1
Core new business Normalised operating profit Normalised headline earnings +16 16% % +19 19% % +3 +30% 0% to R9 303m to R4 059m to R2 829m +10% to R9 705m incl. DH take-on of new closed schemes and gross revenue for the Vitality Group 2
WH WHY HOW HOW WHAT WH Life insurance Members Make people Improved health, better value through improved price and benefits healthier and Short-term insurance enhance and Long-term savings protect their lives Health insurance Societ ety Insurer Banking Healthier society Lower claims Improved productivity Higher margins Reduced healthcare Positive selection and burden lower lapses 3
The 2018 Ambition | best insurer in the world and a powerful force for social good BUSINE INESS SSES ES IMPACT 1 Insur urgen ent 1 R10bn in pre-tax tax earning ings Signi nific icant ant 2 CPI + 10% profit ofit growth th 2 engagem gemen ent 3 Risk free e + 10% retu turn rn on capita tal Super erio ior r actua uaria rial l 3 4 10m Vitali lity ty member ers dynami mics Meet eting ng comple lex x 4 consumer umer needs eds 5 Except eption onal l servi vice ce FOUND NDATION TION 1 Global al platf tfor orm, , science nce and data BUSINE INESS SSES ES 2 Power erful ul brand nd 3 Emplo loyer yer of choice ce for critic tical l skills ls 4 Value ues-based sed cultu ture re 4
Observations for the period 1 Group performance exceeded expectation, enabling it to track strongly toward its stated 2018 Performance Ambition. Normal alis ised ed oper erati ating ng profit it grew w 19%, norm rmali lised sed headline ine earning nings s grew w 30%, while new busine iness s grew 16% 2 Results were ahead of the stated growth methodology and capital plan, with oper erati ating ng profit ofit growth wth Operating exceeding ceeding CPI + 10% and return on capital exceeding risk free + 10%. The Fina nanci ncial al Lever verage ge Ratio o model (FLR) R) remained below the 28% guidance at 26.5% while free ee cash increased eased to R2.5bn 3 Estab abli lishe shed businesses achieved a combine ined growth wth in oper erati ating ng profit it of 15% 15%. The emerg erging ing Business busine iness sses es are all profita itable le and larger in scale and potential than expected with a combine ined performance growth th rate of of 151% 151%. New developments are all on target for launch and within budget 4 Considerable and continued investment took place through the Global l Vital alit ity Netwo work rk, , ensuring Vitality Shared- repeatability and scalability across adjacencies and new geographies – there are now over 7m m Value Insurance Vital ality ity member ers s in 19 count ntrie ries with engagement strong across all markets 5
Im Impa pact ct Core new business Operating profit Return on capital Cash generated Embedded value 6
Operating model Growth methodology Capital management Cash management Group profit growth of Return on capital FLR Cash buffer CPI PI + 10 10% risk sk free e + 10% 10% < 28 28% R1 R1bn n - R2bn 7
Strong operating profit growth 6 mont nths hs 6 mont nths hs Rm Rm to 31 Dec to 31 Dec % chang hange +19 19% % 2017 17 2016 16 +12% 2% 1 332 1 188 +4% +4% to R4 059m 1 839 1 768 Established +29% 9% 419 419 326 326 +73% 3% 57 57 33 33 +15% +15% +19% +15% 5% 82 1 71 1 82 71 +13% +150 50% 355 355 142 142 +7% +1% +1% 261 261 258 258 +19% +197 97% 29 29 (30) Emerging +151% +151% +101 01% 1 (91) +500 00% 36 36 (9) 8% of profits Bank, Vitali lity Invest, +44% 4% New (352) (244) commerc mercial insura rance, H12014 H12015 H12016 H12017 H12018 umbre rella la funds ds and d the GVN 12 +19% +19% Group 4 059 59 3 412 1 54.99% share of Discovery Card profits 8
Emerging businesses experienced rapid growth Discovery Insure gross premium Vitality Group integrated Ping An Health written premium income insurance premiums +3 +30% 0% +62% +6 2% +45% +4 5% to R1.3bn to R3.8bn to R1.9bn 2013 H1 2013 H2 2014 H1 2014 H2 2015 H1 2015 H2 2016 H1 2016 H2 2017 H1 2017 H2 2018 H1 H1 2016 H1 2017 H1 2018 H1 2016 H1 2017 H1 2018 Fastest growing short-term insurer Fastest growing health insurer in China 12 integrated insurance markets 9
Robust core new business growth +16% 16% 6 mont nths hs 6 mont nths hs Rm Rm to 31 Dec c to 31 Dec c % chan hange 2017 17 2016 16 to R9 303m +10% 0% 3 324 1 3 030 1 +10% to R9 705m incl. DH take-on of new closed schemes and gross revenue for the Vitality Group +6% +6% 1 121 121 1 053 Established -5% 5% 1 220 1 278 +18% 8% 522 522 443 443 -4% 4% 557 557 581 581 +22% 2% 495 495 406 406 Emerging +34% 4% 123 2 92 2 123 92 H12014 H12015 H12016 H12017 H12018 +70% 0% 1 986 1 169 1 Excludes new scheme take-ons 2 Vitality Group fee income from insurance partners 10
Strong new business growth from emerging businesses Ping An Health new business Discovery Insure new business Vitality Group fee income from API API insurance partners +3 +34% 4% +22% +2 2% +7 +70% 0% to R123m* to R495m to R1 986m H1 FY2016 H1 FY2017 H1 FY2018 H12014 H12015 H12016 H12017 H12018 H12014 H12015 H12016 H12017 H12018 *Excludes US corporate business 11
Performance exceeded growth engine targets Targe arget Actual ual CPI + 5% CPI I + 10% ESTABLISHED ~3 years CPI + 30% CPI I + 146% EMERGING ~5 years 10% 8% NEW CPI + 10% CPI I + 14% CPI = 4.7% 12
Tracking in line with capital management philosophy Targe arget Actual ual risk free+10% risk free+ ee+11 11.2% .2% <28% 26.5% R1bn – R2bn R2.5bn bn *Annualised ROE for the six-months based on normalised headline earnings **Risk-free is calculated as the Group’s weighted average risk free across the geographies it operates in 13
Reconciliation of reported profit to normalised headline earnings 6 month ths s ended ed 6 month 6 ths s ended ed Rm Rm % change Dec 2017 2017 Dec 2016 2016 3 859 3 859 3 249 19 19 Profi fit from m operations ( 325) (233) Other (incl. finance costs) Includes gearing effect of loss-making 3 534 3 016 17 17 Profi fit before tax businesses turning profitable and a higher (837) (947) Income tax expense effective tax rate in the prior year 52 (46) Other adjustments 2 749 2 023 36 36 Headline ne earni nings ngs UK branding costs carried within - 84 Rebranding and business acquisition expenses businesses 80 77 Other 2 829 2 184 30 30 Normal alised ed headli dline ne earni ning ngs Normali malised sed headline ine earnings per share e (dilute ted): d): 438 438.3c c (+29 29%) %) 14
Dividend policy framework Contribu ribution on Divide idend Philos losoph ophy to operatin ating g cover r ratio io profit fit 90% 90% x x 40% 40% 90% 2.5 In line with ESTABLISHED market 40% of profit ~3 years Dividend cover ~ 4 ~ 4 0 0 20% No dividend EMERGING ~5 years -10% Funded 10% 10% 1 NEW from the dividend Divi vide dend d decla clara ration tion of: 101c 1cps ps (+15 15%) %) 15
Cash management supports the growth methodology R6. 6.1bn 1bn Cash generated by the Group before tax 6,107 440 440 4,845 1 717 717 3,511 2 149 1 800 H1 2016 H1 2017 H1 2018 Sources of cash 16
Cash management supports the growth methodology R6. 6.1bn 1bn FLR Cash buffer 28% 28% Cash generated by the Group R2.5bn before tax R2.bn 26.5% Uses of cash 6,107 Tax, dividend and 1,68 688 finance costs 4,845 3,511 3,82 822 New business New initiatives 1,110 110 H1 2016 H1 2017 H1 2018 Sources of cash 17
Return on embedded value (EV) +13 +13% ~15% of total reve venue nue Annualised growth in EV attri ributa butable le to emerg rgin ing bus usinesse nesses s whi hich h ar are no not 141 2 886 -952 included ded in the EV EV 60 408 Group revenue (Rm) 1 275 incl. 25% of Ping An Health written premium 57 294 26,564 R2 R236m Reduction in EV due to initiatives 23,504 21,193 H12016 H12017 H12018 Opening EV Value of New Unwind of Risk Experience Initiatives Other Closing EV Group revenue excluding Business Discount Rate Variances Total Group revenue emerging businesses 18
Significant progress towards achieving 2018 Ambition 2018 2013 Prospects Prospects Bank Vitality ty Inves est Umbrel ella funds ds Insure Comm mmer erci cial TVG insurance PAH Operating profit New business Countries Operating profit New business Countries R2 367m 7m R5 854m 4m 5 R4 059m 9m R9 705m 5m 19 19 19
Fo Foundation undation People Values Brand Business model 20
Recommend
More recommend
