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Discovery to launch a retail bank

| On the move

Discovery says it plans to expand its business model into banking and to establish an innovative full-service retail bank.

The group said it is about to start the lengthy and complex regulatory process to establish and build a bank.

The healthcare and financial services provider on Thursday reported a 51% growth in new business to R17.5 billion for the year ending June 2015.

This was mainly on the back of Discovery Health being awarded the business of Bankmed Medical Scheme, the group said in a statement.

Normalised profit from operations was up 17% to R5.8 billion billion, while normalised headline earnings increased by 16% to R4 billion.

Discovery CE Adrian Gore said the past six months was significant for Discovery, “not only in terms of an excellent financial performance, but also for the sizeable investment made in new initiatives that in our view, positions the Group well for future growth”.

One of the key developments for Discovery during the past financial year, was a “hugely successful” capital raising aimed at funding growth opportunities in the UK and other local market opportunities, Gore said.

He said growth in Discovery’s primary market South African was driven by strong new business, with Discovery Health, Discovery Life, Discovery Invest and Discovery Insure, all posting robust performances.

Discovery Health exceeded expectation with operating profit increasing 10% to R2.03 billion and new business growing 92% to R9.598 billion, boosted by the Bankmed account.

Discovery Life showed operating profit growth of 15% to R3.0 billion over the period (+18% gross of FinRe), driven by new business growth of 11% to R2.23 billion.

Discovery Life members have to date received over R1.3 billion in PayBacks. New business in Discovery Insure was up 25% to R789 million.

On the international front Discovery rebranded its UK businesses PruHealth and PruProtect to VitalityHealth and VitalityLife, cementing a good financial performance for Discovery.

“The rebrand of Discovery’s business in the UK was very important for us as it reflects the integral nature of the Vitality asset to our ambition of building the best protection business in the UK,” Gore said.

Following the rebrand, VitalityLife, Discovery’s protection business in this market, recorded three consecutive record sales quarters with new business up 22% to R1.08 billion and normalised operating profit up 27% to R542 million.

VitalityHealth made a normalised operating profit of R223 million, up 10% from the previous period.

In the US, the Vitality Group demonstrated improvement in both new membership and engagement, increasing new adult membership by 33% to 774 518 and maintaining an excellent rate of members on the Silver or higher Statuses.

“The growth in Vitality membership and engagement in the programme in the US reflects a growing realisation in the market that Vitality is changing the conversation to focus on healthy living,” Gore said.

Ping An Health continues to grow the emerging health insurance industry in China, with new business more than tripling over the period to R991 million, predominantly driven by individual insurance sales.

In the group market, Ping An Health achieved a year-on-year total revenue growth of 34%, maintaining its market-leading position with 40% share in this market segment.

Gore said the Discovery Group is well positioned for further growth.

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