HONG KONG, 9 November 2020 – AIA Group Limited (the “Company”; stock code: 1299) today announces key new business indicators for the third quarter ended 30 September 2020.

Growth rates are shown on a quarter-on-quarter and constant exchange rate basis.

1. Value of new business (VONB) of US$706 million, up 22 per cent

2. Annualised new premiums (ANP) grew 21 per cent to US$1,359 million

3. VONB margin of 51.6 per cent, consistent with the second quarter of 2020

4. Total weighted premium income (TWPI) up 7 per cent from the third quarter of 2019

 

In the third quarter of 2020, the Group delivered strong momentum in new business sales. VONB increased by 22 per cent compared to the second quarter of 2020, driven by sequential quarter-on-quarter growth from almost all of our markets. VONB margin was consistent with the second quarter as the reduction from economic assumption changes and geographical mix shifts was offset by reduced acquisition expense overruns as quarterly sales momentum improved. Across our agency businesses, we have continued to build future capacity with new recruits up more than 20 per cent compared to the third quarter of 2019.

While sales volumes during the first nine months of 2020 were lower than for the same period last year, the overall scale of our in-force business has continued to increase. TWPI of US$8,797 million increased 7 per cent compared with the third quarter of 2019. Persistency has remained strong and, in the third quarter, there has been an improvement in the adverse lapse experience in the first half of the year for our operations in Thailand and Malaysia. The positive medical claims experience that we reported for the Group in the first half of 2020 has also normalised in the third quarter and experience was in line with our expectations .

The third quarter of 2020 marked a historic change for AIA China, beginning with the incorporation of our new subsidiary in Mainland China on 9 July. Our people worked tirelessly on the conversion process, which included coordination with more than 2,000 counterparties and 150 government departments across the country. Within three months of its incorporation, AIA Life Insurance Company Limited assumed operational control of our business in Mainland China on 1 October. This new corporate structure is critical for delivering our ambitious expansion plans and, following regulatory approval, we are now progressing with preparations for our new branch in Sichuan. In the third quarter, VONB from AIA China was broadly similar to the second quarter before allowing for 5 per cent withholding tax, which has been applied since 9 July. AIA China remained the largest contributor to the Group's VONB. In the first nine months of 2020, we have continued to grow our high-quality Premier Agency force and our disciplined execution has achieved a double-digit increase in new recruits, total agents and also agency leaders.

Our business in Hong Kong delivered modest quarter-on-quarter growth in VONB, driven by increased sales to our domestic customer segment. Sales to Mainland Chinese visitors remained close to zero in the third quarter given the ongoing mandatory quarantine requirement.

AIA Thailand achieved strong quarter-on-quarter growth in the third quarter as sales momentum returned to both agency and bancassurance channels. Our businesses in Singapore and Malaysia delivered excellent quarter-on-quarter growth with VONB more than double the second quarter and also significantly above the third quarter of 2019.

The easing of movement restrictions across many markets supported excellent quarter-on-quarter growth in VONB for our Other Markets segment. Tata AIA Life achieved excellent year-on-year growth on a like-for-like basis despite the ongoing disruption to the Indian economy from the pandemic and has now become the market leader in retail protection business. All of our other individual markets in this segment delivered quarter-on-quarter growth in VONB.

After the sharp contraction in the global economy in the first half of 2020, some countries have returned to growth in the third quarter, including Mainland China. Economic recovery has diverged significantly at the country level, driven by the effectiveness of pandemic containment measures and government policies as well as the importance and competitiveness of manufacturing industries. The medium-term outlook remains highly uncertain given COVID-19 infections have been rising in many countries and political and trade tensions remain elevated. However, the demand for AIA's products and services will continue to grow over the long term, powered by the structural drivers of rising wealth, low insurance penetration levels and limited social welfare across Asia. AIA is uniquely positioned through our powerful distribution, differentiated propositions, leading brand and financial strength to capture the enormous long-term opportunities in the Asian life and health insurance market.

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.

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