Economy

Stellar earnings for Liberty Group

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Liberty Group have announced a first half performance ahead of expectation, with an increase in BEE normalised headline earnings of 41% to R1,7 billion for the six months to June 2012, on the back of a 23% increase in indexed new business for retail, as well as strong net inflows of R7,4 billion in asset management.


Commenting on the results, Liberty Group CEO Bruce Hemphill said: “We have delivered another pleasing set of results for the first half of this year. This was done despite difficult market conditions. Consistent focus on our value creation strategy has placed Liberty on a sustainable growth path. We are seeing the benefits of the quality foundation built within our retail business, where we are growing and taking market share. 

 

"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. 

"Our asset management business, STANLIB, is showing the benefits of the multi-franchise model, which has attracted significant inflows, as investment performance continues to go from strength to strength. Our capital adequacy cover of 2.9 reflects the strength of our balance sheet management.

Headline earnings adjusted for assumption and modelling changes for the six months ended 30 June 2012 are 14% up on the comparative period in 2011. The decrease in operating earnings before adjustments is also attributable to the investment in build initiatives across the businesses for future growth. 

Operational review:

 

Retail SA: Highlights of the Retail SA performance include the continued growth in gross sales at a significant 26% to R8.7billion, while indexed new business lifted 23% to R2,4 billion. The increased volume of quality sales combined with the focus on retention has resulted in an improvement in new business margin of 1,7%. Net customer cash inflows remain strong and almost doubled in the period under review from R1,4 billion in the prior year to R2,7 billion in 2012. 

Headline earnings was R648 million. After normalising for modelling and assumption changes, headlines earnings increased 14% from R544 million to R618 million.

Management has built a strong foundation over the past 24 months and is focused on growth including product innovation and expanding distribution channels. The business has been able to deliver increased risk and persistency variances which is pleasing. 

Liberty remains the largest writer of business in the retail affluent space as well as the having the largest market share of life and disability sales in the South African market. 

Corporate headline earnings at R42 million indicate an improved risk claims experience, however cost ratios remain high due to the transitional related costs. 
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