

DB sales stand at £164m on a pro-forma basis for the six months to 30 June 2016 (2015 pro-forma DB sales: £322m). In the current period, the pattern of DB sales has been influenced by expected pricing disruption following the introduction of the Solvency II regime and increased capital requirements. However the DB pipeline remains strong and since the period end the Group has written over £330m of further DB business.

We have seen a good return to growth in the GIfL market, with pro-forma sales up 17% compared to the same period in 2015 (pro-forma GIfL sales: £397m vs £340m). This demonstrates a continued improving trend in the GIfL market now that the pensions reforms announced in the 2014 budget have taken place, and advisers and consumers have had a chance to adjust to the new pensions landscape.

We have seen impressive growth in Care Plan sales of 42%, based on pro-forma sales of £58m (pro-forma 2015 Care Plan sales, £41m).

Lifetime mortgages ("LTM") of £322m on a pro-forma basis (pro-forma 2015, £205m) were advanced for the six months. Our longer term target of advances as a proportion of Retirement Income sales remains at around 25%, and the sales in the first half provide us with capacity to write profitable DB and GIfL business in the second half of the year.

The pro-forma new business operating profit margin, which is measured as the ratio of new business operating profit to Retirement Income sales (comprising DB, GIfL and Care), was 5.0%. The pro-forma margin is higher than the margin achieved in the six months to June 2015 and the increase reflects higher margins achieved on GIfL business after pricing changes following the implementation of Solvency II capital requirements, together with higher backing asset yields, partially offset by lower sales of DB business.

Overall, operating profit before tax, on a pro-forma basis for the six months ended 30 June 2016, was £48.4m, up 12% on the comparative period, mainly driven by the increase in new business operating profit.

The Group's financial investments increased by £2.8bn from 30 June 2015 to £16.2bn at 30 June 2016, on a pro-forma basis. This is as a result of the new business premiums written during the period and asset value appreciation as a result of lower risk free interest rates.

The Group's total equity on a statutory basis at 30 June 2016 was £1,676.4m (30 June 2015: £814.0m), and the profit before tax for the year ended 30 June 2016 on a statutory basis was £252.5m (2015: loss of £29.6m), reflecting the merger with Partnership, increase in new business volumes and margins, and a positive overall impact in this period from investment and economic profits, compared to significant economic losses in the prior period (investment and economic profits 2016: £147.0m; 2015 loss of £74.1m).

Group European Embedded Value amounted to £2,116.1m at 30 June 2016 or £2.27 per share (30 June 2015: £1,019.3m). The primary drivers for this increase relate to the merger with Partnership (£685.0m), economic variances of £190.3m, new business written in the period of £115.3m and basis harmonisation following the merger (£47.6m).

The Group remains comfortably capitalised under Solvency II with a Solvency Capital ratio of 134% at 30 June 2016. The Group has low gearing and the significant majority of current own funds is comprised of Tier 1 capital. The Group's economic capital ratio at 30 June 2016 was 185%. The Group continues to explore, on an ongoing basis, a range of balance sheet options, including accessing the debt capital markets, with a view to providing further financial strength and growth potential.

As we announced in March we are very proud to have received recognition from the industry for the quality of our service, receiving 5 star ratings at the 2015 Financial Adviser Service Awards. This continued success means that we have held 5 star ratings for an impressive 11 years for Life & Pensions and eight years for Mortgage Lenders and Packagers, demonstrating our excellent quality of support and customer focus. In addition I am delighted that Just Retirement in 2016 was placed first in the Quality Service Provider award by the Institute of Customer Service.

I am also pleased to report that as Just Retirement Group plc we were for the 6th time ranked within "The Sunday Times 100 Best Companies to Work For" list for 2016, achieving a rating of "Outstanding" and the ranking of 92.

Outlook

JRP Group plc has had a very successful start to the year. We have continued to deliver growth at the same time as we integrate our businesses and our focus remains on delivering simple to understand, good value products and services to our Retail and Wholesale customers.

I also want to thank our colleagues once again, not just for achieving these strong results, but also for coping with a significant period of uncertainty and for maintaining high quality customer service.

I am excited about the opportunities that the merger of Just Retirement and Partnership will open up for the new enlarged and stronger JRP Group plc. We are already demonstrating our combined strength and expertise in our chosen markets, and we look to the future with confidence that we can continue to deliver growth and value for our shareholders.

Rodney Cook

Group Chief Executive

Business review

Overview

The merger between Just Retirement Group plc ("Just Retirement") and Partnership Assurance Group plc ("Partnership") completed at the beginning of April 2016, creating JRP Group plc ("JRP"). This is JRP's first interim report following the merger, and the statutory results explained below represent the results of Just Retirement for the entire current period, plus three months' results of Partnership, from the date of acquisition to 30 June 2016.

The transaction was achieved through an all-share merger by way of an acquisition by Just Retirement Group plc of Partnership Assurance Group plc and Just Retirement Group plc changed its name to JRP Group plc on 4 April 2016. Post-merger, Just Retirement shareholders own approximately 60% of the Combined Group and Partnership Assurance shareholders own approximately 40% of the Combined Group.

The Board of JRP Group plc is made up of 13 directors, comprising directors from both Just Retirement Group plc's and Partnership Assurance Group plc's previous Boards, with suitable individuals selected to create a balanced Board with appropriate skills and relevant experience:

Executive directors:

Rodney Cook, Group Chief Executive Officer

David Richardson, Deputy Group Chief Executive Officer (appointed 4 April 2016)

Simon Thomas, Group Chief Financial Officer

Non-executive directors:

Chris Gibson-Smith, Chairman (appointed 4 April 2016)

Tom Cross Brown, Deputy Chairman

Keith Nicholson, Senior Independent Director

Paul Bishop (appointed 4 April 2016)

Peter Catterall (appointed 4 April 2016)

Ian Cormack (appointed 4 April 2016)

Michael Deakin

James Fraser

Steve Melcher

Clare Spottiswoode (appointed 4 April 2016)

Shayne Deighton and Kate Avery resigned from the Just Retirement Board on 4 April 2016.

Following the completion of the transaction the new Board remains confident of delivering the significant strategic and financial benefits to attain even better returns for policyholders and shareholders.

Following the transaction, JRP changed its accounting reference date from 30 June to 31 December. JRP's next full audited statutory results will be for the 18 month period ending 31 December 2016.

In addition to the statutory financial information, illustrative financial information prepared on the basis that the transaction had taken place at 1 January 2015 has been provided on an unreviewed and unaudited pro-forma basis, and is shown below, followed by the statutory view of the results.

Illustrative pro-forma financial information for JRP Group plc

The following pro-forma financial information is provided for illustrative purposes and is presented on the basis that the merger between Just Retirement and Partnership had taken place as at 1 January 2015. Pro-forma information is unreviewed and unaudited. A reconciliation of pro-forma financial information to statutory financial information is given in Note 3 to the Condensed consolidated financial statements.

New business sales - pro-forma basis

New business sales on a pro-forma basis represent sales for the six months ended 30 June 2016 for both Just Retirement and Partnership, together with comparative information on a pro-forma basis representing sales for the six months ended 30 June 2015 for both Just Retirement and Partnership.

Total new business sales for the Group on a pro-forma basis increased by 3%, from £922.6m for the six months to 30 June 2015, to £948.7m for the six months to 30 June 2016. The drivers for this increase are explained below.

DB sales on a pro-forma basis for the six months to 30 June 2016 were down 49% compared to the same period in the prior year, falling from £322.1m to £164.4m. In the current period, the pattern of DB sales has been influenced by expected pricing disruption following the introduction of the Solvency II regime and increased capital requirements. However the DB pipeline remains strong and since the period end the Group has written over £330m of further DB business.

GIfL sales on a pro-forma basis for the six months to 30 June 2016 have increased by 17% compared to the same period in the prior year (H1 2016: £397.1m; H1 2015: £339.6m). This demonstrates a continuing improving trend in the GIfL market now that the pensions reforms announced in the 2014 budget have taken place, and advisers and consumers have had a chance to adjust to the new pensions landscape.

Sales of Care Plans were up 42% on a pro-forma basis, from £40.6m in H1 2015 to £57.7m in H1 2016. The Group benefits from strong performance in this sector, reflecting our increased competitiveness and scale.

Drawdown sales, which include Capped Drawdown ("CD") and Flexible Pension Plan ("FPP") sales, decreased on a pro-forma basis from £13.4m in H1 2015 to £5.4m in H1 2016. This is in line with expectation and reflects the closure of the CD product to new business, and the launch of the FPP product which allows customers to take advantage of the new pensions freedoms.

Protection sales increased slightly from £2.1m in H1 2015 to £2.3m in H2 2016 on a pro-forma basis.

LTM sales have increased by 57% on a pro-forma basis, from £204.8m in H1 2015 to £321.8m in H1 2016. The Group has performed strongly in this sector. On a pro-forma basis, these sales are ahead of our longer-term target of c. 25% of Retirement Income sales; the proportion is expected to reduce towards the longer-term target as these sales will be used to match DB pipeline business and the Group's second half sales.

Operating profit - pro-forma basis

Operating profit on a pro-forma basis represents the operating profit for the six months ended 30 June 2016 for both Just Retirement and Partnership, together with comparative information on a pro-forma basis representing the operating profit for the six months ended 30 June 2015 for both Just Retirement and Partnership. The underlying assumptions have been aligned to be consistent across both Group companies in the current and prior year pro-forma periods.

Operating profit before tax

Operating profit before tax represents the operating results of the Group, including the acquired Partnership business, before taking into account non-recurring and project expenditure, investment and economic profits/(losses), amortisation costs of intangible assets including the acquired in-force business asset, and gain on acquisition of Partnership Assurance Group plc.

New business operating profit

New business operating profit represents the profit generated from new business written in the period after allowing for the setting up of prudent reserves and for acquisition expenses.

New business operating profit has increased compared to the prior period, reflecting changes in pricing following the implementation of Solvency II, particularly for GIfL pricing. The result also benefitted from higher effective yields on backing assets.

In-force operating profit

In-force operating profit captures the expected margin to emerge from the in-force book of business and free surplus, and results from the gradual release of product reserving margins over the lifetime of the policies.

In-force operating profit has increased compared to the prior period. This is as a result of growth in the overall size of the in-force book of business.

Underlying operating profit

Underlying operating profit is the sum of the new business operating profit and in-force operating profit. As this measure excludes the impact of one-off assumption changes and investment variances, the Board considers it to be a key indicator of the progress of the business and a useful measure for investors and analysts when assessing the Group's financial performance and position.

The increase in underlying operating profit reflects movements in new business and in-force operating profit as explained above.

Operating experience and assumption changes

Operating experience and assumption changes capture 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.

Other Group companies' operating results

Other Group companies' operating results include the results of Group companies which provide regulated advice and intermediary services, and professional services to corporates, as well as corporate costs incurred by Group holding companies.

Reinsurance and finance costs

Reinsurance and finance costs includes the interest charge on bank loans and reinsurance financing, together with reinsurance fees incurred in the period, and also includes interest costs in relation to the Tier 2 Notes issued by Partnership Life Assurance Company Limited.

Embedded Value - pro-forma basis

Embedded Value on a pro-forma basis represents the Embedded Value result for the six months ended 30 June 2016 for both Just Retirement and Partnership, as if the merger had taken place on 1 January 2016. Accordingly, pro-forma comparative Embedded Value information has not been presented. The underlying assumptions have been aligned to be consistent across both Group companies.

1 The Opening Group EEV has been stated on harmonised assumptions, and after methodology changes made following the introduction of the Solvency II regulatory regime at 1 January 2016.

Operating EEV earnings include £45.7m from new business written in the period. The other material positive item included in operating EEV earnings is the expected contribution from existing business which has been offset by the impact of the negative experience on lifetime mortgage redemptions and interest paid on subordinated debt.

The key driver for the large increase in embedded value from the non-operating earnings is the impact of the large fall in risk-free interest rates over the period. The non-operating earnings also include transaction and integration costs with regards to the merger (£23.9m pre-tax).

Share based payments was the main driver for the increase in EEV included in the "Other movements in IFRS net equity" line. The JRP Group paid dividends in the period of £10.2m which led to a corresponding reduction in EEV.

Capital management

Summary of JRP Group plc economic capital position

Summary of JRP Group plc Solvency II capital position

The Solvency II regime came into effect on 1 January 2016. The Group has approval to apply the matching adjustment and transitionals 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. The Group has received approval to recalculate the transitional relief as at 30 June 2016 in light of the significant interest rate falls that have been experienced in the period.

Both Just Retirement and Partnership managed their businesses on a basis of both economic and regulatory capital, and the combined JRP Group will continue to do so.

Statutory financial information and Key Performance Indicators

The financial information presented below includes the results of Partnership Assurance Group from the date of acquisition on 1 April 2016. The results for the six months ended 30 June 2016 reflect six months of Just Retirement and three months of Partnership (1 April 2016 to 30 June 2016) and the results for the twelve months ended 30 June 2016 reflect twelve months of Just Retirement and three months of Partnership (1 April 2016 to 30 June 2016). Comparative information for the six and twelve months ended 30 June 2015 reflects the results of Just Retirement only.

Key Performance Indicators ("KPI's")

The Board has adopted the following metrics, which are considered to give an understanding of the Group's underlying performance. These measures are referred to as key performance indicators.

New business sales

£2,021.4m (2014/15: £1,455.8m)

New business sales are a key indicator of the Group's growth and realisation of its strategic objectives. New business sales comprise Retirement Income sales, Drawdown sales, Protection sales and LTM advances in the reporting period.

The table below sets out a breakdown of new business sales for the six months ended 30 June 2016, the six months 30 June 2015, the twelve months ended 30 June 2016 and the twelve months ended 30 June 2015. New business sales for the six months to 30 June 2016 and for the twelve months to 30 June 2016 benefit from three months of Partnership Assurance Group plc sales arising post-merger.

New business sales totalled £2,021.4m for the twelve months ended 30 June 2016, an increase of 39% compared to the same period last year (2014/15: £1,455.8m). The increase is attributable to a combination of new business sales written by Just Retirement, which show an increase of 28%, from £1,456m to £1,858m, plus new business sales written by Partnership which are included in the Group result post-merger, of £163m.

DB sales for the twelve months to 30 June 2016 were £865.6m, compared to £608.9m for the same period last year, an increase of 42%. These sales experienced disruption in the run into and following the introduction of the Solvency II regime which changed the timing pattern of sales. The increase in sales was a result of growth in the overall DB market together with continued growth in the medically underwritten segment. Our DB sales pipeline remains strong and our proposition is differentiated by using our expertise in medically underwriting schemes. Since the end of June 2016, we have written over £330m of further DB business.

The GIfL market has continued to improve over the last twelve months, with 2015/16 sales increasing by 24% compared to the prior period (GIfL sales 2015/16: £591.9m; 2014/15: £478.0m). The current period GIfL sales include the benefit of £63m sales written through Partnership; GIfL sales written through Just Retirement in the period increased by 11% from £478m to £529m. This demonstrates a continuing improving trend in the GIfL market now that the pensions reforms announced in the 2014 budget have taken place, and advisers and consumers have had a chance to adjust to the new pensions landscape.

Sales of Care Plans increased from £12.1m for the twelve months to 30 June 2015 to £58.0m for the twelve months to 30 June 2016. The result for the current period includes £16m of sales attributable to Partnership post-merger, and the overall significant increase from the prior period reflects our increased competitiveness and scale in this sector.

Drawdown sales include Capped Drawdown ("CD") and Flexible Pension Plan ("FPP") sales. Our CD product is now closed to new customers and has been replaced with the Flexible Pension Plan, which allows consumers to take advantage of the new pensions freedoms (CD and FPP sales 2015/16: £12.6m; 2014/15: £48.7m).

Protection sales of £1.0m relate to Protection business written through Partnership since the merger; Just Retirement did not previously write protection business and the acquisition of Partnership brings this new product into the Group.

LTM sales have increased from £308.1m for the twelve months to 30 June 2015 to £492.3m for the same period to 30 June 2016. Of the increase of £184m, £83m relates to LTMs written through Partnership post-merger. LTM sales are managed in line with our overall Retirement Income sales; and although over the twelve month period to 30 June 2016 LTM sales are ahead of our longer-term target of c. 25% of Retirement Income sales, the proportion will reduce towards the longer-term target as these sales will be used to match DB pipeline business and second half sales.

New business operating profit

£78.8m (2014/15: £36.8m)

New business operating profit represents the profit generated from new business written in the period after allowing for the setting up of prudent reserves and for acquisition expenses.

New business operating profit has increased compared to the prior period, reflecting the growth in new business written in the period, positive changes to GIfL pricing following the implementation of Solvency II, and the contribution from DB sales which have a closer durational fit with LTM assets and which deliver higher margins. New business operating profit in the prior year was impacted by competitive pricing for GIfL products and by the disruption to the individual retirement market following the 2014 Budget announcement. New business operating profit for the twelve months to 30 June 2016 includes a small contribution from Partnership of £2.5m, recognising that most DB and GIfL sales in this period relate to Just Retirement, with Partnership sales relating to its pipeline of GIfL sales.

In-force operating profit

£50.6m (2014/15: £49.6m)

In-force operating profit captures the expected margin to emerge from the in-force book of business and free surplus, and results from the gradual release of product reserving margins over the lifetime of the policies.

In-force operating profit has increased slightly during the twelve months to 30 June 2016. The size of the in-force book of business has grown as a direct result of the merger, which has led to an increase in the amount of margin now emerging. Excluding the impact of the merger, the in-force operating profit has reduced compared to the prior period. This is as a result of a change to a slower recognition of in-force mortgage returns from 1 July 2015, although the in-force book continues to grow. Of the in-force operating profit for the twelve months to 30 June 2016, £9.7m relates to profit contributed from the Partnership in-force book in the three months post-merger.

Underlying operating profit

£129.4m (2014/15: £86.4m)

Underlying operating profit is the sum of the new business operating profit and in-force operating profit. As this measure excludes the impact of one-off assumption changes and investment variances, the Board considers it to be a key indicator of the progress of the business and a useful measure for investors and analysts when assessing the Group's financial performance and position.

The increase in underlying operating profit reflects the movements in new business and in-force operating profit explained above and is a combination of an underlying increase in the volume of business written by Just Retirement, at an increased margin compared to the prior period, plus the benefit of the underlying operating profit attributable to Partnership and included within the Group's results for the three months post-merger.

European embedded value ("EEV")

£2,116.1m (30 June 2015: £1,019.3m)

EEV represents the sum of the shareholders' net assets and the value of in-force business, and is a key measure in assessing the future profit streams of the Group's long-term business. It also recognises the additional value of profits in the existing book of business which have not yet been recognised under IFRS accounting.

EEV at 30 June 2016 was £2,116.1m, a significant increase of £1,096.8m compared to the closing value at 30 June 2015. The increase reflects the acquisition of Partnership, the value of new business written in the period, positive investment and economic variances, and basis harmonisation.

Solvency II capital coverage ratio

134% 

Solvency II is the Group's regulatory capital basis, and came into force on 1 January 2016.

Economic capital coverage ratio

185% (30 June 2015: 176%)

Economic capital is a key risk-based capital measure. 

IFRS results

The analysis of the IFRS results for the six months ended 30 June 2016, the six months ended 30 June 2015, the twelve months ended 30 June 2016 and the twelve months ended 30 June 2015 is presented in the table below.

The Group acquired Partnership Assurance Group plc on 1 April 2016, and accordingly the results below include the results of Partnership Assurance Group plc for the three month period from the date of acquisition to the period end.

Operating profit before tax

Operating profit before tax represents the operating results of the Group, including the acquired Partnership business, before taking into account non-recurring and project expenditure, investment and economic profits/(losses), acquisition integration and transaction costs, amortisation costs of intangible assets including the acquired in-force business asset, and gain on acquisition of Partnership Assurance Group plc.

Operating profit before tax for the twelve months ended 30 June 2016 totalled £100.4m, an increase of £32.8m compared to the twelve months ended 30 June 2015 (£67.6m) The movement has been mainly driven by an increase in new business operating profit, as explained above.

Operating experience and assumption changes

Operating experience and assumption changes capture 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.

For the twelve months to 30 June 2016, operating experience and assumption changes amounted to a small loss of £3.4m, compared to a small profit of £2.4m for the twelve months to 30 June 2015.

Other Group companies' operating results

Other Group companies' operating results include the results of Group companies which provide regulated advice and intermediary services, and professional services to corporates, as well as corporate costs incurred by Group holding companies. These companies reported an operating loss for the twelve months to 30 June 2016 of £10.9m (2014/15: loss of £8.7m).

Reinsurance and finance costs

Reinsurance and finance costs include the interest charge on bank loans and reinsurance financing, together with reinsurance fees incurred in the period, and also include interest costs in relation to the Tier 2 Notes issued by Partnership Life Assurance Company Limited.

Reinsurance and bank finance costs are in line with the prior period; the increase compared to the prior period relates to the interest cost on the Tier 2 Notes issued by Partnership Life Assurance Company Limited for the three months post-merger (Reinsurance and bank finance costs 2015/16: £14.7m; 2014/15: £12.5m).

Non-recurring and project expenditure

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 and are explained further below.

Non-recurring and project expenditure decreased to £13.5m for the twelve months to 30 June 2016, from £19.4m for the twelve months to 30 June 2015. These costs include the costs of implementing the new Solvency II regime which came into force on 1 January 2016, and the launch of Just Retirement Money Limited, through which all new mortgage advances are now written. Non-recurring costs in the prior period related to preparation for the Solvency II regime and also to the cost of developing new products in response to the pensions reforms announced in the 2014 Budget, including the Flexible Pension Plan.

Investment and economic profits/(losses)

Investment and economic profits/(losses) 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/(losses) also reflect the impact of assumption changes in future expected risk-free rates, corporate bond defaults and house price inflation and volatility.

For the twelve months to 30 June 2016, investment and economic profits were £147.0m (2014/15: loss of £74.1m), mainly reflecting the impact of the significant reduction of risk free rates during the period, and the positive impact from the difference between actual and expected investment returns earned, offset by a widening in credit spreads and property valuation movements. Of the investment and economic profits for the current period, £66m is attributable to the Just Retirement business and £81m to the Partnership business.

Acquisition integration costs

Acquisition integration costs of £15.9m relate to the cost arising from the post-merger integration of the Just Retirement and Partnership businesses and operations. This amount includes a provision of £5m in respect of staff redundancies. The restructuring changes made to date have already delivered approximately £15m of synergies on an annualised basis.

Acquisition transaction costs

Acquisition transaction costs of £24.2m reflect the one-off costs incurred during the period in relation to the acquisition of Partnership Assurance Group plc. These costs include advisory, legal and stamp duty costs.

Amortisation costs

Amortisation costs relate to the amortisation of the Group's intangible assets, including the amortisation of intangible assets newly recognised in relation to the acquisition of Partnership Assurance Group plc by JRP Group plc. Acquired in-force business and other intangibles of £192m were recognised on acquisition of Partnership Assurance Group plc. The acquired in-force business asset of £165m is being amortised in line with the run-off of the in-force business. Amortisation of the acquired in-force business relating to Partnership Assurance Group plc during the twelve month period to 30 June 2016 totalled £7.8m.

Gain on acquisition of Partnership Assurance Group plc

Although the combination of Just Retirement and Partnership was a merger between the two companies, under IFRS 3 "Business Combinations" an acquirer must be identified, and on a statutory basis Just Retirement is considered to have acquired Partnership.

The acquisition of Partnership during the period has given rise to a gain of £72.8m because the consideration was less than the fair value of the identified assets and liabilities acquired. The acquisition consideration was agreed to be an exchange ratio of Just Retirement shares to Partnership shares fixed at the time the transaction was announced in August 2015. Subsequent to this date market uncertainty and sentiment, linked to the changes in the annuity and retirement market, lead to a decline in the market value of Just Retirement shares at the date of the completion of the transaction on 1 April 2016. The market value of the consideration therefore declined below the fair value of the identified assets and liabilities acquired, when assessed separately. In accordance with IFRS 3, Business Combinations, the gain on acquisition is recognised immediately in the income statement. Further information on the accounting for the acquisition is given in Note 2 to the Condensed consolidated financial statements within this interim report.

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. The information below is extracted from the statutory consolidated statement of comprehensive income, and for the six months ended 30 June 2016 and twelve months ended 30 June 2016 includes the results of Just Retirement, together with the results of Partnership for the three months from the date of acquisition on 1 April 2016. Prior year comparative figures reflect the results of Just Retirement only.

Gross premiums written

Gross premiums written are the total premiums received by the Group in relation to its Retirement Income and Protection sales in the period, gross of commission paid.

Gross premiums written for the twelve months ended 30 June 2016 were £1,494.1m, compared to £1,099.0m for the twelve months ended 30 June 2015. Sales of both DB and GIfL solutions have increased in the current period compared to the prior period, representing an underlying growth in Just Retirement-related sales as well as the benefit of recognising Partnership-related GIfL sales for the three months from April to June.

Net premium revenue

Net premium revenue represents the sum of gross premiums written and reinsurance recapture, less reinsurance premium ceded.

Net premium revenue decreased from £1,927.0m for the twelve months ended 30 June 2015 to £1,117.4m for the twelve months ended 30 June 2016. Net premium revenue for the current period includes reinsurance recapture of £1,166.9m offset by reinsurance premiums ceded of £1,543.6m (twelve months ended 30 June 2015: reinsurance recapture of £950.9m offset by reinsurance premiums ceded of £122.9m). Reinsurance premiums ceded during the period relate to the reinsurance of certain GIfL business written in prior years, as well as continuing to reinsure a proportion of the new business written during the current period.

Net investment income

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 investment income increased by £617.1m, from £635.2m for the twelve months ended 30 June 2015 to £1,252.3m for the twelve months ended 30 June 2016. During the first six months of 2016 there were significant falls in interest rates which have led to unrealised gains in relation to the Group's corporate bond and mortgage portfolios.

Gain on acquisition

The gain on acquisition of Partnership Assurance Group plc is explained within the IFRS Operating Profit analysis above.

Net claims paid

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 claims paid increased by £147.0m in the twelve months to 30 June 2016 compared to the twelve months to 30 June 2015, reflecting the continued growth of Just Retirement's in-force book, together with claims paid in respect of Partnership's in-force book, offset by the reinsurers' share of claims paid.

Change in insurance liabilities

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.

Change in insurance liabilities decreased from £2,095.9m for the twelve months ended 30 June 2015 to £1,451.7m for the twelve months ended 30 June 2016.

This line item comprises the gross change in insurance liabilities together with the change in the reinsurers' share of insurance liabilities and the impact of reinsurance recaptures. The gross change in insurance liabilities during the twelve months to 30 June 2016 was £1.8bn which was driven by the new business written and by the fall in the valuation interest rate over the period.

The reinsurers' share of change in insurance liabilities and reinsurance recapture together total £381m. This reflects the increase in reinsurance assets, which have increased as a result of new business reinsured during the year, offset by claims paid, and the impact of the reinsurance recaptures.

Acquisition costs

Acquisition costs comprise the direct costs (such as commissions) of obtaining new business. Acquisition costs are not deferred.

Acquisition costs have increased by £4.8m from £18.5m for the twelve months ended 30 June 2015 to £23.3m for the twelve months ended 30 June 2016. This is a result of increases in both GIfL and LTM sales compared to the previous period.

Acquisition integration costs and acquisition transaction costs

These costs are explained within the IFRS Operating Profit analysis above.

Other operating expenses

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. Acquisition-related costs are analysed separately from other operating expenses as explained above.

Other operating expenses increased by £32.5m from £127.6m to £160.1m. The increase principally relates to operating expenses for Partnership group companies for the three months from April to June.

Finance costs

Finance costs represent interest payable on the deposits received from reinsurers, interest on reinsurance financing and bank finance costs, and the interest cost on the Group's Tier 2 Notes issued by Partnership Life Assurance Company Limited.

Finance costs increased by £10.4m from £100.9m for the twelve months ended 30 June 2015 to £111.3m for the twelve months ended 30 June 2016. The increase relates to interest on the reinsurance deposit back balances, which have increased compared to the prior year, and the interest cost on the Tier 2 Notes issued by Partnership Life Assurance Company Limited for the three months from April to June.

There is an income tax charge of £41.8m for the twelve months ended 30 June 2016 (twelve months ended 30 June 2015: credit of £4.8m). The effective tax rate is 17%, and includes the impact of certain transitional rules regarding life company taxation.

Highlights from Condensed consolidated statement of financial position

The following table presents selected items from the Condensed consolidated statement of financial position, with key line item explanations below. The information below is extracted from the statutory consolidated statement of financial position and as at 30 June 2016 reflects the statements of financial position of both Just Retirement and Partnership on a consolidated basis. Prior year comparative figures reflect the statement of financial position of Just Retirement only.

The significant increase in the assets, liabilities and total equity of the group from 30 June 2015 to 30 June 2016 is largely as a result of the acquisition of Partnership Assurance Group plc on 1 April 2016. JRP Group plc owns the entire share capital of Partnership and its assets and liabilities are reflected on a line by line basis in the group consolidated statement of financial position.

Financial investments

The following table provides a breakdown by credit rating of financial investments where applicable as at 30 June 2016 compared with the position as at 30 June 2015.

* Includes units held in liquidity funds

Financial investments increased by £7.6bn from £8.6bn at 30 June 2015 to £16.2bn at 30 June 2016, the significant increase being mainly a result of the acquisition of Partnership Assurance Group plc, which accounts for £5.3bn of the increase. The remainder of the increase relates to the continued investment of new business premiums into gilts, corporate bonds and LTM contracts, together with the impact of falling interest rates. The quality of the corporate bond portfolio remains high and is well balanced across a range of industry sectors. The loan to value ratio of the mortgage portfolio is approximately 29%.

The sector analysis of the Group's corporate bond and gilt portfolio at 30 June 2016 is shown in the table below.

The sector analysis shows that the Group's investment portfolio is well balanced across a variety of industry sectors.

Reinsurance assets increased from £2.5bn at 30 June 2015 to £6.1bn at 31 December 2015; of this increase £3.3bn relates to reinsurance assets acquired with Partnership. The reinsurance assets relating to Just Retirement increased slightly from £2.5bn to £2.8bn as a result of new business reinsured during the year, offset by claims paid and reinsurance recaptures.

Other assets mainly comprise cash and cash equivalents, and intangible assets.

Insurance liabilities increased from £7.4bn at 30 June 2015 to £14.8bn at 30 June 2016. Of this increase, £5.6bn relates to the acquisition of Partnership. Liabilities arising on new insurance business written less claims paid in the period, together with the impact of falling interest rates, have together driven an increase in insurance liabilities relating to Just Retirement of £1.8bn.

Other financial liabilities increased from £2.6bn at 30 June 2015 to £5.9bn at 30 June 2016. These liabilities are mainly reinsurance-related and include deposits received from reinsurers, reinsurance financing and other reinsurance-related balances. The increase mainly reflects the deposits received from reinsurers balances relating to Partnership.

Insurance and other payables increased by £86.5m from £22.7m at 30 June 2015 to £109.2m at 30 June 2016; this increase relates to insurance and other payables acquired with the Partnership business, and to timing differences on settlement of investments.

Other liability balances increased by £187.4m from £328.4m at 30 June 2015 to £515.8m at 30 June 2016. The increase mainly relates to the Tier 2 Notes issued by Partnership Life Assurance Company Limited of £94.1m and to the drawdown of a new £60m bank facility in August 2015, less amounts repaid during the period.

Total equity increased by £862.4m from £814.0m at 30 June 2015 to £1,676.4m at 30 June 2016, reflecting new equity raised in October 2015 and shares issued to acquire the Partnership Group in April 2016, a total of £666.4m, the profit after tax for the period of £210.7m, dividends paid of £22.6m, and small adjustments for foreign exchange differences and share-based payments.

Dividends

An interim dividend for the period of 1.1p per share will be paid in October 2016.

Principal risks and uncertainties

Through our strong risk culture, we are confident of making better decisions to achieve business success

Risk management

Purpose

We use risk management to make better informed business decisions that generate value for shareholders while delivering appropriate outcomes for our customers and providing confidence to other stakeholders. Our risk management processes are designed to ensure that our understanding of risk underpins how we run the business.

Risk framework

Our risk management framework is developed in line with the risk environment and best practice. The framework, owned by the Group Board, covers all aspects of risk management including risk governance, reporting and policies. Our appetite for different types of risk is embedded across the business to create a culture of confident risk taking.

Risk evaluation and reporting

We evaluate risks in our operating environment supported and decide how best to manage the risks within our risk appetite. Management regularly review their risks and produce reports to provide assurance that material risks in the business are being mitigated. The Risk team, led by the Chief Risk Officer ("CRO"), challenges the management team on the effectiveness of its risk management. The CRO provides the Group Board's Risk and Compliance Committee with his independent assessment of the principal risks to the business and emerging risk themes.

Financial risk modelling is used to assess the amount of each risk type against our risk appetite. This modelling is aligned to both our economic capital and regulatory capital to allow the Board to understand the capital requirements for our principal risks. By applying stress and scenario testing, we gain insights into how risks might impact the Group in different circumstances.

Own Risk and Solvency Assessment

The Group's Own Risk and Solvency Assessment ("ORSA") further embeds comprehensive risk reviews into our Group management structure. Our annual ORSA report is a key part of our business cycle and informs strategic decision making. ORSA updates are prepared each quarter to keep the Board appraised of the Group's evolving risk profile.

Principal risks and uncertainties 

Statement of Directors' responsibilities

Each of the Directors of the Company confirms that to the best of their knowledge:

· the condensed consolidated financial statements have been prepared in accordance with IAS 34: Interim financial reporting as adopted by the European Union;

· the interim results statement includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7, namely important events that have occurred during the period and their impact on the condensed consolidated financial statements, as well as a description of the principal risks and uncertainties faced by the Company and the undertakings included in the condensed consolidated financial statements taken as a whole for the remaining six months of the financial period; and

· the interim results statement includes a fair review of material related party transactions and any material changes in the related party transactions described in the last annual report as required by Disclosure and Transparency Rule 4.2.8.

By order of the Board:

Simon Thomas

Group Chief Financial Officer

14 September 2016

Condensed consolidated statement of comprehensive income

For the period ended 30 June 2016

The notes are an integral part of these financial statements.

Condensed consolidated statement of changes in equity

For the twelve months ended 30 June 2016

Condensed consolidated statement of financial position

As at 30 June 2016

The notes are an integral part of these financial statements.

1The fair value of debt securities includes accrued interest previously classified as prepayments and accrued income on the statement of financial position. As a result of this change in presentation, £83m of accrued interest has been reclassified from prepayments and accrued income at 30 June 2015.

Condensed consolidated statement of cash flows

For the twelve months ended 30 June 2016

Notes to the condensed consolidated financial statements

1 Basis of preparation

As explained in note 2, on 1 April 2016, Just Retirement Group plc ("JRG") and Partnership Assurance Group plc ("PAG") completed an all‑share merger to create JRP Group plc ("JRP"). This has been accounted for as a business combination in which JRG has acquired 100% of the ordinary share capital of PAG through a share-for-share exchange. JRG changed its name to JRP Group plc on 4 April 2016. As such, these condensed interim financial statements comprise the condensed consolidated financial statements of JRP Group plc (formerly Just Retirement Group plc) ("the Company") and its subsidiaries, together referred to as "the Group", as at, and for the period ended, 30 June 2016.

These condensed interim financial statements have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, Interim Financial Reporting, as adopted by the European Union.

These condensed interim financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. The results for the year ended 30 June 2015 have been taken from the Group's 2015 Annual Report and Accounts, which was approved by the Board of Directors on 16 September 2015 and delivered to the Registrar of Companies. The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006. The results for the six months ended 30 June 2015 presented in the condensed consolidated statement of comprehensive income have been taken from the Group's 2015 Annual Report and Accounts and from the Group's Interim Results for the six months to 31 December 2014, and have been calculated as the difference between the consolidated statements of comprehensive income for these two periods.

The Directors have undertaken a going concern assessment and, as a result of this assessment, are satisfied that the Group and the Company have 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. Accordingly, they continue to adopt the going concern basis in preparing the condensed interim financial statements.

The accounting policies applied are the same as those applied in the Group's 2015 Annual Report and Accounts. The fair value of debt securities includes accrued interest previously classified as prepayments and accrued income on the statement of financial position. As a result of this change in presentation, £83m of accrued interest has been reclassified from prepayments and accrued income at 30 June 2015.

The Group has not early‑adopted any standard, interpretation or amendment that has been issued but is not yet effective.

2 Acquisition of Partnership Assurance Group plc

On 1 April 2016, the Group completed the acquisition of 100% of the ordinary share capital of Partnership Assurance Group plc through an all share exchange which gave PAG shareholders 0.834 JRP Group plc for every PAG share held. In total, 368,376,421 new JRP shares were issued and commenced trading on 4 April 2016. As a result, PAG shareholders hold approximately 40% of the enlarged share capital of the Combined Group. At the closing price of 154.60 pence on the 1 April 2016, the share exchange represents consideration of £569.5m. As part of the acquisition certain employee share schemes granted to PAG employees have been exchanged for equivalent JRP employee share schemes. The fair value cost of replacing those schemes, included in the consideration for PAG, was £2.4m.

Established in 2005 following the acquisition of the business of the Pension Annuity Friendly Society, PAG is a UK life insurer whose strategy is aligned with that of the Group. PAG is focused on retirement income products, offering better rates to customers who suffer from shortened life expectancy by utilising an intellectual property led, capital-efficient business model. Following the pensions freedom changes announced in the 2014 Budget, PAG has increased its focus on the defined benefit scheme de-risking segment whilst continually developing its individually underwritten annuities. The acquisition recognises the benefits of greater scale, enhanced intellectual property, a broader product proposition and a more efficient distribution platform that will improve the potential of the Group to succeed in its chosen markets in the future.

The fair value of PAG identifiable assets and liabilities acquired have been provisionally determined for the purpose of this note. The consideration of £571.9m represents the fair value of PAG net assets acquired of £644.7m and a gain on acquisition of £72.8m, as follows:

The issue of new shares in the Company in exchange for shares of PAG will attract merger relief under section 612 of the Companies Act 2006. Of the £569.5m, £36.8m has been credited to share capital (representing 10 pence per ordinary share) and the remaining £532.7m has been credited to the merger reserve within equity.

Fair value and accounting policy adjustments

Insurance liabilities and reinsurance assets

On completion of the acquisition, the economic assumptions applied to the actuarial models used to determine the value of insurance liabilities and reinsurance assets have been reviewed across the Group. Following this review consistent economic and other assumptions have been applied to all Group entities, resulting in a decrease of £27.9m to PAG's insurance liabilities and a decrease of £28.0m to PAG's reinsurance assets recognised on acquisition. Similarly, consistent economic assumptions have been applied to the models used to determine the fair value of loan assets secured by mortgages, resulting in an increase of £35.8m to the value of PAG's mortgage loan assets.

Financial liabilities

PAG's subordinated debt liability has been recognised at fair value on acquisition. The fair value represents a £5.8m reduction to the amortised cost of the debt liability. The methodology applied to the valuation of reinsurance deposit back liabilities has also been reviewed and a Group accounting basis has been adopted, resulting in a £62.9m increase in the value of PAG's financial liabilities.

Gain on acquisition

The acquisition resulted in a gain of £72.8m, representing the excess of fair value of acquired assets over purchase consideration. The transaction resulted in a gain as a result of the acquisition consideration consisting of shares in the Group exchanged for shares in PAG at a ratio set at the announcement of the transaction on 11 August 2015. At the acquisition date the market value of consideration had been adversely affected by investor uncertainty, reducing the value of consideration below the fair value of the net assets of PAG.

Acquired value of in-force business and intangible assets

An asset of £165.0m was recognised on acquisition representing the present value of future profits from the acquired in-force business as of 1 April 2016. This will be amortised in accordance with the Group's accounting policies.

Intangible assets of £27.0m represent PAG's distribution and customer relationships, brands, technology and software including IP, and other intangibles. These balances will be amortised over their remaining useful economic lives, in accordance with the Group's accounting policies.

Profit and loss

If the acquisition had been effective on 1 July 2015, on a pro-forma basis the Group's revenue is estimated at £2,869.4m and profit before tax attributable to shareholders is estimated at £213.4m. In determining these amounts, management has assumed that the fair value adjustments that arose on the date of acquisition would have been the same if the acquisition occurred on 1 July 2015. The pro-forma results are provided for information purposes only and do not necessarily reflect the actual results that would have occurred had the acquisition taken place on 1 July 2015. Since 1 April 2016 £196.3m has been recognised within the Group's revenue and £66.0m has been recognised within the Group's profit before tax attributable to shareholders arising from the acquired entities.

Acquisition costs of £24.2m incurred to support the transaction have been recognised within other operating expenses in the statement of comprehensive income.

3 Segmental reporting

Segmental analysis of operating profit and profit before tax

The Group's insurance segment writes insurance products for the retirement market - which include Guaranteed Income for Life Solutions and Defined Benefit De-risking Solutions, Care Plans, and Drawdown contracts - and invests the premiums received from these contracts in corporate bonds, Lifetime Mortgage advances, and other financial investments.

The Group's other segments include regulated advice and intermediary services, and professional services to corporates.

The Group's corporate activities are primarily involved in managing the Group's liquidity, capital and investment activities.

The Group operates in one material geographical segment which is the UK.

Segmental reporting and reconciliation to financial information

Product information analysis

Additional analysis relating to the Group's products is presented below. The Group's products are from one material geographical segment which is the UK. The Group's gross premiums written, as shown in the Condensed consolidated statement of comprehensive income, is analysed by product below.

Drawdown and 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.

Reconciliation of gross premiums written to new business sales