Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

Panmure: Partnership & Just Retirement are now 'exceptional' buys

Panmure: Partnership & Just Retirement are now 'exceptional' buys

Panmure Gordon sees some 'exceptional' buy opportunities in life firms after the sector went into shock on George Osborne's pensions bombshell.

The chancellor's annual Budget saw the removal of the compulsion to buy an annuity.

Annuity provider share prices were hammered, with small caps Partnership Assurance sliding 55% and Just Retirement 42.4%.

In the blue chips L&G lost 8.4%, Standard Life 3.9% and Aviva 5.14%.

Panmure analysts Barrie Cornes and Keith Baird see the sell-off as a major overreaction.

'The abolition of compulsory annuity purchase is a massive change to the industry but we do not think that it means the end of annuity product sales,' the pair said in a note to clients.

'Whilst we think that there will be a reduction in the number of people buying an annuity, there will still be demand for the product, particularly given the increasing longevity of the population.'

They added: 'Share prices have been hit hard to the point where we think the market is assuming no new annuities will be written going forward. We think the product will still be acquired given the need to security of income in old age. 

'Being able to draw down an entire pension pot without a sizeable alternative income seems bizarre and lacking in forward thinking.'

The duo describes the opportunity in Just Retirement and Partnership as exceptional.

'Based on these asset values we believe that both Partnership and Just Retirement current share prices represent and exceptional buying opportunity and that the share price reaction has been an overeaction,' they said.

'The current valuations of both are close to assuming that no new business will be written, which we view as wrong. We note also that they both have highly valuable intellectual property that would be highly sought after and prized by their competitors.'

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Play Japan's slump, the umbrella revolution and the battle for Brazil

Japan's slump, the umbrella revolution and the battle for Brazil

With the arrows of Abenomics appearing to be missing their targets and political uncertainty rife in Hong Kong and Brazil we take a look at investor sentiment in this week's Investment Pulse

Your Business: Cover Star Club

Profile: The adviser that tempted Robin Minter-Kemp on board

Profile: The adviser that tempted Robin Minter-Kemp on board

It is rare to meet an impassioned individual who is willing to bang the drum for investment advisory right now

Wealth Manager on Twitter