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Operational update for the three months ended 31 March 2015
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 THREE MONTHS ENDED 31 MARCH 2015
Operating performance supported by ongoing growth across the group
The performance of the group for the three months to 31 March 2015 continues to broadly reflect the trends
demonstrated in the previous financial year of improved operating earnings, positive momentum in retail
insurance single premium investment new business sales and stable customer behaviour. Returns on the
shareholder investment portfolio for the period were in line with the benchmark for 2015 and remain ahead of
the three years’ cumulative benchmark. Assets under management across the group amount to R646 billion
at 31 March 2015 (31 December 2014: R633 billion).
Capital position:
The group’s favourable capital position was maintained following consistent and effective management of
risks within the board approved risk appetite. The group and its insurance subsidiaries remain well
capitalised as reflected by Liberty Group Limited’s capital adequacy level at 31 March 2015 of 3.20 times the
regulatory minimum compared to 3.07 times at 31 December 2014.
Capital cover as measured under the draft Solvency Assessment and Management framework has also
increased.
The capital position of the group is at its highest levels for a number of years and therefore adequately
supported the 2014 final dividend paid in April 2015.
Insurance operations
Long-term insurance operations indexed sales are up 9% compared to the three months to 31 March 2014.
Individual Arrangements: South African Retail insurance operations
The Retail insurance operations indexed new business grew by 3% to R1.5 billion for the period. Single
premium new business gross inflows are up 10% to R5.0 billion. The increase in investment new business
continues to be driven by strong ongoing support for our Evolve and linked life annuity product ranges.
Recurring premium investment and risk business sales have been maintained at similar levels to the
equivalent 2014 period reflecting the growing pressure on consumer disposable income.
Net cash inflows for the Retail insurance segment (excluding the Retail SA LISP) are R1.3 billion for the
period following the continued growth in single premium investment business and ongoing good retention of
customer business.
Group Arrangements:
Corporate
Corporate indexed new business improved by 8% to R158 million (recurring premium of R131 million, single
premium gross inflows of R271 million) largely reflecting continued success of the liability driven solutions
unit in securing mandates, demonstrating growing market acceptance of the Liberty Corporate product
offering. Corporate net cash outflows for the period of R342 million are however higher than the comparative
of R175 million reflecting higher annuity payments related to large deals secured in 2014 and higher scheme
withdrawals partly due to the ongoing termination of small standalone funds. Liberty Corporate cash flows
are by their nature volatile due to the ad hoc occurrence of large investment mandates.
Liberty Africa long-term insurance contribution to the group improves steadily
The commencement of operations in Zambia and good new business growth in Namibia and Uganda have
resulted in indexed long-term insurance new business increasing to R120 million, significantly higher than
the comparative of R32 million. Insurance net customer cash inflows of R128 million are up 24%. Focus
remains on finding opportunities to expand the group’s footprint whilst growing and improving efficiencies in
existing operations.
Balance sheet management
LibFin continues to provide effective balance sheet management and increase returns from the credit
portfolio
LibFin Markets continues to manage the market risk exposures within a narrow range whilst steadily
improving margins from the diversified asset portfolio backing the South African insurance guaranteed
product set.
Asset management operations
STANLIB
STANLIB’s assets under management (excluding the on-balance sheet property portfolio) at 31 March 2015
amounted to R533 billion (including R134 billion segregated Liberty intragroup mandates) compared to
R523 billion at 31 December 2014. Net cash inflows (excluding intragroup) for the period amounted to R0.4
billion, reflecting the net result of positive inflows of R3.2 billion in the South African operations offset by net
outflows of R2.8 billion from the African asset management businesses, mainly due to a large single
withdrawal in Botswana. The intragroup segregated mandates cash flows are negative, mainly arising from
the ongoing changes in product mix and policyholder taxation obligations.
The Africa expansion strategy is progressing well, with the recent launch of STANLIB Ghana. STANLIB is
the first South African asset manager to have a physical presence in that country.
Liberty Properties
The final remaining regulatory approvals relating to the previously announced property management joint
venture with the retail management division of JHI Properties Pty Ltd, owned by Excellerate Holdings
Limited, were received during the first quarter with the joint venture commencing operations from
1 May 2015.
Conclusion
Liberty remains focused on meeting our customers’ changing financial, investment and lifestyle risk needs
through a comprehensive offering. Our association with Standard Bank remains a significant competitive
advantage on the African continent both in existing operations and for expansion initiatives. The core
insurance and asset management businesses of Liberty continue to deliver sustainable value, growth and
capital efficiency, supported by the group’s proven capability in balance sheet and risk management.
Growth initiatives to broaden the group’s geographic representation in African markets continue, whilst
leveraging capabilities and expanding customer segments to create value.
The operational update for the three months ended 31 March 2015 has not been audited or reviewed by the
company's auditors.
Queries:
Investor Relations
Sharon Steyn 011 408 3063
www.libertyholdings.co.za
Braamfontein
21 May 2015
Sponsor
Merrill Lynch South Africa (Pty) Limited
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