Jan 04, 2016
Interim ResultsJune 2002
ContentsContents
1. Business environment
2. Interim results and operational performance
3. STANLIB
4. Capital adequacy and dividend cover
5. Scorecard – performance against goals
6. Key issues for second half 2002
7. Summary of achievements forfirst half 2002
1. Business environment
2. Interim results and operational performance
3. STANLIB
4. Capital adequacy and dividend cover
5. Scorecard – performance against goals
6. Key issues for second half 2002
7. Summary of achievements forfirst half 2002
Business environmentBusiness environment
• Market turmoil
• World equities down 22%
• JSE all share down 2%
• Volatile Rand up 14%
• CPIX up to 9,8%
• Prime rate up 1% to 16%
• Market turmoil
• World equities down 22%
• JSE all share down 2%
• Volatile Rand up 14%
• CPIX up to 9,8%
• Prime rate up 1% to 16%
Liberty performed well in testing markets
HighlightsHighlights
• Indexed new business• New business margin• Bancassurance new business• Headline earnings per share• Net cash inflow from insurance
operations: R1,6bn• Embedded value per share:
R56,68• Dividend cover amended:
reduced from 2,0 x to 1,5 x• Dividend per share of 162 cents
• Indexed new business• New business margin• Bancassurance new business• Headline earnings per share• Net cash inflow from insurance
operations: R1,6bn• Embedded value per share:
R56,68• Dividend cover amended:
reduced from 2,0 x to 1,5 x• Dividend per share of 162 cents
+22%18%
+81%-5%
+60%+5%
+27%
+22%18%
+81%-5%
+60%+5%
+27%
Significant gain in market share
Accounting policiesAccounting policies
• No changes to accounting policies
• In accordance with GAAP
• STANLIB equity accounted
• No changes to accounting policies
• In accordance with GAAP
• STANLIB equity accounted
Headline earnings –continuing operations
Headline earnings –continuing operations
Life fund operating surplus
Revenue earnings – shareholders’ funds
STC on ordinary dividends
Preference dividend
Headline earnings
Headline EPS (cents)
Dividend per share (cents)
Life fund operating surplus
Revenue earnings – shareholders’ funds
STC on ordinary dividends
Preference dividend
Headline earnings
Headline EPS (cents)
Dividend per share (cents)
563
171
(44
(28
662
242,5
162
563
171
(44
(28
662
242,5
162
)
)
)
)
594
120
(20
694
255,7
128
594
120
(20
694
255,7
128
)
)
(5
42
41
(5
(5
27
(5
42
41
(5
(5
27
)
)
)
)
)
)
30 June2002Rm
30 June2002Rm
30 June2001Rm
30 June2001Rm
Change
%
Change
%
Life fund earningsLife fund earnings
Reduced by 5,1% from R594 million to R563 million Geared to investment returns earned for policyholders’
portfolios
Reduced by 5,1% from R594 million to R563 million Geared to investment returns earned for policyholders’
portfolios
Significant reduction in this component of life fund earnings
Offset by benefits from expense management
Significant reduction in this component of life fund earnings
Offset by benefits from expense management
Portfolio weighted average
Mainly due to:Offshore portfolio
Portfolio weighted average
Mainly due to:Offshore portfolio
(0,4
(16,2
(0,4
(16,2
)
)
)
)
10,2
0,8
10,2
0,8
30 June2002
%
30 June2002
%
30 June 2001
%
30 June 2001
%
Local equity and bond portfolios outperformed benchmarks
Net cash inflows from insurance operations
Net cash inflows from insurance operations
Total premiums
Claims and policyholder benefits
Net cash flow
Total premiums
Claims and policyholder benefits
Net cash flow
7 552
(5 915
1 637
7 552
(5 915
1 637
))
6 782
(5 758
1 024
6 782
(5 758
1 024
)
)
11
3
60
11
3
60
30 June2002Rm
30 June2002Rm
30 June2001Rm
30 June2001Rm
Change
%
Change
%
Total net cash inflow from insurance operations
Total net cash inflow from insurance operations
102,5221,5
707,2
1024,3
1636,5
0
500,0
1 000,0
1 500,0
2 000,0
1998 1999 2000 2001 2002
Rm
Embedded valueEmbedded value
Shareholders’ funds
Value of life businessin-force
Financial services subsidiaries fair value adjustment
Total
Embedded value per share (Rand)
Shareholders’ funds
Value of life businessin-force
Financial services subsidiaries fair value adjustment
Total
Embedded value per share (Rand)
9 136
5 507
835
15 478
56,68
9 136
5 507
835
15 478
56,68
8 346
5 112
1 309
14 767
54,21
8 346
5 112
1 309
14 767
54,21
9
8
(36
5
5
9
8
(36
5
5
)
)
30 June2002Rm
30 June2002Rm
30 June2001Rm
30 June2001Rm
Change
%
Change
%
Liberty Personal BenefitsLiberty Personal Benefits
Number of policies
• New business up 18%
• Surrenders down 22%
• Lapses down 3%
Number of policies
• New business up 18%
• Surrenders down 22%
• Lapses down 3%
Better than assumed cost per policy produced expense benefits
New business – percentage increaseNew business – percentage increase
Recurring
Single
Total
Index
Recurring
Single
Total
Index
26
30
29
27
26
30
29
27
10
(24
(18
(2
10
(24
(18
(2
23
17
18
22
23
17
18
22
)
)
)
)
)
)
Personal
Benefits
%
Personal
Benefits
%
Corporate
Benefits
%
Corporate
Benefits
%
Total
%
Total
%
Driven by:• Bancassurance sales up 81,3%• Growth and productivity of sales
force• Investment performance• Product innovation• Adequate off-shore capacity
Value of new business (VONB)Value of new business (VONB)
Current period margin = 18% on index (Dec 2001 : 19%)
Margin sustained in Personal Benefits and Charter Liberty Corporate Benefits VONB reduced as a result
of lower volumes Higher level of bancassurance sales reduces
calculated margin
Current period margin = 18% on index (Dec 2001 : 19%)
Margin sustained in Personal Benefits and Charter Liberty Corporate Benefits VONB reduced as a result
of lower volumes Higher level of bancassurance sales reduces
calculated margin
Value of new businessValue of new business 248248 225225 1010
30 June2002Rm
30 June2002Rm
30 June2001Rm
30 June2001Rm
Change
%
Change
%
Market share(Full year ended 31 December 2001)
Market share(Full year ended 31 December 2001)
New recurring individualBrokersAgents
Individual single premiums
BrokersAgents
New recurring individualBrokersAgents
Individual single premiums
BrokersAgents
15,7214,1117,68
11,499,46
17,00
15,7214,1117,68
11,499,46
17,00
17,8616,9618,94
14,7613,2514,95
17,8616,9618,94
14,7613,2514,95
2000%
2000%
2001%
2001%
Average recurring premiums(Full year ended 31 December 2001)
Average recurring premiums(Full year ended 31 December 2001)
Liberty average premiums
Industry average
Liberty % average
Liberty average premiums
Industry average
Liberty % average
5 705
2 649
215
5 705
2 649
215
6 086
2 519
241
6 086
2 519
241
2000Rm
per annum
2000Rm
per annum
2001Rmper
annum
2001Rmper
annum6,7
(4,9
6,7
(4,9
Change
%
Change
%
)
)
BancassuranceBancassurance
SBFC (Stanfin)• Now managed by Liberty• Total sales up 18%Charter• Total new business up 32%• Funeral products sales up 35%
(410 000 policies in-force)
SBFC (Stanfin)• Now managed by Liberty• Total sales up 18%Charter• Total new business up 32%• Funeral products sales up 35%
(410 000 policies in-force)
Franchise performanceFranchise performance
• New franchise principal remuneration focusing on quality of business
• Results year-to-date:
* Single premiums up 48,8%
* Recurring premiums up 43,3%
* Case count up 18,1%
• New franchise principal remuneration focusing on quality of business
• Results year-to-date:
* Single premiums up 48,8%
* Recurring premiums up 43,3%
* Case count up 18,1%
New products – Excelsior Investments Series
New products – Excelsior Investments Series
• Segmented offering (savers and wealth creators)
• World class local and international asset management
• Risk profiled and sector specific funds• Risk analysis and investment tools• Investment switching at no cost• Tax benefit and flexibility of an endowment• Transparency and dynamic reporting on-
line
• Segmented offering (savers and wealth creators)
• World class local and international asset management
• Risk profiled and sector specific funds• Risk analysis and investment tools• Investment switching at no cost• Tax benefit and flexibility of an endowment• Transparency and dynamic reporting on-
line
MedschemeMedscheme
• Transfer effective 1 August 2002
• ± 38 000 members
• Liberty to continue marketing interface
• Liberty retains reinsurance of scheme
• Insurance JV with Charter to mine ± 1,2 million members
• Transfer effective 1 August 2002
• ± 38 000 members
• Liberty to continue marketing interface
• Liberty retains reinsurance of scheme
• Insurance JV with Charter to mine ± 1,2 million members
Liberty ErmitageLiberty Ermitage
• Assets under management increased from US$2 152 million to US$2 258 million
• Investment marketing sales force now in place
• Strong support from Standard Bank and STANLIB evident
• Assets under management increased from US$2 152 million to US$2 258 million
• Investment marketing sales force now in place
• Strong support from Standard Bank and STANLIB evident
Liberty ErmitageLiberty Ermitage
• Hedge funds stood up well to turmoil in world markets:* Alpha –0,03% in US dollars* Asset Selection +0,94% in US
dollars
• Hedge funds stood up well to turmoil in world markets:* Alpha –0,03% in US dollars* Asset Selection +0,94% in US
dollars
Three out of four equity funds achieved Micropal
4-Star ratings placing them in the top 30% of their
categories in the world over three years
STANLIBSTANLIB
• Assets under management• Assets under management
Life fund
Segregated funds
Unit trusts
Africa
Total
Life fund
Segregated funds
Unit trusts
Africa
Total
30 June
2002
Rm
30 June
2002
Rm
31 December
2001
Rm
31 December
2001
Rm
Increase
%
Increase
%54 807
53 392
25 191
1 737
135 127
54 807
53 392
25 191
1 737
135 127
53 996
52 551
21 174
1 677
129 398
53 996
52 551
21 174
1 677
129 398
1,5
1,6
19,0
3,6
4,4
1,5
1,6
19,0
3,6
4,4
STANLIBSTANLIB
• Strong relative investment performance
• Headcount down 79 people
• Products being rationalised – best of breed to be retained
• Systems integration commenced
• Office move early December
• Strong relative investment performance
• Headcount down 79 people
• Products being rationalised – best of breed to be retained
• Systems integration commenced
• Office move early December
Ahead of plan – merger costs in second half
CAR cover multipleCAR cover multiple
14,4
10,6
6,25,6
3,8 3,43,5
7,38,9
0
2
4
6
8
10
12
14
16
Jun 98
Dec 98
Jun 99
Dec 99
Jun 00
Dec 00
Jun 01
Dec 01
Jun 02
Capital managementCapital management
• Ongoing review of capital management• European insurers capital adequacy being
tested• Expected regulatory increase in local CAR
requirement
Dividend cover:* Dividend cover reduced from 2,0 x to 1,5 x* Retain 33,3% of headline earnings vs 50%* Dividend per share increased by 27%
• Ongoing review of capital management• European insurers capital adequacy being
tested• Expected regulatory increase in local CAR
requirement
Dividend cover:* Dividend cover reduced from 2,0 x to 1,5 x* Retain 33,3% of headline earnings vs 50%* Dividend per share increased by 27%
Well positioned in volatile markets
ScorecardScorecard
Goals set for 20021. Launch and grow
STANLIB2. Develop SBFC and
bancassurance sales3. Reposition Charter in
mass and niche markets4. Focus on profitability of
Liberty Corporate Benefits
Goals set for 20021. Launch and grow
STANLIB2. Develop SBFC and
bancassurance sales3. Reposition Charter in
mass and niche markets4. Focus on profitability of
Liberty Corporate Benefits
½½
ScorecardScorecard
Goals set for 2002
5. Leverage CVM initiative for new business and retention
6. Grow Liberty Ermitage sales
7. Focus on productivity of agency and franchise
Goals set for 2002
5. Leverage CVM initiative for new business and retention
6. Grow Liberty Ermitage sales
7. Focus on productivity of agency and franchise
By half year 5½ out of 7 achieved
Key issues for second half 2002Key issues for second half 2002
• Investment market performance
• Higher STC on higher dividend
• Merger costs – STANLIB
• Re-positioning of Charter
• Corporate Benefits – sales and margins
• Investment market performance
• Higher STC on higher dividend
• Merger costs – STANLIB
• Re-positioning of Charter
• Corporate Benefits – sales and margins
Summary of achievements for first half 2002
Summary of achievements for first half 2002
Achievements• New business and margin• Market share• Franchise productivity• Bancassurance and SBFC• Management of in-force business • Expense control• Healthcare administration outsourced• STANLIB launch
Achievements• New business and margin• Market share• Franchise productivity• Bancassurance and SBFC• Management of in-force business • Expense control• Healthcare administration outsourced• STANLIB launch