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Liberty Group Limited - Ministry Of Finance Announcement Regarding Minimum
Values For Savings Products.
LIBERTY GROUP LIMITED
("Liberty Life")
Registration number 1957/002788/06
Alpha Code LGL
Issuer Code LIBU
ISIN Code ZAE000057360
Incorporated in the Republic of South Africa
Ministry of Finance announcement regarding minimum values for savings products.
Shareholders of Liberty Life are referred to the statements issued earlier today
by the Ministry of Finance concerning minimum standards in respect of values for
savings products (Retirement Annuities, Endowments and other savings products).
Liberty Life has been advising all its stakeholders on an on-going basis that a
resolution was anticipated that may result in a once off reduction in the
group"s embedded value. Until now it has been impossible to determine what the
cost of the resolution would be, as many plausible scenarios existed. As a
general understanding has now been reached with the Ministry of Finance
regarding the scope and level of the resolution, it is likely that Liberty Life
will make a provision in the 2005 year end financial statements for this cost,
should a final resolution be reached. The resolution is subject to finalisation
of new commission regulations along the lines of the LOA"s proposals, approval
by Liberty Life"s board of directors and the fulfilment of certain other
conditions precedent.
On the basis of the announcement made, Liberty Life estimates the reduction in
BEE normalised embedded value to be in the range of R550-R600 million post tax,
or R2,00 to R2,15 per share. The accounting treatment of the adjustment is being
finalised and will be communicated as part of the group"s 2005 year end process.
After taking the impact of the proposed resolution into account, Liberty Life"s
statutory capital adequacy requirement (CAR) cover remains above 2,0 times, well
in excess of the stated target level of between 1,5 and 1,7 times.
Existing net cash flows, future profitability and regular dividends should not
be negatively impacted by this proposed resolution.
Liberty Life fully supports the principles contained in the announcement made
today and will continue to seek ways to improve its value proposition to
policyholders. This will include the launch of new products in 2006.
As evidenced by the trading update published on 23 November 2005 for the first
nine months of the 2005 financial year, Liberty Life has continued to perform
well, in spite of the continued negative sentiment resulting from the Pension
Fund Adjudicator rulings. We believe that today"s proposed resolution will
continue to build on the positive changes that the industry and Liberty Life
have been working towards for some time.
The information contained in this announcement has been estimated and is based
on actuarial projections and assumptions. It has also not been audited or
reviewed by Liberty Life"s auditors.
Date: 12 December 2005
SPONSOR
Merrill Lynch South Africa (Proprietary) Limited
Date: 13/12/2005 07:34:03 AM Produced by the JSE SENS Department
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