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LGL
LIBU
LGL - Liberty Group Limited - Overview of trading for the three months ended 31
March 2008
Liberty Group Limited
Registration number 1957/002788/06
Incorporated in the Republic of South Africa
Share code: LGL
ISIN code: ZAE000057360
(Liberty Group)
Overview of trading for the three months ended 31 March 2008
Introduction
The volatile economic conditions experienced during the period, have created a
difficult operating environment for both the life and asset management
businesses. However, the group`s return on embedded value for the first three
months of 2008 remains in line with market guidance of 14.5% to 15.5%. Group
indexed new business remained firm but growth levels were lower than those
enjoyed in the 2007 year. Indexed new business production (defined as life and
off balance sheet sales), increased by 10.7% or R1.45billion.
Strategies to diversify the business both geographically and into the broader
wealth services market are progressing as planned.
Life Assurance (Liberty)
Liberty`s indexed new business excluding premium escalations was R1 028m for the
first three months of 2008, up 9.0% on the same period in 2007 (Table 1).
Indexed individual new business premiums grew by 5.9%. Risk products continued
to sell well, augmented by even stronger sales of the group`s investment and
savings products. Indexed corporate new business premiums increased by 34.0%,
with both recurring and single premiums remaining strong. Margin pressure has
continued especially in the retail risk only market leading to lower margins
than those at the 2007 year end.
Retail cash flows were marginally negative in the first three months of 2008 due
to the lower sales of single premium products. Difficult consumer conditions
have also had a negative impact on policyholder behaviour, contributing to the
negative cash flows.
The life assurance cost base is expected to increase in line with the growth
strategies outlined in the 2007 results presentations, but is not expected to be
significantly in excess of current inflation forecasts.
The weighted average gross investment return was 3.4% compared to 8.5% for the
same period in 2007.
Asset Management (Stanlib and Liberty Africa)
Assets under management increased from R300.1bn in March 2007 to R340.2bn in
March 2008 (flat on the 31 December 2007 comparative). Total sales for the
period (including Liberty Africa) were R31.5bn up 56.7% on the same period in
2007, as reflected in table 2. Retail net cash flows excluding money market were
neutral, largely due to the ongoing financial market uncertainty. This compares
to the R1.0bn positive cash flow in the 2007 year. Total net cash flows of
R0.5bn were strongly improved from the R2.5bn net cash outflow in 2007.
Stanlib has continued to deliver strong investment performance in 2008 building
on its success in 2007 when it was rated the top unit trust manager in the
PlexCrown Survey. Stanlib was ranked third in the Alexander Forbes SA Large
Manager watch over the 12 months to 31 March 2008.
Conclusion
The challenging operating conditions experienced in the first three months of
2008 are not anticipated to improve in the short term. The Board remains
confident that Liberty`s broader wealth strategy continues to be appropriate.
Audit/Review
None of the figures have been audited or reviewed by the Group`s auditors.
Liberty Group new business for the three months ended 31 March 2008
Table 1 Liberty Life on balance sheet new business* for the three months ended
31 March 2008
2008 2007 % change
Rm Rm
Single premium new business 3 099 3 042 1.9%
Individual Life 2 730 2 741 -0.4%
Corporate Operations 369 301 22.6%
Recurring premium new business 778 639 12.4%
Individual Life 613 563 8.9%
Corporate Operations 105 76 38.2%
Total new business 3 817 3 681 3.7%
Individual Life 3 343 3 304 1.2%
Corporate Operations 474 377 25.7%
Indexed new business 1 028 943 9.0%
Individual Life 886 837 5.9%
Corporate Operations 142 106 34.0%
* excludes premium escalations
Table 2 STANLIB ** off balance sheet new business for the three months ended 31
March 2008
2008 2007 % change
Rm Rm
Total sales excluding money market 12 844 8 158 57.5%
Retail sales excluding money 10 765 6 658 61.7%
market
Institutional sales excluding 2 080 1 500 38.7%
money market
Money market 18 677 11 959 56.2%
Total sales 31 521 20 117 56.7%
** includes Liberty Africa operations
Johannesburg
14 May 2008
Sponsor
Merrill Lynch South Africa (Pty) Limited
Date: 14/05/2008 09:00:01 Produced by the JSE SENS Department.
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