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International Roadshow Presentation

Liberty Life. International Roadshow Presentation. September/October 2004 www.liberty.co.za. Liberty Life – some information about us. Structure. Standard Bank. (54,65%). Liberty Holdings Limited. (53,99%). Liberty Group Limited. Life Assurance Liberty Personal Benefits

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International Roadshow Presentation

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  1. Liberty Life International Roadshow Presentation September/October 2004 www.liberty.co.za

  2. Liberty Life – some information about us

  3. Structure Standard Bank (54,65%) Liberty Holdings Limited (53,99%) Liberty Group Limited • Life Assurance • Liberty Personal Benefits • Liberty Corporate Benefits • Charter Life • Asset Management • STANLIB (37,4%) • Liberty Ermitage • Liberty Properties

  4. Mix of business % 2003 2002

  5. New individual single premium business by channel 30 June 2004 % 30 June 2003 % Channel 43 18 26 7 6 Broker SBFC* Agency Other Franchise 44 22 23 7 4 *Standard Bank sales force

  6. 30 June 2004 % 11 6 36 5 24 5 10 3 22 18 18 7 22 3 2 8 Asset classes – new single premium Portfolio 30 June 2003 % CPI Plus Excelsior Risk Profiled Property Excelsior Income Other Liberty Portfolios Guaranteed Bond Offshore Investments External Investment Managers

  7. New individual recurring premium business by channel Channel 30 June 2004 % 30 June 2003 % Broker SBFC* Agency Other Franchise 45 13 27 1 14 45 14 26 2 13 *Standard Bank sales force

  8. Asset classes– new recurring premiums Portfolio June 2004 % June 2003 % Property Other Liberty Portfolios CPI Plus Excelsior Risk Profiled Offshore Investments External Investment Managers Excelsior Income 24 23 9 6 34 3 1 18 42 10 9 15 5 1

  9. Market share – individual new business % Source: LOA market share statistics for all life offices

  10. Market share – corporate benefits • Not comparable due to size of funds targeted • Number of schemes: 9 500 • Number of members : 287 000 • Typically funds with 10 to 300 employees

  11. (10) (18) 14 Individual average new recurring premiums 3 months 31 Mar 2003 R 3 months 31 Mar 2004 R All offices Large offices Liberty Personal Benefits LPB as % of all offices LPB as % of large offices % Change 2 339 3 137 7 254 310,1% 231,3% 2 611 3 843 6 341 242,9% 165,0% Source: LOA market share statistics for all life offices

  12. Our key value drivers

  13. New business Rm +3% +15% +2% +23% +5% +11% Total Indexed Indexed is sum of recurring plus 10% of single

  14. New business • CAGR of 11,6% • Consistent market share gains • Upper income segment – growing disposable income • Standard Bank’s client base presents further opportunities • Changing model for corporate benefits business • Charter Life for the future • New product development unit

  15. Value of new business and new business margins *Value of new business divided by indexed new business premium

  16. Value of new business and new business margins • Margins maintained in a range between 18% and 21% • Individual business margins range from 20% to 23% • Corporate business margins range from 6% to 10%

  17. Headline earnings Rm

  18. Headline earnings • Operating profit from insurance operations: Reasons for volatility and decrease since 2000 • 10% shareholders’ participation in investment returns • Once off items capitalised by valuation basis e.g. expense profits (or losses) • Stochastic modelling of guarantee reserves • AC133 (to be followed by IFRS4 and IAS compliance) • Other earnings contributors: • STANLIB, Liberty Ermitage, trading portfolio and Liberty Properties • Return on other shareholders’ investments • equities • bonds • cash/preference shares • offshore

  19. Net cash inflows from insurance operations Rm Not included above: 1H 03 1H 04 % change Rm Rm STANLIB net inflows 5 485,0 6 072,9 11 Ermitage net inflows 1 013,3 3 404,4 236

  20. Net cash inflows from insurance operations • Useful when read together with new business growth • In-force book is being managed • Customer service drive and STANLIB’s investment performance will improve retention • Maturities of property backed products in second half of 2004 of R2bn • Total inflows of R11,9bn including asset management inflows

  21. Expenses Rm +8% -1%

  22. Expenses • Targeting expense increases below 5% per annum • Headcount for Liberty Life reduced by 190 since 30 June 2003 • Headcount for STANLIB reduced by 80 since January 2003 • IT capacity to be partially outsourced to Standard Bank • Headcount to be reduced by 70 • Conservative estimate R30m cost saving • Business structure to be scrutinised

  23. Embedded value Rm

  24. Capital adequacy

  25. Capital adequacy • Capital reduction of R10,50 per share in 2001 • Still overcapitalised, but earnings are volatile • BEE deal to reduce cover to approximately 2,2 • Capital level and mix to be finalised by year end • Dividend policy to follow

  26. Risks and issues • Increasing compliance and regulatory requirements • Volatile investment markets • Risk averse investors • Perception of industry • AIDS (not as much an issue for Liberty Life) • Financial Sector Charter

  27. Focus areas until December 2005 • People • Customer service • Business structure • Capital management • Product development • Financial Sector Charter implementation • Domestic operations/other market segments and Africa • Distribution channels • Implement BEE transaction • Continued emphasis on cost containment

  28. Why Liberty Life? • Pure South African life insurance company • Strong parent • Strong equity play • BEE transaction in formal process • Low smoothed bonus business • High capital adequacy

  29. Why Liberty Life? • High dividend yield • Future growth opportunities (market segments) • Revised top team – good mix of insurance and general management experience • Uncomplicated strategy • Share price offers value!

  30. Insurance industry in South Africa Appendix

  31. Competitors Market capitalisation • Old Mutual (listed on the LSE) R48 840,44m • Sanlam R27 398,95m • Liberty Life R14 862,68m • Discovery R 7 459,94m • Momentumnot listed

  32. Net flow of funds from insurance operations Rm

  33. Indexed new business Rm

  34. Embedded value

  35. New business premiums

  36. JSE Securities Exchange statistics

  37. JSE Securities Exchange statistics Y.t.d. 08.09.04 12 months Dec 03

  38. Contact details Myles Ruck Chief Executive Tel: 27 11 408-2001 e-mail: myles.ruck@liberty.co.za Deon de Klerk Chief Financial Officer Tel: 27 11 408-2572 e-mail: deon.deklerk@liberty.co.za Heather Ferreira Head: Group Corporate Communications and Investor Relations Tel: 27 11 408-3483 e-mail: heather.ferreira@liberty.co.za

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