Discovery results

Insurance group Discovery reported a 97% plummet in profits for the full year, as it braces for the fallout from Covid-19, with the group setting aside R3.4bn to cater for future Covid-19-related claims and policy lapses. Lower interest rates in SA and the UK also had an effect on policy values. There was a R4.8bn pre-tax effect on headline earnings, which fell 94% to R296m. Discovery’s embedded value per share is R107 and the market is valuing it at a R128 per share value: Therefore the Ping An, Discovery Insure, Partnership platform and bank are being valued at R20 per share value. Michael Avery spoke to CEO about what do he thinks the market is under-appreciating about Discovery and why? The worrying aspect of Discovery’s results is that members within existing employers is reducing due to retrenchments. This directly affects operating leverage within the business and the Discovery Health Medical Scheme business is the cash-cow for Discovery. It basically funds everything else.