Transcript IAS Presentation 2001
Presentation to Investment Analysts Society of Southern Africa 6 March 2002
Roy Andersen
Group Chief Executive
Content Roy Andersen 2001 achievements The future STANLIB and bancassurance Mike Jackson International operations Human capital Goals for 2002 Conclusion Building value in Financial Services Operations
Financial highlights 2001
Financial services environment in 2001 Good demand for Offshore products Guaranteed products Bancassurance products Volatile investment markets Implementation of policyholder protection rules Implementation of CGT
Environment anticipated and addressed well by Liberty
Highlights Embedded value per share + 23% Headline ROE continuing operations 25% Return on embedded value 26% Headline earnings per share – continuing operations + 14% Indexed new business premiums + 11% Recurring new business premiums + 17% Value of new business + 16% New business margin 18%
Headline earnings on continuing operations Life fund operating surplus Revenue earnings on shareholders’ funds Preference dividend in subsidiary Headline earnings Headline earnings per share Headline ROE 2001 Rm 1 320 2000 Rm 1 153 % Change 14 222 (43 ) 1 499 551 25% 202 10 (40 ) 1 315 485 16% * 7 14 14 * Total operations
Investment return (Managed portfolio) Consistent first and second halves
Return 30% 25% 20% 15% 10% 5% 0% 7,2% 10,6% 14,4% 25,3% First half Actuarial expectation Second half Actual Bonus stabilisation reserves boosted
New business 2001 (excluding natural increases) 2001 Rm Single premiums Corporate Benefits Individual business Recurring premiums Corporate Benefits Individual business Total on balance sheet New business index Value of new business 1 225 6 415 225 1 475 9 340 2 465 455 2000 Rm 2 167 5 589 190 1 251 9 197 2 217 391 % Change (43 ) 15 18 18 2 11 16
Unit trust sales
Rm 6000 5000 4000 3000 2000 1000 0 +142% +99% +120% +25% +91% 1999 Money market 2000 Other Total Three Raging Bull awards 2001 +61%
Net insurance cash flow
Rm 4000 3500 3000 2500 2000 1500 1000 500 0 -500 -1000 102 1 622 3 378 1997 -633 1998 1999 2000 Claims and benefits up 10% 2 930 2001
Embedded value Shareholders’ funds Net value of life business in force Financial services subsidiaries fair value adjustment Total embedded value Embedded value per share Return on embedded value 2001 Rm 8 346 5 112 1 310 14 768 R54,21 26,4% 2000 Rm 6 123 4 822 996 11 941 R43,95 11,3% % Change 36 6 32 24 23
Capital adequacy cover
20 16 12 8 4 0 18,6 12,2 7,3 3,6 1997 1998 1999 2000 2001 Overweight deployment of capital in SAB significantly reduced 3,5
Dividend 2001 cents per share 150 2000 cents per share 131 % Change + 15
Headline return on equity
30% 25% 20% 15% 10% 5% 0% 13% 1997 13% 1998 11% 1999 16% 2000 25% 2001
Scorecard Goals set for 2001 financial year 1.
Redeploy shareholder investments into financial services 2.
3.
Individual business – leverage the strong position in the upper income market Implement customer value management ½
Scorecard Goals set for 2001 financial year 4.
Expand Liberty Corporate Benefits’ business 5.
6.
Drive continued growth in bancassurance Provide private banking services to clients
Scorecard Goals set for 2001 financial year 7.
Achieve further synergies with Stanbic 8.
Establish an empowerment partnership 9.
Leverage Liberty Ermitage for international expansion
The future
a new Wealth Management Group and an enhanced Bancassurance Structure
Standard Bank
STANLIB Organisational structure Stanbic CEO-Jacko Maree 50% Liberty CEO - Roy Andersen 50% STANLIB Limited Executive Chairman Roy Andersen 100% STANLIB Asset Management Alan Miller “ The factory” 100% STANLIB Wealth Management John Liackman “Product / marketing / distribution arm”
Asset management components introduced STANLIB Asset Management Libam SCMBAM
Best investment processes retained
STANLIB wealth management components introduced 100% Unit Trusts Liberty Collective Investments Standard Bank Unit Trusts STANLIB Wealth Management 100% Lisps Liberty Specialised Investments Standard Bank Investment Services 100% Lodestone 52% Simeka
Summary of the benefits Plays to each company’s undisputed strengths Powerful and far reaching distribution = client convenience Leverages the power of two blue chip brands Combines asset management, banking and actuarial skills for product development Pools and leverages intellectual capital Economies of scale achieved New Stanfin and bancassurance contract attractive
Building value in Financial Services Operations
Mike Jackson
Executive Director: FSO
Building distribution Intermediaries 2100 1800 1500 1200 900 600 300 0
970 187 783 1997 1 135 420 715 1 310 668 642 1 663 994 669 1 935 1 197 738 1998 1999 2000 Agency Franchise Consultancy new business up 18% End Feb 2002
Growing bancassurance production
Rm 1800 1600 1400 1200 1000 800 600 400 200 0 680 757 1 155 1 556 1997 1998 Complex 1999 Simple 2000 1 661 2001
Liberty Healthcare Approaching critical mass Principal members Total lives • R12,7 million loss in 2001 February 2002 36 343 86 500 December 2000 18 870 45 161
Focusing on quality growth and profitability
Liberty Corporate Benefits Enhancing new business profitability Single premiums Recurring premiums Total 2001 Rm 26 21 47 2000 Rm 38 4 42 % Change (32 ) 425 12 Embedded value of in-force 674 588
Focusing on expense control and margins
15
Liberty Personal Benefits New business – average policy size Liberty Full year 2001 R Recurring premiums RAs Risk and investment Single premiums 5 650 6 179 136 104 Industry (Values for first half 2001) R % Difference 4 043 2 429 56 699 40 154 140
Focused on the profitable segment
Liberty Personal Benefits Building market share – New recurring individual
20% 16%
15,5% 14,9% 16,2% 15,7% 14,1% 17,7%
12%
17,2% 16,4% 18,2%
8% June 2000 December 2000 All offices Brokers Agents June 2001
Liberty Personal Benefits Building market share – New single individual
20% 16%
13,4% 17,0% 14,8% 13,3% 16,7%
12%
10,7% 9,1%
8%
11,5% 9,5%
June 2000 December 2000 All offices Brokers Agents June 2001
Liberty Personal Benefits Policyholder returns Portfolio Liberty Managed Variable Equity Performance Global Managed Fund returns (after tax) % 20,0 20,2 21,0 35,8
Liberty Personal Benefits Liberty Ermitage returns in Rand Dollar Money Alpha Class Asset Selection Global Equity North American Equity Pan European Equity Asia Pacific Equity Fund returns (after tax) % 51,5 50,8 53,0 47,4 52,2 46,4 31,7
Runner-up to Goldman Sachs – Global Investor Award for Excellence 2001
Liberty Personal Benefits Leveraging existing clients Cross-selling and retention are key objectives Intermediary productivity tools implemented successfully Client data mart, data analysis tools and campaign management capabilities established Enterprise data warehouse infrastructure implementation due April 2002
Liberty Personal Benefits Individual surrenders and maturities Rm 1800 1600 1400 1200 1000 800 600 400 200 0
% of in-force book
1997 1998 1999 2000
Higher retention of in-force book
2001 16% 15% 14% 13% 12% 11% 10%
Product innovation Investment products launched 2001 Global bond – UK Properties Guaranteed Hedge Fund 100 Liberty CPI Plus Investment Liberty Secured RA Guaranteed Global Equity Index Sandton Properties Liberty Ermitage portfolio range LSI Symphony wrap funds
Product development Risk products launched 2001 Optimum/Optimum Plus LivAbility, FemAbility, CareAbility,EnAbility Procure
An exciting future Reaping benefits of an expanding distribution force Bancassurance – growing SBFC (Stanfin) sales Ongoing market share growth Full pipeline of products for 2002 Managing and leveraging in-force business
Goals for 2002
Roy Andersen
Group Chief Executive
Liberty Properties Developing value through property Portfolio continually upgraded Disciplined programme of improvements Revaluations Continued conservatism 5,3% uplift of R466 million to R9,2 billion Disposals of R141 million confirmed valuations
The Earth Summit will boost Sandton
International growth Liberty Ermitage AUM up 69% in Rands Hedge funds doubled – sales force doubled Capital uplift in 2001 + R146 million Effect on earnings of depreciated Rand to be felt in 2002 Offshore acquisition Discerning approach
Human capital Creating value through people B 3 Vision “The best people, doing the best things, best!”
Human capital Creating value through people The best people Attitude towards the client – key Energy and enthusiasm – a requirement Correct cultural diversity – on track Measure progress through growth in Human Capital Index
Liberty a top ten employer for the second year
Human capital Creating value through people The best things Clear and open strategies A wide understanding of what drives value Incentivisation aligned with value creation
Top 200 people on incentive scheme linked to growth in appraisal value
Human capital Creating value through people Best Use of international benchmarks Integrity, trust and honesty core values
Goals for 2002 1.
Launch and grow STANLIB Limited 2.
Develop SBFC (Stanfin) and increase bancassurance sales 3.
Reposition Charter in mass and niche markets 4.
Focus on profitability in Employee Benefits
Goals for 2002 5.
Leverage CVM initiative for new business and retention 6.
Grow Liberty Ermitage sales 7.
Focus on productivity of Agency and Franchise