The Discovery Group grew its normalised profit from operations by 29% to R15.21 billion in the year to the end of June, with Vitality’s profit from operations up by 70% to R3.205bn and Discovery South Africa’s profit rising by 22% to R12bn.
Discovery SA comprises Discovery Health, Discovery Life, Discovery Invest, Discovery Insure, and Discovery Bank.
The Vitality composite consists of VitalityHealth, VitalityLife, Vitality Network, Ping An Health Insurance (PAHI) in China, and Vitality Health International.
The group’s headline earnings and normalised headline earnings increased by 30% to R9.625bn and R9.781bn, respectively, resulting in the normalised return on equity increasing to 15.4% from 13.5% in the previous year.
Basic normalised headline earnings per share were up by 29% at 1.470.4 cents.
The group declared a final dividend of 201 cents per share, up by 32% year on year.
The group’s total new business annual premium income (API) declined by 2% but increased by 8% when excluding the take-on of the Sasolmed closed medical scheme in the previous year.
Chief executive Adrian Gore said the group produced an all-round strong performance in an environment characterised by increased geo-political complexities and uncertainty around global policy shifts and trade tensions.
“The strong performance of Discovery South Africa over the year highlights the compelling contribution from each of our businesses. And in Vitality, the performance reflects the competitive dynamics of the Vitality shared-value insurance model, with excellent progress made in restructuring the global operations into a single focused business over the past nine months. With the positive contributions from each composite, we have seen an excellent start to the current growth phase.
“In the year under review, economic growth remained below potential in many regions where Discovery operates, although interest rate reductions provided a better backdrop for investment markets. Risks remain elevated. However, the acceleration of technological and demographic trends underpin the relevance of the Vitality shared-value insurance model and unique data.”
He said Discovery has emerged strongly from its cycle of significant investment, which focused on creating new avenues for long-term growth.
Although new business growth was impacted in some businesses, compounded by macro-economic challenges, Gore said the group has made an excellent start on its ambition to grow profit from operations by between 15% and 20% on a compound basis over the next five years.
Bank achieves monthly profitability
Discovery Bank reached monthly break-even at the end of the first half of the financial year and generated its first profitable period during the second half of the year, ahead of schedule. The bank aims to turn a profit of R3bn by 2029.
The bank generated an operating profit before new business acquisition costs of R368m, compared to a loss of R52m, and the overall loss improved to R68m, compared with R454m in the prior year.
The six-year-old bank’s total client base grew by 30% to 1.25 million, reflecting continued adoption of the bank’s digital-first model and integration with Discovery’s broader ecosystem.
Retail deposits increased by 26% to R23.3bn and advances by 39% to R9.2bn, while home loans grew significantly to R1.7bn.
Non-interest revenue increased by 32% to R1.373bn, driven by the growth in clients, as well as increased engagement levels and product take-up.
Discovery sees the bank as a key strategic platform to drive growth through Discovery SA’s customer base of 6.4 million, which increased by 6%.
Other SA business segments
Discovery Insure delivered an operating profit of R739m, which was 229% higher than in 2024.
New business API declined by 2% to R1.361bn, which Discovery attributed to “deliberate pricing strategies and evolving market dynamics”.
Insurance revenue increased by 8% to R6.217bn.
Discovery said the segment’s performance highlighted the success of targeted management actions, particularly in improving the non-weather-related claims experience. In addition, benign weather conditions in the current year, compared with severe weather in the prior year, resulted in the loss ratio being 2.5% lower than expected.
Discovery Life’s operating profit increased by 14% to R5.525bn. It said the Individual Life (11%) and Corporate and Employee Benefits (71%) businesses delivered exceptional claims performances, contributing to a R580m lower claims expense than in the prior year.
New business API declined by 10% to R3.203bn, with Individual Life new volumes down by 2% and Corporate and Employee Benefits decreasing by 41%.
Discovery Invest’s operating profit increased by 29% to R1.987bn. Assets under management grew by 18% to R124bn and assets under administration by 15% to R179bn on the back of strong market performance.
New business API increased by 4% to R3.43bn.
A 21% decrease in the sales of guaranteed plans, reflecting lower market interest rates, was offset by a 9% increase from all other products.
Net client cash flows increased by 3% to R3.2bn, curtailed somewhat by a large maturing book of five-year guaranteed endowments sold during the beginning of Covid-19, when market rates increased.
Discovery Health’s operating profit grew by 7% to R4.259bn, with revenue from non-medical scheme products rising from 13.5% to 15.8%.
Vitality composite
Discovery’s recently formed Vitality composite saw new business API increase by 16% to R8.373bn.
VitalityHealth’s profits from operations increased 173% to R1.188bn, “driven by effective pricing actions, a stabilising claims environment, and rigorous claims and expense management”.
New business API rose by 3% to R2.851bn, and lives covered increased by 3% to 1.06 million.
VitalityLife’s operating profit increased by 70% to R627m, with new business API growing by 28% to R2.499bn. Lives covered rose by 12% to 904 000.
The group’s share of PAHI’s after-tax operating profit increased by 7% to R1.206bn, following the prior year’s exceptional result that benefited from both a tax gain (December 2023) and a significant Covid-19 reserve release (March 2024).
PAHI’s pre-tax result increased by 22%, following continued gains from Chinese bond and equity markets.
New business increased by 22% to R3.023bn (Discovery’s 25% share) for the year, driven by a rise in new business through non-Ping An Life channels and a general market shift towards higher-end products.
