CFO Yuresh Maharaj: Liberty's SA retail business had recorded a high number of early lapses.
On Thursday, 27 February, Liberty released its 2019 financial results, which showed a 42 percent increase in headline earnings.
In a statement, the company said that its profits had benefited from a generous R1 billion return from the shareholder capital that it invests. Its day-to-day operations delivered a 10 percent increase in operating earnings, down from a 42 percent increase in 2018.
The company attributed the slower growth in 2019 to lapses in risk policies and muted growth in new sales volumes in its SA retail business, as well as withdrawals in umbrella funds due to increasing retrenchments.
Libery CFO Yuresh Maharaj said the group’s SA retail business had recorded a high number of early lapses policies that are cancelled within 12 months of purchase). These lapses were predominantly in risk policies like life and disability insurance, where consumers pay premiums monthly.
“There’s a real need for risk insurance. But then comes the factor of prioritisation when it gets to disposable income pressures two or three months down the line. That’s the challenge.”
Liberty also announced that it has passed the turnaround phase and is now chasing growth.
The group embarked on the turnaround strategy in 2017. The “refocus” came at a time when it was losing market to competitors like Sanlam and Discovery.
CEO David Munro said that the company has entered a growth phase. “We are no longer talking about the turnaround of Liberty or restoring it. We are growing,” he said. “We are preparing this company for the future. We are building thing that will help us be competitive in a five to 10-year horizon.”