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Operational Update for the Three Month Period Ended 31 March 2016
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 MONTH PERIOD ENDED 31 MARCH 2016
The performance of the group for the three months to 31 March 2016 continues to reflect the trends
observed in the final quarter of 2015. Increasing pressure on consumer disposable income, volatile
investment markets and lower economic growth have impacted both net customer cash flows and
indexed new business. Returns on the shareholder investment portfolio were behind benchmark for
2016 but remain well ahead of the three year cumulative benchmark. Assets under management
amounted to R671 billion (31 December 2015: R668 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 3.00 times the
regulatory minimum at 31 March 2016 (31 December 2015: 3.03 times). Given that the dividend from
Liberty Group Limited to Liberty Holdings Limited was paid on 29 March 2016 (2015: 1 April 2015),
this represents an improvement in the relative capital position.
Insurance
Individual Arrangements
The Retail insurance operations indexed new business of R1.5 billion was 1% up compared to the
prior period. Recurring premium investment and risk sales were 5% up compared to the equivalent
2015 period, reflecting continued pressure on consumer disposable income. Single premium new
business was down 8%, driven by larger distributors shifting business to in-house product providers
and a lack of guaranteed investment plan sales. The lack of capacity to provide guaranteed
investment products has been addressed with a new guaranteed product launched in May 2016.
Net cash inflows for the Retail insurance operations (excluding the Retail SA LISP) reduced to
R0.4 billion from R1.3 billion in the prior period, primarily due to higher claims. The Retail SA LISP
attracted R0.6 billion of gross new business inflows for the period, up 35% on the 2015 comparative.
Group Arrangements
Indexed new business from Liberty Corporate of R131 million was 17% lower than 2015. Recurring
premiums were down 11% due to an increasingly competitive group risk market and lower uptake of
offered enhancements. Liberty Corporate single premiums were down 49% as a result of no
significant new deals being secured in 2016. Liberty Corporate net cash outflows were in line with the
prior period of R344 million, reflecting higher employment termination with consequent withdrawals
from retirement funds and the lack of any large single premium investment mandates.
Liberty Africa Insurance indexed new business of R69 million was 43% lower than the comparative
period. This was largely due to the non-recurrence of the take on of an existing book in Zambia in the
prior year. Muted 2016 first quarter sales in most territories also impacted volumes. Liberty Health
operations are being restructured to focus more on the proprietary risk product solution to employers
in non-South African jurisdictions. Lives covered by this product grew by 5% for the quarter.
Balance sheet management
LibFin continued to manage the shareholders’ investment portfolio, the asset liability market risk
exposures and the credit portfolio within mandate and approved risk limits. The returns on the LibFin
Markets credit portfolio benefitted from the continued growth in credit assets backing annuities and
guaranteed product liabilities.
Asset management
STANLIB
STANLIB’s assets under management amounted to R582 billion compared to R579 billion at
31 December 2015, reflecting low incremental growth from investment market returns and external
net cash outflows of R2.5 billion. Retail and institutional (excluding money market) net cash outflows
for the period amounted to R1.3 billion. Intergroup cash outflows for the period amounted to R4 billion,
mainly attributable to policyholder taxation obligations and changes in product mix.
Conclusion
Given the demanding conditions experienced in the quarter, management is taking active steps to
address some of the shorter term challenges. The group believes that the longer term strategy
remains appropriate and is intact.
The operational update for the three month period ended 31 March 2016 has not been audited or
reviewed by the Company's auditors.
Queries:
Investor Relations
Sharon Steyn 011 408 3063
www.libertyholdings.co.za
19 May 2016
Sponsor
Merrill Lynch South Africa (Pty) Limited
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