The Board of AIA Group Limited (the “Company”) is pleased to announce the Group’s financial results for the six months ended 30 June 2023.
Growth rates are shown on a constant exchange rate basis:
New business performance
- Value of new business (VONB) grew by 37 per cent to US$2,029 million
- Annualised new premiums (ANP) increased by 49 per cent to US$3,984 million
- All reportable segments and all distribution channels delivered positive VONB growth
Earnings and capital
- Embedded value (EV) operating profit of US$4,423 million, up 20 per cent per share
- Operating return on EV (ROEV) of 13.3 per cent, up from 9.4 per cent in full year 2022
- Underlying free surplus generation (UFSG) of US$3,288 million, up 10 per cent per share
- Operating profit after tax (OPAT) of US$3,272 million, up 4 per cent per share
- EV Equity of US$70.6 billion after returning US$3.6 billion in dividend and share buy-back
- Free surplus of US$16.3 billion at 30 June 2023
- Very strong Group LCSM coverage ratio of 260 per cent on the PCR basis(2)
Interim dividend and share buy-back programme
- Interim dividend of 42.29 Hong Kong cents per share, up 5 per cent
- US$2.0 billion returned to shareholders through the share buy-back programme in the first half of 2023
Lee Yuan Siong, AIA’s Group Chief Executive and President, said:
“AIA has delivered excellent new business results with VONB up 37 per cent to over US$2 billion for the first half of 2023. We also reported growth in our other key financial metrics, namely OPAT, EV operating profit, UFSG and EV Equity.
“We have seen our business return to strong and sustainable growth in the first half of 2023 and all of our reportable segments and all distribution channels delivered higher VONB. With the pandemic disruption behind us, the strength of AIA’s unrivalled distribution platform across Asia has powered a return to very strong new business momentum, including double-digit VONB growth from AIA China, our combined ASEAN business and Tata AIA Life, our joint venture in India. AIA Hong Kong more than doubled VONB compared to the first half of 2022, driven by substantial business from Mainland Chinese visitors (MCV).
“Our growing high-quality in-force portfolio and consistent financial discipline supported an increase in both OPAT and UFSG. We returned a total of US$3.6 billion to shareholders in the first half of 2023 through the dividend and our ongoing share buy-back programme, which has enhanced shareholder returns and significantly benefited OPAT and UFSG per share. EV Equity of US$70.6 billion was up 6 per cent over the first half of 2023 before dividend and share buy-back. AIA’s capital position remained very strong with free surplus of US$16.3 billion and a Group LCSM coverage ratio(2) of 260 per cent at 30 June 2023.
“The Board has declared a 5 per cent increase in the interim dividend to 42.29 Hong Kong cents per share. This follows AIA’s established prudent, sustainable and progressive dividend policy, allowing for future growth opportunities and the financial flexibility of the Group.
“AIA’s unrivalled distribution is a core competitive advantage and we have made substantial investments in technology, digital and analytics over the past three years to further enhance and differentiate our Premier Agency and partnership channels.
“Supported by our long-standing commitment to quality, training and digitalisation, we have increased the size, reach and capabilities of our agency force during the pandemic. As normal day-to-day activities resumed in the first half of 2023 across all markets, our focus on uplifting agent activity and productivity has generated 27 per cent VONB growth and a 49 per cent increase in Million Dollar Round Table (MDRT) qualifiers. In July, AIA was named the number one MDRT multinational company for the ninth consecutive year.
“VONB from our partnership distribution grew strongly by 62 per cent, driven by our bancassurance and retail independent financial adviser (IFA) channels. AIA’s long-term strategic partnerships with leading banks generated a 38 per cent increase in VONB, supported by excellent performances in Mainland China, Hong Kong, Thailand, Singapore, India and the Philippines. We continued to work with our high-quality bank partners to improve the productivity of insurance sellers through structured training and strengthening our digital capabilities.
“AIA China rapidly regained very strong momentum with VONB growth of 29 per cent from February as the final surge in COVID-19 cases subsided and normal day-to-day activities resumed. While we have seen very strong demand for our long-term savings products, including our newly-launched tax-deductible private pension products, traditional protection products remain a core proposition for our customers, accounting for the majority of new policies sold in the first half of 2023. Overall VONB grew 14 per cent in the first half of 2023 for AIA China.
“Mainland China offers tremendous potential for AIA, both within our existing footprint and in new geographies. We have continued to expand into new provinces with the launch of our new operation in Zhengzhou, Henan in May this year. By replicating our efficient and scalable model, we delivered 36 per cent higher agency VONB and a 44 per cent increase in the number of active agents in our new operations(3). We also delivered very strong results from our strategic bancassurance partnerships, including a strong uplift in sales through Postal Savings Bank of China. While not included in our VONB results, our 24.99 per cent investment in China Post Life continued to deliver excellent results, with China Post Life’s VONB(4) increasing by 55 per cent in the first half of 2023.
“AIA Hong Kong’s VONB more than doubled in the first half of 2023, supported by double-digit growth from our domestic customer segment and a very substantial increase in MCV business following the full resumption of normal travel in February. Our Premier Agency remains the clear market leader and we achieved a double-digit increase in the number of active agents and significantly higher agent productivity. VONB from our partnership distribution more than trebled with an excellent performance from our bancassurance channel and we returned to the number one market position in the IFA channel with the return of MCV business.
“AIA Thailand achieved a 28 per cent increase in VONB, sustaining the strong new business momentum from the second half of last year. Our consistent focus on quality recruitment delivered very strong growth in the number of active new agents, contributing to a double-digit increase in agency VONB. Our strategic partnership with Bangkok Bank delivered excellent VONB growth, driven by higher insurance sellers’ productivity.
“Our business in Singapore reported 5 per cent increase in VONB, mainly driven by higher new business sales from agency and the strong performance of partnership distribution. Our strategic partnership with Citibank recorded very strong growth, supported by an increase in both onshore and offshore business.
“AIA Malaysia reported a 10 per cent higher VONB, driven by both agency and partnership distribution channels. Our Premier Agency delivered a double-digit increase in VONB as a result of higher agent activity and productivity. Improved productivity of our insurance specialists drove further VONB growth from our bancassurance partnership with Public Bank.
“VONB of our Other Markets segment was up 8 per cent in the first half of 2023, largely driven by double-digit growth in Australia, New Zealand, India, Indonesia and the Philippines. Our performance in Vietnam has been negatively impacted by industry-wide sentiment and the reduction in the number of our new recruits as we continue to transform our agency and focus on improving quality. Tata AIA Life has delivered an outstanding performance with excellent VONB growth. Tata AIA Life is now a top three private life insurer in the market and remains the leader in retail protection.
“AIA operates in the most attractive markets in the world for life and health insurance. I am confident that the long-term prospects for AIA remain exceptional. Our new business performance in the first half of 2023 was broad-based, reflecting AIA’s substantial competitive advantages in capturing the significant growth opportunities in Asia. We will remain focused on helping people live Healthier, Longer, Better Lives as we execute our strategic priorities to generate long-term sustainable value for all our stakeholders.”