SBG and Liberty had enjoyed a “special relationship” since 1974, Liberty said in an operational update for the nine months to September 30. Photo: Leon Nicholas.
SBG and Liberty had enjoyed a “special relationship” since 1974, Liberty said in an operational update for the nine months to September 30. Photo: Leon Nicholas.

Liberty eyes Standard Bank deal, and may also need to increase pandemic reserve

By Edward West Time of article published Nov 19, 2021

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LIBERTY Holdings said yesterday that it anticipated the deal for Standard Bank (SBG) to buy 100 percent of the insurance and investment group to be finalised in the first quarter of 2022.

SBG and Liberty had enjoyed a “special relationship” since 1974, Liberty said in an operational update for the nine months to September 30.

“The proposed transaction represents a natural progression in this special relationship, increasing the integration and ability to collaborate to provide the best financial service offerings to clients through the most efficient means.”

Liberty said positive sales trends seen in the first half of 2021 continued into the third quarter. Its Covid-19 pandemic reserve was being reassessed due to the 2020 and 2021 reserve being deleted from high mortality claims.

Group long-term insurance indexed new business sales for the nine months of R6.8 billion increased 30.9 percent over comparative period, due mainly to R5.97bn of SA Retail indexed new business sales having increased by 29 percent, underpinned by good growth in recurring embedded banking, risk and investment product sales and growth in single premium conventional annuity and Evolve investment plan sales.

The mix of new business sales and margin remained a challenge.

Liberty Corporate indexed new business of R567m, which was 57.5 percent above the comparative period, with good recurring and single premium growth.

Liberty Africa Insurance indexed new business of R266m was 27.9 percent above the comparative period - group life assurance, funeral and pension business in the Kenya and Botswana operations increased.

Group mortality claims increased significantly in the third quarter due to the severity of the third wave of the Covid-19 pandemic in South Africa and subsequent waves in other African territories where the group operates.

The pandemic reserve set aside in 2020 and 2021 had been utilised to absorb the relevant risk experiences across SA Retail, Liberty Corporate and Liberty Africa, and qualifying pandemic-related expenditure.

The risk component of the pandemic reserve was depleted by September 30, 2021. In addition, risk claims that were not covered through the pandemic reserve and not anticipated in the pricing of these books of business had been incurred.

Reassessment of the prospective pandemic reserve was under way, taking account of the possibility of further waves, progress with vaccination roll-outs and other developments relating to the pandemic.

The group remained well capitalised.

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BUSINESS REPORT ONLINE

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