Aia Group Limited · HKEX:1299

Aia — FY2012 Earnings Presentation

55 slides from Aia's earnings presentation, Feb 27, 2013

  1. Slide 1: 2012 Results Presentation: Creating Sustainable Value

    2012 Results Presentation CREATING SUSTAINABLE VALUE 27 February 2013

  2. Slide 2: Disclaimer

    Disclaimer This document (“document”) has been prepared by AIA Group Limited (the “Company”) and its advisors solely for use at the presentation (the “Presentation”) held in connection with the announcement of the Company’s financial results. Document in this disclaimer shall be construed to include

  3. Slide 3: Agenda

    Agenda Presenter Position Topic Mark Tucker Group Chief Executive 2012 Group Review Garth Jones Group Chief Financial Officer 2012 Financial Results Gordon Watson Regional Chief Executive Hong Kong, Korea & Group Insurance Ng Keng Hooi Regional Chief Executive Singapore, Malaysia & China Huynh Thanh

  4. Slide 4: 2012: Another Year of Delivery

    2012: Another Year of Delivery  Delivered record results – again  Executed clear priorities  Continued proven growth strategy  Extended leadership position  Engaged in value enhancing initiatives 4

  5. Slide 5: 2012: Excellent Financial Performance

    2012: Excellent Financial Performance $m FY2012 FY2011 YoY VONB 1,188 932 27% VONB Margin 43.6% 37.2% 6.4 pps Value ANP 2,696 2,472 9% Embedded Value 31,408 27,239 15% TWPI 15,360 14,442 6% Expense Ratio 8.7% 8.7% - IFRS Results Operating Profit After Tax 2,159 1,922 12% Net Profit 3,019 1,600 89% S

  6. Slide 6: 2012: Clear Strategy – Well Executed

    2012: Clear Strategy – Well Executed Distribution  Expanded Premier Agency and partnership engagement Product  Broadened product range and enhanced profitability Customer  Improved customer targeting and sales to existing customers Organisation  Ongoing local empowerment and launched innovative

  7. Slide 7: Distribution: Premier Agency Delivery

    Distribution: Premier Agency Delivery VONB(1) ($m) VONB Margin(1) Premier Agency  Key competitive advantage  Quality recruitment focus 939 54.0% +16% +4.6 pps  AIA Premier Academy expansion 49.4% 811  Strategic partnership with LIMRA  Agency leadership development  Number of active agents up 7

  8. Slide 8: Distribution: Profitable Partnerships Expansion

    Distribution: Profitable Partnerships Expansion VONB(1) ($m) VONB Margin(1) Partnership Expansion  Profitable channel diversification  Bancassurance execution 348 36.4%  Disciplined pricing +59% +10.0 pps  VONB more than doubled 26.4%  New long-term bank agreements 219  Direct marketing expans

  9. Slide 9: Product: Quality VONB Growth

    Product: Quality VONB Growth VONB(1) ($m) Margin Enhancement and Others +9% 1,188 Product Mix Underlying Improvement Volume Growth +3% +17% (1) 932 FY2011 VONB FY2012 VONB Note (1) VONB movement excludes the effect of a single large Australian group insurance scheme which came into effect in 3Q 2011

  10. Slide 10: Customer Experience: Creating Sustainable Value

    Customer Experience: Creating Sustainable Value Improving the Customer Experience Highly Engaged Customers Creates Sustainable Value Buy Significantly More  Customer Experience programme Uplift in additional new premium sales expanded to cover 10 markets by level of engagement 2.3X  Focus on areas

  11. Slide 11: Financial: Sustained Momentum Across All Metrics

    Financial: Sustained Momentum Across All Metrics Free Surplus VONB ($m) EV ($m) OPAT ($m) Generated ($m) 1,188 31,408 2,159 2,845 1,922 932 27,239 2,485 24,748 1,699 667 2,107 FY2010 FY2011 FY2012 FY2010 FY2011 FY2012 FY2010 FY2011 FY2012 FY2010 FY2011 FY2012 11

  12. Slide 12: 2012 Group Review / 2012 Financial Results

    2012 Group Review Mark Tucker 2012 Financial Results Garth Jones Gordon Watson 2012 Business Review Ng Keng Hooi Huynh Thanh Phong Creating Sustainable Value Mark Tucker 12

  13. Slide 13: 2012 Financial Results

    2012 Financial Results Value Creation IFRS Results Capital and Dividends 13

  14. Slide 14: 2012: Record New Business Performance

    2012: Record New Business Performance ANP ($m) 2,696 VONB ($m) 2,472 1,188 +9% 932 +27% FY2011 FY2012 VONB Margin 43.6% 37.2% +6.4 pps FY2011 FY2012 FY2011 FY2012 14

  15. Slide 15: 2012: Record ANP

    2012: Record ANP Annualised New Premium (ANP) ($m) (1) 813 766 696 635 644 612 582 594 543 503 512 437 450 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 Growth FY2012 v FY2011 +9% Rates Note (1) Including ANP from a single large Australian group insurance scheme which came into effect

  16. Slide 16: 2012: Record Margin

    2012: Record Margin VONB Margin 43.6% 44.3% 42.6% 37.2% 32.6% 38.2% 36.0% 28.3% 33.7% 31.7% 28.7% 28.0% 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 Margin FY2012 v FY2011 +6.4 pps Uplift 16

  17. Slide 17: VONB Margin: Positive Actions on Mix and Pricing

    VONB Margin: Positive Actions on Mix and Pricing VONB Margin Increase 6.4 pps 1.1% (0.9)% 6.2% 43.6% 37.2% FY2011 Product and Geographical Mix Assumption FY2012 VONB Margin Portfolio Mix Changes and VONB Margin Other Items 17

  18. Slide 18: 2012: Record VONB

    2012: Record VONB VONB ($m) 1,188 932 676 667 533 512 545 399 364 314 303 231 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 Growth FY2012 v FY2011 +27% Rates 18

  19. Slide 19: 2012: Broad-based VONB Uplift over 2011

    2012: Broad-based VONB Uplift over 2011 VONB ($m) 366 +20% Hong Kong 305 287 +26% Thailand 227 226 +38% Singapore 164 124 +22% China 102 68 (8)% Korea 74 68 +17% Malaysia 58 Other 162 +45% Markets 112 2011 2012 19

  20. Slide 20: Record EV up 15% to $31.4b; Increase of $4.2b

    Record EV up 15% to $31.4b; Increase of $4.2b 2012 Embedded Value Movement ($m) EV Operating Profit $3.5b 380 (530) 828 31,408 1,188 111 30,730 2,192 +15% 27,239 FY2011 Expected Value of New Operating Group EV Investment Exchange Dividend FY2012 Group EV Return on EV Business Experience Before Non-

  21. Slide 21: EV Sensitivity to Capital Market Movements

    EV Sensitivity to Capital Market Movements Interest Rates ($m) Equities ($m) 31,408 31,408 (1.3)% 0.6% (1.8)% 1.8% 50 basis 50 basis points points 10% fall in 10% rise in decrease in increase in equity prices equity prices interest rates interest rates 553 197 FY2012 FY2012 Group EV Group EV (401) (

  22. Slide 22: Strong Cash Flow Generation

    Strong Cash Flow Generation Undiscounted Net Cash Flows(1) ($b) 37.4 11.9 10.8 10.1 9.1 2013-17 2018-22 2023-27 2028-32 >2032 % of Total 15% 14% 13% 11% 47% Note (1) Undiscounted net cash flows are defined as the after-tax surplus generated from the assets backing the statutory reserves and required

  23. Slide 23: 2012 Financial Results

    2012 Financial Results Value Creation IFRS Results Capital and Dividends 23

  24. Slide 24: Operating Profit Up to $2.7b; Diversified Earnings

    Operating Profit Up to $2.7b; Diversified Earnings Operating Profit Before Tax Operating Profit Before Tax ($m) by Segment ($m) Corporate 45 2,651 Korea 164 2,381 China 180 2,102 Hong Kong Malaysia 1,781 796 186 Other Markets 283 Singapore Thailand 393 604 FY2009 FY2010 FY2011 FY2012 24

  25. Slide 25: Investment Income Up to $4.3b; Stable Yield

    Investment Income Up to $4.3b; Stable Yield Investment Income ($m) Invested Assets Composition ($m) 4,277 As at As at Dividend 3,946 413 30 Nov 2011 30 Nov 2012 and 372 Rental Fixed Income(1) 86% 87% Income Equity 9% 10% Fixed Income & Equity 95% 97% Interest 3,864 3,574 Cash 4% 2% Income Properties

  26. Slide 26: Operating and Expense Efficiency

    Operating and Expense Efficiency Operating Margin(1) Expense Ratio Regional Comparison Reported Operating Expenses / Reported Premium Income(2) 20.9% 17.3% 16.8% 16.5% 16.2% 13.4% 13.1% 8.7% 6.2% AXA CPIC Samsung Ping An AIA China Life FY2010 FY2011 FY2012 Co. A Co. B Co. LifeC Co. D Co. E Notes (1)

  27. Slide 27: OPAT Up 12% and Net Profit Up to $3b

    OPAT Up 12% and Net Profit Up to $3b Net Profit ($m) 2011 2012  Operating profit excludes any actual or assumed gains Operating Profit After Tax 1,922 2,159 12%  Average annual non-operating Net (losses) / gains from gains over the past four years equities securities, net of tax (207) 787 were $46

  28. Slide 28: Shareholders’ Equity Up 25% to $26.7b

    Shareholders’ Equity Up 25% to $26.7b Shareholder Equity Movement ($m) Net Profit $3.0b 330 (530) 2,565 26,697 787 73 2,159 21,313 Equity Operating Net Gains Other Non- Net Gains FX and Dividend Equity End of FY2011 Profit After from Equity operating from Bonds Other Items Paid End of FY2012 Tax Mar

  29. Slide 29: 2012 Financial Results

    2012 Financial Results Value Creation IFRS Results Capital and Dividends 29

  30. Slide 30: HKICO Solvency Ratio at 353%

    HKICO Solvency Ratio at 353% Solvency Surplus and Solvency Ratio on HKICO basis ($m) for AIA Co. 6,168  Ongoing capital strength 4,811  Prudent approach to investment and Solvency capital management Surplus 3,192  Positive impact on solvency ratio from 2,768 retained earnings generation and 150%

  31. Slide 31: Self-financed New Business Growth and Dividends

    Self-financed New Business Growth and Dividends Free Surplus Generation ($m) Movement in FS net of fully allocated Group Office expenses, interest costs and dividends 2,845 (1,412) (190) (530) 6,643 5,930 FS at Beginning FS Generated FS Used to Fund Unallocated Dividend FS Available at of Year Durin

  32. Slide 32: Prudent, Sustainable and Progressive Dividend Policy

    Prudent, Sustainable and Progressive Dividend Policy Prudent, Invest in Robust Sustainable & Retain Profitable Financial Progressive Flexibility Growth Strength Dividend  Final dividend of HK24.67 cents per share recommended  Total dividend for 2012 of HK37.00 cents per share  Ex-dividend date: 1

  33. Slide 33: 2012 Business Review

    2012 Group Review Mark Tucker 2012 Financial Results Garth Jones Gordon Watson 2012 Business Review Ng Keng Hooi Huynh Thanh Phong Creating Sustainable Value Mark Tucker 33

  34. Slide 34: Business Review: Creating Sustainable Value

    Business Review: Creating Sustainable Value Hong Kong Gordon Watson Korea Group Insurance Singapore Ng Keng Hooi Malaysia China Thailand Huynh Thanh Phong Other Markets 34

  35. Slide 35: 2012: Focus for RCEs and Country CEOs

    2012: Focus for RCEs and Country CEOs  Profitable Growth  Premier Distribution  Product and Service Innovation 35

  36. Slide 36: Creating Sustainable Value in Hong Kong

    Creating Sustainable Value in Hong Kong VONB ($m)  Premier Agency 366 305  Focus on quality recruitment, effective +20% reactivation and increased productivity 210  24 Month retention up 20%  AIA Premier Academy advantage  MDRT Qualifiers up 9% FY2010 FY2011 FY2012  Agents selling group cases

  37. Slide 37: Repositioning in Progress in Korea

    Repositioning in Progress in Korea VONB ($m)  Positive Signs from 2H growth 74 64 (8)% 68  ANP up 10% in 2H12 vs 2H11  VONB up 9% in 2H12 vs 2H11  First positive growth in agency since 2008  Premier Agency  New active agents up 61% FY2010 FY2011 FY2012  MDRT qualifiers up 40% VONB Margin  Di

  38. Slide 38: Group Insurance: A Growing Opportunity in Asia

    Group Insurance: A Growing Opportunity in Asia  An Underpenetrated Market  1.5 billion people employed in the region(2) VONB(1) ($m)  $17 billion in Group Premiums in 2012(3)  A Strong Market Presence 129  Market leader in Asia 103 +25%  More than 100,000 corporate clients  More than 13 milli

  39. Slide 39: Business Review: Creating Sustainable Value

    Business Review: Creating Sustainable Value Hong Kong Gordon Watson Korea Group Insurance Singapore Ng Keng Hooi Malaysia China Thailand Huynh Thanh Phong Other Markets 39

  40. Slide 40: Creating Sustainable Value in Singapore

    Creating Sustainable Value in Singapore VONB ($m) 226  Premier Agency  Focus on agency leader development 164 +38%  New recruits up 12% 104  Technological innovation – iPoS  Awarded ‘Life Company of the Year’ FY2010 FY2011 FY2012  Profitable Partnerships VONB Margin  Growth in private bank &

  41. Slide 41: Creating Sustainable Value in Malaysia

    Creating Sustainable Value in Malaysia VONB ($m)  Premier Agency 68 58  New recruitment programmes +17% 39  Premier Academy to develop agency leaders and Premier Agents  Profitable Partnerships  VONB from banks and DM more than FY2010 FY2011 FY2012 doubled VONB Margin  Awarded Private Retireme

  42. Slide 42: ING Malaysia Integration Progressing Well

    ING Malaysia Integration Progressing Well Transaction  Transaction closed on 18 December 2012 Closure  Regulatory approval to merge both life and Takaful companies Experienced  Bill Lisle appointed new CEO Leadership  Management team in place comprising AIA and ex-ING staff In Place  Complement

  43. Slide 43: Creating Sustainable Value in China

    Creating Sustainable Value in China VONB ($m)  Premier Agency 124  Quality recruitment training for leaders 102 +22%  Agent training focused on advice skills to 68 close protection gap  Increased professionalism to sustain increase in average agent incomes FY2010 FY2011 FY2012  Quality growth w

  44. Slide 44: Business Review: Creating Sustainable Value

    Business Review: Creating Sustainable Value Hong Kong Gordon Watson Korea Group Insurance Singapore Ng Keng Hooi Malaysia China Thailand Huynh Thanh Phong Other Markets 44

  45. Slide 45: Creating Sustainable Value in Thailand

    Creating Sustainable Value in Thailand VONB ($m) 287  Premier Agency 227  Upgraded recruitment and training 174 +26%  Agency productivity improvements  Number one MDRT with qualifiers up 26%  Product Alignment  Reinforced leadership in life and health FY2010 FY2011 FY2012  Launched AIA Health

  46. Slide 46: Creating Sustainable Value in Other Markets

    Creating Sustainable Value in Other Markets VONB ($m)  Fastest growing life company in 2012 162 Australia  Premier IFA VONB grew by 78% 112 99 +45%  Established independent risk specialist  Awarded ‘Life Company of the Year’  Strong sales of protection and unit-linked business driving VONB grow

  47. Slide 47: Creating Sustainable Value

    2012 Group Review Mark Tucker 2012 Financial Results Garth Jones Gordon Watson 2012 Business Review Ng Keng Hooi Huynh Thanh Phong Creating Sustainable Value Mark Tucker 47

  48. Slide 48: AIA – Creating Sustainable Value

    AIA – Creating Sustainable Value Asian Growth Advantaged Right Proven Opportunity Platform Priorities Execution 48

  49. Slide 49: Enormous Asian Growth Opportunity

    Asian Growth Advantaged Right Proven Opportunity Platform Priorities Execution Enormous Asian Growth Opportunity Rapid Urbanisation Growth in Disposable Incomes Urban population (Millions) No of households with disposable income above US$10k (Millions) 558 548 305 537 315 523 299 301 515 282 265 248

  50. Slide 50: Advantaged Platform to Capture Growth

    Asian Growth Advantaged Right Proven Opportunity Platform Priorities Execution Advantaged Platform to Capture Growth  Only pure play pan-Asian life insurance company  Advantaged scale and franchise with the market-leading brand  Proprietary distribution with direct access to the Asian consumer 

  51. Slide 51: Right Priorities for 2013

    Asian Growth Advantaged Right Proven Opportunity Platform Priorities Execution Right Priorities for 2013 Distribution Product Customer Effectiveness + Targeting + Engagement  Premier Agency  Tailored by channel,  Customer experience implementation market and segment transformation  Recruit next

  52. Slide 52: Record of Delivery

    Asian Growth Advantaged Right Proven Opportunity Platform Priorities Execution Record of Delivery Doubled VONB ($m) EV up 50% ($m) 31,408 1,188 2.2x +50% 20,966 545 FY2009 FY2012 FY2009 FY2012 52

  53. Slide 53: AIA – Creating Sustainable Value

    AIA – Creating Sustainable Value  Significant growth opportunities  Asia-based and Asia-focused  Advantaged platform  Execute relentlessly on priorities  Ideally positioned to capture growth 53

  54. Slide 54: 2012 Results Presentation: Creating Sustainable Value

    2012 Results Presentation CREATING SUSTAINABLE VALUE

  55. Slide 55: Definitions and Notes

    Definitions and Notes  Hong Kong market includes Macau; Singapore market includes Brunei; Other Markets includes Australia, New Zealand, the Philippines, Indonesia, Vietnam and Taiwan  ANP excludes corporate pension business  VONB is after unallocated Group Office expenses and adjustment to refle

AIA Group — FY2012 Earnings Presentation on 6ix