Discovery Results- to end Dec 2016 (6 month results)

Discovery have announced their 6 month results:

Results as per their announcement:

Discovery announces results for the six months ended 31 December 2016

Discovery today, 23 February 2017, presented its latest results for the six months ended 31 December 2016. There was strong delivery across the Group with new business and normalised profit from operations increasing by 15% and 13% to R8 245 million and R3 412 million, respectively. This was despite a combination of falling exchange and interest rates in the United Kingdom, which adversely impacted Group earnings over the period by 4%.

The Group attributed its continued robust performance to three powerful drivers, namely its Vitality Shared-Value Insurance model now being employed across 14 markets, an organic growth methodology and its sophisticated capital management philosophy.

The efficacy of the Group’s organic growth methodology was evidenced by existing businesses growing operating profit by 11% to R3 786 million and new business by 9% to R6 477 million. Emerging businesses, Discovery Insure, Ping An Health and Vitality Group (consolidation of The Vitality Group and Discovery Partner Markets) delivered growth of 43% in new business to R1 768 million.

New initiatives received an investment of 7% of earnings, equal to R244 million. Investment went towards the Group’s banking aspiration, the Global Vitality Network driven by Vitality Group, the Discovery Insure commercial offering, umbrella funds in Discovery Invest and an investment venture in the United Kingdom.

Business-specific performance

South Africa

Discovery Health

Discovery Health delivered excellent results. Normalised operating profit increased by 12% to R1 188 million, and core new business API increased by 20% to R3 030 million. Discovery Health continued to invest in the healthcare system and its digital assets, including expansion in the homecare, pharmacy distribution and wellness operations; and enhanced value-based contracting.

Discovery Life

Discovery Life delivered a strong performance in growth and profit. New business was up by 9% to R1 053 million, driven by individual new business which grew by 10.2%. Operating profit increased by 13% to R1 768 million. Discovery Life’s incentives for healthy lifestyle behaviours translated into exceptional Vitality engagement, with a seven-fold increase in the number of policyholders on Gold and Diamond Vitality status over the past eight years. Vitality Underwriting, a first-of-its-kind dynamic underwriting method based on client biometrics, combined with other product enhancements, has resulted in Discovery Life strengthening its market share in the retail affluent segment to 27.5% (for January to September 2016).

Discovery Invest

Discovery Invest grew assets under management by 14% year-on-year to R64 billion, with new business growth of 9% to R1 278 million. Discovery Invest maintained a position in the top six retail asset takers in the industry in every quarter of 2016. Its market share increased by 80% in the retirement annuity and preservation funds space, and by 50% in the retirement income space (year to end September 2016).

Discovery Insure

Discovery Insure showed significant new business growth, up 23% to R495 million. The business continued to scale and is now close to monthly breakeven. The Vitalitydrive model continues to produce excellent results, as engagement translates into better driving, and lower claims.

Banking

On 25 October 2016, Discovery received authorisation from the Registrar of Banks to establish a banking presence in South Africa. Discovery has a period of 12 months to fulfil the conditions and make application for final approval. Progress is being made in developing the infrastructure, operating processes, regulatory engagement and the customer value proposition.

United Kingdom

Discovery’s UK business, comprising VitalityHealth and VitalityLife, delivered a robust performance, in spite of economic headwinds including falling interest and exchange rates. This included a 6% increase in new business to £57.7 million, and a 10% increase in normalised operating profit to £22.5 million. The business built on the success of the Active Rewards programme with the launch of a new Apple Watch benefit, and HealthyFood through Ocado (an online supermarket). There were close to 9 000 Ocado registrations in the first two months and 15 000 Apple Watch orders in the first four months.

China: Ping An Health

The business performed excellently, reaching RMB 2 billion premium income for the year, with one million clients. Over 650 000 policyholders have joined Vitality Active Rewards through Ping An Life over the past five months, with over 5 000 new activations each day and high levels of physical activity being recorded.

Vitality Group

Over the period, Discovery Partner Markets in South Africa and The Vitality Group in the United States were consolidated into one entity, Vitality Group. The period was noteworthy for AIA Vitality with Vitality-integrated insurance products now live in six AIA markets. In John Hancock Vitality sales and engagement performance was in line with expectation. Manulife Vitality successfully launched in the Canadian market in September 2016. Generali Vitality launched in Germany during July 2016 and new business volumes have been exceptional. France launched its shared-value offering in January 2017.

Discovery Results- to end Dec 2016 (6 month results) was last modified: February 27th, 2017 by Kenny Williamson

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