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Discovery goes into Japan

Discovery made an announcement yesterday that needed closer and further inspection. The headline reads Discovery to introduce Vitality to Japan. Japan of course is a country with over 125 million people, where the average age is around 45 and is possibly one of (if not the) most sophisticated societies on the planet. Organisational skills and attention to detail is not lacking.

OK, so how do discovery plan to do all of this? Simple, at least if you read it at face value - "a strategic partnership with Sumitomo Life Insurance Co. (Sumitomo Life) and SoftBank Corporation (SoftBank) that will see shared value insurance introduced to the Japanese life insurance market through the joint development of insurance products incorporated with Vitality, Discovery's globally recognised wellness programme."

Sumitomo is an insurer that is over 100 years old, it produces profits in excess of 3 billion Dollars per annum, it is headquartered in Osaka (my aunt used to live there), employs over 42 thousand people and most impressive, has policies in place in excess of 1.1 trillion Dollars. Individual life insurance is where their business is at, from their website:



If the Vitality program can boost the company profitability by making those with life insurance eke out a few more years (by having healthier habits) then the payout ratio is extended. Life insurance is a what if I die before I have accumulated enough assets purchase, before I pay down my debt. It is designed to give the remaining behind people, if you happen to die before the actuarial calculations say you will, the same life style that they would have afforded you in the past. There are different forms of life insurance that are also designed to act as investment products, obviously the costs increase as you get older, none of us are Benjamin Button.

For companies such as Sumitomo, it makes sense to use the tried and tested Vitality model. The model is not too dissimilar to the Tesla one, each and every day that data is being sent back to the databases to be crunched by Vitality, the better the systems become. By being healthy, eating right, most importantly exercising and generally being responsible, the company is able to get a better idea of your risk to them. Doing it slightly differently is Discovery, eking out small percentages on giant amounts makes these companies a LOT more profitable and subsequently, the savings are shared as spoils, this is where you benefit as a Discovery shareholder. Softbank, you may recognise that company, they are real operators and I suspect a great partner to be introduced to for the Discovery team. A net positive, the share price rallied one and a half percent on the day.


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