South Africa’s Liberty Sees Full-Year Loss on Pandemic’s Fallout

Liberty Holdings Ltd. expects to report a loss for the year ended in December after the Covid-19 pandemic hammered its insurance operations in South Africa.

The company created what it called a pandemic reserve of about 3 billion rand ($207 million) to honor client claims and saw investment returns from its shareholder investment portfolio fall. These and other factors led to a loss in the first half of 2020.

The virus shock came as Liberty was progressing with a turnaround plan that Chief Executive Officer David Munro, a career investment banker, set in motion in 2017. While losses narrowed in the second half as investment returns improved, Liberty still expects to see headline earnings per share decrease by more than 100%, it said in a statement on Thursday.

Liberty is one of few South African finance firms to have suffered a loss because of the nation’s coronavirus outbreak. The company said in August it struggled to add customers and win new business as advisers were unable to make face-to-face sales during the strictest period of the country’s lockdown.

Its controlling shareholder Standard Bank Group Ltd. said in November it expects a decline in earnings of more than 20% for the year since it also faced pockets of pressure in its retail banking business as customers came under growing financial strain.

Liberty Urges South Africa to Unlock Economy Soon to Save Jobs

Liberty continues to remain well capitalized within its target range of 1.5 to 2 times “after taking account of the operational and investment market impacts of the pandemic and the establishment of the pandemic reserve,” it said.

©2021 Bloomberg L.P.

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