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Discovery posted a strong operating performance across the all businesses, despite the ongoing challenge of the COVID-19 environment
Discovery posted a strong operating performance across the all businesses, despite the ongoing challenge of the COVID-19 environment

Press release -

Discovery delivers strong operating performance during the pandemic and continued evolution of the Shared-value Insurance model

Johannesburg, 2 September 2021 – Adrian Gore, Discovery Group Chief Executive, today presented the Group’s full-year results for the period ended 30 June 2021 to the analyst community. Discovery posted a strong operating performance across the all businesses, despite the ongoing challenge of the COVID-19 environment which manifested in a far higher COVID-19-related mortality in South Africa, compared to its second primary market in the United Kingdom.

Gore provided context for the Group’s results: “The reporting period was characterised by a multifaceted focus on the impact of, and response to, the COVID-19 pandemic, with a notable material impact on Discovery’s financial results due to elevated mortality in South Africa. The Group nonetheless delivered a robust operational performance supported by strong actuarial experience and growth. The growing relevance of our Vitality Shared-value Insurance model, given the increasing importance of health, wellness and resilience, positions the Group strongly for future growth in local and global markets.”

Reflecting on its performance over the period, Gore highlighted several key aspects:

Resilient operating performance during COVID-19

Normalised profit from operations increased 7% to R6 494 million, notwithstanding a R2.4 billion COVID-19-related impact for Discovery Life (R1.1 billion in prior year). New business annualised premium income (API) increased 11% to R21 325 million (core API 9%), while retention levels across the Group were strong.

Normalised headline earnings (NHE) decreased by 9% to R3 406 million. This growth was impacted by R389 million pre-tax mark-to-market foreign currency losses (R578 million pre-tax gains in prior year) arising from a recovery of the rand during the year under review. NHE before these exchange rate effects increased 12% to R3 711 million.

Headline earnings grew more than nine-fold to R2 986 million as the long-term interest rates stabilised in SA and the United Kingdom (UK), which resulted in materially lower economic basis changes than the prior period.

Responding to COVID-19 and Discovery Life’s earnings

Gore explains how the COVID-19 pandemic has impacted its Life business, “The impact of COVID-19 has been significantly worse than expected in South Africa. We estimate that the SA epidemic has turned out to be five times more severe, on a risk-adjusted basis, compared to its effects the UK,”

At the end of the previous year, Discovery Life established a R2 billion provision (R1.1 billion impact net of discretionary margins) for retail claims and lapses which proved adequate for the retail business’ in-period claims, as the strong lapse experience mitigated the elevated mortality. Given the expected mortality claims from the third COVID-19 wave beyond the reporting year, and expected claims from an anticipated fourth wave, an additional provision for the retail business was set up at the end of the year under review.

The group life business, however, works differently.

Gore explains, “Due to the accounting treatment applicable to the short-term contract boundary policies of group life business, Discovery Life could not establish a provision for future group life claims at the end of the previous year. As a result, the high in-period group life COVID-19-related claims caused further strain in the reporting year. At the end of the year under review, group life provisions have been made up to the next policy renewal date to the extent that existing contracts are deemed to be onerous.”

The combined impact on Discovery Life’s overall operating profit from these factors was R2.4 billion for the reporting year.

Ongoing investment in the national vaccination programme with the intention to mandate vaccines for all Discovery employees in SA

Given that global and local data strongly support the safety and efficacy of vaccination, Discovery continues to take a leadership role in driving up national vaccination rates, through its employees, products, and working closely with the National Department of Health on the country’s vaccination roll out.

“In our support of the national vaccination programme, Discovery has established nine vaccination sites nationally, requiring approximately 1 000 employees, investing R42 million in the year under review, and an anticipated spend of R200 million in the 2022 financial year.”

Gore continues, “Discovery intends to implement a mandatory vaccination policy effective 1 January 2022, given the clear moral and social obligation as informed by our core purpose to make people healthier and to enhance and protect all employees’ lives; and by our values, particularly, acting as a force for social good; and supported by a legal obligation to protect and safeguard our people from all potential risks.”

Gore added that the mandatory vaccination policy recognises employees’ right to object to the vaccination and has built in a process to manage this including, where necessary and possible, exemptions and reasonable accommodation of employees taking into account the operational and business requirements of Discovery. This process will consider the employee’s health, religious and other legal rights and seek to balance these with the rights of all employees across the Group.

“We will do our very best to accommodate each employee as we recognise that each case is different. We will not follow a blanket approach but will instead use a fair and equitable process that balances the employees’ rights, the safety of our workplaces and operational requirements,” Gore says.

Capital strength and liquidity a cornerstone of the Group’s growth strategy

A disciplined long-term capital plan remains a key focus as Discovery continues to follow a highly structured approach to navigating the impact of COVID-19 while ensuring that the Group remains resilient and able to continue to fund its growth initiatives. Each of the Group’s businesses are strongly capitalised with capital metrics above set targets, and across the Group there is an excess of liquid assets above minimum regulatory capital requirements of R13.4 billion, held predominantly within the businesses, with excess liquidity held at the centre in SA of R2 billion. The Group’s Financial Leverage Ratio stabilised at 25.7%[1]and is comfortably within the internally set guidance level of 28% and expected to trend down over time.

Commitment to driving growth in China through Ping An Health partnership

The combined effect of the future growth prospects of Ping An Health Insurance (PAH) and its expanding product mix, and the evolving prudential regulatory requirements in China, will require additional capital of RMB2.6 billion (approximately R6 billion). Discovery’s contribution, amounting to approximately R1.5 billion, will be required soon.

Gore comments, “Discovery is committed to our investment in Ping An Health, and our intention is to follow our rights in this regard, aligned with previous capital contributions made. We’re evaluating the optimal funding mechanism in the context of COVID-19 as well as to align with the discipline of the capital plan.”

Discovery has previously responded to fund similar growth opportunities through equity rather than debt. “The prospects for private healthcare and private health insurance in China provide an excellent long-term opportunity, supported by recent government policies emphasising the development of healthcare and private health insurance.”

Discovery demonstrating growth across multiple dimensions as relevance continues to grow

Gore concluded the presentation by setting out the Group’s strategic vision: “COVID-19 has accelerated the link between health, wellness, resilience and mortality through the underlying behavioural drivers of risk. As these have coalesced with the rising trends of technology adoption and purpose-led models, Discovery has been evolving its model to offer multi-dimensional growth prospects; focusing on organic and geographic growth, as well as structural growth through our global insuretech platform that supports our existing businesses.”

Discovery continues to drive the execution of existing market-specific strategies through its composite model, with a strategic vision established for each.

  1. i. South Africa: To be the perfect composite model, number one in every industry, and the Bank pivoting to growth as the composite-maker within SA
  2. ii. United Kingdom: To have best in breed products across businesses and operating as a fully integrated composite business with a seamless One Vitality client journey and to have a successful entry into motor insurance
  3. Ping An Health Insurance: To be the leading health insurer in China with over 50 million clients
  4. Vitality Group: To be the world’s largest and most sophisticated behavioural platform linked to financial services

Gore concludes: “Discovery’s business model has proven to be highly relevant during the COVID-19 pandemic and the trends that are consolidating are likely to accentuate this relevance going forward. The Group is confident in its ability to capitalise on these emerging opportunities and Discovery’s Shared-value Insurance model positions it well to deliver continued growth and operational resilience despite the challenging macro environment.”


Notes to the Editor:

The following table demonstrates the contribution of key businesses to the growth in normalised profit from operations.

Business (Rm)

Current period in ZAR million

% change (Current period vs prior period)

Strategic observation

Discovery Health

3 423


Continued operational excellence, growth in lives and providing significant support to members and society

Discovery Life

1 341


Significant negative COVID-19-related mortality impact but delivering positive actuarial experience and maintaining financial strength

Discovery Invest

1 084


Strong earnings growth, retention and solid investment returns for clients. New business growth impacted by lower guaranteed plan sales




Robust operating performance driven by continued good retention. Careful management of delay of elective healthcare in the COVID-19 environment




Strong recovery and a strengthening of underlying actuarial basis - a successful execution of the management plan. New business slowed with lockdowns and the focus on quality business

Profit from established businesses [3]

7 488


Robust growth across all established, except for Discovery Life

Discovery Insure



Strong new business growth and robust underwriting performance, with earnings impacted by lower investment yields

Vitality Group



Stronger growth due to increasing integration and traction with existing partners and accelerating roll-out to new markets and adjacencies

Ping An Health Insurance (PAH)



Focus on profit quality and scale through distribution channels and product diversification.

Capital injection to support long-term growth

Emerging businesses

1 078


Emerging business delivered particularly strong growth

New initiatives (Excluding Discovery Bank)


Lower by 7%

Lower spend combined with strong growth in new business API, up 156%

Discovery Bank

(1 094)

Lower by 7%

Strong high-quality client and deposit growth while deliberately pursuing a prudent, quality-focused credit strategy

Normalised profit from operations

6 494


[1] Excludes capitalised lease liabilities under the newly adopted IFRS16 and bank borrowings related to normal course lending and borrowing activities

[2] VitalityHealth accelerated the repayment terms of its existing reinsurance programme reducing the net premiums received in the year under review, with a net in-period impact of £39.7 million, which results in better matching of the underlying claims experience expected from the catch-up in claims in future years.

[3] Includes SA Vitality, R43 million (prior: R7 million)



Discovery information

About Discovery

Discovery Limited is a South African-founded financial services organisation that operates in the healthcare, life assurance, short-term insurance, savings and investment and wellness markets. Since inception in 1992, Discovery has been guided by a clear core purpose – to make people healthier and to enhance and protect their lives. This has manifested in its globally recognised Vitality Shared-Value insurance model, active in 27 markets with over 20 million members. The model is exported and scaled through the Global Vitality Network, an alliance of some of the largest insurers across key markets including AIA (Asia), Ping An (China), Generali (Europe), Sumitomo (Japan), John Hancock (US), Manulife (Canada) and Vitality Life & Health (UK, wholly owned). Discovery trades on the Johannesburg Securities Exchange as DSY.

Follow us on Twitter @Discovery_SA


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