WIXLIB

October201821st South African Financial Services ConferenceBRETT TROMP CFO DISCOVERY HEALTH

AGENDA1Efficacy of the Shared value model achievingthe results that drive a social purpose2Discovery Health and growth3Big data accelerating the competitivelandscape4Vitality continues to catalyze the growth2

Make peoplehealthier andenhance andprotect their livesLife insuranceHealth insuranceShort-term insuranceLong-term savingsBanking3

Trends underpinning the Shared-Value model remain relevantSocieties require companies to fulfil a sociallyprogressive core purposeConsumers live in a technology-dominated worldand seek solutions instead of servicesThe nature of risk is behavioural and solutionsare becoming increasingly personalised4

The nature of risk is behaviouralLife insurance4 deWorld Health Organisation andGlobal Burden of DiseaseMake people healthierand live longerSocietyImproved productivityReduced healthcareburdenMotor insurance4 45 deWorld Health Organisation andGlobal Burden of DiseaseMake people healthierand live er claimsHigher marginsPositive selectionand lower lapsesSocietyImproved productivityReduced healthcareburden3 e people betterdrivers and have fewerroad accidentsInsurerLower claimsHigher marginsPositive selectionand lower lapses4InadequateretirementfundingMake people betterprepared for retirementMembersImproved driving, better value throughimproved price and benefitsSocietyNation of better driversLess road deaths andinjuriesLess RAF claimsInsurerLess vehicleaccidentsEncourage longer savings, responsiblefinancial behaviour and a healthy lifestyleSocietyStronger savings cultureLower claimsLower pension relianceon the stateHigher marginsBetter client outcomesPositive selectionand lower lapsesBankingControllablebehavioursCreditdefaults andretirementshortfallsJournal of Economics and Financeand other sourcesMembersImproved health, better value throughimproved price and benefitsHealthier societyLong-term savingsRoad Traffic Management Corporation andU.S. Department of TransportationMembersMembersImproved health, better value throughimproved price and benefitsHealthier societyHealth insuranceInsurerGreater fundsLonger investmentBetter persistencyLower withdrawals

Dynamics of the model manifest across all suranceLong-termsavings1 from2007 to 20162013 to 20183 RA and linked annuities, from 2015 to 20182 from20%-30%increase inmarket share44%increase inmarket share16xincrease inmarket share270%-200%increase inmarket share3x Selection x Behaviour x Lapses 20% 50%better claims experiencecompared to non-Vitalitylower mortality onInitial engagers have:Members who run at leasthighly engaged2 times28%lower hospitalcostsper week save10%lower chronicconditionson healthcare costs10%better drivingscore compared topopulation85% invested intopreferred funds15%15%improvement indriving behaviour60%lower incomedrawdowns15% lower lapse rates50%Stayers havemortality of leaversHigher VNB 3.6xlower lapseratesLower loss ratio60%lower lapse rates24.7%Stayers havelower absolute lossratios than leaversLower loss ratio3x moread hoc additions25%-50%Higher VNBlower withdrawals6

Mathematics of Vitality Shared-Value InsuranceValueMemberShared value IncentiveMemberVitality chassis BehaviourIncentiveProgrammesVitality AgeScreeningVitality PointsActive Rewards Bent (qx) BehaviourNutritionRewardsWeight LossMental WellbeingHealthy AgingBent (qx)Make peoplehealthierProductMorbidity& mortalityDynamicpricingAccidentsVitality Status ValueDefaultsWedgefundingEnhancedyieldVitalityFund

AGENDA1Efficacy of the Shared value model achievingthe results that drive a social purpose2Discovery Health3Big data accelerating the competitivelandscape4Vitality continues to catalyze the growth8

The Healthcare Trilemma.CostA EMBERDISEASEBURDENTREATMENTPREVENTIONQUALITYACCESS AND COST

Discovery Health’s Shared Value Solution to the Healthcare TrilemmaBetter HealthLower Premiums-16.1%Fewer hospital admissions100%Healthier & More ProductiveWorkforceProductivityImpact of employee wellness on productivity95%90%85%80%InactiveLowMedium Highengaged engaged engagedCompetitorsIncreased Growth & SustainabilityDHMS Solvency: 27.45% Reserves: R16.4bn Increase in membership: 2.1%MEMBERSPoor healthBase wellnessIdeal healthHEALTH INSURERLower Claims Heart disease: -41% Diabetes: -53% Lung Diseases: -50%HEALTHCARE PROVIDERSIncreased revenues R100mPaid in quality incentivessince Aug 2012Shared value is intrinsic to the Discovery model

DHMS Value Proposition1Immediate affordability 16.4% lower contributions than next 9 largest open schemes2Full spectrum of plan choices, richest benefits &extensive networks 23 plans with rich benefits – widest range in market 97% Overall In-hospital claims payout ratio Extensive networks to avoid member co-payments3Financial Strength & long term sustainability Highest possible credit rating AAA 27.44% solvency and rising R16.4 bn reserves and rising4Best in class claims risk management Allows scheme to provide rich benefits at competitive premiums5Member satisfaction & servicing Continuous investment in member service systems and tools 8.8 out of 10: Member Satisfaction Score Access to world class digital tools and technologiesSound governance Highly Skilled and fully independent Trustees Sophisticated and rigorous governance environment with 10Board Committees Ongoing external governance review7Peace of mind as healthcare partner for quality PaSS: Improvement in hospital and doctor ratings Monitoring mortality rates for Acute MI Decrease in inappropriate use of hospital acquired infection rates8Strong focus on employee wellness World leading wellness programmes Discovery HealthyCompany Vitality6

11%2018 3.5m2016 8%2014Operating profit20122010200820062004Membershipunder 200119991997excl. take-on of new closed schemes1995to R6 12201320142015201620172018New businessto R2 777m12

Scale of Discovery Health16/1740% 3.5m18Restricted schemes won over the previous 10 yearsTotal market shareRestricted schemes17%Lives under administrationRestricted schememarket share 670 000Lives1Open scheme56.0%DHMSRestricted 9941993Open schememarket share 2.8mLives13

DHMS continued excellence in a challenging economic environmentCompetitive advantage-16.4%Lowest premiums inthe scheme market56% 2.08%(2017: -15.1%)10.1%Growth and stabilityDHMS admin andmanaged care feesin bottom quartile4.8%NomovementR2.10Market shareMembership growthAnnualised lapse rate27.44%SolvencyR16.4bnReservesStability94%Value generated forevery R1 paid toDiscovery HealthSecurity3% Downgrade3% UpgradeR2.45bnNet surplusAAAGCR credit rating14

Contributions are competitively priced across all segments,usually with superior benefitsMarketaverage-16.4%201520162017Sources: Published contributions for 2018P A C Principal member Adult dependant Child dependantDHMS vs the next 8 largest open schemes2018

Becoming the lowest cost administratorLowest quartile admin fees10.1%DH total fees as a% of GCIDecreasing real admin fee increasesEffective interventions to manageclaims costsAdministration expenditure as % of GCIover timeImpact of Discovery Health and Vitality onDHMS risk claims in d 5thlowest of21 openschemesR40.3bn7.8%2009 2010 2011 2012 2013 2014 2015 2016 2017Open schemes ex DHMS (weighted)DHMSPotentialrisk claimsRiskmanagementsavingsVitality impacton DHMSActualrisk claims16

New products driving growth - Healthy Company I Digitally-enabled,comprehensive employee assistance programme and wellness solutionCost per employee per month- 20%- ightsComparative price,excluding ongoingassessments and digitalinterventionsEmployer with 600-700 employees, inclusive of VATHealthy Company(non-integrated)Healthy Company(fully-integrated)

Rapid growth in Non Scheme products.Total p-17Dec-17Mar-18Jun-18Sep-18

Regulatory environmentDiscovery Health is actively supporting the development of the NHI and remains committed to growing sharedvalue in South Africa’s healthcare systemNational HealthInsurance BillMedical SchemesAmendment Bill1. Slow and phased-in process1. Most recommendations are pragmatic2. Focus on vulnerable groups2. Some concerns regarding scheme rulesand governance3. Medical schemes to co-exist with NHI4. Voluntary contracting for private sectorentitiesHealth MarketInquiry1. Majority of findings andrecommendations are sound andworkable2. Critical supply side recommendations willhave significant positive impact ifimplemented as proposed5. No clarity on fundingPragmatic and workableMore clarity requiredComprehensive and insightful19

AGENDA1Efficacy of the Shared value model achievingthe results that drive a social purpose2Discovery Health and growth3Big data accelerating the competitivelandscape4Vitality continues to catalyze the growth20

Data is substantial 2 petabytesof behaviour-linked insurance dataHealth dataDemographic informationCost of claimsProvider visitsHospital admissionsCondition managementHealth outcomesOut of hospital spendChronic condition historyPhysical activityBiometrics and screeningsNutritionSmoker statusVitality statusDriving dataDemographic informationKilometers drivenDriver behaviourAccident impactDriver routesHarsh brakingAccelerationCorneringMobile phone usageTime and distance of tripsFinancial dataCustomer loyaltyCustomer spend behaviourPrice sensitivityCredit riskiness

HealthIDENGAGEMENTENGINEAPP STOREOMICSCARE PATHWAYENGINESignificant progress in building a fully integrated digital platform to enrichinteractions and drive engagementOver 1993 doctorsOver 1.7 m member consentsDrConnectPOPULATION MANAGEMENT TOOL329 543 members and 2 700 doctors enrolledonto DrConnect since launch in August 2017AI ENGINECLINICAL DATA REPOSITORYDEVICE APILAYER22

Data collected through a comprehensive digital member platformExercise data500 000 workouts logged per dayFind a doctor4 400 000 requests per annumClaims informationDiscovery babies bornDiscovery baby born every 6 minutesOrder medicine480 000 orders per annumVitality Health Check data32 000 health screenings per monthHealth IDGeolocation2 000 doctors and1 700 000 member consents2 200 000 pings per monthHealthy Food 55 000 baskets per dayActive Rewards 400 000 usersCall centre data35 000 calls per dayMyPregnancyDriving data1.4m downloads 25 000 members registeredOn average 3 app logins perweek per active userStuff magazine’sApp of the year

Data driving Fraud & informa savings and recoveriesFraud & Informa Includes total savings and recoveries, hospital group settlements and deferred amounts201520162017

Applying behavioural science to fraud100x more costlyto gher2x more3x moreTwitterati are significantly more likely tovisit fraudulent providers4.33x more likelyto visitfraudulentdoctorsProportion of visits to fraudulent doctorsMembers who complain on Twitter tend to bemore costly for medical schemesNon-Twitter UserTwitter User“Unusual” information beyond claims data is being used to combat fraud

AGENDA1Efficacy of the Shared value model achievingthe results that drive a social purpose2Discovery Health and growth3Big data accelerating the competitivelandscape4Vitality continues to catalyze the growth26

Active Rewards is a global success 35%membersCoffees earnedper monthOr coffee equivalent in marketmembers across9 countriesexercise activities a dayExcluding Ping An Run VitalityAppleWatchessold 110% 39%

Engagement and activity generates additional data unique to Vitality,emphasizing the depth of data underpinning analysesGetting Healthy250 00010 millionVitality HealthChecksdiscounted gymvisitsGetting Rewarded20 millionHealthyFoodbaskets boughtOver 10 000Team VitalitymembersR1 billionHealthyFoodcash back1 milliondiscountedflights booked2.5 milliondiscountedmovies1.8 billionDiscovery MilesearnedOn an average day in Discovery Health ofessionals

HealthyFood engagement and impactHealthy Food itemsHealthy FoodbasketsHealthy Foodcashback