FINANCIAL SERVICES GROUP
Adrian Gore unfazed as new initiatives, life claims dent Discovery’s earnings
The financial services group experiences a spike in life insurance claims, and also invested in its bank and other new business initiatives
A spike in life insurance claims and investment into its bank and other new business initiatives made a dent in Discovery’s bottom line in the six months to end-December. Despite collecting R18.5bn in insurance premiums after paying reinsurance costs, the financial services group reported a 14% decline in net profit to R2.3bn for the period. The main culprit was expenditure on new initiatives, which ate up 21% of the group’s earnings. The company borrowed more to fund these initiatives, resulting in an additional R291m in finance costs. "The results were characterised by three themes. The investment in new initiatives, strong performance in our emerging businesses, and the Discovery Life result," said Discovery CEO Adrian Gore. The development of Discovery Bank ran slightly over budget, rising to R2.62bn from the previously indicated R2.41bn. "We had no idea what we were going to build when we initially sought approval for the budget from the board. The end result is more powerful t...