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Interim financial results for the six months ended 31 December 2016
Interim financial results for the six months ended 31 December 2016

Press release -

Discovery’s shared-value insurance business model and organic growth approach drive continued strong performance

Discovery’s shared-value insurance business model and organic growth approach drive continued strong performance

Interim financial results for the six months ended 31 December 2016

  • Normalised profit from operations up 13% to R3 412 million
  • Headline earnings up 14% to R2 023 million
  • Normalised headline earnings up 3% to R2 184 million
  • New business growth up 15% to R8 245 million

Johannesburg, South Africa – 23 February 2017. Discovery today presented its results for the six months ended 31 December 2016. There was strong delivery across the Group with new business and normalised profit from operations increasing by 15% and 13% to R8 245 million and R3 412 million, respectively. This was despite a combination of falling exchange and interest rates in the United Kingdom, which adversely impacted Group earnings over the period by 4%.

“A combination of three main drivers contributed to our robust performance; our Vitality Shared-Value Insurance model being employed across 14 markets, our organic approach to growth and our sophisticated capital management philosophy. In addition to this, progress was made across all of our businesses, putting us on course to reach our 2018 ambition. We continue to gain a deeper understanding of the actuarial dynamics underlying our model and from this have seen systemic improvements of engagement, behaviour change, mortality, morbidity, claims experience and value sharing,” said Discovery Chief Executive, Adrian Gore.

The efficacy of the Group’s organic growth methodology was shown over the period by performance of existing businesses growing operating profit by 11% to R3 786 million and new business by 9% to R6 477 million. Emerging businesses, Discovery Insure, Ping An Health and Vitality Group (a consolidation of The Vitality Group and Discovery Partner Markets businesses) delivered growth of 43% in new business to R1 768 million. These emerging businesses are now substantial, with Discovery Insure covering more than 160 000 vehicles. Ping An Health is the leading health insurer in China and new business has grown by 55% over the period; and Vitality Group is a growing global franchise that is active in 12 markets.

New initiatives received an investment of 7% of earnings, equal to R244 million. Investment went towards the Group’s banking aspiration, the Global Vitality Network driven by Vitality Group, the Discovery Insure commercial offering, umbrella funds in Discovery Invest and an investment venture in the United Kingdom.

During the period under review, Discovery continued to apply its capital management philosophy based on maintaining independently robust levels of solvency cover within each of the regulated entities; planning for the expected funding needs of the current and planned growth businesses; and maintaining a central buffer to withstand potential adverse experience, as well as provide some capacity for unplanned initiatives.

Gore said, “The refinement of our model and creating value for all clients have seen exceptional global adoption of and engagement in Vitality Active Rewards, with over one million members in South Africa, the United Kingdom, United States, Hong Kong and China actively using the benefit. The exciting result is an improvement in physical activity of over 25%, shown to have significant benefits in hindering the onset of disease and improving claims experience.”

Business-specific performance

South Africa

Discovery Health

Discovery Health delivered excellent results. Normalised operating profit increased by 12% to R1 188 million, and core new business API increased by 20% to R3 030 million. Discovery Health was awarded the contract to administer SAB Medical Aid, bringing its restricted scheme client base to 18 schemes. Discovery Health continued to invest in the healthcare system and its digital healthcare assets, resulting in an expansion in the homecare, pharmacy distribution and wellness operations; and enhanced value-based contracting.

Discovery Life

Discovery Life delivered a strong performance in growth and profit. New business was up by 9% to R1 053 million, driven by individual new business which grew by 10.2%. Operating profit increased by 13% to R1 768 million. Discovery Life’s incentives for healthy lifestyle behaviours and outcomes have translated into exceptional Vitality engagement, with a sevenfold increase in the number of policyholders on Gold and Diamond Vitality status over the past eight years. Vitality Underwriting, a first-of-its-kind dynamic underwriting method based on client biometrics, combined with other product enhancements, has resulted in Discovery Life strengthening its market share in the retail affluent segment to 27.5% (for January to September 2016).

Discovery Invest

Discovery Invest grew assets under management by 14% year-on-year to R64 billion, with new business growth of 9% to R1 278 million. Operating profit grew to R326 million, 21% higher than the same period in the year before. Discovery Invest maintained a position in the top six retail asset takers in the industry in every quarter of 2016. During the period, innovation in the retirement space allowed investors to convert Discovery Miles and Vitality points into retirement savings, and Discovery Invest became the first provider in South Africa to offer zero administration fees on retirement provision. Discovery Invest’s market share increased by 80% in the retirement annuity and preservation funds space, and by 50% in the retirement income space (year to end September 2016).

Discovery Insure

Discovery Insure showed significant new business growth, up 23% to R495 million. The business continued to scale and is now close to monthly breakeven. The Vitalitydrive model continues to produce excellent results, as members’ engagement translates into better driving, and lower claims. This is evident in the continued reduction in claim frequency over the period, and since inception (10% lower than at inception). In addition, Discovery Insure broadened access to reward partners, and addressed high-risk behaviour categories, such as night driving, through a strategic partnership with Uber. Using telematics expertise and the footprint of Discovery clients across the country, Discovery Insure developed Crowdsearch – a technology which turns the Vitalitydrive sensor into a beacon which can be located using the smartphones of the business’s member base.


Progress was made during the period regarding the intention to enter banking. On 25 October 2016, Discovery received authorisation from the Registrar of Banks to establish a banking presence in South Africa. Discovery has a period of 12 months to fulfil the conditions and make application for final approval in terms of Section 16 of the Banks Act. Progress is being made in developing the system infrastructure, operating processes, regulatory engagement and the customer value proposition.

United Kingdom

Discovery’s UK business, comprising VitalityHealth and VitalityLife, delivered a robust performance, in spite of economic headwinds including falling interest and exchange rates. This included a 6% increase in new business to £57.7 million, and a 10% increase in normalised operating profit to £22.5 million. Allied to continued investment in brand, partner integration and service journeys, Vitality built on the success of the Active Rewards programme with the launch of a new Apple Watch benefit, and HealthyFood through Ocado (an online supermarket). There were close to 9 000 Ocado registrations in the first two months and 15 000 Apple Watch orders in the first four months.

VitalityLife produced a steady performance in a complex period with volatility in interest rates and exchange rate movements. The net effect was an increase in new business of 8% in GBP, to 32.7 million (decrease of 10% in rand terms to R581 million). Normalised profit decreased by 10% in GBP to 14.5 million (decrease of 25% in rand terms to R258 million). There was continued adoption of the Vitality-integrated model with the Vitality Optimiser product comprising over 60% of all new business sales. VitalityLife achieved a market share of 13% for protection business in the Independent Financial Adviser space. It also launched three new initiatives which are all market-firsts in the UK: a Wellness Optimiser designed to reflect health-related behaviour change through discounts on health checks; enhanced Severe Illness Cover with a cancer relapse benefit; and Vitality Nurses, an online booking system for Vitality screening and non-laboratory medical diagnostic testing as part of underwriting.

For VitalityHealth, the period was characterised by excellent actuarial dynamics, with a continuation of good loss ratio and retention performance. There was a 4% growth in new business in GBP terms, driven by the individual market in which record sales of £13 million (up 20% on the prior year) were achieved. Overall, operating profit grew from £4.4 million to £8 million (up 82%). Engagement in the Vitality wellness programme has delivered clear benefits from both a claims and retention perspective. When engagement is tracked, VitalityHealth members who increased their wellness engagement had a claims cost around 20% lower than those who maintained their starting level of engagement. The lapse rate was halved for Vitality members who were actively engaged.

The period was one of significant investment to further progress VitalityHealth’s Shared-Value Insurance proposition. This included Consultant Select, a consultant-led directional care pathway, and the introduction of a new approach to individual renewal pricing.

China: Ping An Health

The business performed excellently over the period, reaching RMB 2 billion premium income for the year, with one million clients. Over 650 000 policyholders have joined Vitality Active Rewards through Ping An Life over the past five months, with over 5 000 new activations each day and high levels of physical activity being recorded.

Importantly, Ping An Group sees the healthcare environment in China as a key strategic area. With Ping An Health the designated health insurance specialist company, Ping An Group will leverage its impressive agency force to realise its ambition of being China’s largest comprehensive healthcare player.

Vitality Group

Over the period, Discovery Partner Markets in South Africa and The Vitality Group in the United States were consolidated into one entity, Vitality Group, with a unified strategy, executive team and a consistent approach to product, partners and systems. The period was noteworthy for AIA Vitality with Vitality-integrated insurance products now live in six AIA markets, and Vitality Active Rewards in the process of being rolled out in an additional three markets.

John Hancock Vitality continued to experience strong penetration rates and the sales and engagement performance was in line with expectation. The launch in New York State and the introduction of Apple Watch to all customers will drive further sales and engagement. Manulife Vitality successfully launched in the Canadian market in September 2016 offering Vitality on Family Term products.

Generali Vitality launched in Germany during July 2016 with integrated disability and Term Life products. New business volumes have been exceptional with the disability product volumes up by 60% and Term Life product volumes up 82%. France launched its shared-value offering on 9 January 2017, with Vitality being offered to corporate clients. 


Discovery information

About Discovery Limited

Discovery Limited is a South African-founded financial services organisation that operates in the healthcare, life assurance, short-term insurance, savings and investment products and wellness markets. Founded in 1992, Discovery was guided by a clear core purpose – to make people healthier and to enhance and protect their lives. Underpinning this core purpose is the belief that through innovation, Discovery can be a powerful market disruptor.

The company, with headquarters in Johannesburg, South Africa, has expanded its operations globally and currently serves over 5 million clients across South Africa, the United Kingdom, the United States, China, Singapore and Australia. Discovery recently partnered with Generali, a leading insurer in Europe, and has partnered with John Hancock in the US. These new partnerships will bring Discovery’s shared-value business model to protection industries in Europe and the US.

Vitality, Discovery’s wellness programme, is the world’s largest scientific, incentive-based wellness solution for individuals and corporates. The global Vitality membership base now exceeds three million lives in five markets.

Discovery is an authorised financial services provider and trades under the code “DSY” on the Johannesburg Securities Exchange. 

Follow us on Twitter @Discovery_SA


Felicity Hudson

Felicity Hudson

Press contact Head of Reputation Management Discovery Group 0115294514
Nthabiseng Chapeshamano

Nthabiseng Chapeshamano

Press contact Senior Reputation Manager Invest, Cogence, Long & Short Term Insurance, and Sustainability
Zeenat Moorad

Zeenat Moorad

Press contact Senior Reputation Manager Banking | Vitality | Sponsorships
Karishma Jivan

Karishma Jivan

Press contact Reputation Consultant Healthcare & Sustainability
Sesona Ngqakamba

Sesona Ngqakamba

Press contact Reputation Management Consultant Banking | Vitality | Sponsorships
Lianne Osterberger

Lianne Osterberger

Press contact Special Projects: Reputation Management 083 27 27 313

Our core purpose and values guide us in all we do. A clear and profound promise: to make people healthier and enhance and protect their lives.

Discovery is a shared value insurance company whose purpose and ambition are achieved through a pioneering business model that incentivises people to be healthier, and enhances and protects their lives.

Discovery Limited
Discovery Group Limited, 1 Discovery Place, Sandton
2196 Johannesburg
South Africa