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Liberty Holdings has benefited from a strategic review of its operations and worked to overcome key challenges to the business including: management of the balance sheet,
persistency in the life business and investment performance, Liberty CEO Bruce Hemphill said on Thursday.
He said that a comprehensive plan to address persistency in the Life business is bearing fruit.
The customer retention programme will remain focused on enhancing management information, improving operational practices to limit policy withdrawals, continuing to address internal and external churn on key products, and developing product migration options, he added.
"Liberty purchased the balance of the shareholding in STANLIB, to diversify and expand our income base.
"Despite difficult market conditions in the past two years, STANLIB has generated returns consistent with the original valuation.
STANLIB has appointed a highly respected team of investment professionals, headed by Thabo Dloti as Chief Executive, Stewart Rider as CIO, and Patrick Mamathuba as CIO of STANLIB Alternatives," Hemphill said.
Another outcome of the strategic review that has already been implemented is ensuring that LibFin is optimally structured.
"Mandated to build excellence in managing Liberty's balance sheet, LibFin manages the Group's exposure to market, credit and liquidity risks in line with Board-approved market risk appetite as well as delivering appropriate investment performance from asset managers for customers and
shareholders.
"LibFin carries out its mandate in two distinct components, one being the management of market risk, and secondly the management and investment of the long term shareholder and policyholder assets.
In order to make this distinction clearer, we structured LibFin into two defined areas LibFin
Markets and LibFin Investments.
"LibFin Markets is responsible for reducing the capital costs and income statement volatility arising primarily from insurance products through an active asset liability management programme.
"It is LibFin Investments' responsibility to ensure appropriate long run, through the cycle investment performance of shareholder and policy holder assets," Hemphill said.
He said the group's diversification and growth strategy continues to progress well.
"A number of acquisitions in Africa have laid the platform for a regional consolidation strategy in East and Southern Africa.
"Liberty Health which was established in 2007 and in which Liberty Holdings now owns 74,9%,
has over 240 000 lives under administration.
"Liberty Properties continued to progress well with earnings up by 24% to R72m.
"The development project pipeline for Liberty Properties is approximately R3 billion, most of which is scheduled for delivery during 2010," Hemphill added.
In August 2009, Liberty undertook to conduct a strategic and operational review.
The review recommended the establishment of a structure that allows end-to-end ownership of and accountability for the value drivers of all of the key business areas, particularly the core South African retail businesses.
The business is now structured as follows:
SA retail business:
Institutional business and Asset Management:
Business Development:
This is the consolidation of various areas into a growth cluster,
responsible for:
Liberty Africa: will continue to drive our African expansion, focusing specifically on management of operations, marketing and other support functions.
LibFin will continue to manage the market, liquidity and credit risks on the balance sheets of all the insurance licenses, and will monitor and review the investment portfolios on behalf of shareholders and policyholders.
Group Functions will support the business in the areas of strategic services, information technology and group finance.
Going forward, Hemphill said Liberty will continue to convert challenges into opportunities.
The Group is seeing the results of new structures and enhanced management teams, and remains operationally strong, with a healthy capital position and balance sheet within market risk appetite.
"The economic crisis highlighted challenges in our business that we have addressed.
"We have confidence in the streamlining of our core operations and the solid progression of our diversification and growth strategy and that we have the right people and the right processes in place to deliver value to shareholders over the longer term."
Hemphill added that the economic outlook for 2010 is positive as the global economy emerges from recession, however, there is still some uncertainty about economic stability in certain developed economies.
Our key domestic focus areas for 2010 will be to grow our core insurance business by improving policyholder persistency and new business margins.
We believe that this, together with the impact of corrective actions taken at STANLIB,
growth in Liberty Africa, the development of Liberty Health and the positive economic climate positions the group favourably for the future.
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