2012 UBS Conference 11 October 1 Liberty has established - - PowerPoint PPT Presentation

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Liberty Holdings Limited

UBS Conference 11 October

2012

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Liberty has established capabilities to underpin sustainable shareholder returns and create value

140 144 164 164 164 182 192 230 266 291 291 291 298

100 200 300 400 500 600 2006 2007 2008 2009 2010 2011 1H12

Final Interim

Key highlights Jun 2011 – Jun 2012

• Normalised return on group equity, 16.7%
• The share price increased by 20.5% resulting in

a total shareholder return of 27.3%

• The discount to group equity value reduced from

23% to 17% as at the end of June 2012

• Strong balance sheet and capital position

Dividends paid Returns since 2001

• 50

100 150 200 250 300 Total returns since 31 Jan 2001 Return on Price since 31 Jan 2001 60 80 100 120 Share price EV

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Composition of group equity value

30 June 2012 (R29.6bn)

Assets backing capital (34.9%) Growth (2.5%) Asset management (16.5%) Retail affluent (38.3%) ECM (3.3%) Corporate (4.3%)

30 June 2012 (R29.6bn) Assets backing capital (34.9%) Established capabilities (42.7%) New investments (22.4%) South Africa Sub-Saharan Africa

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• 1. Tsunami of regulatory and reform changes
• 2. Large scale changes in the intermediary channel – RDR
• 3. Increased sales through mobile, direct and affinity channels increasing margin pressure
• 4. Rising mass middle class
• 5. Low interest rate environment
• 6. Increasing demand for alternative asset classes

Going forward, what is shaping the new world in South Africa

1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 LSM 1 LSM 2 LSM 3 LSM 4 LSM 5 LSM 6 LSM 7 LSM 8 LSM 9 LSM 10 2005 2010 2020

Source: 80twenty Source: McKinsey

Interest rate history and forecast Population growth by LSM group

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Equity value created by assets backing capital is managed by LibFin

• Libfin markets - Enhances returns from the credit portfolios backing annuities and GCB’s
• Libfin Investments - Gross return of 6.4% for the first six months of 2012
• Headline earnings 2011 : Markets – R155m; Investments – R969m; SIP return – 8.1%
• Market leading balance sheet management

 Capability to price and risk manage guarantees  Capability to manufacture, price and manage illiquid debt for the balance sheet  Capability to construct appropriate investment portfolios for policyholders  Capability to construct optimised risk-adjusted returns for the Shareholders’ Investment Portfolio  Capability to manage liquidity risk

• These capabilities allow new innovative investment products in a low interest rate / low yield

environment Retail has launched its new investment offering in September 2012

Evolve

Investment Range

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Our life business has market leading distribution capabilities supported by innovative products

• Dominant player in the affluent market
• Delivered additional R3.4 billion of group equity value over past 18 month
• 19% increase in new business with steadily rising margins

Liberty continues on its path of market first product innovations: Liberty has successfully establish a multi-channel distribution network Agency IFA Netco’s Entrepreneurs SBFC Bancassurance Direct Affinities

Retrenchment Whole of Life Capital Disability Whole of Life Income Protection Rates Special Offer Differential Pricing Flexible Annuity (RAS) Performance Cap Product Finger Prick HIV & Cotinine 1st Half 2011 2nd Half 2011 2nd Half 2012 1st Half 2012

Risk Investments Market firsts

Underpinned by enabling technology and production / sales support

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Innovation in distribution and product diversification is key

Direct

• Two major affinities – Standard Bank Life Direct and Vodacom – attracted

by the brand and culture of Frank.net

• Direct platform utilised across the group
• Creation of FMCG like skills fostering process and product innovation –

transforming the industry landscape and positions us strongly in the new regulatory environment

• Launched “Own Your Life Rewards” programme – across all

Liberty product offerings

• Increased sales through Liberty’s intermediated distribution

channel

• Product innovation within the Liberty Medical Scheme space

(Platinum Prestige and three new select options);

Health

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Source: Morningstar, Alexander Forbes

Credible and leverageable investment capabilities

Significant investment capabilities which we can leverage to greater effect

80% 67% 40% 31% 100% 93% 67% 54% 3 months 1 year 3 years 5 years 67% 50% 25% 50% 100% 100% 92% 60% 3 months 1 year 3 years 5 years

• Strategic and tactical asset allocation
• Leading listed property fund in the market
• Leading fixed income fund
• Strong balanced and money market funds
• Unlisted property
• Pan African Equity
• Our priority areas :

› Unlisted credit › Infrastructure › Direct property

• We win third party confidence through

› Experienced individuals with a track record › Having skin in the game – own seed capital

Institutional funds in first and second quartile Core Retail funds in first and second quartile

STANLIB performance Responding to the rise of alternatives

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What is shaping the new world in Africa

• Low market penetration
• Demographic dividend
• Increasing middle class / Urbanisation
• Improved business environments
• Technology / mobile enabled

Key success factors:

• Creating markets
• Bank relationship
• Affinity and direct capability

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Asset management Property Health – 14 countries Life insurance Standard Bank

How is Liberty positioned

CfC listed 1 April 2011 Kenya, Tanzania,Uganda Capability: Life, Short-term and Health, Asset management, bancassurance East Africa Nambia, Botswana, Swaziland, Lesotho UFI acquisition in Namibia Minorities out of STANLIB Capability: life, funeral Bancassurance, AM, health Key investment region Nigeria Ghana Southern Africa 45% of THT Nigeria Capability: Health management 1 400 supporting doctors & hospitals West Africa Key investment region Zambia Key investment Increase ownership Establish wider footprint in partnership with SBG Angola, Zimbabwe, Mozambique

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Partnership with Standard Bank - Bancassurance

• Leverage customer base and branch networks
• SBG’s accelerated growth strategy for Africa
• Potential for distribution of selected short-term

products Clear strategy for Insurance

• In country sales and service – local touch is

critical

• Focused product range and distribution
• Partner with strong brands
• Common operating platform
• Investment to create the markets

Leverage our unique capabilities for Africa

1 2

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Opportunities across Africa in Health

• Provision of health solutions to corporates in Africa
• Liberty Blue is a first-to-market pan-African product
• Insured lives up by 23% from end 2011 to June 2012

Opportunities for asset management

• Regulatory reform driving the growth of privately

managed pension assets

• Steady growth of money market funds as an alternative

higher-yielding asset class to bank deposits

• Rapid emergence of an affluent middle class
• Investment fund business in specialist areas (sovereign

funds, infrastructure, property and pension reforms), and

• pportunities to bring new asset classes to domestic and

international investors

• Global capital flows that are increasingly looking for

exposure to emerging African markets

Leverage our unique capabilities for Africa

Source: World Resource Institute International Finance Corp.

Property Value

2010 Existing property

US$29B US$12B

2010-2015 Growth 2015 Market Size

Kenya Uganda Zambia Tanzania Ghana Nigeria US$41B

Growth of investment grad commercial property in selected SSA markets

3 4

Growth of investment grade commercial property in selected SSA markets

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Liberty is well positioned for the brave new world

Market leading distribution capability World class products Unique Bancassurance agreement Leading risk & balance sheet management capability Credible & leverageable investment capability Compelling growth

• pportunities

Attractive valuation Established African

• perations

Questions?