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Operational Update For The Three Month Period Ended 31 March 2021
Liberty Holdings Limited
Registration number 1968/002095/06
Incorporated in the Republic of South Africa
Share code: LBH
ISIN code: ZAE000127148
("Liberty Holdings" or "the Group")
LIBERTY HOLDINGS LIMITED
OPERATIONAL UPDATE FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2021
MEANINGFUL PROGRESS MADE ON STRATEGIC INITIATIVES AND STRONG CAPITAL
POSITION MAINTAINED
Liberty’s current operating environment continues to be adversely affected by the COVID-19 pandemic,
which is impacting the lives of our customers, advisers and staff. Liberty has fulfilled its purpose and
honoured its promises to customers and their loved ones, utilising the Pandemic Reserve set aside for
this in 2020. Due to these extraordinary circumstances, this operational update includes the metrics
traditionally included in past operational updates as well as additional commentary to provide further
context during this period of uncertainty.
Mortality claims for the Group increased significantly during the first quarter due to the second wave of
the pandemic in South Africa, while persistency has not yet worsened as anticipated when the
Pandemic Reserve was reassessed at 31 December 2020. Given this, the Pandemic Reserve has thus
far only been utilised to absorb the relevant risk experiences across SA Retail, Liberty Corporate and
Liberty Africa. However, Liberty Corporate profitability in the current period has been adversely affected
by the elevated risk claims exceeding the Pandemic Reserve set up for this business given the IFRS
accounting treatment of short contract boundary business. Significant uncertainty related to the
evolution and impact of the pandemic and associated waves remains. The reserve will be assessed at
30 June 2021, taking account of the possibility of further waves and other developments relating to the
pandemic.
Group long-term insurance indexed new business sales for the three months to 31 March 2021
increased by 12,4% over the comparative period, with the SA Retail business reflecting an improvement
in new business inflows due to strong growth in embedded banking product sales. In contrast, in the
intermediated distribution channels, new business volumes and margin remain a challenge, with a key
focus maintained on managing the expense base in a disciplined manner, including continued
investment into the Group's strategic initiatives.
The Group remains well capitalised. The Solvency Capital Requirement (SCR) cover ratio of Liberty
Group Limited, the Group’s main long-term insurance licence, at 31 March 2021 was 1,79 times
(31 December 2020: 1,81 times). The SCR cover ratio remains comfortably within the Group's target
range, underpinning our ability to fulfil our promises to clients and other stakeholders.
Group total assets under management of R795 billion has grown by 2,5% since 31 December 2020,
largely due to favourable investment market performance.
Group net external third-party client cash outflows amounted to R3,1 billion, compared to outflows of
R2,8 billion in the comparative period which included outflows on discontinued mandates in STANLIB
Africa.
Favourable investment market conditions during the period contributed positively to returns from the
shareholder investment portfolio. Property outflows from policyholder portfolios continued at the
elevated levels experienced in the second half of 2020.
South African Insurance Operations
SA Retail
Indexed new business sales of R1 863 million were 17,8% above the comparative period. Recurring
premium new business sales of R1 308 million increased relative to the first quarter of 2020 by 20,6%,
due to strong growth in the sales of embedded banking products, while recurring risk and investment
business sales were lower than the comparative period. Single premium new business sales increased
by 12,0%, mainly driven by continued growth in conventional annuity sales. Due to the volume and mix
on intermediated business written in the first quarter relative to costs, value of new business and
margins remain under pressure and have yet to recover from the trend seen in 2020 notwithstanding
the overall improvement in sales volumes.
Net customer cash outflows amounted to R672 million, a marginal improvement over comparative
period outflows of R701 million. This was the net result of growth in premium income, partly offset by
increased death and disability claims resulting from the second wave of the pandemic.
Liberty Corporate
Liberty Corporate indexed new business of R89 million was below the comparative period indexed new
business of R103 million. Recurring premium new business of R78 million was in line with the prior
period, while single premium new business was below the comparative period due to the Liberty
Corporate target market being impacted by the economic consequences of dealing with COVID-19. Net
cash outflows of R1 219 million were above comparative period outflows of R401 million, mainly due to
higher risk claims during the second wave of the pandemic and increased umbrella scheme member
withdrawals aligned to economic trends in South Africa.
South African Asset Management
STANLIB South Africa
In the STANLIB South Africa business, assets under management increased to R631 billion from
R614 billion at 31 December 2020, due largely to favourable investment market returns. Net external
third-party client cash outflows amounted to R1,4 billion compared to inflows of R5,3 billion in the
comparative period. The current period outflows are attributable largely to money market net cash
outflows of R6,7 billion compared to prior period net inflows of R7,8 billion.
Africa regions
Liberty Africa Insurance
Indexed new business of R66 million was below the R112 million reported in the comparative period,
with the recent pandemic related lockdown measures in the various territories (particularly Kenya)
adversely impacting sales. Net customer cash inflows in the Liberty Africa Insurance life businesses of
R153 million are slightly below the comparative period inflows of R155 million.
STANLIB Africa
Assets under management in the STANLIB Africa business amounted to R18,6 billion compared to
R18,1 billion at 31 December 2020, with net external third-party client cash outflows of R78 million,
reflecting an improvement over outflows of R1,3 billion in the comparative period.
Conclusion
Our strategic focus remains on:
- Significantly enhancing the quality of our client and adviser experience;
- Delivering transparent and intuitive risk and investment solutions suitable for the digital age; and
- Aggressively simplifying our whole organisation.
Meaningful progress has been made in the first quarter with the delivery on our key strategic initiatives
and accelerating the work to become more competitive and flexible, to service and support clients and
advisers of the future, offering them simple and intuitive solutions on their journeys towards securing
financial freedom.
As was the case for most of 2020, our leaders, teams and adviser communities have been called upon
to deliver extraordinary effort in support of our customers and business generally during the period
under review. Many have done so while personally also dealing with the impact of the virus on close
friends and family. Once again, we express our appreciation to them for their fortitude and support in
these times and our condolences to everyone in the Liberty community who has suffered loss during
this time.
This operational update for the three month period ended 31 March 2021 has not been audited or
reviewed by the Group's auditors.
Queries:
Investor Relations
Sharon Steyn
Email: sharon.steyn@liberty.co.za
13 May 2021
Sponsor
Merrill Lynch South Africa (Pty) Limited
Date: 13-05-2021 07:05:00
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