(Bloomberg) -- David Munro, the new chief executive officer of Liberty Holdings Ltd., said he’s prepared to make tough decisions to improve the insurer’s performance after first-half profit dropped 15 percent.
“We will not shirk from the necessary decisions needed to equip Liberty to do better in this difficult and highly competitive environment,” Johannesburg-based Munro said in an email on Friday. “We have prioritized initiatives to make an immediate impact on our service to customers and financial performance.”
First-half net income dropped to 1.54 billion rand ($115 million) from 1.81 billion rand a year earlier, the insurer said in a statement. The value of new business sales fell 66 percent to 86 million rand even as volumes rose, while earnings at Stanlib, Liberty’s asset-management firm, declined.
Munro took the helm of the insurer controlled by Standard Bank Group Ltd. in May after the abrupt departure of former CEO Thabo Dloti following a disagreement with Liberty’s board. Munro, formerly Standard Bank’s head of investment banking , stepped in shortly after Liberty, a financial services group with operations across Africa, saw its 2016 earnings plunge more than analysts had expected. Since then, the South African economy has fallen into recession and its credit ratings have been cut to junk.
“The results for the six months reflect difficult market conditions and the challenges we face as a business,” Munro said. “While these results are disappointing, our sales volumes and net cash inflows are showing positive growth.”
Liberty’s shares swung between gains and losses before trading 0.8 percent higher at 113.15 rand as of 9:27 a.m. in Johannesburg, giving the company a market value of 32.4 billion rand. The stock has gained 1.9 percent this year, the worst performer in the five-member FTSE/JSE Africa Life Assurance Index after MMI Holdings Ltd.
To boost the value of new business, which is one of the insurer’s priorities, products more akin to customers’ needs have and will be introduced, while expenses will be tightly managed, Munro said. At Stanlib, which suffered “operational write-offs,” the equity franchise is lagging and Munro’s team is working closely with the leadership of that unit to try and improve portfolio managers’ performance, he said.
“It’s too early to say if the second half will show an improvement,” Munro said. “The macro-economic situation in South Africa is the single biggest determinant and it’s beyond our control. But we are resilient and well capitalized and we’re working hard to restore Liberty’s performance.”
In June, the new CEO worked on handing over his old job to Kenny Fihla at Standard Bank and meeting people at Liberty to get to know the business better, according to Munro. “I have been listening and learning and understanding and getting to grips with life insurance and asset management,” he said. “I couldn’t tell you if the outside world has been warm or cold.”