| Tue 11 May 2010, 11:34 | | DSY - Discovery Holdings Limited - Press Release |
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DSY
DSY
DSY - Discovery Holdings Limited - Press Release
DISCOVERY HOLDINGS LIMITED
(Registration number 1999/007789/06)
(Incorporated in the Republic of South Africa)
ISIN: ZAE000022331
JSE share code: DSY
DISCOVERY SIGNIFICANTLY INCREASES THE SCALE OF PRUHEALTH THROUGH THE ACQUISITION
OF STANDARD LIFE HEALTHCARE
- Acquisition of Standard Life Healthcare expected to create new competitor
scale in the UK Private Medical Insurance market
- New company to retain PruHealth brand name
Discovery Holdings of South Africa today announced that it has entered into an
agreement to acquire the entire share capital of Standard Life Healthcare, a
wholly-owned subsidiary of the Standard Life Group, for R1.56bn (GBP138m). The
transaction is strategically consistent with Discovery`s ambition to increase
its scale and relevance in the UK, through an increased majority shareholding in
PruHealth Holdings Limited, the holding company of PruHealth and PruProtect, the
joint ventures between Discovery and Prudential Assurance Company of the United
Kingdom.
Standard Life Healthcare is the UK`s fourth-largest private medical insurer,
with an 8 per cent market share, 490,000 members, and a tangible net asset value
on acquisition of at least R848m (GBP75m). Standard Life Healthcare has a strong
track record of profitability, with IFRS underlying profit before tax of R106m
(GBP9,4m). The transaction creates a new competitor of scale in the UK Private
Medical Insurance (PMI) market, covering approximately 700,000 lives, and
attracting annual premiums of approximately R4.1bn (GBP370m).
The effective date of the transaction is expected to be 31 July 2010.
The transaction is consistent with Discovery`s stated objective to establish a
substantial presence in the UK
Since the launch of PruHealth in 2004, the UK has been a key focus in
Discovery`s international strategy. The UK has a large, well developed financial
services market which is receptive to the consumer-driven product philosophy
that Discovery has brought to both the health insurance and protection
industries. The continued trend towards wellness and consumerism, as well as the
increased financial pressure that the NHS is expected to face as a result of
tighter public spending, creates significant growth opportunities for
Discovery`s innovative, integrated model.
Discovery`s joint venture with Prudential has created a strong foothold in both
the health insurance and protection markets in the UK; the acquisition of
Standard Life Healthcare is likely to accelerate the attainment of both
PruHealth and PruProtect`s UK strategies. In the protection market, Standard
Life Healthcare`s large, high-quality client base provides growth opportunities
for PruProtect, and enhances Discovery`s ability to implement its integrated
model in the UK.
The acquisition provides PruHealth with complementary assets that significantly
strengthen its competitive position
PruHealth and Standard Life Healthcare have pursued complementary strategies in
the UK; while PruHealth has focused on product innovation, wellness and consumer
engagement, Standard Life Healthcare`s approach has been to offer comprehensive,
flexible coverage with a high-touch service. Both approaches have proven
successful, and have resulted in PruHealth and Standard Life Healthcare building
distinct and highly complementary assets and capabilities in PMI.
Adrian Gore, Discovery`s Chief Executive, said: "While PruHealth has won awards
for product innovation, Standard Life Healthcare has been broadly recognised for
its excellence in service delivery. The integration of our assets will result in
a well-balanced client mix, a comprehensive and complementary product range, a
broadening of expertise in the UK, and a national distribution network of agents
and brokers. This will significantly strengthen our competitive position, and
provide the platform for strong future growth."
The transaction will enable Discovery to increase its shareholding in the
PruHealth and PruProtect joint venture to 75%, while retaining the support of
Prudential
Discovery will fund the purchase of the Standard Life Healthcare transaction,
and intends to contribute Standard Life Healthcare to PruHealth as a capital
investment. Once completed, this will result in Discovery`s shareholding in both
PruHealth and PruProtect increasing from the current level of 50 per cent, to 75
per cent. Prudential will have a 25 per cent shareholding in both companies
within the joint venture, including Standard Life Healthcare. As well as
Prudential providing operational expertise in key areas, the joint venture will
continue to benefit from using the Prudential brand.
Andy Crossley, Deputy Chief Executive of Prudential UK and Europe, said: "We
believe Discovery`s acquisition of Standard Life Healthcare provides significant
opportunities in the UK for both PruHealth and PruProtect and will create value
for both Discovery and Prudential. We look forward to working with Discovery to
integrate Standard Life Healthcare into the joint venture arrangement."
The governance structure of PruHealth is being changed to reflect its increased
scale and growth potential
Discovery and Prudential previously announced management changes to their UK
joint ventures that sought to more closely align the strategic direction of
PruHealth and PruProtect. As part of this process, Herschel Mayers was appointed
as interim CEO of both PruHealth and PruProtect.
Given PruHealth`s enhanced scale and growth potential following the acquisition
of Standard Life Healthcare, it was thought prudent to appoint a dedicated
health insurance CEO in the UK. As a result, Neville Koopowitz, currently CEO of
Discovery Health, will take over as CEO of PruHealth, and will be relocating to
the UK to fulfil this role. Dr Jonathan Broomberg, currently Deputy CEO of
Discovery Health, will replace Neville as CEO of Discovery Health on his
departure. Herschel Mayers will retain his position as CEO of PruProtect.
The deal will be concluded subject to fulfilment of the conditions precedent
The conclusion of this transaction is subject to obtaining the necessary
regulatory approvals from the Financial Services Authority (UK) and the South
African Reserve Bank, which are expected to take approximately 3 months.
The information in Discovery`s press releases is specifically meant for
journalists and consumers should not use it to make financial decisions.
Detailed information about Discovery`s products is available at
www.discovery.co.za
FD Beachhead Discovery Holdings
Adrian Gore, CEO
Ravin Maharaj
Sonja Malan
Chloe Webb
011 214 2400 011 529 2854
Ravin Maharaj - 083 447 5158
Sonja Malan - 083 635 6965
Chloe Webb - 083 305 0144
Discovery information
Discovery is an authorised financial services provider.
Discovery operates in healthcare cover and life insurance markets in South
Africa and the UK and launched Discovery Invest - its investment business - in
2007. Vitality, Discovery`s wellness programme, is the largest provider of
individual and corporate wellness initiatives in South Africa, also operating in
the UK and US. The company`s core purpose is to make people healthier, and to
enhance and protect their lives through financial products that clients need and
want.
Discovery Health
- Discovery Health is South Africa`s largest healthcare funder and manager of
medical schemes. It covers over two million lives and manages 14 medical
schemes.
- This includes the Discovery Health Medical Scheme, the country`s largest open
medical scheme and the only one to enjoy an AA+ rating for its claim paying
ability, the highest possible credit rating from international rating agency,
Global Credit Ratings.
- 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 was voted top medical aid brand in the Sunday Times Top
Brands survey for 2009.
- Discovery Health was voted the top health product supplier at the 2009
Financial Intermediaries` Association Awards.
Discovery Life
- Discovery Life is South Africa`s fastest growing major life assurer, having
captured 24% of the broker business market
- It was the first South African insurer to separate risk from investment,
leading a change in the environment that is projected to save consumers more
than R5 billion by 2010.
- Discovery Life was voted the top life insurance and pension/provident fund in
the 2009 Sunday Times Top Brands survey
- Discovery Life was voted the top risk and life assurance supplier at the 2009
Financial Intermediaries` Association Awards.
Discovery Invest
- Discovery Invest was launched in October 2007.
- Discovery Invest combines the breadth and skill of the asset management
industry with the existing research and development capabilities of Discovery
Life.
- The company now offers consumers a unique and comprehensive product range that
addresses the current gaps in the market by offering greater protection against
poor investment choices.
- In the short space of time that Discovery Invest has been launched, over 1 600
intermediaries have written business with Discovery Invest.
- By December 2009, assets under management crossed the R6.5 billion mark.
PruProtection
The PruHealth JV has been incorporated into a broader JV between Discovery and
Prudential. PruProtection now also develops and markets protection products in
the UK life assurance market through PruProtect.
PruHealth
- PruHealth was launched into the UK market in October 2004 as a joint venture
between Discovery and UK insurer, Prudential, in response to a growing need for
consumer-directed private medical insurance products.
- PruHealth received several industry awards, including the Most Trusted PMI
Provider at the 2009 Moneywise Awards, the Best PMI Provider at the 2009
Moneyfacts Awards and the award for the Best Use of Marketing to Intermediaries
for 2009 at the Health Insurance Awards.
- Since then, PruHealth has grown to cover more than 200 000 lives.
PruProtect
- PruProtect`s strategy mirrors that of Discovery Life, as it is based on the
Vitality structure and enables dynamic pricing to be employed in the UK life
assurance market. Built into this strategy is the expectation that premium
levels will be competitive and risk-selection will be improved.
Discovery Vitality
- Discovery Vitality is a science-based wellness programme that underpins each
of the Discovery businesses and is an international brand in its own right.
- Vitality encourages healthy behaviours that reduce long-term healthcare costs
by rewarding members for improving their health.
- It is accredited by the Sports Science Institute of South Africa and more than
1.4 million people currently belong to Vitality.
- Vitality is available to Discovery Life and Discovery Health members, clients
of PruHealth and PruProtect .
- In February 2009, the HealthyFood (Trademark) Benefit was launched. This
benefit saves members up to 25% on a wide range of healthy foods they buy at
Pick n Pay. To date, more than 180 000 members have activated the
HealthyFoodTrade Mark benefit.
- Vitality`s value offering is further enhanced by the DiscoveryCard that gives
members real cash back.
11.May 2008
Date: 11/05/2010 11:34:01 Produced by the JSE SENS Department.
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