Discovery full-year profit up 24%

South African health insurer Discovery reported a 24% rise in full-year profit on Thursday, helped by a slow recovery in Africa’s largest economy, and said it was positioned for further growth.

Discovery, South Africa’s biggest health insurer and third-largest life insurer by market value, said headline earnings per share totalled 277,7 cents in the year to end-June, compared with 224,1 cents in the same period a year earlier.

Shares of the company rose nearly 2% following the results.

Discovery said in August it expected full-year earnings to increase by 20% to 30%.

Discovery also said last month it would pay about $29-million for a 20% stake in a joint venture with China’s Ping An Insurance, to tap into rising demand for insurance in the Asian country.

Revenue totalled R7,86-billion, compared with R5,19-billion a year earlier.

South African insurers were hit hard by the economic downturn in 2009, as debt-laden customers lapsed on policy payments, while the decline in equity markets hit investment portfolios.

Insurers have begun to mount a slow recovery, but are cautious on their outlook as unemployment and household debt levels remain high in South Africa.

Discovery also faces tougher competition at home. Smaller rival Metropolitan is due to merge with unlisted firm Momentum, in a deal that will displace Discovery as South Africa’s third-largest life insurer.

Discovery said it was “strongly positioned” for future growth and profitability.

Headline EPS is the main gauge of profit in South Africa and excludes certain one-time items.—Reuters

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