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Liberty’s transformation delivers strong earnings

28 February 2008 Liberty Group

Expansion into broader wealth management on track, while reengineering of the business ensures strong new business growth and record earnings.

Highlights

  • Group BEE normalised headline earnings up 18,3%
  • Group normalised embedded value per share up 14,4%
  • Group cash flow up to R17bn
  • Life and Pensions indexed new business excluding premium escalations up 15,7%
  • Life and Pensions headline earnings up 28,9%
  • Stanlib assets under management now R340bn
  • Stanlib pre tax profit R599m

Liberty Group today presented its vision for a broader wealth management company while reporting a strong performance from the mainstay businesses, Liberty Life and Stanlib.

The group reported BEE normalised headline earnings per share of 1100 cents, up 18,3% on 2006. This was on the back of strong performances at both the traditional life business, which grew new business 14% and asset manager Stanlib, which grew assets under management to R340bn. The group also declared a cash distribution of 266 cents.

Liberty CEO Bruce Hemphill (pictured above right) said that the new model would give Liberty the ability to leverage the strength of the collective group, while allowing the different businesses to operate as specialised operating units that were free to focus on driving and achieving their individual strategic imperatives.

Hemphill said through its three level delivery plan of optimising the current business, leveraging further value from the current units and expanding into new areas the strategy had already had a positive impact on Liberty’s performance.

Life and Pensions

Liberty Life’s new total index business is up 15,7% excluding contractual increases, individual index new business is up 17.7%. Individual investment products outperformed, while the risk and annuity business recorded strong growth, although retirement annuities (RAs) took a knock, as a result of lower upfront commission fees paid by Liberty on new RAs. Total embedded value new business profits grew by 15,3% R700m.

Asset Management

Stanlib grew assets under management by 15,6% to R340bn while cash flow grew strongly to R13,1bn against cash outflow of R5,8bn in 2006. Stanlib’s sales excluding money market grew by 18,2%. Stanlib reported operating profit before tax and interest of R599m.

Liberty CEO Bruce Hemphill said “While we are making progress in implementing our broader wealth management strategy, we’re delivering strong results in our existing business. Record earnings, new business sales targets well beaten, improved return on embedded value, transformation targets met – and all done at an overall cost increase significantly below inflation.”

The group also unveiled the plan for Liberty Health, which will be a technology enabled, multiple-revenue, health business aimed at providing value to various clients, including medical schemes, private health insurers, corporate clients, government funds and - ultimately - consumers.

Concluding Hemphill said “We’ve developed a clear vision of where we want to go, and we’re already substantially enhancing our business model and activity levels to support it. This positions us to take advantage of a broader range of opportunities, and drive both organic and acquisitive growth in new markets and territories.”

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