Good afternoon every one.

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2 Good afternoon every one. I m Simon Thomas, CFO of Just Group plc, and it is a pleasure to welcome you today to our third investor seminar of 2017, this time on lifetime mortgages, or LTMs. We know that you have plenty of other uses of your time and very much appreciate the effort you have made to attend. For those who have dialled in, the presentation materials are available in the reports and presentations section of our website justgroupplc.co.uk also, I am obliged to advise you that this call is being recorded Our agenda today is relatively straightforward. First, I m going to explain the significance and usefulness of LTMs to the group Second, Paul Turner, who runs the retirement lending division, will talk about our market and why we expect it to grow Then we have Peter Borley, our Director of Propositions for Life Time mortgages who will explain how we win in this market And finally, David Cooper, our Marketing & Distribution Director will talk about our distribution network in respect of lifetime mortgages 2

3 We ll then have a Q&A session there will be plenty of time for this, so can I please ask that you save your questions until the end. Finally, we will be available to follow up informally over a coffee 2

4 Moving onto slide 4 3

5 Before we launch into any detail, I want to set our key messages. I d sum them up as follows: First, lifetime mortgages offer significant growth potential due to macro-factors. This creates an attractive growth opportunity for our whole business Second, we have a series of competitive advantages, including long term funding from our GIFL and DB books and our unique distribution platform, which collectively explain why we will win in this market Third, LTM s dovetail nicely with our annuity reserves from a matching perspective and form a key part of our ALM strategy, especially given the partial longevity hedge they offer Finally, we are comfortable with their risk reward profile. A 28% LTV across the portfolio mitigates the risk given the spreads we can make on these loans. Adding it up, LTMs are a key component of our strategy of building a sustainable model in growing markets. But I m going to start by looking at the importance of LTMs in a group context, including their risk profile and how we manage it. So moving to slide 5 4

6 On this slide we demonstrate how LTMs are at the heart of the group in all sorts of ways. On the left, you can see that LTMs made up over a fifth of our sales in the first nine months of 2017, and as the top right chart shows - the asset represented about 37% of the total investment portfolio as of 30 June The reason we advance these mortgages and then hold them to maturity is shown in the bottom right chart. Put simply - LTMs are an excellent match to our long term liability cash flows. I d would draw your attention to the light blue area, which shows the cash-flow profile of LTMs, which are long duration in nature Our GIfL liability cash out flows are shown as the blue line & our DB liabilities shown as the red-line. You can see that the DB business tends to be longer duration than our GIfL business, mainly due to the fact that indexation is typically included in DB schemes - whereas GIFL normally provide a fixed income. The long duration characteristics of LTM assets therefore provide a particularly good match for DB liabilities. In an ALM context, our objective is to efficiently match an optimal mix of cash, gilts, corporate 5

7 credit, and our LTMs against our illiquid GIFL & DB liabilities. These illiquid assets provide a good investment return and represents one of our key drivers of corporate profitability. So for clarity, in contrast, if you are running a mutual fund whose unit holders can withdraw their money, you can t typically invest in mortgages - in case your investors want their money back when the going gets tough. However, we can invest in these long term mortgages - because our annuity customers can t just ask for their money back. Moving onto slide 6 5

8 In the previous slide, I touched on why we want to issue LTMs But what about the risk? In these contracts, we have made a collateralized loan, but we haven t bought the house. For those who are not familiar, I am going to introduce the concept of no negative equity guarantee or no NEG The NNEG is a guarantee to the customer that they will never owe more than the underlying value of their property. We receive the principle and rolled up interest after the property is sold, either when the individual passes away or moves into long-term care - with any residual left over, becoming part of that person s estate. We get repaid in full, if the collateral is sufficient. However, we are financially exposed if the value of the house at the time of sale is lower than the loan plus accumulated interest. The NNEG means that we may have a partial write-off - if the proceeds are insufficient to settle the full amount owed. We manage this NNEG risk by limiting the initial loan to value. 6

9 Our typical customer is a 70 year old with a house valued around 200,000. The overall LTV for our book is currently around 28%, confirming that, on average, the NNEG is a long way from biting. The top left hand chart attempts to give you some sensitivity for the NNEG - just to remind you, the key critical inputs to a NNEG calculation are the rate of interest on the loan (which is fixed at outset) and house price inflation In this example we illustrate a 70 year old, borrowing 30% of their property value, with a fixed 5.5% loan interest. Looking at the red line, we show that if house price inflation were to be zero for every year of the loan, then the customer would have to live 22.5 years before the LTV hits 100% and the NNEG would bite. We also show the equivalent line with a range of 1 to 4% of house price inflation showing you would have to live well towards 100 or over for the NNEG to bite in these circumstances And please don t forget - that if the NNEG does bite, it only reduces our total return, as we show in the bottom left chart. Now whilst the past is not a predictor of the future, and I acknowledge that we are in uncertain times, the right hand chart shows actual house price growth since 1974 according to Nationwide. This shows in the UK, we saw an average growth rate of approximately 7.5% per annum over the last 40 years which equates to a real growth rate of 2.7% above RPI inflation over the same period. I should flag that our actual property sales values observed on our portfolio of mortgages shows a close correlation to the Nationwide house price index. Of course, prices have shown volatility over the period - but let s put this in context. If you take our average LTM duration of 17 years, there has never been a 17 year period where annual house price inflation has been less than 5.9%, and indeed the median for a 17 year period has been 7.3%, very close to the 40 year annual average So, we think that the risk of substantial NNEG cost is relatively low and we are therefore comfortable that the interest rate we charge more than compensates for the NNEG risk that we carry. Moving onto slide 7 6

10 Finally, on this slide we give you some more detail on the existing book Here you can see on the left hand chart, we show how diversified our portfolio is geographically. We have mortgages all across the UK, with the bulk of our book away from London and its specific drivers. However, interestingly, LTVs are the lowest in London due to its historic strong house price growth ahead of the rest of the country, so we have extra buffer for this part of the book The chart on the right hand side gives further context showing the LTV of our loans by age of customer and shows you that 90% of loans by value are less than 50% LTV, with only 8m, out of a total of more than 4bn, having an LTV in excess of 75% And with that, I ll hand over to Paul Turner, MD of the Retirement lending business 7

11 Thanks Simon, and please allow me to extend my welcome to all of you today. My name is Paul Turner, and I m the MD of our Retirement Lending business I am going to talk about why we believe the UK LTM market is an exciting growth market in which to participate, and how we create and measure value. Following my slides, Peter Borley will talk about our competitive advantages, and David Cooper will give insight to our distribution footprint in the market Moving to slide 9. 8

12 First some basics. I suspect that none of you will have a life time mortgage, although maybe some of your parents do, so it may be useful to describe the product. A lifetime mortgage is a first charge on a residential property, but it differs from a conventional residential mortgage in the following ways: First, we only lend at a fixed rate of interest Second, instead of the borrower servicing the interest, it is almost always added to the amount owed; and Third, the repayment date of the principal - plus the accumulated interest - is either after entry into residential care or death, rather than a fixed number of years. These characteristics create value for retirees in the following ways: a) Providing liquidity, by accessing the equity in their homes, b) Providing security of a fixed rate of interest for the duration of the loan; c) Removing the worry about having to service interest repayments over an unknown period d) and, importantly, providing a guarantee that they will never owe more than the value of their home. I should add that we are not involved in the reversion or shared ownership markets. So we don t own a stake in the house, but the customer owes us money and it gets repaid when the 9

13 house is sold. We are not just asset investors. Just Money, our FCA regulated, retail mortgage business helps over 60k individual customers achieve a secure and fulfilling retirement. As you can see on the right hand side of the slide, our typical customer is around 70 years old, has a house worth around 200,000 and we approve a loan facility enabling them to borrow around 30% of the property value, which will be taken as a lump sum or drawn down in two or three tranches as required. They use the loan for all sorts of reasons, as you can see from the pie chart on the left, repaying existing debt and mortgages, home improvements, helping children or grandchildren or a holiday are the most common. We are also seeing an increasing trend in people using LTM s to top-up their retirement income. Ultimately LTM s allow people to improve their standard of living in retirement without selling the family home. Given a housing-rich but pension-poor generation heading for retirement, we see LTMs serving an important role in coming decades. Next, I am going to speak about the historic growth and future growth potential of the market. Moving to slide 10 9

14 The market has enjoyed spectacular growth over the last five years, producing a CAGR of 25% since 2011 and we expect the market to almost quadruple in size in the 6 years from 2011 to 2017 that s pretty impressive for any market. Crucially, a higher growth rate in the LTM market compared to our GIfL and DB premiums has meant that our LTM funding base has lagged the growth in the LTM market. This enables us to be increasingly selective about the mortgage risks we choose. We feel very good about this in terms of risk management, and Simon has already discussed the conservatism of our book. This growing market demand has been met by new capacity coming into the market, with L&G and now Nationwide being the most prominent new recent entrants. We welcome new entrants, especially those with strong recognized customer brands because they help to accelerate LTMs to become a mainstream product category. The additional funding they bring has also increased advertising and promotional activity and is resulting in enhanced customer awareness of the product solutions. This has been beneficial and increased the overall market for everyone. It is a trend we expect to continue, given the attractive growth opportunities available. Moving to slide 11 10

15 So the big question is whether the market can continue to grow at these rates? We think it can. The many future growth drivers (which I will cover in more detail in subsequent slides) are (not in any order of importance) : 1. Changing perceptions of the product 2. Demographics 3. Increasing housing wealth among retirees 4. Inadequate Defined Benefit and Define Contribution pension savings 5. Interest only residential mortgages with no repayment vehicles 6. New market entrants and increased advertising spend driving customer awareness; and 7. Increasing distribution reach (which David Cooper will cover in detail later in the presentation). We consider some risks to future growth to be: 1.A sharp and sustained rise in long-term yield curve. This would have the impact of increasing prices to customers and reducing LTVs which would impact demand. However, from a Just Group perspective, this economic scenario would be very beneficial to the liability side of the Group s balance sheet. 2.A major fall in the property market may impact customer sentiment and demand, and would reduce the home equity that is available for customers to use. However, as I will discuss later in the presentation, the penetration rate of LTM borrowing to equity available is very small so a property market fall is unlikely to have a major impact here. 11

16 So, overall, we are very bullish about the long-term sustainable growth drivers of the UK LTM market and at Just, we judge that these structural drivers of growth could add up to a market of around 6.6bn by 2021, representing a CAGR of 25%. Other commentators have produced estimates ranging between 5bn - 10bn by Even if the market grows at the bottom end of this range to 5bn, the growth opportunity is substantial. To support this rate of growth, increased funding from insurers and pension funds is critical. As Simon demonstrated earlier, these illiquid long term liabilities are an ideal match for this asset. Insurers, as providers of long term funding, are ideally placed to benefit most from this market growth. At Just, this would allow to us to grow more quickly in the LTM market by leveraging our significant assets of Hub Financial Solutions (our distribution business) and Just Money (our mortgage underwriting and servicing business) by accessing funding from other investors, and/or to continue our current strategy to grow profits by selecting the most attractive risks. It s a great choice to have. Turning to slide 12 11

17 So the first driver of growth we expect is changing attitudes to LTMs Lifetime mortgages are one of the safest purchases a customer can make. It is not possible to walk in off the street and buy one. The sale of the product is subject to stringent requirements: Firstly, customers must receive Regulated advice from a qualified professional adviser; secondly, customers must receive Independent legal advice; and thirdly the FCA have established a high regulatory conduct barrier, recognising that many of the customers using LTM could be considered to be vulnerable We at Just always ask LTM applicants to tell their children about their plans. Children can take reassurance that the NNEG ensures the LTM provider will never receive more than the value of the home when it s eventually sold, even if their parents live much longer than expected. Also, our distribution business, HUB Financial Solutions performs QA checks on 100% of sale files. We are proud of our record in this market. We have robust standards to ensure we treat customers fairly and act with integrity. Our leadership in the market has helped to ensure the sector has a positive reputation. Let me try and put this into context for you. In the 12 years we have been active in this market our total compensation payments through the financial Ombudsman Service amount to around 6,700. And yes, that is 6,700, I haven t missed any zeros. That s a number the banks can only dream about. 12

18 The consistent behaviours and repeatable actions of companies like Just has resulted in a range of commentators speaking out positively about the industry, including: the consumers association - Which, UK Finance, the FCA & personal finance journalists as you can see on the slide this is resulting in increasing numbers of people being more positively disposed to using the equity in their homes to support their later life. Entry to the market by well-known brands is also increasing customer awareness and advocacy. Although LTMs are not suitable for all customers, we estimate, based on our own customer research, that the proportion of retirees willing to consider the product has increased by some 40% since LTMs are no longer niche. Just has been in this market since 2005 and we have learnt a lot since then. Our innovation credentials are clear to see in this market we introduced the LTM drawdown product - which now accounts for the majority of the LTM plans purchased and delivers a compelling customer benefit and we have plans well under way to launch a major new product innovation in Turning to slide 13 and the second and third expected drivers of growth. 12

19 Demographic change and housing wealth are two powerful structural drivers a growing ageing population and growth in the value of housing equity for people in later life. First, the left hand chart shows material growth in the number of retirees as the UK population ages. This delivers growth for all of Just s core retail markets including our Guaranteed Income for Life solutions and Lifetime mortgages. Turning to the chart on the right - property wealth. People aged 55 and over have more than 2.5trn of housing equity. We estimate that the existing industry loan book including incremental interest is just 20bn. If we assume we can lend at a conservative LTV of 30% this equates to a theoretical upper limit of around 750bn. The key message is clear there is huge headroom for growth in the LTM market. Next, on slide 14, I ll provide more details on the third driver of growth, the pensioner income shortfall it really is quite stark for many people 13

20 Many of these charts will be familiar to you. The take out form this slide is a simple one. If people want to attain acceptable income in retirement, increasing numbers of people will need to access their housing wealth to top-up the income provided by their pensions and other resources. The chart on the left demonstrates the gaps between the income that can be generated from pension savings compared to typical expenditure profiles for a 70 year old couple which is our typical LTM couple. Averages aren t particularly helpful as they reduce the size of the gap; when you strip out the most wealthy, as we do in our own segmentation, we are clear that increasing numbers of home-owning pensioners will need to find additional sources of income. For some that may mean working longer for others, they will access their housing wealth. Turning to the chart at the top right the OECD most recent stats show that the net pension replacement ratio in the UK is 29%, on a par with Mexico as the joint lowest in the OECD. This really puts things into perspective. It is a cliff-edge once you retire, unless you have adequate DB or DC savings to top up the State Pension. The bottom right chart is a reminder of the continuing decline in DB pension schemes. As you may have seen there has been some further high profile companies in the news recently such as Royal Mail and BT undergoing their triennial reviews and seeking to change the pension entitlements. The message here is that the vast majority of future retirees will not be able to rely on DB pension schemes to provide their retirement income. Moving to slide 15 and the fourth growth driver 14

21 The volume of interest only mortgages reaching the end of the mortgage term is a major source of growth for the LTM market. Significant numbers of people do not have sufficient resources to settle their outstanding mortgage debt. Some will choose to sell their house and downsize to a smaller property, but a high proportion do not wish, or cannot economically, pursue this option. Others will seek to identify an alternative later life lending solution of which lifetime mortgages are an increasingly popular choice. LTMs are popular because many of the people with interest-only mortgages are in or approaching retirement and do not have sufficient income to continue making mortgage repayments. Interest-only re-financing with a LTM is the largest segment of the LTM market, and we predict that it will continue to be a steady source of business. We estimate that our addressable market over the next 5 years, highlighted by the dotted line on the chart, is 7.5bn. These IO mortgages have Loan to value ratios of less than 40% and the borrower is likely to be aged 65+. Insurers are uniquely able to offer a funding solution to banks whose own funding supply is very liquid, unlike our illiquid funding. Not only is the bank transferring the credit risk to an insurer, but also longevity risk, which the insurer understands and is comfortable underwriting. The high street banks are starting to contract with LTM manufacturers and distribution businesses to provide solutions to their maturing interest only mortgage customers. Our manufacturing business, Just Money, and our distribution business HUB Financial Solutions are involved in providing solutions to banks. Turning to slide 16 15

22 As people have become more disposed to using their housing equity, distribution businesses have become more confident to increase their investment in advertising and promotion. The top left chart shows the growth in advertising spend shown by the red line- and you will see that sales shown in the blue line are highly correlated to the investment in advertising. The chart on the bottom left shows how the mix of media has changed over the last 3 years, with TV being used more. Broadcast mediums such as TV help to build greater awareness. Next time you re off work sick, turn on your TV during the afternoon and I can almost guarantee you ll see an LTM advert. These styles of adverts aren t designed to win the best creative awards instead they are very efficient at generating leads. That s the last growth driver that I will discuss. The 7th driver of growth, increasing distribution reach will be cover by David Cooper later in session. So we have a range of sentiment, structural and economic drivers together we are confident they will contribute to continuous annual growth resulting in a market value in excess of 6bn by the end of

23 Turning now to my final slide, 17. I d like to briefly talk through, what we at Just, consider to be the most important drivers of value for our LTM business. 1.First, Market demand and supply. We have just discussed a number of the drivers of demand that have created a growing market. This demand attracts increasing supply of funding, as we have seen, and in turn this increased funding supply creates increased demand with investment in branding and advertising. However barriers to entry for new suppliers have been high given the long-term illiquid nature of the funding and actuarial nature of the risks, so far increased demand has more than soaked up new supply. 2.Next, The LTM market contains a number of different product types including; lump sum and drawdown, interest serviced and medically underwritten. Variants of these products are developed to target specific customer segments. This enables us to be selective in which segments we choose to participate, which risks to select to best optimize against our liability funding cash-flows, and gives us the ability to vary our market participation to match our funding needs. 3.Third, The age of the customer, and whether single or joint life determines the duration of the mortgages and the loan to value ratios that we can offer however, we at Just go further, we use our proprietary IP to better understand customers life expectancy moving to box 4 4.Just is one of only two companies that medically underwrites in the LTM market. By getting closer to the customer and using our IP to determine their life expectancy, we are then able to 17

24 offer higher LTVs to certain groups of customers compared to people who have not been medically underwritten. Peter Borley talk in more detail about our product mix and medical underwriting IP when discussing our competitive advantages in the next section. 5.Next, Underlying long-dated bond yields are the key pricing metric these are long duration assets and need to be priced appropriately as the LTM is a fixed rate of interest. The value created by the LTM is the spread above bond yields 6.And finally, Rodney, our CEO, has made the point, and it s worth repeating, when we receive premiums from our GIfL and DB customers, we invest in an optimal mix of cash, gilts, corporate credit and LTMs, taking into consideration liquidity, risk adjusted yields and capital efficiency. Reflecting the illiquidity premium, the yield pick-up on LTMs is attractive, and the greater investment return we generate, the better the guaranteed income rate we can offer to our GIfL & DB customers. The return we pay our GIfL and DB customers, and the cost of the capital we hold to back these policies is the funding costs for the LTMs. After all, we are fundamentally a spread business between our investment assets and policyholder liabilities. Once we have chosen our risks, the value created can be simply summarized as the spread over our cost of funding multiplied by the duration of the underlying mortgage, less a provision for NNEG So to summarise: We believe we are an established player in a high growth market with substantial potential for future growth, due to the multiple drivers I have highlighted. Next my colleague Peter will explain to you how we win in this exciting environment. Thank you 17

25 Thanks Paul and good afternoon. My name is Peter Borley, and I am the director of propositions for Just Group s retirement lending business. As part of that role I work with Paul to develop our overall retirement lending strategy and day to day I have responsibility for the development and deployment for all our lifetime mortgage products. I ve been doing that role for about two years and previous to that I led the delivery of our regulated mortgage company and the SPE that converts LTMs into matching adjustment compliant cashflows. I work with a team of highly knowledgeable individuals who collectively have extensive experience across both mortgages and LTMs. Between them my two senior managers have worked in the broader mortgage market for almost 40 years and collectively my team and I have over 30 years of experience of LTMs. Now that Paul has set the scene in terms of market outlook, I m going to describe our business model, and how we win in this exciting fast growing market. Let us turn to slide

26 First, a brief overview of our credentials in LTMs. We ve been providing LTMs since 2005 and we have been delivering an LTM advisory service since We are one of the longest participating providers in the market and importantly we have been a consistent provider which has allowed us to build up a significant amount of distributor loyalty, market insight and product and property performance experience. We designed and introduced the drawdown product to the UK the version of the LTM which remains most popular today. Over three quarters of all new products advised in the third quarter of 2017 are drawdown solutions. Paul has talked about the strong growth in the LTM market and as many of you will be aware we have chosen not match that increase. We have been much more selective about the profitable risks we take on. Despite that, today we remain one of the largest funders of new LTMs in the UK with this funding being deployed to the market through a range of Just and third party products. 19

27 Turning to slide 20 I should simply like to highlight that we are the only LTM business operating in the UK today which participates in all parts of the value chain funding, product manufacture and distribution. This unique business model gives our Group unrivalled flexibility to exploit any shifts in the value chain and defend ourself against adverse competitor activity. But why have we been so successful? Turning now to slide 21 20

28 On this slide we show the four major building blocks to our success. Over the next few slides I shall go into the 2nd, 3rd and 4th but let me briefly touch on the 1st funding. Clearly we are not alone in the LTM market so we are not the only company that is able to access long term funding. But let me be clear beyond the GIfL and DB de-risking providers there is currently little appetite to invest in lifetime mortgages. The main issue faced by investors is the ability to manage longer duration investments with variable end dates linked to a customer s death or entry to residential care. The average duration of a lifetime mortgage is 17 years and to invest in them you need to not only have the appetite to invest in long dated illiquid assets but also understand two fundamental risks property AND longevity. We have acquired that risk knowledge over many years and for those of you who have got to know our business over that time, you will know we have unique intellectual property that helps us to understand longevity better than the competition. But what you may not know is that we also built up insight into property risk which I shall cover on the next slide. As Simon pointed our earlier, LTMs are a very good match to our GIfL and DB liabilities and therefore a great investment for Just. Now moving on to slide 22 our insight 21

29 We collect, store and process data to deliver valuable insight in 3 critical areas market, property and longevity. I d like to now touch on each of these. Firstly market insight. Through our consistent participation over the past 12 years we have built up significant insight into the product and distributor landscape. We track details of every single product on offer in the market and we use this insight together with distributor feedback to develop what we call - product heat maps. These heat maps enable us to judge how our market offerings are positioned against the competition across a wide range of features and benefits. And more importantly they equip us to make adjustments to our offerings so that we may exploit gaps and select the most profitable risks. We combine this market insight with sophisticated profit and capital modeling to understand the optimal product set up and product mix which we then deploy through changes to our product set and through our multi-channel distribution model. Moving on to the next area - property insight. We use this intelligence to select the types of properties that best match our risk profile. Unlike traditional bank funded mortgages, the term of our LTM will be as long as the customer lives and the property sale will normally be our primary source of repayment. So we want assurance that the properties we use as security will be of sufficient quality when they are sold in order to repay our LTMs. 22

30 Since we started our LTM business we have underwritten over 90,000 properties and seen the results of how around 9,000 have performed over the duration of the LTM to its repayment. This insight has allowed us to refine the tools and methods we use. We have improved our criteria for the type of properties we want to use and educated our property underwriting experts, some of whom have been with us since day one. We review every single valuation that is undertaken by a professional valuer and use our insight to select those properties that meet our appetite for risk. And as a result we have chosen not to accept about 25% of all properties we see for one reason or another. And now - longevity insight We leverage our unique IP of understanding customer longevity to estimate the expected term of the LTM and how best it will match our GIfL and DB liabilities. For this purpose we leverage the same PrognoSysTM insight as we do on the GIfL business. And what you may not be aware of is that we are using our medical underwriting skills to underwrite an increasing share of our LTM business. By the end of 2017 we expect it to account for around 30% of our new LTMs. The customer benefits by having access to an enhanced LTV where their live is impaired. We are then able to use the information captured to increase our confidence of the customer s longevity and therefore better match these assets with our liabilities. There are only three medically underwritten products in the market and we fund two of them. Collectively this insight is difficult - if not impossible to replicate because it has been built up over time and given we are continuing to run fast it s hard to catch us. This insight gives us a sustainable competitive advantage. 22

31 So turning to slide 23 the next of our building blocks the products we fund. The two key points I would draw out on this slide are (1) the breadth of our offering and (2) the fact that we offer product not only through our own brand but also through the lending subsidiaries of the two largest distributors of LTMs Key Retirement and Age Partnership. That breadth means we are more able to exploit the gaps I mentioned on the insight slide. We can position our products at different points to a greater degree than any other provider. This enables us to be selective in the risks we choose to compete for and in doing so deliver improved profitable growth. As I said on the previous slide we also fund two of only three medically underwritten products in the market and these products uniquely give customers who are medically impaired a higher LTV. We believe that similar to the GIfL market a greater share of the LTM market will be medically underwritten over time. Today it is less than 5% but we believe that we should be aiming for it to be nearer to 50%. And that positions Just well for the future. Our partnerships with more2life and Pure Retirement give us four major benefits. Firstly as I mention above it increases the breadth of our offering. Secondly it increases our change bandwidth so should we need to introduce new product we 23

32 can do that either through our own brand or if we have other priorities through more2life or Pure. Thirdly it gives us access to even more market insight, and Fourthly, it gives us strong relationships with the two largest distributors of lifetime mortgages in the UK. 23

33 On slide 24 I d like to briefly talk about the last of our building blocks - service. This is an essential part of our proposition not just the service to our customers but as importantly, the service we provide to our distribution partners. Distributors want two things from their product partners competitive products, which I have talked about, and a product partner they can rely on. A distribution partner wants to know that once the product selection has been made and advice process has been completed that the product administration will be completed efficiently and effectively. Our distribution customers know that we are a partner that can deliver all that. Not only because we have proved it to them but also as we have showed on the slide: 1.We have been awarded nine Financial Adviser Service five star awards more than any other LTM provider. 2.In a survey conducted for us in 2016 by the research agency, ORC 91% of our customers gave us a service rating of either good or very good. This compares with only 63% for customers of other providers. 3.Our fast product completion times whilst we have no formal stats, anecdotally we have been told that we have some of the fastest in the industry. Quite simply we make it easy for our distribution partners to do business with us. And that s what they value. 24

34 Delivering outstanding service runs through the DNA of Just, it has been at the centre of both our GIfL and LTM propositions since the day we started and continues to be part of our orderwinning proposition today. 24

35 Turning now to slide 25, my final slide and to summarise. We use our insight that we have developed over 12 years to deploy a broad range of product, some of which is unique, in combination with quality service, and as David will tell you next, through a diversified multi-channel distribution strategy, to gather profitable business for our life company. And with that I now hand over to David. 25

36 Good afternoon, I m David Cooper, Group Marketing and Distribution Director 26

37 We originate LTMs via 2 channels financial intermediaries or FIs, and via partners such as Saga, Age UK and the Mirror Group where we utilise our own corporate solutions and advice business known as HUB Financial Solutions. I will cover each briefly here and then in more detail on the following slides Of the UK s 24,000 FIs, we estimate that only 5,000 carry the additional qualification required to advise on LTMs. Our Group has directly assisted the independent professional examining bodies in helping nearly 2,000 of them secure their qualification. Where an advice business does not wish to or cannot advise, we also offer a referral business into HUB Financial Solutions who will undertake the advice for them There is a significant focus by the FCA on vulnerable customers. Something that s very relevant to the LTM market given the target audience. We demonstrate our credentials in the market by helping FIs to identify and assist customers that might be deemed as vulnerable. This helps Just to continue to build its brand with FIs and helps to protect the reputation of the industry. To re-iterate the point about conduct and product suitability, I would like to remind you that the lifetime mortgage market has required mandatory regulated advice since Consequently, every single agreement originated by our Group has undergone a rigorous and customer focused advice process 27

38 Our corporate solutions and advice business helps organisations create value from their own customer bases. In this market we help them by generating LTM leads and delivering regulated advice and customer service. I will cover HUB Financial Solutions more thoroughly in a moment. Both channels are underpinned by all of the capabilities and competitive advantages that Paul and Peter have covered earlier. Moving now to slide 28 27

39 Considering the 2 channels in greater detail, we operate a segmented model. For the intermediary channel, which makes up about 80% of our new business sales, we identify two segments. The specialists are firms which focus on the at and in retirement customer markets. They operate national advice salesforces which are generally fed by leads emanating from direct marketing you saw an example of this earlier. They employ in aggregate around 300 dedicated LTM advisors. These specialist firms undertake around 80% of total FI sales. Then there are generalists. We work with many of them on our other product categories such as GIfL. Generalists are made up of both wealth managers and mortgage advisors. We expect significant growth in business from this segment as holistic financial planning becomes more widespread and as mortgage brokers revisit their databases for older customers that they have served before or who return to them with IO repayment concerns. HUB Financial Solutions targets two types of partner. Affinities which include charities, retirement businesses, insurers and publishers. Here we offer white labelling to large partners together with a range of marketing services. Banks and building societies receive a different proposition. Here we provide wider financial planning capabilities that are designed to help those with borrowing in later life, and consider the optimal use of their home equity together with their pension and non-pension savings. Our pilot work with two major banking groups suggest that we are able to improve the financial positions of the majority of business presented to us. Turning now to slide 29 28

40 HUB Financial Solutions was created this year by combining two businesses, Just Retirement Solutions and TOMAS, or The Open Market Annuity Service. It s objectives are threefold Firstly, to give access to mass market retirees who may struggle to secure advice and guidance help elsewhere Secondly, to grow the markets in which the Group operates, and Thirdly, to help partners monetise the value of their retired customer bases and/or solve conduct or other risk related issues that they face. HUB is an important source of LTM business and is a top 5 distributor in this market. We expect our share to grow substantially as we grow our investment in partner acquisition both existing and new, and in our customer handling capabilities in a specialist service centre based in Belfast. So let me summarise - we have a multi-channel distribution strategy that is well established - we have strong relationships with every major LTM distributor in the market - and we also have our own fast growing advice business that enables partners and brings us closer to the customer These collectively position the Group superbly to capture the opportunities for growth that Paul and Peter have described. With that I ll hand you back to Simon. 29

41 Thanks David. It s always impressive to hear just how deep our distribution goes into the market, and LTM s are no exception. So, LTMs form an attractive market in their own right. Rightly or wrongly, a lot of people view their house as their pension, and if that s what it comes down to, then LTM s can fund your retirement without your having to sell the family home. Hard demographics and economic reality mean demand for LTM s will grow significantly. This growth in the LTM market enables us to price selectively, and deliver attractive spreads - which mean that our GIFL and DB economics work better. We have shown how we have a variety of edges in this market, not just the distribution platform that David and his team have built, but also the property and customer underwriting skills we have honed over time, and the long term funding our DB and GIFL business produce This synergy between mortgages and DBs and GIFLs is at the heart of our business and we believe it provides a favourable balance between risk and reward. So by now, I hope we have made the case for LTM s being a key building block within our group strategy of building a sustainable model in growing markets. Moving to Q&A 30

42 Before we commence with Q&A, just a quick reminder, that we will be following previous formats, and sticking to questions on today s session only i.e. LTMs. And with that, we ll open up to the floor Question from the floor Operator any questions on the line? And with that, we will bring today s session to a close, and we would be delighted to join us for a coffee 31

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