Liberty Holdings delisted from the JSE in March after majority shareholder Standard Bank bought out minorities in order to integrate the insurance giant into the banking group.
That process saw Liberty’s former CEO David Munro rejoin Standard Bank as the executive responsible for overseeing the integration of the insurer into the bank’s operations. As a consequence, Liberty appointed former financial director Yuresh Maharaj as its new CEO.
Business Day asked Maharaj about some of the challenges he has faced at Liberty, as well as how the insurer will be integrated into Standard Bank’s offering. Here’s what he had to say:
Q: What have been the challenges since you started your career at Liberty and how have you dealt with them, having been part of the management team?
A: Market conditions were tough, and Liberty was experiencing many challenges when I joined the board as financial director in February 2018. The business was not where it should have been and, in a nutshell, needed to be more responsive to changing customer behaviour and market conditions.
We implemented a turnaround strategy focused on improving profitability by increasing the value of new business, aligning our cost structures, and improving investment performance. We also focused on improving our risk and governance oversight across the business.
We spent significant time refining our purpose and getting the business basics right. We made great strides improving our client and adviser experience and repositioning the business from inward looking to external with a client-centric lens.
Q: Tell us about how Liberty is being fully integrated into Standard Bank?
A: Liberty and Standard Bank have always enjoyed a special relationship and this transaction represents the culmination of this relationship over the years. Standard Bank clearly sees the value that Liberty can bring to their business strategically as a life insurer and asset management business.
We believe in the strong prospects of Liberty’s business as a fully-owned subsidiary of Standard Bank, with greater opportunity for Liberty’s growth and investment. This will be to the benefit of customers and policy holders, employees, and Standard Bank shareholders.
Q: Will Liberty be renamed now that it has delisted and been fully integrated into Standard Bank?
A: Liberty will continue to operate under its own brand and logo.
Q: A lot of critics have questioned the wisdom of Standard Bank pinning its hopes on what is perceived as a somewhat outdated bancassurance model with the buyout of Liberty minorities? What is the rationale for integration into what is already a pretty large and unwieldy organisation given that so many insurers seem to be streamlining their businesses by focusing on digitisation?
A: Standard Bank group and Liberty have co-operated at arm’s length through a highly successful and valuable bancassurance arrangement for a number of years. This transaction is, however, much broader than bancassurance and represents a natural progression in this relationship by increasing the ability to collaborate to provide the best financial service offerings to clients through the most efficient means.
We believe that integrating Liberty fully into the greater group will facilitate the creation of a united and formidable competitor in financial services in Africa with scale.
Standard Bank group’s banking, private client asset management and short-term insurance capabilities will complement Liberty’s strength in long-term insurance and asset management, and this will enhance the competitive position of Liberty’s adviser force in the market. Liberty will be part of a larger and stronger entity and Standard Bank will benefit from capital efficiencies after this transaction.
Q: Wouldn’t the Old Mutual and Nedbank separation suggest that the old bancassurance model is not where the financial services industry is heading?
A: There are numerous examples of successful banking and insurance collaborations, both within the SA market and markets abroad, including groups only recently moving in this direction. Standard Bank group and Liberty’s close integration, as a fully owned company, will lead to superior propositions and performance in the years to come.
Q: Liberty has said it needs to transition from a legacy seller of products that is focused on closing transactions to a more digitised insurer focused on meeting client needs? How do you achieve this when you are integrating into an almost 160-year-old bank that is already quite bureaucratic?
A: Both Liberty and Standard Bank are aligned in terms of utilising the benefit of digital technology to advance strategies to improve client experience. This transaction will enable Liberty to benefit from the scale of Standard Bank, which is a critical component of any digital platform strategy. We will continue to transform from a linear value chain business to a platform-based business.
Q: The Liberty management team has implemented a turnaround strategy that sought to anchor Liberty onto its core SA market. However, with the Standard Bank integration looming, surely one of the big growth options for Liberty will be to roll out more of its products via Standard Bank’s extensive presence in the rest of Africa?
A: Yes, our SA business has required a significant amount of management time and attention to ensure an improved performance. Liberty is now in a much stronger position and will be able to leverage off Standard Bank to pursue growth opportunities in Africa.
Q: Liberty of course has its own legacy given that it was founded way back in 1957 by the late Donald Gordon. Can you give readers a picture of the Liberty of the future? What sort of insurer are you trying to build given the integration with Standard Bank?
A: Liberty’s strategy is to become a human-augmented platform business whose purpose is to make its clients’ financial freedom possible. The integration of Liberty into Standard Bank Group enhances our ability to meet our clients’ financial needs, making possible holistic advice and competitive solutions for them, especially during major transition points in their lives.
Q: One of the potential unintended consequences that has been flagged with the Standard Bank-Liberty merger is that the parent could end up resembling a holding company that owns a bank, an asset manager (Stanlib) and an insurer (Liberty). That could see it trading at a discount to the value of its underlying constituents. Is this something that has been considered?
A: We believe this transaction will unlock significant value in the long run for stakeholders. We are creating a more united group that will bring our banking, insurance and asset management businesses much closer together to create something really special. This will be a whole that will be much greater than the sum of its parts.
Q: Liberty has said that while it will become more digital in future, there will still be a place for traditional brokers. How do you intend to manage this?
A: Our business is an intermediated business. We want to be there for our clients in their time of vulnerability and help them make their dreams and aspirations true. Liberty will always be a people-centric business and our advisers are critical to our business. Our strategy is to be a digitally-led human augmented platform business where we can enable both our advisers and clients to have better service and experience through digital technology.
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