FRIDAY OCTOBER 5 2001

Discovery Health - Press Release:
(Registration Number:  1999/007789/06)
Share Code:  DSY
ISIN Code:    ZAE000022331

MEDICAL SCHEMES COUNCIL FINALLY AGREES TO DISCOVERY HEALTH'S REQUEST TO
RELEASE KPMG REPORT

The Council for Medical Schemes (Council) has responded favourably to
Discovery Health's request for the KPMG report into Discovery's use of
reinsurance to be made public.

The report (published in March) stemmed from an investigation conducted by
KPMG in January 2001 at the instigation of the Council. This investigation
followed from a highly publicised "raid" of Discovery Health in October 2000
and allegations of "abuse" and "profit stripping" made by the Council
against the Discovery Health Medical Scheme.  Several public comments made
by the Council followed, alleging that Discovery had acted illegally in
incorporating reinsurance into its business model.

However the KPMG report effectively cleared Discovery of wrong doing in
adopting the use of reinsurance, and in fact recommended that the scheme
continued to reinsure its risks. In the seven months since the report was
handed to the Council, Discovery has repeatedly asked the Registrar, Patrick
Masobe, to publish the report but this has been refused.

A letter received today from attorneys representing Masobe said that he had
consented to taking the necessary steps to have the report released, but did
not indicate when the report would be made available.

The Registrar has also finally defined his concerns about Discovery's use of
reinsurance. Masobe's complaints were not based on any legal violations, but
rather on the fact that there had been improper minute taking in the early
stages of adopting reinsurance. This has been acknowledged by Discovery, and
corrected some time ago.

The only other issue that Masobe raised was that Discovery should have
disclosed a certain transaction that took place after the October 2000
"raid", as a loan and not as reinsurance. Discovery Health principal officer
Shaun Matisonn says that this is in fact a technical accounting issue that
is directly linked to current statuary requirements and is in fact not at a
reinsurance issue. In addition, the scheme had obtained two separate

independent opinions on this issue from Arthur Anderson and Deloitte &
Touche, and had furnished the Council with these opinions supporting its
treatment of the transaction in the accounts. These differences are
currently subject to an appeal.

"It is clear from today's letter that far from being guilty of illegal or
abusive behaviour, as alleged by the Council on numerous occasions, the
Council has acknowledged that there is no legal basis for its unfounded and
defamatory accusations against Discovery.

"In fact, the letter makes it clear by default that the Council has only two
minor concerns about the Discovery Health Medical Scheme's reinsurance
arrangements being (a) a perceived lack of minute taking up to October 1999,
and (b) a difference of opinion in an accounting treatment that took place
after the initial investigation was launched - neither of which are
offences."

Matisonn says that the process with the Council has been destructive with
allegations and counter allegations, and that Discovery Health Medical
Scheme is hoping for a more constructive process going forward, following
the receipt of the letter from the Council today.

For further information, please contact Shaun Matisonn, principal officer,
Discovery Health.
Tel:   011 529 2865
Fax:   011 529 2065
Cell:  082 606 2865
Email: shaunm@discoveryhealth.co.za