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Johannesburg - Financial services group Liberty Holdings [JSE:LBH] said on Friday that for the three months ended March 2011 its indexed new business declined to R1.059bn from R1.091bn in 2010.
The company said that at the annual general meeting to be held later Friday, chief executive Bruce Hemphill will advise shareholders on trading results for the three months.
The capital adequacy level of Liberty Group, the entity which conducts the bulk of the company's insurance activities, remains strong at 2.5 times the required cover after the payment to Liberty Holdings of R850m in respect of the final dividend for 2010 in March 2011. All the other Life License subsidiaries remain well capitalised and at similar levels to those reported at 31 December 2010.
SA retail indexed new business generated in the franchise, agency, and broker channels, excluding entry level market (ELM) business, is up by 3% on the same period in 2010. SA retail single premium new business is up 4% to R2.009bn.
The overall reduction in indexed new business compared to the prior period was expected given the significant remedial action taken by management in 2010 to address poor lapse experience in the ELM business, the company said.
During the period, action was taken to ensure sustained profitable new business volume growth in the ELM business and management expects sales volumes to improve from current levels. This includes the expansion of the successful internal call centre channel, and the re-pricing of certain products.
Corporate indexed new business volumes were up 8% to R125m for the quarter, which included strong single premium flows.
Despite the continuing substantial improvement in policyholder lapse experience, assumption reviews and changes to assumptions are only considered half yearly.
Consequently new business margins for the quarter have not been adjusted for improved persistency experience and new business margins remain at 1.2%.
Insurance net cash flows of R296m are substantially up on the corresponding 2010 period. Retail SA net cash flows are significantly better demonstrating the improvement in in-force premiums and single premium new business combined with consistent claims experience. Corporate net cash flows, whilst negative, showed an improvement on those experienced in the first quarter of 2010.
Stanlib's assets under management for the period increased to R361.3bn compared to R355.2bn at the end of December 2010, reflecting both an increase in net cash flows and underlying asset values.
The ongoing market volatility continues to be reflected in customer investment decisions and flows into money market and fixed interest products have continued but at slightly lower levels than those experienced in the same period in 2010.
There was a significant improvement in the medical loss ratio during the period and a number of key contracts in Africa were successfully re-priced. Strong membership growth in Africa offset some membership attrition in South Africa.
Frank.net (Frank) is performing in line with business plan and is making good progress in establishing its brand in the market.
Liberty Holdings and Standard Bank Group [JSE:SBK] concluded an amendment to their existing bancassurance joint venture agreement during the period. The amendment retains the evergreen status of the original agreement but extends the notice period from one to two years and stipulates that notice cannot be given for two years post date of signature. In addition, the amendment expands the agreement to include new channels, new product lines and new geographies. The terms relating to the sharing of profit on existing acquisition models and business lines in South Africa remain materially unchanged.
The company said that at the annual general meeting to be held later Friday, chief executive Bruce Hemphill will advise shareholders on trading results for the three months.
The capital adequacy level of Liberty Group, the entity which conducts the bulk of the company's insurance activities, remains strong at 2.5 times the required cover after the payment to Liberty Holdings of R850m in respect of the final dividend for 2010 in March 2011. All the other Life License subsidiaries remain well capitalised and at similar levels to those reported at 31 December 2010.
SA retail indexed new business generated in the franchise, agency, and broker channels, excluding entry level market (ELM) business, is up by 3% on the same period in 2010. SA retail single premium new business is up 4% to R2.009bn.
The overall reduction in indexed new business compared to the prior period was expected given the significant remedial action taken by management in 2010 to address poor lapse experience in the ELM business, the company said.
During the period, action was taken to ensure sustained profitable new business volume growth in the ELM business and management expects sales volumes to improve from current levels. This includes the expansion of the successful internal call centre channel, and the re-pricing of certain products.
Corporate indexed new business volumes were up 8% to R125m for the quarter, which included strong single premium flows.
Despite the continuing substantial improvement in policyholder lapse experience, assumption reviews and changes to assumptions are only considered half yearly.
Consequently new business margins for the quarter have not been adjusted for improved persistency experience and new business margins remain at 1.2%.
Insurance net cash flows of R296m are substantially up on the corresponding 2010 period. Retail SA net cash flows are significantly better demonstrating the improvement in in-force premiums and single premium new business combined with consistent claims experience. Corporate net cash flows, whilst negative, showed an improvement on those experienced in the first quarter of 2010.
Stanlib's assets under management for the period increased to R361.3bn compared to R355.2bn at the end of December 2010, reflecting both an increase in net cash flows and underlying asset values.
The ongoing market volatility continues to be reflected in customer investment decisions and flows into money market and fixed interest products have continued but at slightly lower levels than those experienced in the same period in 2010.
There was a significant improvement in the medical loss ratio during the period and a number of key contracts in Africa were successfully re-priced. Strong membership growth in Africa offset some membership attrition in South Africa.
Frank.net (Frank) is performing in line with business plan and is making good progress in establishing its brand in the market.
Liberty Holdings and Standard Bank Group [JSE:SBK] concluded an amendment to their existing bancassurance joint venture agreement during the period. The amendment retains the evergreen status of the original agreement but extends the notice period from one to two years and stipulates that notice cannot be given for two years post date of signature. In addition, the amendment expands the agreement to include new channels, new product lines and new geographies. The terms relating to the sharing of profit on existing acquisition models and business lines in South Africa remain materially unchanged.
