Johannesburg - South Africa's leading insurance sector analysts have squared off with management at Liberty Holdings during a cagey third-quarter trading update conference call on Friday.

Liberty management tried to deflect some searching questions about its underperformance and strategic direction, by mainly using a looming closed period as an excuse.

The company reported that new sales at its life division were 11% lower, while its corporate benefits business dropped 29% to R856m.

It has failed to participate fully in the rebound in equity markets as it entered a number of sophisticated hedging transactions which saw it betting that stock markets would fall and the rand would weaken against the dollar. However, equity markets are up over 30% since March and the rand has been one of the best-performing currencies globally.

"I have no idea what normal is any more," lamented Francois du Toit of JP Morgan as he battled to understand the effect of hedging activities on earnings.

CEO Bruce Hemphill and his management in turn said most business units were performing "in line with expectations", or that company policy prevented them from disclosing specifics around the purchase price of an additional 24% in health group Liberty Health.

Michael Christelis of UBS was equally unimpressed with the answers he received.

"There must be some other disappointing numbers in there," he said, pointing out that the embedded value of the firm had only risen slightly to 8 000c a share from the 7 919c reported at the half-year mark.

Still no Stanlib CEO

Embedded value is the metric by which insurance companies are valued as they attempt to calculate future profits from policies in the market.

Christelis pointed out policy lapses continued to be higher than those of Liberty's competitors. The industry has been under pressure as consumers have been cashing in their policies - often to service debt.

Christelis also queried whether the brokers which deserted Liberty earlier this year had been taking business to competitive firms.

However, Liberty Life CEO Steven Braudo argued that Liberty's broker network was expanding.

"We have not lost any agents to competitors since the half-year report. In fact, we have started to hire some from our competitors," he countered.

Analysts were also annoyed by the fact that wealth manager Stanlib, which is responsible for Liberty's asset management, has been without a formal CEO since George Brits left earlier this year.

"We are still looking for a chief executive," Hemphill said.

Liberty Holdings shares were down 1.6% a share to 6 801 in Friday trade.

- Fin24.com