South African health insurance firm Discovery said on Tuesday its loss-making United States unit Destiny Health would quit the US retail insurance market.
Discovery said Destiny would continue to market its Vitality product to employer groups and health plans, but would transfer its insured block of business to a health insurance carrier, which would start operating it from April 1.
Discovery said in a statement Destiny’s US staff would be significantly cut, and it had estimated a provisional cost of $25-million to $30-million to run off the business over the next 18 months.
It gave no details of how many staff would be affected.
Discovery said it had taken the decision because Destiny was paying a much higher price for the healthcare of its members than its competitors.
Discovery also has a 50/50 venture with United Kingdom life insurer Prudential, called PruHealth, which it said had made progress towards achieving profitability.
Discovery also reported on Tuesday a 14% rise in diluted headline earnings per share of 74,9 cents for the half-year to December. Headline earnings per share is the key profit gauge in South Africa, and strips out non-trading, capital and certain extraordinary items. — Reuters