At Liberty to divulge?

20 January 2004 Angelo Coppola

In spite of the tough operating environment in the long-term insurance industry, Liberty, in a trading update not reviewed by its auditors, says that its new business premiums were marginally higher than in 2002.

The group will release its results on 3 March.


Initial indications are that new business margins were maintained in the range experienced in recent years and net cash inflows from insurance operations remained strong.


Expenses have been curtailed and are within the actuarial assumption on a per policy basis.


The weighted average investment return for 2003 on the equity, managed and foreign assets portfolios for 2003 was +12,5% versus –9,5% in 2002.


Despite the positive impact on the life fund operating surplus of the turnaround in investment returns, a year-on-year reduction in headline earnings is still anticipated as a result of the inclusion in 2002 of releases from the life fund, due mainly to reduced expenses on a per policy basis in that year.


Initial estimates of headline earnings per share indicate that the year-on-year decrease is expected to be between 10% and 15%.


The company’s capital position remains strong and it is not anticipated that the capital adequacy cover will have deteriorated from the level at 30 June 2003 of 2,6. Similarly, embedded value per share is expected to be higher than the value shown at 30 June 2003 of R53,42.


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Financial behaviour experts suggest that today’s risk modelling methodologies ignore your client’s emotional ability / behavioural capacity. What are your thoughts on spicing up risk profiling tools to make allowance for your client’s financial behaviours


[a] Bring it on; my client’s make too many irrational financial decisions
[b] Existing risk profiling tools are adequate
[c] Risk profiling tools should be based on the model / rational client
[d] The perfect risk profiling tool is science fiction
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