Discovery experiences local and international growth
Adrian Gore, group chief executive of Discovery Limited said: “Over the period, Discovery’s shared-value insurance model delivered continued growth in the established and emerging businesses, with over 100% growth in annualised new business.”
Discovery believes that the success of its “Discovery brand and shared-value insurance model [has made it] highly attractive and applicable globally.”
Gore explained: “This shared-value insurance model leads to lower price points, the attraction of healthier lives, positive behaviour change, and lower lapse rates. This creates value for members, the insurer, and broader society.”
Discovery Limited is a financial services organisation that provides a variety of services and products including, healthcare, life assurance, short-term insurance, savings and investment products and wellness markets.
The company’s headquarters are in Johannesburg, but it has extended its reach to include China, the United States, Singapore, Australia, the UK, and Europe.
The local market
Discovery Limited offers a variety of products to the South African market, including Discovery Health, Discovery Health Medical Scheme (DHMS), Discovery Life, Discovery Invest, DiscoveryCard, and Discovery Insure.
According to Discovery, Discovery Health is the largest healthcare funder and manager of medical schemes in South Africa.
During the six month period ending 31 December 2014, it experienced an 11% (R954 million) increase in normalised operating profit. “A newly-formed direct-to-consumer channel contributed 40% of individual new business, which increased off a significant base by 7% to R2 806 million.”
Discovery Health Medical Scheme is the only scheme in South Africa to have an AA+ rating for its claims paying ability.
During the six month period, DHMS acquired R11.6 billion in reserves for its members, as well as a 25.8% solvency ratio.
According to the results released by Discovery, Discovery Life achieved an increase in operating profit of 17% (R1 464 million), as well as a 9% increase (to R1 151 million) in new business.
Gore revealed: “The integrated model in Discovery Life is the best manifestation of the Group’s shared-value insurance model, which results in better initial selection, ongoing positive behaviour change, and positive selective lapsation.”
Discovery Invest’s operating profit increased to R191 million, and assets under management also increased by 27% to R45.6 billion.
The figures released by Discovery indicate that the DiscoveryCard, which is the company’s credit card product, now has in excess of 250 000 cardholders.
Discovery Insure, the business segment of Discovery Limited, experienced an impressive 57% growth to R403 million during the six month period ending 31 December 2014.
During this time it “focused on raising brand awareness, harnessing advanced mobile tracking technology and transforming the member claims experience.”
Finally, Discovery Vitality is the company’s science-based wellness programme. According to Discovery, “it is the largest programme of its kind in the world, with a global membership base of over three million lives.”
Recent figures show that there are now over 1.7 million South Africans who make use of Discovery Vitality.
In addition to the growth experienced by Discovery’s local operations, its international business ventures also performed well during the six month period ending 31 December 2014.
According to Discovery, “the strategy is to partner with leading global insurers in markets that are characterised by large life insurance industries, a high prevalence of non-communicable diseases, a strong intermediary presence, and product commoditisation.”
The United Kingdom
In the UK, normalised operating profit increased by 20% to R432 million, while new business increased to R915 million (7%).
The UK businesses were rebranded, with PruHealth changing to VitalityHealth, following Discovery’s acquisition of Prudential’s 25% of the UK joint venture.
PruProtect was also rebranded, now operating as VitalityLife.
VitalityLife’s normalised operating profit increased to R269 million and new business increased to R502 million. While VitalityHealth’s normalised operating profit increased to R163 million.
The United States
In the US, Discovery holds 100% share in The Vitality Group, which is a stand-alone version of the company’s Vitality programme. It offers services to self-insured members, to large employer groups and to healthcare carriers. The Vitality Group has 700 000 member across 50 states.
Discovery is set to announce a partnership with a large US life insurer soon.
In 2009 Discovery expended its reach into China through a 25% acquisition of Ping An Health Insurance Co, launching Ping An Health. In 2012, the company’s Vitality programme was also launched.
“The opportunity within the Chinese private health insurance sector remains robust. This is driven by a significant proportion of out-of-pocket medical spend, a rapidly expanding middle class, the increased use of technology to provide access to private healthcare, and government’s policy that strongly supports the development of commercial health insurance,” explained Gore.
Singapore and Australia
Through a joint venture with AIA Group Limited, Discovery launched AIA Vitality in Singapore in 2013 and in Australia is 2014.
According to Discovery, “52% and 33% of all sales of current products with integrated options in Singapore and Australia, respectively, are Vitality integrated products.”
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