HONG KONG, 12 March 2020 – AIA Group Limited (the “Company”; stock code: 1299) today announces financial results for the year ended 31 December 2019.
VALUE OF NEW BUSINESS UP 6 PER CENT; UP 16 PER CENT EXCLUDING HONG KONG OPERATING PROFIT UP 9 PER CENT; FINAL DIVIDEND UP 10 PER CENT
Growth rates are shown on a constant exchange rate basis below:
Robust growth in value of new business
- 6 per cent growth in value of new business (VONB) to US$4,154 million
- 16 per cent growth in VONB excluding Hong Kong
- Annualised new premiums (ANP) up 2 per cent to US$6,585 million
- VONB margin increased by 3.0 pps to 62.9 per cent
Increased operating profit and attractive returns
- Operating profit after tax (OPAT) up by 9 per cent to US$5,741 million
- Embedded value (EV) operating profit increased by 6 per cent to US$8,685 million
- Operating return on EV (operating ROEV) at 15.9 per cent
Strong cash flow and resilient capital position
- EV Equity of US$63.9 billion and EV of US$62.0 billion, both up 12 per cent
- Underlying free surplus generation of US$5,501 million, up 13 per cent
- Free surplus increased to US$14.9 billion
- Net remittances of US$3.7 billion
- Solvency ratio for AIA Company Limited (AIA Co.) remained strong at 362 per cent on the HKIO basis, after the effect of the acquisition of The Colonial Mutual Life Assurance Society Limited (CMLA) in Australia
Total dividend up 11 per cent
- 10 per cent growth in final dividend to 93.30 Hong Kong cents per share
- Total dividend of HK$1.266 per share, up 11 per cent (excluding special dividend in 2018)
Ng Keng Hooi, AIA’s Group Chief Executive and President, said:
“AIA has delivered a resilient performance in 2019, despite a challenging operating environment, with continued growth in all our main financial metrics. Headline VONB growth of 6 per cent was the result of very strong growth in the first half of the year set against a second half significantly affected by social unrest in Hong Kong. VONB grew strongly at 16 per cent excluding Hong Kong. Operating profit after tax increased by 9 per cent, underlying free surplus generation grew by 13 per cent, and EV Equity grew by 12 per cent.
“Our wholly-owned operation in Mainland China once again delivered a very strong performance with 27 per cent growth in VONB. I am also pleased that OPAT from Mainland China exceeded US$1 billion for the first time, illustrating the attractive financial dynamics of our business. Following the announcement late last year of the further opening of Mainland China to foreign life insurers, we submitted an application for regulatory approval to convert our Shanghai branch into a subsidiary. Subject to regulatory approval, this will form the new foundation for our geographical expansion plans in Mainland China, which began with the opening of new sales and service centres in Tianjin and Shijiazhuang, Hebei during 2019.
“The 5 per cent VONB reduction in Hong Kong reflected a decline in sales from Mainland Chinese visitors in the second half of 2019, broadly tracking the fall in the number of visitor arrivals as previously highlighted. Our domestic customer segment in Hong Kong continued to deliver a strong performance with double-digit VONB growth for the year.
“VONB growth in Thailand and Malaysia was supported by our Premier Agency strategy and bancassurance partnerships. Other Markets achieved 27 per cent growth in VONB, led by strong performances in Australia, the Philippines and Vietnam.
“AIA’s proprietary agency distribution delivered 11 per cent VONB growth as we focused on our quality recruitment programmes to drive an increase in the number of active agents. Our partnership distribution business reported slightly lower VONB as strong VONB growth in the bancassurance channel was offset by a significant decline from the retail IFA channel in Hong Kong in the second half. Excluding Hong Kong, agency distribution VONB grew by 16 per cent and partnership distribution VONB increased by 19 per cent for the year.
“The Board has recommended a 10 per cent increase in final dividend for 2019 to 93.30 Hong Kong cents per share, following AIA’s established prudent, sustainable and progressive dividend policy allowing for future growth opportunities and the financial flexibility of the Group within the context of the immediate macroeconomic and capital markets environment.
“While our insurance benefits provide financial support to our millions of customers when they need it most, we continue our journey of moving beyond the traditional transaction-focused insurance model towards being a lifelong partner to our customers. The further growth in the membership of our wellness programmes to 1.7 million reflects our commitment to helping millions of people live Healthier, Longer, Better Lives.
“Over the last century, AIA has successfully managed through many different economic cycles. Some of our markets are facing near-term headwinds from the lower interest rate environment and the past two months have seen COVID-19 emerge as a new global risk. We have seen a significant disruption in the Group’s new business sales in the first quarter from reduced face-to-face interactions and have taken a number of proactive measures including a rapid acceleration of digital platforms to further support agency recruitment, training and sales activities. AIA’s agency recruitment pipeline in Mainland China remains strong. Our local businesses in affected areas have also been assisting communities with enhanced benefits and expedited claims procedures. Our thoughts are with the families and communities who have been affected by this public health emergency.
“The strong domestic drivers of demand and major demographic trends in Asia provide powerful structural support for the long-term prospects of AIA’s business. We have unrivalled distribution capabilities and a diversified, high-quality portfolio of businesses across 18 markets, the latest addition being our recently- launched operation in Myanmar, and we are continuing our preparations for further geographical expansion in Mainland China. The need for AIA’s insurance products will continue to grow strongly given rising incomes, low levels of private insurance penetration and limited social welfare coverage and I am confident that AIA is ideally positioned to deliver long-term sustainable growth.”
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AIA Group Limited and its subsidiaries (collectively “AIA” or the “Group”) comprise the largest independent publicly listed pan-Asian life insurance group. It has a presence in 18 markets in Asia-Pacific – wholly-owned branches and subsidiaries in Hong Kong SAR, Thailand, Singapore, Malaysia, Mainland China, South Korea, the Philippines, Australia, Indonesia, Taiwan (China), Vietnam, New Zealand, Macau SAR, Brunei, Cambodia, Myanmar, a 99 per cent subsidiary in Sri Lanka, and a 49 per cent joint venture in India.
The business that is now AIA was first established in Shanghai a century ago in 1919. It is a market leader in the Asia-Pacific region (ex-Japan) based on life insurance premiums and holds leading positions across the majority of its markets. It had total assets of US$284 billion as of 31 December 2019.
AIA meets the long-term savings and protection needs of individuals by offering a range of products and services including life insurance, accident and health insurance and savings plans. The Group also provides employee benefits, credit life and pension services to corporate clients. Through an extensive network of agents, partners and employees across Asia-Pacific, AIA serves the holders of more than 36 million individual policies and over 16 million participating members of group insurance schemes.
AIA Group Limited is listed on the Main Board of The Stock Exchange of Hong Kong Limited under the stock code “1299” with American Depositary Receipts (Level 1) traded on the over-the-counter market (ticker symbol: “AAGIY”).
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1. Hong Kong SAR refers to Hong Kong Special Administrative Region.
2. Macau SAR refers to Macau Special Administrative Region.
(1) All figures are presented in actual reporting currency (US dollar) and based on actual exchange rates (AER) unless otherwise stated. Change on constant exchange rates (CER) is calculated using constant average exchange rates for the year ended 31 December 2019 and for the twelve months ended 31 December 2018 other than for balance sheet items that use CER as at 31 December 2019 and as at 31 December 2018.
(2) Change is shown on a year-on-year basis compared with the corresponding twelve-month period ended 31 December 2018, unless otherwise stated.
(3) VONB is calculated based on assumptions applicable at the point of sale.
In 2019, ANP and VONB for Other Markets include 49 per cent of the results from our joint venture in India, Tata AIA Life Insurance Company Limited (Tata AIA Life), to reflect our shareholding. The reported ANP and VONB for 2018 have not been restated and do not include any contribution from Tata AIA Life.
The total reported VONB for the Group in 2019 excludes the VONB attributable to non-controlling interests of US$32 million. VONB for 2018 has not been restated and is reported before deducting the amount attributable to non-controlling interests of US$27 million, as previously disclosed in our Annual Report 2018.
(4) VONB includes pension business. ANP and VONB margin exclude pension business and are before deduction of non-controlling interests.
(5) OPAT and operating earnings per share are shown after non-controlling interests unless otherwise stated.
(6) Total dividend of HK$1.14 per share for the twelve months ended 31 December 2018 does not include the special dividend for the additional month in the accounting period due to the change in financial year-end date.
(7) In the context of our reportable market segments, Hong Kong refers to operations in Hong Kong Special Administrative Region and Macau Special Administrative Region; Singapore refers to operations in Singapore and Brunei; and Other Markets refers to operations in Australia (including New Zealand), Cambodia, India, Indonesia, Myanmar, the Philippines, South Korea, Sri Lanka, Taiwan (China) and Vietnam.
(8) The results of Tata AIA Life are accounted for the twelve-month period ended 30 September 2019 and the twelve-month period ended 30 September 2018 in AIA’s consolidated results for the year ended 31 December 2019 and the twelve months ended 31 December 2018 respectively.
The IFRS results of Tata AIA Life are accounted for using the equity method. For clarity, TWPI does not include any contribution from Tata AIA Life.
(9) AIA’s financial information in this Financial Summary is based on the audited consolidated financial statements and supplementary embedded value information for the year ended 31 December 2019, unless otherwise stated.