Discovery results show little exposure to Abil

(Shutterstock)
(Shutterstock)

Johannesburg - Health insurer Discovery [JSE:DSY] said it had only limited exposure to failed African Bank Investments [JSE:ABL] also known as Abil, as it reported an expected 20% jump in headline full-year earnings on Wednesday.

Abil was rescued in a $1.6bn bailout led by the central bank last month after being hit by waves of bad debt as its core market of low-income borrowers failed to pay back loans.

"Discovery is only effected through indirect money market and equity unit trust investments and the exposure for shareholders and policy holders is immaterial," SA's largest health insurer said in its earnings report.

Discovery said diluted normalised headline earnings increased to R5.95 a share for the year ended June from R4.96 a year earlier.

Discovery had already flagged normalised headline earnings would rise by as much as 25%.

The company wrote new business worth R12.2bn, up 15%.

Discovery's business model gives customers incentives to lead a healthier lifestyle by subsidising gym fees, fruits and vegetables and even refunding fuel costs to good drivers.

Betting on exponential growth for the Asian insurance industry, Discovery has entered China and Singapore, but has largely shunned Africa where incomes are still relatively low.

It also has businesses in the United Kingdom and the United States.

Discovery shares have risen faster than other blue-chip index constituents this year, climbing 18% compared to the Top-40's 11%.

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