Liberty Holdings. Analyst day 30 November Retail SA

Transcription

1 Liberty Hldings Analyst day 30 Nvember 2012 Retail SA This dcument serves t utline key messages extracted frm the presentatins n 30 Nvember. The aim is t infrm the market and elabrate n the develpments within the Retail SA business ver the last 3 years. Strategy update Steven Braud, CE Retail executive team has remained the same since 2008 Cmbined financial services experience f mre than 197 years 2012 Perfrmance t Octber; Cntinued psitive mmentum in the business reflected in gd sales and peratinal perfrmance Strng sales f the guaranteed investment plan and living annuity prducts Lwer than expected claims and withdrawals due t the nging successful retentin prgramme Sustained imprvements in plicyhlder persistency Expense management remains gd with cst saving initiatives implemented acrss the business The current perating envirnment has varius challenges; Uncertain ecnmic cnditins Lw interest rates Cnsumer affrdability impacted by higher service csts (fuel, rates, electricity) Cmpetitrs adapting fast Regulatry changes TCF and RDR Retail statistics at June ,5m plicies in-frce (ECM: ) and apprximately new plicies (ECM: 65,900) Biggest cntributr t earnings 76% f Grup nrmalised perating earnings permanent emplyees as well as tied agents Largest areas are; Retail Operatins and Sales and Distributin Critical skills areas Retail Actuarial Slutins; Prduct Develpment Market share mvements at June 2012 Ttal new business market share 19% New recurring premiums were up 20% Single premiums up 27% acrss all investment prduct lines 35% increase in annuities Risk new business 23% On an indexed basis, Liberty s market share was up by 1.3% All market segments have grwn since 2005, with the emerging middle market (R3,000 R10,999) grwing by 33% Ppulatin prjectins fr the emerging middle market (R3,000 R10,999) segment shw cntinued grwth f 46% frm 2012 t 2020 The prduct set fr Retail is fairly diversified acrss the business; Embedded prducts sld thrugh the Bancassurance arrangement with Standard Bank Funeral plan, Hme Lan prtectin, Credit Card prtectin, Persnal and Micr-Lan prtectin, Vehicle finance prtectin Risk prducts sld thrugh independent and tied brkers include Death, Disability, Dread disease, Incme prtectin, Educatin Investment prducts sld thrugh independent and tied brkers include Investment builder, Investment Plan, RA Plan / Preserver, Life Annuity & Flexible Annuity, Evlve

2 ECM prducts sld thrugh call centres and wrksite agents Funeral plan, Life Cver plan, Accident plan, Investment plan The Bancassurance relatinship with Standard Bank is a key cntributr t the bttm line with Liberty s share f value-in-frce cntracts at June 2012, R1,2bn 3 channels include; Embedded business Liberty s life licence is used, prducts are integrated in bank s systems and prcesses. Prfit share 90/10 fr the Bank/Liberty Advisry business/ SBFC Bank appinted cnsultants sell Liberty s insurance, investment and health prducts thrugh persnal engagement. Prfit share 50/50. Transactinal business Launched Nvember 2011, sale f insurance prduct n a single sale basis, nt linked t a bank prduct. Administratin prvided by Liberty, branch infrastructure and staff are used t access custmers. Prfit shares range between 50:50 and 65:35 depending n sales and amunt f wrk dne 2013 fcus areas Market and cnsumer Cntinue develpment and delivery f the Investment radmap Cntinue t innvate in risk space Deliver innvative digital slutins Grwth Increase penetratin in ECM Cntinue grwing ur market share in traditinal markets Earnings enhancement Manage csts Imprve peratinal effectiveness Distributin OYL Rewards start build f next phase f the prgramme Capacity, prductivity and quality ECM Lindi Dlamini, CE Perfrmance fr the first 10 mnths f 2012 Indexed new business increased 54% cmpared t 2011 Pleasing sales perfrmance benefited frm; Imprved distributin channels Enhanced prductivity in the call centre Increased manpwer in tied channels Gd cntributin frm supprting brkers Strategy review The ECM strategy aims t psitin Liberty as a credible cmpetitr with a significant presence in the emerging middle incme segment Key milestnes have been reached in executing strategy with significant imprvement in value f new business The grwth f the emerging middle segment cntinues t be fuelled by demgraphics presenting an pprtunity fr ECM t grw in the future The ECM team has been challenged t at least duble market share in the medium term Market verview All market segments have grwn since 2005, with the emerging middle market (R3,000 R10,999) grwing by 33% Ppulatin prjectins fr the emerging middle market (R3,000 R10,999) segment shw cntinued grwth f 46% frm 2012 t 2020 The ECM segment is relatively yung and living in metrplitan and rural areas

3 The ECM segment has varying attitudes and behaviurs The varied needs f these cnsumers can be satisfied by develping distinct value prpsitins What is the current frmula fr success in the industry Effective participatin in ECM financial services is based n certain general qualifiers Trusted and visible brand Innvative and flexible slutins Extensive custmer tuch pints Reliable and cnsistent service Mney cllectin Systems Tangible value-added services Strategic partnerships Regulatry update Industry players will need t develp strategies t respnd effectively t ptential risks t grwth resulting frm ptential refrms Strategic path fr grwth Invest in distributin Increase number f tied sales agents Invest in sales training academy fr Financial Advisers and Sales Management Invest in brand and marketing Develp a distinct ECM brand psitining Invest in strategic partnerships with key stakehlders and affinity grups Implement cntrlled lcal market initiatives Implement reginal CSI prgrammes Invest in custmer service capability Increase number f client servicing centres Review servicing mdel and custmer experience design Design distinct financial services and lifestyle-riented slutins that address life-stage needs Cnclusin Liberty intends t invest in additinal resurces in the next few years t develp a significant presence in the emerging cnsumer market Establish an extensive distributin ftprint and prduct range Develp a highly visible and trusted brand that resnates with emerging market cnsumers Differentiate by adapting prducts and services t evlving needs f custmers in the segment Adpt practices that will ensure grwth f a significant base f quality custmers Increase ECM prfitability resulting in a meaningful cntributin t the grup Capital David Jewell Liberty participated in the FSB s secnd quantitative impact study (SA QIS2) sl entity and grup submissins (fr all life entities) QIS2 is mre clsely aligned t Liberty s internal ecnmic capital mdel Areas we believe require mre wrk are: Treatment f transfer tax Credit risk (e.g. requirement t hld capital against credit risk in exchange traded instruments) Treatment f insurance participatins at sl level Cnclusin Jurney t increased sphisticatin f risk and capital management well advanced Enhanced actuarial capability central t this:

4 Mre frequent and timely management infrmatin Strnger actuarial analytics Life license ratinalisatin shuld strengthen capital psitin, and will reduce cmplexity and realise peratinal efficiencies Well psitined t meet future SAM requirements Sales & Distributin Jhan Minnie Sales and Distributin strategies are centred arund creating value Sales Capacity + Sales Prductivity + Prduct Mix + Cst f Distributin + Quality f new business = VONB cntributing t the Value f in-frce bk A Diversified Multi-Channel Distributin Mdel Highlights f 2012 Mre than 50% f grwth in cmplex risk cases frm intermediaries wh sld n risk in 2011 in the first six mnths Pleasing perfrmance frm higher risk business sales, and strng guaranteed investment plan and annuity business ~ at Octber 2012 Indexed new business up 19%; Recurring new business up 23% t R3 billin; Single premium new business up 12% t just under R12 billin. Market first prduct innvatin including; Whle f Life disability and Flexible Annuity with unique incme enhancer benefit launched in 2H11 Liberty Evlve launched in September H11 was a recrd half, therefre fcus n sales prductivity and prduct innvatin was key fr 2012 Liberty has a diversified multi-channel distributin mdel Custmers have different purchasing preferences; RDR legislatin may change histric trends; Channels have different cst structures & peratinal leverage Independent Brkers; Liberty emplyees (Brker Cnsultants) wh service independent financial advisrs SBFC; Independent financial advisrs emplyed by Standard Bank n Bank infrastructure Entrepreneurs; Tied financial advisrs within a Franchise infrastructure Agency; Tied financial advisrs within Liberty infrastructure Intrductin f RDR in SA FSB intends perfrming a detailed review f Retail Distributin befre amending remuneratin in islatin Sme f the anticipated changes include: All cmmissin n retirement and savings business t be banned and replaced by client negtiated advice fees Cmmissin n risk business t remain largely upfrnt Changes t cmmissin n replacement risk business Intrductin f definitins f independent and restricted advice Clser alignment f remuneratin between IFA s and Tied agents Fcus Areas Fcus n Quality f Brker Supprt base AQC Average and abve. With an increased Brker base writing better quality business will lwer cst f acquisitin Fcus n Level f Supprt, 80% Retentin and Strategic Acquisitin deals In 2012; fcus n the Brker supprt base, 2200 Supprting Brkers

5 Liberty Frank Schutte 2013 & 2014; Fcus n Retentin f Supprting Brkers 80% Retentin, 2000 IFA s 500 SBFC Supprters Innvatin is aligned t Liberty s strategic framewrk The develpment f the QlickView system was in respnse t the requirement t manage custmer data, intermediary data and plicy data fr an Integrated Business Intelligence platfrm The system helps the management f intermediaries thrugh the Advisr Dashbard (AQC), which rates advisrs accrding t the size f their bk, new business, lapse rates and regulatry scres The system has dramatically imprved lapse & withdrawals rates because f the granular ability t view current and day t day intermediary infrmatin Custmer segmentatin is pssible by regin The Financial Advisr Value prpsitin is designed t attract and retain the desired quality f FA; Dependent n the Life-stage f the FA; Hlistic nt just abut remuneratin; Value f prpsitin received is aligned t the value created (AQC) Excellent & Gd Intermediaries: 710 Mre cmpetitive prduct pricing; Preferred access t limited capacity prduct; Mnthly prfit share based n the size f their in-frce bk (tied nly); Pririty Servicing Average & Marginal Intermediaries: Small prfit share payment based n the size f their in-frce bk (tied nly) Pr Intermediaries: 530 Managed up r ut Liberty wants t attract prfitable market share, and dispse f unprfitable market share Prduct innvatin Liberty has been the leading innvatr f insurance prduct in the past 36 mnths; Prducts are infrmed by custmer needs, s aligned t TCF Flexible annuity prduct launched t mitigate against lngevity risk Evlve prduct launched t prvide cst effective slutins in a lw interest rate envirnment Cntinually wrking t imprve prduct margin, attract prfitable market share & dispse f unprfitable market share; Custmer experience First in SA t ffer finger prick HIV tests & Urine ctinine tests, rather than full blds; Reduced the length f ur risk applicatin frm by 40%. Reduced the length f plicy dcument by 80% Tele-underwriting, Nurses n the Rad Welcme call t new custmers gives rise t a massive increase in persistency in first year; Imprved custmer self service capability nline; Technlgy enablement can be a key differentiatr if applied well Liberty launched the ipad applicatin in Nvember 2012 Marketing and activatin is key t engagement with the sales frce Own Yur Life Rewards Jhan Cetzee Reasns fr the rewards prgramme Attract and Retain Intermediaries Attract and Retain Clients Reduce Churn Mre Cmpelling Prduct Range Liberty Health inclusin

6 What is the prgramme abut; Lifestyle Prgramme Discunts and savings Relates t current spending and easily accessible and beynd instant gratificatin Fees: R129 fr a single member, R189 fr a family (2 adults & 2 children), R70 additinal child dependant Partners include benefits in; travel, shpping, fitness, leisure, educatin, living and family time Successful launch t 3700 Tied and independent advisers and staff in September new beneficiaries (4 673 principle members) as at 16 Nvember advisers have registered 80 active partner benefits gd pipeline f future partners Operatins running well Mbile applicatin released in December 2012 Retail IT & Ops Len Diest (presented by Jhn Maxwell) There are five peratinal areas within IT & Ops that underpin the supprt f the Retail business Prduct peratins 19% f ttal staff Medical services, underwriting, claims, reinsurance Custmer peratins 23% f ttal staff Campaigns, retentin, service, engagement, assurance Intermediary peratins 13% f ttal staff Reginal peratins, new business, servicing, prcessing Technlgy slutins 19% f ttal staff Strategy executin, prgramme management, technlgy build, peratins Supprted by the shared peratins 26% f ttal staff Cllectins, disbursements, administratin, cntact centre, IT services, managed services Areas f fcus Outside-in aligned prduct peratins Open fr business as a benchmark in the insurance specific disciplines End-t-end accuntable custmer service Able t cmpete against nn-traditinal cmpetitrs Empwered regins & intermediary servicing Leverage clser relatinship with sales & distributin Innvative IT slutins delivery Mve the business engagement upstream Managed services and shared peratins Cst f peratins as a differentiatr Strategically managed legacy prducts Reduce the business and systems cmplexity f the legacy envirnment Custmer strategy access cnnect deliver Access Our custmers can get hld f us whenever they want thrugh their cmmunicatin channel f chice Cnnect Cnnect with ur custmers thrugh meaningful interactins that ges beynd a transactin Deliver Listen carefully, respnd t the custmer's need, and fllw thrugh until it is dne Shared infrastructure

7 C-lcate; cre cntact centre staff in the same lcatin. Cnslidate; integrate business prcesses per lgical flw f business. Integrate; prcess and technlgy t better enable the agents. Lking ahead Outside-in aligned prduct peratins Fcus mre n the service side f the value chain End-t-end accuntable custmer service Implementatin f ur access-cnnect-deliver strategy Empwered regins & intermediary servicing Migrating remaining channels int the new mdel Innvative IT slutins delivery Technlgy as a surce f simple innvatin Managed services and shared peratins Next phases f ur managed services and cntact centre initiatives Strategically managed legacy prducts Drive select prduct migratin f legacy platfrm