Liberty Group annual report published: CEO discusses transformation of business into Africa’s leading wealth management company
CEO Bruce Hemphill discusses transformation of business into Africa’s leading wealth management company
In the Liberty Group 2007 Annual Report, Chief Executive Bruce Hemphill (pictured right) focuses on a positive 2007 from a strategic and operational perspective, and discusses Liberty’s strategic plans for 2008 which will transform the business into a leading wealth management company.
Financial Highlights
Bruce Hemphill was pleased to report that the group achieved record earnings and exceeded new business sales targets, obtaining improved return on embedded value and meeting its transformation goals.
“We achieved a very positive set of financial results in 2007. Marketing, Sales and Distribution is the driving force of the business and the growth of new business indexed production demonstrates the benefits of leveraging the established sales and distribution channels to sell off-balance sheet products, reinforcing the merits of the STANLIB transaction.”
Strategic Highlights from 2007
Hemphill highlighted the progress that has already been made towards the long term transformation of the group, including:
- Consolidation of Marketing, Sales and Distribution across the group
- Initiatives to attract new and retain existing talent in the field
- Formation of innovative distribution partnerships including a joint venture with kulula.com
- Liberty Health new business strategy – a technology-enabled, multiple-revenue, health solutions business
- Restructuring of Liberty Properties into a cluster of property businesses, involving management, development and investment
These initiatives provide the launch-pad to enable Liberty to achieve its strategic objectives for 2008.
Hemphill emphasised that “While Liberty’s expansion plans are a long-term undertaking, there has already been a marked shift in the shape, philosophy and direction of the business.”
“Throughout 2007, Liberty invested significantly in actively building a culture of open and honest engagement with our staff and financial advisers. This is critical to the execution of the strategy for two reasons: first, ensuring that the customer’s perspective is core to our solutions driven approach and secondly, ensuring that we succeed in the war for talent.”
Strategic Outlook for 2008
The process of transformation began 18 months ago, when Liberty began to migrate its operating model into a more sophisticated structure, separating the different sectors into business units including Individual Life, Corporate Business, Properties, Africa, Health, STANLIB and Strategic Ventures.
Each of these business units will draw on the expertise of centralised marketing, sales and distribution as well as other group services. Liberty Health will also be supported by an integrated front- and back-office technology solution, with the flexibility and scalability to enable sophisticated product development and management.
Liberty is also focusing on expansion into the rest of Africa. Hemphill said “the strategy identifies South, East and West Africa as the primary target areas. The approach will be to target smaller African markets with a standardised repeatable model within acceptable risk tolerance areas, whilst utilising a more tailored deal-by-deal approach that allows faster acquisition of share of the larger African markets we are targeting.”
To support this new structure, Liberty has made a number of internal and external appointments, including the appointment of Chief Financial Officer André du Plessis as Chief Executive of Individual Life, and the appointment of Russell Harte as Chief Executive Officer.
Prospects
Bruce Hemphill remains confident of the long-term prospects for South Africa. As Liberty celebrates its 50th birthday, the group only glances back as it strives forward towards the future of wealth management on the African continent.
Saki Macozoma, Chairman of Liberty Group Limited, discusses the performance of the Group in the year under review
Overall performance
2007 was a significant year in Liberty Group Limited’s history. Firstly, it marked the group’s 50th anniversary. Secondly, as a fitting tribute to this anniversary, the group delivered an excellent set of results, with record earnings from our core insurance operations and all key indicators reflecting a solid operational performance. STANLIB, our asset manager, delivered outstanding investment performance and received the 2007 Raging Bull award for the best domestic unit trust manager in South Africa.
Challenges
One of the biggest issues facing the South African economy is the critically low rate of national savings. The group is fully supportive of the government’s efforts to encourage a savings culture among South Africans. It is committed to playing a leading role in collectively finding solutions to the challenges of improving the cost effectiveness and consumer protection provided by contractual savings products and influencing the reshaping of the life assurance industry with National Treasury, the Financial Services Board and the Life Offices Association of South Africa.
Outlook
South Africa’s economy is slowing after robust sustained growth over the past few years. During 2007, economic growth was relatively broad-based with almost all sectors of the economy making a positive contribution. Recent global and local developments suggest that 2008 will be a more challenging year for the group, but we believe that the business is well positioned to manage any slowdown in the economy.
The foundations for the future have been well laid and I am confident that our strong leadership team, under chief executive Bruce Hemphill, will take us into the future as responsible corporate citizens of South Africa, answering to the demands of all our shareholders.
Kevin Lings, STANLIB economist, discusses the economic outlook for 2008
US economic slowdown
It has been clear for some time that the US economy is slowing appreciably, indicated by a declining trend in the leading economic indicators. The key concern is whether this weakness in the US housing market is spreading globally. The effects of the US crisis have been evident in Europe, but less so in emerging markets and Asian countries. South Africa is facing its own set of economic difficulties, with the consumer feeling the pinch. A weakness in the European economy has been a slackening in domestic demand, due to less consumer spending. However, Japan has managed to avoid much of the weakness in the US and Europe, evident through its robust business confidence.
Emerging Markets
In contrast, large emerging markets have showed continued growth, with continued expansion in China, India and Brazil. However, world growth is expected to slow in 2008, as a consequence of high commodity prices and the global credit squeeze. World inflation remains a risk, with recent inflation levels in Developed Economies reaching their highest since 2001. The Federal Reserve is extremely concerned about the severity of the global economic situation, and is clearly acting to try and ensure the US economy is able to avoid a severe recession. The recent rates cut by the Federal Reserve is a very welcome stimulus for the US and global economy.
South African economy
The South African economic outlook remains moderate. During 2007, South Africa’s economic growth was relatively broad-based with almost all sectors of the economy making a positive contribution. Ongoing growth in the construction and financial services sectors is encouraging; however there has been a moderation in residential property activity in recent months. Concerning is that household debt is the highest ever recorded in South Africa, while the cost of servicing debt is at its highest in eight years, negatively impacting the consumer. There is no doubt that the consumer is hurting, with motor and retail sales falling. However, inflation is expected to moderate as the year progresses.
