Lee Yuan Siong, AIA’s Group Chief Executive and President, said:
“AIA has exceeded pre-pandemic levels of new business for each of our segments other than Hong Kong, where travel restrictions continue to affect sales to Mainland Chinese visitors. Outside Hong Kong, VONB for all segments in the first quarter of 2021 was higher than the first quarter of 2019. Compared with the first quarter of 2020, we have delivered 19 per cent overall VONB growth for the Group, including excellent growth in Mainland China, Thailand and Malaysia and double-digit growth from our domestic customer segment in Hong Kong.
“The momentum that returned to our businesses, as movement restrictions eased in 2020, has continued into 2021. VONB growth is broad-based across the Group, and has been driven by excellent performance from our Premier Agency and increased demand for our protection products.
“We are making excellent progress with our strategic priorities, further extending our competitive advantages as we harness the opportunities available to AIA across Asia. In particular, I am delighted that we have launched our new provincial branch in Sichuan as we continue to leverage our unique opportunity in Mainland China.
“The Group’s financial position has remained very strong through the recent exceptional volatility,
giving peace of mind to our millions of customers. The pandemic has increased awareness of health and wellness and we have seen very strong growth in protection VONB compared to the first quarter of 2020 as we help more people across Asia live Healthier, Longer, Better Lives.”
SUMMARY FOR THE FIRST QUARTER
AIA’s wholly-owned operation in Mainland China remained the largest contributor to the Group’s VONB and achieved excellent growth compared with the first quarter of 2020. VONB margin was consistent with the prior year despite the deduction of 5 per cent withholding tax since July 2020.
Following approval from the China Banking and Insurance Regulatory Commission in March, our new branch in Sichuan has now successfully launched operations.
AIA Hong Kong achieved double-digit VONB growth from the domestic customer segment, while travel restrictions continue to limit sales from Mainland Chinese visitors. In our Macau branch, Mainland Chinese visitor sales contributed around one-third of ANP in the first quarter, supported by the resumption of the Individual Visit Scheme.
In March, we announced a 15-year exclusive bancassurance partnership with The Bank of East Asia, Limited (BEA) covering Hong Kong and Mainland China. In Hong Kong, this partnership further broadens our extensive distribution capabilities, providing exclusive access to BEA’s 1.2 million predominantly domestic customers. AIA also gains exclusive access to BEA’s fast-growing, affluent customer base in Mainland China where the bank is a top three foreign bank.
AIA Thailand achieved excellent VONB growth, driven by both agency and partnership channels, and was the second-largest contributor to the Group’s VONB in the first quarter of 2021. VONB margin increased significantly resulting from our successful shift in product mix towards protection and unit-linked businesses.
In Singapore, we delivered positive VONB growth, with double-digit growth from our agency, partially offset by a decline in partnership channels as offshore new business sales remain limited given ongoing border controls.
AIA Malaysia continued its strong momentum from the second half of 2020 and delivered the highest VONB growth among our reportable segments, supported by both our agency and our bancassurance partnership with Public Bank Berhad.
VONB from Other Markets reduced, reflecting the effect of ongoing movement controls in the Philippines and the significant one-off contribution to VONB in Australia in the first quarter of 2020, as previously disclosed. Excluding these two markets, VONB from Other Markets increased compared with the first quarter of 2020.
Overall, VONB margin improved to 61.6 per cent, up from 56.6 per cent in the first quarter of 2020, mainly driven by geographical mix shift and higher government bond yields, partially offset by the deduction of withholding tax for AIA China. The VONB margin is stated net of acquisition expense overruns, and the long-term investment return assumptions remain unchanged from those shown in our Annual Report 2020. Margin reported on a present value of new business premium (PVNBP) basis was stable compared with the first quarter of 2020 at 10 per cent. ANP of US$1,703 million increased by 10 per cent compared with the first quarter of 2020. TWPI increased by 6 per cent to US$9,663 million, reflecting further growth of our in-force portfolio and continued strong persistency.
The long-term prospects for AIA’s businesses are exceptional given our substantial competitive advantages 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.
Global economic growth gained traction in the first quarter of 2021 as unprecedented fiscal and monetary support helped reduce the burden of the pandemic shock. While the outlook remains dependent on government and central bank policies, effectiveness of containment measures and the acceleration of vaccination programmes, we remain cautiously optimistic as the economic recovery extends from manufacturing-led sectors to consumption and services.
We are confident that the execution of our strategic priorities will build on our strong track record of growth and generate long-term sustainable value for shareholders.
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.