Stable Liberty gets ready to square up to rivals
● Liberty Holdings’ turnaround strategy seems to be coming to fruition as the insurer’s management slowly returns the group to profitability, with half-year results showing gains in new business and margins, while it continues the process of overhauling its business by 2020.
The group’s results for the six months to end-June showed it was able to increase new business 57% and boost margins from 0.4% to 0.7%. Despite this, headline earnings fell 1% to R1.52bn.
CEO David Munro said the company’s description of its results as “a stabilisation” was accurate as “noone should be fooled that 18% growth [for normalised operating earnings] off a very low base is a laudable thing, but I can tell you that 18% up is much better than 18% down, so we will take it”.
He pointed to struggling asset manager Stanlib and Liberty’s individual-arrangement business on policies, such as life insurance for individuals, as the main drivers of the improvement. Stanlib was able to increase net cash inflows 49% to R8.4bn.
Munro cited the difficult economic conditions as a limitation to the group’s performance, in particular to inflationary pressures as consumers’ disposable income among Liberty’s affluent target market comes under pressure.
He said, though, that if there was an improvement in the economy, Liberty would be able to capitalise on it due to changes it had implemented, including cutting costs and simplifying its product range.
Liberty’s share price increased 1.69% on Thursday but since the beginning of the year has dropped by more than 6%.
Munro said the group was in the process of introducing a few innovations in the next few months that would allow Liberty to go “toe-to-toe” with competitors to which it has lost considerable market share in recent years.
Fund manager Richard Hasson, co-head of Electus, said the results showed the group was moving in the right direction. The better working relationship with Liberty’s parent company, Standard Bank, was a positive.
Liberty was the victim of a data breach in June, but Munro said the group had not experienced any discernible effects and did not expect any.
But he said: “Of course, it is negative in the sense that something happened to Liberty and it went to the heart of a trust relationship . . . but the longer-term consequences I think you will only be able to read into the data once we have got perspective on this event.”
I can tell you that 18% up is much better than 18% down, so we will take it David Munro
Liberty Holdings CEO