1
Liberty Holdings LimitedUBS Conference
11 October 2012
2
Liberty has established capabilities to underpin sustainable
shareholder returns and create value
140 144 164 164 164 182 192
230266
291 291 291298
0
100
200
300
400
500
600
2006 2007 2008 2009 2010 2011 1H12
Final
Interim
Key highlights Jun 2011 – Jun 2012
● Normalised return on group equity, 16.7%
● The share price increased by 20.5% resulting in
a total shareholder return of 27.3%
● The discount to group equity value reduced from
23% to 17% as at the end of June 2012
● Strong balance sheet and capital position
Dividends paid
Returns since 2001
-
50
100
150
200
250
300
Total returns since 31 Jan 2001
Return on Price since 31 Jan 2001
60
80
100
120
Share price EV
3
Composition of group equity value
30 June 2012 (R29.6bn)
Assets backing capital (34.9%)
Growth (2.5%)
Asset management (16.5%)
Retail affluent (38.3%)
ECM (3.3%)
Corporate (4.3%)
30 June 2012 (R29.6bn)
Assets backing capital (34.9%)
Established capabilities (42.7%)
New investments (22.4%)
South Africa
Sub-Saharan
Africa
4
1. Tsunami of regulatory and reform changes
2. Large scale changes in the intermediary channel – RDR
3. Increased sales through mobile, direct and affinity channels increasing margin pressure
4. Rising mass middle class
5. Low interest rate environment
6. Increasing demand for alternative asset classes
Going forward, what is shaping the new world in
South Africa
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
LSM 1
LSM 2
LSM 3
LSM 4
LSM 5
LSM 6
LSM 7
LSM 8
LSM 9
LSM 10
2005
2010
2020
Source: 80twenty Source: McKinsey
Interest rate history and forecastPopulation growth by LSM group
5
Equity value created by assets backing capital is
managed by LibFin
• Libfin markets - Enhances returns from the credit portfolios backing annuities and GCB’s
• Libfin Investments - Gross return of 6.4% for the first six months of 2012
• Headline earnings 2011 : Markets – R155m; Investments – R969m; SIP return – 8.1%
• Market leading balance sheet management
Capability to price and risk manage guarantees
Capability to manufacture, price and manage illiquid debt for the balance sheet
Capability to construct appropriate investment portfolios for policyholders
Capability to construct optimised risk-adjusted returns for the Shareholders’ Investment Portfolio
Capability to manage liquidity risk
• These capabilities allow new innovative investment products in a low interest rate / low yield
environment
Retail has launched its new investment offering in September 2012
EvolveInvestment Range
6
Our life business has market leading distribution
capabilities supported by innovative products
• Dominant player in the affluent market
• Delivered additional R3.4 billion of group equity value over past 18 month
• 19% increase in new business with steadily rising margins
Liberty continues on its path of market first product innovations:
Liberty has successfully establish a multi-channel distribution network
Agency IFA Netco’s Entrepreneurs SBFC Bancassurance Direct Affinities
Retrenchment
Whole of Life
Capital
Disability
Whole of Life
Income
Protection
Rates Special
Offer
Differential
Pricing
Flexible
Annuity (RAS)
Performance
Cap Product
Finger Prick
HIV & Cotinine
1st Half 2011 2nd Half 2011 2nd Half 20121st Half 2012
Risk
Investments
Market firsts
Underpinned by enabling technology and production / sales support
7
Innovation in distribution and product
diversification is key
Direct
• Two major affinities – Standard Bank Life Direct and Vodacom – attracted
by the brand and culture of Frank.net
• Direct platform utilised across the group
• Creation of FMCG like skills fostering process and product innovation –
transforming the industry landscape and positions us strongly in the new
regulatory environment
• Launched “Own Your Life Rewards” programme – across all
Liberty product offerings
• Increased sales through Liberty’s intermediated distribution
channel
• Product innovation within the Liberty Medical Scheme space
(Platinum Prestige and three new select options);
Health
8Source: Morningstar, Alexander Forbes
Credible and leverageable investment capabilities
Significant investment capabilities which we can leverage to greater effect
80%
67%
40%
31%
100% 93%
67%
54%
3 months 1 year 3 years 5 years
67%
50%
25%
50%
100% 100%
92%
60%
3 months 1 year 3 years 5 years
• Strategic and tactical asset allocation
• Leading listed property fund in the market
• Leading fixed income fund
• Strong balanced and money market funds
• Unlisted property
• Pan African Equity
• Our priority areas :
› Unlisted credit
› Infrastructure
› Direct property
• We win third party confidence through
› Experienced individuals with a track record
› Having skin in the game – own seed capital
Institutional funds in first and second quartileCore Retail funds in first and second quartile
STANLIB performance Responding to the rise of alternatives
9
What is shaping the new world in Africa
• Low market penetration
• Demographic dividend
• Increasing middle class / Urbanisation
• Improved business environments
• Technology / mobile enabled
Key success factors:
• Creating markets
• Bank relationship
• Affinity and direct capability
10
Asset management
Property
Health – 14 countries
Life insurance
Standard Bank
How is Liberty positioned
CfC listed 1 April 2011
Kenya, Tanzania,Uganda
Capability: Life, Short-term
and Health, Asset
management, bancassurance
East Africa
Nambia, Botswana,
Swaziland, Lesotho
UFI acquisition in Namibia
Minorities out of STANLIB
Capability: life, funeral
Bancassurance, AM, health
Key investment region
Nigeria
Ghana
Southern Africa
45% of THT Nigeria
Capability: Health management
1 400 supporting doctors &
hospitalsWest Africa
Key investment region
Zambia
Key investment
Increase ownership
Establish wider footprint in
partnership with SBG
Angola, Zimbabwe,
Mozambique
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Partnership with Standard Bank - Bancassurance
• Leverage customer base and branch networks
• SBG’s accelerated growth strategy for Africa
• Potential for distribution of selected short-term
products
Clear strategy for Insurance
• In country sales and service – local touch is
critical
• Focused product range and distribution
• Partner with strong brands
• Common operating platform
• Investment to create the markets
Leverage our unique capabilities for Africa
1
2
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Opportunities across Africa in Health
• Provision of health solutions to corporates in Africa
• Liberty Blue is a first-to-market pan-African product
• Insured lives up by 23% from end 2011 to June 2012
Opportunities for asset management
• Regulatory reform driving the growth of privately
managed pension assets
• Steady growth of money market funds as an alternative
higher-yielding asset class to bank deposits
• Rapid emergence of an affluent middle class
• Investment fund business in specialist areas (sovereign
funds, infrastructure, property and pension reforms), and
opportunities to bring new asset classes to domestic and
international investors
• Global capital flows that are increasingly looking for
exposure to emerging African markets
Leverage our unique capabilities for Africa
Source: World Resource Institute International Finance Corp.
Pro
pert
y Val
ue
2010
Existing property
US$29B
US$12B
2010-2015
Growth
2015
Market Size
Kenya
Uganda
Zambia
Tanzania
Ghana
Nigeria US$41B
Growth of investment grad
commercial property in selected SSA markets
3
4
Growth of investment grade commercial
property in selected SSA markets
13
Liberty is well positioned for the brave new world
Market leading
distribution
capability
World class
products
Unique
Bancassurance
agreement
Leading risk &
balance sheet
management
capability
Credible &
leverageable
investment
capability
Compelling
growth
opportunities
Attractive
valuation
Established
African
operations
Questions?
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