Discovery Life Group Risk

Discovery Life Group Risk
Sales presentation

Agenda Why Discovery Our products Group Life Assurance
Income Continuation Benefit Severe Illness, Capital Disability and Funeral Vitality

Making people healthier and enhancing and protecting their lives
JSE listed with market cap in excess of R16 billion Listed in JSE Top-40 index “A” rating for BEE based on FSC scorecard Covers over 2 million lives Largest open scheme with 40%+ market share 12 Restricted membership schemes Largest national networks Rated number 1 in IFA new business over 2009 Invest business with over R6bn in assets under administration Over group and individual policies Largest programme of its kind in the world Internationally renowned for success Over 1.5 million lives on programme worldwide Over 200,000 lives covered in the UK Vitality style programme successfully launched Protection business successfully launched in 2007

What are the benefits of a Group Scheme
Most cost effective way of providing insurance Compulsory nature Cross subsidisation Makes life insurance affordable and accessible to the masses Limited underwriting Simple administration Annually renewable

Discovery Life Group Risk is the fastest growing group risk insurer in the market
Inforce API (Rm) Source: Swiss Re Survey: Discovery management accounts Innovation has been the key driver behind Discovery Life Group Risk’s success in the market

When did we start and how did we develop?
Launched in September 2001 In-force annual premium income in excess of R400 million Over families are protected by Discovery Group Risk Sustainable rates with average increases less than 3% High client retention with less than 4% pa lapse rate Over 4% market share per the Swiss Re premium volume survey (Dec08)

Group Risk has widespread consumer endorsement
Many high profile companies support our philosophy and approach 7 7

Clients increasingly demand Discovery
In the last 6 months we have had the following clients join our unique risk pool

Financial services companies trust Discovery

Agenda Why Discovery Our product offering Group Life Assurance
Income Continuation Benefit Severe Illness, Capital Disability and Funeral Vitality

How the Discovery Group Risk LIFE PLAN works
1 CORE BENEFITS These benefits cover the most essential employee risk needs and ensure that all employees enjoy a core level of protection. Life Cover Benefit Global Education Protector™ Mortgage Protector™ Income Continuation Benefit Performance Bonus Protector™ Contribution Protector™ Dynamic Spend Protector 2 PLUS BENEFITS These benefits cover additional employee risk needs and ensure that all employees enjoy an additional level of protection. These additional benefits are chosen by the employer. Capital Disability Benefit Severe Illness Benefit Funeral Cover Benefit 3 FLEX BENEFITS These benefits are not compulsory and employees choose it as a multiple of salary. Life Cover Benefit Capital Disability Benefit Severe Illness Benefit DGR has been designed to specifically be able to address all risks faced. 4 VITALITY Vitality is a wellness programme that empowers employees to improve their health by giving them the knowledge, tools and motivation to set and meet health goals. The more healthy your employees, the more Vitality rewards them and the greater their productivity in the workplace. Underpinned by individual and corporate wellness

Agenda Why Discovery Our product offering Vitality
Group Life Assurance Income Continuation Benefit Severe Illness, Capital Disability and Funeral

Employers and employees benefit from Discovery integration
Health Group Risk Vitality Integration has benefits from better pricing through to making people healthier over time. Having health, DGR and Vitality allow employers to optimise price, treatment and productivity of employees. Engaged members have lower claims Potential improved pricing

The impact of Vitality: New Business
Gross claims ratio of new members compared to that of existing business Existing Business New Business by Vitality engagement 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% All members Not engaged Moderate engagement High engagement

Access to corporate wellness programmes Medical premium covered in full Potential improved pricing Integration has benefits from better pricing through to making people healthier over time. Having health, DGR and Vitality allow employers to optimise price, treatment and productivity of employees. Engaged members have lower claims Potential improved pricing

Companies on Discovery Health get access to Corporate Wellness benefits
Wellness Days Screening tests Personal Health Reviews Fun elements to drive participation Access to world class HIV management HIV prevalence estimation Corporate HIV policy development Voluntary Counseling and Testing (VCT) The vast information provided from wellness days and VCT days could allow DGR to improve rates as members engage and look at their health Provided to companies with as little as 35 employees on Discovery Health. Fee for non-members will be waived if the company has Group Risk Income Continuation & Life Cover and 50% or more of its employees on DHMS

Access to corporate wellness programmes Medical premium waivers cover in full Potential improved pricing Valuable rewards incentivise healthy behaviour Vitality offers the most valuable rewards world wide Integration has benefits from better pricing through to making people healthier over time. Having health, DGR and Vitality allow employers to optimise price, treatment and productivity of employees. Engaged members have lower claims Potential improved pricing

Discovery Vitality helps you to:
Earn immediate Vitality points by understanding your health status: Vitality Nutrition Assessment Vitality Fitness Assessment Vitality Age Many more preventative tools Bronze Silver Gold P 15 000 35 000 45 000 P+A 30 000 70 000 90000

Vitality benefits increased through the DiscoveryCard CASH BACKS
Vitality status Other partner stores Blue 5% 10% Bronze 6% 10% - 12%* Silver 7% 10% - 14%* Gold 8% 10% - 15%* Diamond 10% - 20%* * Depending on the number of years they’ve been a Vitality member

Some things you may not know about Vitality
There are many ways to earn Vitality Points Earn up to 35% off local flights Earn up to 60% off international flights Free Ster Kinekor movies for children under 16 Earn and use your DiscoveryMiles to access a world of discounted rewards

Vitality HealthyFood™ benefit
All adults on Vitality can apply for their HealthyFood™ card that can be used at Pick n Pay. The HealthyFood™ card carries an automatic 10% saving on HealthyFood™. Members who complete the Vitality Personal Health Review will increase their HealthyFood™ saving to up to 25%. Members also earn up to 15 Vitality points for every HealthyFood™ item they buy (up to a max of 500 points pm). Members identify HealthyFood™ items by reading their HealthyFood™ catalogues. Members present their HealthyFood™ card (or DiscoveryCard) at the till point when paying to record their HealthyFood™ purchases. Cash back into customer account or DiscoveryCard. DiscoveryCard holders also get their usual partner store cash back (5% to 10% depending on their Vitality status). Total HealthyFood™ saving of up to 35%. Data reconciliation Determination of HealthyFood™ purchased. Calculation of HealthyFood™ saving. Check against benefit limit. Allocation of Vitality points.

Case study: Healthy basket
HealthyFood total: R395.69 Vitality saving: R98.92 Vitality Points: 160

How to get to Gold Vitality status in less than a day
1 hour Completion of an online Personal Health Review 2 000 Completion of online Vitality stress assessments 2 500 Completion of an online nutrition assessment 500 Non-smoker declaration 5 000 Vitality Nutrition Assessment Vitality Fitness Assessment 7 500 Bonus Fitness points for a fitness level four 6 000 Weight assessment Glucose test 1 500 Glucose test result in the normal range Cholesterol Cholesterol test result in the normal range Blood pressure Blood pressure result in the normal range HIV test Total 45 000 2 hours 1 hour Visit for full details on how to earn points

Personalising Vitality: Vitality Personal Pathways
Personal Pathways to be rolled out towards end 2010 1 Complete a Personal Health Review and determine Vitality Age The member completes a Personal Health Review (PHR) online The PHR assesses the impact of lifestyle behaviours on health status The results of the PHR are used to determine the members’ risk-adjusted age The Vitality Age provides the member with a list of risk factors, and a suggested path to wellness 2 Set personal health goals The member selects personal health goals from his range of risk factors based on his readiness to change Vitality lowers the financial barriers to engage in activities in line with the member’ 3 Earn Vitality Points by undertaking activities to improve health Vitality points are personalised and are assigned in accordance with the member’s risk factors Additional points are allocated to sicker members to encourage engagement in appropriate activities

Examples of Intervention Weighting
Blue Gold Silver Bronze Stop smoking Manage cholesterol Nutrition Other core activities Sally Real Age 37 Vitality Age 55 Exercise Weight loss Bob Real Age 31 Vitality Age 34

The savings to members far outweigh the cost of Group Risk Cover
Sample savings for a Vitality member in any one month R 1,400 R 1,200 3% of cost to company for Group Life, Income continuation and Severe Illness benefits and R116 Vitality premium R116 Movies R80 Music R 1,000 R80 Take out R60 Cellphone R399 Gym R 800 R80 Groceries (other) R 600 R400 Groceries (healthy food) R375 R116 Vitality Premium Contribution R 400 R 200 R 0 Potential Vitality savings far outweigh Group Risk contributions

Agenda Why Discovery Our products Vitality Group Life Assurance
Income Continuation Benefit Severe Illness, Capital Disability and Funeral

Group Life Assurance - enhancing lifestyle protection
Perception Reality Death benefit Lifestyle Education Debt By addressing these needs, dependants are left with more freedom to enjoy with the lifestyle they were accustomed to

Group Life Assurance Market Standard Meeting member need
Group life as multiple of salary Market Standard Global Education Protector ™ Meeting member need Covers the actual cost of education, and on tertiary level also the cost of the required books and accommodation on tertiary for: Structure as “Employer XYZ Education Fund” Pre-primary school to High School Local university or Network of global universities This whole section speaks to what we offer above the norm – to address a specific risk. The value of our approach to the member is critical in all cases.

Over 50% of deaths occur between the age of 25 and 40
The Global Education Protector offers much needed extra cover where dependants need it most Source: Discovery Group Risk claims experience (n=300) Over 50% of deaths occur between the age of 25 and 40

The Global Education Protector adds substantial additional cover for the average member
Illustrative GEP value add for a member with children 4.6 4.4 4.2 4.0 Effective GLA multiple 3.8 3.6 3.4 3.2 3.0 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 Member age Without GEP With GEP Average age of deaths The Global Education Protector can add up to 1.4x more to Standard Life Cover on an automatic indemnity basis at age 38, when majority of our members die, these families have 50% more protection as a result The Global Education Protector Benefit only applies to members with children

Success of the Global Education Protector
Key facts More than children currently benefitting from this benefit More than 200 schemes have claimed for this benefit We have paid fees to more than 580 different schools

Additional benefits from Vitality integration

Life cover for Vitality members is enhanced with the Private School Upgrade Benefit™
147% increase Assumptions Average monthly salary R 12,500 Average number children per family - 1.5 Total value is significant more than two times more. With a competitive rate, members get lots more for similar price. Trustees need to act in the best interest of members and more value for similar cost should be a no brainer. Education cost PV R240,000 Based on a 35 year old employee with two children (aged 5 and 8) and earning a monthly salary of R with a death benefit of three times annual salary Private School Upgrade Benefit™ is available to Vitality members with a Bronze status or higher

Group Life Assurance Market Standard Meeting member need
Group life as multiple of salary Market Standard Global Education Protector ™ Mortgage Protector™ Meeting member need Covers the actual cost of education, and on tertiary level also the cost of the required books and accommodation on tertiary for: Structure as “Employer XYZ Education Fund” Pre-primary school to High School Local university or Network of global universities Pays member’s bond installments for up to 24 months, depending on Vitality status. Payable to any registered mortgage provider in South Africa This whole section speaks to what we offer above the norm – to address a specific risk. The value of our approach to the member is critical in all cases.

Mortgage Protector™ Traditional coverage Discovery Life Group Risk No allowance for housing Pays up to 24 bond installments in case of death or disability Members/dependants could lose house due to affordability Members/dependants guaranteed to have housing Significant financial strain coping with disability Additional income is available for member to adjust to new life

How does the Mortgage Protector™ work?
Step 1: Determine the monthly Mortgage Protector™ benefit amount The monthly amount will be equal to the average bond repayment made over 12 months preceding claim event, limited to 30% of the member’s salary Step 2: Determine the number of bond payments covered based on the member’s Vitality status: Step 3: Determine the method of payment On death, the Mortgage Protector™ pays these repayments as a lump sum directly to the mortgage provider Vitality Status Blue Bronze Silver Gold Diamond 3 months 6 months 9 months 12 months 24 months On a death claim for a Silver Vitality member that paid an average of R4 000 over the last 12 months, the amount that will be paid to the bank is: R4 000 x 9 = R36 000

Life cover for Vitality members is enhanced further with the Mortgage Protector™
Diamond R Gold Silver Bronze R Blue R R Traditional insurer Discovery Based on a 35 year old employee earning a monthly salary of R which spends 30% of that on his bond, with a death benefit of three times annual salary

Income Continuation Benefit
Standard flat 75% of Salary Market standard Meeting member need Contribution Protector™ Payment of medical aid and any other Discovery risk premiums for 12 or 24 months. Also pays for non-Discovery Health medical aids up to generous limits Similarly we exceed the standard on Income continuation effectively ensuring members are minimally impacted by disability

Contribution Protector™
Traditional coverage Discovery Life Group Risk No explicit cover for risk premiums All Discovery risk premiums is paid on behalf of the member for up to two years Members likely to sacrifice risk cover due to affordability Members enjoy cover from any Discovery product they had prior to disability Significant financial strain coping with disability Additional income is available for member to adjust to new life

How does the Contribution Protector™ work?
Contribution Protector™ pays 100% of: LIFE PLAN R400 Discovery retirement Optimiser™ R450 Health Plan (any medical aid) R2 201 Discovery Retirement Annuity R500 Discovery Vitality R142 Total R3 693 ICB at 75% of R salary R11 250 Contribution Protector™ R3 693 Total R14 943

Standard flat 75% of Salary Market standard 100% upgrade™ Permanently disabled members will have their disability income increased by a generous 33% Meeting member need Contribution Protector™ Payment of medical aid and any other Discovery risk premiums for 12 or 24 months. Also pays for non-Discovery Health medical aids up to generous limits Similarly we exceed the standard on Income continuation effectively ensuring members are minimally impacted by disability

100% upgrade on permanent disability
Traditional coverage Discovery Life Group Risk 75% limit on disability income Upgraded to 100% if member is permanently disabled Waiting period before disability income becomes payable Waiting period waived if member is permanently disabled Significant financial strain coping with disability Additional income is available for member to adjust to new life

Value of the 100% upgrade Difference = R901 555 60 months salary
Based on an employee earning R per month with an Income Continuation Benefit of R per month

Standard flat 75% of Salary Market standard Rehabilitation and partial income cover Up to R cover to assist in re-skilling and retraining an employee to continue working. Partial disability cover for employee who can no longer do their own higher paid job Meeting member need Contribution Protector™ 100% upgrade™ Payment of medical aid and any other Discovery risk premiums for 12 or 24 months. Also pays for non-Discovery Health medical aids up to generous limits Permanently disabled members will have their disability income increased by a generous 33% Similarly we exceed the standard on Income continuation effectively ensuring members are minimally impacted by disability Discovery Life Group Risk’s Income Continuation Benefit offers the most comprehensive protection in the market

Discovery rehabilitation and case management
Provides access to a psychologist for up to six consultations and private support Extends to family and caregivers Referred to specific groups that best suit the claimant, family and caregivers Focused on restoring maximum wellness Supports details to the illness or disease Education on treatment, lifestyle impact and management Retraining including finding new ways of performing similar functions Reskilling including training to perform new functions Up to R cover to assist in re-skilling and retraining an employee to return to work

Additional benefits from Vitality integration

Income Continuation Benefit enhancements for Vitality members
Standard flat 75% of Salary Performance Bonus Protector™ Pays member his/her average bonus received over the last three years for up to 24 months, depending on Vitality status. Market standard Meeting member need Similarly we exceed the standard on Income continuation effectively ensuring members are minimally impacted by disability

Performance Bonus Protector™
Traditional coverage Discovery Life Group Risk No allowance for bonuses and other variable remuneration Pays members up to 100% of their past bonuses for up to 24 months Disability income based on basic salary Significant boost to disability income for the first two years Significant financial strain coping with disability Additional income is available for member to adjust to new life

How does the Performance Bonus Protector™ work?
Step 1: Calculate average performance bonus earned in the three years prior to disability Step 2: Determine the Performance Bonus Protector Vitality factor Step 3: Determine the monthly bonus Annual salary x average bonus x Vitality status factor ÷ 12 Year Annual salary Bonus Bonus % 2007 R R 30% 2008 R R 40% 2009 R R 35% Average = 35% Vitality Status Blue Bronze Silver Gold Diamond 10% 20% 50% 75% 100% If this member were on Silver Vitality status, his monthly benefit will be increased by: R x 35% x 50% ÷ 12 = R7 583

Standard flat 75% of Salary Performance Bonus Protector™ Pays member his/her average bonus received over the last three years for up to 24 months, depending on Vitality status. Market standard Mortgage Protector™ Pays member’s bond installments for up to 24 months, depending on Vitality status. Payable to any registered mortgage provider in South Africa Meeting member need Similarly we exceed the standard on Income continuation effectively ensuring members are minimally impacted by disability

How does the Mortgage Protector™ work?
Step 1: Determine the monthly Mortgage Protector™ benefit amount The monthly amount will be equal to the average bond repayment made over 12 months preceding claim event, limited to 30% of the member’s salary Step 2: Determine the number of bond payments covered based on the member’s Vitality status Step 3: Determine the method of payment On disability the Mortgage Protector™ pays these repayments on a monthly basis directly to the mortgage provider Vitality Status Blue Bronze Silver Gold Diamond 3 months 6 months 9 months 12 months 24 months On a disability claim for a Silver Vitality member that paid an average of R4 000 over the last 12 months, the Mortgage Protector™ will pay R4 000 per month for up to 9 months

Standard flat 75% of Salary Performance Bonus Protector™ Pays member his/her average bonus received over the last three years for up to 24 months, depending on Vitality status. Market standard Mortgage Protector™ Pays member’s bond installments for up to 24 months, depending on Vitality status. Payable to any registered mortgage provider in South Africa Dynamic Spend Protector™ Permanently disabled Vitality members with DiscoveryCards will get a significant boost to their partner store cash backs, based on Vitality status Meeting member need Similarly we exceed the standard on Income continuation effectively ensuring members are minimally impacted by disability Discovery Life Group Risk’s Income Continuation Benefit offers the most comprehensive protection in the market

Dynamic Spend Protector™
Traditional coverage Discovery Life Group Risk No explicit allowance for living expenses Members get increased cash backs at partner stores when using their DiscoveryCard Disability benefit to decline in real terms due to inflation Living expenses significantly reduced Significant financial strain coping with disability Additional income is available for member to adjust to new life

How does the Dynamic Spend Protector™ work?
Step 1: Use DiscoveryCard at partner stores to earn cash back Step 2: Use the DiscoveryCard to provide extra protection against increased costs of living Step 3: DiscoveryCard cash back at partner stores increase in event of disability Income Continuation Benefit Vitality Status Blue Bronze Silver Gold Diamond 5% 7.5% 10% 15% 20% If this member were on Silver Vitality status, his partner store cash back will be increased by 10%

Value added benefits make a considerable difference to the average disabled member
Dynamic Spend Protector™ 100% upgrade Monthly salary Bonuses received Tax Housing Risk cover Education Other expenses Pension Performance Bonus Protector™ Contribution Protector™ Mortgage Protector™ Mortgage Protector™ 75% of monthly salary 75% of monthly salary

Income Continuation Benefit option summary
Temporary disability Permanent disability Core option Standard 75% Contribution Protector™ Comprehensive option 100% upgrade Mortgage Protector™ Performance Bonus Protector™ Mortgage Protector™ Mortgage Protector™ Performance Bonus Protector™ Dynamic Spend Protector™ Mortgage Protector™ The added value provided by Vitality integration uniquely addresses every aspect of the members lifestyle in the unfortunate event of disability at no extra cost

Group Risk Cost – Benefit illustration
Standard insurer Discovery Group Risk Group Life Basic cover (3x) Global Education Protector™ Mortgage Protector™ 33 750 Total cover Income Continuation Benefits Basic cover 11 250 11 250 100% upgrade 3 750 Mortgage Protector™ 1 3 750 Performance Bonus Protector™ 1 1 875 Total cover (75%) 20 625 Monthly premium 250 250 DiscoveryCard cashback 2 -250 Value of free cover -200 Nett monthly premium 250 -200 1 Payable for up to two years 2 Including Dynamic Spend Protector Assumptions: Member on comprehensive ICB earning R15 000pm and 25% performance bonus, Silver Vitality status, spends 25% of salary on bond payments and R2 500 pm at DiscoveryCard partner stores

Discovery offers the most comprehensive severe illness cover
Whole Body Coverage Tiered Severity payments (5% – 100%): Matching the payout to the impact on lifestyle Automatic Family Benefits Child severe illness cover up to R per child Global Treatment Benefit Providing access to international treatment Multiple Claims Claims in excess of the selected cover amount Claim regardless of higher, the same or a lower severity

Discovery’s Severe Illness Benefit pays out more, more often
Purchased LIFE FUND = R Severe Illness Benefit = 50% No Minimum Protected Fund Multiple claim example shows the value of the benefit, where other severe illness benefits wouldn’t pay out Discovery Life Severe Illness Benefit payout = R + R R Received 130% of his Severe Illness Benefit

Global treatment benefit gives access to world class facilities
Example of cover for a liver transplant R 0 R 200,000 R 400,000 R 600,000 R 800,000 R 1,000,000 R 1,200,000 R 1,400,000 R 1,600,000 Cost of treatment Benefits Cost of international treatment at Network Hospital R710,000 R200k paid by Discovery Health Global treatment benefit R510,000 80% of Severe Illness Benefit R800,000 R R R R R R R R benefit R R Global treatment offers flexibility and choice to members

Capital Disability further target specific employee needs
Unique method of assessing severity thus effectively targeting benefit to need No exclusions for back ailments and depression Designed to allow for multiple claims for different conditions or worsening conditions No waiting periods and no reduction in benefit as member approaches retirement Just touch on the other plus benefits briefly, highlighting the strong aspects.

Discovery’s objective claims assessment results in all valid claims being paid out
Competitors Limited Activities of Daily Living Often poor proxy for earning ability Not offered or less sophisticated ADL’s (Functional impairment) Functional impairment Medical impairment Activities of Daily Living Discovery Accurately reflect earning ability Cater for subjective claims Occupational based Discovery pays out more, more often than it’s competitors

Discovery’s objective claims assessment results in all valid claims being paid out
Competitors Limited Activities of Daily Living Functional impairment Medical impairment Activities of Daily Living Discovery Back ailments Depression Discovery pays out more, more often than it’s competitors

Activities of Daily Living
Discovery’s objective claims assessment results in all valid claims being paid out Competitors Medical impairment Activities of Daily Living Discovery Accurately reflect earning ability Cater for subjective claims * Multiple claims possible for members with a Minimum Protected Fund and/or if a category B claim was paid previously Discovery pays out more, more often than it’s competitors

Discovery does not reduce benefit as members approach retirement
Incidence of disability Disability incidence rate Cover a % of total selected Members are 2.3 times as likely to become disabled after 55

Funeral cover further target specific employee needs
Can be offered to the employee only or the employee and family Definition of spouse broadly defined and allowing up to three spouses under a traditional marriage Benefits scale down from R for employee and spouse to R for stillborns Children under the age of 24 still studying will still be considered children under the policy and have cover Just touch on the other plus benefits briefly, highlighting the strong aspects.

Funeral cover further target specific employee needs
Choice in product structure Can be offered to the employee only or the employee and family Generous family coverage Definition of spouse broadly defined and allowing up to three spouses under a traditional marriage Generous benefit levels Benefits scale down from R for employee and spouse to R2 250 for stillborns Cover for full-time students Children under the age of 24 still studying will still be considered children under the policy and have cover Just touch on the other plus benefits briefly, highlighting the strong aspects.

Discovery Life Group Risk Funeral Cover Benefit

Why are we the ideal partner for you?
Product differentiation Global Education Protector and the Medical Premium Waiver Service excellence 80% approval rating by brokers Robust pricing Our invitation to join our risk pool will enhance your benefits at a sustainable price Claims care Accessible team with significant experience, independence and access to medical evidence Size and scale Big enough to take on your scheme but small enough to care Future Discovery Health integration, product innovation, industry leader

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