Liberty Drops Most Since 2009 as Profit Falls More Than Expected

JOHANNESBURG (Capital Markets in Africa) – Liberty Holdings Ltd. slumped the most since April 2009 after the South African insurer said full-year profit tumbled more than analysts expected.

The stock slid almost 12 percent to 109.90 rand as of 3:05 p.m. on Friday in Johannesburg, the biggest decline of 162 securities on the FTSE/JSE Africa All Share Index. Volumes traded in Liberty soared, reaching 2.7 times the daily average over the past three months. Earnings per share for 2016 dropped 40 percent to 60 percent from a year ago, Liberty said in a statement. That compares with a median estimate of four analysts for a decline of 2 percent, according to data compiled by Bloomberg.

The insurer, controlled by Standard Bank Group Ltd., said it was hit by weaker returns on investments, gains in the rand against the dollar, and a write-down of infrastructure holdings in its alternative portfolios. It also experienced higher risk claims and costs related to the reorganization of its South African and East African asset-management business, and had to take accounting charges for the consolidation of a property unit listed on the Johannesburg bourse.

“Liberty hasn’t diversified its business very successfully and it’s struggling with its health business,” Tracy Brodziack, head of research at Old Mutual Equities, said by phone from Cape Town. “There were clearly persistency issues.”