To view the PDF file, sign up for a MySharenet subscription.

LIBERTY HOLDINGS LIMITED - Operational Update Nine Months Ended 30 September 2015

Release Date: 19/11/2015 16:30
Code(s): LBH
Wrap Text
Operational Update Nine Months Ended 30 September 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")
LIBERTY HOLDINGS LIMITED


OPERATIONAL UPDATE FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015

Operating performance supported by good South African insurance business results

The performance of the group for the nine months to 30 September 2015 continued to reflect the
trends demonstrated in the first six months of the year, being strong long-term insurance cash inflows,
continued momentum in long-term insurance retail single premium investment new business sales,
stable customer behaviour and active cost management across the group. Returns on the
shareholder investment portfolio for the period were slightly ahead of benchmark for 2015 and remain
ahead of the three year cumulative benchmark. Assets under management across the group
amounted to R655 billion (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’s main life subsidiary, Liberty
Group Limited, remains well capitalised as reflected by its capital adequacy level of 3.01 times the
regulatory minimum at 30 September 2015 (31 December 2014: 3.07 times).

Insurance operations

Individual Arrangements: South African Retail insurance operations

The Retail insurance operations indexed new business grew by 2.3% to R4.7 billion for the period.
Single premium new business remained robust, reflecting R15.6 billion (2014: R14.9 billion) in new
premiums, driven by strong ongoing support for our Evolve and linked life annuity product ranges.
Recurring premium investment and risk sales are up slightly compared to the equivalent 2014 period,
reflecting continued pressure on consumer disposable income. Flat credit life sales and banks shifting
business to in-house product providers also impacted new business growth.

Net cash inflows for the Retail insurance operations (excluding the Retail SA LISP) were up 51% to
R4.8 billion, supported by lower policy withdrawals.

The Retail SA LISP attracted R1.7 billion of gross new business inflows for the period to
September 2015, slightly below the 2014 comparative.

Group Arrangements: Liberty Africa Insurance

Liberty Africa Insurance produced strong indexed new business growth with new business up 28% to
R215 million. This was largely attributable to the commencement of operations in Zambia as well as
good new business growth in Botswana, Namibia and Kenya.

Group Arrangements: Liberty Corporate

Liberty Corporate incurred net cash outflows for the period of R1.1 billion compared to net cash
inflows of R43 million in the prior period, reflecting the lack of large investment mandates in 2015,
higher annuity payments related to large deals secured in 2014 and higher scheme withdrawals.
Adverse economic conditions are resulting in higher employment termination and consequent
withdrawal from retirement funds. Liberty Corporate cash flows are, by their nature, volatile due to the
ad hoc occurrence of large investment mandates.

Indexed new business is 17% below 2014, mainly due to single premiums being 57% lower than 2014
as a result of no significant new deals being secured in 2015. Recurring premiums were 4% down on
the comparative period. A new range of passive investments has been launched and will be a
significant focus area for the remainder of 2015, particularly with asset consultants.

Balance sheet management

LibFin continued to manage the shareholders’ investment portfolio, the asset liability and market risk
exposures and the credit portfolio within mandate and approved risk limits.

The returns from the LibFin Markets credit portfolio benefited from the growth in the diversified asset
portfolio backing the South African insurance guaranteed product set.

Asset management operations

STANLIB

STANLIB’s assets under management at 30 September 2015 amounted to R569 billion (including
R185 billion Liberty intergroup assets) compared to R551 billion at 31 December 2014, reflecting low
incremental growth from investment market returns and net cash inflows of R7 billion. Retail and
institutional (including money market) net cash inflows (excluding intergroup) for the period amounted
to R17 billion, with the mix of flows in favour of higher margin products. Intergroup cash outflows for
the period amounted to R10 billion. Money market net cash flows have remained positive throughout
the period compared to the net outflows of the third quarter in 2014.

Strategic update

From the beginning of 2015, Liberty Holdings accelerated expansion initiatives to broaden the group’s
geographic representation in African markets in support of the strategy to diversify earnings. Key to
the initiatives is to ensure efficient deployment of available capital and resources, expand customer
segments to create value and ensure a sustainable revenue base for the future.

A number of these initiatives are at advanced stages of completion, but still subject to regulatory
approval. Further details will be provided as the necessary approvals are received.

Conclusion

Liberty remains focused on meeting our customers’ changing financial, investment and lifestyle risk
needs through a comprehensive customer value proposition. Our partnership with Standard Bank
remains a significant competitive advantage on the African continent both in terms of new business
opportunities and for facilitating expansion initiatives which we have been able to demonstrate. The
core insurance and asset management businesses of Liberty, in challenging investment market and
consumer environments, continue to deliver sustainable value, growth and capital efficiency,
supported by the group’s proven capability in balance sheet and risk management.

The operational update for the nine months ended 30 September 2015 has not been audited or
reviewed by the Company's auditors.
Queries:

Investor Relations
Sharon Steyn 011 408 3063
www.libertyholdings.co.za

19 November 2015

Sponsor
Merrill Lynch South Africa (Pty) Limited

Date: 19/11/2015 04:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story