Group chief executive
Discovery is a South African-founded financial services organisation with operations in the healthcare, life insurance, short-term insurance, savings and investment and wellness markets. Founded in 1992 as a specialist health insurer, Discovery today operates in South Africa, the UK, China, Singapore, Australia, and the USA through various business lines and covers over eight million lives. It operates under the Discovery Health, Discovery Life, Discovery Insure, Discovery Invest, DiscoveryCard, Discovery Vitality, PruHealth, PruProtect, Ping An Health and AIA Vitality brand names.
Its core purpose is to make people healthier and to enhance and protect people’s lives. The business model centres on making people healthier, having a positive long-term impact on costs and value for both the insurer and the client. The result is a more effective insurance system that is increasingly more relevant globally, given the global trends of chronic diseases, the challenge of rising healthcare costs and consumers turning to protection products to mitigate financial uncertainty.
Discovery designs innovative insurance products that emphasise the importance of prevention and wellness. Relying on a strong data analytics capability to understand and refine the incentives that contribute to positive behaviour change, this behavioural-linked insurance model addresses the shortcomings of traditional insurance systems by incentivising better health and driving and channelling the resultant risk savings into the incentives required to deliver these behaviour changes. This contributes to better health and value for customers, superior actuarial dynamics for the insurer and a healthier society at large.
Discovery’s ambition is to be the best insurance organisation in the world and a force for social good. By using powerful financial and behavioural structures that meet people’s needs in sustainable ways, Discovery is able to provide superior returns for shareholders. However, Discovery’s core purpose and ambition extend further than its immediate clients and financial performance. Businesses must not only navigate social change successfully, but must also contribute to building the stability necessary for a thriving society.
Discovery’s framework for sustainable development supports this ambition. This framework focuses on five areas:
The Discovery Fund gives ongoing financial support to 43 community healthcare organisations and projects across South Africa, many of which are situated in remote and rural areas. The Discovery Foundation is investing R150 million over a period of 10 years to train 300 healthcare specialists in South Africa. To date, it has funded the training of over 240 doctors in renowned local and international medical research institutions. During the 2014 reporting period, the Foundation has invested R22 million in 30 recipients.
The year to 30 June 2014 was a satisfying period for Discovery:
All businesses are competitively positioned in their respective markets.
The healthcare environment remains complex, characterised by an increasing disease burden, a deepening shortage of physicians, continued upward cost pressure and legislative reform. Against this backdrop, Discovery Health’s performance exceeded expectation: operating profit before tax increased 10% to R1.9 billion, after continued efficiencies were passed on to the medical scheme through a planned scale-related discount; new business increased 4% to R5 billion; and lives under management grew to 2.9 million.
Discovery Life demonstrated exceptional earnings before tax growth of 23% to R2.6 billion over the year, driven by new business growth of 6% to R2 billion, better than expected claims and lapse results, improved renewal efficiencies and disciplined expense control.
The performance of Discovery Invest over the year exceeded expectation. Earnings before tax increased by 50% to R331 million, driven by high growth of products sold and strong performance of the market. Assets under management increased to R42 billion.
The scale and relevance of Discovery’s UK businesses reflect the benefits of a decade of investment. The combined PruHealth and PruProtect businesses grew earnings before tax by 33% to R628 million; new business grew 35% to R2.1 billion and the combined customer base measured almost 800 000 at the end of the year.
In the year under review, Ping An Health entrenched its position as the top health insurance player in China and more than doubled new business volumes to R339 million.
Discovery Insure’s new business was exceptional, with 73% growth to R632 million. It is now the fastest growing short-term insurer in South Africa.
RMI Holdings included R866 million of Discovery’s earnings in its normalised earnings (2013: R699 million).
For an in-depth review of Discovery’s performance, RMI Holdings’ shareholders are referred to www.discovery.co.za.