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Operational Update for the Nine Month Period Ended 30 September 2017
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 Group")
OPERATIONAL UPDATE FOR THE NINE MONTH PERIOD ENDED 30 SEPTEMBER 2017
Group long-term insurance indexed new business grew by 6% compared to the nine month period to
30 September 2016 (the prior period) supported by good Liberty Corporate new business sales. Low
economic growth and consequential ongoing pressure on consumers continued to impact retail
volumes. Heightened political and economic uncertainty saw continued flows into guaranteed products.
This manifested in a weaker mix of business from a margin perspective and lower value of new business
in the Group’s retail operations in South Africa. Improved asset management non-money market cash
flows supported the higher group net customer cash flows compared to the prior period. Assets under
management amounted to R708 billion (31 December 2016: R676 billion).
Capital position
The capital adequacy ratio of the Group’s main life subsidiary, Liberty Group Limited, increased to
3.26 times the regulatory minimum at 30 September 2017, above the upper end of the target range,
from 2.82 times at 30 June 2017. The capital ratio benefited from the additional debt capital of R1 billion
in issue at 30 September 2017 as well as a revision to the credit capital requirements in August 2017.
This strong capital position underpins the Group’s ability to fulfil its commitments to all its stakeholders.
Insurance
Individual Arrangements
The retail insurance operations indexed new business of R4.9 billion was 2% up compared to the prior
period. Single premium new business was up 4%, driven by good sales of guaranteed investment
products. Recurring premium investment and risk business sales are 1% up on the prior period.
Net cash inflows for the retail insurance operations (excluding the Individual Arrangements LISP)
increased to R1.3 billion from R0.7 billion in the prior period, due to reduced policy surrenders and
maturities in the current period. The Individual Arrangements LISP attracted R1.5 billion of gross new
business inflows in line with the prior period.
Group Arrangements
Indexed new business from Liberty Corporate of R802 million was 37% higher than 2016. Recurring
premiums were up 38% due to strong group risk and umbrella enhancement sales. Single premiums
were up 31% compared to the prior period due to improved single premium umbrella sales. Net cash
outflows amounted to R1.5 billion compared to R1 billion in the prior period, reflecting the loss of certain
investment mandates and higher risk claims linked to the economic environment.
Liberty Africa Insurance indexed new business of R232 million was 10% higher than the prior period.
This was attributable to increased single premium business from the Southern African long-term
insurance operations.
Asset management
STANLIB South Africa
In the STANLIB South Africa business, assets under management amounted to R554 billion compared
to R535 billion at 31 December 2016, reflecting growth from investment market returns and external net
cash inflows of R4.6 billion. Retail and institutional (excluding money market) net cash inflows for the
period amounted to R4.3 billion (30 September 2016: inflows of R0.7 billion). Intergroup cash outflows
for the period amounted to R12 billion, mainly attributable to policyholder taxation obligations and
changes in product mix.
STANLIB Rest of Africa
Assets under management in the STANLIB Rest of Africa business amounted to R55 billion compared
to R51 billion at 31 December 2016, with external net cash outflows of R0.8 billion. Retail and
institutional (excluding money market) net cash outflows for the period amounted to R1.6 billion
(30 September 2016: inflows of R2 billion). Intergroup cash outflows for the period amounted to
R77 million.
Conclusion
Operating conditions are expected to remain challenging in light of the poor outlook for economic
growth. Management’s immediate priority remains the strategic execution of initiatives to restore the
value of new business and margin, reduce costs and complexity in the business and improve customer
experience.
The operational update for the nine month period ended 30 September 2017 has not been audited or
reviewed by the Group's auditors.
Queries:
Investor Relations
Sharon Steyn 011 408 3063
www.libertyholdings.co.za
24 November 2017
Sponsor
Merrill Lynch South Africa (Pty) Limited
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