Thabo Dloti. Picture: MARTIN RHODES
OPPORTUNITIES: Liberty CEO Thabo Dloti says the group wants to expand in Africa through partnerships. Picture: MARTIN RHODES

INSURER Liberty is looking to acquire stakes in private equity businesses as part of its strategy to bolster the capabilities of its asset manager, Stanlib.

Liberty is also looking at opportunities to enter the short-term insurance market in SA by offering products to small and medium enterprises and medium-sized corporations.

"For years, we have been trying to build private equity franchises in our business, but we found it difficult to attract talent. We now believe it will be easier to buy stakes in existing entities," Liberty CEO Thabo Dloti said on Friday after the release of the company’s full-year results.

"We are finding there are a lot more ears listening to what we are saying. We are in talks with entities we believe we can partner with. We hope we can announce something soon."

Mr Dloti said Liberty was looking to team up with private equity companies with a pan-African exposure. There was a lot of demand from institutional clients to invest in alternative asset classes in Africa.

On offering short-term insurance in SA to small and medium-sized businesses, Mr Dloti said it was likely that Liberty would do so through a partnership.

"We are exploring short-term insurance solutions for small to medium-sized corporations. We need to think carefully on whether we should build the capability in-house or how to partner. Obviously, by the end of this year we will have clarity," Mr Dloti said.

Liberty, which is majority-owned by Standard Bank, already has short-term insurance capability in the rest of Africa and sees a lot of growth opportunities. Last month, Liberty entered Uganda’s general insurance market by buying a 51% stake in Madhvani Group’s short-term insurer, East African Underwriters.

Liberty has a presence in 16 African countries and provides health, life and short-term insurance, and investment products to individuals and businesses.

But the group has had some challenges in making its health business profitable. Mr Dloti said the focus was on growing the health division in the rest of Africa. He did not see much growth in SA for its health business and was looking at ways to reorganise the model domestically to be more competitive.

Liberty reported a 7% rise in BEE-normalised operating earnings to R2.7bn in the 12 months ended-December last year. BEE-normalised headline earnings, which exclude certain one-time items, and take into account the effect of its black shareholder scheme, is Liberty’s main performance measure.

The individual arrangements unit, which offers retail insurance and investment products, grew earnings 11% to R1.87bn in the period under review. Earnings in the group arrangements division — covering Liberty Corporate, Liberty Africa Insurance and Liberty Health — rose 13% to R225m. The health business was unprofitable, but narrowed its losses to R19m from R30m in the 2014 financial year.

Earnings at Stanlib fell 7% to R616bn and Libfin Markets grew earnings 18% to R260m.

Commenting on the group’s earnings, one analyst said: "They had good numbers, that’s for sure. I was expecting flat earnings so they beat expectations."