Discovery Limited · JSE:DSY
Discovery — H1 2013 Earnings Presentation
95 slides from Discovery's earnings presentation, February 2013
Slide 1: Unaudited interim results announcement and cash dividend declarations
Unaudited interim results announcement and cash dividend declarations for the six months ended 31 December 2012 Adrian Gore, Group Chief Executive Officer, Discovery 1
Slide 2: Overview of the Discovery Group
Overview of the Discovery Group 100% 100% 100% 100% 75% 75% 75% 75% 25% 20% Gross inflows: R31bn in the 6-month period 4 countries > 6.1m customers* * Health, Life, Insure, Card, PruHealth, PruProtect, TVG, HumanaVitality, Ping An Health as at December 2012 2
Slide 3: Discovery's core purpose, ambition and methodology
Discovery’s core purpose, ambition and methodology Core Make people healthier and enhance Core Purpose and protect their lives Purpose An insurance organisation comparable to the best in the world that is renowned for excellence, Core Ambition Purpose innovation and financial strength. In addition,
Slide 4: Chronic diseases of lifestyle are critical to morbidity and mortality
Chronic diseases of lifestyle are critical to morbidity and mortality Root causes of most deaths are preventable Policy framework in place 3 controllable behaviours Smoking, poor nutrition, lack of exercise 4 chronic diseases of lifestyle Diabetes, cancer, lung and heart diseases 50% of deaths world
Slide 5: World is increasingly risk averse, but innovation in protection lags
World is increasingly risk averse, but innovation in protection lags that of investments Investment returns are disappointing Commoditisation of protection products FTSE Index 8000 Lost Decade 7000 6000 5000 4000 Value of R1 3000 invested in 2000 1 2000 0.9 1000 2000 2012 0 1990 1992 1994 1996 1998
Slide 6: Healthcare is expected to always inflate higher than CPI
Healthcare is expected to always inflate higher than CPI ‘Scarce-skills’ industries do not gain efficiencies Baumol effect helps explain healthcare inflation through advances in technology Industries dependent on scarce skills Philharmonic orchestra College education Industries gaining efficiencies
Slide 7: Discovery's integrated business model: scalable and repeatable
Discovery’s integrated business model: scalable and repeatable 100% 100% 100% 100% 75% 75% 75% 75% 25% 20% Unique and compelling product proposition Addresses the competitive levers in the market Leads to superior actuarial dynamics Builds an integrated data set for risk analytics 7
Slide 8: Discovery
Discovery
Slide 9: Overview of performance
Overview of performance Normalised profit from operations +21% to R2bn; New business API +12%, with strongly improving run rate in established businesses and excellent growth from new and emerging businesses; Greater diversification of new business and earnings; Embedded Value +18% Operating profit
Slide 10: Overview of performance
Overview of performance Combined new business +46% to R727m; Operating profit +68% to R347m (pre TSA); Growth in number of customers to 712,000; Businesses strongly cash flow positive R103m operating profit, +87%; Strong growth in new business, +36%; Excellent performance on key drivers of loss rati
Slide 11: The capital-light, organic growth approach
The capital-light, organic growth approach High dividend cover; 5%-7% IP-led, capital-light partnerships Superior products; Innovation margin; #1 in new business 11
Slide 12: Earnings contribution by business
Earnings contribution by business 6 months 6 months % to 31 December 2012 to 31 December 2011 change Profit from operations 1,973 1,634 21% Established 762 682 12% 1 032 881 17% 15% 5 0 12
Slide 13: Earnings contribution by business
Earnings contribution by business 6 months 6 months % to 31 December 2012 to 31 December 2011 change Profit from operations 1,973 1,634 21% Established 762 682 12% 1 032 881 17% 15% 5 0 Emerging 180 87 107% 103 55 87% 71% 99 81 22% 13
Slide 14: Earnings contribution by business
Earnings contribution by business 6 months 6 months % to 31 December 2012 to 31 December 2011 change Profit from operations 1,973 1,634 21% Established 762 682 12% 1 032 881 17% 15% 5 0 Emerging 180 87 107% 103 55 87% 71% 99 81 22% New 10% of (208) (152) (37%) operating profit Normalised Headline Ea
Slide 15: New business contribution by business
New business contribution by business 6 months 6 months % to 31 December 2012 to 31 December 2011 change New business 5,106 4,544 12% Established 2,286 2,089 9% 950 892 7% 105 74 42% Emerging 344 218 58% 383 281 36% 518 487 6% New 184 118 56% 113 174 (35%) 223 211 6% New insurance business (excl. ag
Slide 16: Earnings growth and new business development
Earnings growth and new business development Profit from operations almost R2bn New business API of R5.1bn Normalised profit from New business API (Rm) operations (Rm) 6,000 2,000 21% 1,800 Earnings growth 5,000 12% 1,600 of 28% pa 23% compounded 21% 1,400 4,000 since listing 1,200 28% 16% 16% 1,000
Slide 17: Earnings by source: Business analysis
Earnings by source: Business analysis Earnings: Business analysis (profitable operations only) 2008 2012 13% offshore 2% 8% 5% 5% 0% 35% 45% 53% 47% Health Life Vitality Health Life Vitality Discovery Invest PruHealth PruProtect 17
Slide 18: Sources and uses of cash: 6 months to December 2012
Sources and uses of cash: 6 months to December 2012 R2.3bn cash generated during the 6-month period; Discovery Life self-funding; Little cash utilisation in international markets Analysis of cash generation and usage (Rm) Cash utilisation: local versus offshore 2,500 6% 2,000 1,500 1,000 500 - 94% S
Slide 19: Embedded value growth
Embedded value growth Group Embedded Value (Rm) R million 35,000 18% 30,000 18% 25,000 15% 2% 20,000 15,000 10,000 2008 2009 2010 2011 2012 Diluted Embedded Value per share of 5,926c (+17%) 19
Slide 20: Embedded value movement: June 2012 - December 2012
25,000 26,000 27,000 28,000 29,000 30,000 31,000 32,000 33,000 34,000 Embedded value at June 2012 30 246 Build-up of the EV: Profit from new business 954 Expected return June 2012 to December 2012 1 355 Experience variances 627 New markets and dividends -648 Embedded value from EV Movement: June 201
Slide 21: Experience variances; All businesses
Experience variances; All businesses: June 2012 to December 2012 R627m positive experience variances generated over the 6-month period R million 300 250 200 150 100 50 - Lapses, cancellations and Mortality and morbidity Economic assumptions Extended Modelling term adjustments 21
Slide 22: Vitality
@ Discovery Viledity-
Slide 23: Vitality SA
Vitality SA Accelerating growth in lives Decreasing lapses Vitality lives (millions) Vitality-only Lapses 1,638,033 3.4% 3.3% 1,540,640 3.1% 1,483,882 2010 2011 2012 2010 2011 2012 23
Slide 24: Engagement levels high
Engagement levels high Gym visits Flights 12 Monthly gym visits Monthly flights Planes 2,500,000 80,000 per day 70,000 2,000,000 60,000 50,000 1,500,000 40,000 1,000,000 30,000 20,000 500,000 10,000 - 0 May-09 Apr-07 Aug-10 Apr-12 Nov-06 Sep-07 Feb-08 Jul-08 Nov-11 Sep-12 Dec-08 Jun-06 Oct-09 Mar-10
Slide 25: HealthyFood: A case example
HealthyFood: A case example Scientific process of selection Positive change in behaviour Clear health benefits Fruits and vegetables Cumulative spend at Incidence of life-style 3,000 products HealthyFood partner (bn) related diseases by proportion of Healthy Food Grains and cereals Healthy Spend Oth
Slide 26: Rolling out the concept: Woolworths in SA
Rolling out the concept: Woolworths in SA Woolworths in SA Physical presence in store 26
Slide 27: Global branding: UK
Global branding: UK Top 10 role models 1. Jessica Ennis 2. Mo Farah 3. Stephen Fry 4. The Queen 5. Alan Sugar 6. Bradley Wiggins 7. Kate Middleton 8. Cheryl Cole 9. Gary Barlow 10. David Beckham 27
Slide 28: Global branding for our insurance partners
Global branding for our insurance partners 28
Slide 29: Growth in Vitality
Growth in Vitality Initial traction on PingAn 6,000,000 700k Medicare lives at 5,000,000 HumanaVitality 4,000,000 3,000,000 2,000,000 1,000,000 - 2008 2009 2010 2011 2012 2013 YTD Discovery Vitality PruHealth PruProtect The Vitality Group HumanaVitality PingAn 29
Slide 30: Impact of Vitality: Making people healthier
Impact of Vitality: Making people healthier Reducing mortality: Health Data Published evidence of lower health costs Mortality curves by Vitality status: Risk-adjusted hospital costs for Standard lives engaged Vitality members are 0.009 10% – 40% lower than non- 0.008 engaged members for non- chroni
Slide 31: PruProtect / PruHealth
4 2/PRUPROTECT 43 /PRUHEALTH
Slide 32: Rollout of the Integrated model in the UK
Rollout of the Integrated model in the UK 32
Slide 33: Performance of the UK joint venture: Financial excellence
Performance of the UK joint venture: Financial excellence New business of R727m Operating profit up 68%* Embedded Value over R4bn New business (Rm) Operating profit (Rm) Embedded value (Rm) 800 350 4,500 700 4,000 300 3,500 600 250 3,000 500 +46% 200 2,500 400 +68% +31% 150 2,000 300 1,500 100 200 1
Slide 34: Performance of the UK joint venture: Progression of cash flow
Performance of the UK joint venture: Progression of cash flow over time Strong growth in cash generation R million 250 200 150 100 50 0 Dec-10 Dec-11 Dec-12 34
Slide 35: Regulatory environment: Protection and Health
Regulatory environment: Protection and Health Expected to reverse historic polarisation between wealth Retail Distribution and protection specialists Review Wealth managers typically high-advice, benefit-rich sellers Increased prices to drive a move towards benefit selling Gender Neutrality Actuaria
Slide 36: PruProtect
4 2/PRUPROTECT
Slide 37: Key financial metrics
Key financial metrics 6 months 6 months % to 31 December 2012 to 31 December 2011 change New business API R344m R218m 58% Policies in force 136,164 89,139 53% Value of new business (100%) R388m R215m 80% Operating profit/(loss) (R, 100%) R180m R87m 107% 37
Slide 38: Product development: Differentiated product structure and impact on new business
Product development: Differentiated product structure and impact on new business Unique protection benefits £14.5m new business Almost 140,000 policies in-force and Vitality integration generated during Q4 2012 Ongoing Total new business APE 140,000 dynamic risk (£m) rating based on 30 120,000 Vital
Slide 39: PruProtect market share development
A 3.8% B 4.8% PruProtect 5.6% C 6.0% D 6.0% E 8.0% Q3 2010: 5.6% F 13.5% 7th largest writer G 13.9% Impact of the model: H 16.1% A 4.2% B 5.3% C 6.4% PruProtect 7.6% D 8.7% E 8.7% 6th largest writer F 14.8% Q3 2011: 7.6 % G 15.2% H 15.3% Market share development (Intermediary channel) A 4.7% B 5.5%
Slide 40: Quality of the portfolio: Ongoing improvement in key metrics
Quality of the portfolio: Ongoing improvement in key metrics Retention performance better Claims experience better than Value of in-force exceeding than expected expected R550m Lapse rate (June 2011 = 1) Cumulative claims: Actual VIF (Rm) to Expected 1.0 40 600 35 500 0.8 30 25 400 0.6 £m 20 15 300
Slide 41: PruHealth
43 /PRUHEALTH
Slide 42: Key financial metrics
Key financial metrics 6 months 6 months % to 31 December 2012 to 31 December 2011 change Loss ratio 69.1% 71.0% (3%) Operating profit/(loss) (100%, R167m R120m 39% excluding TSA) New business R383m R281m 36% 42
Slide 43: Financial performance: Focus on quality and key drivers of performance
Financial performance: Focus on quality and key drivers of performance Loss ratio improvement continues, and is Lapse rates below long-term target significantly below industry Loss ratio Lapse rate Dec-11 Dec-12 Long-term Dec-10 Dec-11 Dec-12 Industry* target * Estimate 43
Slide 44: Success of the Standard Life Healthcare acquisition
Success of the Standard Life Healthcare acquisition: Key performance metrics and return exceeding expectations 10-year IRR of 33% on the acquisition Lapse rate: Actual to Expected Loss ratio: Actual to Expected 2010 2011 2012 2010 2011 2012 Expected Actual Expected Actual 44
Slide 45: Product development: 2013 launch and impact on new business
Product development: 2013 launch and impact on new business Breaking new ground in benefit design: Improving new business trend, with strong 2013 launch Jan 2013 run rate New business (Rm, 6 month periods) 450 Up to 15% PMI premium reduction 400 for not smoking 350 300 Bariatric surgery offered as p
Slide 46: Engaging members in their health and wellbeing: UK Vitality structure
Engaging members in their health and wellbeing: UK Vitality structure Sustainable structure with explicit monthly 70% new business take-up of Vitality Plus premium in January 2013 80% 70% 60% 50% 40% 30% 20% 10% 0% Jan-12 Jan-13 New business 46
Slide 47: UK brand development: Consumer and Corporate campaigns
UK brand development: Consumer and Corporate campaigns Participating companies include: 47
Slide 48: Ping An Health
Pees PINGAN
Slide 49: Overview of financial metrics
Overview of financial metrics 6 months 6 months % to 31 December 2012 to 31 December 2011 change New business 223 211 6% New business (Insurance business, 51 38 33% excluding agents) 49
Slide 50: China health care market opportunity
China health care market opportunity 5th largest health care market globally High levels of self-funding PHI market in infancy Total health care % of total health care % of total health care expenditure ($ bn) that is funded by expenditure that is out private medical of pocket 357 insurance 37 37 21
Slide 51: Focus on building a health insurer in China
Focus on building a health insurer in China People and systems Office infrastructure Staff in various disciplines 250 200 371 people 150 100 50 Head 0 office Marketing Operations Admin Actuarial, managers BAs Vitality Planning Finance, Product Systems and IP transfer • Claims risk management • Custo
Slide 52: Building a branch infrastructure focused on the opportunity
Building a branch infrastructure focused on the opportunity Market opportunity Current and planned footprint Liaoning Beijing Tianjin Jiangsu Shanghai Zhejiang Guangdong Shenzhen Original branches New branches 2011, 2012 Planned branches 2013 Source: McKinsey 52
Slide 53: A focused product strategy
A focused product strategy Previous product offerings Current product offerings Fund business Group high- Individual Administration of in-house funds end mid-market Service business Executive medicals; high cost medical check-up; no medical cover Accident/Critical illness Health insurance SHI supple
Slide 54: Market share gains in Group High-end
Market share gains in Group High-end Explosive growth Blue-chip clients # 2 in Group high-end Business sales RMB Market share % 250 Continent 29% P&C 200 PAH 24% 150 CIGNA-CMC 22% 100 Taiping 16% Pension 50 AXA-Minmetal 10% 0 Dec 2011 Dec 2012 54
Slide 55: CHP product overcomes current shortcomings of PHI products
CHP product overcomes current shortcomings of PHI products Shortcomings of existing CI products Distinctive features of CHP Bought in discreet tranches, based on need Offers comprehensive cover and affordability, not on risk • Both on and off-schedule costs are covered Offer cover for a very narrow
Slide 56: Comprehensive Health Protector product addresses unmet need
Comprehensive Health Protector product addresses unmet need Standard waiting rooms VIP waiting rooms Primary consult waiting line VIP waiting room Huashan hospital Huashan hospital Saturday 1:30 PM Saturday 1:35 PM 56
Slide 57: Vitality in place and offers tremendous integrated value with CHP
Vitality in place and offers tremendous integrated value with CHP Vitality reward partners Cost of CHP matched by Vitality benefits Vitality Blue Bronze Silver Gold Platinum 10% 12% 15% 18% 20% 57
Slide 58: A focused product strategy: Targets in place
A focused product strategy Targets in place #1 in Group Group high- Individual 100 apps high-end end mid-market per day
Slide 59: Belief in the potential of the Chinese market opportunity
Belief in the potential of the Chinese market opportunity Discovery shareholding in Ping An Health 25% > 20 years of clinical 20% 2nd largest insurer in and actuarial IP the world Global expertise 1 of only 4 specialist health insurers in China Vitality Distribution asset Current Future 59
Slide 60: Discovery Insure
Discovery Insure
Slide 61: Overview of financial metrics
Overview of financial metrics 6 months 6 months % to 31 December 2012 to 31 December 2011 change New business R 184m R 118m 56% Operating profit/(loss) (R102m) (R74m) (38%) 61
Slide 62: Claims development: Impact of hail
Claims development: Impact of hail October experienced a unique and adverse weather system Motor vehicle claims in Oct 2012 (number) 450 400 350 300 250 200 150 100 50 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Current estimate for SA insurers is R1,3bn – R
Slide 63: Discovery Insure new business growth
Discovery Insure new business growth Exceptional growth in this period In-force book reaching scale New Business API In force API (R m) (R m) 200 450 180 400 160 350 140 300 120 250 100 200 80 150 60 40 100 20 50 0 - Feb-12 Jun-11 Jun-12 Aug-11 Apr-12 Aug-12 Dec-11 Dec-12 Oct-11 Oct-12 July - Jan -
Slide 64: Quality of clients is exceptional
Quality of clients is exceptional % Discovery Insure members who have other Discovery products 37.80% 25.70% 25.50% 10.30% 0.70% 0 1 2 3 4 64
Slide 65: Latent potential in the broker channel
Latent potential in the broker channel Hybrid distribution model Untapped potential in broker channel Share of activations by channel (July Relative Embedded value new 2012 – Jan 2013) business value per channel (Agent = 100) 120 9% 100 13% 80 60 40 78% 20 0 Telesales Broker Agent Agent Broker Teles
Slide 66: Building a nation of safer drivers
Building a nation of safer drivers Improvement in driver behaviour over time Lower fatality rates VitalityDrive status distribution by duration of policy Relative motor vehicle fatality rate (National = 100) 100% 120 90% 80% 100 70% 80 60% 50% 60 40% 30% 40 20% 10% 20 0% 1 2 3 4 5 6 7 8 9 10 11 12 1
Slide 67: Big data advantage: Weather warnings
Big data advantage: Weather warnings Mapping of weather to vehicle location data Weather warnings 67
Slide 68: Big data advantage: Impact alert and Emergency HealthID
Big data advantage: Impact alert and Emergency HealthID Telemetry technology identifies unusual g- Integration with other Discovery forces businesses Distribution of g-forces Possible impact -1 -0.75 -0.5 -0.25 0 0.25 0.5 0.75 1 Vehicle is monitored to determine if QR codes have access to critical h
Slide 69: Discovery Health
Discovery Health
Slide 70: Overview of financial metrics
Overview of financial metrics 6 months 6 months % to 31 December 2012 to 31 December 2011 change New business R2,286m R2,089m 9% DHMS lapse rate 3.2% 3.9% (18%) Principal members 1,264,928 1,190,703 6% Operating profit R762m R682m 12% 70
Slide 71: DHMS performance demonstrates member satisfaction
DHMS performance demonstrates member satisfaction Exponential growth Reserves highest in industry DHMS Membership growth Accumulated funds end 2012* 3000000 Addition of (R'000) over 400 000 lives in 3 9,000,000 2500000 years 8,000,000 7,000,000 2000000 6,000,000 5,000,000 1500000 4,000,000 3,000,000
Slide 72: Discovery supports the NDP vision of universal coverage
Discovery supports the NDP vision of universal coverage co-existing with health insurance schemes Encourage referral and partnership – vertical and horizontal Integration between and within public and private sectors Private Hospitals Modernised primary care Quaternary/Central Hospital Private Labor
Slide 73: SA health care inflation
SA health care inflation Doctor shortages in SA Baumol effect Specialists per 10,000 Increase in prices (1970 = 100) 50 8000 45 7000 40 6000 35 Medical care and 30 5000 health expenses 25 4000 20 3000 15 General 2000 inflation 10 5 1000 Clothing and textile 0 0 Germany Brazil Australia China India U
Slide 74: Lapses and downgrades remarkably low
Lapses and downgrades remarkably low Low lapses Minimal plan movements DHMS Lapses, calendar year Downgrade Upgrade 3.2% from July - Dec 2.1% 3.8% 4.90% Other Downgrade Upgrade downgrade 4.20% 4.30% 4.10% 2.2% 3.5% 2.5% 3.80% 3.80% 2010 KeyCare Access Upgrade 0.7% 3.3% 2011 2012 2007 2008 2009 2010
Slide 75: Discovery Health approach
Discovery Health approach Minimise Maximise cost benefits Build Improve healthcare patient system journey 75
Slide 76: DHMS derives significant value from its admin fee investment
DHMS derives significant value from its admin fee investment 2 times return on admin fee investment Admin fee evolution Annualised return on admin fee investment Admin and Managed care fees as a % of Gross Contribution Income 1.8- 22% 2.3x 20% 18% 16% 14% 12% 10% 8% Admin and Value generated 6% 2006
Slide 77: DHMS cost and contribution inflation is lowest in market
DHMS cost and contribution inflation is lowest in market Cost inflation lower than market Contribution increase lowest in industry % Growth in plpm costs (2008 – 2011) % annualised contribution increases relative to CPI (2008 – 2013) 35 DHMS Open 6.3% schemes… 6.0% 30 25 4.8% 4.6% 4.6% 4.3% 3.9% 3.9
Slide 78: DHMS delivers better overall value
DHMS delivers better overall value DHMS Healthcare cost + admin cost is lower than industry healthcare costs Admin Fees 100% Admin Fees 11.1%* 85% Healthcare costs Healthcare costs Industry DHMS * 2013 78
Slide 79: DHMS benefit levels beat the rest of the market
DHMS benefit levels beat the rest of the market Benefit levels outstrip competition High cover ratios, % Benefits per unit of premium (Indexed real values, 2007 = Base year) 120 Executive 99.6 Classic 98.2 110 100 90 Essential 95.5 Coastal 93.7 80 70 60 2007 2008 2009 2010 2011 2012 2013 Discovery K
Slide 80: Delivering an exceptional member journey: HealthID
0 20,000 40,000 60,000 80,000 100,000 120,000 2012-05-… 2012-05-… 2012-05-… 2012-06-… 2012-06-… 2012-07-… 2012-07-… 2012-07-… * 7000 doctors is the potential universe 2012-08-… 2012-08-… 2012-09-… 2012-09-… 2012-09-… Member consents 2012-10-… 2012-10-… Member take-up high 2012-11-… 2012-11-… 2012-11
Slide 81: Delivering an exceptional member journey: MemberApp
Delivering an exceptional member journey: MemberApp Carry an electronic Track claims and medical membership card spend Personal health records Request a document Take a photo of a claim and View information on hospital send it to us procedures Order door-to-door medicine Translate cover into one of
Slide 82: Making members healthier: Telemetry application
Making members healthier: Telemetry application Simple interface with a smartphone Triggers alerts to your doctor Excellent member feedback % Share of members who rated the service excellent* 82 Glucose meter connects Data is accessible for both patients and doctors directly to phone Readings are tr
Slide 83: Investing in society
Investing in society Discovery Foundation Awardees by type of degree or training (2006-2012) 35 30 No. of Students 25 20 Independent trust that is 15 investing over R100 10 million in scarce specialist healthcare resources 5 0 R83m has thus far been invested 195 recipients to date (~4% of total spec
Slide 84: Discovery Health approach
Discovery Health approach Minimise Maximise cost benefits Build Improve healthcare patient system journey 84
Slide 85: Discovery Life
Discovery Life
Slide 86: Overview of financial metrics
Overview of financial metrics 6 months 6 months % to 31 December 2012 to 31 December 2011 change New business R950m R892m 7% Gross revenue R3,441m R2,905m 18% Operating profit R1,032m R881m 17% Value of in-force (Life and Invest) R16,188m R12,675m 28% 86
Slide 87: New business trajectory: Relative monthly run rate
New business trajectory: Relative monthly run rate: 2012/13 versus 2011/12 Relative new business run-rate significantly improved since December Relative Monthly Individual Risk new business (excluding servicing, 2011/2012 = 1) 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 Jul Aug Sep Oct Nov Dec Jan 2012 - 20
Slide 88: Discovery Life model and implications
Discovery Life model and implications 1. Better benefits 2. Lower and more accurate pricing over Integration duration Life 3. Better selection (in and out) 4. Lower lapsation 5. Better mortality and morbidity experience Vitality 88
Slide 89: The integrated model is working well: Excellent performance across all key metrics
The integrated model is working well: Excellent performance across all key metrics R273m positive experience Positive lapse experience Positive mortality experience variances Lapses: actual to expected Mortality experience: A:E Overall Life and Invest (gross) experience variances (Rm) 300 100% 250 9
Slide 90: The integrated model is working well: Life expectancy by Vitality Status
The integrated model is working well: Life expectancy by Vitality Status Engagement with Vitality results in longer life expectancy by Status Life expectancy from birth 88 80 82 67 49 SA population Insured population Insured** Vitality** Vitality Gold & Diamond** ** Discovery Health Medical Scheme 9
Slide 91: Cash flow analysis: Generation of cash from in-force
Cash flow analysis: Generation of cash from in-force: 6 months to Dec 2012 Over R1.1bn net cash generated from the in-force business over the 6 months Gross policyholder cash flow (Rm) 3,500 3,000 2,500 2,000 1,500 1,000 500 - Premium income Claims and reserves Expenses and Commission Cashflow from
Slide 92: Cash flow analysis: Use of generated cash
Cash flow analysis: Use of generated cash: 6 months to Dec 2012 Discovery Life cash flow used to grow new business, repay financing and build Discovery Invest Gross policyholder cash flow (Rm) 1,200 VNB margin 1,000 11.0% 800 10.0% 10.6% 10.0% 600 9.0% 400 8.0% Jun12 Non-Economic Economic Dec12 200
Slide 93: Discovery
Discovery
Slide 94: Prospects
Prospects Context Proliferation of non-communicable diseases Uncertainty and increasing risk aversion Inflating, but sustainable healthcare costs Model Established businesses well positioned Establishment of platforms for future growth Metrics for success Method : Use the business model to make a re
Slide 95: Unaudited interim results announcement and cash dividend declarations
Unaudited interim results announcement and cash dividend declarations for the six months ended 31 December 2012 Adrian Gore, Group Chief Executive Officer, Discovery 95