Berenberg starts coverage of Just Group at 'buy', highlights attractive business model
By Michele Maatouk
Date: Tuesday 08 Jul 2025
(Sharecast News) - Berenberg initiated coverage of Just Group on Tuesday with a 'buy' rating and 209p price target.
It noted that Just Group - which sells annuities in the UK - creates value by investing around 45% of new annuity funds in illiquid assets.
Just Group's main target metric is tangible net asset value (TNAV) the sum of tangible shareholders equity and the contractual service margin (CSM) net of tax, it said.
"The TNAV compound annual growth rate was 16% over 2022-24, Just Group targets a greater than 12% return on equity, which is the main driver of TNAV growth, and we forecast a 13% TNAV CAGR 2024-28E, which is an attractive and sustainable growth rate in our view," Berenberg said.
The bank also highlighted an "attractive" business model. It said Just Group differentiates itself from other life insurance providers in three ways.
"It is very focused as it only sells one product - annuities, in one country - the UK. It is innovative and runs a pricing tool (Beacon) on which it has pre-loaded more than 350 DB schemes; this helps accelerate sales to smaller schemes.
"It invests 45% of the funds for new annuities into illiquid credits, which means it can earn a circa 200 basis points spread over the risk-free rate on the funds invested, while offering policyholders an attractive circa 30bp spread over the risk-free rate."
At 1225 BST, the shares were up 1.6% at 130.60p.
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