Discovery is to acquire the entire share capital of Prudential Health Holdings Ltd, the holding company of PruHealth and PruProtect, the UK joint venture with Prudential Assurance Company.
Prudential’s remaining 25% stake in the joint venture will cost £155 million, valuing the business at approximately £620 million.
The joint venture was initially established as an equally-owned venture between Discovery and Prudential in the private medical insurance market, and subsequently expanded to offer long-term protection products. The joint venture underwent a shareholding change in 2010, at which time Discovery increased its shareholding in the joint venture to 75%. Today, the joint venture covers over 800,000 people.
In aggregate, the joint venture attracts annual premiums of approximately £480m, with annualised new business in excess of £110m.
As part of this announcement, the former businesses of PruHealth and PruProtect will be rebranded and consolidated under a single insurance brand, Vitality, with the business offering two insurance lines, VitalityHealth in the private medical insurance market, and VitalityLife in the long-term protection market.
Adrian Gore, CEO of Discovery, 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 to Discovery and is key to our strategy to replicate Discovery’s shared-value insurance model in this market.”
“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, mean that we are well placed to achieve our goal of substantially improving the health of two million people in the UK by 2020. In my view, we are well on track to move insurance as a low-interest product category to one that is aspirational.
“Prudential has been a vital partner in this process and it’s only with their help over the past decade, and their ongoing support, has this been possible.”