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Liberty reports R2.2b loss amid pandemic, but 'capital ratio remains strong'

5 August 2020 7:53 PM
Tags:
SA Economy
The Money Show
Bruce Whitfield
Insurance
Liberty
Liberty Life
David Munro
Coronavirus
Lockdown
COVID-19

Liberty's David Munro tells The Money Show its R3b pandemic reserve shows the insurer 'truly living out its purpose'.

Financial services group Liberty has reported a loss of R2.17 billion for the first six months of 2020, in line with its forecast in July.

It had warned shareholders of an expected headline loss of R2b - R2.4 billion.

The life insurer earmarked R3 billion (before tax) for the "excess mortality" claims it expected, to cushion the company from the fallout of the Covid-19 pandemic.

A YouTube screengrab shows Liberty CEO David Munro who addressed the media on 17 June 2018, after Liberty Group's system was hacked.

CEO David Munro explains that Liberty Holdings envisaged four scenarios with varying health and economic implications, ranging from a "ruthless" lockdown to a situation similar to the one South Africa is in now.

You have a high level of infections being reported - we saw a massive escalation in the last six weeks - but actually what that is reflecting, is that there are really a significant level of other people that are either asymptomatic or that have got some level of infection that hasn't really affected their health badly...

David Munro, CEO - Liberty

What we need to model as an insurer like Liberty is what's the mortality consequence and what's the retrenchment consequence - that's the balance.

David Munro, CEO - Liberty

The R3-billion reserve that was earmarked is patently "not the right number" he says, but it's the company's best estimate, modelling in predicted deaths and job losses.

We're working with imperfect information and we're trying to understand how this will transpire in the next 18 months, and that's what the pandemic reserve is designed to try and absorb for us.

David Munro, CEO - Liberty

This is what we call a plausible best estimate of what we think will transpire.

David Munro, CEO - Liberty

In terms of our analysis of we're pretty much following the same trajectory as one can see from the Medical Research Council data and that shows... since the 6th of May, excess deaths in South Africa have accumulated to another 22,000...

David Munro, CEO - Liberty

There's quite a significant lag between the rate of infection, the steady increase in mortality and then the claim coming through to us.

David Munro, CEO - Liberty

We haven't yet seen a significant increase in the number of claims in our 'lifestyle protector book', but we have seen it in our 'funeral book'.

David Munro, CEO - Liberty

He describes the pandemic reserves as the company truly living out its purpose - "to be there for people at their most profound moments of human vulnerability"

So, setting aside the money isn't really about the money at this point in time for us, it's actually about living out the purpose of the organisation.

David Munro, CEO - Liberty

Munro notes that Liberty's capital ratio remains "very strong".

For more detail, listen to the discussion below:


5 August 2020 7:53 PM
Tags:
SA Economy
The Money Show
Bruce Whitfield
Insurance
Liberty
Liberty Life
David Munro
Coronavirus
Lockdown
COVID-19

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