South Africa’s health insurer Discovery eyes Indian market

South Africa’s health insurer Discovery eyes Indian market

Johannesburg: South African health insurer Discovery could target fast-growing India eventually as it explores opportunities in Asia, its chief executive told Reuters.

The company on Thursday reported a 24% rise in full-year profit and said it was positioned for further growth.

“The two countries that I think are exciting for us are India and China," Adrian Gore told Reuters on Thursday following Discovery’s full-year earnings.

“We keep our minds open to opportunities in Asia generally," he said, adding that Discovery would consider India expansion “in time".

Foreign health insurers are increasingly looking for opportunities in India, given its large population and growing middle class.

But India’s government caps foreign direct investment (FDI) in the insurance sector, making it difficult for foreign players to take big stakes in local firms.

The health insurer has weathered the financial crisis and subsequent downturn in Africa’s biggest economy better than some rivals due to its emphasis on health insurance, which is less sensitive to the economic cycle than life insurance.

Discovery, South Africa’s largest health insurer and third-largest life insurer by market value, has been bulking up by focusing on emerging markets and fast-growing areas in developed markets.

Ping An stake

Discovery would like to lift its stake in its joint venture with Chinese group Ping An Insurance to nearly 25% from 20% if China’s regulator would allow it, Gore said.

The company said last month it would pay about $29 million for a 20% stake in a joint venture with Ping An, China’s second-largest insurer.

The South African company had originally planned to buy just under 25% of the joint venture, but was forced by Chinese regulators to scale that back.

“If we could get to 24.99 (%), we’d like to," Gore said.

In May Discovery said it would buy a unit of Britian’s Standard Life Group for 1.56 billion rand ($214 million), to tap growing demand for private healthcare in that country.

It is also expanding its “wellness" business in the United States to benefit from demand for exercise and nutrition programmes.

Headline earnings per share totalled 277.7 cents in the year to end-June, compared with 224.1 cents in the same period a year earlier, helped by the health insurance business.

Headline EPS is the main gauge of profit in South Africa and excludes certain one-time items.

Revenue totalled 7.86 billion rand, compared with 5.19 billion rand a year earlier.

Shares of Discovery were up 1.9% at 36.23 rand as of 1308 GMT, outpacing a 0.14% decline in Johannesburg’s All-share index.