Discovery Group plans to create a single global composite, with the same strategy, product and technology, which it will simply name Vitality, outside of its existing South Africa composite.
The group has traditionally been made up of three business composites: Discovery South Africa; Vitality UK (VUK); and Vitality Global (VG).
“The group’s evolution provides the opportunity today to create one global composite, Vitality, comprising VUK and VG, alongside Discovery South Africa,” the group said in a statement yesterday.
The share price gained 2.54% to R139.50 in the afternoon, at a time when the JSE All-Share Index was up only 1.1%, signally that shareholders appeared favourably disposed to the move.
The group results for the six months to December 31 showed that in terms of operating profit, the UK composite increased its contribution 13% to R812 million, the VG composite grew 71% to R455m, while the South Africa composite grew by 9% to R4.36bn – still the group’s biggest earnings centre.
VUK CEO Neville Koopowitz would drive the new composite as Vitality’s CEO. Barry Swartzberg, who was CEO of VG, would work directly with Group CEO Adrian Gore to drive the group’s organic growth.
“This will focus on delivering the strategic priorities, including the finance and technology strategies to ensure disciplined and structured scaling,” the group said. The change in Swartzberg’s executive responsibility took effect yesterday.
Discovery said it had built in VUK and VG two largely independent international businesses of scale and significance. Both businesses had grown organically over many years at a different pace, and with different progressions given the prevailing considerations for each.
Over the past two years, each business had intensified its management focus on core initiatives, while closing those with marginal benefits and aligning their strategies.
“The scale of the underlying businesses, the evolving data and its applicability, the focus on a unified product strategy, and the opportunity for uniform and consistent data, IP and technology created the opportunity for a single global composite of scale, with significant organic growth potential,” the group said.
The performance of the emerging Vitality Shared-value Insurance Model had also been consistent for all businesses within VUK and VG, demonstrating high levels of customer engagement and the strong causal effect of this engagement on mortality and morbidity.
The group said a central structure would create an opportunity to more rapidly advance the group’s products and solutions in competitive global health, and life insurance markets.
“Currently, the emerging Vitality 3.0 with hyper personalised pathways across all markets will significantly enhance the group’s competitive advantage, benefiting the group’s global customers and partners,” the group said.
BUSINESS REPORT