Liberty Holdings Limited 2012 UBS Conference 11 October 1
Liberty has established capabilities to underpin sustainable shareholder returns and create value Dividends paid 120 600 500 Final 100 400 Interim 298 291 291 291 300 266 80 230 200 100 192 182 164 164 164 60 144 140 0 2006 2007 2008 2009 2010 2011 1H12 Share price EV Key highlights Jun 2011 – Jun 2012 Returns since 2001 300 ● Normalised return on group equity, 16.7% 250 ● The share price increased by 20.5% resulting in 200 150 a total shareholder return of 27.3% 100 ● The discount to group equity value reduced from 50 23% to 17% as at the end of June 2012 - ● Strong balance sheet and capital position Total returns since 31 Jan 2001 Return on Price since 31 Jan 2001 2
Composition of group equity value 30 June 2012 (R29.6bn) 30 June 2012 (R29.6bn) Assets backing capital (34.9%) Assets backing capital (34.9%) Growth (2.5%) Asset management (16.5%) Established capabilities (42.7%) Retail affluent (38.3%) ECM (3.3%) New investments (22.4%) Corporate (4.3%) Sub-Saharan South Africa Africa 3
Going forward, what is shaping the new world in South Africa 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 Population growth by LSM group Interest rate history and forecast 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 2005 5,000,000 2010 4,000,000 2020 3,000,000 2,000,000 1,000,000 LSM LSM LSM LSM LSM LSM LSM LSM LSM LSM 1 2 3 4 5 6 7 8 9 10 Source: McKinsey Source: 80twenty 4
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 Evolve Investment Range 5
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: Market firsts Whole of Life Income Whole of Life Protection Capital Finger Prick Risk Disability HIV & Cotinine Retrenchment Differential Pricing Rates Special Offer 1 st Half 2011 2 nd Half 2011 1 st Half 2012 2 nd Half 2012 Flexible Performance Investments Annuity (RAS) Cap Product Liberty has successfully establish a multi-channel distribution network Agency IFA Netco’s Entrepreneurs SBFC Bancassurance Direct Affinities Underpinned by enabling technology and production / sales support 6
Innovation in distribution and product diversification is key • Two major affinities – Standard Bank Life Direct and Vodacom – attracted by the brand and culture of Frank.net • Direct platform utilised across the group Direct • 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 Health • Increased sales through Liberty’s intermediated distribution channel • Product innovation within the Liberty Medical Scheme space (Platinum Prestige and three new select options); 7
Credible and leverageable investment capabilities Core Retail funds in first and second quartile Institutional funds in first and second quartile 100% 100% 100% 93% 92% 80% 67% 67% 67% 60% 54% 50% 50% 40% 31% 25% 3 months 1 year 3 years 5 years 3 months 1 year 3 years 5 years Responding to the rise of alternatives STANLIB performance • • Strategic and tactical asset allocation Our priority areas : › Unlisted credit • Leading listed property fund in the market › Infrastructure • Leading fixed income fund › Direct property • Strong balanced and money market funds • We win third party confidence through › Experienced individuals with a track record • Unlisted property › Having skin in the game – own seed capital • Pan African Equity Significant investment capabilities which we can leverage to greater effect 8 Source: Morningstar, Alexander Forbes
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 9
How is Liberty positioned 45% of THT Nigeria East Capability: Health management Africa CfC listed 1 April 2011 1 400 supporting doctors & hospitals Kenya, Tanzania,Uganda West Capability: Life, Short-term Africa and Health, Asset Key investment region management, bancassurance Nigeria Ghana Key investment Increase ownership Establish wider footprint in partnership with SBG Southern Africa Angola, Zimbabwe, Nambia, Botswana, Mozambique Swaziland, Lesotho UFI acquisition in Namibia Minorities out of STANLIB Capability: life, funeral Bancassurance, AM, health Life insurance Key investment region Health – 14 countries Zambia Asset management Property Standard Bank 10
Leverage our unique capabilities for Africa 1 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 2 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 11
Leverage our unique capabilities for Africa Opportunities across Africa in Health 3 • 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 4 Opportunities for asset management • Regulatory reform driving the growth of privately managed pension assets Growth of investment grade commercial • property in selected SSA markets Steady growth of money market funds as an alternative Growth of investment grad higher-yielding asset class to bank deposits commercial property in selected Kenya SSA markets Uganda Zambia • Rapid emergence of an affluent middle class Tanzania Ghana US$41B Nigeria Property Value • Investment fund business in specialist areas (sovereign funds, infrastructure, property and pension reforms), and US$29B opportunities to bring new asset classes to domestic and US$12B international investors • Global capital flows that are increasingly looking for 2015 exposure to emerging African markets 2010 2010-2015 Existing property Growth Market Size Source: World Resource Institute International Finance Corp. 12
Liberty is well positioned for the brave new world Leading risk & balance sheet Attractive management valuation capability Compelling World class growth products opportunities Market leading Established distribution African capability operations Credible & Unique leverageable Bancassurance investment agreement capability 13
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