Life assurance and financial services group Liberty on Thursday reported a 34% leap in headline earnings per share from 303,4 cents to 407,2 cents for the six months to the end of June.
BEE-normalised headline earnings per share for the half-year amounted to 384,9 cents, which were 32% higher than the 291 cents reported for the previous comparable six-month period.
The group declared an interim dividend per share of 140 cents compared with 126 cents for the previous comparative period — an increase of 11%.
Total sales for the six months increased by 16% from R26,2-billion to almost R30,6-billion, notwithstanding a 2% decline in Liberty Life new business from R7,9-billion to R7,8-billion.
The embedded value per share increased by 1% from R75,96 to R76,55.
Liberty said the results were achieved despite a difficult environment. It said the life-insurance industry continues to be challenged by an increasingly dynamic marketplace where product, pricing and distribution are facing major revisions.
On the legislative and regulatory front, significant challenges are posed by the Financial Sector Charter, Financial Advisory and Intermediary Services Act, the Financial Intelligence Centre Act and the National Credit Act, as well as rulings by the pension fund adjudicator and the National Treasury’s reform proposals for the industry, it said.
In addition, there have also been a Financial Services Board investigation and parliamentary hearings in relation to the issue of “bulking” and “secret profits”. As a result, the reputational risk facing the industry has increased.
“The difficult environment, fierce competition and the necessary internal review process caused by the above environmental changes have had a dampening effect on on-balance sheet new-business sales for the period under review,” Liberty added.
Both individual life and corporate benefits indexed new-business sales of R1,871-billion and R424-million respectively for the half-year, which were 3% lower than in 2005.
Sales of on-balance sheet individual single-premium investment products were 2% or R128-million lower than in 2005, mainly as a result of pricing competition in the market and the move to off-balance-sheet products. Indexed sales of Capital Alliance products amounted to R121-million in 2006, 35% lower than the R186-million in 2005, mainly due to the expected loss of First National Bank business.
Due to lower volumes of Liberty Life new business and increased acquisition costs, Liberty Life’s new-business margin has been reduced from 2,8%, restated for the impact of the statement of intent (SOI), in respect of the six months ended June 30 2005, to 2,4% in respect of the six months ended June 30 2006.
Liberty’s attributable portion of Stanlib’s gross sales (excluding money market) increased by 60% from R5,410-billion in 2005 to R8,647-billion in 2006. — I-Net Bridge