2. Group results overview
2
+22%
to R 16 231m
excl. Bankmed
New business
+15%
to R7 230m
Existing business profit
+73%
to R823m
New initiative spend
+11%
to R6 407m
Operating profit
3. Observations
3
Financial performance
Evolution of the Model
Existing businesses
New initiatives
New business
+22%
Operating profit
+11%
Acceleration of financial performance in the second half of the financial year; continued spend on new
initiatives; funded through debt and capital raising
Vitality Shared-Value Insurance model continues to evolve and creates the basis for the strong
performance for existing businesses and strategy for investment in new initiatives
New business
+20% +15%
Operating profit
+22%
+5%
+17%
+43%
+23%
+12%
+14%
+22%
-17%
+25%
DH strong growth and efficiencies; 8/9 restricted schemes won; DHMS financially robust; low lapses
Accelerated profit and new business in H2; model remains strong; powerful distribution force; focus on quality
Continued financial success; over R60bn in AUM; shared-value model manifesting
System integration completed and robust; acceleration in H2; focus on quality new individual business
Strong performance despite impact of Brexit and interest rates; model efficacy more evident
Investment
+73%
Intent to enter
banking
Accelerated new business in second half; focus on building a business of real scale
New business
+45%
+7%
+75%
Approaching profitability
Approaching profitability
Approaching profitability
Leading health insurer in China; #1 in Group high end and Individual health insurance
Best global insurance partners; Vitality penetration high and increasing; addition of France and Japan
Building a fully-fledged retail bank in the process of a licence application and infrastructure development
4. Complex economic environment
4
Low growth environment
Depreciating ZAR currency
Increasing interest rates
Systemic market risk
Record-low interest rates
GBP currency sensitivity
-6
-4
-2
0
2
4
6
8
10
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
GDP
%
growth
per
quarter
SA GDP growth rate since 1994
Nov-10 Jul-12 Jan-14 Jul-14 Jul-15 Nov-17 Jan-16 Mar-16
REPO at date of adjustment
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2011/06/302012/06/302013/06/302014/06/302015/06/302016/06/30
12
month
Daily
Average
Beta
Listed life insurance companies (BETA)
0.0
5.0
10.0
15.0
20.0
1975 1980 1985 1990 1995 2000 2005 2010 2015
UK 10-Year Gilt Forward Rate 1975 - 2016
Impact on SA business: High long-term interest rates and Beta UK: low interest rates countered by currency
5. 2012 2013 2014 2015 2016
Strong new business growth
5
Rm
12 months
to 30 Jun
2016
12 months
to 30 Jun
2015
%
change
6 577 5 398 22%
(Bankmed) 4 200
2 347 2 231 5%
1 161 814 43%
1 332 1 079 23%
1 932 1 646 17%
841 789 7%
1 732 991 75%
Existing
businesses
New
+22%
to R 16 231m
excl. Bankmed
-7% Incl Bankmed
+18%
+16%
+15%
+22%
6. H2
2014/2015 2015/2016
New business acceleration in the second half of the financial year
6
New business API (Rm)
+14%
Individual Life excluding DRO
H2
2014/2015 2015/2016
+10%
7. 2012 2013 2014 2015 2016
Robust normalised operating profit
7
*Includes R121m from additional 54.99% share in DiscoveryCard profits
Rm
12 months
to 30 Jun
2016
12 months
to 30 Jun
2015
%
change
2 265 2 031 12%
3 373 2 968 14%
165* 42 293%
186 223 -17%
678 542 25%
563 460 22%
Existing businesses 7 230 6 266 +15%
-823 -477 73%
Core
businesses
New
OTHER
+11%
to R6 407m
+17%
+17%
+23%
+11%
8. Growth in Normalised Headline Earnings Per Share
Revenue reconciliation
New business +22% to R 16 231m
Existing business profit +15% to R 7 230m
Spend on new initiatives +73% to R 823m
Normalised operating profit +11% to R 6 407m
Impact of debt funding
Impact of capital raising through rights issue
-4%
-6%
Normalised Headline Earnings Per Share +1% to 676.3 c Dividend declaration of 90c per share (+1%)
8
9. Acceleration in profit in the second half of the financial year
9
2 824
2 965
3 015
3 392
H1 H2
2014/2015 2015/2016
Normalised Operating Profit (Rm)
+7%
+14%
Existing businesses + 11% Existing businesses + 19%
11. A turn in performance in the second half of the year | Vitality
Health
11
New business API (Rm) Normalised operating profit (Rm)
H2
2014/2015 2015/2016
+55%
+35% in GBP
H1 H2
2014/2015 2015/2016
+24%
+62%
+4% in GBP
+37% in GBP Full year result
-17% to R186m
From -43% at half year
Excl. systems migration
+31% to R292m
12. Group Embedded Value to R53bn
12
+2%
2 987
560
4 622
1667
68
246
655
3433
331
EV at start of period VNB (Excl. Assumption
changes)
Unwind of discount rate Other initiatives Experience Variances
(Excl. Economic)
Experience Variances
(Economic)
New business impact of
economic methodology
and assumptions
changes
VIF impact of economic
methodology and
assumptions changes
Other methodology
changes
Change in capital and
dividends paid
EV at end of period
R52.3bn
R53.1bn
+R6bn (non-economic influences) -R4.6bn (economic influences)
13. Observations
13
Financial performance
Evolution of the Model
Existing businesses
New initiatives
New business
+22%
Operating profit
+11%
New business
+20% +15%
Operating profit
+22%
+5%
+17%
+43%
+23%
+12%
+14%
+22%
-17%
+25%
Investment
+73%
Intent to enter
banking
New business
+45%
+7%
+75%
Approaching profitability
Approaching profitability
Approaching profitability
14. 2
Technology is an enabler in insurance,
creating the ability to more accurately
track and segment risk; and reward
behaviour change
3
A growing social responsibility for
insurers given increasing complexity
and evolving client needs
1
Nature of insurance risk is behavioural
and competitiveness of insurance
companies depends on their ability to
affect behaviour change
Trends Why How
Make people
healthier and
enhance and
protect their lives
Importance and justification of the Vitality Shared-Value Insurance
model
14
15. Mathematics of the Vitality Shared-Value Insurance Model
15
=
∆ Behaviour
Incentive
Incentive
Member
Bent (qx)
∆ Behaviour
× × ×
Value
Bent (qx)
Vitality chassis
Engagement
Make
people
healthier
Surplus
sharing
=
Screening
Exercise
Nutrition
Weight Loss
Vitality Age
Vitality Points
Vitality Status
Rewards
Morbidity &
mortality
Accidents
Defaults
Health
insurance
Life insurance
Short-term
insurance
Banking
35m years health data; >5 years mortality data; over 4.5bn km of telematics linked driving
16. Vitality Shared-Value Insurance Model
16
Model for behaviour change
30
to
34
35
to
39
40
to
44
45
to
49
50
to
54
55
to
59
60
to
64
65
to
69
None Blue Bronze
Silver Gold
>50%
differential
Blue Bronze Silver Gold
Bent (Qx)
Value
1 5 10 15 20 25 30 35
Base Neutral Engaged Advanced
Fuel rewards
Dynamic pricing
Wedge
Enhanced yield
Bent q(x)
Blue
Bronze
Silver
Gold
and
Diamond
Blue
Bronze
Silver
Gold
and
Diamond
Base
Neutral
Engaged
Advanced
Health
Insurance
Short-term
Insurance
Life
Insurance
By demographics
17. Vitality Active Rewards with Apple Watch
17
Free Apple Watch
Weekly rewards
Loss aversion
1.9 2.4
Prior event days
per week
Current event
days
Active Integrator
Upfront discount
& Dynamic pricing
> 25,000
Apple Watch
> 2m weekly rewards
3.4 million physical activity
events logged
Impact on tracked activity:
>20% increase post activation
Mortality experience by
physical activity
30% lower lapses for engaged
clients
Relative to non-Vitality clients
=
∆ Behaviour
Incentive
Incentive
Member ∆ Behaviour
Value
× × ×
Bent (qx)
Bent (qx)
18. Launch of Vitality Active Rewards with Apple Watch in China
18
Ping An Life
Run Vitality with Apple Watch
1 million agents
2000 cities
3.6 million policies expected per year
Ping An Health
Owns and manages Active Rewards platform
Cross sell products to Ping An Life portfolio
Active Rewards on group products
20. Observations
20
Financial performance
Evolution of the Model
Existing businesses
New initiatives
New business
+22%
Operating profit
+11%
New business
+20% +15%
Operating profit
+22%
+5%
+17%
+43%
+23%
+12%
+14%
+22%
-17%
+25%
Investment
+73%
Intent to enter
banking
New business
+45%
+7%
+75%
Approaching profitability
Approaching profitability
Approaching profitability
22. 22
New business API (Rm)
Normalised operating profit
(Rm)
+12%
to R2 265m
1
2
3
Strong financial performance for DH; DHMS
extends leadership position with healthy
growth and financials; extension of DH model
and assets to restricted schemes continues
Significant investment in building a world-class
healthcare system and combating healthcare
inflation for members
2012 2013 2014 2015 2016
2012 2013 2014 2015 2016
+22%
to R6 577m excl Bankmed
-31% incl. Bankmed
Management of a complex high-inflation
healthcare environment characterised by high
utilisation and supply-driven demand
23. Discovery Health Medical Scheme continues to deliver
23
Growth Financial security
2 691 852
54%
Lives
Market share
>360 000
2.16%
New lives
Growth
R12.9bn
25.98%
Reserves
Solvency
AA+
GCR credit rating
24. DH growing client base - Discovery Health Medical Scheme - and
17 restricted schemes
24
*excluding GEMS
DHMS = Discovery Health Medical Scheme
-
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
1993 1998 2003 2008 2013
DHMS Restricted Schemes
Open scheme
Restricted schemes
8/9
17
Closed schemes
won over 5 years
Restricted schemes
579 00
27%
Restricted scheme
lives
Market share*
>3.3m lives under administration
38% overall market share
25. The Discovery Health System
25
Lower cost
Better health
Better healthcare
Technology
Personal Health
Programmes
40% decrease in
preventable admissions
Managed Care
Programmes
12% lower premium
than market
Fraud and forensic
recoveries
R1.04bn fraud
savings (2013-2015)
Tariff negotiation
Smart plan HealthID
Discovery
Member App
17 300+ lives
30 years average
age
1 m+
member
consents
2.89 m+
monthly
logins
Integrated Pharmacy
Benefit Management
Strategy
Patient Satisfaction
Score (PaSS):
HomeCare
National average PaSS
increased to 60.6%
(from 56%) since public
sharing of results
KidneyCare,
HIVCare, CCP
26. Complexities in the healthcare system
26
1 Not just about tariffs but utilisation
Not just about the sick but also the healthy
Not just about demand but supply-induced demand
Technology doesn’t reduce costs, it increases them
Not about non-healthcare expenses but healthcare expenses
2
3
4
5
Healthcare inflation is:
27. Claims inflation remains high and is driven mainly by increasing
utilisation of healthcare services
27
1 Not just about tariffs
but utilisation
Not just about the sick but
also the healthy
Not just about demand but
supply-induced demand
Technology doesn’t reduce
costs, it increases them
Not about non-healthcare
expenses but healthcare
expenses
2
3
4
5
Healthcare inflation is:
Average annualised inflation rates (2008 – 2015)
6.3% 0.5%
2.9%
1.7% 11.4%
CPI Tariffs Demand side
utilisation
Supply side
utilisation
Claims inflation
If utilisation was constant since 2008,
contributions would be 27% lower vs
2.8% lower if tariff differential was
0% were constant
28. Selection and ageing have a significant effect on scheme financial
performance
28
1 Not just about tariffs but
utilisation
Not just about the sick
but also the healthy
Not just about demand but
supply-induced demand
Technology doesn’t reduce
costs, it increases them
Not about non-healthcare
expenses but healthcare
expenses
2
3
4
5
Healthcare inflation is:
Impact of losing healthy DHMS members
Top 5% surplus
generating members
Top 5% Vitality
engaged members
Ageing by a year*
Impact on healthcare result
R1 148m
reduction
R2 872m
reduction
R998m
reduction
*Assuming net claims incurred go up by 3% if scheme ages by 1 year
29. New hospitals have had an incremental R1.1bn impact on DHMS
over past 8 years
29
1 Not just about tariffs but
utilisation
Not just about the sick but
also the healthy
Not just about demand
but supply-induced
demand
Technology doesn’t reduce
costs, it increases them
Not about non-healthcare
expenses but healthcare
expenses
2
3
4
5
Healthcare inflation is:
Regional analysis: Durban regional admission rate relative to national
average
2010 2014
2011
14%
19.8%
29.7%
30. Growing impact of high-cost medicines and new technologies
30
Increasing incidence of ultra high-cost medicine
13
Ultra high-cost
claimants
89
Ultra high-cost
claimants
2008 2015
3 333 median claimants pay for
1 ultra high-cost claimant
R1,22 million
R4 030
PER ULTRA-
HIGH COST
CLAIMANT
AVERAGE COST
PER CLAIMANT
Top high-cost oncology
products submitted for funding
consideration
Perjeta +
Herceptin
Adcertris
Yervoy
Zelboraf
R2.2m
R1.3m
R1m
R0.8m
1 Not just about tariffs but
utilisation
Not just about the sick but
also the healthy
Not just about demand but
supply-induced demand
Technology doesn’t
reduce costs, it
increases them
Not about non-healthcare
expenses but healthcare
expenses
2
3
4
5
Healthcare inflation is:
31. There are several complexities in the healthcare system
31
01 Not just about tariffs but
utilisation
Not just about the sick but
also the healthy
Not just about demand but
supply-induced demand
Technology doesn’t reduce
costs, it increases them
Not about non-
healthcare expenses but
healthcare expenses
02
03
04
05
Healthcare inflation is:
Increasing healthcare expenses with decreasing non-healthcare
expenses
2015
Admin as % of GCI
2008 2009 2010 2011 2012 2013 2014 2015
Cumulative Increases
Relative to CPI
Administration and Managed Care
Risk claims
32. Discovery Health provides an integrated healthcare system
32
1 Not just about tariffs but
utilisation
Not just about the sick but
also the healthy
Not just about demand but
supply-induced demand
Technology doesn’t reduce
costs, it increases them
Not about non-healthcare
expenses but healthcare
expenses
2
3
4
5
Healthcare inflation is:
34. 2012 2013 2014 2015 2016
New business API (Rm) Normalised operating profit (Rm)
Robust financial performance
+14%
to R3 373m
+5%
to R2 347m
2012 2013 2014 2015 2016
35. Individual Life new business activations (API Rm)
excl. DRO
Normalised Operating Profit (Rm)
Accelerated performance in the second half of the year
+18%
1504
1780
H2
2014/2015 2015/2016
349
383
H2
2014/2015 2015/2016
+10%
36. Vitality model working
Lapse rates (6 monthly) well below
expectation Claims experience at expectation
Lapse and claims performance remains robust
Expected Actual
Claims as a percentage of
expected claims
100%
Blue/Bronze Silver Gold/ Diamond
50%
Lapses
Blue/Bronze Silver Gold/ Diamond
70%
Mortality
37. Vitality Shared-Value model continues to create value for the client
and Discovery
8-fold increase in engagement
since 2008
0% 0% 0% 0%
1%
3%
4%
5%
8%
9%
12%
18%
22%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Paybacks as a percentage of claims
To date Discovery Life has paid
R2 billion in PayBacks
Blue Bronze Silver Gold &
Diamond
8x
2008 - > 2016
37
38. Quality of distribution force continues to excel
Growth and productivity of tied financial advisers
115
1 193
2007-8
2008-9
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
17%
of tied advisers
37%
of tied adviser
new business
market share
Continued gains in market share and IFA recognition
24.1% 25.3% 25.7% 26.2% 28.8%
23% 22% 22% 20% 14%
18% 19% 19%
19%
19%
13% 12% 12% 13%
12%
2012 2013 2014 2015 2016 H1
Discovery Insurer A Insurer B Insurer C Insurer D Other
2013 2014 2015 2016
Retail affluent market share
39. Value of new business (Rm) VNB margin acceleration in H2
Underlying VNB margins remain strong, impacted by economic
assumptions
755
802 846 878
807
-
-
-
-
263
Jun-12 Jun-13 Jun-14 Jun-15 Jun-16
Published VNB Jun15 Economic Assumption
10.4%
11.2%
HY1 HY2
June 2015 economic assumptions
21%
40. Cash generation and new business strain (Rm)
7750
2101
184
4562
1087
1964
1251 1205
Premium and fees Claims and PH
reserves
Manex, Renewal
comm, ACIs, new
initiatives and SH
income
Cash from existing NB strain New FinRe FinRe repayment Discovery Life cash
flow
IRR = 21.1%
Payback = 9 yrs
41. Powerful risk segmentation by Vitality Status Vitality further segments standard underwriting
Vitality provides a unique segmentation of life insurance risk
Cardiovascular
Disease
Cancers - Smoking
Related
Other Accident
None Blue Bronze and Silver Gold Diamond
Relative claims experience to non-Vitality members
Health loading
Standard rates Segmentation using Vitality
Vitality
Segment 1
94% of
traditional
underwriting is
done at
standard rates
Vitality
Segment 2
Vitality
Segment 3
Vitality
Segment 4
43. 2011 2012 2013 2014 2015 2016
2011 2012 2013 2014 2015 2016
New business API (Rm) Operating profit (Rm)
Assets under management (Rbn)
+17%
to R1 932m
+22%
to R563m
+21%
to R61bn
2011 2012 2013 2014 2015 2016 Fastest growing unit-trust company
Top 5 taker of net flows
(UBS)
45. Initial success of the model
Retirement income API Fund selection Vitality engagement VNB margin
2014/2015 2015/2016
+72%
In External Funds
In Discovery Invest Funds
88% in Discovery Invest
Funds
Relative to non-
integrated
Indexed engagement
compared to traditional product +10%
Jun-15 Jun-16
Linked annuity API 45
47. Solid year for the UK business
47
Scale of the UK Primary Market
₤40.3m
Operating profit
Lives
932k
₤580m
Earned premiums
+8%
R864m
R12.4bn
48. Record high levels of Vitality engagement
48
Increase in relative engagement
levels
Physical activity uplift as a result
of Active Rewards
1m Starbucks coffees awarded to
date
Silver Gold Platinum
2014 2015 2016
Indexed status distribution shift (2014=1)
1 5 9 13 17 21 25 29 33 37 41 45 49
Cumulative
number
of
coffees
awarded
Weeks since launch
Increase in physical activity as a result
of Active Rewards
2013 2014 2015 2016
8-fold increase
50. Complexity created by Brexit
50
Record low interest rates at
financial year-end Impact on VitalityLife
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50 Upwards price pressure to preserve
margin, in particular whole of life. Industry
wide impact
Pricing
Exchange rate movement partially offset
drop in interest rates
Operating profit
£26.3m decrease in EV
Driven by the 105bps reduction in yield
curve impacting expected investment
return on reserves
EV
Currency sensitivity (ZAR to GBP)
UK 10-Year Gilt Forward Rate
< 1 in
200
year
event
6
8
10
12
14
16
18
20
22
24
June
-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
51. Solid business performance
51
Normalised operating profit (Rm) New business API (Rm)
+25%
to R678m
+5%
in GBP
+23%
to R1 332m
+4%
in GBP
2012 2013 2014 2015 2016
2012 2013 2014 2015 2016
52. Quality of business
52
% business integrated with Vitality
Optimiser Lapse rate
Relative claims experience of
Optimised vs non-Optimised clients
60%
Vitality Optimiser take-up
Sep’13
Nov’13
Jan’14
Mar’14
May’14
Jul’14
Sep’14
Nov'14
Jan'15
Mar'15
May'15
Jul’15
Sep’15
Nov'15
Jan'16
Mar'16
May'16
Standard Life
Insurance
VO Life cover
Optimised clients claim
40% less
2012/13 2013/14 2014/15 2015/16
53. Interest Rate Optimiser particularly suited to low-interest rate
environment
53
Upfront discount and dynamic premiums Example
VITALITY
E
C
O
N
O
M
I
C
Long-term
Interest Rate
Bronze Silver Gold Platinum
Current rate (3.25%) 4.4% 3.4% 2.4% 1.4%
Long-term average
(5.50%)
3.3% 2.3% 1.3% 0.2%
Long-term average +
0.5% (6.00%)
3.0% 2.0% 1.0% 0.0%
Dynamic premiums
appropriate to economic
and lifestyle conditions
27-50% upfront discount
35 Year old,
Gold Vitality status
Flexing
by
Interest
rate
Flexing by Vitality engagement Example
Premium (₤)
Product
Standard WoL
Standard WoL after
industry re-price
WoL with Interest
Rate Optimiser
85
102
Dynamic premium re-adjustments
based on interest rates and wellness
51
55. VitalityHealth financial performance
55
New business API (Rm) Normalised operating profit (Rm)
+43%
to R1 161m
2012 2013 2014 2015 2016
-17%
to R186m
2012 2013 2014 2015 2016
+20%
in GBP
-30%
in GBP
56. A turn in performance in the second half of the year
56
New business API (Rm) Normalised operating profit (Rm)
60
93
H2
2014/2015 2015/2016
+55%
+35% in GBP
H1 H2
2014/2015 2015/2016
+24%
+62%
+4% in GBP
+37% in GBP Full-year result
-17% to R186m
From -43% at half year
Excl. systems migration
+31% to R292m
57. Improving actuarial dynamics of the business
57
Loss ratio performance Lapse rate
Lapse rate (2014 = 1)
Loss ratio (2012 = 1)
2012 2013 2014 2015 2016 2014 2015 2016
58. Focus on quality new business
58
Relative profitability of Individual
lives
Vitality brand positioning has
extended the PMI traditional market
Shift towards more profitable
Individual lives
New-to-
market
Switch
85%
Individual business through direct
channels - % new-to-market
Relative profitability by
segment (Corporate = 1)
Corporate SME Individual
5.6X more profitable
39.8%
47.6
%
New business mix
2015 2016
Corporate SME Individual
59. Profit emergence
59
Profit (£ m)
36.6
11.4
5
11.2
9
Cash flow from
existing book
FinRe out Once-off system
integration
New business strain
net FinRe
Profit
60. Observations
60
Financial performance
Evolution of the Model
Existing businesses
New initiatives
New business
+22%
Operating profit
+11%
New business
+20% +15%
Operating profit
+22%
+5%
+17%
+43%
+23%
+12%
+14%
+22%
-17%
+25%
Investment
+73%
Intent to enter
banking
New business
+45%
+7%
+75%
Approaching profitability
Approaching profitability
Approaching profitability
61. Building substantial businesses
61
Capital going
forward
Shared-Value short-term insurance model
based on telematics and improving driving
behaviour through incentives
Statutory capital
Leading health insurer in China, #1 in
group high-end and individual health
insurance
Growth dependent
Discovery Partner Markets A global network of the best insurers who
use the Vitality Shared-Value Insurance
model
Light
Intent to enter banking
Building a fully-fledged retail bank in the
process of a licence application and
infrastructure development
Heavy
Launch Profit Scale
±5yrs ±10yrs
+73%
to R823m
63. 63
Combined ratio New business API (Rm)
+7%
to R841m
2012 2013 2014 2015 2016
2013
Q1
2013
Q2
2013
Q3
2013
Q4
2014
Q1
2014
Q2
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
2016
Q3
2016
Q4
102%
H1
H2
2014/2015 2015/2016
0%
to R402m
14%
to R439m
2014/2015 2015/2016
64. Success of the business model
64
Vitalitydrive impact Duration impact
1 2 3+
Loss ratio by duration
1 2 3+
Lapse ratio by
duration
Bad drivers Good drivers
Loss ratio by
Vitalitydrive status
Lapse rate by
driver behaviour
65. High growth impacting average book duration
65
Fastest-growing new insurer (no
acquisition) Vehicles covered Exceptional inforce growth
Insurer A
1998
Insurer B
2008
Insurer C
2008
Insurer D
2010
DSY-I
2011
Year 1 Year 2 Year 3 Year 4 Year 5
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Oct-13
Feb-14
Jun-14
Oct-14
Feb-15
Jun-15
Oct-15
Feb-16
Jun-16
>145 000
cars
+36%
to R2.2bn
Jul-13
Sep-13
Nov-13
Jan-14
Mar-14
May-14
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
3.8 months increase in average book duration for 12 months increase in DI duration
66. 2014 Jan-Jun 2014 Jul-Dec 2015 Jan-Jun 2015 Jul-Dec 2016 Jan-Jun
Model offsets claim inflation in the context of the current
economic volatility
66
Exchange rate impact on claims severity
Vitalitydrive offsets increased
claims
For every 10% depreciation in the currency, the loss increases by 4.9%
R/$
Impact
2014
Jan-Jun
2014
Jul-Dec
2015
Jan-Jun
2015
Jul-Dec
2016
Jan-Jun
Decreasing accident frequency
67. Telematics
67
Before collision After collision
23% more likely to have a car
accident given driving behaviour
More likely to have a front vs rear
collision
27 year old female
Red Toyota Yaris
ImpactAlert Collision type
and severity
Parts to be
replaced
Expected cost of repair
3.7g
1.6g
Reserving, fraud detection, pricing
0 0.5 1 1.5
Acceleration
[m/s2]
Time [s]
Longitudinal Lateral Vertical
68. Evolution of Discovery Partner Market strategy
68
Joint
Venture
Franchise
Global Vitality Network
Data and Technology
Partners
69. Activity within Discovery Partner Markets and the Vitality Network
69
Vitality Active Rewards with Apple
Watch launch to corporate clients
Launch of Vitality Active Rewards with
Apple Watch for Ping An Life clients
Vitality penetration
continues to grow
Integrated insurance more
available across states
Manulife launch at LPGA
classic
Announcement of partnership with
Sumitomo Life and SoftBank
Launch in Germany in July
with strong initial traction
France to
launch in 2017
Launch of Vitality
Active in Hong Kong
Approaching profitability; capital light
Exponential growth in individual new
business continues
Vitality launch in
Philippines in Oct
Launch in
Malaysia in Oct
Launch in
Thailand in June
70. Generali Vitality had a brilliant initial response
Positive API impact on Term policies
Media coverage
Pre- launch Post- launch
+141%
pre-launch average
Base sales Vitality sales
72. New business API (Rm)
2012/2013 2013/2014 2014/2015 2015/2016
+75%
to R1 732
Revenue to RMB 1.5bn
73. Government 5-year plan Insurance market demand Ping An Group alignment
Systemic focus on healthcare in China
Healthcare reform a core subject of
Government’s new five-year plan
Government spending on healthcare under
pressure and reform will rely heavily on private
insurance sector involvement
Current insurance penetration is
low (3% of spend) with high
consumer out-of-pocket
expenses (50% co-pay)
Healthcare as a major
strategic investment with
investments in nearly every
aspect of the sector
Data to follow
Number of private hospitals/clinics in China
3.2
13.6
2008 2015
Source: Mckinsey
“To achieve medium and high speed
growth of insurance industry. By
2020, the national premium income
should reach approximately RMB 4.5
trillion with an insurance penetration
of 5%, per capita premium of RMB
3,500 and total assets of the
insurance industry of RMB 25 trillion”
13th 5-year plan of development
Thousand
74. No 1. market share in group high-end market Individual health insurance
Ping An Health continues to deliver exceptional growth
74
>400 000 lives
Policyholder
growth
Jan Feb Mar Apr May June
Internet based
product sales
Calendar YTD new business (Indexed) and YoY growth
+15%
+12%
+18%
-14%
-15%
75. Quality and stable loss ratio; focus on creating scale
Policy count weighted loss ratio for Group and Individual products
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16
76. Group results overview
76
+22%
to R 16 231m
excl. Bankmed
New business
+15%
to R7 230m
Existing business profit
+73%
to R823m
New initiative spend
+11%
to R6 407m
Operating profit
