AIA Group Limited (the “Company”) announces key new business indicators for the third quarter ended 30 September 2023.
KEY FINANCIAL SUMMARY
Growth rates are shown on a constant exchange rate basis.
• Value of new business (VONB) growth of 35 per cent to US$994 million for the third quarter
• Mainland China, Hong Kong, ASEAN and India all delivered double-digit VONB growth
• Annualised new premiums (ANP) increased by 54 per cent to US$1,938 million
• Strong VONB margin of 51.2 per cent, increased from the first half of 2023
| US$ millions, unless otherwise stated | Three months ended 30 September | Nine months ended 30 September | ||||||
| 2023 | 2022 | YoY CER | YoY AER | 2023 | 2022 | YoY AER | YoY AER | |
| VONB | 994 | 741 | 35% | 34% | 3,023 | 2,277 | 36% | 33% |
| VONB margin | 51.2% | 58.1% | (7.0) pps | (6.9) pps | 50.9% | 56.1% | (5.3) pps | (5.2) pps |
| ANP | 1,938 | 1,271 | 54% | 52% | 5,922 | 4,049 | 51% | 46% |
Lee Yuan Siong, AIA’s Group Chief Executive and President, said:
“The strength and diversification of AIA’s businesses have enabled us to deliver another excellent VONB result in the third quarter. This is the Group’s highest ever third quarter VONB and reflects the strong demand for our products and services after the pandemic. We have built on our very strong first half performance with further double-digit increases from our key growth engines of Mainland China, Hong Kong, ASEAN and India underpinning the Group’s overall 35 per cent VONB growth.
“Our focus on executing our strategic priorities continues to enhance AIA’s competitive advantages, supporting excellent VONB growth in the third quarter from both our agency and partnership distribution channels. Quality recruitment programmes across the Group’s differentiated Premier Agency have generated strong quarter-on-quarter growth in new recruits and a year-on-year increase in the number of active agents. Our partnership channel has also delivered VONB growth from each of our reportable segments.
“In Mainland China, I am delighted that we recently received regulatory approval to upgrade our Shijiazhuang licence to cover the whole of Hebei province.
“AIA is uniquely positioned to capture the growing demand for protection and long-term savings solutions as we continue to help millions of people live Healthier, Longer, Better Lives and deliver long-term sustainable value for all our stakeholders.
SUMMARY FOR THE THIRD QUARTER
AIA delivered a 35 per cent increase in VONB to US$994 million in the third quarter of 2023, supported by excellent performances across our distribution channels. Our proprietary agency increased VONB by 27 per cent while our partnership distribution delivered 62 per cent growth compared with the same period in 2022. VONB growth was broad-based with double-digit increases from our operations in Mainland China, Hong Kong, ASEAN and India. For the first nine months of 2023, VONB increased by 36 per cent year-on-year to US$3,023 million, already exceeding the result for the full year 2022 on a constant exchange rate basis.
AIA China’s VONB growth was over 20 per cent in the third quarter, an acceleration from the first half as we continued to benefit from Mainland China’s reopening after the pandemic. While demand for our long-term savings products remained strong, we also delivered very strong double-digit VONB growth from critical illness products in the third quarter of 2023. Our high-quality differentiated Premier Agency remains our key focus and was the core contributor to VONB growth. In our bancassurance channel, the combination of strong quarter-on-quarter growth and an improved VONB margin continued to deliver incremental VONB. VONB margin for our agency remained broadly stable compared with the first half and overall VONB margin improved progressively through the third quarter, supported by a higher proportion of traditional protection business, a favourable shift in product mix within long-term savings business and product repricing.
AIA China’s Premier Agency delivered excellent VONB growth across both our established operations and new geographies, driven by a double-digit increase in the number of active agents compared with the prior year and enhanced agent productivity. Our new geographies increased their contribution to more than 5 per cent of agency VONB in the third quarter, supplemented by the successful launch of our new branch in Henan province in May.
Agent recruitment momentum remained strong with very strong double-digit year-on-year growth, supporting growth in total number of agents over the third quarter. Our enhanced agent development programmes contributed to higher new agent activity and productivity, leading to an increase in average income for our new agents back to pre-pandemic levels.
We continue to make good progress with AIA China’s geographical expansion with recent regulatory approval to upgrade our Shijiazhuang licence to cover all of Hebei province.
AIA Hong Kong achieved another excellent increase in VONB compared with the third quarter of 2022. While our domestic business declined slightly compared with the strong comparative last year, sales to Mainland Chinese visitors continued to grow very strongly, contributing around half of AIA Hong Kong’s VONB in the quarter, similar to the level in the first half of 2023. In our Premier Agency, recruitment momentum has continued to build and overall agent productivity exceeded pre-pandemic levels. Within the partnership channel, we achieved excellent growth from both our bancassurance and retail independent financial advisers (IFAs).
AIA Thailand continued its strong first half momentum with excellent VONB growth for the third quarter of 2023, supported by higher sales volumes and a more favourable product mix. Both the number of active agents and agent productivity increased by double-digit percentages, and we saw significant growth in the number of new recruits. Our businesses in Singapore and Malaysia reported increases in VONB, driven by growth from both our agency and partnership distribution channels.
As previously reported, negative consumer sentiment continued to impact the life insurance industry in Vietnam. Excluding Vietnam, Other Markets delivered growth in VONB, driven by strong double-digit VONB growth from both of our businesses in India, the largest contributor to this segment, and the Philippines. Tata AIA Life in India delivered an excellent performance from its proprietary agency and was ranked as the third largest private life insurer in India. In aggregate, our ASEAN businesses delivered double-digit VONB growth.
Overall, ANP for the Group grew by 54 per cent to US$1,938 million and VONB margin of 51.2 per cent increased from the first half of 2023. Following our usual practice, the long-term investment return assumptions used to calculate VONB remained unchanged from those shown in our Annual Report 2022. Compared with the third quarter of 2022, margin reported on a present value of new business premium (PVNBP) basis remained stable at 10 per cent while total weighted premium income (TWPI) increased by 9 per cent to US$9,355 million.
AIA’s very strong and resilient financial position is an important differentiator and competitive advantage, underpinned by our strong in-force portfolio management and liability-driven investment approach.
We have provided details of the Group’s investment portfolio as at 30 September 2023 in the appendix on pages 6 to 8.
OUTLOOK
The long-term prospects for AIA’s businesses are exceptional given our substantial competitive advantages, geographical diversification and the powerful structural growth drivers for life and health insurance in Asia. Rising incomes, low levels of private insurance penetration and limited social welfare coverage continue to drive demand for AIA’s insurance products across our markets.
We are confident that the continued execution of our strategic priorities uniquely positions AIA to capture the enormous long-term opportunities in the Asian life and health insurance market and deliver long-term sustainable value for all our stakeholders.
FOREIGN EXCHANGE VOLATILITY
AIA receives the vast majority of its premiums in local currencies and we closely match our local assets and liabilities to minimise the economic effects of foreign exchange movements. When reporting the Group’s consolidated figures, there is a currency translation effect as we report in US dollars. We have provided growth rates and commentaries on CER unless otherwise stated, since this provides a clearer picture of the underlying performance of the businesses.
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