Slide 1: Unaudited Interim Results
UNAUDITED INTERIM RESULTS for the six months ended 31 December 2021
Slide 2: Group headline results
GLOBAL Core new Normalised Headline Normalised business operating profit earnings headline earnings +6% +8% +78% +26% to R10 475m to R4 872m to R3 278m to R2 876m +2% new business API, including DH take- on of new closed schemes and gross revenue for Vitality Group 2
Slide 3: Discovery businesses and strands
Discovery Health Vitality Health Discovery Life Vitality Life Discovery Invest Vitality Invest Discovery Insure USA Vitality Car HEALTH Discovery Bank 3
Slide 4: Three concurrent areas of focus
Three concurrent areas of focus Navigating COVID-19 Robust Drive performance with for capital and growth liquidity strength 4
Slide 5: Navigating COVID-19
Navigating COVID-19
Slide 6: Most severe COVID-19 claims in period, fourth wave less severe
Most severe COVID-19 claims in period, but fourth wave was less severe than previous waves Individual Life provisions D614G Beta Delta Omicron remain intact, expected to be sufficient for H2 22 claims R538m R1 871m R3 940m R115m Discovery Discovery Discovery Discovery 80% Life COVID Life COVID Life
Slide 7: Recurring pattern in the South African COVID-19 waves
Recurring pattern in the 4 South African COVID-19 waves to date 7-day moving average of new COVID-19 cases and hospital Discovery Health clients case fatality admissions rate reducing over time D614G Beta Delta Omicron 14 Day Average Case Fatality Rate: 1 April 2020-31 December 2021 3500 24000 162 2
Slide 8: COVID-19 mutates in parallel
COVID-19 mutates in parallel – next variant hasn’t come from the last Flu Measles COVID-19 Virus mutates in a ladder- No immune pressure that Mutations haven’t evolved in a ladder-like like pattern, so fairly pushes one mutation to fashion - the next variant hasn’t been coming predictable outcompete
Slide 9: Vaccination is important
Vaccination is important Lower Lower transmission Lower mortality risk hospitalisation risk risk Vaccine effectiveness was Every 20% increase in Vaccines remain highly Historic Life COVID-19 claims* retained through Omicron vaccination leads to 50% effective at reducing mortality by vaccination stat
Slide 10: SA population has strong and increasing levels of immunity
0% 20% 40% 60% 80% 100% 20200201 20200222 20200314 20200404 20200425 20200516 20200606 20200627 20200718 20200808 20200829 20200919 20201010 20201031 20201121 20201212 % 20210102 20210123 20210213 20210306 Immunity 20210327 20210417 20210508 20210529 it wanes due to reinfection risk* 20210619 202107
Slide 11: Encouraging COVID-19 trends, provisions remain intact
Encouraging COVID-19 trends, provisions remain intact to cover best estimate scenario Case fatality rates reduced Higher risk Discovery Individual Life provisions remain significantly population vaccinated intact, expected to be sufficient for H2 22 claims Life deaths Actual % vaccinated At least pa
Slide 12: Financial results
Financial results
Slide 13: Resilient performance
Resilient performance +8% +6% R4.9bn R10.5bn ZARm Operating profit Core new business API Resilient financial performance, supported by continued operational efficiency and new Health 1 750 +5% 3 598 +29% business over the period Strong positive experience variances with robust capital and liquidity
Slide 14: Maintaining excellent growth
Maintaining excellent growth Core new business (Rm) Operating profit (Rm) 12,000 +6% 5,000 +8% 10,000 4,000 8,000 3,000 6,000 2,000 4,000 1,000 2,000 - - H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2014 2015 2016 2017 2018 2019 2020 2021 2022 2014 2015 2016 2017 2018 2019 2020 2021 2022 14
Slide 15: Operating profit
New business Operating profit H1 2018 H1 2018 *100% PAH H1 2019 H1 2019 +5% H1 2020 H1 2020 +29% H1 2021 H1 2021 to R3 598m to R1 750m H1 2022 H1 2022 Excl new closed schemes H1 2018 H1 2018 H1 2019 H1 2019 +9% +1% H1 2020 H1 2020 H1 2021 to R1 267m to R1 934m H1 2021 H1 2022 H1 2022 H1 2018 H1 2018
Slide 16: Investing heavily offshore, strong operating profit in the strands
Investing heavily offshore, strong operating profit in the strands 71% Bank and Vitality Group Bank 20% Other SA 11% 51% UK 18% VG Operating profit (ZARm): Total Group: 6% 13% 21% 18% 17% 4% 8% 18% 18% 16% 17% 31% 33% 9% 8% 47% 41% 52% 42% 52% 6,000 4,000 1,200 250 +4% +5% 5,000 +2% 1,000 +8% -5% +3
Slide 17: Group is well capitalised and highly liquid
Group is well capitalised and highly liquid Highly liquid across Sufficient liquidity Strongly capitalised FLR is within target the Group3 at the centre Liquid excess assets above minimum regulatory capital requirements FLR R millions SA Liquidity4 , R millions Dec 20 Dec 21 Cover Cover 29% 16 000 2
Slide 18: Group Embedded Value
Group Embedded Value +22.7% Annualised ROEV 14% excluding COVID-19, forex and economic changes Operational EV Economic and other +17% Annualised ROEV R82 920m R80 895m R74 645m Opening EV Value of new Unwind of Non-economic Operational EV Economic Forex Finance costs Other Change in Closing EV busin
Slide 19: Reported profit for period affected by three key factors
Reported profit for period affected by three key factors 6 months ended 6 months ended In SA, significant drop in real Rm Dec 2021 Dec 2020 % interest rates Normalised profit from operations 4,872 4,507 +8% 1 In UK, derivatives highly effective in mitigating 1 Economic assumptions adjustment - DL 49
Slide 20: The Vitality shared-value model
The Vitality shared-value model
Slide 21: The three trends remain relevant
The three trends remain relevant Standard risk factors, behavioural risk factors, correlations, pricing precision NATURE TECHNOLOGY OF RISK Digital functionality, engagement, behaviour change, personalisation SOCIAL RESPONSIBILITY Make people healthier, good for society, good for the planet HEALTH D
Slide 22: Conviction in the model
Conviction in the model Know Your Improve Your Get Health > Health > Rewarded Prediction Engagement Shared-value Next Best Action Vitality Points PRODUCT Next Best Action Healthy Futures Leading health State of the art health recommendation engine HEALTH INSURANCE assessment framework Vitality Statu
Slide 23: Risk prediction with Healthy Futures
Risk prediction with Healthy Futures 23
Slide 24: Example
Example Fx-smoker 30 minutes of moderate physical activity per day Poor cardiorespiratory fitness High consumption of alcohol, red meat, processed meat and sugar-sweetened beverages Hypertensive and not adhering to medication ORC) +0.9 22.2 = Potential 16.2 | increase in healthspan | Add 20 minutes
Slide 25: Healthspan
PREDICT RECOMMEND INCENTIVISE 12 weeks Demographics Quit smoking MEMBER Engagement history Quit smoking experience DATA Health claims Life claims Preferences 12 weeks Lose weight Healthy weight experience ∆qx │ ∆behaviour INFERENCE Manage stress CASUAL Coaches 6 weeks & burn-out Be well experience C
Slide 26: Execution in the three strategic strands
Execution in the three strategic strands
Slide 27: The strategic strands
The strategic strands Discovery Health Discovery Insure Discovery Invest Discovery Bank Vitality Health Vitality Invest Discovery Life Vitality Life Vitality Car USA HEALTH 1 Perfect composite model, #1 in every industry, and the Bank pivoting to growth as the composite-maker within SA Best-in-breed
Slide 28: Discovery Bank
Discovery Health Discovery Insure Discovery Invest Discovery Bank Discovery Life Excellent performance across all metrics, performance exceeded expectations resulting in the Bank’s operating loss reducing faster than plan 28
Slide 29: Key focus areas for the Bank
Key focus areas for the Bank Full service 1 bank at scale Transaction and Demand, tax-free, notice Multi-currency 24/7/365 Market-leading app & fixed-deposit accounts credit cards accounts availability functionality (24hr – 5 years) Savings Lending Shared-value 4.4% 8.5% 2 banking model 5 key financ
Slide 30: Discovery Bank's key performance metrics trending positively
Discovery Bank’s key performance metrics trending positively Total clients Total accounts Retail deposits Advances Operating result >400k >850k R9.5bn R4.2bn -R498m H1 H1 H1 H1 H1 FY18* FY19* FY20 FY21 FY22 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 FY21 FY21 FY21 FY21 F
Slide 31: Growth of 750+ high quality clients per day
Growth of 750+ high quality clients per day Average daily New business Channel mix Product mix new business composition ~750 average daily sales; highest Healthy distribution of “Discovery” Diversified channels – traction in ±50% Credit and Transaction new business levels across and “new-to-Discover
Slide 32: Market-leading NIR per client with strong engagement
Market-leading NIR per client with strong engagement Spend Engagement mix Gross NIR pcpm (DSY v market) 31% Growth in spend y-o-y 34% Primary and highly active clients 16% Higher than Big 4 average 20% +16% 34% 47% Primary and highly active Active Inactive DSY Bank 1 Bank 2 DSY Big 4 Bank 3 DSY Bank
Slide 33: Increasing market share of high-quality advances book
Increasing market share of high-quality advances book Credit card market Average advances Credit loss ratio Net interest Total NII share margin R4.2bn Indexed to Q2 FY21 ±20% Market share in >R100k 8% 110% pm income band 7% 20% 6% 16% 12% 5% 100% 8% 4% 4% 3% 0% 90% 2% 1% DSY market share 2021 DSY ma
Slide 34: Shared-value model correlations driving positive outcomes
Shared-value model correlations driving positive client and financial outcomes Funding Revenue Average deposits Spend 7x 4x 64 4.0 2.6 1.7 11 1.0 higher average 1 2 higher spend deposit Gold and Diamond vs Blue Gold and Diamond Blue Bronze Silver Gold and Blue Bronze Silver Gold and vs Book average
Slide 35: Digital scalability driving positive operating leverage
Digital scalability driving 40% positive operating leverage Revenue vs expense growth indexed to Jan 21 Revenue per client 120% +9% +2% H1 FY21 110% H1 FY22 100% Spend/client Fees/client 90% 40% Expenses per client 80% +35% 70% +2.5% H1 FY21 H1 FY22 60% Expenses Clients 50% Gross NIR pcpm Expenses p
Slide 36: Discovery Bank tracking ahead of upside scenarios
Discovery Bank tracking ahead of upside scenarios to deliver attractive returns and profitability Key financial levers Business case sensitivities and scenarios Long-term economics (FY26) Base Upside Current Growth: clients 1,000 (average daily new business) 500 0 Current Base Upside Average gross N
Slide 37: Key focus areas for the Bank
Key focus areas for the Bank Full service 1 bank at scale Transaction and Demand, tax-free, notice Multi-currency 24/7/365 Market-leading credit cards & fixed-deposit accounts accounts availability app functionality (24hr – 5 years) Savings Lending Shared-value 2 4.… 8.… banking model 5 key financia
Slide 38: Discovery Invest
Discovery Health Discovery Life Discovery Invest Discovery Insure Discovery Bank strong new business growth Performed robustly across all metrics with 38
Slide 39: Discovery Health
Discovery Health Normalised operating profit New business Membership +5% to R1 750m +29% to R3 598m >3.7m lives under administration Excluding the take-on of new closed schemes DHMS Restricted Schemes Non Scheme Products 2017 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2019 2021 H1 H
Slide 40: Discovery Health Medical Scheme performance summary
Discovery Health Medical Scheme performance summary Membership and growth Plan stability and low lapses Security and surplus >2.78m 38.6% AAA Plan movements 100% 90% lives 80% unaudited solvency credit rating 57.5% R30.8bn 70% 0.45% increase 60% following strong new business 50% in a contracting mar
Slide 41: Continued excellence in the closed scheme market
Continued excellence in the closed scheme market Robust growth Consistent, stable performance across all closed schemes 18 250% 500% Solvency 450% 200% closed schemes 700k 150% 100% lives 50% 32% closed scheme 0% 2019 2021 25% Solvency requirement market share Contribution increases 12% 10% 8% 6% 4%
Slide 42: Key healthcare insights emerging in 2022
Key healthcare insights emerging in 2022 Healthcare utilisation is Population health has COVID-19 has increased COVID-19 will continue increasing following drop worsened overall disease burden to feature prominently High utilisation end of 21 Percentage of lives with key health Percentage of claims
Slide 43: Discovery Life
Discovery Health Discovery Insure Discovery Invest Discovery Bank Discovery Life Strong positive experience variances with robust capital and liquidity positions. R6bn gross COVID-19 claims paid cumulatively which reduced asset base returns and impacting earnings 43
Slide 44: Discovery Life
Discovery Life Normalised Record high claims New business API Strong capital Positive cashflow operating profit paid, 3rd and 4th and liquidity from existing book COVID-19 waves in impacted by in period +1% this period +9% SCR Liquidity COVID-19 claims to R1 934m Gross claims (Rm) to R1 267m Life an
Slide 45: Embedded value growth and value of new business
Robust embedded value growth driven by positive operating variances and inforce growth, resilient new business margins Positive non- Life and Invest embedded value Value of new business and margin economic experience (Rbn) variances H1 2022 (Rm) +15% +10% VNB (Rm) Life: Annualised VNB margin (%) Lif
Slide 46: Discovery Invest
Discovery Health Discovery Insure Discovery Invest Discovery Bank Discovery Life Robust performance with strong increase in new business growth and assets under management 46
Slide 47: Discovery Invest
Discovery Invest Normalised New business Assets under Lapse rates Shared value operating profit administration outcomes +10% +15% +19% -16% Since the launch of shared value: to R517m to R1 519m to R128bn 12% lower drawdowns 7.5 more years to retirement R13bn in shared value benefits accrued and paid
Slide 48: Discovery Insure
Discovery Health Discovery Insure Discovery Invest Discovery Bank Discovery Life Difficult period, characterised by an increased loss ratio driven by adverse weather events combined with motor parts inflation dramatically exceeding CPI 48
Slide 49: Discovery Insure
Discovery Insure Gross written New business Normalised Vehicles insured Market share premium operating profit in GWP +13% to R2 318m1 -3% to R597m1 -86% to R15m2 +11% to 292 0001 7% CMT Personal lines H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2018 2019 2020 2021 2022
Slide 50: Improved quality of drivers but external factors affected claims
Improved quality of drivers but external factors affected claims Retention of good Better risks from gold Improved loss ratios H1 2022 loss ratio drivers and diamond drivers with client duration higher than 2021 Lapse rates by Vitality status Relative loss ratios by Vitality Loss ratio by duration H
Slide 51: Economic and environmental factors contributed to a higher loss ratio
Economic and environmental factors contributed to a higher loss ratio High repair cost High inflation1 in the Resulting from rapidly Impact with value of inflation, hailstorms cost of car parts increasing shipping costs car makers and fire claims Reasons for variations in AvE Car parts inflation by
Slide 52: Vitality Health, Life, Invest and Car
Vitality Health Vitality Life Vitality Invest 52 Vitality Car
Slide 53: UK Composite
UK Composite Normalised Earned premiums Lives covered New business operating profit +36% +7% +11% +7% to £54.2m to £438m to 1.48m lives to £77.2m Vitality Health Vitality Invest Vitality Life Vitality Car GBP millions GBP millions GBP millions Best-in-breed products across businesses and operating a
Slide 54: Vitality Health
Vitality Health Normalised Earned premiums Lives covered New business operating profit +44% to £41.5m +7% to £274m +10% +15% to 764k lives to £34.5m GBP millions GBP millions GBP millions H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 20
Slide 55: Strong performance across all metrics driving profit growth
Strong performance across all metrics driving strong profit growth Excellent performance of Further improvement in High impact of pricing retention strategy expense efficiencies initiatives over time Lapse rates Per life per month expenses New business as a % of lives insured Lapses as a % of lives
Slide 56: Positioned to accommodate a catch-up in claims post-COVID-19
Strategically positioned to accommodate a catch-up in claims post- COVID-19 Authorisations have returned to Widening access to care through digital pathways has improved pre-COVID-19 levels efficiency of care delivery Monthly authorisations per 1000 lives Primary care now accounts for over 40% of Ex
Slide 57: Vitality Life
Vitality Life Normalised operating Earned premiums Lives covered New business profit +15% +7% +6% +3% to £17.6m to £164m to 686k lives to £27.1m GBP millions GBP millions GBP millions H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2
Slide 58: Continued strong operating performance driven by retention strategy
Continued strong operating performance driven by excellent retention strategy Benefits from addressing 10 Positive trend in lapse Hedge performed well in a volatile interest point plan now being AvE continued rate environment witnessed 30 120% Area Management actions 20 GBP Millions 10 1 Intervened
Slide 59: Vitality Health partners
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Slide 60: Strong underlying growth. Health insurtech JV in Asia with AIA
Insurance Vitality Health Partner Markets International USA HEALTH Strong underlying growth. Broadening our global impact through a health insurtech JV in Asia with AIA 60
Slide 61: Vitality Group
Vitality Group 2 Integrated API by Revenue Operating result Insurance partners insurance partners membership 1 to $766m to $44.5m to $15.5m to 2.7m R11.5bn R667.5m R234m +45% +26% H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2018 2019
Slide 62: Insurance Partner Markets
Insurance Partner Markets 62
Slide 63: Insurance Partner Markets: continued robust performance
Insurance Partner Markets Continued robust performance as the platform scales KPIs Strong intrinsic contract Margin emergence 2016 2017 2018 2019 2020 2021 values 28 Number of Insurance markets revenue & expenses 9 markets 120 Actual → Forecasted Present value of existing contract revenues 67% Penet
Slide 64: Vitality Health International
Vitality Health International Broadening our global impact Unique ecosystem Shared-value health insurance approach Vitality Health International USA HEALTH 64
Slide 65: Extending the behavioural platform through health insurtech JV in Asia with AIA
Extending the behavioural platform through a health insurtech JV in Asia with AIA • Providing initial capital • Proprietary IP and native • Leading pan-Asian health strength of digital assets and businesses, with a captive programs base of ~50m clients across • 250 Discovery talent, 9 key geographie
Slide 66: Offering a full suite of services to healthcare businesses
Offering a full suite of services to healthcare businesses Capabilities CARE DELIVERY NETWORKS VIRTUAL CARE AND PROVIDER NETWORKS PRIMARY CARE HOSPITAL CRITICAL PRODUCT ARCHITECTURE CARE ILLNESS CLAIMS & DIGITAL HEALTH HEALTH INSURANCE TECHNOLOGY ADMINISTRATION ECOSYSTEM CLAIMS SEGMENTATION & VALUE-
Slide 67: Significant value to be unlocked in an enormous market
Significant value to be unlocked in an enormous market Amplify Health has already proven potential Potential to scale in rapidly-expanding digital through a POC healthcare space in Asia 2020 healthcare expenditure in markets where AIA operate Annual growth in Asia health expenditure (vs 5% in develo
Slide 68: Ping An Health
Ping An Health PAH’s operating Discovery’s operating Written premium1 New business1 results pre-tax result after tax to R1.1bn to R140m to R20.4bn to R5.7bn (DSY’s share is R277m) Growth in Own Licence business H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2018 2019 2020 2021 2022 2018
Slide 69: Exceptional calendar year growth, sustainable high-quality metrics
Exceptional calendar year growth, focused on sustainable growth reflected through high-quality business metrics Operating result grew 44% High quality metrics and balance sheet PAH is one of the over CY2021 strength most profitable PAH operating result pre-tax ZARm Lapse rates insurers in China -3.1
Slide 70: Distribution channels optimised for a maturing business model
Distribution channels are being optimised to adapt to a maturing business model, balancing both scale and quality Historic business model Maturing business model leverages capabilities Reaching customers through prioritised scale to establish to create customers value new and diverse channels market
Slide 71: Three concurrent areas of focus
Three concurrent areas of focus Navigating COVID-19 Robust Drive performance for with capital and growth liquidity strength 71
Slide 72: Unaudited Interim Results
UNAUDITED INTERIM RESULTS for the six months ended 31 December 2021