Liberty Group, SA's third largest provider of long-term wealth and life insurance solutions, has announced record earnings, dividends and embedded value for 2006.
For the 12 months to 31 December, BEE-normalised earnings per share increased by 34% to R9,30 while headline earnings were up 36% to R2 501million.
BEE embedded value possibly the most important financial measure for a long-term insurance company, which includes the current value of future profits to be earned from business already on the books - was up 12% to R82,55 per share, even after the payment of R3,60 per share of capital back to shareholders at the half year. The 2006 return on BEE embedded value was a strong 22,4%.
A final dividend of R2,30 per share has been declared, bringing the total dividend for the year to R3,70 per share.
At a presentation to local investment analysts this morning, Chief Executive Bruce Hemphill said he believed Liberty had achieved a good set of results in a difficult year for the industry, assisted by the strong performance in equity markets.
We achieved a substantial amount in 2006 and laid a strong platform for 2007. In support of the governments objectives to increase the savings base in South Africa, we engaged actively with National Treasury and tackled industry issues head-on by rapidly leading initiatives to improve product design and remove product that didnt fit our revised customer value proposition.
Hemphill said that Libertys 2006 new business sales result of 1% down on 2005 (as measured by indexed new premiums) was disappointing but was nonetheless a strong improvement on the -3% reported at the half year. There was a significant uptick in sales volumes in the last quarter, indicating that distribution changes implemented in the earlier part of the year were starting to gain traction.
Hemphill went on to say a key strategic development for the Group was the acquisition of 100% of asset manager Stanlib - shareholder approval was given in January this year.
In addition to allowing Liberty to take advantage of the trend towards off-balance sheet investment, the Stanlib acquisition is the first building block in diversifying our business beyond risk and life towards a broader wealth offering.
Hemphill said he was very satisfied with progress in most aspects of Libertys operations. Costs were managed well below inflation, increasing by 0.6% over 2005. Total cash-flows remained significantly positive at R3,6billion, though down from 2005s R4,9billion.
At the presentation, he also presented statistics indicating that Liberty had made significant progress in improving service levels to individual business customers and financial advisers.
Liberty's progress towards a single technology platform remained on-track, while the integration of the Capital Alliance business acquired in 2005 is tracking on schedule.
Looking at the year ahead, Hemphill said that investment market performance remained a key determinant of the groups future performance, but that the business is well positioned for the new insurance landscape.
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