Liberty Holdings is a financial services group based in South Africa, with a presence in 16 other African countries. The group’s history stems back to 1957 when the company was established by Sir Donald Gordan. Today, Liberty offers asset management, insurance, retirement, investment and health products to around 3.2 million people.

The company mainly targets products for sale to South Africa’s mass affluent consumer segment, and is the largest insurance solutions provider within this market. It is also one of the largest players within the retail unit trust, employee benefits and bancassurance markets. Operations are split into several business units such as Retail SA, Institutional and Asset Management, Liberty Health, Liberty Africa Insurance, Bancassurance and LIBFIN.

The group has total assets under management of R679 million, and recorded total earnings of R4.287 billion for the 2015 year. Liberty shares are available to buy on the Johannesburg Stock Exchange (JSE) with a market cap of R33 billion. The live online stocks chart shows that Liberty share price has been highly volatile, but the stock remains a popular buy and has good trade liquidity.

Liberty’s latest financial data covering the first six months of 2016 illustrated weaker sales and earnings due to the challenging macro-economic environment in South Africa. Headline earnings from South African retail operations were down 18% to R718 million, due to increased competition, worsening investment and modelling changes. Lack of capacity to provide a guaranteed investment product solution, together with a challenging consumer environment, led to lower growth in new business sales.

Under STANLIB, asset management had an 11% dip in earnings to R267 million due to continued market volatility and market growth that was lower than expected. Liberty Corporate produced solid earnings of R88 million, with a 2% rise in new business and a 13% increase in recurring premium sales. Earnings for Liberty Africa Insurance were lower at R11 million, whilst Liberty Health recorded a loss of R11 million, reflecting an improvement from a R22 million loss. Liberty Health is being strategically repositioned to focus on providing solutions to employers and employees. Meanwhile, the commercial bancassurance joint venture with Standard Bank, which applies to all the group’s asset management and insurance operations, continues to make a significant contribution to earnings and new business volumes.

In line with unstable market conditions, Liberty share price has been volatile. Liberty shares reached a high of R170 at the beginning of 2015, but dropped to R115.35 by August 2016. Despite weaker sales and earnings, the group is still in a strong capital position which allowed it to increase interim dividends by 9% to R2.76 per share.

Much of the losses experienced recently have been attributed to once-off problems which a large and well-established company such as Liberty should be able to shake off. As market conditions improve, this indicates that Liberty may return to profit growth soon and provide some long-term returns for investors who buy Liberty shares.

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