DISCOVERY delivered a robust performance in the six months to December 31, 2021 as it pursued a dual strategy of navigating the pandemic and working on growth, while paying out R3.4 billion in Covid-19 claims.
In a trading statement on Friday, the company said normalised profit from operations was expected to increase by between 5 percent and 10 percent compared to the six months ended December 31, 2020, while normalised headline earnings (NHE) were expected to increase by between 20 percent and 30 percent.
Core new business API (Annualised Premium Income) increased by 6 percent compared to the prior period.
The six months included the end of the Covid-19 Delta third wave in South Africa, in the latter part of September, and the start of the Omicron variant towards the end of November.
Discovery continued to support South Africa in its vaccination rollout across its vaccination sites. The third wave led to a significant number of deaths in South Africa, while the fourth wave was characterised by a considerable number of new infections, but with less severe clinical outcomes compared to the other waves.
R3.4 billion in Covid-19 claims (gross of reinsurance) were paid in the six-months period − the highest throughout the pandemic − the earnings impact was limited, as previously raised provisions were adequate.
Liquidity and solvency remained strong. New business trends in South Africa and the UK improved and persistency continued to exceed expectations. Discovery Bank’s performance exceeded expectations, including client acquisition, revenue per client and the performance of the advances book.
Discovery Health performed robustly with new business growth.
Discovery Life performed robustly with strong positive experience variances, particularly lapse experience, while capital and liquidity positions remained robust. Provisions were sufficient for claims paid in the reporting period, and the group believed its remaining provisions were sufficient to withstand a potential fifth wave of the corona virus. This was supported by high levels of vaccination among its clients and natural immunity.
Discovery Invest saw a strong increase in new business growth.
Discovery Insure had a difficult period, characterised by an increased loss ratio driven by adverse weather events combined with motor parts inflation dramatically exceeding CPI.
Vitality Group delivered strong underlying growth, with growth in profit from operations impacted by foreign exchange gains.
PAH delivered robust profit growth, with increased scale, improved lapse experience and tight expense management. New business written premium reduced by 21 percent, primarily due to a rebasing of the co-operation with Ping An Life for business written in certain regions in China.
Group headline earnings per share (heps) were expected to be between 70 percent and 80 percent higher to between 476.5 cents and 504.5 cents, compared to the reported heps (basic) of 280.3 cents for the prior period.
edward.west@inl.co.za
BUSINESS REPORT ONLINE