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LIBERTY Holdings had “fixed” its operations and was setting its sights on expansion of its footprint and market share, the company said yesterday. It would also add products. Reporting its annual results for the year to December, the wealth management group linked to Standard Bank said its strategy of strengthening its key operating units was now reaping rewards. Now it would take back the market share it had lost between 2007 and 2010 and aim at higher margins in its retail business this year.
Focus would be on boosting the capacity of its African operations, using direct sales platforms, adding affinities and making full use of the scope provided by the bancassurance deal with Standard Bank, chief executive Bruce Hemphill said.
The bancassurance agreement revised by the two groups in 2011 allowed Liberty to sell its insurance policies more broadly across Africa through Standard Bank’s outlets.
In the 2011 financial year, Liberty Africa grew its headline earnings by more than 100 percent to R21 million. The value of new business grew by 73 percent to R9m and assets under management added 34 percent.
Mukesh Mittal, the group’s chief executive of growth, strategy and risk, said the acquisition of CFC Insurance, a Kenyan insurer, which the group finalised last year, had played a significant part in this because of the boost it gave the insurance business. Liberty acquired a 57 percent interest in CFC last year for R199m.
“Our focus in 2012 is on growing existing operations through corporate acquisition… and leveraging products and service models across geographies,” Mittal said.
The group had been in “fixing” mode for too long and was now competitive enough to envision growth. “We need to start driving growth,” he said. And different divisions needed to come up with innovative products because Liberty wanted “to see exciting things this year”.
What made the company confident was that in areas where it had lost market share, such as retail, it was now taking it back “at a right price”.
The Retail SA division, which provides insurance risk and investment products locally, delivered “outstanding” results across its operations, growing headline earnings by 46 percent to R1.3 billion. Retail SA’S gross sales from distribution channels leapt by 28 percent to R16.2bn. The unit’s net customer cash flows rocketed to R4.8bn from R990m in 2010.
Long-term insurance indexed new business across all businesses was up 19 percent to R5.2bn – largely on growth in single-premium business.
The asset management business, Stanlib, increased headline earnings by 15 percent as it improved margins.
Despite volatile markets, the financial solutions unit, Libfin, delivered in line with benchmarks and contributed investment earnings in excess of R1bn. Liberty Properties’ gross profit rose 6 percent but headline earnings were flat at R96m.
Liberty Corporate, the provider of staff benefits, investment and risk solutions reported a 65 percent dip in headline earnings and its gross contribution limped in at 1 percent.
Liberty Health and Frank.net both reported loses.
But the group’s investment in fixing this business would show results this year. Liberty believed the business would be a key contributor to the group’s future earnings.
Dimitri Mitropapas, an analyst at PSG Konsult, said Liberty had faced heavy competition in recent years and the group needed to refocus on its clients, services and product offerings to reclaim its spot.
“They are starting to do a couple of things right but there are areas where they’ll need to do more,” he said.
Mitropapas said the group should start by sharpening its insurance business and could look at cross-flow between its banking and insurance division to form synergies that could benefit the whole group.
Liberty shares lost 1 percent yesterday to close at R88.50.