Value of new business up 22 per cent
Operating profit up 13 per cent;
Final dividend up 14 per cent
Hong Kong, 15 March 2019 – AIA Group Limited ("AIA"; or the "Company"; stock code: 1299) delivered excellent operating performance with double-digit growth across our main financial metrics for the twelve months1 ended 31 December 2018, including very strong growth in value of new business (VONB) of 22 per cent on a constant exchange rate basis, compared with the corresponding twelve-month period ended 31 December 2017.
Growth rates are shown on a constant exchange rate basis below:
Very strong growth in value of new business
- 22 per cent growth in VONB to US$3,955 million
- Annualised new premiums (ANP) increased by 15 per cent to US$6,510 million
- VONB margin up 3.7 pps to 60.0 per cent
Strong operating profit generation
- Operating profit after tax (OPAT) up by 13 per cent to US$5,298 million
- Embedded value (EV) operating profit increased by 23 per cent to US$8,278 million
- Operating return on EV (operating ROEV) up by 110 bps to 16.3 per cent
Robust cash flow and resilient capital position
- EV Equity of US$56.2 billion; EV of US$54.5 billion, up US$3.7 billion
- Underlying free surplus generation of US$4,945 million, up 13 per cent on a comparable basis
- Free surplus of US$14.8 billion
- Net remittances of US$2.8 billion
- Solvency ratio for AIA Company Limited (AIA Co.) of 421 per cent on the HKIO basis
Strong increase in recommended final dividend
- 14 per cent growth in final dividend to 84.80 Hong Kong cents per share
- Total dividend (excluding special dividend) up 14 per cent to HK$1.14 per share
- A special dividend of 9.50 Hong Kong cents per share
Ng Keng Hooi, AIA's Group Chief Executive and President, said:
"AIA has once again delivered an excellent performance with double-digit growth across our main financial metrics in 2018. Value of new business increased by 22 per cent to reach a new record of US$3,955 million. We also achieved strong growth of 13 per cent in both operating profit after tax and underlying free surplus generation. These very strong results were achieved against a backdrop of economic uncertainty and financial market volatility.
"Our business in China delivered an excellent performance with VONB growth of 30 per cent. I am also delighted that we recently received approval to set up sales and service centres in Tianjin and Shijiazhuang, Hebei. Hong Kong delivered another very strong performance with 24 per cent VONB growth and VONB in Singapore grew by 18 per cent. Thailand returned to growth with VONB up 12 per cent, as our agency transformation delivered tangible results.
"AIA's agency channel had another excellent year with 26 per cent VONB growth and the Group now has more than 10,000 Million Dollar Round Table (MDRT) members. In partnerships, our bank channel delivered 18 per cent VONB growth and we activated four new strategic partnerships including with Bangkok Bank in Thailand and SK Telecom in Korea.
"Our brand promise, Healthier, Longer, Better Lives, epitomises our commitment to customers as AIA shifts towards being a partner for life with wellness as a key focus. Membership of our wellness programmes exceeded 1.2 million, transforming engagement and delivering meaningful health improvements for our customers.
"These strong results are underpinned by our diversified, robust and high-quality business model together with our relentless focus on capturing the significant opportunities presented by the long-term structural drivers of growth across Asian insurance markets.
"The Board has recommended an increase of 14 per cent in the 2018 final dividend and a special dividend of 9.50 Hong Kong cents per share due to the change in financial year-end date. The dividends reflect the strength of AIA's financial results and our confidence in the outlook for the Group.
"The scale, quality and breadth of AIA's exceptional businesses across the Asia-Pacific region, combined with our unrivalled distribution capabilities, trusted brand, financial strength and innovation capabilities, enable us to meet the evolving needs of our customers for protection and long-term savings as we help them to live Healthier, Longer, Better Lives.
"We enter 2019, our centennial year, with confidence about our long-term outlook. AIA has always been committed to providing financial protection and driving economic and social development across the region. Our centenary gives us the opportunity to reaffirm our commitments and our focus on delivering long-term sustainable value for our shareholders."
AIA Singapore's Business Results in 2018:
AIA Singapore achieved outstanding growth in 2018 attributed to strong results across all channels.
- Double-digit growth in Value of New Business (VONB), by 18 per cent to US$357M, mainly driven by the agency channel and our strategic partnership with Citibank.
- Strong growth in Annualized New Premium (ANP), by 26 per cent to US$547M, driven by regular premium protection products in all channels.
- IFRS Operating Profit After Tax (OPAT) increased 7 per cent reflecting long-term sustainable business growth.
AIA Singapore maintained its market leadership position in agency distribution and delivered very strong growth in VONB through this core distribution channel. Focused execution of our Premier Agency strategy drove increases in both the number of active agents and productivity, as our professional agents continued to concentrate on meeting customer needs with an emphasis on regular premium protection products.
In 2018, we developed several innovative digital tools including a new mobile application integrated with our propensity models that helps our agents engage with customers more effectively to better meet their needs. The introduction of these tools and our targeted recruitment and training programmes drove active agent growth and increase in productivity.
Our strategic partnership with Citibank delivered excellent VONB growth, with a focus on recruiting and enhancing the productivity of the bank's insurance specialists to address our customers' protection needs.
AIA Singapore also remained a market leader in the group insurance market where we secured several new and sizeable corporate client cases during the year. In 2018, for the 13th consecutive year, AIA Singapore won the prestigious Best Employee Insurance Provider (GOLD) Award at the HR Vendors of the Year 2018 Awards.
In 2018, we continued to invest in and enhance our AIA Vitality wellness platform with the introduction of new benefits and launch of a strengthened digital experience via the new AIA Vitality app in December 2018. Endeavours to engage more customers yielded significant increase in AIA Vitality members over the course of 2018.
Patrick Teow, Chief Executive Officer of AIA Singapore, said:
"AIA Singapore recorded strong performance in 2018, achieving sustained business success reflected in outstanding growth in both Value of New Business (VONB) and Annualized New Premium (ANP).
We remain unwavering in our commitment to make a positive difference to the lives of our customers and their families. In 2018, on top of our efforts to deepen customer engagement with AIA Vitality, we launched Personal Medical Case Management service through our exclusive partnership with Medix, expanded the AIA Quality Healthcare Partners network and increased the number of participating hospitals with pre-approval claim services. These were part of the company's concerted approach to provide a comprehensive and innovative health and wellness proposition for our customers.
In 2018, we continued to invest in Singapore's health and financial wellbeing through innovations and initiatives, as well as intensify our efforts to transform our business in the areas of data and digitalization. This is our commitment to meet the evolving needs of our customers and help them live healthier, longer and better lives as we celebrate AIA's centennial in 2019."
Key innovations and initiatives in 2018 to meet the evolving protection and financial needs of customers include:
- Medix (Personal Medical Case Management Service) – AIA Singapore is the first insurer in Singapore to provide our customers with Personal Case Management Service with no additional charge. The exclusive partnership with Medix enables AIA Singapore customers to receive the best possible treatment and personalised ongoing support throughout their medical journey till recovery when faced with serious medical conditions, boosting customer experience with quality healthcare. Obtaining timely and accurate diagnosis and having access to optimal treatment will alleviate stress and provide peace of mind for customers and their families in their time of need.
- AIA Pro Lifetime Protector – In response to young families' concerns on facing the risks of pregnancy complications, birth defects, long-term impact of a child's developmental and learning disorders and managing the high costs of raising a child, AIA Pro Lifetime Protector was launched in 2018. It is an all-in-one investment-linked plan, alongside three distinctive riders, with market-first features specially introduced to help address the unmet needs of young families in Singapore.
- POS EZ – We created an online platform and first-in-market innovation that has changed the way after-sales service is being conducted. With this platform, our agency can facilitate a multitude of customer requests digitally with customers authenticating their requests securely anytime, anywhere. Our innovation was recognized by being awarded as 'Innovator of the Year - Life Insurance at the Singapore Business Review Management Excellence Awards 2018'.
We encouraged the community to stay active and healthy by engaging in health and wellness initiatives such as Fitness Fest by AIA, The Music Run™ by AIA, KidZania Singapore's "AIA at the Stadium", and the 'What's Your Why' campaign with David Beckham, our Global Ambassador for healthy living.
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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, Thailand, Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau, Brunei, Cambodia, a 97 per cent subsidiary in Sri Lanka, a 49 per cent joint venture in India and a representative office in Myanmar.
The business that is now AIA was first established in Shanghai almost 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$230 billion as of 31 December 2018.
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 33 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").