AIA Group Limited (the “Company”; stock code: 1299) today announces record quarterly value of new business (VONB) of US$1,021 million and continued strong growth of 20 per cent on constant exchange rates (CER) for the first quarter ended 31 March 2018.
VONB growth of 20 per cent on constant exchange rates
Highlights of the first quarter on constant exchange rates:
- 20 per cent growth in VONB to US$1,021 million (26 per cent on actual exchange rates (AER))
- 1 per cent increase in annualised new premiums (ANP) to US$1,696 million (4 per cent on AER)
- VONB margin of 59.7 per cent, up 9.8 pps
- Total weighted premium income (TWPI) up 14 per cent to US$7,219million (19 per cent on AER)
KEY FINANCIAL SUMMARY
Ng Keng Hooi, AIA's Group Chief Executive and President, said:
“AIA has made a strong start to the year with 20 per cent growth in VONB to US$1,021 million, which is the first time that quarterly VONB for the Group has exceeded US$1 billion.
“We have maintained our strong track record of year-on-year growth, with today's headline figures demonstrating the consistent execution of our profitable growth strategy.
“AIA's strategy remains closely aligned with the vast opportunities created by the unprecedented structural economic, demographic and social changes taking place across our markets. Our competitive advantages, combined with our deep roots and long history in the region, mean that the Group is exceptionally well-placed to help the rapidly growing middle-class across Asia meet their substantial needs for financial protection and long-term savings and live healthier, longer, better lives.”
SUMMARY FOR THE FIRST QUARTER
VONB increased by 20 per cent to US$1,021 million with each of our operating market segments registering growth compared to the first quarter of 2017.
AIA's wholly-owned operation in China was once again our fastest growing business in the first quarter, with excellent VONB growth driven by an increase in active agents and higher productivity. Our differentiated strategy continues to set AIA apart in the industry with full-time professional agents providing high-quality advice, supported by digital platforms that enhance efficiency and effectiveness.
In Hong Kong, we delivered positive growth in VONB, building on a strong performance in the first quarter of 2017. Lower ANP through the retail IFA channel was more than offset by increased profitability of the product mix, which was also a feature of the second half of 2017.
Singapore achieved very strong growth in VONB, with continued growth in regular premium protection business. Strong agency results benefited from both an increased number of active agents and productivity improvements. Malaysia also delivered very strong VONB growth, across both agency and partnership distribution channels.
VONB growth in Thailand was positive in the first quarter of 2018, supported by improvement in agent productivity. Our Other Markets segment delivered double-digit VONB growth with strong performances in Indonesia, Korea, the Philippines and Vietnam.
VONB margin improved strongly to 59.7 per cent, compared with 49.2 per cent in the first quarter of 2017, mainly driven by product and geographic mix. ANP increased by 1 per cent compared with the first quarter of 2017 to US$1,696 million, as lower sales volumes in Hong Kong were offset by double-digit growth across all other operating market segments. Margin reported on a present value of new business premium (PVNBP) basis remained strong at 10 per cent for the first quarter of 2018. Long-term economic assumptions remain unchanged from those shown in our Annual Report 2017, following the same approach that we have applied consistently for quarterly new business highlights. TWPI increased by 14 per cent to US$7,219 million, compared with the first quarter of 2017, as we continue to layer new business onto our large in-force portfolio.
The outlook for the global economy remains positive. Asian economies have increasingly re-oriented towards domestic drivers of growth with inter-regional demand for exports continuing to rise. While global political uncertainty continues to drive volatility in capital markets, Asian policymakers retain significant monetary and fiscal flexibility to sustain domestic sources of investment.
AIA is uniquely positioned to capture the immense opportunities presented by this backdrop of positive economic developments, rising incomes and the rapid growth in the middle classes across Asia. Low levels of social insurance protection and increasing incomes combine to create strong demand for protection and savings products in all of our markets. We remain confident in our ability to deliver growing and sustainable shareholder value.
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 constant exchange rates unless otherwise stated, since this provides a clearer picture of the year-on-year performance of the underlying businesses.
2017 SUPPLEMENTARY FINANCIAL INFORMATION ON CALENDAR YEAR BASIS
In February 2018, the board of directors of the Company (the “Board”) resolved to change the Company's financial year-end date from 30 November to 31 December as previously announced on 27 February 2018. Accordingly, the next 13-month financial period-end date of the Company will be 31 December 2018. The next audited financial statements of the Group will cover a 13-month period from 1 December 2017 to 31 December 2018 and a voluntary disclosure of the 12-month periods from 1 January to 31 December 2017 and from 1 January to 31 December 2018.
In conjunction with this change, the Company voluntarily discloses supplementary financial information for the calendar year 2017 as set out in the Appendix on pages 6 to 36.
The 2017 supplementary financial information set out in the Appendix on pages 6 to 36 does not constitute the Company's statutory annual consolidated financial statements for that year and has been prepared to provide a historical comparison. It has neither been audited nor reviewed by the Company's external auditor, PricewaterhouseCoopers.
The Company has delivered the financial statements for the year ended 30 November 2017 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Companies Ordinance and will deliver the financial statements for the 13-month period ending 31 December 2018 in due course.
The Company's external auditor has reported on the financial statements for the year ended 30 November 2017. The external auditor's report was unqualified; it did not include a reference to any matters to which the auditor drew attention by way of emphasis of matter without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Companies Ordinance. The Company's external auditor has yet to report on the financial statements for the 13-month period ending 31 December 2018.
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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$216 billion as of 30 November 2017.
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 30 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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As for all quarterly new business highlights announcements, there will not be a conference call for media or investors and your usual contact will be available to answer queries.
- AIA's first fiscal quarter of 2018 ended on 31 March 2018 and comparatives for 2017 relate to the three-month period ended on 31 March 2017.
- All figures are presented in actual reporting currency (US dollars) and based on actual exchange rates (AER) unless otherwise stated. Change is shown on a year-on-year basis and based on constant exchange rates (CER) unless otherwise stated. Change on CER is calculated using constant average exchange rates for 2018 and 2017.
- Long-term economic assumptions are the same as those shown as at 30 November 2017 in Section 5.2 of the Supplementary Embedded Value Information in our 2017 annual results preliminary announcement published on 27 February 2018. Non-economic assumptions are based on those used at 30 November 2017 updated to reflect the latest experience observed.
- VONB is calculated based on assumptions applicable at the point of sale and before deducting the amount attributable to non-controlling interests. The amounts of VONB attributable to noncontrolling interests in the three months ended 31 March 2018 and in the three months ended 31 March 2017 were US$7 million and US$6 million respectively.
- VONB includes pension business. ANP and VONB margin exclude pension business.
- ANP represents 100 per cent of annualised first year premiums and 10 per cent of single premiums, before reinsurance ceded and excluding pension business.
- TWPI consists of 100 per cent of renewal premiums, 100 per cent of first year premiums and 10 per cent of single premiums, before reinsurance ceded.
This document contains forward-looking statements relating to AIA Group Limited that are based on the beliefs of the Group's management as well as assumptions made by and information currently available to the Group's management. These forward-looking statements are, by their nature, subject to significant risks and uncertainties. When used in this document, the words “will”, “future” and similar expressions are intended to identify forward-looking statements. You are strongly cautioned that reliance on any forwardlooking statements involves known and unknown risks and uncertainties. Actual results and events may differ materially from information contained in the forward-looking statements.
This document is for information purposes only and does not constitute an invitation or offer by any person to acquire, purchase or subscribe for securities. This document is not, and is not intended to be, an offer of securities for sale in the United States. The securities of AIA Group Limited have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements under the U.S. Securities Act. There is not, and is not intended to be, any public offering of such securities in the United States.