Both Liberty and MMI are paying lip service to the back-to-basics approach. Liberty CEO David Munro, who was parachuted in by controlling shareholder Standard Bank last June, says there will be no acquisitions on his watch, at least for another couple of years. He has pulled the plug on the ambitious Nigerian life insurance acquisition, where negotiations have been taking place for three years. This, he says, was driven as much by the need to keep management time focused on local needs as by the cost. The capital involved was just another consideration. Liberty is certainly well covered with a 2.92 capital adequacy ratio, or almost three times the minimum required capital. It will probably be the easiest of Munro’s tasks to maintain this, especially with the freeze on acquisitions. But Liberty is not prepared to follow the example of new MMI CEO Hillie Meyer, who plans to buy R2bn of shares instead of paying dividends. Both life offices trade at a 20%-25% discount to embedded value ...

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