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Discovery posts excellent results; repeatable business model continues to yield strong growth

Press release   •   Feb 20, 2014 11:00 CAT

Discovery posts excellent results; repeatable business model continues to yield strong growth

•  Normalised profit from operations up 21% to R2 383 million

•  New business API up 19% to R5 883 million

•  Cash generated from operations of  R1.3 billion

•  Growth and quality of earnings reflect the relevance and efficacy of the Discovery business model

•  Excellent performance in the key drivers of new business, loss ratios and lapses

News release from Discovery Limited – 20 February. Discovery Limited today presented a strong set of financial results for the six months ended 31 December 2013 to the analyst and investor community. Normalised profit from operations increased to R2 383 million, up 21% from the comparable 2012 period and new business Annual Premium Income is up 19% to R 5 883 million. Adrian Gore, Group CEO, commented; “We are pleased with the performance across Discovery’s businesses over the past six months. The period reflects the increasing relevance and efficacy of the Discovery business model; especially in the light of the global impact of chronic diseases of lifestyle, the challenge of rising healthcare costs and consumers turning to protection products to mitigate uncertainty.”

Gore gave details in his presentation of how Discovery’s business model, which centres around making people healthier, contributes to the Group’s ability to build robust insurance systems, “Behavioural economics is the catalyst that enables us to develop next generation insurance products. Understanding the triggers of behaviour change and designing the appropriate incentives to achieve long-term change not only creates value for consumers, but also enables us to achieve lower mortality and morbidity rates, better lapse rates and claims experience. In addition, our clients benefit from the additional value of product integration across the Discovery businesses.”

Discovery continued its deliberate strategy of investing in the further development of the model to ensure that it can be replicated across South African businesses, international markets and adjacent industries. Gore said; “We continued to invest significantly in building out the underlying capabilities that support our approach to insurance – clinical and behavioural research that can be applied to product design, health and wellness tools, digital platforms and data analytics. This will remain a key strategy going forward,”

Discovery’s South African businesses of Discovery Health, Discovery Life, Discovery Invest and newest member Discovery Insure, posted pleasing results. Discovery Health increased its new business by 15% to R2 623 million and operating profit by 13% to R860 million. Discovery Health Medical Scheme managed by Discovery Health, performed equally well: membership is up 4%, loss ratios declined and lapses and plan downgrades remained low, while achieving a R1.4 billion surplus and solvency reserves of R9.7 billion. Gore commented on Discovery Health, “We did considerable work on enhancing the entire member journey, including service initiatives that are rated best-in-industry, collaboration with stakeholders in the healthcare system to improve healthcare quality outcomes and building out our network of healthcare professionals; all of which translates into lowest-in-industry healthcare costs.”

Discovery Life experienced strong earnings growth of 21%, driven by strong new business, continued positive lapse and claims experience, and excellent expense management. Important is the positive impact of Vitality engagement on mortality and morbidity, as well as on lapse rates.

Discovery Invest’s performance exceeded expectation with assets under management increasing by 35% to R36 billion, and new business increasing by 26% to R652 million.

Discovery Insure continued its strong performance across all aspects of the business. Gore commented, “Discovery Insure’s potential remains exciting for us. During the review period, we focused on further product innovation, building the distribution capability, service innovation and enhancing the value of the Vitalitydrive model. All this activity has contributed to Discovery Insure’s position as the fastest-growing short-term insurer in South Africa.”

In the UK, Discovery’s combined businesses of PruHealth and PruProtect grew their combined profit by 27% to R359 million, and new business by 35% to R982 million with a client base at 774 000 lives. A critical development in the UK market has been the implementation of Discovery-based product integration across PruHealth and PruProtect. The significant investment in the Vitality programme as well as in the Vitality brand in the UK, has resulted in higher new business levels, strong loss ratio and lapse rate performance, and product innovation opportunities that create further competitive advantage.

Discovery’s foray into China with Ping An Health is gaining traction. New business has doubled over the period to R138 million and is predominantly driven by Group Insurance sales where Ping An Health is the dominant player. Gore added; “In October last year we launched the Comprehensive Health Protector 2.0 as well as a revamped Vitality offering, which saw a marked increase in individual sales and fantastic future potential.”

Gore concluded with observations on Vitality’s role and impact in a global setting through The Vitality Group in the US and the recent joint venture with AIA Group in Singapore and Australia, “The US remains the centre of wellness research and adoption, and Discovery leads the intellectual property development through The Vitality Group.”  The Vitality Group steers the development of wellness solutions for large employer groups, including multinationals, and is recognised by broker houses as the preferred wellness provider. In the AIA joint venture, Vitality is incorporated into an integrated life assurance product, and a pilot has been rolled out in Singapore.


Discovery information

About Discovery Limited

Discovery Limited is a South African-founded financial services organisation that operates in the healthcare, life assurance, short-term insurance, savings and investment products and wellness markets. Founded in 1992 by the current Group Chief Executive Officer Adrian Gore, Discovery was guided by a clear core purpose – to make people healthier and to enhance and protect their lives. Underpinning this core purpose is the belief that through innovation Discovery can be a powerful market disruptor.

The company, with headquarters in Johannesburg, South Africa, has expanded its operations globally and currently serves over seven million clients across South Africa, the United Kingdom, the United States, China and Singapore. Vitality, Discovery’s wellness programme, is the world’s largest scientific, incentive-based wellness solution for individuals and corporates. The global Vitality membership base now exceeds 5.5 million lives in five markets.

Discovery is an authorised financial services provider. It is listed among South Africa’s Top 40 companies on the Johannesburg Securities Exchange and trades under the code “DSY”. South African operations

Discovery Health
Launched in 1992, Discovery Health isSouth Africa’s largest healthcare funder and manager of medical schemes. It manages 13 medical schemes.
  • This includes the Discovery Health Medical Scheme, which has a 51% share in the open medical schemes market, making it South Africa’s largest open medical scheme.
  • Discovery Health covers over 2.8 million lives (all schemes under management).
  • Discovery Health Medical Scheme is the only one in South Africa to enjoy an AA+ rating for its claims paying ability, the highest possible credit rating from international rating agency Global Credit Ratings. The Scheme has maintained this rating for 12 consecutive years.
  • The Discovery Health Medical Scheme holds over R8.2 billion in reserves.
  • Discovery Health pioneered consumer-driven healthcare in South Africa with the introduction of innovations like the Medical Savings Account and its wellness programme, Vitality.
  • Discovery Health is continuously innovating new products and tools to enhance the quality of care members receive, including HealthID, an iPad-based application for doctors launched in 2012. The HealthID application is also available on Android mobile devices.
  • Discovery Health has been voted the top healthcare product supplier for the last four consecutive years at the Financial Intermediaries Association of Southern Africa (FIA) Awards.
  • The Discovery Foundation’s ongoing work to address the shortage of medical graduate and specialist skills, committing a total of R150 million to train 300 healthcare specialists in South Africa. This was augmented by the launch of the prestigious Discovery Foundation MGH Fellowship Award and by the recently-launched set of new awards recognising excellence and innovation amongst private sector doctors.
  • In 2013, Discovery Health was recognised as the top Medical Aid Company (Business Category) in South Africa in the Sunday Times Brand Survey. It was also voted top in the Spontaneous Awareness award (B2B).
  • In an independent review, Deloitte Consulting strongly endorsed the value provided by Discovery Health to Discovery Health Medical Scheme, as well as the Scheme’s governance structures and the integrated outsourcing relationship between the Scheme and Discovery Health.
Discovery Life

  • Discovery Life was launched in 2000 and is South Africa’s fastest growing major life assurer in the risk market, having captured 25% of the overall risk broker market.
  • Discovery Life being the number one writer of intermediated new business with 371 248 individual policies
  • It was the first South African insurer to separate risk from investment, leading significant change in the industry.
  • Discovery Life addresses the problem of underinsurance through its unique integrated operating model and through innovative product development.
  • Discovery Life was voted the top life assurer in the Sunday Times Top Brands survey for 2010, 2011 and 2013.
  • Discovery Life has been voted the top Long-term Insurer of the Year (Risk) for the past three consecutive years at the Financial Intermediaries Association of Southern Africa (FIA) Awards
Discovery Invest 
  • Discovery Invest was launched in 2007 and declared its maiden profit in 2010.
  • Discovery Invest combines the breadth and skill of the asset management industry with the existing research and development capabilities of Discovery Life.
  • The company offers consumers a unique and comprehensive product range that addresses the current gaps in the market by offering greater protection against poor investment choices.
  • With 90 758 policies, Discovery Invest now has more than R36 billion more in assets under management.
  • Through Discovery Invest’s LISP platform, clients have access to over 329 local and 65 offshore investment funds.In 2011 and 2013, Discovery Invest received the Financial Intermediaries Association of Southern Africa (FIA) award for best recurring premium business
Discovery Insure
  • Discovery Insure was launched in May 2011.
  • This pioneering product was created by leveraging the behavioural expertise developed in the Vitality programme with the latest telematics technology.
  • The unique Vitalitydrive programme encourages and rewards better driving behaviour and ensuring that vehicles are roadworthy.
  • At the heart of Vitalitydrive is the DQ-Track telematics device that measures and reports crucial aspects of driving behaviour.
  • Drivers on the higher driver status have 34% fewer claims than average or poor drivers (as measured by Vitalitydrive).
  • Vitalitydrive provides up to 50% fuel rewards on clients’ monthly BP fuel spend.
  • Young adults between 18 and 25 can receive further discounts of up to 25% on their motor premiums.·  Discovery Insure offers comprehensive vehicle, personal and household cover.
  • Discovery Insure was voted second in the Short-term Insurance (Consumer Category) at the 2013 Sunday Times Top Brands Awards.
Discovery Vitality
  • Launched in October 1997, Vitality is Discovery’s science-based wellness programme that underpins each of the Discovery businesses and is an international brand in its own right.
  • It is the largest programme of its kind in the world, with a global membership base of over five million.·  Vitality encourages healthy behaviours that reduce long-term healthcare costs by rewarding members for improving their health.
  • There are now more than 1.6 million people engaged in Vitality in South Africa.
  • Vitality is accredited by the Sports Science Institute of South Africa.
  • The HealthyLiving benefit offers Vitality members up to 25% cash back on HealthyCare products at Clicks, HealthyGear at adidas and TotalSports stores, and HealthyFood items at Pick n Pay and/or Woolworths.
  • Vitality now has the ability to integrate into over 100 fitness tracking technologies.
  • The Vitality value offering is enhanced by the DiscoveryCard, Discovery’s unique Visa credit card which gives members real cash back.
  • Launched in October 2004, the DiscoveryCard is South Africa’s largest non-bank new generation credit card in issue, with a 9.26% share of point-of-sales spend. There are now over 240 000 primary cardholders.
International operations

United Kingdom

In the UK, Discovery has a 75% shareholding in a joint venture with Prudential plc. Through PruHealth and PruProtect, the company offers healthcare cover and protection products. The Vitality Advisory Board was launched in the UK in 2013.


  • Launched in April 2004, PruHealth is the fourth largest Private Medical Insurer in the UK and the only one that rewards people for leading a healthy lifestyle.
  • PruHealth now covers around 555 000 lives.
  • It offers consumer-directed products linked to the Vitality wellness programme.
  • In 2010, Discovery acquired Standard Life Healthcare, thereby leveraging the significant assets of both companies and resulting in greater scale for PruHealth.
  • PruHealth has won several awards for its product innovations.


  • PruProtect, which was launched in September 2007, markets consumer-engaged life assurance products in the UK market.
  • The company’s products integrate with those of PruHealth and Vitality to unlock added value and significant premium savings for clients.
  • The company has become a major player in the UK protection market. There are currently 153 671 policies in force.
  • PruProtect has received industry recognition, including awards in four categories at the 2011 Defacto Awards. 
  • The company was also named Best Individual Protection Provider in 2011 by Professional Adviser, and walked off with the Innovation Award at the 2011 Protection Review.

United States

The Vitality Group

  • The Vitality Group was launched in 2007 and offers a stand-alone version of the Vitality programme to self-insured, large employer groups and to healthcare carriers.
  • Discovery holds a 75% share in The Vitality Group, 25% being held by Humana Inc.
  • The Vitality Group now covers over 1.6 million lives.
  • The Vitality Group has entered into a partnership with Wellness and Prevention, a subsidiary of Johnson&Johnson, the world’s premier consumer health company.
  • The Vitality Group recently announced a partnership with ADP, one of the world’s largest providers of payroll and employee benefits administration solutions.
  • In 2011, the group was awarded the C Everett Koop National Health Award for its work with Alcon Laboratories, a highly prestigious award recognising outstanding workplace health improvement programmes.
  • The Vitality Institute, was launched in the US in 2013.
  • The Vitality Institute, founded in 2013 by Discovery as part of its commitment to health promotion and wellness programs that advance social good, aims to advance knowledge about the evolving science of prevention and health promotion.


  • Launched in February 2011, HumanaVitality is a joint venture between Humana Inc and Discovery (through The Vitality Group) that makes Vitality available to Humana clients with commercial medical plans.
  • Discovery holds a 25% share in HumanaVitality.
  • Humana is the third largest US insurer, based on revenue. Humana has approximately 11.8 million medical members and 7.7 million specialty members.
  • HumanaVitality now has more than 2.7 million Vitality members.
  • In 2013, Vitality’s HealthyFood benefit structure was rolled out to Wal-Mart in the US.


Ping An Health

  • Ping An Health was launched in China in 2009, after Discovery acquired a 25% share in Ping An Health Insurance Co of China Ltd, a wholly-owned subsidiary of Ping An Insurance (Group) Company of China.
  • Ping An Insurance is China’s leading insurer and the second largest insurer in the world.
  • The joint venture will see Discovery’s product innovation and consumer-engaged model exported to a potential market of 83 million families.
  • Vitality was launched in China through Ping An Health in June 2012.


AIA Vitality

  • AIA Vitality was launched in Singapore in July 2013, after a strategic joint venture between AIA Group Limited and Discovery Limited that aims to introduce Discovery’s successful wellness-based life insurance model to the Asia-Pacific region.
  • AIA Group Limited and its subsidiaries comprise the largest independent publicly listed pan-Asian life insurance group and holds leading positions across the majority of its markets. It has operations in 17 markets in Asia-Pacific and has operated in Singapore for more than 80 years.
  • AIA serves the holders of more than 25 million individual policies and over 13 million participating members of group insurance schemes.
  • The investment to be made in AIA Vitality by Discovery is expected to fall within Discovery’s strategic framework of less than 5% of pre-tax profits for new business development.

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