The South African company taking over the UK

Discovery’s Vitality brand is taking over the United Kingdom’s health insurance market, with the deteriorating performance of the National Health Service (NHS) pushing more consumers into the private market. 

This has been coupled with Vitality’s intense marketing of the potential benefits of its shared-value model, with its brand awareness surpassing more established competitors.

This has translated into a strong financial performance, with Vitality UK’s operating profit more than doubling in the past financial year.

Vitality now covers over two million lives in the United Kingdom as individuals increasingly seek private alternatives to the NHS.

CEO Adrian Gore has flagged this trend over the past few years, with Britons looking to supplement the NHS with private services.

This trend has benefitted all health insurers in the United Kingdom, which include giants such as Aviva, Zurich, and Royal London. 

To beat out these competitors, Discovery is heavily pushing the benefits of its shared-value model to customers in the United Kingdom.

The company has made these benefits clear to individuals by conducting extensive research with universities. 

This research enabled Vitality UK to advertise that its model, on average, will allow clients to live five years longer than if they were with a different insurer. 

Gore said this was crucial in getting the message across about what Vitality is all about, with the UK being the first market in which Discovery has had to market its services from scratch. 

He explained that this advertising and marketing strategy has raised Vitality’s brand awareness by 357% since 2014. 

Its brand awareness is now higher than its competitors, with Vitality becoming front of mind for Britons through its sponsorship of The Hundred cricket tournament and Premier League team Bournemouth’s football stadium.

The strong growth of Discovery’s Vitality UK business can be seen in the graph below. 

Vitality going global

Gore explained to Daily Investor that one of the key growth areas for Discovery over the coming five years is the global expansion of Vitality. 

Discovery has ambitions to double its operating profit by 2029 through scaling its bank and rapidly expanding Vitality through global partnerships. 

Gore thinks the company’s Vitality data set, collected over the past 25 years, is the most unique in the world and cannot be replicated very easily. 

The company is now looking to monetise this asset by licensing it to various insurers around the world, including John Hancock in the United States and Sumitomo in Japan. 

At the heart of Vitality becoming a global brand is the work done in the United Kingdom to showcase the model’s success in a global setting. 

Vitality UK is also central to building a global brand for the company, through its pink roundel and mascot, Stanley. 

It is also key in achieving the company’s ambitious growth targets, with its steady performance expected to dovetail with Discovery’s South African businesses. 

Discovery South Africa still contributes the vast majority of the company’s profits, with R12 billion of its R15.2 billion coming from its home market. 

“The core businesses have to perform well and grow robustly. I think scaling the bank is a key issue and breaking through globally on the Vitality Network is important,” Gore said. 

“This means the United Kingdom business has to continue to grow, life and health have to grow in South Africa, and the bank has to scale alongside a strong breakthrough elsewhere in the world.”

Gore thinks this breakthrough will be found in the United States and Europe, with those being the next two major economies for Vitality to expand to. 

It already has significant exposure to China, through its equity stake in Ping An, and Japan through its partnership with Sumitomo. 

“We have had a partnership with John Hancock from the get-go in the United States, and it has worked incredibly well. The issue is that we have an exclusivity with them in certain parts of the market, so we are limited to them,” Gore said. 

“In Europe, it is an open field now after we ended our Generali agreement. It is a massive market that we will now look to grow into.” 

The financial performance of Discovery’s Vitality Network business can be seen in the graph below.