South Africa getting a new life insurer soon

Dis-Chem is set to launch its life insurance product in the first three months of 2025, following its acquisition of OneSpark earlier this year.

This was revealed in Dis-Chem’s interim results for the six months through August 2024, which revealed decent results for the retailer.

Its total income grew by 10.4% to R6.01 billion, up from R5.44 billion the year before. Retail revenue grew by 7.1% to R16.7 billion, with comparable pharmacy store revenue growth at 4.8%. 

During the six months to 31 August 2024, Dis-Chem opened a net 6 retail pharmacy stores, resulting in 274 retail pharmacy stores and 53 retail baby stores as of 31 August 2024. 

Total profit for the six-month period increased by 15.3% to R597.56 million, while basic earnings per share also grew by 15.6% to 67.4 cents.

Di-Chem explained that the biggest contributor to this earnings growth was the containment of group payroll costs.

It said this was predominantly driven by the successful deployment of its staffing framework 1.0, which delivered positive operating leverage, with operating profit growing at 17.5% ahead of group revenue growth of 9.6%.

“Following the identification of the eight strategic areas of focus aimed at delivering sustainable shareholder returns, the group has made pleasing progress in each of these areas,” the company said.

Looking ahead, Dis-Chem said it is still committed to its 3-year target of expanding its footprint to 137,000 m². The company currently has a space pipeline of 107,000 m².

In addition, the company wants to continue to incrementally increase total income growth ahead of revenue growth and focus on securing sustained positive operating leverage with its staffing framework 2.0, facilitating further reductions in invested payroll cost per retail m²

The company said it also wants to continue to transition its independent pharmacy pipeline into TLC franchise stores as it extends wholesale market share gains.

One of Dis-Chem’s biggest goals is to launch Dis-Chem Life in the first quarter of 2025.

Dis-Chem said this will be supported by the evolution of its extraRewards programme to drive policyholder and shopper behaviour change and engagement.

This comes after the retailer completed the acquisition of insurance group OneSpark in June this year. Dis-Chem bought a 50% stake in the insurer for R155.9 million.

This acquisition will add products like life and funeral cover to Dis-Chem’s stable.

CEO Rui Morais told Business Times at the time that OneSpark, together with Kaelo, which was acquired two years ago, will form businesses that deploy “our financial services ambitions into integrated healthcare”.

“If you think about what we do, we inherently manage risk well. So we reduce morbidity and mortality risk, which is an underlying metric for life insurance,” he told the publication.

“We have always wanted to invest in products and business that can be seen in the healthcare lens.”

Dis-Chem already entered the insurance market through a partnership with Kaelo, which allowed it to enter the healthcare funding arena.

“These policies cover essential everyday healthcare needs, aligning with Dis-Chem’s core purpose of delivering access to quality healthcare at reasonable prices,” the company said in its 2024 annual results.

“The introduction of the extra rewards programme for policyholders, offering a 20% discount on over 2,500 frequently purchased items, enables customers to access healthcare that essentially pays for itself.”

In these results, Dis-Chem said it was pleased to report significant growth in its affordable medical insurance offering.

“To strengthen our integrated health positioning, we have entered into agreements to invest in an innovative life insurance business with the experience, capabilities, and proprietary technology to offer transformative insurance products that align with the Dis-Chem brand’s commitment to better health,” it said.

Dis-Chem’s board declared a gross interim cash dividend of 26.98 cents per share.