Discovery acquires full ownership of its UK joint venture, rebrands UK businesses (Continued)
On 10 November 2014, Discovery announced an important strategic change in its business with its acquisition of the remaining 25% stake in Prudential Health Holdings Limited, the holding company of PruHealth and PruProtect in the UK.
Group Chief Executive, Adrian Gore, said; “We are tremendously excited about this major strategic milestone for Discovery. Taking full ownership of our UK operations signals the significance of the UK market to Discovery and is key to our strategy to replicate Discovery’s shared-value insurance model in this market.”
Discovery will now own 100% of the UK operations, valued at £620 million. Initially established as an equally-owned venture between Discovery and Prudential in the private medical insurance market in 2004, it subsequently expanded to offer long-term protection products. It underwent a shareholding change in 2010 when Discovery increased its shareholding to 75% with the acquisition of Standard Life Healthcare. Today, the life and health insurance businesses cover over 800 000 lives, at number four and three market positions respectively for the health and life arms, and attracting annual premiums of approximately £480 million and annualised new business in excess of £110 million.
Gore continued, “Discovery’s increased investment in the UK has always been part of our longer-term strategy. It will afford us the opportunity to realise our vision to further entrench our insurance model and to be recognised as the best protection provider in the UK. Being highly receptive to the needs of our clients, and highly engaged with them, means that we are well placed to achieve our goal of substantially improving the health of consumers in the UK. In my view, we are well on track to move insurance as a low-interest product category to one that is aspirational.”
Strategically, the UK market presents significant opportunity: the UK protection market is the third largest globally and the combination of high levels of underinsurance and low retention rates among insurers, provide an optimal platform for Discovery to replicate its shared-value insurance model.
Gore commented; “The UK environment is right for us. Our goal is to create a unique protection business that is responsive to global trends and that creates unique value for members and society.” With the ownership change and the ongoing elevation of the Vitality brand over the last few years, the PruHealth and PruProtect businesses will be rebranded under a single insurance brand: Vitality, with two insurance lines offered, VitalityHealth and VitalityLife.
The rebranding reflects the brand equity that has been developed in the Vitality brand as well as the significance of Vitality as a mechanism to deliver Discovery’s shared-value insurance model.
Financially, the joint venture is targeting £1 billion of earned premiums and £200 million of new business over the next five years.
Extracted from the “eDiscoverer” dated