Life and disability sales carry diversified insurer to a record half-year
The gloomy domestic economic outlook does not preclude insurance intermediaries from writing new business. Liberty Holdings – one of the country’s leading diversified financial services providers – reported a record first-half sales performance at its Ret
Financial advice played a big part in the listed life insurer’s performance. “We are seeing the benefits of the quality foundation built within our retail business, where we are growing and taking market share,” said Liberty Group CEO Bruce Hemphill. “This is on the back of stronger risk management, an improved acquisition and retention model that combines a compelling value proposition for our financial advisors and a strong product mix which includes market leading innovation.” Liberty remains the largest writer of business in the retail affluent space as well as having the largest market share of life and disability sales in the South African market. This is a popular market segment for financial intermediaries...
Customers pouring money into risk insurance product
Cash flow is a useful indicator of progress at a financial services company. In the latest six months Liberty’s SA Retail division reported net customer cash inflows of R2.7 billion – almost double the amount recorded in the first half of FY2011. StanLib, the group’s asset management division, also reported a bumper half-year thanks to R7.4 billion in net inflows. These cash inflows contributed to an incredible half-year for the Liberty Group, which reported an overall 41% increase in BEE normalised headline earnings to R1.7 billion.
Liberty singles out four business areas likely to drive its future growth ambitions. Top among these is to avail of the “into Africa” investment trend playing out globally. Liberty Africa is making good progress in this regard, although the R16 million in headline earnings suggest it will be years before this division contributes significantly to the overall bottom line. At this stage the group’s Africa focus appears to be on investments – with R39 billion in assets under management in the region – and opportunities in the bancassurance space.
Africa is a key focus at the Liberty Health division too. Sales of health risk products into Africa continue to grow with the latest in-force book up from 68 000 (in December 2011) to 79 000 lives. Unfortunately this division does not yet have the critical mass to offset investments in systems and processes, with the result it contributed a headline loss of R45 million for the period.
Banking on FRANK.NET and bancassurance...
Love them or hate them the direct insurers are here to stay. There is a certain irony that many of the heavyweights in the direct space are owned by company’s that trumpet the intermediated model as their bread and butter. Liberty reports that its direct life insurer FRANK.NET has produced solid results since its 2011 launch and that the direct life insurer’s platform capabilities will now be leveraged to assist its broader Direct Financial Services division. An interesting development is the bringing on board of affinity partners Vodacom and Standard Bank. These arrangements will ensure unbelievable reach among the low and middle income segments across the continent.
Bancassurance continues to deliver value, with strong performances across most channels and countries. “Liberty’s bancassurance agreement with Standard Bank represents a strong strategic advantage in South Africa and Africa, and both partners are focused on delivering value and growth over the short and long term,” admits the group. StanLib’s net services fees on assets under management through the agreement grew by 9% to R191 million and Liberty’s share of the value of in-force contracts grew by 18% to R1.2 billion over the period.
“The balance sheet is well managed and positioned for the lower interest rate environment; we have made significant investment in new and existing capabilities; our operating earnings have demonstrated good growth, achieved during volatile economic circumstances and the business is well diversified across channel, product line and geography,” concludes Hemphill. Liberty is well positioned for sustained growth, within acceptable risk parameters.”
Editor’s thoughts: Liberty has reported a pleasing set of results despite difficult market conditions. The group attributes its success to a range of factors, including diversification across product line and geography, the compelling value proposition offered through its financial adviser distribution chain and better returns at its asset management division. But it seems future growth will come from bancassurance, direct financial services and the push into Africa. Are you comfortable with traditional intermediary-based insurers strengthening their positions in the direct space? Add your comment below, or send it to gareth@fanews.co.za
