Volatility knocks Liberty

Johannesburg - Life insurance and wealth management business, Liberty Group has been knocked by continued market volatility.

The company said on Thursday during a trading update for the nine-month period to end-September 2008 that it "is exposed to falls in local (and to a limited extent, offshore) equity markets and long-term interest rates, and associated volatilities.

"Management has been monitoring these positions, and has to some extent reduced the level of market risk on the balance sheet. Notwithstanding this, the extent of the fall in equities and long-term interest rates, partly offset by the weakening rand, has resulted in a slightly higher level of earnings decline than disclosed at the half year."

The company reported that its life assurance business had reported strong sales in the first half of 2008, but expected a slow down in sales activity in the final quarter of the financial year.

The company said that assets under management at asset management unit Stanlib had not changed materially since the half year as a result of strong cash inflows into money market funds. The market has shifted away from equity markets into money market funds.

Group embedded value has decreased to R88 per share from R94 reported at the previous six month period.

The company said: "Sales, margins and earnings from operating businesses remain broadly in line with forecasts, although ongoing market volatility will continue to have a significant impact on the Group`s level of reported earnings."

The Liberty Group share price has dropped by 2.5% (149c) in early trade on Thursday to trade at 5 851c.

- Fin24.com