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Acquisition hits Discovery earnings

Feb 22 2011 11:00
Johannesburg - Discovery Holdings [JSE:DSY], South Africa's largest health insurer, posted a 16% drop in first-half earnings on Tuesday, hit by the cost of acquisitions, and said it would launch a US venture with Humana.

Discovery, which last year bought a unit of Britain's Standard Life, said diluted headline earnings per share totalled 114.6 cents in the six months to end-December, compared with 135.9c a year earlier.

Discovery said this month earnings were likely to fall as much as 20%, citing the cost of the R1.6bn acquisition of UK-based Standard Life Healthcare in May.

Excluding the impact of such transactions, Discovery said earnings rose by a quarter.

Revenue from insurance premiums rose 83% to nearly R6bn.

The company said it would launch a joint venture with US insurer Humana Inc to provide a wellness programme in the world's biggest economy.

Discovery will own a quarter of the partnership, while Humana will take the same size stake in a Discovery US unit.

Discovery, which also owns a stake in China's Ping An Insurance, has been looking for opportunities in overseas markets as its once-rapid growth in South Africa slows.

CEO Adrian Gore told Reuters last year the company could eventually target India as it looks for more opportunities in Asia.
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