- Just Group said the Prudential Regulation Authority's conclusions on mortgage rules were considerably less onerous than set out in the consultation paper as the regulator confirmed that transitional relief would remain available for business arranged pre-2016.

Citing the PRA's policy statement, Just Group said the minimum deferment rate for allowing no negative equity risks would be 1% with a 13% property volatility rate, which was at the lower end of the range considered within the consultation paper released in July, the company said.

The proposals set out in the consultation paper issued in July, required companies like Just Group to set aside more capital to protect against the risks from mortgages, owing to falling house prices.

The Policy Statement also confirmed that the regulator had no plans to apply the effective value test to other assets, and transitional measures for technical provisions for pre-2016 business would be recognised over the remaining transitional period to 31 December 2031.

The changes set out in the PRA statement would take effect from 31 December 2019.

The PRA had announced it intends to consult further in early 2019 on various matters, including the process by which the volatility and deferment rates would be reset and how the effective value tests applied in stress.

'We welcome the greater clarity provided by the Policy Statement, and the PRA's recognition of the important role played by ERMs for our customers as they plan their retirement finances. The regime envisaged is considerably less onerous for Just than set out in the CP, particularly in respect of pre Solvency II business, and the outcome is well within the range of what we have been planning for, said Rodney Cook, Group Chief Executive.

'However, even at the 13%/1% parameters confirmed today, we view the EVT as very prudent, as for JRL2 it is equivalent to holding capital and technical provisions sufficient for the price of every house in the portfolio to fall immediately by over 35% and then remain there indefinitely. The changes prescribed by the Policy Statement do not take effect until 31 December 2019. This means the Board can evaluate the optimal capital structure to support our new business franchise in a considered manner.'

At 9:28am: [LON:JUST] Just Group Plc share price was +17.95p at 100.05p

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