Liberty update leaves sector reeling
The disastrous trading update from Liberty spooks the market
Shareholders of major life insurance companies lost more than R10bn on Friday, as share prices tumbled following a disastrous trading update from Liberty, which has raised concerns over the sector’s profitability. Economic growth over the past two years has crawled to about 1% a year, resulting in job losses and enormous withdrawals from retirement and pension funds. Liberty said that normalised headline earnings per share for the year to December 2016 were expected to be 35%-55% lower than the previous period. The share dropped nearly 11%, wiping R3.1bn off the company’s market value. The share prices of rivals Sanlam, MMI and Discovery fell more than 2%, while Old Mutual ended flat. "It’s a very worrying trading update. Until you see the full results you’re not quite sure whether it’s the industry or just bad management [at Liberty]," said David Shapiro, deputy chairman at Sasfin Securities. Liberty, which reported a 9% decline in earnings for the six months to June 2016, was plag...
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