BIG READ | Leaner, meaner Liberty goes after middle market segment

Liberty is approaching its 70th year on a much stronger growth footing than on its 60th anniversary in 2017 after one of the most consequential decades in its history, which, among other things, saw Standard Bank take full control of the group.

Founded by the daring Sir Donald Gordon in 1957, it entered its 60^th year in turmoil and on shaky ground after a plunge in earnings, leading to the departure of CEO Thabo Dloti.

Standard Bank quickly shipped in respected executive David Munro, then head of corporate and investment banking, to steady the ship.

Steady the ship he did, handing the baton to Yuresh Maharaj in 2023 to lead the storied group into the next phase of growth. Munro led the integration of Liberty into Standard Bank following the buyout of minority shareholders in 2022 and the delisting of the company from the JSE.

The buyout has proved to be a success, with Liberty returning R16bn in dividends to Standard Bank since the transaction.

In an interview with Business Times this week, Maharaj cut a confident figure, saying the company was poised to add more value to the group.

One growth opportunity that Maharaj says Liberty has a right to win is in the middle market segment — a market the insurer wants to disrupt — on the back of its trusted brand and extensive distribution reach.

Maharaj’s bullishness finds support in data from the Association for Savings & Investment South Africa (Asisa), which has flagged a large unmet need for life insurance in the middle market segment.

The Asisa insurance gap study estimates that life insurance penetration remains low in this segment, particularly across household incomes between R8,000 and R40,000 per month. It is this market Liberty is eyeing, to increase its reach of simple life and funeral products.

“We believe this gap exists for several reasons, all of which we believe we’re best positioned to solve and meet the client’s needs. Consumer awareness of the need for life cover remains relatively low, and many households are uncertain about how to solve for this need,” Maharaj said.

“Designing products for this client segment requires carefully balancing several factors, including simplicity of the customer experience, appropriate pricing and overall affordability. With the right product design and distribution capabilities that we have, we estimate that this segment could grow to approximately R15bn of gross written premium over the longer term.”

Liberty has ended its “disastrous” foray into the health insurance business across sub-Saharan Africa after years of operating losses and a lack of competitive scale, and right-sized its rest-of-Africa portfolio to markets where it has scale and has the right to win market share.

Maharaj said they would resist being everywhere that Standard Bank is and focus on markets where they can see high returns on investment. Standard Bank is present in 20 countries on the continent outside South Africa.

For Liberty, about six of these markets are where it can extract more value for shareholders, with South Africa remaining the key market for the group.

Maharaj said the group’s approach will remain focused, with South Africa as its core earnings contributor in the medium term, while Africa regions represents a longer-term growth opportunity.

“From a market perspective, South Africa remains the anchor profit pool, accounting for more than 70% of Africa’s insurance market. However, we also see attractive longer-term growth in six African markets — particularly Nigeria, Angola, Ghana, Kenya, Uganda and Namibia,” he said.

“The medium-term growth expectations for these countries exceed that of South Africa, and the market position for IAM [insurance and asset management] in most of these priority countries is outside of the top three, creating opportunity for long-term growth.

“Our most significant insurance presence outside South Africa is in Kenya, where, as Liberty, we operate a life and short-term insurance business trading as a heritage network. We also have a strong position in Nigeria.”

Maharaj doubles up as CEO of Standard Bank’s IAM franchise, which was established in 2022 as an engine of the group’s insurance, investment and asset management capabilities.

A key cog in the business unit is the asset manager at Stanlib, headed by Derick Msibi. The asset manager was established in 2002 as a joint initiative between Liberty and Standard Bank and has since grown to be one of South Africa’s large-scale asset managers, marshalling about R800bn in assets.

The entire IAM business has in the region of R1.8-trillion in assets — with the unit having grown headline earnings to more than R4bn since its establishment, representing a 21% compound annual growth.

IAM is also looking to grow its share of the open market and scale its asset management and investment capabilities as part of the target to grow its contribution to Standard Bank’s earnings to about 15% by 2028.

The unit had since 2022 more than doubled its return on equity to 22.1% by the 2025 financial year, an outcome that is at the top end of its traditional insurer peer group in South Africa.

Business Times