Operational Update for the three month period ended 31 March 2018
Liberty Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 1968/002095/06)
Share Code: LBHP ISIN Code: ZAE000004040
Share code: LBH ISIN code: ZAE0000127148
("Liberty Holdings" or "the Group")
LIBERTY HOLDINGS LIMITED
OPERATIONAL UPDATE FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2018
The 2017 year end results presentation set out the challenges that the Group
faced and management’s priorities for 2018 and 2019. These priorities are to
restore the financial performance of the SA Retail insurance business,
improve the investment performance of STANLIB, simplify the group’s overall
operations and maximise the relationship with the Standard Bank Group.
During the first quarter of 2018, management continued to execute plans to
address these priorities. Formal programmes are in operation to ensure that
focus on specific deliverables and outcomes is maintained and that progress
is closely tracked. Intense focus on addressing the new business volumes
across all business lines has been required, together with continued strict
discipline in managing the expense base. An update will be provided during
the 2018 half year results announcement.
The Group remains well capitalised at the upper end of its target range in
respect of the current capital regime. The impending Solvency Assessment and
Management (SAM) regime is expected to become effective from 1 July 2018 and
the group’s capital coverage under SAM is well within its target range.
The retail insurance operations indexed new business of R1 503 million was
3% down compared to the three months to 31 March 2017 (the comparative
period) reflecting weak new business volumes experienced in the first quarter
of 2018. Recurring premium investment and risk business sales were flat
compared to the comparative period, with a decrease in single premium
business partly attributable to a continued migration to off-balance sheet
The continued retention efforts in the retail insurance operations to reduce
policy surrenders and maturities have positively contributed to net cash
inflows (excluding the Individual Arrangements LISP) increasing to R514
million from R292 million in the comparative period. The Individual
Arrangements LISP attracted R545 million of gross new business inflows which
was 19% up on the comparative period.
Liberty Corporate indexed new business increased to R171 million from
R129 million in the comparative period. Recurring premiums grew to
R156 million from R115 million due to strong group risk sales. Single
premiums were up 12% due to improved single premium umbrella sales. Net cash
outflows reduced to R278 million compared to R756 million at 31 March 2017,
reflecting lower scheme terminations.
Liberty Africa Insurance indexed new business reduced to R62 million from
R83 million in the comparative period, attributable mainly to the sale of
more single premium business in the current quarter.
STANLIB South Africa
In the STANLIB South Africa business, assets under management amounted to
R543 billion compared to R556 billion at 31 December 2017, reflecting the
effect of external net cash inflows of R2.5 billion offset by lower
investment market returns for the quarter. Retail and institutional net cash
inflows for the period amounted to R1.5 billion (31 March 2017: inflows of
R1 billion) and money market net cash inflows amounted to R1 billion
(31 March 2017: outflows of R1.9 billion). Intergroup cash outflows for the
period, mainly attributable to policyholder taxation obligations and changes
in product mix, amounted to R5.4 billion.
STANLIB Rest of Africa
Assets under management in the STANLIB Rest of Africa business amounted to
R47 billion compared to R53 billion at 31 December 2017, with external net
cash outflows of R6.6 billion (31 March 2017: outflows of R0.9 billion) due
mainly to the loss of a large mandate in the Southern African region.
Actions to achieve the Group’s medium-term strategic priorities are in full
flight. Management is confident that Liberty has all the ingredients for
success and will continue to focus on executing the plans to restore the
performance of the business.
The operational update for the three month period ended 31 March 2018 has
not been audited or reviewed by the Group's auditors.
Sharon Steyn 011 408 3063
18 May 2018
Merrill Lynch South Africa (Pty) Limited
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