S.A’s Liberty mulls expansion, eyes margins in turnaround drive


JOHANNESBURG (Reuters) – The new boss of Liberty Holdings Ltd will slow its expansion and focus on higher margin products such as a recently launched pension policy, he said on Friday, as he strives to turn around South Africa’s fourth-largest insurer.

Shares in Liberty fell as much as 7 percent after it reported a 30 percent slump in normalised headline earnings per share to 456.7 cents for the six months ended June.

However, new CEO David Munro, the former head of Standard Bank’s investment banking unit, told reporters he was working on steps that would have an “immediate impact on our service to our customers, financial advisers and on our financial performance.”

Munro was appointed in June to replace Thabo Dloti, who abruptly left the company following a clash with the board over its immediate priorities.

Liberty, which competes with larger Sanlam and Discovery, has lagged rivals operationally and on the stock market over the last three years as a weak economy and high interest rates in South Africa hit disposable incomes.

Munro said he would aim to improve products and introduce new ones to boost margins – such as the recently launched Agile 2.0 that allows investors to take on more risk to improve returns while providing protection against volatile markets.

He also said he would curb the company’s expansion and cut the capital earmarked for investments in Africa. Under Dloti, Liberty had been expanding in other parts of Africa, where a growing middle class is driving demand, to offset slowing growth at home. But some of the investments haven’t borne fruit.

“We’re cautious on further expansion until we’ve got a deeper understanding of why we’re doing it,” Munro said.

PSG Wealth portfolio analyst Adrian Cloete was supportive.

“With any offshore investment or startup there’s always a J-curve you go through when you invest upfront and you get your payback later, so it made sense, considering the tough period Liberty is in now, to slow down the expansion,” he said.

“The appointment of David Munro is a very good one because he was the former head of investment banking at Standard Bank so he’d be capable of driving the Liberty turnaround strategy, with his experience in financial services.”

At 1328 GMT, Liberty shares were down 6.2 percent at 105.35 rand.

($1 = 13.3640 rand)

Editing by Jane Merriman and Mark Potter

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