Discovery has been an extraordinary story, growing from zero to a market cap of R172bn in little more than 30 years. It overtook the company where the founders cut their teeth — Liberty — and subsequently also industry giant Old Mutual, which at its peak controlled almost half of the South African life insurance market.
It wouldn’t have been possible if Discovery hadn’t spent its early years nestled in the bosom of Momentum Life, which at the time was a subsidiary of Rand Merchant Bank (RMB). Momentum’s chair at the time, Laurie Dippenaar, was a strong mentor for Discovery founder Adrian Gore.
In particular, Momentum’s strength was distribution — or what is rather pretentiously called “advice” these days. While its competitors favoured tied agents, Momentum had strong relationships with independent advisers and an institutional consulting force that marketed what was originally Momentum Health alongside the life, investment and annuity range.
It was quite clear it was never going to be a permanent marriage. From day one Dippenaar and the RMB board had given Gore and his partner, Barry Swartzberg, a material share of the fledgling medical aid business.
Momentum Health had offices in Sandton, not in Momentum’s home, sleepy Verwoerdburg, as Centurion was still called. The medical aid product was called Discovery, and it was the first company in the FirstRand fold to be given its own listing — in 1999, just a year after the big bang launch of FirstRand.
While Discovery went out into the world to find its own fate, Momentum was the dowdy old maid who stayed at home. But Gore is gracious and has always called his former partner a well-managed company.
This hasn’t always been true, but over the past few years Momentum has found the right formula. Hillie Meyer returned to the CEO slot after more than a decade leading the quiet life at his wine farm. He found an ideal partner in Jeanette Marais, who became CEO in August 2023. The group has certainly shed its old maid image.
In finance it has a strong team of relatively personable actuaries in CFO Risto Ketola and his deputy, Rowan Burger. While it is still the smallest of the major life offices, it has a substantial R45bn market capitalisation.
Momentum had a good six months to December 2025. Its return on equity is 24%, well above the target of 20%. Its earnings in an increasingly competitive market grew ahead of inflation, up 8% to R3.7bn, and new business was up 11% to R43.3bn.
There were some real pockets of strength, with its rest-of-Africa sales up 28%. Momentum Corporate’s sales were up 23%, the sweet spot being group life and disability benefits in its Funds@Work pension umbrella fund.
The most important news is that from June Momentum will be the administrator of Bonitas medical aid, the second-largest open medical aid in South Africa. It is the biggest transfer of a medical scheme in South Africa yet.
Bonitas’ previous administrator, Medscheme, is part of Sanlam-controlled Afrocentric. It’s fair comment when Momentum says the news reinforces the group as a credible, trusted partner. It certainly brings more scale to the business, adding 750,000 new beneficiaries to the group. It now overtakes Medscheme to become the second-largest administrator after Discovery.
Momentum now has 30% of the lives covered by medical aid, though most of these are in the relatively low-margin Government Employees Medical Scheme (Gems).
Ketola rather cheekily points out that there is nothing to stop the trustees of the Discovery Health Medical Scheme (DHMS) from moving the administration of that fund to Momentum. Gore probably wouldn’t make such gracious comments about Momentum after that.
It’s highly unlikely, though it would certainly be a blow to Discovery. DHMS has almost 60% of the open scheme market, or 34% of the total market, including Gems and other closed (restricted access) schemes.
An exception to the good news story at Momentum was its mass-market business, Metropolitan, in which sales were down 13%. Like at just about every results announcement, the unit is going through a “restructuring of distribution business”.
But earnings at least increased substantially, by 14% to a shade under R500m, as there were lower distribution overheads, and lower lapse and death rates.
The good news for shareholders is that Momentum feels confident enough to increase its interim dividend by 29% to 110c a share. It is close to completing its share buyback programme.
The heart of Momentum is its affluent life and investment business — and it is investing in distribution. It never had a large tied-agency force, but this has grown to more than 500 and a further 480 in its Consult by Momentum franchise business, which includes 110 specialist short-term insurance brokers. Momentum has brought in 89 recruits that are new to the industry.
Its competitors are busy getting into banking — whether directly, in the case of Old Mutual, or through a strategic partnership with GoTyme for Sanlam. But Momentum is going against the grain. It is exiting its quasi-banking operation, Momentum Money, which should be closed by the end of the financial year.
• Cranston, a financial journalist, is the author of ‘The Mavericks’, a book about South African fund management.
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