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Operational Update for the ten months ended 31 October 2013
Liberty Holdings Limited
Registration number 1968/002095/06
Incorporated in the Republic of South Africa
Share code: LBH
ISIN code: ZAE0000127148
("Liberty Holdings" or the "Company")
OPERATIONAL UPDATE FOR THE TEN MONTHS ENDED 31 OCTOBER 2013
Group operating performance reflects continued sales momentum
The performance of the group for the ten months to 31 October 2013 reflects the benefits of product
innovation and effective distribution partnerships which have resulted in continued good sales
momentum in the insurance business and strong customer net cash inflows and growth in assets
under management in the asset management business. Returns on the shareholder investment
portfolio have benefitted from tactical asset allocation and positive investment markets performance.
Key highlights:
• Long-term insurance indexed new business (excluding premium escalations) increased by 17.3%
to R5.7 billion for the period.
• Net customer cash inflows of R28 billion reflecting an improvement on the R21 billion reported for
the corresponding 2012 period.
• Total group assets under management increased to R606 billion from the R566 billion at
30 June 2013.
• The shareholder investment portfolio gross investment return continues to be above the
benchmark.
Capital position:
The project to rationalise life licences (LLR) and transfer the business under Liberty Active Limited,
Capital Alliance Life Limited and Liberty Growth Limited to the main licence, Liberty Group Limited,
was successfully completed on 1 September 2013.
The capital adequacy level of Liberty Group Limited (LGL), at 31 October 2013 post the LLR was
2.31 times the regulatory minimum after funding dividends during the period of R1.9 billion.
This compares to the pro-forma 2.07 times at 30 June 2013 and 2.11 times at 31 December 2012
(recalculated as if LLR had been effective at those dates). All the other group life licence subsidiaries
remain well capitalised.
Insurance operations
Retail segment indexed sales up 15.4%
The Retail segment improved indexed new business for the period by 15.4%, with recurring new
business up 12.7% to R3.4 billion and single premium new business up 22.3% to R14.3 billion. The
increase continues to be driven by excellent sales growth in single premium investment business as
well as pleasing credit life sales.
Net cash inflows for the Retail segment are R4.0 billion for the period following the good growth in
single premium investment business and ongoing improved retention, despite higher policy maturity
and surrender payments following the increase in investment values from good investment market
performance.
LibFin returns ahead of benchmark
LibFin Investments continue to manage the shareholder investment portfolio (SIP) within approved
asset allocation limits, with returns for the ten months ahead of the gross benchmark return due to
good tactical asset allocation. Average SIP asset allocations have remained similar to those disclosed
at 30 June 2013.
Libfin Markets continues to manage the market risk exposures within a narrow range with good
margin income growth derived from the ongoing build in the credit portfolio.
Corporate new business up 37.4%
Corporate indexed new business increased by 37.4% to R647 million, mainly as a result of excellent
growth in single premium business, and a 39.1% increase in risk sales.
Corporate net cash outflows for the period are R187 million but have improved considerably
compared to the R2.3 billion outflows for the comparable period in 2012. The business remains on
track with its strategy to provide new product offerings and position the business for growth.
Liberty Health focused on strategy execution
Management focus remains on improving the efficiency of the Liberty Health operations and building
scale to leverage the investment in systems and processes.
Liberty Africa long-term insurance new business up by 7.4%
Long-term insurance indexed new business increased by 7.4% compared to the equivalent 2012
period, supported by improved sales in the bancassurance channel. Short-term insurance claims loss
ratios remain at acceptable levels.
Asset management operations
STANLIB AUM grow by 15.1%
(includes asset management operations in all African regions)
Assets under management (excluding the on-balance sheet property portfolio) at 31 October 2013
increased to R515 billion compared to R438 billion at 31 December 2012. This strong growth reflects
inflows for the period of R15 billion into higher margin asset allocation funds. Total cash inflows
(excluding intergroup) for the period are R23 billion. The good performance of equities coupled with
the depreciation of the local currency towards the end of the second quarter of 2013 benefitted asset
values during the period.
Conclusion
The core insurance and asset management businesses of Liberty Holdings, utilising the group’s key
competitive differentiators of distribution partnerships, product innovation, investment expertise and
balance sheet management, continue to deliver substantial value and grow market share.
The focus is on growth, leveraging these capabilities to gain further profitable market share in existing
markets and driving initiatives to broaden geographic representation and expand customer segments.
The operational update for the ten months ended 31 October 2013 has not been audited or reviewed
by the Company's auditors.
Queries:
Investor Relations
Sharon Steyn 011 408 3063
www.libertyholdings.co.za
Johannesburg
28 November 2013
Sponsor:
Merrill Lynch South Africa (Pty) Limited
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