Discovery has released its half-year results for the period ending 31 December 2018, reporting a drop in normalised profit from operations of 4% to R3.8 billion.
The group said that this temporary decline in profits was due to considerable investment in new initiatives and volatility in large claims in Discovery Life – unique to this reporting period.
According to Adrian Gore, group chief executive, the decline in profits was largely expected with the group set to launch its new Discovery Bank in March 2019.
However, he noted that the group has had to alter some of its reinsurance structures to mitigate the effects of claims volatility.
“We expected our planned and significant investments in new initiatives, most notably the investment in Discovery Bank, to create a reduction in Group earnings,” he said.
“All businesses remain strongly positioned for growth and our responsive alteration of reinsurance structures will mitigate the effects of claims volatility in Discovery Life going forward for this business to regain target performance levels.”
“Our focus going forward will be to continue building value in all our businesses, while also leading a global movement around behaviour change and wellness.”
While Discovery cannot provide exact details on clients, a spokesperson confirmed to BusinessTech that a number of large death claims were responsible for this volatility.
“The total cost of claims above expectation is R314 million,” Discovery said.
“This is primarily as a result of volatility caused by some large death claims which ranged between R10 million and R75 million.”