Liberty plans to rationalise four life licences into one

INSURER Liberty says it will rationalise its four life licences into one, a move that will save the financial services company an estimated R20m annually.

In order for insurers to sell longterm insurance they need to be registered with the Financial Services Board as life companies.

Liberty had four licences registered, including Capital Alliance, which it acquired in 2005; Rentmeester, now known as Liberty Growth; and Charter Life, known as Liberty Active. When Liberty bought these companies it did not transfer the licences to the Liberty Group life licence. The South Gauteng High Court approved Liberty’s plans to rationalise the life licences at the end of last month.

“We will now have one life licence,” Liberty Retail CEO Steve Braudo said on Monday. “We are not looking to fire people. It’s not about rationalising people, it’s rationalising the process.”

After the rationalisation, which is expected to be completed by the end of the year, Liberty will no longer need four registered life companies to be separately audited. Mr Braudo said that with the advent of the Solvency and Assessment Management — a regulatory framework requiring insurers to align their capital requirements with the underlying risk so that they can pay out multiple claims from policyholders — having four licences would be inefficient.

Mr Braudo said all the regulators had approved the rationalisation and, most importantly, policy holders had given Liberty the go-ahead.

Communication about the process was sent to 1.2-million policyholders so they could decide whether they were for or against it.

“The major condition (for the approval) is that existing policyholder rights must be protected,” Mr Braudo said.

This meant that the company still had to honour the contracts policyholders had when they bought policies from the life companies.

He added that Liberty has about 2.2-million policyholders and 2.6million policies.

With one licence, Mr Braudo said Liberty would have a single set of actuarial valuations. Cost savings would be used to enhance the customer offering, he said.

Liberty has been praised in the market for bringing out innovative products. It recently launched a hybrid investment solution which allows customers to purchase unit trusts alongside savings products such as retirement annuities, endowments and preservation funds.

The newly launched solution puts customers in a position where they would not need to tap into their retirement and preservation funds for cash. Instead they could tap into their unit trusts, vehicles which are more liquid.

Upon retirement a customer can also make a limited withdrawal.