Slide 1: Unaudited interim results and cash dividend for six months ended 31 December 2017
La Unaudited interim results and cash dividend rati + FORTHE SIX MONTHS d S c| a la Cl O fi | ENDED 31 DECEMBER 2017 Discovery
Slide 2: Core new business, normalised operating profit and headline earnings growth
Core new business Normalised operating profit Normalised headline earnings +16% +19% +30% to R9 303m to R4 059m to R2 829m +10% to R9 705m incl. DH take-on of new closed schemes and gross revenue for the Vitality Group 2
Slide 3: Why, how, what: make people healthier and enhance and protect their lives
WHY HOW WHAT Members Life insurance Make people Improved health, better value through improved price and benefits healthier and Short-term insurance enhance and Long-term savings protect their lives Health insurance Society Insurer Banking Healthier society Lower claims Improved productivity Higher
Slide 4: The 2018 Ambition
The 2018 Ambition | best insurer in the world and a powerful force for social good BUSINESSES IMPACT 1 Insurgent 1 R10bn in pre-tax earnings 2 Significant 2 CPI + 10% profit growth engagement 3 Risk free + 10% return on capital 3 Superior dynamics actuarial 4 10m Vitality members 4 Meeting complex c
Slide 5: Observations for the period
Observations for the period 1 Group performance exceeded expectation, enabling it to track strongly toward its stated 2018 Performance Ambition. Normalised operating profit grew 19%, normalised headline earnings grew 30%, while new business grew 16% 2 Results were ahead of the stated growth methodol
Slide 6: Impact
Impact Core new business Operating profit Return on capital Cash generated Embedded value 6
Slide 7: Operating model
Operating model Growth methodology Capital management Cash management Group profit growth of Return on capital FLR Cash buffer CPI + 10% risk free + 10% < 28% R1bn - R2bn 7
Slide 8: Strong operating profit growth
Strong operating profit growth 6 months 6 months Rm to 31 Dec to 31 Dec % change +19% 2017 2016 1 332 1 188 +12% to R4 059m 1 839 1 768 +4% Established 419 326 +29% 57 33 +73% +19% +15% 82 1 71 1 +15% +13% 355 142 +150% +7% +19% 261 258 +1% 29 (30) +197% Emerging 1 (91) +101% +151% 36 (9) +500% H120
Slide 9: Emerging businesses experienced rapid growth
Emerging businesses experienced rapid growth Discovery Insure gross premium Vitality Group integrated income Ping An Health written premium insurance premiums +30% +62% +45% to R1.3bn to R3.8bn to R1.9bn 2013 H1 2013 H2 2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1 H1 2016
Slide 10: Robust core new business growth
Robust core new business growth +16% 6 months 6 months Rm to 31 Dec to 31 Dec % change 2017 2016 to R9 303m 3 3241 3 0301 +10% +10% to R9 705m incl. DH take-on of new closed schemes and gross revenue for the Vitality Group 1 121 1 053 +6% Established 1 220 1 278 -5% 522 443 +18% 557 581 -4% 495 406
Slide 11: Strong new business growth from emerging businesses
Strong new business growth from emerging businesses Discovery Insure new business Ping An Health new business Vitality Group fee income from API API insurance partners +22% +70% +34% to R495m to R1 986m to R123m* H12014 H12015 H12016 H12017 H12018 H12014 H12015 H12016 H12017 H12018 H1 FY2016 H1 FY20
Slide 12: Performance exceeded growth engine targets
Performance exceeded growth engine targets Target Actual ESTABLISHED CPI + 5% CPI + 10% ~3 years EMERGING CPI + 30% CPI + 146% ~5 years NEW 10% 8% CPI + 10% CPI + 14% CPI = 4.7% 12
Slide 13: Tracking in line with capital management philosophy
Tracking in line with capital management philosophy Target Actual risk free+10% risk free+11.2% <28% 26.5% R1bn – R2bn R2.5bn *Annualised ROE for the six-months based on normalised headline earnings **Risk-free is calculated as the Group’s weighted average risk free across the geographies it operate
Slide 14: Reconciliation of reported profit to normalised headline earnings
Reconciliation of reported profit to normalised headline earnings 6 months ended 6 months ended Rm % change Dec 2017 Dec 2016 Profit from operations 3 859 3 249 19 Other (incl. finance costs) ( 325) (233) Includes gearing effect of loss-making Profit before tax 3 534 3 016 17 businesses turning prof
Slide 15: Dividend policy framework
Dividend policy framework Contribution Dividend to operating Philosophy cover ratio profit ESTABLISHED 90% In line with market 2.5 90% x 40% 40% of profit ~3 years Dividend cover ~5 years EMERGING 20% No dividend 0 0 ~4 NEW -10% Funded from the 1 10% dividend Dividend declaration of: 101cps (+15%) 1
Slide 16: Cash management supports the growth methodology
Cash management supports the growth methodology R6.1bn Cash generated by the Group before tax 6,107 440 4,845 1 717 3,511 2 149 1 800 H1 2016 H1 2017 H1 2018 Sources of cash 16
Slide 17: Cash management supports the growth methodology
Cash management supports the growth methodology R6.1bn FLR 28% Cash buffer Cash generated by the Group R2.5bn before tax R2.bn 26.5% Uses of cash 6,107 1,688 Tax, dividend and finance costs 4,845 3,511 3,822 New business 1,110 New initiatives H1 2016 H1 2017 H1 2018 Sources of cash 17
Slide 18: Return on embedded value
Return on embedded value (EV) +13% Annualised growth in EV ~15% of total revenue attributable to emerging 141 businesses which are not 2 886 -952 included in the EV 60 408 1 275 Group revenue (Rm) incl. 25% of Ping An Health written premium 57 294 26,564 R236m Reduction in EV due to initiatives 23,5
Slide 19: Significant progress towards achieving 2018 Ambition
Significant progress towards achieving 2018 Ambition 2013 2018 Prospects Bank Prospects Vitality Invest Umbrella funds Insure Commercial TVG insurance PAH Operating profit New business Countries Operating profit New business Countries R2 367m R5 854m 5 R4 059m R9 705m 19 19
Slide 20: Foundation
Foundation People Values Brand Business model 20
Slide 21: Scale and sophistication of the Global Vitality Network
Scale and sophistication of the Global Vitality Network 19 countries >7m Vitality members ACTIVE INSURERS +200 000 members each ONE month TECHNOLOGY DATA 40m+ life years of mortality >R500m allocated to PARTNERS C M L E and morbidity data developing a single global ONE analysis and Vitality platform
Slide 22: Addressing physical inactivity as a first priority
Addressing physical inactivity as a first priority Significant correlations to mortality Causal impact on healthcare claims Mortality experience by physical activity Morbidity healthcare claims (Generalised linear model results : five-year in- band (Indexed) hospital costs) Starting Change in activi
Slide 23: Two years since launch of Vitality Active Rewards with Apple Watch
Two years since the launch of Vitality Active Rewards with Apple Watch 1 Get Apple Watch 2 Achieve your exercise goal 3 Get Rewarded Weekly rewards Personalised Dynamic Any exercise Vitality Active Rewards with Apple Watch Benefit design (US) Get active Achieve your goals Get rewarded Members get th
Slide 24: Significant engagement and behaviour change
Significant engagement and behaviour change 22%-63% more active in the 35% - 110% more active long run Impact seen across all risks Average exercise days per month after taking up benefit exercise days 5.5 per month to 7.6 BMI Band +35% Low +28% +29% +90% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 +
Slide 25: Creating shared value
Creating shared value Hospital and chronic costs Better retention Per life per month healthcare costs1 of Apple Watch members vs Lapse rate for Health and Life policies other members over Sep’16-Sep’17 Indexed to members with no Active Rewards benefit Percentage Discovery Health policy lapses -18% H
Slide 26: Increased disease burden at older ages
Increased disease burden at older ages Risk factors vary by age Increased disease burden at older ages 100% Total chronic disease rate Rate per 900 1,000 lives 80% 60% 700 40% 500 20% 300 0% 20 - 30 30 - 40 40 - 50 50 - 60 60 - 70 70 - 80 80+ 100 Dietary risks Low PA Smoking & Secondhand smoking Alc
Slide 27: Life expectancy
Manifestation in retirement planning Life expectancy 93.6 +10 years • Vaccinations Average • Physical activity • Medical adherence Shortfall 83.2 • Preventative screenings Current savings Current Age: 50 Retirement Age:65 Retirement savings Vitality boost for healthy behaviour Life expectancy for a
Slide 28: Transitioning to a single behavioural chassis
Transitioning to a single behavioural chassis Health 2018 Gold Fitness Silver Bronze Driving Vitality Blue Points Blue Bronze Silver Gold Driving Financial 28
Slide 29: Vitality Shared-Value globalisation
Vitality Shared-Value globalisation Expansion into new Expansion into Expansion into markets and adjacent industries adjacent industries partners Invest Bank 29
Slide 30: Businesses
Businesses Discovery Bank Vitality Invest Commercial insurance Umbrella funds Emerging Established New 30
Slide 31: Discovery Insure: new business, gross written premium, operating result
New business Gross Written Premium Operating result +22% +30% +197% to R 495m to R 1.3bn (H1) to R29m H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 2013 H1 2013 H2 2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 31
Slide 32: Drivers of the operating result
Drivers of the operating result Premium income 57% CAGR Claims 52% CAGR Expenses 32% CAGR 2013 H1 2013 H2 2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1 32
Slide 33: Vitality model for Discovery Insure
Vitality model for Discovery Insure Engagement Loss ratio Lapses Dec 2015 – Dec 2016 – Dec 2017 -70% -70% -55% +50% Blue Gold and Diamond Blue Bronze Silver Gold Blue Bronze Silver Gold 33
Slide 34: Dynamics manifesting in a strong insurance book
Dynamics manifesting in a strong insurance book Claims ratio by cohort duration Claims ratio over time Profit from existing book (Rm) Average book duration: 23 months For the 6 months: -35% -13% Existing Book Premium R1.1bn Existing Book Profit R99m Excl. Associates Year 1 Year 2 & 3 Year 4 + H2 201
Slide 35: Direct and intermediated business offer similar value to clients
Direct and intermediated business offer similar value to clients Business mix and growth Value of new business Direct Intermediated But provide the same value to customer per unit of premium paid 2011 2017 Intermediated business has Premium 30% higher VNB Claims + rewards 61% 59% New business API: R
Slide 36: Vitality network membership
Network Membership +49% to 1.78m PARTNERS GYM & DEVICES GROCERS TRAVEL OTHER ACTIVE REWARDS June 2013 June 2014 June 2015 June 2016 June 2017 December 2013 December 2014 December 2015 December 2016 December 2017 LIFE INSURANCE HEALTH INSURANCE UNIT-LINKED PRODUCTS CORPORATE WELLNESS PRODUCTS >60 10
Slide 37: Vitality Group: integrated API, fee income, operating result
Fee income from insurance Vitality integrated API partners Operating result +45% +34% +101% to R1.9bn* to R123m* to R1m H1 FY2016 H1 FY2017 H1 FY2018 H1 FY2016 H1 FY2017 H1 FY2018 H1 FY2016 H1 FY2017 H1 FY2018 *Excludes US corporate business 37
Slide 38: Gearing of profit
Gearing of profit +34% ~70% Growth in fee expenses are income expected fixed to translate directly to growth in operating profit H1 2016 H1 2017 H1 2018 Fixed expenses H1 Marginal expenses H1 Operating profit H1 2018 2018 2018 Fee income 38
Slide 39: Use case: Market A
Use case: Market A Vitality take-up New business growth Engagement Attractive benefits 4x membership growth 2x increase in policy applications after launch 38 average Vitality of Apple Watch 35% activities per month per member 29% 11bn steps ~170x around the world 2016 Q4 2017 Q4 2016 H1 2016 H2 201
Slide 40: Use case: Market B
Use case: Market B Reduced lapses and Vitality take-up New business growth Engagement improved profitability 4x Vitality members have roughly higher margin 22% membership growth 350k 66% workouts than non-Vitality tracked per members week Non-Vitality member 45% 30% 60% 21bn steps ~ 320x around the
Slide 41: Increasing expansion into new markets and partners
Increasing expansion into new markets and partners Maturity of market < 1 year / New 3 years 2 years 4+ years Japanese insurance market Americas Asia-Pacific 2 World’s nd 152m Policies in- force largest life insurance market $316bn Gross written premiums Europe Australia Sumitomo Life Market rank Po
Slide 42: Ping An Health ecosystem
Ping An Health ecosystem Expertise Insurer Products Distribution 1.4m+ life insurance sales 1.4bn people agents LIFE AGENTS 2000+ outlets across China 11 branches Group cover >100m HEALTH people Individual DISTRIBUTION HEALTH Online 41 branches across China ANNUITY 140k Insurance & P&C AGENTS Agents
Slide 43: Ping An Health continues to extend reach
Ping An Health continues to extend reach Branch network covers most of largest cities and continues expanding Moving online with explosive growth Population (Millions) Business mix (R revenue) New business sales (API) Guangzhou Beijing Selling 200-220k policies per month Shanghai 8% Sold through Wuh
Slide 44: Ping An Health results
Ping An Health Discovery’s operating New business Written premium operating profit profit +70% +62% 10x +500% to R2bn to R3.8bn to R244m to R36m H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 FY2015 FY2016 FY2017 FY2018 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 FY2015 FY2016
Slide 45: Businesses
Businesses Discovery Bank Vitality Invest Commercial insurance Umbrella funds Emerging Established New 45
Slide 46: Discovery Health: new business, membership, operating profit
New business Membership Operating profit +10% >3.4m +12% to R3 324m lives excl. take-on of new closed to R1 332m schemes DHMS Restricted Schemes 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 46
Slide 47: Discovery Health Medical Scheme delivers strong and consistent growth
Discovery Health Medical Scheme continues to deliver strong and consistent growth dynamics and financial performance Growth Stability Security 56% 2.78 94% No movement 27.45% Market Share million Solvency lives 41k 3% Upgrade New lives R16.3bn 3% Downgrade Reserves R2.45bn Net surplus 5% Annualised
Slide 48: The healthcare trilemma
The healthcare trilemma Cost DISEASE COST BURDEN TREATMENT COST MEMBER MEMBER DISEASE TREATMENT BURDEN A+ PREVENTION QUALITY ACCESS AND COST Access Quality 48
Slide 49: Cost and disease burden
DISEASE COST BURDEN TREATMENT COST MEMBER MEMBER DISEASE TREATMENT BURDEN 7.9% contribution increase (DHMS) 16% cheaper than market 49
Slide 50: Impact of managed care initiatives
Impact of managed care initiatives KidneyCare programme DiabetesCare programme 100% of dialysis Detailed Enrollment Access to high Detailed centres and monitoring of unlocks quality reporting and patients key dialysis additional risk coordinated feedback enrolled metrics benefits care Length of stay
Slide 51: Record fraud savings and recoveries in 2017
Record fraud savings and recoveries in 2017 Significant fraud savings Sophisticated fraud analytics and tools Fraud savings and recoveries in 2017 (Rm) Code gaming Network analysis 539 405 351 False claims analysis Jan-15 Jan-16 Jan-17 2014/04… 2015/01… 2015/02… 2015/02… 2015/03… 2015/03… 2015/04… 2
Slide 52: Extensive provider networks
Extensive provider networks Network Geographic Presence Reach GPs >5 700 practices 87% of total GP visits within the Discovery Health network Specialists >6 400 specialists 89% of total specialist visits within the Discovery Health network Hospitals >670 facilities 94% in-hospital coverage ratio 52
Slide 53: Providing affordable healthcare for members
Providing affordable healthcare for members Savings through Vitality and Competitive contributions for Value for money managed care members 43 R6.2bn in savings 5.0 DHMS weighted average contribution increase 7.9% R2 Value generated for every R1 paid to Discovery Health 11.6% For 2018 10.1% 1.2 -16%
Slide 54: Impact of Discovery Health system on restricted schemes claims inflation
Impact of the Discovery Health system on restricted schemes claims inflation Weighted claims inflation for schemes pre and post Discovery Health Glencore Bankmed administration 13.4% 10.3% 19.8% 7.0% 7.4% 12.0% 8.5% 3.7% 5.7% 2014 2015 2016 2017 2014 2015 2016 2017 -3.5% Average Increase: Average In
Slide 55: Discovery Life: new business and operating profit
New business Operating profit +6% +4% to R1 121m to R1 839m H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 55
Slide 56: Derivation of profit
Derivation of profit Profit DL profit estimate Reconciliation (accounting to estimate) Rm 3,607 3,368 3,334 3,174 Profit margin 1 Revenue x VNB margin* 1,839 Fluctuations 2 Experience variances 1,866 Return on Assets 3 Discount rate x Negative reserve 2016 FY 2017 FY 2018 H1 * Gross of COC and Tax 5
Slide 57: New business dynamics remain strong
New business dynamics remain strong Growth in market share Acceleration in Q2 post launch Increasing VNB margin 27.5% Individual Life new business growth vs. H1 2017 Individual Life new business (incl Servicing, excl ACI's) 25.9% 26.4% 12.7% 25.7% 7% 6% 6% 11.5% 22% 20% 10.6% 20% 18% -2% -7% -11% Oc
Slide 58: Positive experience variances for half year
Positive experience variances for half year Experience variances over time Variances in H1 2018 (Rm) Trend in policy alterations Life and Invest experience variances over time Rm Extended modelling term 33 Dec16 Dec17 Expenses 25 Lapses 64 206 Economic -98 Policy alterations -98 -45 Mortality and mo
Slide 59: Reinsurer validation of the model
Reinsurer validation of the model Actual experience vs. Standard life q(x) Actual = Expected (Standard life), risk adjusted -20% VS. Other SA insurers DL Book Blue Bronze Silver Gold Diamond Source: Global reinsurer 59
Slide 60: Claims volatility from non-natural deaths
Claims volatility from non-natural deaths Suicide as percentage of death claims Small number of large policies Suicide claims in six months is double historic six month experience Rm 144 Other Other Other Other Cancer Cancer Cancer Cancer Nervous Nervous 63 Nervous Nervous MVA MVA MVA MVA Crime and
Slide 61: Dynamic pricing leads to dynamic mortality expectations
Dynamic pricing leads to dynamic mortality expectations Vitality status and rewards Dynamic pricing Expectations of mortality By policy count Bent q(x) 50% 20% 21% 9% Mortality rates Blue Bronze Silver Gold By sum assured 44% Significant upfront premium discounts 1 including Vitality 26% 20% 10% 2 D
Slide 62: Vitality status driving extraordinary engagement
Vitality status driving extraordinary engagement Actuarial refinement Proliferation of wearables End of year points rush Physical activity days per life policy Vitality Health Check Online 10% Unverifiable, lower weighting 23% 5% Nutrition x2 8% Exercise Flu vaccinations 41% Focus on intensity vs. q
Slide 63: Fraud detection models and machine learning
Fraud detection models and machine learning 99.2% of clients truthful but 3 000 Discovery Life Gold clients confirmed fraudulent Gold 500m 5m biometric exercise readings; 10k> 10k > adviser readings healthcare client books professionals Device Model Provider Model Adviser Model Outlier Time-series M
Slide 64: Robustness of the negative reserve
Robustness of the negative reserve DL profit estimate Negative reserve robust despite sensitivities in assumptions (Rm) 2,087 2,023 2,277 1st and 2nd 1 Revenue x VNB margin* 20,243 Tier margins 2 Experience variances 44,251 Negative reserve excl. margins 3 Discount rate x Negative reserve Reserve +
Slide 65: Discovery Invest: net flows and operating profit
Net flows Operating profit +20% +29% to R3.3bn to R419m HY1 2014 HY1 2015 HY1 2016 HY1 2017 HY1 2018 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 65
Slide 66: Drivers of operating performance
Drivers of operating performance Assets under management Business mix VNB margin +22% 2.7% to R77.8bn 2.5% 77% in Discovery funds Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun17 Dec17 66
Slide 67: Brilliant fund performance
Brilliant fund performance Discovery Invest ranked 4th in PlexCrown ratings (Up from 12th) Fund Fund Size 1 Year Sector 3 Year Sector 5 Year Sector Return Quartile Return Quartile Return Quartile (Annualised) (Annualised) Discovery Balanced Fund R22bn 11.3% 2 8.1% 1 11.5% 1 Discovery Equity Fund R2b
Slide 68: Vitality: new business, operating profit, lives covered
New business Operating profit Lives covered +5% +54% +7% to R1.08bn (£61m) to R616m (£35m) to 1.02m lives H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 2013 2014 2015 2016 2017 68
Slide 69: Exceptional engagement
Exceptional engagement Number of points-earning activities undertaken +58% to 30m 52k Apple Watch sold to date 2013 2014 2015 2016 2017 3.5m Physical activity events workouts tracked +42% per week 2013 2014 2015 2016 2017 Screening and preventative >5m care Starbucks drinks +11% to date 2013 2014 20
Slide 70: Changing health and life insurance for good
CHANGING HEALTH AND LIFE INSURANCE FOR GOOD Viledity
Slide 71: Vitality brand competes on its own terms
Vitality brand competes on its own terms I think I’ll just stay here actually I’m not built for squats My Vitality age is 24. Stanley That’s 168 in dog years. Antagonist Creates brand tension with charming irreverence for Wearing well, Jessica. healthy living messaging Vitality ambassadors Inspirati
Slide 72: Brand strategy yields powerful presence
Brand strategy yields powerful presence Prompted brand awareness of Vitality Leads generated through direct channels Achieved after 10 years of brand 46% investment after 3 years +50% 45% 38% 14% Nov 14 Nov 17 H1 2016 H1 2017 H1 2018 72
Slide 73: New business and operating profit (UK)
New business Operating profit -4% +1% to R557m (£31.5m) to R261m (£14.8m) H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 73
Slide 74: Interest rate environment
Interest rate environment UK spot yields Monthly interest rate over time Brexit 5 4 Impacted reserves 3 by approximately £75m Interest rate (%) 2 1 over time 0 -1 -2 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 J
Slide 75: Business reconfigured for low interest rate environment
Business has been reconfigured for low interest rate environment Term New business mix WoL Annualised VNB Margin Term assurance mix 65% 71% 76% 92% 96% 11.4% 11.5% 2013 2014 2015 2016 2017 Indexed Impact of Brexit New business mix Level Indexed premium 6.7% 22% 25% 27% 30% 36% mix 5.1% 2013 2014 201
Slide 76: Upside as interest rates rise
Upside as interest rates rise UK 25y spot yield 2.15 1bps 2.10 Interest rate used for valuations 2.05 increase in interest 2.00 rate (at current levels) 1.95 → + £0.9m 1.90 1.85 1.87 Change in reserve 1.80 1.75 20 Dec 29 9 Jan 18 29 7 Feb 2017 2018 76
Slide 77: New business and operating profit
New business Operating profit +18% +150% to R522m (£29.5m) to R355m (£20.1m) H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 77
Slide 78: Strong operating performance driven by key factors
Strong operating performance driven by key factors Number of points earning activities Member engagement +90% 31- 45% Vitality engagement continues to increase reduction in risk rapidly factors 2013 2014 2015 2016 2017 Lapse rates indexed to Bronze Contributes Value and retention Selective retention
Slide 79: Sophisticated machine learning applied in multiple contexts
Sophisticated machine learning applied in multiple contexts Unique data set Gradient boosting machines 1 Demographic & health status 3 Health System interactions Model Learning algorithms that reduce prediction errors as they iterate (age, health conditions, (hospital network, referrals etc) postal
Slide 80: Significant improvement in risk profit and strong cash generation
Significant improvement in risk profit and strong cash generation Claims per life per month Cash from in-force (£m) Acquisition costs (£m) rolling 12-month avg after reserving adjustments Expected claims 47.7 5% projected medical inflation 21.8 1 H1 H2 H1 H2 H1 H1 H2 H1 H2 H1 2 2016 2016 2017 2017 2
Slide 81: Businesses
Businesses Discovery Bank Vitality Invest Commercial insurance Umbrella funds Emerging Established New 81
Slide 82: Observations for the period
Observations for the period 1 Performance 2 Operating model 3 Business performance 4 Vitality Shared- Value Insurance 82
Slide 83: Unaudited interim results and cash dividend
La Unaudited interim results and cash dividend rati + FORTHE SIX MONTHS d S c| a la Cl O fi | ENDED 31 DECEMBER 2017 Discovery