Liberty lessons pay - income up
Focus on quality insurance book working with improving persistency, even in lower end of the market that Liberty had been slow to penetrate| SURE KAMHUNGA |
Published: 2011/08/05 07:34:21 AM |
LIBERTY was no longer chasing market share growth at the expense of profitability as it used the lessons from its disastrous performance in 2009 to grow a strong business, CEO Bruce Hemphill said yesterday.
An exercise started almost two years ago to restructure the business, tighten processes, cut costs and write quality business was now paying off, he said when he released Liberty’s interim results to June in Sandton.
Liberty is keen to put behind it the disastrous performance of the first half of 2009, when losses exceeded R1bn due to a spate of lapse rates and a mistimed hedging strategy.
Liberty reported a 17,2% rise in normalised headline earnings to R1,2bn boosted by an increase in indexed new business (excluding contractual increases) of 6,4% to R1,98bn from R1,86bn last year.
Mr Hemphill said the lessons of that period had been well learnt, and were being put into practice. The focus on a quality insurance book was working as shown by improving persistency rates, even in the lower end of the market, which he admitted Liberty had been "slow off the mark" to penetrate.
"I have found out that we have good and enormous talent in the organisation to solve some of the problems (we have faced)," said Mr Hemphill. "We have combined this talent with new talent and I think we are building a strong team because this is business which requires proper planning, structures and processes."
He said Liberty’s other key revenue streams, among them asset manager Stanlib, were also registering growth, with its headline earnings rising to R190m from R164m. The Africa operations were gaining traction, and would be boosted by the agreement with parent Standard Bank to sell bancassurance products using its branch network.
Liberty had also acquired a 57% shareholding in CfC Insurance Holdings for R199m, which would provide a launch pad into East Africa.
Mr Hemphill said he was not in a rush to make more acquisitions and preferred to make the CfC investment work first before seeking other assets to buy.
In the property sector, Liberty wanted to use its experience of developing and managing shopping malls and commercial properties to expand into Africa.
Rival Old Mutual is the market leader in the life insurance segment, and its own interim results today should confirm this trend.
But Sanlam recently warned that the business environment remains challenging and that it is unlikely to book strong earnings growth similar to that achieved in the second half of last year.
