Liberty CEO reviews strategy

TARGETS: STANDARD BANK RELATIONSHIP REINFORCED

David Munro wants to right the ship at home.

focus on its local insurance and asset management operations.

In SA, Liberty is doubling down on efforts to leverage off its relationship with parent company Standard Bank.

Liberty previously entered into a joint venture with the banking group to develop competencies in personal and commercial lines within the short-term insurance market. That venture is appearing to show progress, with Liberty’s bank assurance business reporting a 7% increase in new business premiums to R3.3 billion in the year ended December 2017.

Standard Bank and Liberty have long said they leverage off their relationship with, until now, little result.

Munro said the relationship would be different and based on a more defined strategy.

“The opportunity is for us to start being capable of delivering our products and offering into the Standard Bank Group and at the same time, start to be able to deliver Standard Bank Group’s product into our customer base. That is the heart of this game plan.”

This plan could result in the two potentially servicing 14 million customers: 12 million belonging to Standard Bank and two million to Liberty.

According to PSG Wealth’s Adrian Cloete, Standard Bank realising the importance of Liberty “came through strongly” with the implementation of a 10-point bancassurance plan after a weak 2016. Liberty was a drag on Standard bank in 2016, with earnings attributable to it falling 61% to R955 million.

“I think Liberty reached the bottom in 2016 [FY headline earnings per share: 904.5 cents]. There was a slight recovery in 2017 from a very low base.

“Considering where the company was coming from, I think the market expectations were a bit too optimistic.

“There is a new CEO. He’s put the strategy and numbers out there. The market must be a bit more patient and give him a longer-term horizon. Liberty said there will be a slight recovery in the first half of 2018, which will pick up in the second half and that there’ll be a proper [recovery] in 2019.”

Munro has put forward four targets for the next two years:

Value of new business margin: 1%-1.5% range Growth in embedded value in excess 12% Return on range Maintain robust capital within target range: 2.5x-3x equity: 15%-18%