Hello and goodbye
Why Thabo Dloti quit Liberty
Dloti closed underperforming units, but that wasn’t enough for the board, which wants costs and profitability to be fixed quickly
The Financial Mail cover story (April 20-26) asked if CEO Thabo Dloti could turn Liberty around. Now we will never know. Dloti has quit.
At the life insurer’s mid-May board meeting it was clear that Dloti’s strategy did not have the support of the directors.
Unusually, instead of announcing that he would be spending more time with his family, Dloti was allowed to write an explanation for his departure in Liberty’s official press release.
He said there was a difference of opinion with the board on the immediate focus of the company at a time when the organisation is facing tough operational and environmental challenges.
"Alignment among key stakeholders is imperative to ensure the effective execution of the strategy," he says in his best management jargon.
Liberty faces tighter margins, reduced market share and increased competition, most recently from the new Investec Life. Dloti had taken action to close underperforming units such as the Own Your Life loyalty programme, direct insurer Frank.Net and the Liberty medical aid, now part of Bonitas.
But Liberty chairman Jacko Maree says this wasn’t enough — the board wanted deeper cost cuts and higher margins at a faster rate than Dloti was willing to agree to. "There needs to be more emphasis on the short term and that means scaling back on some of our growth projects. The new CEO will have to relook at our strategy on short-term insurance, for example."
There is perhaps no surprise that the new CEO, David Munro, has been recruited from Standard Bank. Munro was head of the Corporate & Investment Bank, with no experience of life insurance and very little of retail financial services.
The bank is the majority shareholder in Liberty and since it has controlled the life office, three of the four CEO appointments have been career bankers, Myles Ruck (who also ran the corporate bank), Bruce Hemphill, and now Munro. Dloti was the exception, he ran the mass market business at Old Mutual and then its asset manager.
Maree says there was nobody suitable from within the ranks of Liberty: until they moved to Old Mutual, former deputy CE Steven Braudo and one of Liberty’s directors former Alexander Forbes boss Peter Moyo could have been considered. Munro was appointed to the Liberty board in February.
Maree says Munro has a different style from Ruck, a notorious bull in a china shop.
"Munro is definitely one of the most capable executives I have ever worked with."
Kokkie Kooyman, a fund manager at Denker Capital says it could make a difference that Standard Bank has decided to get more involved, but it reflects badly on Liberty that nobody internally had been earmarked for the position.
Warwick Bam, insurance analyst at Avior Research, says Munro is bound to look like a hero when he presents the 2017 results. The one-off costs and nonrecurring actuarial assumptions pushed down the base in 2016 so there is a good chance that they will be substantially better.
Maree says Munro’s move to Liberty will be a sacrifice for the bank. It does, however, give Standard Bank the chance to put a black executive in charge of CIB — at a time when Absa Capital has taken flak for not doing so. He is Kenny Fihla, the former CE of Business Against Crime and comes with strong contacts from his time in the public sector. More recently, he served as CIB’s deputy CE and head of client coverage.