Discovery still optimistic about UK business - CEO

Johannesburg – Low exchange rates and interest rates in the UK impacted Discovery’s earnings by 4%, but chief executive Adrian Gore says the group is optimistic about its business in the UK.

In a telephonic interview with Fin24, Gore shared his perspectives on doing business globally in a world with increasing trends of nationalism.

Discovery reported growth in its normalised profit from operations by 13% to R3.4bn. Headline earnings were up 14% to over R2bn and new business growth was up 15% to R8.2bn.

Speaking about the group’s UK businesses, VitalityHealth and VitalityLife, Gore said: “We remain very optimistic about what we can do in the UK.” He added that the state of low interest rates, at record lows, and a weaker pound was only a temporary. “It seems unlikely that you will have negative real rates of return forever,” he said.

Gore added that VitalityHealth and VitalityLife both progressed well, reporting a 6% increase in new business to £57.7m (R932.2m) and a 10% increase in normalised operating profit to £22.5m (R363.5m).

Discovery’s businesses in China, Ping An Health, and the US, John Hancock Vitality, are different in that the group partners with “national champions”, explained Gore. “To the extent these companies are committed to our model and roll it out in their countries, we will grow with them,” he said.

Ping An Health’s new business in China grew by 55% and Vitality Group is active in 12 markets, according to the group’s SENS.

Locally, Discovery’s businesses Health, Life, Invest and Insure also reported strong growth, despite low economic growth.

READ: Discovery expects profit increase

Gore said this is attributed to the group’s shared value model, which offers value to customers. “The product is excellent and I believe if you give people value, you will do business,” he said.

The Vitality shared-value insurance model is appealing to consumers because of the incentives offered to the. “You actually get value out of what you do,” said Gore. He added that the model also creates better products which are more stable, and this has also contributed to its successful uptake globally.  

So far there are over 1m members of Vitality Active rewards in South Africa, the UK, US, Hong Kong and China. Over 100 000 new members use the benefit every month.

Other components contributing to the group’s performance are its organic growth methodology and its capital management philosophy, the Group said in a statement.

New initiatives received an investment of R244m, this is at 7% of earnings. These include the group’s new banking aspiration and the Global Vitality Network among others.

Discovery plans to be a global insurance leader by 2018. Of this, Gore said that the group was tracking behind “ambitious goals” but was confident the group would get there. 

AUDIO: Adrian Gore on navigating economic headwinds