Invested in SA: Discovery says it’s not migrating to London as local headwinds swirl

Discovery building, Sandton. “The company is deeply invested in South Africa and in growing its businesses in the country,” Discovery said. Picture: Karen Sandison Independent Newspapers

Discovery building, Sandton. “The company is deeply invested in South Africa and in growing its businesses in the country,” Discovery said. Picture: Karen Sandison Independent Newspapers

Published Nov 24, 2023


Financial and insurance services group Discovery, which is facing complaints over unfair treatment of its health insurance clients, has denied that it is pursuing re-domiciling of its operations from South Africa to London even as speculation swirled around the purpose of CEO Adrian Gore’s travels abroad.

Discovery offers banking, investment, health, life and vehicle insurance among other services to South Africans as well as to other international markets, including the UK.

Financial and insurance industry sources in South Africa have said that the company was now focused more on its international business, with a source who declined to be named telling “Business Report” the group was considering moving its operations to London as woes mounted back in South Africa.

Gore has spoken out about the National Health Insurance in recent works, criticising the South African scheme as a sentiment killer given the “shortage of resources” and doctors.

“The company is already premised as a global empire and the CEO is pushing that approach. It’s early days yet but moving to London may be brought up for open discussion in the coming months,” the source said.

Billiton, Anglo American and SA Breweries are among the companies that have already re-domiciled abroad as South African investors have seen the JSE decimated by capital outflows from South Africa’s equity and bond markets since the start of 2023. This comes as the country’s challenges mount with a power and logistics crisis and now water shedding, among many other issues.

Discovery, however, denied that it was moving its operations to London. It told “Business Report” by email that it was “not considering moving its operations” overseas.

“The company is deeply invested in South Africa and in growing its businesses in the country,” Discovery said.

Andrew Bahlmann, chief executive: corporate and advisory at Deal Leaders International (DLI), said in an interview on the speculation that moving operations from South Africa to London would potentially benefit Discovery given the city’s status as a global financial hub and opportunities for access to a larger pool of international investors.

“Potentially, such a move could also result in a loss of some jobs in South Africa and a negative impact on the country’s economy – though the mentioned companies do continue trading in South Africa as before.”

In the context of Discovery, added Bahlmann, moving domicile from South Africa to London would also “lessen its dependence on South Africa as it has expressed concerns about policymaking under President Cyril Ramaphosa’s ANC government.


Meanwhile, Discovery in response to “Business Report” questions on the NHI Bill, said it was surprised that the National Assembly and the Parliamentary portfolio committee had approved the largely unchanged amended NHI Bill despite material concerns raised against it by opposition parties.

The company also cited significant constitutional concerns that were raised by the parliamentary legal adviser, which it said may have been ignored.

Discovery said it dId “not endorse the single funder model as proposed in the bill and believe that sustainability can only be achieved through collaborative work” between the private and public sectors.

Discovery’s operations are encompassed under its South Africa portfolio, Vitality UK, and Vitality Global, which partners life and health insurers globally. In South Africa, Discovery Bank remains a critical success factor for the SA composite, said the company.

The changing landscape in the UK, particularly the growing demand for private health insurance, remained an exciting growth opportunity, it added.

In the year to June 2023, Discovery’s UK composite lifted normalised operating profit by 14% to £83.4 million (R1.96 billion), with earned premiums increasing by 11% year-on-year to £989.2m and total lives insured increasing 11% to 1.72 million.

Vitality Global, which includes Vitality Network as well as Ping An Health Insurance (PAHI) within Vitality Health International, increased operating profits by 49% to $44m (R810m).

New initiatives and head office costs incurred in the Vitality Global composite have been allocated to Vitality Network and Vitality Health International and totalled R215m for the same period.

At group level, Discovery’s normalised operating profit increased 24% to R11.6bn while headline earnings increased 5% to R5.4bn.

This came as the impact of interest rates in the UK was more muted over the reporting year, and Discovery’s “hedging strategy proved effective, with some gains resulting in increased” discretionary margins.

There was, however, a more pronounced impact in South Africa, with the Discovery Life economic assumptions adjustments amounting to R2.8bn, gross of tax.

In South Africa, the group has been facing pressure from disgruntled clients complaining over unfair treatment, especially in relation to shortfalls on their health policies.

In response, Discovery Health said it was “always concerned regarding shortfalls” although it had put in place “tools and data… to manage” the shortfalls carefully.

“Our data suggests that Discovery is offering the highest cover ratio in the industry relative to our competitors. In-hospital cover ratios are at 96%, above the rest of the industry, which is currently sitting at around 90%,” it further explained.