JOHANNESBURG, Sept 2 (Reuters) - South African insurer
Discovery scrapped its annual dividend again on
Thursday and said it may have to raise equity capital to cover
costs linked to its investment in China's Ping An,
sending its shares down 8%.
The company, which ties premium rates to its clients'
lifestyles, has not paid a dividend since the COVID-19 pandemic
took hold last year and said ongoing uncertainty over the impact
of the virus meant it would continue to withhold payments for
Its growth-driving partnership with Ping An, meanwhile,
would require 1.5 billion rand ($104 million) more capital from
Discovery to meet regulatory requirements.
Chief Executive Adrian Gore said it would likely seek to
fund this via an equity raise, not debt, with the proceeds
ring-fenced for this purpose.
On dividends, he said the insurer had never been a big
dividend payer, preferring to invest capital in growth, and
there was still uncertainty around the impact of COVID-19.
"We don't believe as an insurer facing mortality claims we
know fully the playout," he told Reuters in an interview, adding
the restoration of dividends would be reviewed on an ongoing
Discovery had already flagged a more than tenfold rise in
headline earnings per share (HEPS) - the main profit measure in
South Africa to 454.7 cents, compared to 45 cents a year
The main driver of the rise was the impact of changes in its
economic assumptions. On a normalized basis its HEPS fell by 9%
to 518.7 cents, compared to 570.7 cents last year.
Discovery also said it would make COVID-19 vaccination
compulsory for its employees from January.
Gore said that employees who decline could be dismissed
after a lengthy process to establish whether an accommodation
needs to be made for, for instance, religious beliefs.
"If ... not, and you just don't believe in vaccines, then
you can't work at Discovery," he said.
The insurer will also give vaccinated new clients better
premiums. Existing members will be given incentives via its
rewards program Vitality, which awards members points for
desirable behavior that can get them benefits ranging from
cheaper insurance to free coffees, Gore said.
(Reporting by Emma Rumney; Editing by Wendell Roelf, Barbara
Lewis and David Evans)