Discovery’s spending spree eats into profit
The financial services group experienced 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 2018. 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," said Discovery CEO Adrian Gore on Tuesday. "The investment in new initiatives, strong performance in our emerging businesses, and the Discovery Life result." The development of Discovery Bank has run 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 re...
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