Membership Page 1. Additional information as at 30 June 2016

Size: px

Start display at page:

Download "Membership Page 1. Additional information as at 30 June 2016"

Elisabeth Jacobs
5 years ago
Views:

1 Customers per Entity Life Policyholders Individual 411, , , , , , , , , , , ,531 Invest 139, , , , ,445 91,858 82,847 74,327 65,573 57,848 48,723 39,776 Group (lives) 435, , , , , , , , , , , ,697 Group schemes 2,401 2,403 2,332 2,186 2,063 1,960 1,893 1,795 1,702 1,615 1,517 1,384 Life NB APE (Rm) Year ended 6 months to Year ended 6 months to Year ended 6 months to Year ended 6 months to Year ended 6 months to Year ended 6 months to Total Life APE* 4,279 2,138 3,877 1,948 3,409 1,707 2,966 1,468 2,710 1,379 2,474 1,229 Individual 2,242 1,144 2,124 1,097 1, , , , Group Invest - Recurring Invest - Single APE* 1, , * APE shown at 10% of Single premium Health Members DHMS - Keycare 247, , , , , , , , , , , ,247 DHMS - Non-Keycare 1,034,833 1,018,612 1,013, , , , , , , , , ,790 In-House Schemes 265, , , , , , , , , , , ,993 Total 1,547,863 1,422,152 1,407,674 1,375,358 1,355,276 1,324,163 1,301,904 1,264,982 1,236,298 1,190,703 1,166,778 1,134,030 Health Lives DHMS - Keycare 428, , , , , , , , , , , ,229 DHMS - Non-Keycare 2,281,630 2,257,759 2,250,081 2,219,753 2,199,601 2,152,815 2,127,094 2,066,984 2,036,068 1,983,316 1,963,229 1,906,056 In-House Schemes 550, , , , , , , , , , , ,423 Total 3,261,390 3,019,052 2,992,861 2,932,651 2,895,338 2,833,194 2,792,378 2,722,174 2,664,609 2,584,912 2,539,806 2,446,708 SA Members* 824, , , , , , , , , , , ,684 *Includes 93,015 Balance members (Balance is for Bankmed) Health Policies Individual 80,910 75,969 74,570 75,566 76,896 73,078 72,484 71,127 71,024 71,261 75,448 77,344 SME 165, , , , , , , , , , , ,704 Corporate 58,756 56,880 54,696 53,924 50,634 47,893 45,634 53,997 43,313 55,248 66,443 67,775 Trust and Cost Plus 5,496 17,345 17,547 18,224 17,972 23,068 25,163 28,689 28,735 28,686 28,469 41,545 Total 310, , , , , , , , , , , ,368 Health Lives Individual 139, , , , , , , , , , , ,439 SME 293, , , , , , , , , , , ,709 Corporate 103, ,216 97,516 95,241 91,173 85,718 81,135 97,573 76,632 98, , ,097 Trust and Cost Plus 9,245 33,830 33,879 36,437 36,053 48,660 50,100 56,061 56,707 57,408 57,218 82,261 Total 545, , , , , , , , , , , ,506 Life Policies Policies 299, , , , , , , , ,929 89,132 67,886 54,505 Discovery Insure Policies June 2016 December 2015 June 2015 December 2014 June 2014 December 2013 June 2013 December 2012 June 2012 Policies 100,034 91,945 79,847 70,622 54,067 39,409 28,677 23,405 13,522 Membership Page 1

2 Split of shares in issue June 2016 December 2015 June 2015 December 2014 June 2014 December 2013 June 2013 Total shares in issue 647,427, ,427, ,872, ,872, ,872, ,872, ,872,390 Rights-issue 55,555,556 Less treasury shares: 647,427,946 - BEE share trust (1,324,112) (1,331,198) (1,438,216) (1,508,921) (1,560,796) (1,568,882) (1,583,803) - Discovery Health (680,268) (680,268) (680,268) (680,268) (680,268) (680,268) (680,268) - BEE partners (1,200,554) (1,190,254) (16,311,021) (15,496,251) (15,496,251) (15,487,616) (35,595,469) 644,223, ,226, ,998, ,186, ,135, ,135, ,012,850 Shares in Issue Page 2

3 NAV by Entity In allocating the NAV, we have the following difficulties: The different segments overlap across legal entities. The position was particularly bad in the past when reinsurance for the Health business was done by Discovery Life Ltd. There are still some overlaps that remain. Discovery Health (Pty) Ltd acts as "treasury" for the group. It also houses much of the operational assets used by all the divisions. The Health business is cash positive. Cash from this business is extracted and invested into the other businesses, making any meaningful comparison of NAV over time difficult. June 2016 Dec 2015 June 2015 Dec 2014 June 2014 Dec 2013 June 2013 Dec 2012 June 2012 Dec 2011 June 2011 Dec 2010 The NAV by legal entity (net of non-controlling interests) Holdings (including consolidation effects) 4,704 4,993 2, ,138 1, Health 1,486 2,025 2, Life 17,735 16,455 15,076 13,724 13,383 12,191 11,035 10,021 9,067 8,258 7,056 6, Destiny Health 5,248 6,397 4,246 3,705 3,629 3,450 2,937 2,970 2,625 2,555 2,066 1,272 Life 2,313 1, Insure Connect -112 Goodwill and intangibles from business combinations 2,972 3,589 3,060 2,955 3,058 2,976 2,644 2,417 2,316 2,273 2,013 1,462 Puttable non-controlling interest ,494-3,909-3,782-3,201-2,893-2,742-2,314 - Loan -5,240-5, , For December 2010, Health, Life and goodwill and intangibles are shown net of minorities. From June 2011, Health, Life and goodwill and intangibles are shown at 100% with minorities included in the puttable non-controlling interest liability. 30,607 31,311 27,356 20,575 17,411 16,332 13,706 12,882 11,730 10,844 8,969 9,168 NAV per Entity Page 3

4 Value of New Business at Point of Sale vs Valuation Date June 2016 VNB at Point of Sale (R million) Life and Invest Health Life 1 Acquisition Costs and Initial strain (347) (2,316) (918) (2,450) Value of In Force 1,191 3,579 1,027 3,043 Cost of Capital (48) (67) (47) (315) 796 1, ) The acquisition cost and initial strain is now negative to reflect the zeroisation of the negative reserves on Life and the Discovery funded Life business on the Prudential license, which no longer offests acqusition costs. New business contribution to value of in force at valuation date (R million) Life and Invest Health Life Value of In Force 1,205 3, ,807 Cost of Capital (47) (67) (47) (295) 1,158 3, ,512 December 2015 VNB at Point of Sale (R million) Life and Invest Health Life 1 Acquisition Costs and Initial strain (147) (1,178) (458) 36 Value of In Force 417 1, Cost of Capital (11) (30) (15) (30) ) The acquisition cost and initial strain is positive due to a negative reserve created in month 1 that more than offsets initial costs. New business contribution to value of in force at valuation date (R million) Life and Invest Health Life Value of In Force 419 1, Cost of Capital (11) (30) (11) (33) 408 1, June 2015 VNB at Point of Sale (R million) Life and Invest Health 2 Life 1, 2 Acquisition Costs and Initial strain (332) (2,191) (586) 329 Value of In Force 938 3, Cost of Capital (22) (56) (20) (57) 584 1, ) The acquisition cost and initial strain is positive due to a negative reserve created in month 1 that more than offsets initial costs. 2) The Life figures in the table above have been prorated to allow for Discovery's ownership increasing from 75% to 100% in November 2 New business contribution to value of in force at valuation date (R million) Life and Invest Health * Life * Value of In Force 940 3, Cost of Capital (22) (56) (22) (56) 918 3, * The Life figures in the table above represent Discovery's 100% ownership. December 2014 VNB at Point of Sale - SVM (R million) Life and Invest PruHealth PruProtect* Value of New Business Page 4

5 Acquisition Costs and Initial strain (132) (1,137) (178) 178 Value of In Force 401 1, Cost of Capital (9) (29) (6) (17) * The acquisition cost and initial strain is positive due to a negative reserve created in month 1 that more than offsets initial costs. New business contribution to value of in force at valuation date (R million) Life and Invest PruHealth PruProtect Value of In Force 401 1, Cost of Capital (8) (29) (7) (20) 393 1, June 2014 VNB at Point of Sale - SVM (R million) Life and Invest PruHealth PruProtect* Acquisition Costs and Initial strain (297) (1,908) (431) 290 Value of In Force 867 3, Cost of Capital (19) (52) (20) (32) 551 1, * The acquisition cost and initial strain is positive due to a negative reserve created in month 1 that more than offsets initial costs. New business contribution to value of in force at valuation date (R million) Life and Invest PruHealth PruProtect Value of In Force 866 2, Cost of Capital (19) (52) (18) (30) 847 2, December 2013 VNB at Point of Sale - SVM (R million) Life and Invest PruHealth PruProtect* Acquisition Costs and Initial strain (109) (983) (202) 44 Value of In Force 353 1, Cost of Capital (8) (26) (10) (14) * The acquisition cost and initial strain is positive due to a negative reserve created in month 1 that more than offsets initial costs. New business contribution to value of in force at valuation date (R million) Life and Invest PruHealth PruProtect Value of In Force 352 1, Cost of Capital (8) (26) (10) (15) 344 1, June 2013 VNB at Point of Sale - SVM (R million) Life and Invest PruHealth PruProtect* Acquisition Costs and Initial strain (286) (1,853) (294) 99 Value of In Force 682 2, Cost of Capital (16) (44) (20) (23) New business contribution to value of in force at valuation date (R million) Life and Invest PruHealth PruProtect Value of In Force 677 2, Cost of Capital (16) (44) (21) (25) 661 2, Value of New Business Page 5

6 EV Buildup per Entity Life and Invest Health Life Other Total Value of in-force business at 30 June Expected return (in-force business) Release of profits (in-force business) (1 746) (1 670) ( 337) ( 137) 0 (3 890) Value of new business Expected return (new business) Release of profits (new business) ( 67) ( 175) ( 27) ( 81) 0 ( 350) Experience variances 310 ( 74) ( 83) Methodology changes ( 11) (4 154) ( 594) ( 368) 0 (5 127) Other ( 134) 0 21 Value of in-force business at 30 June Shareholders funds per Balance Sheet Adjustment to shareholders' funds 0 (15 768) ( 290) (3 131) (4 394) (23 583) Embedded value at 30 June ( 622) EV Buildup per Entity Page 6

7 EV Reconciliation to Income Statement R million 12 months to 30 June 2016 Value of In- Force Cost of required Capital Impact on Income Statement Adjustment to Shareholders Funds Statement of Changes in Equity Total profit from new business (at point of sale) 2,332 8,241 (477) (5,432) ,187 (48) (343) Life 1,196 3,305 (67) (2,042) Health (47) (656) Life 278 2,984 (315) (2,391) - - Profit from existing business * Expected return 4, (39) 4, ,648 (174) 9 1, Expected transfer from VIF & VNB to net worth - (1,813) - 1, Unwinding of the risk discount rate 1,648 1, Life 2, (38) 1, Expected transfer from VIF & VNB to net worth - (1,845) - 1, Unwinding of the risk discount rate 2,585 2,623 (38) Health 262 (161) Expected transfer from VIF & VNB to net worth - (364) Unwinding of the risk discount rate Life 127 (22) (69) Expected transfer from VIF & VNB to net worth - (218) Unwinding of the risk discount rate (69) * Change in methodology and assumptions (3,764) (4,769) (358) 1, (11) 4 (15) Life (3,182) (4,082) (72) Health (45) (412) (182) Life (526) (279) (89) (158) - - * Experience variances (178) (471) (8) Life (569) (85) 11 (495) Health (131) (77) (6) (48) Life (27) (167) - - Acquisition of Prudential Joint Venture Increase in goodwill and intangibles (366) (366) - Other initiatives (878) 9 - (887) - - Non-recurring expenses (508) - - (508) - - Acquisition costs (23) 1 - (24) - - Finance costs (107) - - (107) - - Intangibles no longer allocated to minorities Other (24) Foreign Exchange Rate Movements (39) (40) 31 (31) (111) 112 Intangibles (108) (108) - DAC (3) (3) - Puttable NCI Liability Other 72 (40) 31 (31) Return on shareholders' funds (7) - Unrealised gain on investments and realised gain on investments transferred to income statement (7) - investment income Life investment income Health investment income Amortisation of Intangibles (37) - - (372) Amortisation of intangibles from business combinations (37) - - (232) Amortisation of systems intangibles (140) Life DAC and unemployment reserve (67) - Puttable non-controlling interest fair value adjustment Other Minority Interest ( Life) Life assets under insurance contracts ,560 (2,560) - Life Limited and Discovery funded Life business on the Prudential license net assets under insurance contracts ,090 (3,090) - Embedded value earnings 1,345 4,115 (782) 3,730 (5,799) 81 Profit for the year per Income Statement 3,730 Adjustment to Shareholders' Funds: Change in: DAC -55 Intangibles -94 Life negative reserve -2,560 Life negative reserve -3,090 EV recon Page 7

8 Components of Assets under insurance contracts and adjustment to Shareholders' funds on Published basis 1. Assets under insurance contracts Jun 16 Dec 15 Jun 15 Dec 14 Jun14 Dec 13 Jun13 Discovery Life long term reserves in respect of policies with positive liabilities: 2,816 2,422 2,247 2,075 1,726 1,237 1,106 Discovery Life long term reserves in respect of policies with negative liabilities: (23,720) (22,087) (20,166) (19,011) (17,330) (15,822) (14,567) Unit reserves - 7,646-5,851 5,234 4,348 3,437 Life net long term reserve (9,685) (10,885) (8,157) (6,770) (5,956) (4,730) (3,510) Total Assets under insurance contracts: (30,589) (22,904) (26,076) (17,855) (16,326) (14,967) (13,534) 2. Negative liabilites not included under assets under insurance contracts Negative reserve in respect of Invest business (2,911) (2,226) (2,368) (1,838) (1,603) (1,472) (1,309) DAC and DRL in respect of Invest business (419) (393) (368) (360) (338) (309) (288) (3,330) (2,619) (2,736) (2,198) (1,941) (1,781) (1,597) 3. Components to be zeroised on the statutory balance sheet Discovery Life long term reserves in respect of policies with negative liabilities: (23,720) (22,087) (20,166) (19,011) (17,330) (15,822) (14,567) Negative reserve in respect of Invest business (2,911) (2,226) (2,368) (1,838) (1,603) (1,472) (1,309) DAC and DRL in respect of Invest business (419) (393) (368) (360) (338) (309) (288) Adjust for reduction on Deferred Tax Liability as a result of reduction in earnings 5,414 4,979 4,561 4,089 3,894 3,480 3,117 Liabilities off set against Negative reserve before zeroisation 5,868 5,153 5,133 5,002 3,687 3,671 3,589 (15,768) (14,574) (13,208) (12,119) (11,691) (10,451) (9,458) 4. Other adjustments to published Shareholders' funds Life Limited and Discovery funded Life business on the Prudential licence net assets under insurance contracts (3,090) Health Insurance Limited deferred acquisition costs (net of deferred tax) (290) (287) (230) (226) (243) (214) (190) Life receivable relating to the Unemployment Cover benefit (net of deferred tax) (41) (50) (44) (43) (34) (32) (32) Goodwill and intangible assets (net of deferred tax) relating to the acquisition of Standard Life Healthcare and the Prudential joint venture (3,615) (4,290) (3,523) (3,274) (2,550) (2,356) (1,983) Life Limited and Discovery funded Life business on the Prudential licence net assets under insurance contracts Unwind puttable non-controlling interest liability 3,511 2,927 2,663 Non-controlling share of losses/profits included in retained earnings (13) Net preference share capital (779) (779) (779) (779) (779) (779) (779) Adjustment to Shareholders' funds from published basis (23,583) (19,980) (17,784) (4,322) (11,799) (10,894) (9,611) EV Adjustment to SH funds Page 8

9 Recon of Assets under Insurance Contracts FY June 2016 FY June 2015 Balance at the beginning of the year 26,076 21,372 Movement for the period: Expected Movement in Policyholder Liabilities -2,863-2,049 Unwinding of Discount Rate 1,766 1,594 New Business Written 4,416 4,727 Experience Variances Economic (CPI) Operational Modeling and method changes 69 3 Benefit Enhancements Changes in assumptions Economic -1, Operational Changes in margins 2,125 1,009 Margins related to Premium and Benefit Increase assumptions Other margin changes 2, Exchange rate difference Balance at the end of the period 30,589 26,076 In line with accounting policy, the best estimate and margins are reset at every valuation date to reflect the underlying profitability of the overall portfolio. Assets under insurance contracts 33,101 28,144 Recovery from reinsurers -2,512-2,068 30,589 26,076 Breakdown between Discovery Life and Life - Rm Discovery Life Life Total Balance at the beginning of the year 17,919 8,157 26,076 Movement for the period: - Expected Movement in Policyholder Liabilities ,029-2,863 Unwinding of Discount Rate 1, ,766 New Business Written 1,833 2,583 4,416 Experience Variances Economic (CPI) Operational Modelling and method changes Benefit Enhancements Changes in assumptions -1, Economic ,389 Operational , Changes in margins 2,125-2,125 Margins related to Premium and Benefit Increase assumptions Other margin changes 2,050-2,050 Exchange rate difference Balance at the end of the period 20,904 9,685 30,589 Life Liability recon Page 9

10 Breakdown of Invest Funds under Management (R million) Total Jun-11 17,164 Dec-11 20,949 Jun-12 25,086 Dec-12 26,615 Jun-13 30,153 Dec-13 36,026 Jun-14 41,822 Dec-14 45,619 Jun-15 50,473 Dec-15 56,195 Jun-16 60,953 Invest FUM Page 10

11 Segment information Normalised SA SA SA SA UK UK All other Segment UK profit IFRS R million Health Life Invest Health Life segments total Life DUT adjustments total 30 June 2016 Income statement Insurance premium revenue (826) Reinsurance premiums (1) (2 014) - - (2 030) (884) (213) (5 142) (4 316) Net insurance premium revenue Fee income from administration business income Investment income earned on assets backing policyholder liabilities (480) - Finance charge on negative reserve funding (632) - (632) Inter-segment funding 1 - (452) Net fair value gains on financial assets at fair value through profit or loss Net income (480) Claims and policyholders' benefits (1) (6 401) (5 010) - (6 357) (781) (1 043) (19 593) (19 163) Insurance claims recovered from reinsurers (430) Net claims and policyholders' benefits - (4 743) (5 010) - (4 586) (345) (893) (15 577) (15 577) Acquisition costs - (1 760) (710) (82) (617) (2 218) (166) (5 553) (632) - - (6 185) Marketing and administration expenses - depreciation and amortisation (253) (23) - - (197) (1) (117) (591) (591) - other expenses (3 079) (1 523) (454) (2 127) (2 637) (1 264) (2 372) (13 456) (214) (163) (365) (14 198) Recovery of expenses from reinsurers Transfer from assets/liabilities under insurance contracts IFRS reporting adjustments - change in assets arising from insurance contracts change in assets arising from reinsurance contracts (7) change in liabilities arising from insurance contracts - (1,518) (5 053) (17) (35) (6 257) (6 250) - change in liabilities arising from reinsurance contracts - (354) (1 127) - - (1 127) Fair value adjustment to liabilities under investment contracts - (2) (118) (120) - (575) - (695) Share of net (losses)/profits from equity-accounted investments (67) (66) (66) Normalised profit/(loss) from operations (788) (214) - (845) Investment income earned on shareholder investments and cash Net realised gains on available-for-sale financial assets Rebranding and business acquisition expenses (365) - - (365) Gain from business combination Amortisation of intangibles from business combinations (275) (275) (275) Finance costs (37) (15) - - (7) (18) (216) (293) (293) Foreign exchange gains/(losses) - - (1) - (30) Profit before tax (209) 674 (1 178) (214) Income tax expense (646) (954) (163) (16) 29 (237) 33 (1 954) (1 740) Profit for the year (180) 437 (1 145) The inter-segment funding of R452 million reflects a notional allocation of interest earned on the negative reserve backing policyholders' funds of guaranteed investment products and hence is transferred to Discovery Invest. Page 11

12 Insure Segmental information R million 30 June June 2015 Income statement Insurance premium revenue Reinsurance premiums (213) (218) Net insurance premium revenue 1, Fee income from administration business Guarantee received from Humana income Investment income on assets backing policyholder liabilities Finance charge on negative reserve funding Inter-segment funding Net fair value gains on financial assets at fair value through profit or loss Net income 1, Claims and policyholders' benefits (1,043) (715) Insurance claims recovered from reinsurers Net claims and policyholders' benefits (893) (579) Acquisition costs (176) (130) Marketing and administration expenses - depreciation and amortisation (43) (27) - other expenses 1 (457) (446) Recovery of expenses from reinsurers Transfer from assets/liabilities under insurance contracts - change in assets arising from insurance contracts - change in liabilities arising from insurance contracts (35) (26) - change in liabilities arising from reinsurance contracts 15 Fair value adjustment to liabilities under investment contracts Normalised profit/(loss) from operations (150) (151) Investment income earned on shareholder investments and cash 3 15 Net realised gains on available-for-sale financial assets Amortisation of intangibles from business combinations Puttable non-controlling interest fair value adjustment Finance costs (1) (2) Foreign exchange gains/(losses) Share of net loss from associates Profit before tax (148) (138) Income tax expense Profit for the year (148) (138) 1 With effect from 1 July 2015, costs related to Discovery Connect (Discovery's Direct to Consumer channel) which were previously included in Insure's marketing expenses, have been moved to a separate entity. These costs remain in the new business development segment. 2 With effect from 1 July 2015, Insure has discontinued the use of new Finacial Reinsurance. Repayments of the tranches entered into in the prior years remain in the above figures. Insure Segmental information Page 12

13 VIF, APE and VNB split between Life and Invest Jun16 Dec15 Jun15 Dec14 Jun14 Dec13 VIF Life 18,189 18,866 18,659 18,517 17,575 16,027 Invest 3,500 3,669 3,249 3,010 2,645 2,416 APE Life Invest VNB Life Invest Results split Life and Invest Page 13

14 Discovery Health 30-Jun Jun-15 % change Admin & Managed Care Fees 5,259 4,755 11% Healthcare services income % Fee income from administration business 5,582 4,881 14% A similar amount is included in other expenses in Discovery Health Discovery Health-analysis of fee income Page 14

15 Reconcilliation to the Required Capital R millions Life and invest Health Life Total Opening - 30 June ,114 1, , Expected release on in-force at start of period (68) 122 (127) (83) (155) - Impact of new business written ,019 - Other changes 30 (114) Exchange rate movements (4) 130 Change in Required Capital ,161 Closing - 30 June Page 15

ADDITIONAL DISCLOSURE SUPPLEMENT

6 ADDITIONAL DISCLOSURE SUPPLEMENT Unaudited Condensed Group Interim Results DO GREAT THINGS EVERY DAY 112 Old Mutual Limited GROUP INTERIM RESULTS for the six months ended 30 June 2018 SUPPLEMENT CONTENTS