Just Group has been working on bolstering its capital position and sold a book of lifetime mortgages in January as it dealt with tougher rules and uncertainties created by the pandemic.
Cost cutting and reduced strain from new business enabled the company generate 18 million pounds ($24.91 million) in cash in 2020, against cash burn of 15 million pounds a year earlier, but it still withheld a dividend in light of continued economic uncertainty.
"I don't think anyone can pretend there is a... level of certainty," Chief Executive David Richardson told Reuters, with Britain still in the grip of the coronavirus and an eventual end to government support measures looming.
Just Group's shares rose 5% by 0953 GMT, adding to a 36% gain so far this year and continuing to outshine the wider sectoral index.
"Looking beyond 2021, there is a wealth of growth opportunities over the medium term," Richardson said.
Just Group's sales from insuring companies' defined benefit or final salary pension schemes jumped 22% to 1.5 billion pounds, pushing up underlying operating profit to 297 million pounds in the year ended Dec. 31, 2020, from 266.4 million pounds a year earlier.
In-force earnings, generated from the back book of annuities as capital is released over time, climbed 16% to 97.8 million pounds, while profit from new business grew 9%.
Just Group's Solvency II capital coverage ratio, which indicates the amount of capital an insurer must hold to reduce the risk of insolvency, improved to 156% from 141% at the end of 2019.
A higher ratio implies that the risk of a company defaulting on its obligations has reduced.
"These results show that Just Group is at last a cash generative insurer which is no longer at risk of needing external capital," RBC analysts, who have an "outperform" rating on the stock, said.
($1 = 0.7228 pounds)
(Reporting by Chris Thomas and Muvija M in Bengaluru; Editing by Ramakrishnan M., Carolyn Cohn and Susan Fenton)
By Chris Thomas and Muvija M