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DISCOVERY HOLDINGS LIMITED
Discovery raises half-year earnings by 72%
Significant progress by start-ups Discovery Life and Destiny Health,
increased profitability for Vitality, and the group announces a methodology
to meet statutory reserve requirements for the Discovery Health Medical
Scheme
DISCOVERY, the JSE-listed health and life insurance group, has increased
attributable earnings for the six-months ending December 2001 by 72% to
R85m, and headline earnings per share by 71%.
Discovery is the holding company for four key businesses: healthcare company
Discovery Health, life insurer Discovery Life, lifestyle company Discovery
Vitality and US-based healthcare company Destiny Health.
There was substantial new business growth across all of these businesses.
The net result was a 43% increase in new business annualised premium income
to R1,2bn, and a 52% increase in gross inflows under management to R3,5bn.
Commenting on these interim results, CEO Adrian Gore said: "These results
demonstrate strength throughout the Discovery businesses. Our start-up
businesses, Discovery Life and Destiny Health, made significant progress;
while our established businesses, Discovery Health and Discovery Vitality,
continue to deliver value for our clients."
Other significant operational developments in each of the businesses are:
US-based Destiny Health, which serves the Chicago market (roughly the size
of the entire SA healthcare market) started to get traction as annualised
premium income rose from R6,1m to R118,7m. The company's product range,
modeled on the SA version, is at the forefront of the consumer-driven health
care revolution in the US health care market, and has received significant
press and TV coverage.
Discovery Life, launched barely a year ago, is now close to break-even -
ahead of the three years initially projected. The company, and its
innovative risk products, took R110m in new annualised premium income, or
nearly 20% of all new business sold by independent intermediaries in the
risk assurance market.
The Discovery Health Medical Scheme's average annual contribution increase
was again below the industry average; membership grew to cover over one
million members; and claims-paying ability was reconfirmed as being the
highest in the country when the scheme again received the highest possible
credit rating.
Discovery Vitality, a key differentiator of the Discovery Health and
Discovery Life products, launched exciting enhancements for members such as
R8 movie tickets at Ster-Kinekor in 45 premier shopping centres around South
Africa.
"Clearly, focusing on our core purpose of making people healthier and
enhancing and protecting their lifestyles, can go hand-in-hand with
innovation, financial prudence and profitability. A strong, successful group
is in our clients interests," said Gore.
Gore announced that a bold, new solution had been forwarded to the
regulatory authorities to meet the capital requirements of the Discovery
Health Medical Scheme.
"This solution makes maximum use of Discovery's financial strength to ensure
that the reserve requirements are met without placing any financial burden
on members," said Gore.
This is how it works. The amount required to meet the statutory reserve
requirements will be paid on behalf of members into the medical scheme.
Members will then repay this amount over the duration of their membership.
But because a portion of the current member contributions have already been
allocated to build up the required reserves over time, medical scheme
contributions will be reduced going forward. The amount by which the medical
scheme contributions are reduced will then be used by members to repay the
money paid into the medical scheme on their behalf. Therefore, in effect
members still pay the same amount for their medical cover; there are no
additional costs. If a member leaves the scheme, there are no further
repayments.
The rule amendment required to enact this solution has been submitted by the
trustees of the Discovery Health Medical Scheme and awaits the Registrar's
approval.
"We've subjected this solution to intense scrutiny from both a legal and a
financial perspective," Gore said. "We're confident in the solution.
Firstly, it is in the interests of our members in terms of maintained
benefits and no effective increase in the costs of their medical cover;
secondly it meets all the technical and legal requirements of the Medical
Schemes Act; while thirdly satisfying the spirit of the Act by utilising
member contributions to meet the capital reserve requirements; and finally,
this is a solution that meets both the short-term and long-term
capitalisation requirements for the Discovery Health Medical Scheme."
"Discovery is proud of our performance. We have built an excellent platform
for future innovation and growth," said Gore.
Ends.
FOR FURTHER INFORMATION PLEASE CONTACT:
Hans Venter/Rosemary Renton
Corporate Communications Consultants
Tel: (011) 783-8926 or 083 365 5152 Fax: (011) 783 7608
E-mail: hansv@corpcom.co.za
On behalf of: Adrian Gore
CEO
Discovery
Contact: (011) 529 2888 // 082 606 2800