Slides
Page 1
Unaudited Interim Results and cash dividend declaration for the six months ended 31 December 2024
Page 2
2 Performance overview Normalised profit +27% to R7 020m New business1 -12% to R12 534m +6% when excluding Sasolmed in prior period Headline earnings +34% to R4 267m Normalised headline earnings +34% to R4 350m 1 Excluding discontinued products like VitalityInvest, DBI and Ping An Health reinsurance business Non-insurance income +14% to R3 181m
Page 3
3 Key insights from H1 FY2025 performance 1 2 3 The structuring of the group into two composites has been completed, with the Group in a new phase of growth and performing well The Vitality Shared-value model is a key driver of performance4 The growth is consistently strong across the two composites and within the businesses The Group is financially resilient in a complex and uncertain environment Growth Shared value Consistency Resilience
Page 4
4 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Strong profit performance Health 2 023 +8% Life 2 612 +15% Invest 904 +46% Insure 401 +1905% Bank -145 -57% Other SA1 -275 +216% SA 5 520 +27% Vitality Health 599 +14% Vitality Life 327 +8% Vitality Network 339 +15% Ping An Health Insurance 424 +23% VHI - Other -149 -14% Other Vitality -40 -33% Vitality (UK and VG) 1 500 +27% Normalised profit, ZARm 1 Vitality, Other SA Initiatives and Group initiatives and central costs to R7 020m IFRS 17 +27% Strong normalised profit growth
Page 5
5 Strong performance Health 4 714 -31% 646 +9% Life 1 463 -4% Invest 1 735 +7% Insure 659 -1% Bank 1 100 +42% Other SA1 448 +22% SA 9 019 -18% 1 746 +27% Vitality Health 1 326 +2% Vitality Life 1 101 +18% Vitality Network 970 +3% Ping An Health Insurance 1 088 +6% VHI - Other 465 -2% Other Vitality Vitality (UK and VG) 3 515 +8% 1 435 +1% New business2 Non-insurance incomeZARm 1 Vitality and other SA Initiatives 2 Excl products in run down to R12 534m to R3 181m New business growth impacted by Sasolmed - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Sasolmed Robust non-insurance income growth +6% - 500 1,000 1,500 2,000 2,500 3,000 3,500 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 +14% Excl Sasolmed in prior period -12%
Page 6
6 -20% 0% 20% 40% Entering a new phase of growth % spend on new Dividend cover Cash conversion ratio (normalised history) Normalised profit growth FLR RoE Scaled organic growth 15-20% RoE 15-20% CAGR c5% Spend on new 10-20% FLR ≤5x Dividend cover 60-70% Cash conversion ratio Forward looking information on this slide is for illustration and has not been reviewed or reported on by the auditors and re flects the average expected over the time frame 15% H1FY25 18% H1FY25 30-40% of expected full year dividend at H1FY25 27% H1FY25 5% H1FY25 75% H1FY25 0% 20% 40% 60% 80% Illustrative ranges 0% 10% 20% 30% 0% 10% 20% 30% Big investments in NewUnfettered organic growth Average 13%Average 20% Average 22% Average 3% 4.6x 5.7x CAGR IFRS 4 9%CAGR 22% 8% 15% 56%60% Average Average Average Average Average Average FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2026 FY 2027 FY 2028 FY 2029 H1 2025 Above plan Within plan Expected FY25 Within plan Within plan Within plan Within plan 0% 10% 20% 30% - 2 4 6 H1 FY25
Page 7
7 Well positioned for future growth Expect continued organic growth Average expected earnings growth ambition Profitability Discovery Group Forward looking information on this slide is for illustration and has not been reviewed or reported on by the auditors SA Growth Vitality Growth 0% 5% 10% 15% 20% 25% 30% 12.5-17.5% 20-30% p.a. (FY25-FY29)
Page 8
8 Strong ambition in each composite 12.5% - 17.5% p.a. Earnings growth FY25-FY29 c15% Revenue growth (USD) c50% Operating margin >10% Premium growth (GBP) >RF+5% Life new business IRR c7.5% Health gross margin >RF+10 Hurdle return on capital FY27 Vitality USA break-evenVHI -other >5% Premium growth above market PAHIPreserving quality profit growth Growth ambitions 20% - 30% p.a. Earnings growth FY25-FY29 >RF+8% Life and Invest new business IRR c10% Insure margin R400m Bank operating profit growth p.a. R3bn Bank FY29 profit ambition Vitality UK Vitality Network Vitality Health InternationalDiscovery SA Forward looking information on this slide is for illustration and has not been reviewed or reported on by the auditors and re flects the average expected over the time frame
Page 9
9 The mathematics of growth - actual better than expected Forward looking information on this slide is for illustration and has not been reviewed or reported on by the auditors and re flects the average expected over the time frame Outperformed against targets in period H1 FY2025 cumulative profit growth contribution Expect strong profit growth from composites Expected average growth contribution (FY25-FY29) 0% 5% 10% 15% 20% 25% 30% SA excl bank SA Vitality Total 0% 5% 10% 15% 20% 25% 30% SA excl bank SA Vitality TotalBank Bank 15% to 20% c10% + c5% + c3% 27% 21% + 6% + 0% Target corridor of growth Target corridor of growth
Page 10
10 Consistently strong growth across all businesses Health Life Invest Insure Bank Vitality Health Vitality Life Vitality Network +57%+8% Normalised profit (H1 FY25 Growth) +15% +46% >100% +14% +8% +15% Ping An Health Insurance +23%
Page 11
11 Supportive below the line performance for the six months Interim ordinary dividend declaration of 87cps, a 34% increase in line with growth in normalised headline earnings R million Actual Actual %H1 2025 H1 2024 Normalised profit from operations 7 020 5 536 27% Forex gains/(losses) 13 -40 1 DP finance lease impact -44 -59 Finance charges excl. 1DP finance lease -954 -881 Investment income and fair value gains on financial instruments 260 195 Other -126 -72 Profit before tax 6 169 4 679 32% Taxation -1 840 -1 401 Profit after tax 4 329 3 278 32% Profit not attributable to ordinary shareholders -100 -88 Loss on disposal/derecognition of property and equipment 2 2 Loss on derecognition of intangible assets 16 4 Loss on dilution and disposal of equity accounted investments 20 Headline earnings 4 267 3 196 34% Amortisation of intangibles from business combinations 47 45 Restructuring costs 36 15 Normalised headline earnings 4 350 3 256 34%
Page 12
12 Non-covered CoveredOpening EV Value of new business Unwind of risk discount rate Non-economic experience variances and methodology & assumption changes Non-covered businesses Operational EV Economic experience variances and methodology & assumption changes Forex Finance costs, investment income and other Change in capital and dividends Closing EV Solid growth in Group Embedded Value R119 422m R110 354m R119 616m 19% (18% excl all economic basis updates) c30% of Group revenue is not covered in EV Revenue split by covered vs non-covered businesses c30% Annualised RoEV
Page 13
13 - 500 1,000 1,500 2,000 2,500 3,000 3,500 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 10% 15% 20% 25% 30% H1 FY23 FY23 H1 FY24 FY24 H1 FY25 Group well capitalised with robust cash generation FLR decreasing Strongly capitalised Improving cash conversion Sufficient centre liquidity DHMS solvency (unaudited) 31% 1 Capital Adequacy Ratio ; 2 Comprehensive Solvency Ratio, definition set by China Banking and Insurance Regulatory Commission ; 3 Centre cash + undrawn committed facilities ; 4 Normalised for COVID-19 reserve impact, refer to Annexure A 28% 18% FLR Dec 23 Cover Dec 24 Cover Life 1.8x 1.8x Insure 1.5x 2.0x VH 1.4x 1.7x VL 2.3x 2.0x Bank1 1.3x 1.2x PAHI2 3.1x 3.4x Group cash conversion ratio4Centre liquidity3, Rm 75% R3.2bn (R1.1bn of which will be used to repay maturing debt by March 2025) Solvency cover Required buffer 0% 20% 40% 60% 80% H1 2021 H1 2022 H1 2023 H1 2024 H1 2025
Page 14
14 Health Discovery Life and Invest Vitality Health Vitality Life Robust cash generation drives strong cash conversion Cash uses (Rbn) R8.3bn Cash generated from in-force Cash generated Discovery New business and tax Operating cash flow -R3.5bn New business net of external funding R4.0bn-R0.8bn Tax 75% cash conversion ratio 1.1 0.9 0.7 0.6 0.5 0.2 Dividends Finance costs New initiatives Existing business development Repayment of debt Financing & matching Servicing cost Investment in growth Capital movements Cash conversion ratio is calculated as Operating Cash Flow (R4 055m at 31 December 2024, from the ‘Additional Analyst Information’ document) over the IFRS normalised profit/(loss) from operations (R7 276m at 31 December 2024, from note A.1 Segment Information of the ‘Unaudited Interim Results’) net of IFRS income tax expense (R1 840m at 31 December 2024, from note A.1 Segment Information of the ‘Unaudited Interim Results’)
Page 15
15 Increasingly complex environment, with risks mounting on all fronts The world is growing increasingly complex, with risks mounting on all fronts and optimism fading about the ability of institutions to manage them. Geopolitical tensions, economic instability, and trade wars are fueling uncertainty, while AI-driven misinformation erodes public trust. At the same time, climate challenges, resource shortages, and a weakening of multilateral cooperation further complicate coordinated responses to emerging crises ECONOMIC Global economic risks have shifted from immediate inflation concerns to broader fears of stagnation, supply chain disruptions, and asset market instability GEOPOLITICAL The world is experiencing a "geopolitical recession," where traditional alliances are weakening, and new regional power struggles are emerging SOCIOPOLITICAL Social cohesion is weakening due to rising misinformation and deepening ideological divisions. Governments worldwide are struggling to balance security measures with the protection of civil rights ENVIRONMENTAL The economic costs of extreme weather events are rising, disproportionately impacting vulnerable communities. Water and food security are emerging as global flashpoints, requiring immediate action TECHNOLOGICAL Technology is evolving faster than governance structures can adapt, creating new vulnerabilities - concerns about misinformation, surveillance, and job displacement gaining traction • Economic downturn (recession, stagnation) • Disruptions to a systemically important supply chain • State-based armed conflict • Geoeconomic confrontation (sanctions, tariffs, etc.) Source: WEF Global Risks Report 2025; The Global Risks Report 2025 20th Edition Insight Report • Misinformation and disinformation • Societal polarisation • Erosion of human rights/civic freedoms • Extreme weather events • Natural resource shortages • Critical change to Earth systems • Adverse outcomes of AI technologies • Cyber espionage and warfare • Online harms (fraud, misinformation, etc.) Global risks interconnection map
Page 16
16 Strong risk governance ensures minimal exposure Set of defined risk principles Minimal risk exposure due to geographic diversification 1. Liability matching: Liabilities matched by currency, nature and duration 2. Interest rates hedged: Interest rate fluctuations that affect solvency and liquidity will be hedged out 3. Currency matching: Cross-currency expenses will be immunised via forward currency instruments, and debt is serviced from cashflows in country in which debt is denominated 4. Appropriate liquidity buffers: Appropriate cash buffers are held in all regulated entities 5. Mitigate lapse risk: Where economically feasible lapse risk will be mitigated through non-recourse financial reinsurance arrangements, and mass lapse protection 6. Monitor new initiatives: Focus on key initiatives will be intensified and new initiatives that have marginal benefit will be ceased Only 20% of debt is not fixed, with exposure to UK interest rates Limited short-term offshore funding planned (VG) SA Bank Debt 23% SA DMTN Debt 57% UK Bank Debt 20% Fixed, 80% Floating, 20% Composition of Group debt FY24 1% increase in SONIA is c4% increase in finance cost bill (R77m p.a.) Cash from the centre, Rm - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Bank VG UK Insure FY25- FY29 Forward looking information on this slide is for illustration and has not been reviewed or reported on by the auditors
Page 17
17 50% 60% 70% 80% 90% 100% 110% FY2025 FY2026 FY2027 FY2028 FY2029 50% 60% 70% 80% 90% 100% 110% FY2025 FY2026 FY2027 FY2028 FY2029 50% 60% 70% 80% 90% 100% 110% FY2025 FY2026 FY2027 FY2028 FY2029 Equity stress Interest rate and inflation up Group remains resilient to economic uncertainty *Stresses broadly parameterised at 1-in-25-year level Forward looking information on this slide is for illustration and has not been reviewed or reported on by the auditors Operating cash flow Headline earnings Group solvency Inflation Up (permanent) SA inflation +100bps UK inflation +50bps Inflation Down (permanent) SA inflation -100bps UK inflation -50bps Rand Appreciation 25% ZAR appreciation Equity Stress 30% reduction to asset value with no recovery Nominal Interest Down (permanent) SA nominals -100bps UK nominals -50bps Interest Rate and Inflation Up (permanent) SA nominals +100bps UK nominals +50bps Stresses are calibrated to reflect severe but plausible events* Equity shock and rand appreciation are the worst stresses Rand appreciation is the worst stress Interest rate up is the worst stress Base Inflation up Nominal interest down Rand appreciation Inflation down Stresses relative to base (base scenario rebased to 100%)
Page 18
18 Significant status correlations Lapses Deposits CLR 95% Lower credit loss ratio 11x More deposits 69% Lower paid-ups 48% Lower withdrawals 31% Lower claims 79% Lower lapses 57% Lower claims 53% Lower lapses Claims Life insurance Health insurance Motor insurance Long-term savings Banking Blue Bronze Silver Gold Diamond Blue Bronze Silver Gold Diamond 22% Lower claims 65% Lower lapses 2024 experience Blue Bronze Silver Gold Diamond Blue Bronze Silver Gold Diamond Blue Bronze Silver Gold Diamond Blue Bronze Silver Gold Diamond Blue Bronze Silver Gold Diamond Blue Bronze Silver Gold Diamond Blue Bronze Silver Gold Diamond Blue Bronze Silver Gold & Diamond
Page 19
19 Vitality SA experienced considerable engagement Increase in status distribution Increased engagement Increased travel bookings Increased HealthyFood spend % members Bronze and above Total Active Rewards gameboard plays Flights bookings and prices HealthyFood spend H1 2024 H1 2025 +11% Tickets booked Avg ticket price Tickets booked Avg ticket price Domestic International H1 2024 H1 2025 H1 2024 H1 2025 +8% +14% +26% +6% +18% 0% 50% 100% 150% 200% Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Jul-24 Sep-24 Nov-24 +36% H1 24 to H1 25 flights bookedVitality members Vitality points- earning workouts HealthyFood spend52m 1.1m R3.4bn2.4m New partner launched HealthyFood baskets28m All figures for 2024
Page 20
20 The power of the Vitality Shared-value model in dealing with profound change Long-term savings Short-term insurance Banking • Transfer of risk moving from Defined Benefit to Defined Contribution • Supply chain disruptions post COVID-19 • Rising climate volatility and catastrophe risk • Commoditisation and digital distribution • Shift to ‘skinny banks’ – commoditised and low service, with a focus on transaction accounts and payment processing Health insurance • Fiscal pressures on public healthcare • Ageing populations • Increasing chronicity • Escalating technology costs Rapid medical inflation Inadequate retirement savings Margin pressure and volatile profits Multi-banked clients Life insurance • Massive and mature industry • Capital-intensive with long payback periods • Commoditisation and digital distribution • Consumer duty and treating customers fairly Acceptable return on capital Trends Challenge
Page 21
21 +27% +27% H1 FY25 profit growth:
Page 22
22 Discovery SA Discovery CEB Discovery Insure Discovery Invest Discovery Bank Discovery Life Discovery Health Strong earnings and core new business growth (up 9% excl the new closed scheme Sasolmed in prior period) Strong earnings and cash generation with positive claims experience and maintained its retail market share and new business margins, while Group Life new business declined Significant earnings growth benefitting from strong market performance and some one-off gains for the period Excellent margin achieved from diligently executed business actions, with benign weather conditions (severe in prior period) Excellent performance across all key metrics and achieved monthly operational break-even ahead of target
Page 23
23
Page 24
24 GL O B A L B A N K I N G T R E N D S Data-centric hyper-personalisation Integrated holistic ecosystem Generative AI as the operational backbone Democratising private banking through the use of Generative AI, and personalising financial products at scale Integrating personalised data analytics, gamification, and real-time redemption options, creating more engaging and tailored customer experiences Discovery Bank and market trends Using behavioural data to dynamically adjust rewards based on real-time health and spending data, using AI and predictive analytics to anticipate customer needs and nudge behaviours Growing emphasis on integrating banking into broader ecosystems, such as retail platforms, to reach new segments and provide comprehensive services Phygital banking: blending digital agility with human trust Seeking app-based convenience, while retaining the affinity for tangible interactions - acknowledging diverse customer preferences Cybersecurity prioritisation Embedding encryption and anomaly detection into core systems to combat fraud and AI deepfakes promoting financial scams Leveraging fintech to enhance rewards programmes #1 - Smart, simple and easy products #1 - Best service and experience #1 - Top private banking provider #1 - Excellent benefits and rewards #1 - Best emotional experience #1 - Best relationships with clients
Page 25
25 Discovery Bank Deposits Normalised profitRevenue (NII+NIR) +32% +27% +57%+42% to 1.1m to R21.2bn to (R145m)to R1.1bn H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Accounts Clients H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 NII NIR Advances +37% to R7.8bn Total accounts Total clients +35% to 2.6m H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025
Page 26
26 (300) (250) (200) (150) (100) (50) - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2022 FY2023 FY2024 FY2025 Achieved run-rate break-even ahead of target − R169m R37m Operating income Expenses New business acquisition costs Profit / (loss) before tax− = R400m operating profit growth p.a. (i.e. before acquisition costs) Short- to medium-term real growth target Normalised operating expenses1 (Rm) NBAC per new client2 (R) Profit (loss) before tax (Rm)NII + NIR (Rm) − − 6% CAGR 56% CAGR -3% CAGR − − R207m Jan 2025 H1 FY25 - 100 200 300 400 500 600 700 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2022 FY2023 FY2024 FY2025 - 100 200 300 400 500 600 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2022 FY2023 FY2024 FY2025 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY2022 FY2023 FY2024 FY2025 R1 031m R214mR1 100m 1 Includes fair value adjustments | 2 New Business Acquisition Costs represent the upfront expenses incurred to acquire new clients. Revenue generation from these clients occurs over time as they increase engagement with their Discovery Bank account. As a result, NBAC reflects an initial investment with deferred returns. Forward looking information on this slide is for illustration and has not been reviewed or reported on by the auditors Profitable in Dec
Page 27
27 Attributes driving Discovery Bank growth *Through-The-Cycle; adjusted average to measure the expected credit losses over an extended period, rather than in the current reporting cycle Shift towards credit products Relevance from outside DSY Superior credit quality maintained Revenue driven by engagement Growing home loans book Daily growth maintained Daily sales per business day New-to-Bank product mix New business by Discovery product take up Engagement per client Credit loss ratio vs market Value of home loans disbursed, Rm 400 600 800 1,000 1,200 1,400 1,600 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 45% 45% 46% 42% 47% 51% 50% 55% 55% 54% 58% 52% 49% 50% Transaction PAYT and Savings Credit, Suite & TRX Bundled 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 With no Discovery products With a Discovery product 0 100 200 300 400 500 600 700 0 1 2 3 4 5 6 7 8 9 10 11 12 Months after joining the Bank Payment value Number payments >6x 149 1,039 Sep-24 Jan-25 H1 25 H1 24 H1 23 H1 22 H2 22 H2 23 H2 24 * >65% With no Discovery products 0% 1% 2% 3% 4% 5% 6% 7% Market average Discovery CLR TTC As at Dec24: Growing market share, currently 2% Switching market share of 9%
Page 28
28 Shared value in Discovery Bank Total deposits Probability of default Credit loss rate1 – 90 days arrears 89% lower probability of default 97% lower arrears rate >95% lower credit loss rate 11x more deposits NIR per client NIR by VM status (indexed to Blue) Months on book 0 100 200 300 400 500 600 700 800 1 - 3 4 - 6 7 - 12 13 - 24 Blue Bronze Silver Gold Diamond Jun-21 Nov-21 Apr-22 Sep-22 Feb-23 Jul-23 Dec-23 May-24 Oct-24 Blue Bronze Silver Gold Diamond
Page 29
29
Page 30
30 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Discovery Health *Sasolmed contributed R2 510m to new business for FY2024 Normalised profit New business Non-scheme growthMembership +8% -31% 3.96m to R2 023m to R4 714m Lives under administration >412k lives +21% Sasolmed* closed scheme Excluding Sasolmed in prior period: +9% Jan-18 Aug-18 Mar-19 Oct-19 May-20 Dec-20 Jul-21 Feb-22 Sep-22 Apr-23 Nov-23 Jun-24 Flexicare Gap cover Healthy Company 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2024 Non Scheme Products Restricted Schemes DHMS
Page 31
31 0% 1% 2% 3% 2020-21 2021-22 2022-23 2023-24 2024-25 Upgrades Downgrades 0% 5% 10% 15% 20% 25% 30% 35% 40% 0 5 10 15 20 25 30 35 2020-21 2021-22 2022-23 2023-24 2024-25 Reserve Actual Solvency Required Solvency Discovery Health Medical Scheme: continued excellent performance in a complex environment Membership and open market share as at June 2024 Plan changes exclude impact of plan closures Membership Customer satisfaction Solvency 57.9% market share Low proportions of members change plans, with more members upgrading than downgrading: Lapses continue to remain stable R29.4bn 31% AAA projected unaudited reserves projected unaudited solvency credit rating R billion 95% no plan changes DHMS Rest of the industry Others 0% 2% 4% 6% 8% 10% 2020-21 2021-22 2022-23 2023-24 2024-25
Page 32
32 DHMS’s growing contribution differential enhances market competitiveness into 2025 Weighted average contribution increase (%) Comparison of average contributions 9.3% 9.4% 9.6% 10.2% 10.8% 12.8% 12.4% 2018 2019 2020 2021 2022 2023 2024 2025 Discovery Health Medical Scheme Next 7 largest open schemes -11.1% -12.3% -14.6% -16.3%-14.4% -13.3% -14.3% -12.7% Scheme 1 Scheme 2 Scheme 3 Scheme 4 Scheme 5 Scheme 6
Page 33
33 Addressing the cost of healthcare Age distribution of lives (2008 – 2024) Sustained aging of the Scheme Increased chronicity continues across age groups 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 Age 2008 2021 2024 Average age 2008: 32.3 years 2021: 36.1 years 2024: 37.6 years Chronic ratio (2008 – 2024) 0% 20% 40% 60% 80% 100% 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 Age 2008 2021 2024 (after CIB clean-up) Chronic ratio 2008: 15.7% 2021: 30.8% 2024: 31.8% ACTIVE Smart (Launched 2025) PERSONAL HEALTH PATHWAYS (Launched 2025) >61% Market share for 20-to-39-year-olds held by Smart plans R1 350 Lowest price point in the market
Page 34
34 Impact of doing Next Best Action | Net savings to health funder 0% 20% 40% 60% 80% 100% 0% 25% 50% 75% 25% of members complete NBA → 53% of potential saving Percentage saving Diabetes Hypertension 0% 20% 40% 60% 80% 100% 0% 25% 51% 76% Percentage saving Percentage completing NBA 25% of members complete NBA → 58% of potential saving Engaging members in a personalised program that incentivises healthier habits and behaviour change Percentage completing NBA 2.08m eligible lives 63% of activated lives are in the chronic, disease prevention or emerging risk cohort 348k Next Best Actions completed since Jan 2025 PHP activation and engagement statistics as at 27 February 2025 R7.9m rewards earned
Page 35
35 The private healthcare sector is a strong asset – delivers excellent value for members Members have access to world-class care Higher income countries South Africa Cost of cover (PPP adjusted) 4 – 42% 3,347 14,709 8,346 11,073 34,504 Germany New Zealand South Africa UK USA 3,980 7,595 3,553 3,950 13,560 Germany New Zealand South Africa UK USA South African prices compare favourably by international comparison3 Coronary angioplasty (USD) Appendectomy (USD) The private sector has significant scale Open Medical Schemes1 4.8m lives Closed Medical Schemes1 4.3m lives 838 private facilities 42k hospital beds 7.3k GPs 47k nurses 7k specialists 3.5k dentists 2.5k optometrists 3.6k psychologists Community rated, open to selection 1 2023 CMS Industry Report; 2 2023 General Household Survey : National Income Dynamics Study; 3 International healthcare cost comparison report 2024; 4 WHO expenditure database 2022 41.6% of SA households used the private healthcare sector as as their last accessed care2
Page 36
36 Bigger issues surrounding medical inflation High utilisation driving medical inflation 0% 2% 4% 6% 8% 10% 12% 14% Overall medical inflation Tariffs Supply side utilisation Risk mngt, Vitality effect & efficiencies Demand side utilisation 1 2 3 3 key drivers of inflation can be broken down further: Oncology drugs (Keytruda, Darzalex,...) Next-generation Sequencing BioFire (multiplex panels) Robotic-assisted surgeries Biologics Multiple sclerosis treatments Micra pacemaker New technology and treatments increase costs, but members recognise the value 2 TECHNOLOGY • Open enrolment • Community rating • Increased ageing • Increased chronicity 3 DEMOGRAPHIC ASPECTS Increases access but leads to adverse selection 1 TARIFFS Tariff growth relative to CPI growth (indexed to 2014) 2014-2023 CAGR +7.4% Other +11.6% High-cost drugs vs 90 100 110 120 130 140 150 160 170 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Tariff increase CPI
Page 37
37 Bigger issues surrounding medical inflation Longitudinal impact of medical inflation 100 120 140 160 180 200 220 240 260 280 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 CPI Tariffs Tariffs+Supply Tariffs+Supply+Demand Relative growth rates over last 10 years (indexed to 2014) 46% of medical inflation increase is due to demand-side utilisation (adverse selection) Management of contribution inflation requires an overall management approach: • Negotiation and price regulation (tariffs) • Networks and directionality, value- based care integration (supply- side) • Hyper-personalisation and personal health pathways, growing the effect of Vitality (demand-side) 37% of medical inflation increase is due to tariffs Tariffs keep in line with CPI 17% of medical inflation increase is due to supply-side utilisation (technology) Accelerating and gap widening COVID-19 CPI+6% CPI+2% CPI
Page 38
38 Discovery’s position: NHI is not workable without private sector collaboration
Page 39
39
Page 40
40 H1 2025H1 2025H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Individual Group Discovery Life Normalised profit New business Maintained leading market share Strong capital and liquidity +15% to R2 612m Individual life: +12% SCR coverage Total liquidity 183% 2 859m 1X ILT125% SCR Target -4% to R1 463m Individual life: 0% H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Individual Group IFRS 17 2023 2024 12 months to Dec 2024 Competitor market share relative to Discovery Life 59% 47% 20% NMG market report Q4 2024
Page 41
41 Discovery Life Ltd EV variances (Rm) Robust performance with positive operating variances Positive operating variances Excellent experience relative to assumptions R261m Policy alterations was a significant negative variance and slightly improved from prior period. Action plan in progress Mortality and morbidity Persistency Premium and fee income Policy alterations Other Total non-economic Economic Total R468m None Blue Bronze Silver Gold Diamond Mortality experience by Vitality status relative to expected H1FY25 experience Jul 2019 – Dec 2024 Long-term expected
Page 42
42 Robust EV growth and stable VNB margin Growth in Embedded ValueSteady VNB margin Jun-24 Economic Business mix … Other Dec-24 3.8% Individual life: 5.0% (20.0% IRR) 3.6% Jun-24 Economic Business mix and expenses Other Dec-24 VNB margin (%) Significant drop in Group Life new business volumes over a short period. Individual Life margin benefits from lower interest rates Individual life: 5.4% (19.7% IRR) 20.6% Annualised RoEV* *Annualised before the dividend payment. June 2024 New Business Expected Unwind excl NB Experience Variances Basis changes Below the line items December 2024 25948 239 2265 469 1487 30020 R45 948m R50 028m 14.1% excluding economic updates -380
Page 43
43 Strong cashflow generation Life and Invest cash significantly ahead of target Cashflow before financing initiatives and dividends to Group (Rm) Cashflow over time 545 1,093 1,523 Dec-21 Dec-22 Dec-23 Dec-24 Dec 2021 Covid impact Dec 2022 Dec 2023 Dec 2024 Premiums & fees & investment income Cash outflows Cash outflowsCashflow before financing/funding to group R1 523m R11 539m -R6 112m Claims -R2 128m Operational costs -R1 776m New business cash conversion ratio >60% 981 429 Financing repayment Dividend to Group (Rm) R981m R429m Exceptionally high this period given favourable claims in Indiv Life, Group Life and strong fee performance in Invest, plus lower new business strain -848
Page 44
44 Value generation of business under IFRS 17 Store of value absorbs variances and plays out as earnings during the period IFRS 17 Life and Invest GMM business stored valued absorbs variances and basis changes Components of Life segment earnings (incl PAA business such as Group Life) Economic margin New business Release to earnings Non-economic margin June 2024 December 2024 CSM 20,237 RA 7,243 OCI -3,980 23,499 27,432 1,043 -1,102 CSM 20,324 RA 8,042 ZARm Life = 886 Invest = 216 = Life segment earnings 2,612 CSM & RA release 886 IFIE 1,349 Other2 378 = c17% Growth from June 2024 1,894 -949 517 2,528 Net impact of -R432m Net impact of +R4.4bn1 OCI -935 1 2 Favourable claims experience offsets reduction in current period IFIE due to June 24 systematic rate movements 3 Total margin up c17% from R23.5bn in June 24 to R27.4bn in December 24 (+c3% excl. OCI) Significant gains reflected in OCI driven by lower interest rates in December 24 vs June 24 1 Includes changes to assumptions related to financial risk 2 “Other” includes largely PAA business earnings and varian ces such as the favourable claims experience variance in the period and non -directly attributable expenses. Insurance finance income/ expense1 Non- financial risk variances and basis changes
Page 45
45
Page 46
46 Discovery Invest Normalised profit New business Assets under administration +46% +7% +15% to R904m to R1 735m to R167bn Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Once-off items +19% Excl once-offs IFRS 17
Page 47
47
Page 48
48 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Discovery Insure SolvencyNormalised profit Insurance revenue >100% +10% to R372m to R3 078m IFRS 17 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 198% Personal lines -1% to R659m H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Gross new business
Page 49
49 New business based on insurance risk exposure Vitality continues to drive improvement in quality Disciplined approach to underwriting Targeted premium increases Lower severity by status Retaining the right clients Relative average anniversary increase by status Relative lapse rate by status 0% 20% 40% 60% 80% 100% Blue Bronze Silver Gold Diamond 0% 20% 40% 60% 80% 100% Blue Bronze Silver Gold Diamond Relative accident severity by Vitality status 0% 20% 40% 60% 80% 100% Blue Bronze Silver Gold Diamond 0% 40% 80% 120% Jul 19 Jan 20 Jul 20 Jan 21 Jul 21 Jan 22 Jul 22 Jan 23 Jul 23 Jan 24 Jul 24 Above-average AverageAverage risk Superior risk Lower loss ratio by status Relative loss ratio by Vitality status 0% 20% 40% 60% 80% 100% Blue Bronze Silver Gold Diamond
Page 50
50 Strong margin recovery from management actions taken Claims initiatives 0.3% Behaviour change 1.3% Other external factors FY24 H1 Margin 2.4% Unexpected weather improvement FY25 H1 margin 2.6% Expected weather improvement 0.6% Upfront selection 1.2% Underwriting actions 1.3% Pricing actions 0.5% Selective lapsation uplift 1.8% 0.1% FY25 H1 margin before unexpected weather improvement 9.7% 12.1% Profit margin based on insurance revenue
Page 51
51 0% 2% 4% 6% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0k - 200k 200k - 300k 300k - 500k 500k+ Material and consistent decrease in theft over time Decrease in theft rate over time Consistent trend by sum insured Consistent by geography 0% 1% 2% 3% 4% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0% 1% 2% 3% 4% 5% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Gauteng Western Cape KZN Other Theft rate Theft rate by sum insured Theft rate by province 0% 2% 4% 6% 8% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2022 2024 0% 2% 4% 6% 8% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2022 2024 0k - 500k 500k - 750k 750k - 1m 1m + Theft rate Theft rate by sum insured Theft rate by province Motor theft House and contents theft 0% 4% 8% 12% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2022 2024 Gauteng Western Cape Kwazulu- Natal Other KZN
Page 52
52 Vitality Successfully actioned significant price increases to mitigate increased PMI utilisation on the back of NHS pressure, with a strong retention of in-force business Strong increase in quality new business in a commoditised and stagnant UK market Strong margin expansion and integrated API growth, demonstrating the global relevance of the Shared- value Insurance model Excellent progress in growing quality health insurance driven by continued operating delivery and strong gains from Chinese bond and equity market movements Vitality USA acquired WellSpark, expanding beyond employee wellness into broader integrated digital health and care market. Amplify Health progressed in deploying healthtech solutions across Asia
Page 53
53 A single global composite: Single Vitality chassis to establish a unified approach to personalisation across markets, enhancing customer engagement and loyalty Inter-operable technology platforms and consistent global enablement to achieve operational efficiencies, improved systems integration, scalability and reduced costs Single, more prominent brand to achieve greater brand recognition and market differentiation Five centres of excellence to share best practice and ensure an appropriate level of alignment across the business Unified partner network to maximise benefits to our members while driving efficiencies globally
Page 54
54 Incentivising behaviour change through hyper-personalised pathways Physical activity has a significant impact on mortality Causal Elastic Habitual Behavioural dynamics are universal, holding across ages and health status Habits form quickly and easily, yet their true strength lies in their durability -29% -52% -59% 0 (base) Low Medium High -36% -38% -58% 0 (base) Low Medium High Relative mortality for the 45-65 age group Relative mortality for the 65+ age group 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 6 9 12 15 18 21 24 27 Percentage Number of weeks taken to form a habit 7 – 15 weeks Peak around 10 weeks Young moderately healthy 30-year-old 10.2 56.7 43.5 53.7 Healthspan Sick years 1046.7 Middle age unhealthy 50-year-old 1 0. 2 16.6 24.9 Healthspan Sick years 25.1 Advanced age unhealthy 70-year-old 4 14.6 6.1 10.1 Healthspan Sick years 11.6 +7% increase in healthspan +51% increase in healthspan +90% increase in healthspan 8.3 33.58.4 3
Page 55
55 Vitality AI is the breakthrough solution for traditional model inefficiencies Dynamic pricing Incentivised engagement AI recommender Dynamic risk assessment Data Key value drivers 1. New business 2. Selection 3. Behaviour change 4. Selective lapsation 5. Upsell / cross-sell Enhanced VoNB / IRR
Page 56
56 UK
Page 57
57 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Vitality UK Normalised profit Premium income New business Lives covered +12% +14% +10% +7% to £40.0m to £610m to £104.9m to 1.9m GBP millions GBP millions +12% to R14.1bn +9% to R2.4bn +11% to R926m H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 GBP millions IFRS 17
Page 58
58 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 VitalityHealth Normalised profit Premium income1 New business Lives covered +15% +16% +3% +6% to £25.9m to £394m to £57.3m to 1.0m IFRS 17 GBP millions GBP millions GBP millions +15% to R9.1bn +2% to R1.3bn +14% to R599m H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 1 Insurance revenue
Page 59
59 40% 60% 80% 100% 120% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2022 2023 2024 Retention resilient despite pricing actions, expect recovery of margins Increase in claims costs Shift towards primary care Selective retention of healthier lives Expect a recovery of margins Claim categories PLPM (indexed) Lapse rates vs premium increase by Vitality status Claims PLPM over time Normalised profit (GBPm) H1 2023 H2 2023 H1 2024 H2 2024 H1 2025 40% 60% 80% 100% 120% Lapse rate Average increase +13% +9% FY23 FY24 Pricing actions implemented Premiums vs claims PLPM (rebased to Jan 24) FY2025 85% 90% 95% 100% 105% 110% 115% Jan 24 Mar 24 May 24 Jul 24 Sep 24 Nov 24 Rolling 3m average Premium PLPM Rolling 3m average Claims PLPM - 1 2 3 4 5 6 VGP consultation +477% Talking Therapies +107% Tumours +21% Cardiac +15% Oncology +19%
Page 60
60 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 VitalityLife Normalised profit* New businessPremium income Lives covered +8% +10% +19% +9% to £14.1m to £217m to £47.6m to 852k lives IFRS 17 GBP millions GBP millions GBP millions +9% to R5bn +18% to R1.1bn +8% to R327m *H1 2024 has been restated for IFRS17 accounting methodology changes applied in 30 June 2024 reporting
Page 61
61 Price optimisation in a commoditised, portal-driven market Sophisticated price optimisation and elasticity provides opportunity for Optimiser to compete on portals Optimiser allows us to compete on portals where price plays an important role 61% of cases, Optimiser is cheapest 1% away from the cheapest, on average Up to 30% lower than standard plan rates Dynamic rating enables us to accurately account for controllable risk throughout the policy duration Regular and ongoing engagement through interactions that drive positive behaviour change Vitality premium (Optimiser) Policy duration Premium Competitor premium Corridor of competitiveness Illustrative pricing Portal-driven market
Page 62
62 Exceptional new business growth in a stagnant market Significant change in value Growing net new business value New business net value (£m) VL continues to generate strong levels of net new business value. If maintained, VL’s CSM and RA will grow for the year 39% net growth, despite a flat market VL new business growth +19% vs market excl VL -1%1 New business (£m) 29.1 40.5 10.8 7.139.9 47.6 H1 FY2024 H1 FY2025 Automatic Contribution Increases (ACIs) Net new business (i.e. excl. ACIs) +39% +19% Indicative IRR hurdle2 Establishing solid market share Key competitors: VitalityLife market share1 -1 0 1 2 3 4 5 1. GenRe Protection Pulse; 2. IRR hurdle line is indicative of the average monthly level of net new business value required to achieve VL's internal IRR hu rdle rate, but in practice this will vary dependent on the relative level of fixed expenses, new business and profitability; 3. CSM & RA” on NB excludes the impact of new reinsurance contracts attaching to the in -force book in the period. The total CSM and RA on all contracts incepted in the period was £13.3m (new business net value excluding financing) 7.5% 7.4% 10.1% 10.5% 12.4% H1 FY21 H1 FY22 H1 FY23 H1 FY24 H1 FY25 £24.3m from -£0.2m in H1 FY24 New business net value (£m)3 (CSM and RA, less onerous new business) VNB (£m) £2.6m from -£5.7m in H1 FY24
Page 63
63 Value generation of business under IFRS 17 1 New business net value excludes the impact of new reinsurance contracts attaching to the in -force book in the period. The total CSM and RA on new contracts incepted in the period was £16m. The difference is included in ‘Non -financial risk, variance, basis changes and other’ ; 2 Includes changes to assumptions related to financial risk IFRS 17 stored value absorbs variances and basis changes Components of VitalityLife earnings Economic margin New business1 Insurance finance income/ expense2 Non- financial risk variances, basis changes and other Release to earnings Non-economic margin June 2024 December 2024 CSM 329 RA 77 OCI 112 518 535 2 26 -20 -8 7 9 OCI 128 CSM 327 RA 80 19.6 OCI 128 RA 80 Net impact of -£1m VL earnings 14.1 CSM & RA release 19.6 IFIE 6.3 Other -11.8 = 1 Total margins increased by c3% from £518m at June 24 to £535m at December 24 2 Non-economic margins increased slightly from June 24 to December 24. This is an important feature for future earnings Strong levels of margins generated on new business more than offset release of CSM & RA to earnings3 Non attributable costs, in period cashflow variances and impact of onerous business (after establishing a risk margin) marginally offset CSM & RA release and positive IFIE in earnings 4 Store of value absorbs variances and plays out as earnings during the period GBPm Net impact of +£11m = c3% Growth from June 2024
Page 64
64 Strategic vision for Vitality UK Focused ambition Enabled by powerful shared value differentiators Supported by an aspirational brand Transforming the UK health and life insurance markets through shared value powered by Vitality AI Underpinned by clear objectives Highest brand recognition in the market Top 3 UK health and life insurer Renowned for market-leading customer service Changing behaviour through hyper- personalisation Advanced price optimisation drives growth in profitable segments Shared-value product features manage risk over time Optimiser Employer cashback Status-linked excess ABC pricing £150 £100 £100 £0 Bold messaging that emphasises insurance as a tool for living a richer, longer life Vitality helps members live up to 5 years longer Externally validated Partnered with leading brands Brought to life across the UK Ambassadors Sponsorship portfolio Football Cricket Netball Running Media
Page 65
65 Network
Page 66
66 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Vitality Network Integrated API by insurance partners Revenue Insurance partners membershipNormalised profit +13% to $909m +8% to R16.3bn +8% to $54.1m +3% to R970m +20% to $18.9m +15% to R339m +26% to 6.2m H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 USD millions USD millions USD millions
Page 67
67 Vitality Network’s key strategic focus areas Revenue growth through deepening of existing partnerships and pursuit of new opportunities Unlock geared profits through operational efficiencies generated from scaling 1 2 3 Strong performance from John Hancock with 29% increase in performance fees +4% Increase in profit margin from H1FY2024-H1FY2025 Profit margin 24% 20% 26% 31% 35% H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 35% Profit margin for H1FY2025 Substantial growth from SLI with 2 million Vitality policies sold Evolving Vitality products through hyper-personalisation and Vitality AI Rebuild of mobile app to enable greater hyper- personalisation and member engagement Leveraging Vitality AI to drive engagement New mobile experience successfully launched across 3 markets – Pakistan, Netherlands and Ecuador
Page 68
68 Positive impact of shared value observed across markets Claims correlations Lapse correlations Blue Bronze Silver Gold 63% lower 47% lower Blue Bronze Silver Gold Diamond Blue Bronze Silver Gold Diamond 53% lower 57% lower 27% market share Blue Bronze Silver Gold 70% lower ~12% market share Bronze Silver Gold Platinum 36% lower Bronze Silver Gold Platinum Member engagement 2019 2024 2019 2024 64% Member engagement % of members earned a point 6% increase in proportion of off-Blue members 4th largest life insurance market 3rd largest life insurance market 2019 2024 Consistent member engagement
Page 69
69
Page 70
70 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 Investment income and gains Profit before investment income and gains Ping An Health Insurance PAHI’s operating results pre-tax Discovery’s operating result after tax PAHI licence new business1 PAHI licence earned premium1 +62% +27% +10%+16% to RMB906m (RMB226m DSY’s share) to RMB170m to RMB1.7bnto RMB8.3bn Lives +11% to 29.1m PAHI licence lives +57% +23% +6%+13% to R2.3bn (R565m DSY’s share) to R424m to R4.4bnto R20.7bn 1 100% of PAHI RMB millions RMB millions RMB millions RMB millions 19-Jun 19-Dec 20-Jun 20-Dec 21-Jun 21-Dec 22-Jun 22-Dec 23-Jun 23-Dec 24-Jun 24-Dec H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 H1 2021 H1 2022 H1 2023 H1 2024 H1 2025 -14% before investment income H1 2021 H1 2022 H1 2023 H1 2024 H1 2025
Page 71
71 Superior operational performance and growth 65% 70% 75% 80% 85% 90% 2021 2022 2023 2024 50% 60% 70% 80% 90% 100% 2020 2021 2022 2023 2024 Strong persistency Improving operating performance Significant balance sheet growth Combined ratio (%)Reapplication rates (%) Net asset value (RMB millions) 0 2,000 4,000 6,000 8,000 10,000 12,000 2020 2021 2022 2023 2024
Page 72
72 Increasing demand for private healthcare drives growth in Commercial Health Insurance 0 200 400 600 800 1 000 1 200 1 400 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 65 and above 50-64 40-49 30-39 20-29 <20 China's population by age band1 (m) China's aging population calls for a high-quality, multi-levelled, Commercial Health Insurance system Rising volumes of health risks put pressure on the Social Health Insurance +3.6% Increase in Commercial Health Insurance spending as a share of China's total healthcare expenditure3 Evolving factors drive further private healthcare demand From 2015 to 2021, China has seen… Macroeconomic factors Micro-sectoral factors Renewed fiscal and monetary stimuli to counter past macroeconomic headwinds, unleashing the health sector's underlying growth4 Expected expansion of tax incentives for Commercial Health Insurance5 Rising demand for original medicine drives health insurance demand6 Fiscal constraints shift healthcare spending pressure towards households7 +20% Rise in diabetes & kidney diseases disability adjusted life years (DALYs)2 +13% Rise in neoplasms DALYs2 Sources: 1. China Briefing (2021) | 2. Institute for Health Metrics and Evaluation (n.d.) | 3. China Macro Group (2024) | 4. Reuters (2024) | 5. National Financial Regulatory Authority (2024) | 6. BBC (2025) | 7. China Pharmaceutical Innovation and Research Development Association (2024) +12% Rise in cardiovascular disease DALYs2 -1.8% Decrease in Social Health Insurance spending as a share of China's total healthcare expenditure3
Page 73
73 PAHI continues to grow in a competitive market Scale Q1 – Q3 2024 1 2 RMB15.6bn PAHI leads health & wellness service-driven specialised health insurance. Through its health ecosystem of “insurance + health services + health management”, PAHI ensures that policyholders are not only insured against disease but also actively manage and improve their health. It leverages the shared-value model of insurance to retain customers and control risk 2 1 RMB44.0bn An early entrant in the specialised health insurance, PICC Health is a state- owned entity that leverages government resources and holds competitive position in “policy-backed health insurance” market (e.g., major illness insurance). Its business is integrated with the SHI, reaching a large population in third- and fourth- tier cities and rural areas 3 3 RMB6.0bn CPIC Health products lead towards standardisation. Its strengths lie in its cooperative network with public hospitals and group supplementary medical insurance for corporate employees 4 4 RMB4.3bn Fosun Health has the advantageous access to Fosun Pharma’s pharmaceutical and medical products and innovation. Fosun Health focuses on the integration between medicine and insurance and is known for covering innovative drugs and cutting-edge treatment 5 5 RMB1.2bn Ruihua Health Assurance’ products are tailored to four clearly defined market segments: special care (for chronic conditions), urgent care (for high end customers), long-term care (for elderly), and affordable solutions. Ruihua focuses on digitalisation, technology integration, and customer service, making it popular amongst the digitally-savvy customers Total health insurance premiums written by all financial institutions in China RMB822.5bn (100%) Health insurance premiums written by specialised health insurers RMB71.1bn (9%) Profit margin rank Market share rank
Page 74
74 Strong performance relative to market Note: 1. PAHI's market share of accessible sectors of the market High growth relative to market Growing market share Superior operational performance Revenue growth (rebased) PAHI market share (%)1 Net profit margin 0 1 2 3 4 5 2018 2019 2020 2021 2022 2023 2024 Market PAHI 2.3x higher 9.9% 10.4% 10.6% 10.8% 11.7% 2020 2021 2022 2023 2024 -4% -2% 0% 2% 4% 6% 8% 10% 2019 2020 2021 2022 2023
Page 75
75 VHI
Page 76
76 Vitality Health International (Other) Note: Quantium Health, which is part of VHI, has not been included in this update 1 2 3 1 2 Acquisition of WellSpark, from EmblemHealth, a prominent New York health plan administrator Continued progress in sales to US health plans, a key strategic segment, and expansion into significant Medicare Advantage market Strong progress in product and technology implementation, particularly Vitality AI, and execution of cost efficiencies Successful deployment of nine health tech solutions across six Asian markets1 Integrated product stack now included in Amplify Health’s overall proposition for deployment to AIA markets and external clients Benefit navigation Care navigation Enrollment Onboarding Member service Wellness Coaching Care management Virtual medical care ClaimsCondition management Coaching platform further enhances offering Vitality USA capability Vitality 3.0 Care Connector platform Vitality AI Business Solutions Advisory Managed Services Products (SaaS) Digital Health Engagement Payment Integrity Claims Administration Business Intelligence Clinical Informatics Data Platform (DaaS) Data Commercialisation Enabler Healthtech Launchpad (PaaS) Innovation Accelerator 1. Excludes deployments by Amplify Health (Hong Kong) Limited
Page 77
77 In summary
Page 78
78 Key insights from H1 FY2025 performance 1 2 4 Growth Consistency Profit growth 27% % spend on New 5% Cash conversion ratio 75% RoE 15% FLR 18% Interim dividend growth 34% Health Life Invest Insure Bank VH VL VN +57%+8% Normalised profit growth +15% +46% >100% +14% +8% +15% PAHI +23% 3 Shared value Blue Bronze Silver Gold Diamond Significant status correlations Using shared-value model in response to industry trends Resilience 1. Liability matching 2. Interest rates hedged 3. Currency matching 4. Appropriate liquidity buffers 5. Mitigate lapse risk 6. Monitor new initiatives Set of defined risk principles Resilient to stresses 80% 90% 100% 110% FY2025 FY2026 FY2027 FY2028 FY2029
Page 79
79 Strong prospects for growth in the Group’s new lifecycle *65% cash conversion ratio from target profit growth (assuming constant debt and 5.0x dividend cover) generates strong net cash flow and cash to centre (assuming 50% retained in business) Forward looking information on this slide is for illustration and has not been reviewed or reported on by the auditors and reflects the average expected over the time frame Vitality AI next dimension of shared-value model Strong growth from the composites Strong growth gives resilience and optionality 12.5% to 17.5% 20% to 30% average earnings growth p.a. (FY25-FY29) average earnings growth p.a. (FY25-FY29) 15-20% CAGR Illustrative Group leverage and accumulated excess cash at the centre* Up to cR10bn excess cash generated over the next five years Excess cash available to • Repay debt and/or • Invest in new initiatives and/or • Increase dividend payout 16% 15% 13% 12% - 2,000 4,000 6,000 8,000 10,000 12,000 FY26 FY27 FY28 FY29
Page 80
80 Presentation disclaimer This presentation contains information extracted from the Discovery Group’s unaudited condensed consolidated interim financial statements for the six months ended 31 December 2024. This results presentation and the unaudited condensed consolidated financial statements have not been reviewed or reported on by Discovery’s independent joint auditors. This presentation may contain forward looking statements with respect to certain of Discovery’s plans and its current goals and expectations relating to its future performance and results. All forward looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Discovery’s control. Accordingly, Discovery’s actual future financial performance and results may differ. Any reference to future financial performance has not been reviewed or reported on by the Group’s auditors.
Page 81
Unaudited Interim Results and cash dividend declaration for the six months ended 31 December 2024