Slide 1: Unaudited Results and cash dividend declaration, six months ended December 2023
Unaudited Results and cash dividend declaration for the six months ended December 2023
Slide 2: Performance overview
Performance overview Discovery Health Discovery Insure Discovery Invest Discovery Bank Discovery Life Vitality Health Vitality Life USA Normalised New business Headline Normalised operating profit earnings headline earnings +13% +28% +0% +11% to R5 622m to R14 197m to R3 260m to R3 320m 2
Slide 3: Navigating a complex backdrop
Navigating a complex backdrop Slowing inflation globally High interest rates Market outlook Inflation rate by market1 Central bank policy rates2 South Africa • NHI bill has noble aims but creates uncertainty 12% 9% • Election permutations create uncertainty • Widespread power cuts have lessened 8% •
Slide 4: Well positioned for growth in the micro-environment
Well positioned for growth in the micro-environment Nature of risk Technology • Risk due to modifiable behaviours: 37% of • Artificial intelligence and machine learning healthcare expenses are due to modifiable advances: new tools are revolutionising behaviours diagnostics, treatment planning, and p
Slide 5: Period under review
Period under review 1 Strong financial performance with robust operating profit growth, good cash generation and capital resilience 2 A smooth transition to IFRS 17 accounting standard A focused approach to create growth platforms by scaling the Bank, 3 evolving the Vitality Shared-value model and s
Slide 6: Growth and performance
Operating profit New business Growth and performance 6
Slide 7: Strong operating performance
Strong operating performance R5 622m R14 197m R2 942m +13% +28% +15% Non-insurance ZARm Operating profit New business2 income Health 1 874 +7% 6 835 +52% 592 +3% New business boosted by successful take-on of Sasolmed Life – Individual 2 128 +12% 1 444 +7% Strong earnings and improving new business m
Slide 8: Significant operating profit and new business growth over time
Significant operating profit and new business growth over time Operating profit New business IFRS 4 IFRS 17 6,000 16,000 5,000 +13% 14,000 +28% Operating profit New business 12,000 4,000 Rapid growth in IFRS 4 earnings 10,000 +11% historically, New business 3,000 relatively flat on 8,000 excluding t
Slide 9: Group well capitalised with robust cash generation
Group well capitalised with robust cash generation Strongly Highly liquid across Sufficient centre Strong cash FLR within target capitalised the Group liquidity conversion FLR Liquid assets across the Centre liquidity4, Rm Group cash conversion5 Group3, Rm Dec 22 Dec 23 COVID and 30% Cover Cover 20,
Slide 10: Strong growth in Group Embedded Value
Strong growth in Group Embedded Value 12.1% Annualised RoEV R105 251m R103 480m R98 176m Opening EV Value of new Unwind of risk Non-economic Operational EV Economic Forex New Initiatives Other IFRS 17 Closing EV business discount rate experience experience Transition variances and variances and Impa
Slide 11: IFRS 17 performance H1 FY23 to H1 FY24
IFRS 17 performance H1 FY23 to H1 FY24 Actual Actual R million H1 2024 H1 2023 % Normalised profit from operations 5 622 4 973 +13% Forex losses/gains -40 28 1 DP finance lease impact -59 -73 Finance charges excl. 1DP finance lease -881 -778 Investment income and fair value gains on financial instru
Slide 12: Dividend policy
Dividend policy Previously communicated at FY23 announcement: Annual ordinary dividend is expected The Group has declared to be covered approximately 5 times its interim ordinary by normalised headline earnings dividends for period at Interim ordinary dividends expected to be paid in the range of 30
Slide 13: Transition to IFRS 17
IFRS 17 IFRS 4 Duration Transition to IFRS 17
Slide 14: Recap of IFRS key messages
Recap of IFRS 17 key messages Value unchanged but reallocated Group is approaching cross-over Strong IFRS 4 profit growth 1 No change in underlying value nor underlying economics Annual profit IFRS 4 IFRS 17 • No direct change to cash flows, 6,000 underlying risk and reward of IFRS 17 Discovery Life
Slide 15: Reconciliation of comparative period from IFRS 4 to IFRS 17
Reconciliation of comparative period from IFRS 4 to IFRS 17 Difference between IFRS 4 and IFRS 17 is H1 2023 restated from IFRS 4 to IFRS 17 volatile in the short-term H1 2023 earnings IFRS 4 vs IFRS 17 for H2 and FY 2023 Rm IFRS 4 IFRS 17 % H2 2023 FY 2023 H1 2023 benefited from lapse gains recogni
Slide 16: Business performance and Growth
Discovery Health Discovery Life Discovery Invest Discovery Insure Discovery Bank Vitality Health Vitality Life platforms USA Business performance and Growth 16
Slide 17: Discovery grows businesses organically
Discovery grows businesses organically Organic growth Focused on streamlining model New initiatives Growth platforms expected to drive material growth Investment in New % core operating profit 25% ESTABLISHED ESTABLISHED CPI+5% BUSINESSES 20% 15% GROWTH PLATFORMS EMERGING GROWTH CPI+30% 10% PLATFORM
Slide 18: The Vitality chassis has evolved
The Vitality chassis has evolved 18
Slide 19: Vitality's rich and comprehensive dataset allows sophisticated understanding of behaviour
Vitality’s rich and comprehensive dataset allows for a sophisticated understanding of behaviour and the impact on risk Risk Diagnoses & medication predictions Health records Clinical and wellness data linked longitudinally Pathology & Transactions radiology Episodes of Property care ownership Using
Slide 20: The effect of behaviour change exceeds expectations
The effect of behaviour change exceeds expectations Physical activity has a significant impact on Physical activity has a significant Effects of behaviour change increase with mortality and increases by age impact on healthcare costs age and chronicity Relative mortality for the 45-65 age group Rela
Slide 21: Vitality enhances the traditional value chain
Vitality enhances the traditional value chain TRADITIONAL UNDERWRITING PREMIUMS CLAIMS AND EXITS VALUE CHAIN SHARED-VALUE VALUE CHAIN VALUE x PROPENSITY Take 5k Gym Get your HbA1c Steps 2x Visit Ranks the LIFESPAN Get Flu Vaccine Heart Rate Get a mammogram top 3 Workout Next Best Actions SICK YEARS
Slide 22: AI Recommender
Al Recommender Ranks the top3 Next Best Actions GVH ¢ AUSNadoud «an TWA Al Recommender > Value @ Propensity mp} A Habit LIFESPAN = F HEALTHSPAN SICK YEARS
Slide 23: Hyper-personalised Next Best Actions, with personalised goals
Hyper-personalised Next Best Actions, with personalised goals VALUE PROPENSITY HABIT Causal model built to estimate the Ensemble Machine Learning model Index built to quantify and classify a effect of completing an NBA on built to estimate the probability of a customer's consistency of completing do
Slide 24: Personal Health Pathways
Personal Health Pathways | A hyper-personalised programme manifesting in a simple user experience with two rings Applicable to: • Vitality Network LIFESPAN • VHI HEALTHSPAN SICK SICKYEARS • Discovery VALUE Habit Effective years in perfect YEARS Risk 1 Risk 2 Health Risk 3 health PROPENSITY Mortality
Slide 25: Life insurer | The impact is significant on all measures
Life insurer | The impact is significant on all measures Insurer value Customer value Societal value Value drivers of Personal Health Higher VoNB Lower premiums More health- More rewards Larger portfolio Reduced cost of (PV premiums vs engaged (Vitality rewards as % of lives covered cover Pathways T
Slide 26: Health insurer | The impact is significant on all measures
Health insurer | The impact is significant on all measures Distribution of clients by healthcare costs Impact of doing Next Best Action | Net savings to health funder Member base by different healthcare utilisation Diabetes Hypertension Combined hypertension scores and diabetes 100% 100% 100% 80% 58
Slide 27: Discovery Bank
Discovery Health Discovery Life Discovery Invest Discovery Insure Discovery Bank 27
Slide 28: Discovery Bank
Discovery Bank Clients Deposits Advances Revenue (NII + NIR) Operating result +42% +31% +20% +32% -15% -40% to 825k to R16.67bn to R5.75bn to R933m to (R339m) to (R154m) Before NBAC H1 H1 H1 H1 H1 2020 2021 2022 2023 2024 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2020 2021 2022 202
Slide 29: New business acquisition costs driven by strong growth
New business acquisition costs driven by strong growth New business Average daily sales Source of new business New business product mix acquisition costs >1 000 New business by number of Product mix of new business New business acquisition costs per Discovery products new client >40% Transaction Bun
Slide 30: Strong NIR growth
Strong NIR growth Increasing NIR per client by Record-high monthly Total net NIR duration banking activity Rm NIR per new client by months on book Monthly spend and payment volumes (indexed to first month after joining) 250% 38% CAGR 65% CAGR 200% 150% 100% 58% CAGR 50% 0% Sep-23 Sep-21 Sep-22 Mar-2
Slide 31: Strong NIR growth driven by Banking capabilities
Strong NIR growth driven by Banking capabilities VITALITY Discover View flights Select flight Make payment TRAVEL Select travel routes Go through the various flight Select your flight and Pay using Discovery Miles or a and dates options with discounts applied confirm flight details Discovery bank ac
Slide 32: High-quality credit growth strategy supported by Shared-value model and integration
High-quality credit growth strategy supported by the Shared-value model and integration Shared-value impact Total NII Credit growth strategy and value of integration Non-performing loans Rm Approval rate by credit risk Credit loss ratio by Vitality Money Stage 3 advances (indexed to exceptional low
Slide 33: Discovery Bank home loans market launch
Discovery Bank home loans market launch Home loans mispricing is an The Discovery Bank Home Loan opportunity to create value Mispriced Discovery Bank clients Up to 100% financing with personalised interest rates 60% Up to 30-year Of Discovery Bank clients term would get an interest rate reduction Dy
Slide 34: Discovery Health
Discovery Health Discovery Life Discovery Invest Discovery Insure Discovery Bank 34
Slide 35: Discovery Health
Discovery Health Operating profit New business Membership Non-scheme growth +7% +52% >3.8m +7% +17% to R1 874m to R6 835m Lives under to R722m >340k administration Revenue Lives Oct-21 Dec-20 Sep-19 Feb-20 May-21 Jan-23 Aug-22 Jun-23 Nov-23 Mar-22 Jan-18 Jun-18 Nov-18 Jul-20 Apr-19 1993 1999 1996 20
Slide 36: Discovery Health Medical Scheme: continued excellent performance
Discovery Health Medical Scheme: continued excellent performance in a complex environment Membership Customer satisfaction Solvency Low proportions of members change plans, with 57.8% market share more members upgrading than downgrading: R27.1bn unaudited reserves 3% 96% no plan changes 30.6% unaudi
Slide 37: Significant value from introducing Personal Health Pathways
Significant value from introducing Personal Health Pathways Ability to identify the most Chronicity valuable clients to target Significant uplift Chronic ratios continue to increase Cost savings where Next Best Action (NBA) is followed 29% 28% 28% 27% Distribution 27% 26% 26% 26% 25% 24% 53% 58% 58%
Slide 38: NHI: status quo is unsustainable – universal healthcare is crucial
NHI Status quo is unsustainable – universal healthcare is crucial Additional funding required p.a, as indicated by the R200bn National Department of Health for narrowed benefit package Discovery’s position: NHI is not workable without private 31% increase in personal income tax or; sector collaborat
Slide 39: Discovery Life
Discovery Health Discovery Life Discovery Invest Discovery Insure Discovery Bank 39
Slide 40: Discovery Life
Discovery Life Normalised Strong capital Maintained leading Strong cashflow operating profit New business and liquidity market share generation +6% +2% SCR Liquidity 12 months to Life and Invest cash flow coverage coverage December 2023 in excess of 35% of net of tax normalised earnings to R2 267m t
Slide 41: Robust EV growth with positive operating variances
Robust EV growth with positive operating variances Growth in Positive non-economic operating variances Embedded Value Individual life Discovery Life Ltd variances (Rm): 12% RoEV 15.3% constant economics Largely offsetting R42 863m 120% R81m R41 138m 100% 80% 60% 40% Persistency Mortality and Policy
Slide 42: Margin improvement and generating significant customer value
Margin improvement and generating significant customer value Significant improvement in VNB margin Superior returns driven by Shared-value model VNB Margin (%) Individual life: c70% of value from behavioural uplift returned to policyholder 5.6% (IRR: 21.5%) VNB per unit of premium*: 4.3% Individual
Slide 43: Discovery Invest
Discovery Health Discovery Life Discovery Invest Discovery Insure Discovery Bank 43
Slide 44: Discovery Invest
Discovery Invest Normalised operating Assets under profit New business administration Cogence +11% +8% +11% to R620m to R1 629m to R145bn IFRS 17 Full executive team in place On track for R16bn AUM in short-term Fully integrated Aladdin WealthTM technology with Vitality Healthy Futures Nov-20 Aug-22
Slide 45: Discovery Insure
Discovery Health Discovery Life Discovery Invest Discovery Insure Discovery Bank 45
Slide 46: Discovery Insure
Discovery Insure Gross written Normalised premium Gross new business Vehicles insured operating profit +9% +8% +1% -92% to R2.8bn to R666m to 291 194 to R2m H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 202
Slide 47: Insure well positioned to achieve target margin
Insure well positioned to achieve target margin Operating margin set back due to loss of pricing power during COVID and extreme weather impacts Vitality allows for a unique business model Gauteng hailstorm in November Average premium increases reflect Proportion of good drivers increases over Best d
Slide 48: Vitality Health and Vitality Life
Vitality Health Vitality Life 48
Slide 49: UK Composite
UK Composite Normalised operating profit Earned premiums Lives covered New business -2% +13% +11% +27% +5% +6% +22% to £34.7m to R812m to £536m to R12.6bn to 1.8m lives to £88.3m to R2.1bn IFRS 17 Both VH and VL earnings impacted by specific aspects in the transition from IFRS 4 to IFRS 17 GBP milli
Slide 50: VitalityHealth
VitalityHealth Normalised operating profit Earned premiums Lives covered New business -30% -20% +11% +27% +10% +11% +28% to £22.5m to R527m to £339.4m to R8bn to 989k lives to £48.4m to R1.1bn IFRS 17 Impact of increased claims spend GBP millions GBP millions GBP millions H1 H1 H1 H1 H1 H1 H1 H1 H1
Slide 51: Dynamics of healthcare in the UK
Dynamics of healthcare in the UK Challenges in accessing treatment Material gearing effect for private healthcare National Health System (NHS) waiting list Healthcare expenditure (£bn) 9 8 7.6m 250 c35x 233 7 NHS waiting list (millions) 200 6 5 150 4 100 3 2 50 1 6.7 0 0 Nov-23 Jan-13 Jan-23 May-16
Slide 52: NHS backlogs resulting in increased utilisation with a shift to primary care
NHS backlogs resulting in increased utilisation with a shift to primary care Substantially increasing Impacting overall claims Pricing actions Shift to primary care benefit utilisation experience implemented Claims attributable to primary Claims per 1 000 lives Change in claims experience Claims inc
Slide 53: Excellent quality of the business positions it well for growth
Excellent quality of the business positions it well for growth Unique digital capabilities and Strong growth Resilient retention rates industry recognition 3rd largest health insurer1 Individual and SME lapse rates Digital assets -14% 4.9 Vitality rating GP app 4.3 Vitality Trustpilot score H1 H1 H1
Slide 54: VitalityLife
VitalityLife Normalised operating profit Earned premiums Lives covered New business +71% +97% +10% +26% +6% +2% +17% to £16.6m to R390m to £196.7m to R4.6bn to 782k lives to £39.9m to R935m IFRS 17 Higher interest income and once-off variances GBP millions GBP millions GBP millions H1 H1 H1 H1 H1 H1
Slide 55: Embedding Shared-value in the PAC book
Embedding Shared-value in the PAC book Causal impact of behaviour Behavioural-based valuation Shared-value modelling on PAC change model book Isolating the impact of physical activity on Differential assumptions and transitions mortality after adjusting for confounding 1. £4.8m factors Mortality, mo
Slide 56: Positive lapse and claims experience, offsetting impacts from high interest rates
Positive lapse and claims experience, and offsetting impacts from high interest rates Positive experience High long-term interest Strong indexation Margins negatively variances rates results impacted EV experience variances (£m) UK 50-year swap rate history1 Indexation continuation upon VNB margin (
Slide 57: USA
= Q Discovery Discovery Health Discovery Life Discovery Invest geese as. i espe pons oF iis AN HOI TH INSIIONC suurowoure BBVA fotnck, IGA 1) Manulife (34252 ESGENERALL & rodent Vlelity BSUNEcom, Medifé DMULTICARE Q auantium ij); amplifyhealth Discovery Insure Discovery Bank ity Health
Slide 58: Vitality Global
Vitality Global Vitality Global Operating result Vitality Vitality Health Network International +55% +71% to $24.4m to R455m USA HEALTH H1 H1 H1 H1 H1 Strong underlying growth, driven by deepened 2020 2021 2022 2023 2024 partner relationships, broadening the reach of Vitality assets and capabilities
Slide 59: Vitality Network
Vitality Network Integrated API by Insurance partners Operating profit insurance partners Revenue membership +37% +49% +16% +25% +16% +25% +28% to $15.8m to R295.8m to $806.7m to R15.1bn to $50.3m to R941.5m to 4.3m H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 2020 2021 2022 2023 2024
Slide 60: Key strategic focus areas
Key strategic focus areas Significant mortality % Revenue (in USD) improvements across markets 5 4 Revenue growth through deepening of 10 existing insurance partnerships and 40 1 targeted pursuit of new insurance partnerships, as well as starting to 16 TATA AIA India participate in emerging profits
Slide 61: Vitality Health International
Vitality Health International Vitality Health International Operating result Including PAHI equity earnings +96% +125% PAHI continues to be a resilient performer with the business VHI – PAHI beginning to see a return on the investments made in diversifying its distribution channels with 28% growth i
Slide 62: Ping An Health Insurance
Ping An Health Insurance PAHI’s operating Discovery’s operating PAHI licence new results pre-tax result after tax Written premium1 business1 Lives +117% +126% +289% +305% +10% +14% +23% +28% +34% to RMB0.6bn to R1.4bn to RMB133m to R344m to RMB9.0bn to R23.3bn to RMB1.6bn to R4.1bn to 26m PAHI licen
Slide 63: Excellent operating performance
Excellent operating performance Better persistency Excellent quality Strong cash generation Balance sheet strength Increasing reapplication Decreasing COR Net cashflow from operating Net asset value RMBm as rates activities (RMB) at 31 December 100% 4 10,000 Billions 86% 95% 95% 9,000 RMB8.6bn 91% 8
Slide 64: Maintained superior profitability, building a comprehensive business
Maintained superior profitability, building a comprehensive business driven by health and wellness services Maintained leading position in the market Developed meaningful health and wellness services Net margin Providing health insurance products, ranging from basic affordable cover to high-end comp
Slide 65: Growth platforms
Sinem 8 ares cam ROS @suurowoure BBVA a =" Fotock, GA Wh Manulife © sete GNERAL Grn Discovery Invest Discovery Insure Discovery Bank Discovery Health Discovery Life BStRBccmn, Medifé Vitality Health Vitality Life Growth platforms
Slide 66: Discovery grows businesses organically
Discovery grows businesses organically Organic growth Focused on streamlining model New initiatives Growth platforms expected to drive material growth Investment in New % core operating profit 25% ESTABLISHED ESTABLISHED CPI+5% BUSINESSES 20% 15% GROWTH PLATFORMS EMERGING GROWTH CPI+30% 10% PLATFORM
Slide 67: Growth platforms expected to drive material growth
Growth platforms expected to drive material growth Economics of the Growth platforms Operating profit Established businesses + Growth platforms CPI+[10% to 15%] annual growth Established businesses only FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Long-term cash flow growth CAGR 10% to 15% higher fr
Slide 68: Bringing the Bank to scale and profitability in the near-term
Bringing the Bank to scale and profitability in the near-term New business Operating income − Expenses − acquisition costs = Profit / (loss) before tax NII +NIR (Rm) Normalised operating expenses (Rm) NBAC per new client (R) Profit (Loss) before tax Forecast 60% CAGR 2% CAGR 1% CAGR Jul'23 projected
Slide 69: Vitality Network unlocking operational efficiencies
Vitality Network unlocking operational efficiencies Vitality Network Gearing effect due to growing foreign currency revenues and stable ZAR- global partners based expenses Operational efficiencies ($m) 50.3m 15.8m Profit Revenue 43.5m 42.2m 11.5m 3.6x 35.6m 33.6m 34.5m 33.5m 32.0m Expenses 8.6m 31.2
Slide 70: Expect Ping An Health Insurance to continue growing strongly
Expect Ping An Health Insurance to continue growing strongly Rising written Strong cash Increasing NAV Growing lives premium1 Excellent quality generation R22.5bn +34% +14% 91% R8.1bn as at 31 December 2023 to 26m y-o-y to R23.3bn COR Net cashflow from operating activities 3.06x solvency ratio Compr
Slide 71: Period under review
Period under review Normalised New FLR Cash Strong financial performance with robust operating 1 operating profit business conversion profit growth, good cash generation and capital resilience +13% +28% 20% 66% No material impact on Total Group 2 underlying economic value, CSM A smooth transition to
Slide 72: Unaudited Results and cash dividend declaration
Unaudited Results and cash dividend declaration for the six months ended December 2023