Discovery Group reports strong annual earnings growth, share rise over 6%

JSE-listed financial services group Discovery’s share price shot up 6.09% on the JSE Wednesday morning after its management reported that a strong performance is expected for the financial year to June 30.

The group, which specialises in health, insurance, banking, and investments, said in a trading statement that its normalised headline earnings are expected to increase by between 27% and 32%. Normalised profit from operations is expected to rise between 26% and 31% compared to June 30, 2024.

The share price traded at R225.39 on the JSE late Wednesday morning, a 12-month high, far outstripping the 0.44% growth in the JSE All Share Index at the same time, and over 51% higher than the price exactly a year ago.

The group described the performances of all its business units as “robust.” Discovery Life grew its contribution to normalised profit by between 11% and 16%. The growth from Discovery Health was between 4% and 9%.

The contribution from Discovery Invest increased between 27% and 30%, while Discovery Insure’s contribution was between 225% and 230% higher. Losses at Discovery Bank reduced by between 82% and 87%.

VitalityHealth’s contribution to group normalised profit increased by between 170% to 175%. VitalityLife’s by between 67% to 72%, and Vitality Network’s contribution increased by 2% to 7%.

The contribution from Ping An Health Insurance increased by 5% to 10%, while Vitality Health International losses reduced by 23% to 27%. The contribution from Vitality (Vitality UK & Vitality Global) increased by between 67% and 72%.

Discovery Bank had generated its first profitable period in the second half, ahead of plan, while the acquisition of quality clients accelerated.

Discovery Health generated "solid" earnings growth, with further investment into technology, innovation, and AI.

Discovery Life delivered strong earnings growth, mainly driven by an exceptional claims experience.

Discovery Invest delivered significant profit growth due to an increase in the value of assets under management and certain one-off benefits.

Discovery Insure executed pricing and claims management initiatives which, combined with benign weather conditions, resulted in significant improvement in the claims ratio.

The Vitality composite's result reflected good progress made in restructuring all the global operations into a focused single business over the last nine months.

VitalityHealth's performance was strong, driven by pricing actions, a stabilising claims environment, and rigorous claims and expense management.

VitalityLife delivered strong earnings with excellent new business growth, driven by the effective execution of the Shared-value Insurance model.

Ping An Health Insurance performed robustly, following the prior year's exceptional result that benefited from both a COVID-19 reserve release and a tax gain.

Vitality Network's result reflects the restructure underway to build longer-term scale and value.

BUSINESS REPORT