Liberty CEO David Munro says he will not shy away from difficult decisions
Profit fell in the first half, and the value of new business sales was down sharply
David Munro, the new CEO of Liberty Holdings, says he is prepared to make tough decisions to improve the insurer’s performance, after first-half profit dropped 15%.
“We will not shirk from the necessary decisions needed to equip Liberty to do better in this difficult and highly competitive environment,” Munro said in an e-mail on Friday.
“We have prioritised initiatives to make an immediate impact on our service to customers and financial performance.”
First-half net income dropped to R1.54bn from R1.81bn a year earlier, the insurer said in a statement. The value of new business sales fell 66% to R86m even as volumes rose, while earnings at Stanlib, Liberty’s asset-management firm, declined.
Munro took the helm of the insurer controlled by Standard Bank in May, after the abrupt departure of former CEO Thabo Dloti following a disagreement with Liberty’s board. Munro, formerly Standard Bank’s head of investment banking, stepped in shortly after Liberty, a financial services group with operations across Africa, saw its 2016 earnings plunge more than analysts had expected.
SA’s credit ratings have been cut to junk and the economy has fallen into recession. “The results for the six months reflect difficult market conditions and the challenges we face as a business,” Munro said. “While these results are disappointing, our sales volumes and net cash inflows are showing positive growth.”
Liberty’s shares fell 6.4% to R105.10 at 1pm on Friday, giving the company a market value of R30bn.
To boost the value of new business, which is one of the insurer’s priorities, products more akin to customers’ needs have been, and will be, introduced, while expenses will be tightly managed, Munro said. At Stanlib, which suffered “operational write-offs”, the equity franchise is lagging and Munro’s team is working closely with the leadership of that unit to try improve portfolio managers’ performance, he said.
“It’s too early to say if the second half will show an improvement,” Munro said. “The macroeconomic situation in SA is the single-biggest determinant and it is beyond our control. But we are resilient and well-capitalised and we’re working hard to restore Liberty’s performance.”
In June, the new CEO worked on handing over his old job to Kenny Fihla at Standard Bank and meeting people at Liberty to get to know the business better, according to Munro. “I have been listening and learning and understanding and getting to grips with life insurance and asset management,” he said. “I couldn’t tell you if the outside world has been warm or cold.”