| Thu 15 Mar 2007, 9:14 | | DSY - Discovery Holdings Limited - Discovery To Pa |
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DSY
DSY
DSY - Discovery Holdings Limited - Discovery To Partner With Prudential
Plc In New Life Insurance Company
DISCOVERY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1999/007789/06)
ISIN: ZAE000022331
Share Code: DSY
("Discovery")
DISCOVERY TO PARTNER WITH PRUDENTIAL PLC IN NEW LIFE INSURANCE COMPANY
Following the success of their existing joint venture partnership, Prudential
plc, a leading UK insurance group, and leading South African life and health
insurer, Discovery, have announced their intention to substantially enhance
their relationship through the roll out of life assurance products into the UK
market.
This will be achieved by consolidating their joint venture into a new protection
company, jointly owned by Discovery and Prudential, which provisionally will be
called PruProtection. It will house two distinct businesses, PruHealth and a
newly-formed life assurance company, PruLife. The latter will market life
assurance products in the UK based on those of Discovery Life.
As 50/50 partners in PruProtection, Discovery and Prudential will make equal
capital contributions to the venture. Discovery expects to contribute capital of
around R1 billion over a 5-year period. The amount of capital will be
proportional to the success of the venture. Further funding will be provided in
the form of financial reinsurance by Hannover Re. This in effect means Discovery
will earn 50% of profits while providing less than 50% of the required capital,
which it will fund from its existing and internally-generated cash resources.
According to Discovery CEO Adrian Gore, a pilot life assurance product has
already been launched in the UK, with an excellent response and strong support
for the benefit design. Further development of this protection product will now
be possible under PruProtection, and introduce to the UK market the consumer-
engaged model that has made Discovery Life so successful in South Africa in
recent years.
"The life assurance market in the UK has become very commoditised, with little
differentiation in terms of price or benefits," says Gore. "The market is very
similar in this way to the PMI market we encountered in the UK before PruHealth
was launched in 2004."
Gore says the integrated approach will offer more differentiation in both price
and benefits, as well as offering rewards for policyholders who take steps to
improve their health through Vitality.
"UK consumers can look forward to benefits that address their needs, with broad
claims definitions and objective claims criteria," he says, "Pricing will also
be more competitive with flexible funding structures that reflect one`s health
status."
Gore says this is an exciting opportunity for Discovery. "The current UK
protection market is about 3.5 times larger than the South African market, with
new business API of R11 billion," he says. "We have seen with PruHealth the
extent of interest in new generation insurance and the Discovery model, with
over 100 000 lives on the books in its first two years."
Gore adds that the real excitement comes through the integration possibilities,
already proven in Discovery Life`s experience in South Africa, and through the
links with Vitality, Discovery`s market-leading wellness programme. "Our
experience reveals better loss ratios, lapse rates and benefit take up, as well
as improvements in disability and morbidity," he says, "All of this while giving
cheaper cover to consumers."
In addition to Discovery`s unique product design capabilities, PruProtection
will also have access to Discovery`s back-office servicing and administrative
capabilities in South Africa.
Prudential will provide a strong distribution capability as well as its
established market presence and brand name to the venture. Prudential is the
UK`s largest insurer, and regularly scores highly in brand recognition and
customer satisfaction surveys.
The transaction is subject to FSA and SA Reserve Bank approval.
Shaun Matisonn, currently CEO of PruHealth, will retain his position while also
taking the reins as CEO of PruProtection. A CEO for the life assurance business
will be appointed in due course.
Discovery will host a conference call for investors and analysts at 2pm this
afternoon, 15 March 2007, followed by a short question and answer session.
Interested parties can participate in the call by dialling in on the numbers
below.
South Africa
Toll: 011 535 3600
Toll-free: 0800 200 648
UK
Toll-free: 0800 917 7042
A live webcast of the presentation will also be available on www.discovery.co.za
at 11:30 am).
Distributed by : Beachhead Media & Investor Relations
Patrick Lawlor 011 214 2410/ 082 459 6709 / patrick@bmsa.co.za
On behalf of : Adrian Gore, CEO Discovery
011 529 2800
Background on Discovery
Discovery operates in health cover markets in South Africa, the US and the UK,
and locally in the life insurance market, and strives to develop financial
services products that clients need and want. The company`s core purpose is to
make people healthier, and to enhance and protect their lives.
Discovery Health
As South Africa`s largest health care funder and medical scheme administrator,
Discovery Health covers over 2 million lives and administers twelve 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, the highest possible
credit rating from international rating agency, Global Credit Ratings.
Discovery Health pioneered consumer-driven health care in South Africa with the
introduction of innovations like the Medical Savings Account and its wellness
programme, Vitality.
Discovery Health`s service is ranked among the best in the industry by all
stakeholders according to the TWIG SA`s Private Healthcare Tracker industry
survey.
Discovery Life
Discovery Life is South Africa`s fastest growing major life assurer, having
captured around a third of the independent broker market since its inception in
2000.
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.
In 2005, the company introduced the new-generation retirement Optimiser that
heralded a change in retirement annuity market to provide consumers with better
returns and greater certainty.
Destiny Health
Destiny Health is Discovery`s fully-owned subsidiary in the US, and leverages
Discovery`s unique Consumer-driven Healthcare Model and the growing trend to
consumerism into the world`s biggest consumer of health care services.
Combined, Destiny Health and Discovery are the largest providers of consumer-
directed health care in the world.
Destiny Health covers over 59 000 lives.
Destiny Health operates in the mid-West, mid-Atlantic, North-East and South of
the United States.
Both Destiny Health and PruHealth`s technology and call centre backbones are
managed out of Discovery`s Johannesburg head office.
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.
Since then, PruHealth has grown to cover 100 000 lives
A third of PruHealth`s customers are new to private medical insurance in the UK
Both Destiny Health and PruHealth`s technology and call centre backbones are
managed out of Discovery`s Johannesburg head office.
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 centres on encouraging healthy behaviours to reduce long-term health
care costs - an independent actuarial study by US firm, Milliman, shows that
Vitality members claim 40% less than their non-Vitality counterparts.
It is accredited by the Sports Science Institute of South Africa
Linked to Vitality is the DiscoveryCard, Discovery`s new generation credit card.
Since the DiscoveryCard`s launch in 2004, more than 450 000 cards have been
issued and an independent survey by Razor`s Edge has rated it the best value
credit card in the South African market.
15 March 2007
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 15/03/2007 09:14:08 Produced by the JSE SENS Department.
