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Munro’s brand of evangelism pays off

Liberty’s full-year results reflect the benefits of single-minded focus.

If Liberty CEO David Munro sounded positively evangelical while presenting the company’s annual results to analysts yesterday, it’s because he is.

“Liberty is on the move, and we have to have leaders who are confident and believe in what we do. I’m an old banker, but this business has caught my imagination,” he says.

To illustrate, he adds that Liberty paid out R7 billion worth of death and disability claims in the last year, 11% more than in the previous year. “This reflects the moment of truth, showing that when people are suffering, when they need us, we are there to honour our promise. It may only be money, but I think it’s important to show that.”

The company has come a long way since Munro joined in May 2017. In the same year, he and his team presented their Operation Refresh vision, which aims to bring the business back to its roots – namely the South African insurance and asset management operations, and life has been lived at a gallop since then.

Evidence of progress was visible in the results for the six months to June, but this was “not good enough,” according to Munro at the time.

On the road to recovery

“We had a lot of people focused on inconsequential things. What was critical was regaining a single-minded focus on the Liberty SA business, on the asset management business and the golden thread that connects them – that is the key. Being really connected to your purpose is how you get people to deliver. We have now made that strategic shift and put foundations in place. But it’s not the end game yet.”

There are two numbers that suggest that Munro is succeeding in restoring trust and credibility in both Liberty and Stanlib: Firstly, normalised operating earnings increased 42% to R2.06 billion, which reflects improved operational performance in the SA insurance and the Stanlib SA businesses.

And secondly, strong cost discipline together with product and margin enhancements resulted in a 59% improvement in the value of new business (VoNB) to R371 million, with margin improvement to 0.9% from 0.5% in 2017.

“I can’t promise a 42% increase in operating earnings every year, but these numbers, in particular, the new business number, suggest that the turnaround is taking place,” Munro says.

Rahgib Davids, investment analyst at Kagiso Asset Management agrees that the recovery of new business margins and strong growth in the value of new business written is positive. This was supported by a combination of good cost control and a pickup in sales growth in the second half of 2018 (impressive in a tough SA operating environment).

The company is making progress on its four measurable targets, which were set using December 2017 as a target and December 2020 as the goal. In only one case, capital adequacy is within range, but Munro is not stressed. “That is fine. We didn’t say we would get there in a year. The beauty is that we have clear priorities, clear focus and the momentum to get there.” 

Source: Liberty

In line with its single-minded focus on the SA insurance and asset management businesses, several assets are up for sale. “Running a company across multiple geographies brings complexity and distractions,” says Munro. “We don’t have the resources to get these businesses to scale, and in some cases even if the scale was there, the business would not be consequential to Liberty.”

These include the asset management businesses in East and West Africa, Liberty Health and Liberty Africa Insurance’s short-term insurance businesses in Malawi and Namibia. In some cases, Liberty will retain a small stake in the operation. “Africa presents attractive opportunities but requires focus and scale to succeed,” says Davids. “Right now, Liberty needs to focus on fixing its South African businesses so that they are better able to defend against increasing competition in a weak consumer environment.”

Liberty’s short-term insurance technology platform has been sold to Standard Bank. Notwithstanding the sale of the technology platform, the transaction ensures that Liberty’s short-term insurance offering will still be available to Liberty’s financial advisers in the local market.

Simple philosophy

Changing a corporate culture is a subject that has occupied the minds of human resource specialists and executive coaches for decades. Munro has a simple philosophy: “Organisations are a shadow of their leaders. You can’t change or define a culture; it lives, is organic, but is shaped by people behaviour. And that is shaped by the people who lead.

“Modern organisations are not built on the financial metrics that we show. These are merely a dipstick that reflects how well the company is operating. The bigger responsibility is the human capital – customers’ hopes and aspirations; financial advisors and their trust, and our employees and staff and their well-being.”

In other words, get that right and your financial metrics will come right too.

This year the focus will be on driving SA Retail performance and VoNB growth by delivering better client and advisor experiences, continuing to improve the investment performance of Stanlib, finalising outcomes for each of the group’s operations under review and continuing to maximise the company’s relationship with the Standard Bank Group.

A final dividend of 415 cents per ordinary share was declared, bringing the dividend for the year to 691cps.

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The facts are that Liberty’s corporate culture remains quite toxic and their market position in their core life and short-term insurances has been sideswiped by the likes of Discovery.

What’s toxic about the culture?

You could write a book about it.

To sum it up it is back-stabbing, poor internal communication, lacking of empathy and management that won’t take decisions in case something is bad and then trying to claim an idea is theirs if it turns out to be good.

Its the people.

How many jobs did Liberty put on the chopping block last year???
Much like Std Bank!!!!

Which corporate culture is not toxic.Always enjoyed interaction with Liberty management and Munro has clearly made some strides in turning things around.They have never been the strongest in the short term side and not likely to change soon.They have in the past been patient with underperforming staff.

When you look as the sheer size of Liberty, you quite simply cannot compare Discovery. Last year’s staff reduction was painful, but needed. As usual, Liberty will bounce back stronger than ever. It takes strong drive and cool headed Management to steer such a big ship back to be the best once again. Well done David. Their Short term book has just started, but is already very competitive, and well placed. Proud to be associated with Liberty for close to 30 years.

I can’t comment on their corporate culture, but as a client I don’t see how this company has a future. I’m struggling to settle a death claim on my father’s policy now for two months – only getting frustrating e-mail replies once every two weeks. No empathy, apologies or common sense. They were on his case if the premium was paid a day late. It’s tragic that when push came to shove and we needed their support, they couldn’t even give us a call…and before you ask: this was a natural causes death from someone who was a loyal policyholder for more than twenty years.

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