Health and life insurer Discovery Holdings reported a 43% leap in headline earnings for the six months that ended on December 21, 2004.
Headline earnings swelled from R134-million to R191-million, resulting in headline earnings per share increasing on a diluted basis from 26,4 cents to 35,7 cents.
The group’s embedded value burgeoned to R8-billion — a whopping 27% growth. Diluted embedded value per share rose 26% to R14,71, from R11,67 in 2003.
This was achieved along with a significant investment in the start-up of PruHealth and the DiscoveryCard during the period. There were particularly strong performances from Discovery Life and Destiny Health in the United States.
New business growth saw annualised recurring income rising 34% to R1,957-billion. Growth was strong in all divisions, including Destiny Health, where it rose 116% in US dollar terms, contributing R409-million to the overall new business figure.
“This has been a period in which strong organic growth has driven new business to record levels,” says Discovery CEO Adrian Gore. “At the same time we have seen significant progress in our new ventures and these will create platforms for future growth.”
The United States operation, Destiny Health, achieved excellent growth. It reduced its losses in the period to R39-million, from a previous R79-million, and turned profitable in January this year, with a $260Â 000 (R1,6-million) operating profit for the month.
A key contributor to Destiny’s profitability has been the South African back-office operation, which gives Destiny access to the cost efficiencies of the local Discovery operations. Furthermore, over 200 jobs have been created in South Africa, according to Gore.
Destiny benefited from growth in lives covered — membership grew by 81% to 51Â 473, from a previous 28Â 449. In addition, the joint venture with Guardian Life performed ahead of expectation.
“Destiny has met all of its targets in terms of expansion, membership and profit,” says Gore. “It now makes up 21% of all new business for Discovery. Destiny is well placed in three important US markets and we are evaluating further expansion in late 2005.”
Domestically, Discovery Life was once again a star performer, contributing R191-million to overall group operating profit of R330-million, an increase of 82%.
Discovery Health turned another solid result, with annualised recurring new business income rising 26% to R1,175-billion. Operating profit was R249-million, an increase of 15%, thanks to increased membership and improved administration efficiencies. ‒ I-Net Bridge