Aia Group Limited · HKEX:1299
Aia — FY2023 Earnings Presentation
85 slides from Aia's earnings presentation, Mar 14, 2024
Slide 1: 2023 Annual Results Presentation
2023 ANNUAL RESULTS PRESENTATION 14 March 2024
Slide 2: Disclaimer
Disclaimer This document (“document”) has been prepared by AIA Group Limited (the “Company”, and together with its subsidiaries, “AIA”, the “Group” or “AIA Group”) solely for use at the presentation held in connection with the announcement of the Company’s financial results (the “Presentation”). Ref
Slide 3: Agenda
Agenda 1 BUSINESS HIGHLIGHTS Lee Yuan Siong, Group Chief Executive and President 2 FINANCIAL RESULTS Garth Jones, Group Chief Financial Officer 3 STRATEGIC PRIORITIES: ACCELERATING AIA’S MULTIPLE GROWTH ENGINES Lee Yuan Siong, Group Chief Executive and President Feature TDA at AIA Update Presentatio
Slide 4: Business Highlights
Business Highlights Lee Yuan Siong Group Chief Executive and President
Slide 5: 2023 Strong Financial Performance; Growth in All Key Metrics
2023 Strong Financial Performance; Growth in All Key Metrics VONB EV Operating Profit EV Equity Operating ROEV GROWTH $4,034m $8,890m $70.2b 12.9% +33% +37% per share +7% +350 bps before shareholder returns Shareholders’ OPAT CSM Allocated Equity Operating ROE EARNINGS $6,213m $53.1b $44.8b 13.5% +7
Slide 6: Excellent VONB Growth Driven by Multiple Growth Engines
Excellent VONB Growth Driven by Multiple Growth Engines ASEAN HONG KONG Largest contributor to Group VONB #1 Overall, #1 Agency, #1 IFA +13% Agency VONB Excellent MCV; Growth in domestic ▪ Higher activity and productivity +57% Agency VONB AIA Group +14% +82% ▪ Increased new recruits ▪ +12% active ag
Slide 7: High-Quality Agency: Strong Recruitment and Productivity
High-Quality Agency: Strong Recruitment and Productivity Agency VONB ($m) Accelerating Growth in New Recruits 3,219 Increasing Momentum Strong Recruitment in 2H23 2,611 +23% New Recruits YoY Growth(1) Across Growth Engines 26% New Recruits 2H23 YoY Growth 11% +58% Hong Kong +16% Mainland China +8% A
Slide 8: Strategic Profitable Partnerships: Excellent Performance
Strategic Profitable Partnerships: Excellent Performance Excellent Bancassurance Growth Across All Growth Engines Rest of Partnership VONB ($m) India Group >20% >50% 1,031 ASEAN Hong Kong ex-Vietnam Mainland China +42% ASEAN +58% Banca VONB 652 >3x >20% Hong Kong Mainland China India Hong Kong ▪ #1
Slide 9: Compelling Propositions Driving Customer Growth
Compelling Propositions Driving Customer Growth Total Product Proposition Approach to Meet Customer Needs Growing New Customers, Increasing Loyalty Targeted Solutions Launched in 2023 Professional Customer Acquisition through Multiple Channels Advice Powered by TDA Segment Affordable health insuranc
Slide 10: AIA's TDA Transformation: The Essential Foundation for Gen AI
AIA’s TDA Transformation: The Essential Foundation for Gen AI Over 3 years ~$800m invested; >70% increase in TDA talent World-Class Technology, Digital and Analytics Significant Benefits and Value Generation Jun 20 Dec 23 Target 90% TDA-Powered 100% $1.2b Cloud Distribution End-to-end ANP from 15% 9
Slide 11: 2023 Strong Performance, Confident Outlook
2023 Strong Performance, Confident Outlook Multiple Growth Engines Unmatched Financial Flexibility ▪ 33% VONB growth to >$4b STRONG, RESILIENT ▪ $16.3b free surplus, +25% before S/H returns AIA GROUP ▪ Premier Agency +23%, Partnerships +58% BALANCE SHEET ▪ 275% Group LCSM coverage ratio GROWING ▪ 14
Slide 12: Financial Results
Financial Results Garth Jones Group Chief Financial Officer
Slide 13: Growth Earnings Capital & Dividends
Growth Earnings Capital & Dividends 13 13
Slide 14: Excellent VONB Growth of 33% to Over $4b in 2023
Excellent VONB Growth of 33% to Over $4b in 2023 VONB Growth Across 5 Largest Markets, Other Markets Double-Digit Growth in 10 Markets 10% Malaysia 7% Hong Kong Mainland China Thailand Hong Kong Singapore VONB 33% $1,430m $1,037m $713m 9% +82% +20% +21% $4,034m +33% Singapore Malaysia Other Markets
Slide 15: High-Quality Profitable New Business, Strong and Stable Margins
High-Quality Profitable New Business, Strong and Stable Margins VONB Up $1b in FY23 with Strong VONB Margin Stable PVNBP Margins Across Product Types 14% 14% FY22 FY23 57.0% (3.2) pps +0.3 pps (2.5) pps +1.0 pps 52.6% 11% 10% 10% 9% 9% 8% 8% 7% 2022 Product Geographical Channel Others Including 2023
Slide 16: Profitable New Business Drove Higher VONB Margin in 2H23
Profitable New Business Drove Higher VONB Margin in 2H23 Hong Kong Mainland China Rest of Group VONB Margin VONB Margin VONB Margin 58.1% 63.4% 59.5% 56.9% 52.7% 54.0% 50.1% 1H23 2H23 1H23 2H23 2H23 1H23 2H23 Agency Note: VONB margin comparatives are shown on a constant exchange rate basis 16
Slide 17: EV Operating Profit Up 37% Per Share; Operating ROEV of 12.9%
EV Operating Profit Up 37% Per Share; Operating ROEV of 12.9% VONB is a Key Driver of EV Operating Profit ($m) Operating ROEV EV Operating Profit Growth 8,890 12.9% +350 +33% 6,703 9.4% bps +37% per share EV Operating 45% VONB Profit 55% FY23 Others including Expected Return on EV FY22 FY23 FY22 FY2
Slide 18: EV Equity Up 7% to $76.1b Before Shareholder Returns
EV Equity Up 7% to $76.1b Before Shareholder Returns EV Equity Movement ($b) Shareholder Returns +7% $5.9b + 4.0 + 0.04 (0.4) (2.8) (0.5) (0.7) + 5.2 76.1 (2.3) (3.6) 71.2 70.2 - $8.9b EV Operating Profit Operating ROEV 12.9% +350 bps Group Expected VONB Operating Finance Investment Economic Other G
Slide 19: EV Sensitivity to Market Movements Remains Small
EV Sensitivity to Market Movements Remains Small AIA Long-Term Investment Return Assumptions vs Market Rates Small EV Sensitivities to Interest Rates and Equity Prices Weighted Average by Geography(1) Impact on 5% FY23 Group EV Interest Rates 4% 50 bps Decrease +1.4% 3% 50 bps Increase (1.5)% 2% Equ
Slide 20: Growth Earnings Capital & Dividends
Growth Earnings Capital & Dividends 20 20
Slide 21: CSM of $58.4b Before Release, 8.4% Underlying CSM Growth
CSM of $58.4b Before Release, 8.4% Underlying CSM Growth CSM Movement, Net of Reinsurance ($b) +17% CSM Release ($m) + 2.6 59.8 (1.0) (0.3) 5,314 58.4 (5.3) 5,005 + 7.0 +6% 53.1 50.2 CSM New Business Expected CSM Before Variances Exchange Closing CSM CSM CSM 2022 2023 End of 2022 CSM Return on Varia
Slide 22: OPAT of $6.2b, Underlying Growth of 7% Per Share
OPAT of $6.2b, Underlying Growth of 7% Per Share FY23 OPAT Movement ($m) + 309 (221) +2% per share (163) Underlying OPAT 6,306 (18) 6,213 +7% per share Excluding the effect of higher medical claims in 2023 compared with 2022 and minor IFRS model refinements Operating Margin 16.4% FY22 CSM Release Me
Slide 23: Growing High-Quality Diversified Portfolio
Growing High-Quality Diversified Portfolio High-Quality Sources of Earnings Geographically Diversified Portfolio Return on Other Markets Net Worth(1) Malaysia 9% 14% 5% 70% 35% Hong Kong Spread 16% Insurance 35% Singapore 11% OPBT OPAT 55% Services ASEAN 15% 15% Non-Par Thailand Participating and Fe
Slide 24: Operating ROE Up to 13.5%
Operating ROE Up to 13.5% Shareholders’ Allocated Equity Movement ($b) $3.8b Net Profit Shareholder $5.9b Returns + 6.2 (2.0) (0.4) (0.3) 50.7 (2.3) (3.6) 47.2 44.8 Operating ROE 13.5% +50 bps Shareholders' Operating Profit Investment Return Other Exchange Rates, Shareholders' Dividend Share Shareho
Slide 25: Comprehensive Equity of $85.4b, Reinforces AIA's Prudent EV
Comprehensive Equity of $85.4b, Reinforces AIA’s Prudent EV VONB to EV Equity to New Business CSM ($b) Comprehensive Equity ($b) FY23 As at 31 Dec 2023 Additional Value 7.0 85.4 not reflected in AIA’s EV Equity 70.2 Net CSM ▪ +$0.9b mark-to-market on AIA’s medium-term notes 4.0 ▪ +$1.5b net from Chi
Slide 26: Growth Earnings Capital & Dividends
Growth Earnings Capital & Dividends 26
Slide 27: Very Strong and Resilient Solvency Position
Very Strong and Resilient Solvency Position Group LCSM Coverage Ratio Movement Small Sensitivity to Interest Rates .00 4.00 +14 and Equity Prices pps .50 3.50 335% 335% Impact on Group LCSM +27 pps (14) pps +27 pps (14) pps Coverage Ratio +3 pps +3 pps (2) pps(2) pps297% 297% (9) pps(9) pps .00 3.00
Slide 28: High-Quality, Diversified and Resilient Investment Portfolio
High-Quality, Diversified and Resilient Investment Portfolio AAA BB & below(4) 1% (3) Non-Par 6% AA Par 8% and Surplus Total Business Assets Investment grade corporate bond portfolio ($b) Corporate ▪ Average rating A- Bonds Government & Government Agency Bonds 27.9 61.7 89.6 BBB A ▪ >1,700 issuers,
Slide 29: Free Surplus Up 25% to $22.3b Before Shareholder Returns
Free Surplus Up 25% to $22.3b Before Shareholder Returns Free Surplus Movement ($b) Shareholder Returns +25% $5.9b + 6.0 (1.3) (0.3) (0.5) + 0.7 (0.2) 22.3 (2.3) (3.6) 17.9 16.3 Free Surplus Underlying New Business Unallocated Finance Costs Investment Acquisitions Free Surplus Dividend Share Free Su
Slide 30: Progressive Returns to Shareholders; Total Dividend Up 5%
Progressive Returns to Shareholders; Total Dividend Up 5% Prudent, Sustainable and $10b Ongoing Share Buy-Back Enhancing Shareholder Returns Progressive Dividend Policy $7.2b returned as of 31 Dec 2023 Total Dividend Per Share Returns to Shareholders ($m) (HK cents) 5,829 5,930 161.36 3,637 +5% Shar
Slide 31: Disciplined Capital Deployment Driving Shareholder Returns
Disciplined Capital Deployment Driving Shareholder Returns Free Surplus $14.8b Capital Deployed in the Last 2 Years After Capital Deployment Prudent, Sustainable Return Excess Free Surplus ($b) Profitable Disciplined and Progressive Capital to Organic Growth Inorganic Growth Dividend Shareholders 24
Slide 32: Strong Financial Performance in 2023
Strong Financial Performance in 2023 ▪ 33% VONB growth to over $4b ▪ EV Operating Profit up 33%; Operating ROEV up 350 bps to 12.9% ▪ Robust cash generation with Free Surplus up 25% before returns to shareholders ▪ 7% underlying OPAT growth per share; 8.4% underlying CSM growth ▪ Prudent, sustainabl
Slide 33: Strategic Priorities: Accelerating AIA's Multiple Growth Engines
STRATEGIC PRIORITIES: ACCELERATING AIA’S MULTIPLE GROWTH ENGINES Lee Yuan Siong Group Chief Executive and President
Slide 34: Asia is the Most Attractive Region for Life and Health Insurance
Asia is the Most Attractive Region for Life and Health Insurance Attractive Growth Prospects Across AIA’s Markets Unparalleled Opportunities for Life and Health Insurance APAC Financial Assets to Grow Fastest in the World Bridging the Immense Life Protection Gap Wealth Financial Assets Increase 2021
Slide 35: Clear Strategy to Capture Asia's Powerful Drivers of Growth
Clear Strategy to Capture Asia’s Powerful Drivers of Growth Strategic Priorities Leading Customer Experience Unrivalled Distribution Compelling Propositions Seamless omnichannel customer Scale capacity and productivity through Be the leading provider of personalised experience with best-in-class eng
Slide 36: Mainland China
MAINLAND CHINA Market Opportunities Strategic Priorities Through AIA China >550 million Middle-Class and above ▪ Growing AIA’s leading Premier Agency Middle- Population by 2030 Estimate(1) Class and ▪ Protection and differentiated long-term savings propositions Affluent ▪ Accelerating growth through
Slide 37: Differentiated Premier Agency Driving Future Growth
MAINLAND CHINA Differentiated Premier Agency Driving Future Growth Most Productive Agency Growing Agency Through Quality Recruitment in Mainland China Young and Experienced Team VONB Per Agent(1) Agency 2.6x of Peers’ Average Leaders 42 >8 years 100% Average Age Average Tenure Adoption of Digital Ma
Slide 38: Robust Demand from Resilient Middle-Class via Premier Agency
MAINLAND CHINA Robust Demand from Resilient Middle-Class via Premier Agency Long-Term Relationships Driving Customer Value High-Quality Propositions Meeting Customer Needs Others Agency VONB Margin Focus on middle-class and above(1) customer Par 5% segments where demand remains robust 5% 63.4% Other
Slide 39: Accelerating Growth through Geographical Expansion
MAINLAND CHINA Accelerating Growth through Geographical Expansion Expanding and Deepening our Footprint Proven & Scalable Expansion Model ▪ Expanded from 5 to 10 geographies Agency VONB Tianjin, Hebei, Sichuan, Hubei and Henan ▪ New branch in Henan ~5% ▪ Shijiazhuang upgraded to Hebei provincial bra
Slide 40: Highly Selective Banca Partners: Targeting Affluent & HNW
MAINLAND CHINA Highly Selective Banca Partners: Targeting Affluent & HNW AIA’s Unique Value Proposition Exclusive Partnership Bancassurance VONB 15-Year Exclusive Partnership ▪ Long-term strategic partnerships 6% US$20k 620k of AIA China ▪ Targeting affluent and HNW Average Policy Case Size No. of C
Slide 41: Hong Kong
HONG KONG Market Opportunities Strategic Priorities >$2 trillion ▪ Scaling and enhancing our Premier Agency Personal Financial Assets in HK ▪ High-quality Partnerships ~$7 billion Annual Out-of-Pocket Health Expenditure ▪ Differentiated and compelling propositions $8 billion Industry MCV segment ▪ S
Slide 42: Unparalleled Position and Capabilities in Hong Kong
HONG KONG Unparalleled Position and Capabilities in Hong Kong Successfully Captured Market-Leading Premier Agency, Scaling Capacity Differentiated Propositions Return in Demand in 2023 AIA HK VONB ($m) #1 Agency #1 MDRT Targeting Affluent and HNW 1,430 in Hong Kong(1) in Hong Kong and Macau(2) and M
Slide 43: Sustainable Demand in Mainland Chinese Visitor Segment
HONG KONG Sustainable Demand in Mainland Chinese Visitor Segment Strong Return of Increasing Momentum Through 2023 Agency Expansion Driving Growth MCV Demand Strong Uptick in 4Q23 Strong Recruitment Momentum No. of MCV Policies, Agency Channel MCV-Focused Recruits >70% MCV VONB from customers +16% n
Slide 44: ASEAN
ASEAN Market Opportunities Strategic Priorities >500 million ▪ Scale and enhance AIA’s Premier Agency Middle-Class and Affluent Population by 2030 ▪ Accelerate our strategic Bancassurance partnerships ~2.7% Insurance Penetration ▪ Extend leadership in Protection and Unit-Linked business >$35 billion
Slide 45: Market-Leading Growth Engine for the Group
ASEAN Market-Leading Growth Engine for the Group Largest Contributor to AIA’s VONB in 2023 Unrivalled Distribution Driving High-Quality Profitable New Business Leading Premier Agency Protection-Focused Propositions Driving Superior Financials 35% #1 Life Insurer(1) #1 MDRT in ASEAN >$1.5b ASEAN ASEA
Slide 46: AIA Thailand: The Market Leader, Excellent Execution
ASEAN AIA Thailand: The Market Leader, Excellent Execution AIA Thailand VONB ($m) Significant Upside Clear Leader in Agency via Bangkok Bank +63% 713 #1 Agency Financial Adviser (FA) 41% market share(1) Programme 588 #1 Bank in Thailand(4) FA Headcount 39% 438 #1 MDRT ANP contribution Pre-COVID-19 i
Slide 47: AIA Singapore: Capturing the Wealth and Health Opportunity
ASEAN AIA Singapore: Capturing the Wealth and Health Opportunity Strong Performance Premier Agency Partnership Distribution VONB ($m) 394 Scaling #1 MDRT +21% >25% 358 High-Quality in Singapore New Recruits ANP growth +10% Distribution 1-in-4 +37% #1 Agents are New Agency Leaders Employee Benefits M
Slide 48: AIA Malaysia: Consistent Profitable New Business Growth
ASEAN AIA Malaysia: Consistent Profitable New Business Growth Strong Growth Throughout the Pandemic Leading Premier Agency Strategic Long-Term Bancassurance VONB ($m) 319 234 #1 MDRT for 7 years in Malaysia FY23 vs FY19 ANP from +36% Insurance Specialists Growing Scale and Productivity >40% Manpower
Slide 49: India
INDIA Market Opportunities Strategic Priorities 1 billion ▪ Deploy AIA’s proven Premier Agency model at scale Middle-Class and Affluent Population by 2030 ▪ Digitally-enabled, high-performing strategic partnerships Fastest ▪ Extend leadership in Protection, Grow in Health and Wellness Growing G20 Ec
Slide 50: Tata AIA Life: Leading Platform to Capture India's Potential
INDIA Tata AIA Life: Leading Platform to Capture India’s Potential Leading Position, Focus on Quality #1 Premier Agency with Superior Growth Tata AIA Life VONB Top 3 Private Insurers in India(1) #1 MDRT #1 Productivity life insurer in India by ANP Individual Weighted New Business Premiums in 2023 Co
Slide 51: AIA: Uniquely Positioned to Capture Full Growth Potential
AIA: Uniquely Positioned to Capture Full Growth Potential Significant Multiple Unmatched Competitive Advantages Growth Engines Financial Flexibility Unrivalled Distribution MAINLAND CHINA Strong and Resilient Balance Sheet Leading Customer Experience Growing Free Surplus HONG KONG Generation Compell
Slide 52: Strong Track Record of Delivering Shareholder Value
Strong Track Record of Delivering Shareholder Value Growth Earnings Capital & Dividends Cumulative Free Surplus Cumulative VONB Cumulative OPAT Share Buy-Back Generation $35.4b since IPO $59.3b since IPO $66.9b since IPO $7.2b cumulative EV Equity ($b) Shareholders’ Allocated Equity ($b) Total DPS (
Slide 53: Definitions and Notes
Definitions and Notes ▪ The Group adopted IFRS 9, Financial instruments, IFRS 17, Insurance Contracts and Amendment to IAS 16, Property, Plant and Equipment from 1 January 2023. The comparative financial information for the six months ended 30 June 2022, the year ended and as at 31 December 2022 hav
Slide 54: Definitions and Notes (Cont.)
Definitions and Notes (Cont.) ▪ ANW is the market value of assets in excess of the assets backing the policy reserves and other liabilities of the life (and similar) business of AIA, plus the IFRS equity value of other activities, such as general insurance business, less the value of intangible asse
Slide 55: Definitions and Notes (Cont.)
Definitions and Notes (Cont.) ▪ Non-participating (non-par) business includes all insurance liabilities under the General Measurement Model (GMM) model, covering traditional protection, unit-linked with significant protection benefits, universal life and other participating business without distinct
Slide 56: Appendix
APPENDIX
Slide 57: Unparalleled Growth Platform
Unparalleled Growth Platform Geographical Mix Distribution Mix Product Mix % of FY23 VONB % of FY23 VONB % of FY23 VONB Other Markets 10% Others Malaysia 19% Partnerships 7% 24% Hong Kong Traditional 33% Protection Singapore Unit- 9% linked 40% 10% Thailand 17% Agency Participating Participating Mai
Slide 58: Geographical Market Performance
Geographical Market Performance Hong Kong ($m) FY23 FY22 CER AER Singapore ($m) FY23 FY22 CER AER VONB 1,430 787 +82% +82% VONB 394 349 +10% +13% VONB Margin 57.5% 69.5% (12.0) pps (12.0) pps VONB Margin 67.2% 65.7% +1.5 pps +1.5 pps ANP 2,407 1,078 +123% +123% ANP 586 531 +8% +10% TWPI 11,554 11,23
Slide 59: AIA's Integrated Health Strategy
AIA’s Integrated Health Strategy Personalised Integration with Advanced Healthcare Health Insurance Outpatient Clinics Administration and Management Be the leading provider of Deliver better health outcomes Provide more effective personalised health insurance at lower costs through strategic care ma
Slide 60: Embedding ESG in Our Business
Embedding ESG in Our Business AIA’s To be a global industry leader in ESG, shaping a more sustainable future for the communities Ambition we serve and creating long-term value for all our stakeholders ESG Strategy Health and Wellness Sustainable Investment Sustainable Operations ▪ Engage and inspire
Slide 61: ESG: AIA Committed to Achieving Net-Zero
ESG: AIA Committed to Achieving Net-Zero Climate Action Health and Wellness Sustainable Investment SBTi Validated >$2 trillion CFA ESG total sums assured First Climate First Pan-Asian life and AIA One Billion $6.3 billion Certificate health insurer to get Action Plan science-based targets rolled out
Slide 62: CPL: Capturing Additional Growth in Mainland China
CPL: Capturing Additional Growth in Mainland China China Post Life Significant Value Uplift via Dedicated AIA Group Advisory Team 24.99% Equity Strategic Investment by AIA Group Enhanced Business Quality CPL VONB(3) Access to PSBC, Largest Retail Financial Distribution Network >4x >80% >1,900 ~40k >
Slide 63: 2023 ANW Movement
2023 ANW Movement ANW Movement ($b) + 5.1 (0.05) + 0.4 (0.4) 38.6 (0.9) (0.2) + 0.5 (2.3) (3.6) 33.8 (0.2) 32.0 ANW Effect of Expected Contribution Operating Finance ANW Investment Other Exchange Dividend Share ANW End of 2022 Acquisitions Return to Experience Costs Before Return Non- Rates and Paid
Slide 64: 2023 VIF Movement
2023 VIF Movement VIF Movement ($b) + 4.1 (0.3) 39.0 39.0 (2.5) (1.1) + 0.01 35.4 35.1 + 0.1 35.4 VIF Expected Contribution Operating VIF Investment Other Exchange VIF End of 2022 Return to VIF Experience Before Return Non-Operating Rates and End of 2023 from VONB Variances and Non-Operating Varianc
Slide 65: Shareholders' IFRS Equity and ANW
Shareholders’ IFRS Equity and ANW Reconciliation of Shareholders’ IFRS Equity to ANW ($b) 41.1 (2.1) (0.1) + 1.0 (3.6) + 0.1 36.4 (4.4) 32.0 Shareholders' Difference Mark-to-market Deferred Elimination Non-controlling ANW Adjustment to ANW IFRS Equity between Adjustment for Tax Impacts of Intangible
Slide 66: $3.6b Net Investment Result from Non-Par and Surplus Assets
$3.6b Net Investment Result from Non-Par and Surplus Assets FY23 Net Investment Result After Expenses ($m) From Non-Par and Surplus Assets 5,658 (1,866) Expected long-term investment return 1,363 for equities and FY22 1H23 FY23 real estate (187) 3,605 Interest revenue on Fixed Income Yield(1) 4.2% 4
Slide 67: 2023 Net Profit of $3.8b
2023 Net Profit of $3.8b Reconciliation of OPAT to Net Profit $m FY23 FY22 YoY CER OPAT 6,213 6,421 (1)% Short-term investment and discount rate variances, (2,007) (1,134) n/m net of tax Reclassification of revaluation gains for property (8) (71) n/m held for own use, net of tax Other non-operating
Slide 68: Shareholders' Allocated Equity Increased to $44.8b Since IPO
Shareholders’ Allocated Equity Increased to $44.8b Since IPO Shareholders’ Allocated Equity Movement Since IPO ($b) +$53.9b Net Profit + 59.3 (3.7) (1.7) (3.8) + 1.8 (17.5) (7.2) 44.8 17.6 Shareholders' Operating Profit Investment Other Exchange Other Dividend Share Shareholders' Allocated After Tax
Slide 69: IFRS 17 Reinforces Prudence in AIA's Embedded Value
IFRS 17 Reinforces Prudence in AIA’s Embedded Value EV Equity to Comprehensive Equity ($b) VONB to New Business CSM ($b) + 13.1 85.4 + 1.8 7.0 70.2 (3.1) + 5.2 Net CSM(1) + 1.1 (0.4) + 0.4 4.0 Shareholders’ Equity EV Equity Risk Cost of Valuation Comprehensive FY23 Tax Risk Cost of Valuation FY23 En
Slide 70: Free Surplus vs Group LCSM Surplus
Free Surplus vs Group LCSM Surplus Reconciliation of Free Surplus to Group LCSM Surplus ($b) + 9.3 46.5 + 5.7 + 8.2 + 7.0 23.3 16.3 Free Surplus on Adjustment to Reflect Free Surplus Reflecting Different Capital Eligible Group Consolidated Basis Consolidated on Business Shareholders' (1) Requirement
Slide 71: Holding Company Financial Resources
Holding Company Financial Resources Holding Company Financial Resources Movement ($b) + 3.3 (0.1) + 0.4 (0.4) + 0.2 14.1 (2.3) (3.6) 10.7 8.1 Holding Co. Capital Flows Corporate Increase in Interest Investment Holding Co. Dividend Share Holding Co. Financial from Activity Borrowings (1) Payments on
Slide 72: Discipline Around Financial Leverage
Discipline Around Financial Leverage Group Total Leverage ($b) Composition of Borrowings ($b) CSM Net of Reinsurance and Taxes Subordinated 44.5 (Hybrid)(2) 1.6 Leverage Ratio(1) Borrowings Subordinated Borrowings 2.6 12.1% 11.8 Senior $11.8b Notes 7.6 Total Equity 41.6 Notes: As of 31 Dec 2023 (1)
Slide 73: Total Invested Assets of $235.9b
Total Invested Assets of $235.9b (3) Non-Par Par and Surplus Total Business (2) ($b) Assets Real Estate Others 4% 5% Government and Government Agency Bonds 27.9 61.7 89.6 Corporate Bonds 49.4 29.6 79.0 Equities(1) 17% Structured Securities 0.4 1.8 2.1 13% Loans and Deposits 0.5 3.5 3.9 Par(3) Total
Slide 74: Fixed Income Portfolio
Fixed Income Portfolio Total Fixed Income by Type Total Fixed Income by Maturity Government & Government 51% >10 Years & 74% Agency Bonds No Fixed Maturity Corporate Bonds 46% >5 - 10 Years 10% Total Fixed Total Fixed Income Income $174.6b Structured Securities 1% $174.6b >1 - 5 Years 12% Loans and
Slide 75: Total Bonds by Accounting Classification
Total Bonds by Accounting Classification (1) Non-Par Total Bonds by Accounting Classification Par and Surplus Total Business ($b) Assets Fair Value Through Other Non-Par and Surplus Assets 52% - 88.3 88.3 Comprehensive Income (FVOCI) (FVOCI) Par (1) Business (FVTPL) 45% Fair Value Through Profit Tot
Slide 76: Government and Government Agency Bond Portfolio
Government and Government Agency Bond Portfolio Government Bonds(1) by Geography Government Agency(2) Bonds by Rating FY23 FY22 FY23 FY22 Average Rating A+ A+ Mainland China 41% 39% Thailand 17% 18% AAA 21% 21% US 9% 9% AA 20% 18% Government South Korea 9% 9% Government Bonds(1) Agency A 41% 43% Sin
Slide 77: Corporate Bond Portfolio by Rating
Corporate Bond Portfolio by Rating Par(1) Non-Par Corporate Bonds by Rating Rating ($b) and Surplus Total Business Assets FY23 FY22 AAA 0.6 0.2 0.8 Average Rating A- A- AA 3.3 2.4 5.7 AAA 1% 1% A 23.1 12.8 35.9 AA 7% 7% Corporate Bonds A 45% 44% BBB 21.6 12.3 33.9 $79.0b BBB 43% 45% (2) BB and below
Slide 78: Corporate Bond Portfolio (Non-Par and Surplus Assets)
Corporate Bond Portfolio (Non-Par and Surplus Assets) Corporate Bonds by Geography Corporate Bonds by Sector Non-Par and Surplus Assets Non-Par and Surplus Assets $b % of total $b % of total Asia Pacific 20.1 68% Energy 2.8 9% United States 5.8 20% Materials 1.1 4% Other 3.7 12% Industrials 3.2 11%
Slide 79: Structured Security Portfolio
Structured Security Portfolio Par (1) Non-Par Structured Securities by Rating Rating ($b) Business and Surplus Total Assets Total $2b FY23 FY22 AAA 0.02 0.1 0.2 Average Rating A- BBB AA 0.1 0.2 0.3 AAA 7% 7% A 0.1 0.6 0.7 AA 14% 11% Structured BBB 0.1 0.7 0.8 Securities A 32% 28% $2.1b BBB 40% 37% B
Slide 80: AIA China: Prudent Investment Portfolio
AIA China: Prudent Investment Portfolio Other Real Estate 1% 3% Equities Prudent ALM Approach Corporate 11% Bonds(1) 6% ▪ Asset allocation driven by liability cash flow matching in local currency AIA China Invested Assets ▪ 85% of invested assets in fixed income Non-Par and Surplus Assets ▪ >90% of
Slide 81: Risk Discount Rate and Risk Premium
Risk Discount Rate and Risk Premium As at 30 Nov 2010 As at 31 Dec 2023 Long-term Long-term Risk Discount Risk Risk Discount Risk 10-year 10-year Rates Premium Rates Premium % Govt Bonds Govt Bonds Australia 8.75 5.65 3.10 7.93 3.80 4.13 Mainland China 10.00 3.74 6.26 9.16 3.50 5.66 Hong Kong 8.00 3
Slide 82: IFRS 17 Discount Rates and Illiquidity Premium
IFRS 17 Discount Rates and Illiquidity Premium Spot Rates as at 31 Dec 2023 1 year 5 years 10 years 15 years 20 years With With With With With Risk free illiquidity Risk free illiquidity Risk free illiquidity Risk free illiquidity Risk free illiquidity premium premium premium premium premium % USD 4
Slide 83: Sensitivity Analysis: Embedded Value
Sensitivity Analysis: Embedded Value Sensitivity of EV as at 31 Dec 2023 Equity prices +10% +2.7% Equity prices -10% (2.7)% Interest rates +50 bps (1.5)% Interest rates -50 bps +1.4% Presentation currency 5% appreciation (2.0)% Presentation currency 5% depreciation +2.0% Lapse/discontinuance rates +
Slide 84: Sensitivity Analysis: VONB
Sensitivity Analysis: VONB Sensitivity of VONB for the year ended 31 Dec 2023 Interest rates +50 bps +3.2% Interest rates -50 bps (3.8)% Presentation currency 5% appreciation (3.5)% Presentation currency 5% depreciation +3.5% Lapse/discontinuance rates +10% (6.5)% Lapse/discontinuance rates -10% +7.
Slide 85: Other Sensitivity Analysis
Other Sensitivity Analysis CSM Shareholders’ Group LCSM (Net of Reinsurance) Allocated Equity Coverage Ratio Equity Prices 10% Fall (1.3)% (2.6)% (2) pps 10% Rise +1.3% +2.6% +1 pps Interest Rates 50 bps Decrease +1.0% +0.4% +10 pps 50 bps Increase (0.9)% (0.3)% (10) pps Note: Calculated based on po