International Roadshow Presentation
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description
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 - PowerPoint PPT Presentation
Transcript of International Roadshow Presentation
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International Roadshow Presentation
September/October 2004
www.liberty.co.za
Liberty Life
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Liberty Life – some information about us
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Structur
eStandard Bank
Liberty Holdings Limited
Liberty Group Limited
(54,65%)
(53,99%)
Life Assurance
• Liberty Personal Benefits
• Liberty Corporate Benefits
• Charter Life
Asset Management
• STANLIB (37,4%)
• Liberty Ermitage
• Liberty Properties
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Mix of
business
0
10
20
30
40
50
60
70
80
Market related business 21,3 50,3 71,6 21,2 48,6 69,8
Smooth bonus business 4,6 1,1 5,7 4,1 1,4 5,3
Reversionary business nil 7,8 7,8 nil 8,1 8,1
Non-profit business 1,2 13,7 14,9 0,4 16,2 16,6
Group Individual Total Group Individual Total
2003 2002
%
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BrokerSBFC*AgencyOtherFranchise
30 June2004
%
30 June2003
%
43182676
44222374
Channel
New individual single premium business by channel
*Standard Bank sales force
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Asset classes – new single premium
CPI PlusExcelsior Risk ProfiledPropertyExcelsior IncomeOther Liberty PortfoliosGuaranteed BondOffshore InvestmentsExternal Investment Managers
30 June2003
%
30 June2004
%
116
365
245
103
2218187
22328
Portfolio
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BrokerSBFC*AgencyOtherFranchise
30 June2004
%
30 June2003
%
4514262
13
4513271
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Channel
New individual recurring premium business by channel
*Standard Bank sales force
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Asset classes– new recurring premiums
PropertyOther Liberty PortfoliosCPI PlusExcelsior Risk ProfiledOffshore InvestmentsExternal Investment ManagersExcelsior Income
June2004
%
June2003
%
242396
3431
1842109
1551
Portfolio
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Market share – individual new business
Source: LOA marketshare statistics for alllife offices
19,622,7
23,6 25,3
28,3
15,4 16,6
20,2
24,5
29,6
0
5
10
15
20
25
30
35
Recurring individual Single individual
Year ended 31 December 2000
Year ended 31 December 2001
Year ended 31 December 2002
Year ended 31 December 2003
Three months ended 31 March 2004
%
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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
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Individual average new recurring premiums
All offices
Large offices
Liberty Personal Benefits
LPB as % of all offices
LPB as % of large offices
3 months31 Mar2003
R
3 months31 Mar2004
R
%Change
2 611
3 843
6 341
242,9%
165,0%
2 339
3 137
7 254
310,1%
231,3%
Source: LOA market share statistics for all life offices
(10)
(18)14
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Our key value drivers
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New business
0
2 000
4 000
6 000
8 000
10 000
12 000
New Business 9 626 9 819 11 301 11 667 6 342
New Business 2 646 2 944 3 634 3 808 1 968
2000 2001 2002 2003 June 04
+2%
+15%
+11%
+23% +5%
Indexed is sum of recurring plus 10% of single
+3%
IndexedTotal
Rm
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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
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Value of new business and new business margins
0
100
200
300
400
500
600
700
15,0%
16,0%
17,0%
18,0%
19,0%
20,0%
21,0%
22,0%
Value of new business 391 455 605 609 330
New business margin* 17,6% 18,5% 20,3% 19,9% 20,9%
2000 2001 2002 2003 June 04
*Value of new business divided by indexed new business premium
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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%
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Headline earnings
1 153
162
1 320
179
889
180
720
230
335
125
0
200
400
600
800
1 000
1 200
1 400
1 600
2000 2001 2002 2003 June 04
Revenue earnings attributable to shareholders' funds
Operating profit from insurance operations
Rm
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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
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Net cash inflows from insurance operations
3 3792 931
4 501 4 497
2 382
0
1000
2000
3000
4000
5000
2000 2001 2002 2003 June 04
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
Rm
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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
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Expenses
0
500
1 000
1 500
2 000
Expenses 1 713 1 691 1 832 927
2001 2002 2003 2004
-1%+8%
Rm
2002 2003 1H 2004
% (Decrease)/increase in maintenance cost per policy
-2% +7%
+4%
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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
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Embedded value
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
Fair value adjustment 996 1 310 838 541 686
Shareholders' funds 6 123 8 346 8 588 8 782 8 922
Value of in force business 4 822 5 111 5 701 6 494 6 279
2000 2001 2002 2003 June 04
Rm
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Capital adequacy
5,7
3,53,0 2,58 2,55
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
Times covered 5,7 3,5 3,0 2,58 2,55
2000 2001 2002 2003 June 04
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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
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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
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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
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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
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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!
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Insurance industry in South Africa
Appendix
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Competitors
• Old Mutual (listed on the LSE) R48 840,44m
• Sanlam R27 398,95m
• Liberty Life R14 862,68m
• Discovery R 7 459,94m
• Momentum not listed
Market capitalisation
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Net flow of funds from
insurance operations
-5 000
-4 000
-3 000
-2 000
-1 000
0
1 000
2 000
3 000
June 02 1 637 -2 629 -2 138 n/ a n/ a
June 30 1 730 -4 024 -1 971 960 187
June 04 2 382 -1 747 -2 800 n/ a 331
Liberty Sanlam Old Mutual Momentum Discovery
Rm
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Indexed new business
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
June 02 1 676 1 032 1 624 n/ a 154
June 03 1 779 882 1 576 872 209
June 04 1 968 917 1 356 n/ a 264
Liberty Group Sanlam Old Mutual Momentum Discovery
Rm
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Embedded value
0
10 000
20 000
30 000
40 000
50 000
60 000
J un-02
J un-03
J un-04
J un-02
J un-03
J un-04
J un-02
J un-03
J un-04
J un-02
J un-03
J un-04
J un-02
J un-03
J un-04
Liberty Group Sanlam Old Mutual Momentum Discovery
Value of in-force business Shareholders funds Other
Rm
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New business premiums
-
1 000,0
2 000,0
3 000,0
4 000,0
5 000,0
6 000,0
Individual Group Individual Group Individual Group Individual Group
Liberty Group Sanlam Old Mutual (net ofcontractualincreases)
Momentum
June 02 June 03 June 04
Rm
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JSE Securities Exchange statistics
Y.t.d 8.09.04
12 monthsDec 03
Share price (Rand) - High - Low - Closing
57,00 48,00 54,15
57,00 45,00 54,00
CodesShare code I-Net Bridge Bloomberg Reuters ISIN ordinary shares
LGL LGL LGL.SJ LGL.J.J ZAE000024543
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JSE Securities Exchange statistics
Shares traded
Volume traded
Value traded (Rm)
Shares in issue
70 947 116
3 796,19
275 847
730
104 600 208
5 325,96
274 671 040
12 monthsDec 03
Y.t.d.08.09.04
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Contact details
Myles Ruck Chief ExecutiveTel: 27 11 408-2001 e-mail: [email protected]
Deon de Klerk Chief Financial OfficerTel: 27 11 408-2572 e-mail: [email protected]
Heather Ferreira Head: Group Corporate
Communications and
Investor RelationsTel: 27 11 408-3483e-mail: [email protected]
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