Slide 1: Unaudited Interim Results and Cash Dividend Declaration
UNAUDITED INTERIM RESULTS AND CASH DIVIDEND DECLARATION for the six months ende: 31 December 2016
Slide 2: Group Results Overview
Group Results Overview New business Operating profit Headline earnings Normalised headline earnings to R 8 245m to R 3 412m to R 2 023m to R 2 184m +3% incl. DH take-on of new closed schemes to R8 732m 2
Slide 3: Operating Model
Operating Model Why & How Growth Methodology Capital Philosophy Make people healthier and enhance and protect their lives Vitality Shared-Value Insurance Model Target group profit growth of CPI + 10% 3
Slide 4: Consequence of the Vitality Shared-Value Insurance Model
Consequence of the Vitality Shared-Value Insurance Model Competitive advantage Initial selection Selective lapsation Behaviour change Bent lapse and claims experience Healthier society 4
Slide 5: Growth Methodology
Growth Methodology Profit growth of CPI + 5% ESTABLISHED Positive net cash flow ~3 years Achieving a Cash investment Profit growth of CPI + 30% sustainable of 10% of EMERGING Negative net cash flow group profit profit growth of ~5 years Growth in investment NEW of CPI + 10% Mathematical derivation C
Slide 6: Discovery Capital Allocation Philosophy
Discovery Capital Allocation Philosophy Three pillars of capital Solvency Allocated Capital Capital ESTABLISHED Dedicated capital and reserves Dedicated capital for 5 Year Capital Plan Projection planned initiatives Additional Individual business ORSA assessment including new Solvency 1 in 200 5 Yea
Slide 7: Combination of the Model and Growth Methodology gives confidence in 2018 Ambition
Combination of the Model and Growth Methodology gives us confidence in our 2018 Ambition Why & How Growth Engine Capital Philosophy Ambition 2018 IMPACT ASSETS Competitive advantage BUSINESS Achieving a Separation of Solvency Initial selection Selective lapsation sustainable group Capital, new
Slide 8: Financial Results and Performance
Financial Results and Performance 8
Slide 9: New business and Operating profit
New business Operating profit (1) Strong operational performance; (2) Continued investment in new initiatives (7% of earnings); (3) Demonstrable success of +15% +13% growth methodology (DI and PAH profitable on run-rate basis) and Shared-Value Insurance Model New business Operating profit DH: Integr
Slide 10: UK business performance impacted by interest and exchange rate headwinds
01 Jan 98 01 Jul 98 01 Jan 99 01 Jul 99 01 Jan 00 01 Jul 00 (1998 -2016) 01 Jan 01 01 Jul 01 01 Jan 02 01 Jul 02 01 Jan 03 01 Jul 03 01 Jan 04 UK Foward Yields 25 year 01 Jul 04 01 Jan 05 01 Jul 05 01 Jan 06 01 Jul 06 01 Jan 07 Nominal 25-year 01 Jul 07 01 Jan 08 01 Jul 08 01 Jan 09 01 Jul 09 01 Jan
Slide 11: Strong new business growth
Strong new business growth 6 months 6 months % to 31 Dec to 31 Dec change Rm 2016 2015 to R 8 245m +3% incl. DH take-on of new closed schemes 3 030* 2 527 +20% to R8 732m Established 1 053 970 +9% Established 1 278 1 168 +9% 92 97 -5% +9% 443 513 -14% 581 643 -10% 495 402 +23% Emerging +43% Emerging
Slide 12: New business growth in the UK market impacted by exchange rate headwinds
New business growth in the UK market impacted by exchange rate headwinds 6 months 6 months % to 31 Dec to 31 Dec change Rm 2016 2015 to R 8 245m +3% incl. DH take-on of new closed schemes 3 030* 2 527 +20% to R8 732m Established 1 053 970 +9% 1 278 1 168 +9% 92 97 -5% 443 513 -14% +6% in GBP 581 643
Slide 13: Robust normalised operating profit growth
Robust normalised operating profit growth 6 months 6 months % to 31 Dec to 31 Dec Rm change 2016 2015 to R 3 412m 1 188 1 061 +12% Established 1 768 1 561 +13% Business growth engine benchmark 326 270 +21% Established CPI +5% +11% 33 31 +6% 71 58 +22% 142 93 +53% 258 343 -25% (30) (69) +57% Emerging
Slide 14: Operating profit growth impacted by performance of the UK market
Operating profit growth impacted by performance of the UK market 6 months 6 months % to 31 Dec to 31 Dec Rm change 2016 2015 to R 3 412m 1 188 1 061 +12% Established 1 768 1 561 +13% 326 270 +21% 33 31 +6% 71 58 +22% +10% in GBP -8% in ZAR 142 93 +53% 258 343 -25% (30) (69) +57% New Emerging (91) (8
Slide 15: Group Embedded Value to R53.3bn dampened by economic headwinds
Group Embedded Value to R53.3bn dampened by economic headwinds +0.4% +R2.9bn (non-economic influences) -R2.0bn (economic influences) 2,431 39 248 840 234 145 292 1,301 1,599 R53.3bn R53.1bn 680 EV at Start of Period VNB (Excl Economic Unwind of Discount Other Initiatives Experience Variances Experie
Slide 16: Discovery Capital Allocation Philosophy
Discovery Capital Allocation Philosophy Three pillars of capital Solvency Allocated Capital Capital R6.3bn in dedicated capital Dedicated capital for 5 Year Capital Plan Projection planned initiatives Additional Individual business ORSA assessment including new Solvency 1 in 200 5 Year Buffer busine
Slide 17: Additional Buffer
Additional Buffer R1bn – R2bn Projected Buffer for new initiatives Financial Leverage Ratio cash or near 3,000 cash Flexibility to 28% pursue new initiatives, support adverse 2,000 Target experience Buffer R millions 1,000 FY2017 FY2018 FY2019 FY2020 FY2021 - FY2017 FY2018 FY2019 FY2020 FY2021 FLR B
Slide 18: Normalised Headline Earnings distorted in short-term
Normalised Headline Earnings distorted in short-term Reconciliation of Normalised Profit from Operations to Normalised Headline Earnings Impact on Factors that will ameliorate R million H1 2017 H2 2016 normalised by financial year end profit from operations Normalised Profit from Operations 3,412 3,
Slide 19: Tracking performance against Operating Model
Tracking performance against Operating Model Why & How Growth Methodology Capital Philosophy Ambition 2018 Separation of Solvency Capital, Achieving a sustainable group new initiatives and buffer for profit growth of unplanned events CPI + 10% Risk free + 10% Better than expected performance Rob
Slide 20: Emerging Businesses
Emerging Businesses 20
Slide 21: Several new initiatives moving to emerging businesses
Several new initiatives moving to emerging businesses, demonstrating the success of the growth engine New business Operating profit Progress +55% Operating profit (Rm) 2013 2014 2015 2016 Equity stake profitable to R 1 169m Leading specialist health insurer -9 Extraordinary growth with an annual
Slide 22: Health: Ping An Health
Cp ese PING AN HEALTH
Slide 23: New business API and operating result of equity stake
New business API (Rm) Operating result of equity stake (Rm) +55% H1 2013/2014 H1 2014/2015 H1 2015/2016 H1 2016/2017 to R1 169m +55% Equity stake in PAH profitable +77% +209% H1 2013/2014 H1 2014/2015 H1 2015/2016 +104% CAGR 23
Slide 24: Private health insurance in China expected to be a RMB1 trillion industry by 2020
Private health insurance in China expected to be a RMB1 trillion industry by 2020 Trends impacting demand Government and industry support Market is in its infancy 12% Number of private hospitals exceeds public 1. Aging population PHI premiums per Capita 9% hospitals % of population over 65 30000 x89
Slide 25: Three phases in the evolution of Ping An Health
Three phases in the evolution of Ping An Health 2010 2011 2012 2013 2014 2015 2016 2017 Phase 1 Phase 2 Phase 3 >1.3m insurance lives >180k sales Joint Venture between Product extension, distribution PAL distribution, digital healthcare agents Ping An and Discovery and healthcare asset development a
Slide 26: Ping An Group healthcare ecosystem
Ping An Group healthcare ecosystem Wanjia Clinics Company Ping An Good Doctor Ping An Health SHI Company Health Cloud Company > 10 000 80m #1 220 >$30mn Company set up to Largest global e-health Largest, leading Group high- SHI management company set Investment in Health records consolidate and deve
Slide 27: Ping An Health performance
Ping An Health performance Actuarial dynamics #1 Leading PHI writer in China Loss ratio (Group business) Group High End 100% Group Mid Market Individual Health Insurance > 1m RMB API in online sales a day Sophisticated infrastructure January December Risk management 2015 2016 Provider Networks Reten
Slide 28: Ping An Health is gearing up for strong growth
Ping An Health is gearing up for strong growth Growth strategy for PAH 5-year growth target Support required 1. Boost balance sheet Expand distribution footprint 7x (A- rating) 180k to 1m agent potential 2. Fund new business strain 3. Sales platforms and support Broadening online sales capability Cu
Slide 29: Discovery Insure
Discovery Insure
Slide 30: Discovery Insure new business growth and operating result
New business growth Gross Written Premium Vehicles covered Turning loss signature +23% +33% +22% to R495m to over R997m over 160 000 Operating result (Rm) 2012 2013 2014 2015 2016 New business API (Rm) Jul-13 Jul-14 Jul-15 Jul-16 Mar-14 Mar-15 Mar-16 Nov-13 Nov-14 Nov-15 Nov-16 Feb-13 Oct-14 Aug-15
Slide 31: Efficiencies emerging with duration effect impacted by high growth rate
Efficiencies emerging with duration effect impacted by a high growth rate Operating cost versus Combined ratio premium growth Durational impact 119% Loss ratio by duration 116% 111% 109% 109% 103% 1 2 3+ 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Average book dur
Slide 32: Vehicle insurance shifting towards a digitised FinTech environment
The world of vehicle insurance is shifting towards an increasingly digitised, FinTech environment Trends impacting insurance companies +237% Growth in global insurance Fintech investment in 2015 2014 2015 $0.8bn $2.6bn Accenture FinTech Report 2016 32
Slide 33: Drivers of competitive advantage: data and analytics
Drivers of competitive advantage Extensive data capabilities Powerful analytics Examples of analytics applications 5.4 billion km of data Discovery 1. Added Discovery telematics- enabled underwriting unique data capabilities dimension Over of pricing ƒ (Vitality status, Vitality ƒ (Driving behaviour
Slide 34: Drivers of competitive advantage: product and pricing
Drivers of competitive advantage: product and pricing allowing the selection and retention of risks Funding Wedge The Dynamic Plan Driver behaviour price Relative loss ratio Funding wedge Blue Bronze Silver Gold Diamond Traditional price 0-100 100-200 200-300 300-400 400-500 500-600 600-700 700-850
Slide 35: Disruptive use of technology ensuring a fully digital customer journey
Disruptive use of technology ensuring a fully digital customer journey On boarding Tracking driving Safety Claims DQ tracker and smart- Unique driver ClaimsView phone-enabled DQ tracker profile ImpactAlert CrowdSearch Discovery has over 500 000 clients all over South Africa with the Discovery app 35
Slide 36: ImpactAlert
ImpactAlert
Slide 37: CrowdSearch – Second layer of safety
CrowdSearch – Second layer of safety
Slide 38: CrowdSearch – Second layer of security
CrowdSearch – Second layer of security
Slide 39: Vitality Group
ARG GROUP
Slide 40: Vitality Group growth and expected profit
2016 2015 1. YOY Business revenue growth of 196% 2. Integrated insurance premium increase of Number of integrated 178% to R1.3bn products 3. Expected to deliver R300m – R500m in profit in next 3-5 years New market launched in 2016 Vitality penetration rate 40
Slide 41: Tremendous success of Vitality Active Rewards
Tremendous success of Vitality Active Rewards Vitality Active Rewards Engagement Rewards Earned Members Over 650k in less than 5 Over 16m activities Over 0.6m coffees and months completed healthy meals 19m physical activity Over 3.6m coffees/smoothie 300k unique members events logged vouchers given
Slide 42: Vitality Active – strategic partnership with Hannover Re
Vitality Active – strategic partnership between Vitality and Hannover Re A cloud-hosted Vitality solution, with a lower cost of entry and a quicker time to market & 3rd Active Rewards Largest reinsurer 150 5 000 Module countries clients Screen shot in the world Wellness Development and Support: Prod
Slide 43: New Network Assets 2017
NEW Network Assets 2017 VITALITY AGE 2.0 VITALITY VITALITY FOR SMOKING MENTAL WEIGHTLOSS ACTIVE SENIORS CESSATION WELLBEING REWARDS Silver Gold and Diamond Blue Bronze 15:5:2 UNIT LINKED VITALITY VITALITY FUND DYNAMIC FUND BOOST UNDERWRITING DYNAMIC COVER BOOST PRICING PRICING AMBASSADORS 2016 2017
Slide 44: Insights from CMLE
Insights from CMLE 10m+ life years 44.5k deaths Granular view of Vitality impact Jan 2012 – Mar 2015; family status; 3 year lag in status Standardised for Age, Gender, SE Class, Initial RUB; Rebased to Non-Vitality Extensive list of diseases analysed By disease: Cardiovascular diseases Malignant neo
Slide 45: New Initiatives
New Initiatives 45
Slide 46: Investment in new initiatives
Investment in new initiatives Initiatives in the pipeline of earnings decreased spend by Intent to enter Authorisation from the Registrar of Banks to establish a banking presence 13.3% banking to R 244m Gap in the market for investment products designed to support people in leading a healthy life
Slide 47: Adjacent expansion into the UK investment market
Adjacent expansion into the UK investment market Characteristics of the UK Composite model for investments Vitality Shared-Value Model savings market built on the same chassis £162bn Net retail flow in 2015 Client Encourage prudent financial management 1 life year People are living longer and intere
Slide 48: Several new initiatives moving to emerging businesses
Several new initiatives moving to emerging businesses, demonstrating the success of the growth engine New business Operating profit Progress +55% Operating profit (Rm) 2013 2014 2015 2016 Equity stake profitable to R 1 169m Leading specialist health insurer -9 Extraordinary growth with an annual
Slide 49: Established Businesses
Established Businesses 49
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50
Slide 51: Discovery Health - Sustained excellent performance
Discovery Health - Sustained excellent performance New business API (Rm) Type 1 new business API (Rm) Operating Profit (Rm) +20% +23% +12% to R3 030m excl. take-on of new schemes to R1 211m to R1 188m -8% incl. take-on of new closed schemes +23% +3% 2015 2016 2014 2015 2016 2015 2016 51
Slide 52: Discovery Health – A fully integrated health system
Discovery Health – A fully integrated heath system 52
Slide 53: Discovery Health's social mandate – Curbing medical inflation
Discovery Health’s social mandate – Curbing medical inflation Drivers of claims inflation Healthcare inflation is: 1.8% 11.3% 1 Not just about tariffs but utilisation 2.9% 2 Not just about the sick but also the healthy 6.1% 0.5% Not just about demand but 3 supply-induced demand Technology doesn’t re
Slide 54: Turnaround in Discovery Health Medical Scheme loss ratio
Dramatic turnaround in Discovery Health Medical Scheme loss ratio due to effective interventions R700m turnaround in projected DHMS claims - equivalent to 2% of total premiums R1 305m Hospitals Centres of Excellence Doctor partnerships Value network 2015 Admission Trend 2016 Admission Trend R703m R1
Slide 55: DHMS performance gap against other open schemes
Discovery Health Medical Scheme – Increasing performance gap and competitive advantage against other open schemes DHMS performance vs the rest of the open schemes market Low contribution increases (2017) Open schemes, DHMS excluding DHMS 15.0% Membership growth (Sep 15 – Sep 16) +2.5% -3.1% 12.7% 13
Slide 56: Discovery Health Medical Scheme - Continued excellent performance
Discovery Health Medical Scheme - Continued excellent performance Competitive advantage Growth Stability and security Lowest premiums in the scheme market +2.3% Membership Growth 94% No movement 3% 3% 3% Upgrade -15% >53 000 New lives 3% Downgrade 94% (2015: -14%) 26.3% Solvency R14.2bn Reserves AA+
Slide 57: Discovery Health – Widening competitive advantage
Discovery Health – Widening competitive advantage Restricted schemes >3.3m lives under administration 10/11 Closed schemes won over 5 years 40% overall market share for DH 18 Restricted schemes 591 616 Restricted scheme lives 30% Market share NEW Excludes GEMS medical scheme 57
Slide 58: Discovery Health investing over R800m per annum in technology
Discovery Health investing over R800m per annum in technology and digital innovation 500 000+ users 1st EHR in SA 59% YoY user growth 2,780+ doctors Discovery Member App 2.6 million+ monthly logins 1.2 million+ member consents 1st in SA healthcare Big Data and Data Science Hub 94% of queries answere
Slide 59: New functionality in Member App through partnership with HealthTap
Substantial new functionality in Member App and HealthID through partnership with HealthTap Database of 5.5bn Instantaneous indicative answers to medical diagnoses, with questions from over likelihoods and direct 107,000 doctors access to doctors for internationally further input Discovery Dr AI: Us
Slide 60: Ongoing reduction in administration fees
Ongoing reduction in administration fees despite substantial investments in technology and innovation Administration expenditure as % of GCI over time DHMS admin fees in bottom quartile as % of GCI Large open schemes (excl self-administered) Ranked 18th of 22 schemes 13% differential 7.7% DHMS 2016
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Slide 62: Discovery Life new business API and normalised operating profit
New business API (Rm) Normalised operating profit (Rm) +9% +13% to R1 053m to R1 768m 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 62
Slide 63: Vitality Shared-Value Insurance Model for Discovery Life
Vitality Shared-Value Insurance Model for Discovery Life Shared-Value Model Dynamic Pricing Model Output 1. New business effect 2. Selection Sales & Selection 3. Behaviour change effect Behavioral effect 4. Selective lapses 5. Bent q(x) Superior VNB 63
Slide 64: Strong growth in individual business and market share gains
Strong growth in individual business and further gains in market share Individual Life new business New business market share in the Retail Affluent API Jul-Dec (Rm) segment 27.5% 26.3% 10% 25.3% 25.7% 24.1% 9% 2% 6% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 YTD* Discovery Insurer A Insurer
Slide 65: Outputs of the Vitality Shared-Value Insurance Model
Outputs of the Vitality Shared-Value Insurance Model Selection Engagement Lapses Mortality Actual mortality rate relative to Distribution of lives on Vitality best estimate reinsurance rate statuses relative to 2010 2008-2013 100% Weighted 96% mortality expectation 41% lower 59% BE mortality Non-eng
Slide 66: Strong cash generation funding attractive new business
Strong cash generation funding attractive new business Profit/cash flow reconciliation Cash flow sources and uses Discovery Life & Invest cash flow 6 months to December 2016 Average Negative Reserve X Valuation (Rm) interest rate over the period + Premium income X Gross margin 3,160 R1.5bn invested
Slide 67: Strong cash generation funding attractive new business
Strong cash generation funding attractive new business Value of new business (Rm) Return on Capital profile over time Individual Life VNB Life and Invest (on a constant economic basis) Dec 2016 IRR +23% 25% Dec ‘16 Risk free + 10% 17 years Jun ‘16 20% 15% Dec ‘16 yield Risk free rate curve 10% • Cas
Slide 68: Product innovation evolving the Vitality Shared-Value Insurance Model
Product innovation evolving the Vitality Shared-Value Insurance Model and enhancing the customer journey Vitality Rating Managed Care Integrator Enhanced Severe Illness Medicals on Demand Non- Integrated Benefit Standard Integrated premium Select LifeTime Select Vitality Rating Opportunity to cover
Slide 69: Medicals on Demand reduces application times by 75%
Medicals on Demand reduces application times by 75% Application Appointment Nurse Laboratory Policy Current completed set up with conducts processes activated Average time process nurse medical samples to activation Application process started with client 1hr 2hr 24hr 72hr 96hr 100hr Medicals on Dem
Slide 70: Medicals on Demand: nurse dispatch
Sister Jane is 17 minutes (5km) away, driving a Toyota (DC 34 RE.GP) 70
Slide 71: Medicals on Demand reduces application times by 75%
Medicals on Demand reduces application times by 75% Application Appointment Nurse Laboratory Current Policy completed set up with conducts processes Average time process activated nurse medical. samples to activation Application process started with client 1hr 2hr 24hr 72hr 96hr 100hr Medicals Polic
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Slide 73: Discovery Invest new business, profit and assets under management
Normalised operating New business API (Rm) profit (Rm) Assets under Management (Rbn) +9% +21% +14% to R1 278m to R326m to R64bn 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun
Slide 74: Long-term savings platform harnessing Shared-Value Insurance Model
Long-term savings platform harnessing Shared-Value Insurance Model Delivering value to clients, resulting in increased Comprehensive range of savings solutions market share Lump sum Retirement Plan & Preservers > R2.2bn > R1.7bn Retirement Discretionary Linked Retirement Income Plan created in upfro
Slide 75: Vitality
heat Vitedity
Slide 76: Solid performance in a difficult economic climate
Solid performance in a difficult economic climate UK Primary Market ₤22.5m +10% Operating profit ₤57.7m +6% Sales 950k +5% Lives 76
Slide 77: Product innovation: Active Rewards with Apple Watch and HealthyFood with Ocado
Product innovation: Active Rewards with Apple Watch and HealthyFood with Ocado Earn your Apple Watch with Vitality Free delivery and up to 25% discount if you eat Health and Life Insurance healthy and exercise 15,000 Number of Apple Watch sold 500+ Daily orders 5x Increase in weekly HealthyFood spen
Slide 78: Record levels of engagement in Vitality
Record levels of engagement in Vitality Number of point-earning activities undertaken by members Value for members in 2016 Every day … 9X 19,298,765 GETTING HEALTHY 9,000 530 590 m discounted Vitality Health steps walked by our gym visits Reviews completed members GETTING REWARDED 1,440,440 £4,700 5
Slide 79: Brand investment: sponsorship and ambassador portfolio
Brand investment: expansion of sponsorship and ambassador portfolio Ambassadors Sponsorships Advertising The addition of Rugby Union player A diverse and expanding sponsorship In January Vitality became the first Maro Itoje, and new initiatives from portfolio, focused on sport and mass- company to r
Slide 80: VitalityLife
VitelityLife
Slide 81: Robust operational performance
Robust operational performance New business API (GBP) Number of lives covered Improved experience dynamics Actual vs Expected Claims* +8% to £32.7m +18% Expected to 415 000 lives 79% Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 2012 2013 2014 2015 2016 Cumulative FY 2015/16 H1 2016/17 period prior 2015
Slide 82: Performance impacted by interest rate headwinds
01 Jan 98 01 Jul 98 01 Jan 99 01 Jul 99 01 Jan 00 01 Jul 00 01 Jan 01 (1998-2016) 01 Jul 01 01 Jan 02 01 Jul 02 01 Jan 03 01 Jul 03 01 Jan 04 UK Foward Yields 25 Yr 01 Jul 04 01 Jan 05 01 Jul 05 01 Jan 06 01 Jul 06 01 Jan 07 Nominal 25-year 01 Jul 07 01 Jan 08 01 Jul 08 01 Jan 09 01 Jul 09 01 Jan 10
Slide 83: Performance dampened by Brexit impact
Performance dampened by Brexit impact Value of in-force (Rm) Operating profit (GBP) +7% -10% to £14.5m Release of second tier margins due to low interest rate environment: to R3 934m Reduced future £63m profit by*: 𝑎 = 22% decrease in VL profits (GBP terms) Jun-16 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
Slide 84: Remedial actions taken to mitigate the interest rate impact
Remedial actions taken to mitigate the interest rate impact Improved profitability on Whole of Life products Remedies against adverse impact Relative Net* VNB (Indexed) 1. Reprice of Whole of Life new business SII 2. Escalating products Remedies Brexit 3. Increased Optimiser take up WOL Optimiser ta
Slide 85: Confidence in the business going forward
Confidence in the business going forward Scenarios of future movements in the interest rate: Increase in No change in Decrease in interest rates interest rates interest rates Apr-15 Apr-16 Aug-14 Feb-15 Feb-16 Oct-14 Aug-15 Oct-15 Aug-16 Oct-16 Dec-14 Dec-15 Dec-16 Jun-14 Jun-15 Jun-16 • Existing bl
Slide 86: VitalityHealth
VitelityHealth
Slide 87: VitalityHealth operating profit and new business API
Operating profit (GBP) New business API (GBP) New business Split +82% +4% +20% in individual new business to GBP 8m to GBP 25m 13.0 10.8 2015/16 2016/17 Individual SME Corporate 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 87
Slide 88: Impact of behaviour change on claims rates
Evidence of the success of the model: impact of behaviour change on claims rates Record levels of engagement in Claims rates for Vitality members based on initial wellness Vitality engagement and subsequent changes in wellness engagement Level of claims (£) Low initial engagement Moderate initial en
Slide 89: Strong profit generation from inforce book
Strong profit generation from inforce book, with an investment in quality new business For the 6 months ending December 2016 GBP (m) 3.6 13.5 Up 21.5% from H1 2016 21 3 H1 2016 H1 2017 8 Profit from inforce book Profit from new business Acquisition expenses after Project amortizations and Operating
Slide 90: Management of hospital expenditure through purchasing alliances
Management of hospital expenditure through purchasing alliances Early signs of positive impact on hospital Market share for PMI claims per life +4% +4% -1% 23% of the PMI market forming a purchasing alliance Bupa AXA PPP Aviva VitalityHealth 2014 2015 Expected 2016 2016 Other 90
Slide 91: Operating Model
Operating Model Why & How Growth Methodology Capital Philosophy Make people healthier and enhance and protect their lives Vitality Shared-Value Insurance Model Target group profit growth of CPI + 10% 91
Slide 92: Unaudited Interim Results and Cash Dividend Declaration
UNAUDITED INTERIM RESULTS AND CASH DIVIDEND DECLARATION for the six months ende: 31 December 2016