Solvency and Financial Condition Report 2021

St. James's Place Group

Solvency and Financial Condition Report 2021

Contents

Introduction 1

Summary 2 Statement of

Directors' Responsibilities 5

Auditors' Report and Opinion 6

A) Business and Performance 10

A.1 Business 10

A.2 Underwriting performance 11

A.3 Investment performance 11 A.4 Performance of

other activities 11

B) System of Governance 12 B.1 General information on

the system of governance 12

B.2 Fit and proper requirements 13 B.3 Risk management system

including the ORSA 14

B.4 Internal control system 14

B.5 Internal audit function 16

B.6 Actuarial function 16

B.7 Outsourcing 16

C) Risk Profile 18

C.1 Underwriting risk 19

C.2 Market risk 20

C.3 Credit risk 21

C.4 Liquidity risk 21

C.5 Operational risk 22

C.6 Other material risks 22

C.7 Any other information 22

D) Valuation for Solvency Purposes 23

D.1 Assets 23

D.2 Technical provisions 26

D.3 Other liabilities 30 D.4 Alternative methods

of valuation 31

D.5 Any other information 31

E) Capital Management 32

E.1 Own Funds 32

• E.2 Solvency Capital

  Requirement & Minimum

  Capital Requirement 34

• E.3 Use of duration based equity risk sub-module in

  the calculation of SCR 36

• E.4 Difference between

  Standard Formula and

  any internal model used 36

• E.5 Non-compliance with the

  MCR and Non-Compliance

  with the SCR 36

Appendix: Quantitative

Reporting Templates 37

Glossary of Terms 65

01

Introduction

This Solvency and Financial Condition Report (SFCR) has been prepared in line with the requirements of the Solvency II (SII) Regulations, to assist clients of the St. James's Place Group (the Group) and other stakeholders in understanding the nature of our business, how it is managed, and its solvency position.

This is a single SFCR that incorporates consolidated information at the level of the Group, and solo information for the subsidiary insurance undertakings located within the UK and European Union: St. James's Place UK plc (SJPUK) and St. James's Place International plc (SJPI). This report is prepared in compliance with rule modification A00003533 granted by the PRA with effect from 1 January 2022.

Following the UK's exit from the EU and the end of the subsequent Transitional Period, the PRA has adopted the SII requirements with only limited changes. Throughout this document, any references to the SII Directive and associated Delegated Regulation should be interpreted as referring to:

• • the UK enactment of the legislation (unless otherwise indicated) for the Group and for SJPUK

• • the EU enactment of the legislation for SJPI

Relevant information about the business of our Group is provided in the Group's Annual Report and Accounts for the year ended 31 December 2021 (the Report & Accounts), a copy of which can be found atwww.sjp.co.uk/ shareholders/reports-presentation-and-webcasts/2022. Where appropriate we will refer readers to that document.

There are, however, certain specific SFCR requirements which are not already reported publicly elsewhere, and those are specifically included in this report. In particular this report includes full reporting of the SII valuation undertaken at 31 December 2021, and the associated capital position for our Group. Those results are also presented in quantitative reporting templates (QRTs), and the Group's and its solo insurance undertakings' submissions can be found in the Appendix to this report.

02

Summary

St. James's Place plc is an award-winning wealth management company. Clients of St. James's Place have access to a range of financial solutions, including the provision of funds and expert advice regarding building investment portfolios, retirement planning, managing intergenerational wealth and ensuring financial protection. Advice is provided by the St. James's Place Partnership, a 4,556-strong force of self-employed advisers, with whom we enjoy a close relationship.

We aim to be the most trusted brand in UK wealth management, and focus on doing 'the right thing' for our clients.

The Group provides insurance-based investment and pension products, mainly to UK clients, through two key subsidiary companies - St. James's Place UK plc (SJPUK) which is based in the UK, and St. James's Place International plc (SJPI) which is based in Dublin. The Group also provides insurance-based investment products to a small but growing number of clients, mainly ex-patriates, in Asia through a branch of SJPI based in Singapore and a subsidiary of SJPUK based in Hong Kong.

The Group also provides unit trusts and discretionary fund management.

Our Business

After the challenges of 2020, the operating environment in 2021 proved to be far more favourable for our business as global economies returned to growth, investments markets responded by registering positive gains, and consumer confidence recovered.

Our business performed strongly against this backdrop, with client retention rates at all-time highs for the Group, net inflows totalled £11.0 billion (2020: £8.2 billion) equivalent to 9% (2020: 7%) of opening funds under management. This new business performance, together with the positive impact of investment markets, resulted in funds under management closing at a record £154.0 billion (31 December 2020: £129.3 billion), up 19% year-on-year.

Our financial business model remains straightforward and unchanged. We attract and then retain funds under management on which we will receive an annual management fee. We use this income to meet our overheads and to invest for the future.

Although the COVID-19 pandemic has had far-reaching consequences for the Group, the local and worldwide economy and the environment in which the Group operates, the risk landscape has improved considerably over the last 12 months following the successful rollout of vaccinations in the UK. However, we remain mindful of the risk posed by emerging mutations of the virus, which may be vaccine resistant, reduce the efficacy of the vaccines going forward and/or result in the re-imposition of certain restrictions.

The unit-linked business model means that the financial positions of SJPUK and SJPI have remained resilient throughout the year.

Insurance Funds Under Management (FUM) in the Group and individual entities grew over the year as follows:

SJP Group

SJPUK1

SJPI

Investment returnClosing Insurance FUM

1

Figures for SJPUK include closing funds under management of £0.25 billion (2020: £0.18 billion) in a subsidiary life insurance company based in Hong Kong.

Most of the Group's insurance business is investment-related. However, both SJPUK and SJPI have small legacy books of protection business, which are substantially reinsured with highly-rated UK and EU-based reinsurance companies.

The Group has an additional £43.21 billion (2020: £35.81 billion) of funds under management within its unit trust and discretionary fund management companies.

More information about our business can be found in Section A of this report.

St. James's Place Plc

03

Summarycontinued

Risk Management

The Group Board and the Boards of the insurance entities have responsibility for assessing the main risks affecting the business, and these are monitored on a regular basis.

The emergence and impact of COVID-19 has been a major external risk event. No event of this nature can be precisely forecasted and planned for. However, through our approach to the fundamentals of risk management the Group continues to be able to demonstrate resilience, from a financial and operational perspective, against COVID-19. We remain highly confident in our ability to withstand further challenges that may or may not emerge.

Although these risks remain outside of our control, we remain focussed on understanding the degree to which the various outcomes might impact the business to allow us to consider how they might be mitigated. Stress and scenario testing has been performed which demonstrates that the businesses remain resilient, and we continually monitor the changing environment to ensure our analysis and scenario testing remains appropriate.

The key risks that could impact on the profitability of the Group's insurance businesses are:

• •Market Risk:A reduction in funds under management owing to market shocks, poor market performance or currency and exchange rate movements would reduce future annual management charges, and hence future profits.

• •Lapse Risk:Similarly, a reduction in funds under management owing to higher withdrawal rates would reduce future annual management charges. This may arise from factors such as changes in the economic climate, poor investment performance, competitor activity, or reputational damage to the Group.

• •Expense risk:Higher expenses would reduce future profits.

• •Operational risk:Losses from operational risk events, such as a product failure, failure of a Third-Party Administrator or a significant cyber attack could result in one-off operational losses reducing future profits, as well as wider reputational damage which could impact on client retention.

Although these risks may impact on the future profitability of the Group, they do not have a significant impact on our ability to meet contractual payments to clients. Our investment business is managed on a 'unit-linked' basis, where we hold assets which match our clients' investments, ensuring that we are always able to meet clients' withdrawal requests in line with their products' Terms and Conditions.

The low risk nature of our business also means that our Solvency Ratio remains resilient to changes in the business.

More information about the risks that the business faces, and how we manage them, can be found in Section C of this report.

Our Solvency Position and Capital Management

We continue to manage our balance sheet prudently to ensure the Group's solvency, and that of its subsidiary entities, is maintained safely through the business cycle. We hold assets which match our clients' unit liabilities, and the remaining assets in the insurance companies are invested in high quality, liquid assets - typically AAA rated money market funds.

Each subsidiary company holds capital which is sufficient to cover any regulatory requirements together with an additional margin which can absorb adverse future changes.

The Group's solvency position assessed on the UK and EU regulatory basis, known as 'Solvency II', is shown in the following table:

SJP Group

SJPUK

SJPI

Solvency II Own Funds (A)

1

Before payment of final dividends, as presented in Group Report and Accounts.

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St James's Place Group plc published this content on 08 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 April 2022 13:05:47 UTC.