What is the Solvency Capital Requirement?
A life annuity is a financial product providing policyholders with guaranteed income for life. As a South African life annuity provider, Just SA and its peers must follow regulatory standards to make sure we have enough money (capital) to pay policyholders and remain solvent, even in tough economic times.
The Solvency Capital Requirement (SCR) is therefore a reflection of this capacity and acts as a safety net or a shock absorber.
The SCR is calculated using stress tests that simulate extreme but plausible scenarios across various risk categories — such as market, credit, operational, and underwriting risks.
How Just SA Manages its SCR
As an early-stage life insurer, we expect significant growth in terms of business volumes. To write these volumes, we need capital to manage and grow the business while still meeting regulatory requirements to make good on our product promises. Maintaining a stable and well-buffered SCR is therefore essential for stakeholder confidence.
Just SA has a robust capital buffer, well above the regulatory minimum. This buffer ensures Just SA can withstand negative events and market movements and is held in liquid money market instruments to ensure immediate availability. Just SA generally holds capital in the region of 200% of its SCR, in line with other South African insurance companies. It significantly exceeds our own risk appetite limit, which is well above the regulatory limit and is deemed acceptable by our shareholder.
While the SCR is monitored and reviewed monthly by Just SA management, the ratio is published twice a year. Quarterly and annual regulatory returns are also completed and submitted to the Prudential Authority. An independent actuary from Deloitte validates these assessments.
How Just Group plc supports our SCR
Just Group plc also maintains an SCR that is well above UK regulatory limits. Just Group plc plays a critical role in supporting Just SA’s solvency capital requirements, ensuring the South African subsidiary remains financially robust and compliant with regulatory expectations.
Just Group plc issued a legally binding and enforceable letter of financial support to the Prudential Authority of the South African Reserve Bank. This letter commits the Group to maintaining Just SA in a solvent position. The structure of this support is designed to provide regulatory comfort without compromising capital efficiency.