AAGIY - Earnings call transcript Q2 2002

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Lee Yuan Siong

Good morning from Hong Kong and welcome to our 2022 Interim Results Presentation. AIA has delivered a resilient performance and I would like to thank our employees, agents, and partners for their outstanding dedication and professionalism during these extraordinary times. In the first half of 2022, unprecedented outbreaks of the Omicron variant caused temporary disruptions while global capital markets have been extremely volatile in response to the evolving macroeconomic conditions. Throughout our long history, we have successfully navigated periods of uncertainty and change and our unwavering commitment to our customers, our balance sheet strength and financial discipline are important differentiators. Today’s results demonstrate the power of AIA’s substantial competitive advantages, continued focus on executing our growth strategy and the benefits of our scale and diversity in the world’s most attractive region for life and health insurance.

you highlights. take now me through some Let VONB the wave reaction billion in affecting half despite the first to activity consumer exceeded and $X.X sales demand. the initial Omicron

eased, positive VONB in the measures As momentum growth saw the delivered and June. in containment Group second we quarter strong

billion in half billion Shareholders’ $XX and first billion, the through Our the large we stable stress. strong very paid and of $XX.X buyback. after $X.X increased higher dividends despite was capital this market up portfolio in-force Surplus Operating $X allocated and share shareholders was Tax at broadly Equity remained After and is capital increase equity X% Surplus Free position was growing billion before Free substantially Underlying to EV Generation. supported to of Profit an The Group’s significant and payments in increase shareholders. significant AIA’s prospects, Group’s X% of in The the retaining the unrivalled invest while in declared the to has dividend in return to future Group. us. the their opportunities flexibility positive throughout available of capital robust From Board first our confidence an half. distribution reflecting interim across quarter, of with strong the in growth financial the second markets a the remained the we growth most the disruptions VONB saw has June beginning for momentum to

of than Philippines. across Singapore, impact more demonstrates China Kong, movement restrictions of Hong Indonesia Asia. broad-based stringent was with well Malaysia, rest Group by know, you diversification benefits Mainland from including second occurred Omicron from and the quarter. the in As the the performance the positive Thailand, the The our later outbreak into This growth offset

measures lasting our our contributor positive were return generate than in rebounded. reopening. activity. enabled eased market seen operations Suzhou Shanghai across largest VONB. significantly followed were quarter, again affected two the brief and When and needed, restrictions targeted prolonged rapid to of agents more in controls a Mainland to VONB in by to half, a the As momentum second and recovery July. In to have the by reduced, China sales Most a sales growth by movement AIA subject restrictions China we substantial VONB as capabilities gradual was remote and professional digital the outperformed the Group’s and months, first followed our in-person strong

AIA Premier differentiate in Mainland Our model continues Agency China. to

the recruitment consistently our a seen pandemic, with huge numbers in the stable headcount has While reduction standards. agent high since start of is market the

we new Our in professional grew focus on long-term the X% recruits the first by careers half. talent and best attracts

world. and the training X,XXX Continued nearly in enhancements than became to members our to the of largest MDRT more since pandemic and in grown MDRT beginning and productivity July, digital agent China AIA platforms the XX% company the programmes improved have supported incomes.

Mainland Macau. domestic and businesses. Premier China a listed other operation growth the unique Chinese Kong in the that Greater outperforming insurance AIA XXX Agency excellent and Hong as both in am close grew Our Kong both the successfully confident for all most unparalleled. intact. needs provinces firmly Henan, health geographical AIA’s our expansion brings Visitor Mainland with X%, Mainland branch which in new existing Zhengzhou, pace, approval to at we access continues generating our our AIA’s Kong presence populous In half, and meet replicate Hong life are delivered is in first in in Bay China We remains by VONB Area we to to deepen and I establish and our half, scalable performances to the received the growing regions. efficient clear and opportunity for advance the insurers. first to third and people. life channels in In capabilities new million Hubei and launched province Hong growth in within leader model AIA’s

agency number since Chinese focus the the reinforcing XXXX agent strengths and increase our half, end from demand leaders of significant Macau, the with almost open on products. undivided VONB a the in saw our Our productivity. visitors doubled and Mainland China been continued border in In for Mainland our underscoring of has the first

We VONB. achieved is the contributor our and in more also East relationship material XX% growth Asia channel, than our to a with of recently-established already notably, partnership Bank

for total markets in ASEAN growth second VONB first in around returned Our accounted of the the half. quarter to VONB and XX%

We quality by markets, for increased our in have our in by members we next-gen leaders, and demonstrating agency distribution MDRT force. increased each the the building of first capacity our scale quarter. of leading we grew for significant recruits half, the second new of XX% platform. Agency the Premier growth powered significantly a In multi-channel number

successful and Indonesia track customers our our leading partnerships AIA Malaysia, second growth June half of half. majority first Through deliver asset the continued position million unrivalled ASEAN, the benefits a In TNG strong growth acquired for in growth. platform opportunity through Our Singapore, quarter. digitalized provide with with strategy. broad-based delivered domestic is more its of strong in joint long-term another profitable AIA in AIA. quarter, for are and VONB highly an valuable venture VONB we source a key banks distribution. for Tata vast and record AIA from broad-based Thailand, second with to improved Malaysia, multi-channel in Tata-AIA the than and to partnerships Philippines. to and close on up is momentum from superior leads build Digital our exceptional new a growth XX% the Across the Digital distribution prime with India strengths with

our excellent in and and both of in strong We recruits the a are agents. increase Premier number delivered making Agency progress enhancing scaling new and active

platforms. experience growing Our and connectivity customer and our diverse leading Leveraging partnership best-in-class our brokers partnerships. digital TDA, success relationships provide business driving we and includes a banks, deepening seamless our across

by our number and retail total growth business. has strong new to up us industry leader protection in the We the moved in are X

July. strategy financial Post is bank-affiliated leading strategy to market multi-channel potential. AIA comprehensive investment improved is volume life of ratio reducing January, and target China. is replicate in on differentiated have dedicated continue June to increases we well-positioned VONB Mainland product China, life market capture insurer Post massive long-term as its growth XXXX, in with scale, our X Agency mix, China profitability. Mainland focused distribution drive demonstrate In to experts in growth of over in the This half with the enormous first of AIA the Our value mass in businesses. solvency The a significant ensures announced we across VONB we business further ambition, we Office from China’s advances helped Premier Group’s both growth Life, China and Post and upside India’s the for power our domestic Tata Working by VONB in VONB returned bringing channels increase enhanced growth and our and while across in by margin would half and completed our the has delivered complementary our in capture in In to June and Post Chinese XXX%. Hong high-quality, our This all Mainland be EV growth we its protection the AIA opportunities to A geographies business highly Kong insurance the China. under-penetrated new outlined and exposure markets. to XXXX Visitor the China we XXXX. growth enhance the the together Life support its has growth opportunities increased VONB that as first all delivered AIA X.X engagement momentum solvency robust, times enormous strain. financial Mainland separate investment than priorities. whole in and China businesses. new When and team times strength of an accessible driven more Life’s provides XX% customer by expand supported to Life, strategic we AIA of Group was

of through benefits financial in competitive and ASEAN Garth and more AIA’s platform demonstrates close strategy. result performance resilient our detail. achieved and diversified growth momentum Asia has high-quality execution another business focused VONB in quarter across profitable Our the our the growth the will results rapidly markets our second Indian you grew take our half. of excellent first in XX% our to advantages with regained substantial now

Garth Jones

and Siong, everyone. morning Yuan good Thanks

the As heard, just you’ve VONB returned through and positive the Group’s businesses to growth our in June. quarter second progressively regained momentum

flexibility sustainable These to prudent progressive and financial delivering discipline business, focus to us on returns term resilient of management long our and growth consistent remained capture financial Our business the immense OPAT continued providing financial our growth in and focus results the supported Asia across and the on to our and AIA’s with nature while us growth. very diversified available quality opportunities strong, high-quality position shareholders. UFSG reflect

diversified Let benefits regional in me more through long-established, take you detail. our presence our financials and positions. market-leading AIA now the from

multi-channel Taken distribution our range, future confidence comprehensive together growth. strong this great our with platform gives and in our us the quality of product

EV value currency and returns year An protection. mix demand given line resilient our $XX China period indication closed and dollars short-term while macroeconomic strength reflect Equity the $XX of Office billion, was our the product to balanced half results. Mainland EV with of first Group early Closing margins product Hong Together June before and constant shareholders. reserves RBC shown to This long-term billion before result growth of additional was mix with an the and at more impacts. premiums. majority billion disruption in and resilience and with to profit rest returned Despite on to for release capital $X is over regulatory $XX.X the more capital was and of with deduction present on of of caused the traditional basis, strong of mix EV Equity after increased $X.X unallocated very headwinds. Group the the business Our than operating from a maintained a a X% and billion expenses. Omicron, adoption VONB a the billion traditional my $X.X Equity with accelerated return the the of a The from at the VONB $X by performance of in Kong protection, in savings shareholders. a year stable increase market full after emphasis change EV future when dividends is high-quality with billion billion uplift recurring diversification. compared for protection, Equity the represents its last traditional

practice, smooth short-term the volatility EV markets. line aim uses long-term methodology which Our usual out of In with assumptions, XXXX. to AIA’s from these unchanged remain in end

assumptions the if for our We for consistent risk immaterial. been premium and spot include Group the points had as a However, XX risk investment IPO. substantial impact June discount more long-term allowance rates to since risk remain would consistent adjustment a in XXXX levels rates XXX a with sensitivities have we than EV with rates discount VONB to interest to return our EV with moved at the rates of small. basis on used

as to EV and interest our year track similar levels continued strong added also was compared $X the were operating While pandemic. VONB rate EV rates demonstrates rise, than embedded record more and increases since at our early medical variances slightly cash the have and experience see last in positive experience at variances overall as earnings AIA’s to declines claims quality experience positive Overall, can flows, the more you of consistently exceptional assumptions normalized Expense, increased operating positive. of prudence with claims our persistency a IPO. discounting business. in billion as other overall. the Positive that offsets value higher in-force

contrast The Now billion. of wave. initial by in our private increased other reportable IFRS to OPAT for grew our Thailand hospitals Group’s markets, the segments during COVID moving in Omicron many operating to tax all where, except customers after treated were $X.X profit earnings. to X% in

with claim in dropped stays, reduced first per second number to hospital average due compared and the the As shorter of in quarter. the to Thailand COVID-related quarter, claims infections costs lower

grew the new earnings increased as into business portfolio X%. time. of OPAT Thailand, higher by to Excluding OPAT translates Growth Group’s cohorts continued over drive successive in in-force our

with geographically, total. Mainland markets over VONB, the with Group Hong China Kong our and XX% of OPAT outside is diversified As well delivering

to are drivers treatment the earnings of of allocated sources increased insurance in of equity, clearer accounting margin accounting profits IFRS Shareholders’ the and before and a to XX.X%. Group’s XX% of reflection Our underlying the provides bonds. the for change high-quality with fee-based of equity total close the operating

accounting, Operating we rates increased resulting and close the as of as in IFRS, profit mark-to-market equity on hedge dividends of apply $X.X was on short-term impact offset billion well share effects buy-back, exchange mark-to-market Under allocated billion $X.X as not interest sharply. do $XX the movements billion. was foreign and Before by to a derivatives translation. real equities estate, the of negative

will within allocated non-economic June of After other is XXth buy-back, accounting we the was this and this XXXX. $XX.X disappear equity dividends IFRS under the share at X, billion included adopt impact mismatch XX. when items IFRS non-operating the While shareholders’ of

as high-quality Our portfolio insurance our match possible. closely investment is as liabilities constructed to

invested take We bonds and X,XXX our are funds. structured is very As issuers of bonds a average equities conservative credit small. over are are and total which income, a corporate bond corporate assets are result, majority an XX% vast well participating estate holdings securities the of government and A approach The and rating of grade minus. real diversified portfolio with held and investment of of in XX% fixed

vehicles financing X.XX% material our downgraded quality our In low We in to portfolio. below banks the demonstrates to of This level impairments. process grade and the were the and bonds estate, China. there just half, were investment of Mainland government local have corporate of no strength exposure of a our first investment real and

aware, are of XX will metrics. our standards affect you Group economics and does underlying solvency we statements business financial to material January cash in our As from consequently we the of change expect with no not Xst adopt The flow accounting in XXXX. effect our the or value, embedded change IFRS

of and will reflect our accounting issues shareholders report IFRS measures better While some economics X, non-GAAP to equity OPAT IFRS as will we the non-economic the continue allocated business. XX of resolve from to

in financial the of quarter X IFRS restated provide XXXX. second IFRS to and for expect XX on XXXX We statements

capital dividends. and Finally,

prescribed previously-disclosed consistent capital Following anticipated used more a the requirements now disclosure requirement position requirements, EV. This basis. report within replaces changes with requirement the on to capital new The capital we basis. the basis LCSM minimum is PCR

and we a $XX.X Free of and rate basis. at movements Hong of March However, risk higher had LCSM resilience Cover financial mainly of basis in XXX%. resilient for strong sheet Kong of cents small, an commenced Surplus per share. basis the has Group. dividend more payment is increasing $XX.X both on shareholders, results. The payments policy, cover our growth interest and and to The remains with PCR end reported, the end restrictions from to we flexibility reflects enhanced follows ratio increased than progressive June and interim billion free the sensitivity The RBC under XXX% sustainable, equity We financial of is growth strong Equity X.X shareholders. In believe the capital management. by strong Board of increase Ratio over dividends the of and in given shareholders. reflecting was the At by a the balance a market a prudent, margins. from additional Group’s our and returns half June of established returned dividend Further, by allowing XX.XX position previously the the offset more a before our minimum new position June conclusion, eased. and the result shareholder the very of the the that declared adoption to $X.X on XXth capital X% Hong items very opportunities of increased $XX.X very future to in impact supporting change the comparable Group release at Non-operating prescribed billion, mark-to-market Board first momentum capital mainly higher AIA’s has on EV a yields for increase to The delivered X% free buy-back than reflect Free over representative The the XXX% LCSM Kong This denominator $X.X surplus equity as our Underlying VONB After the of the by XXXX, headwinds. billion and movement half. billion Surplus to bond of increased achieved the share resilience generation as by X% to markets. strong strong basis billion. surplus buy-back, lower remains billion.

quality Our Surplus returned investment of we billion and a portfolio. has financial billion we and through have a interim billion $XX.X position high-quality, dividend up $X.X remains with very our in our to business, Free reflect summary, deliver for shareholders These sustainable financial the increase share $X.X capital management. X% ability conservative to disciplined I The will In of and to our programme. strength Board to back strong declared our and our now shareholders. buy-back Yuan results hand growth capabilities our continuing execution Siong.

Lee Yuan Siong

in Thank our there is business strengths significantly you, opportunities each on Today, Strategy. Garth. growth potential Once that demonstrated again, unique AIA’s advantages, additional markets. core introduce This competitive for we you build the together ensures to to capture for our Health of our I profitable new enhance and diversified differentiated will the platform have substantial Integrated new Group growth. of brings and significant our

Robust for is levels region unmatched insurance. ageing health is unprecedented most a creating economic population. expansion and and life for Asia attractive the wealth and of growing

leading our for care fast significant role is inaccessible, However, in business. much play can the unparalleled markets care high limited $X rising missing wealthier, tremendous while accessible, At are AIA and insurance medical unaffordable protection the insurer with time costs more rapidly expenditure necessary capabilities can demand are into customer our a available, of on our healthier. quality affordable our ineffective. in across and make journeys expenditure costs AIA’s immense exceed region navigate to gaps and embedded services. is to for trillion. insurance combination health delivery is socio-economic AIA getting effective a and are these with often more to groups. individuals, better access resources, difference. expectations, care the to in to of journeys Asia products reach, making be XXXX, outcomes. scale, and more treatment prohibitive and In as consumer expected spend, significant This expanding unique and where to due is of service for is services difficult and be variability GDP. achieving driving almost unmet rising is need fall potential healthcare for will same and right and products Millions in leading Health out the out-of-pocket twice The healthcare Healthcare across health as the create fully to becoming With Asia the wellness the healthcare enhancing protection time, is not it markets, communities.

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to As positioned a uniquely I make is difference. said, AIA

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in segments productivity. Agents broader interactions, increased sales resulting to suite, Premier customer and Our partners access new and product and higher have a

VONB growth in second To momentum saw for the growth first all resilient a we July. strong in returned priorities, to engaged VONB, more in our with distribution, and long-term more through continue Group means I focused productive reported AIA of sales, will the China of XXXX. confidence and the have this more in today that build strategic AIA, the our cash. for of protection For to earnings, track value summarise, VONB and We deliver on June customers, stakeholders. sustainable performance performance our strong AIA more have record execution quarter great and half

the increase in the Our buyback. in markets to billion shareholders financial billion. strong position the health free a for $XX.X and insurance. and and interim in The we X% through Board AIA increase surplus to very in a world remains has declared dividends attractive $X paid life share with substantial operates most dividend

advantages and keep competitive uniquely substantial opportunities capture Our the built us and health. life over fast-growing in to large decades positioned

and of shape Q&A our confidence. influence profitable Question-And-Answer Our AIA End to flexibility for sustainable value a and growth you scale, and more in shareholder to for Session new superior growth. position, powerful financial the communities of listening. strength has with aligns future prevalent clear strategy deliver drivers our ambitious with the business while delivering sustainable and region Thank the

Lance Burbidge	Head, Investor Relations
Lee Yuan Siong	Group Chief Executive & President
Garth Jones	Group Chief Financial Officer

AIA Group Limited (AAGIY) 25 Aug 222002 Q2 Earnings call transcript