Aia Group Limited · HKEX:1299

Aia — H1 2013 Earnings Presentation

45 slides from Aia's earnings presentation, Jul 26, 2013

  1. Slide 1: 2013 Interim Results Presentation

    2013 Interim Results Presentation CREATING SUSTAINABLE VALUE 26 July 2013

  2. Slide 2: Disclaimer

    Disclaimer This document (“document”) has been prepared by AIA Group Limited (the “Company”) and its advisers 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 1H2013 Group Review Garth Jones Group Chief Financial Officer 1H2013 Financial Results Ng Keng Hooi Regional Chief Executive China, Thailand, Singapore, Malaysia Gordon Watson Regional Chief Executive Hong Kong, Korea, Other Markets C

  4. Slide 4: Creating Sustainable Value

    Creating Sustainable Value  Delivered another set of record results  Sustained growth momentum  Continued strong execution  Progressed strategic priorities  Well positioned to capture growth opportunities 4

  5. Slide 5: 1H2013: Excellent Financial Performance

    1H2013: Excellent Financial Performance $m 1H2013 1H2012 YoY VONB 645 512 26% VONB Margin 41.6% 42.6% (1.0) pps Value Creation ANP 1,527 1,187 29% EV Equity(1) 33,296 31,657 5% Operating Profit After Tax 1,268 1,080 17% Net Profit 1,934 1,444 34% IFRS Results TWPI 8,495 7,305 16% Expense Ratio 8.9%

  6. Slide 6: 1H2013: Clear Strategy – Well Executed

    1H2013: Clear Strategy – Well Executed Distribution  Continued strong growth across all channels Product  Targeted product innovation and improved mix Customer  Created additional value from focused customer management Organisation  Enhanced local empowerment and employee engagement Financial 

  7. Slide 7: Distribution: Premier Agency Delivery

    Distribution: Premier Agency Delivery VONB ($m) Premier Agency 490  VONB up 20%; ANP up 26%  Double-digit increase in active agents 407 +20%  Number 1 for MDRT in Asia  Further roll-out of iPoS to enhance agency productivity  Quality recruitment focus  AIA Premier Academy expansion  Partnersh

  8. Slide 8: Distribution: Profitable Partnerships Expansion

    Distribution: Profitable Partnerships Expansion VONB ($m) Partnerships Expansion 212  Profitable channel diversification  VONB margin up 2.6 pps 147 +44%  ANP up 35%  Bancassurance execution  New agreements launched  Doubled VONB  Direct marketing expansion  Continued to grow IFA channel in

  9. Slide 9: Creating Sustainable Value: Distribution and Product

    Creating Sustainable Value: Distribution and Product VONB ($m) more than doubled since IPO Volume Margin 37% (5)% (8)% 23% 49% 645 303 1H2010 Agency Partnership Product Mix Channel Mix, Assumption 1H2013 Volume Volume Geographical Changes and Mix and Other Items Acquisitions 9

  10. Slide 10: Creating Sustainable Value: Existing Customers

    Creating Sustainable Value: Existing Customers Excellent Results from Significant Opportunities to Existing Customer Marketing(1) Engage Existing Customers +22% +33%  27m individual in-force policies and 16m group members  Existing Customer Marketing initiatives active across the region  Focus on

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

    Financial: Sustained Momentum Across All Key Metrics VONB ($m) EV Equity ($m) IFRS OPAT ($m) 2.1x 1.5x 1.4x 33,296 645 1,268 29,091 512 1,080 27,612 399 967 899 303 22,178 1H2010 1H2011 1H2012 1H2013 1H2010 1H2011 1H2012 1H2013 1H2010 1H2011 1H2012 1H2013 11

  12. Slide 12: 1H2013 Group Review

    1H2013 Group Review Mark Tucker 1H2013 Financial Results Garth Jones Ng Keng Hooi 1H2013 Business Review Gordon Watson Creating Sustainable Value Mark Tucker 12

  13. Slide 13: 1H2013 Financial Results

    1H2013 Financial Results Value Creation IFRS Results Capital and Dividends 13

  14. Slide 14: 1H2013: Sustained Growth in VONB

    1H2013: Sustained Growth in VONB VONB ($m) 676 645 533 512 399 364 303 1H2010 2H2010 1H2011 2H2011 1H2012 2H2012 1H2013 Growth 1H2013 v 1H2012 +26% Rate 14

  15. Slide 15: 1H2013: Sustained Growth in ANP

    1H2013: Sustained Growth in ANP ANP ($m) 1,509 1,527 1,378 1,187 1,138 1,094 887 1H2010 2H2010 1H2011 2H2011 1H2012 2H2012 1H2013 Growth 1H2013 v 1H2012 +29% Rate 15

  16. Slide 16: 1H2013: Volume and Margin Movement

    1H2013: Volume and Margin Movement 26% Growth in VONB ($m) Volume Margin 3% (4)% 10% (1)% 19% 645 512 1H2012 Agency Partnership Product Mix Channel Mix, Assumption 1H2013 Volume Volume Geographical Changes and Mix and Other Items Acquisitions 16

  17. Slide 17: 1H2013: Broad-based VONB Uplift

    1H2013: Broad-based VONB Uplift VONB ($m) 168 +20% Hong Kong 140 146 +11% Thailand 131 110 +13% Singapore 97 76 +27% China 60 54 +69% Malaysia 32 45 +36% Korea 33 Other 112 +67% Markets 67 1H2012 1H2013 17

  18. Slide 18: EV Equity: Effect of Acquisitions

    EV Equity: Effect of Acquisitions FY2012 EV Equity Reconciliation ($m) Effect of Acquisitions 249 (1,865) 810 1,055 31,657 31,408 31,657 FY2012 FY2012 FY2012 Purchase Acquired Goodwill FY2012 Group EV Goodwill Group Price EV and Other Group and Other EV Equity Intangibles from EV Equity Intangibles

  19. Slide 19: EV Equity up 5% to $33.3b

    EV Equity up 5% to $33.3b 1H2013 EV Equity Movement ($m) EV Operating Profit $1.9b 465 (353) 64 (380) 645 1,198 33,564 33,296 31,657 FY2012 Expected Value of New Operating Group Investment Exchange Dividend 1H2013 Group Return on EV Business Variances and EV Equity Variances Rates and Paid Group EV

  20. Slide 20: EV Sensitivity to Capital Market Movements

    EV Sensitivity to Capital Market Movements Interest Rates ($m) Equities ($m) 32,242 32,242 (1.1)% 0.4% (2.2)% 2.2% 50 basis 50 basis points points 10% fall in 10% rise in decrease in increase in equity prices equity prices interest rates interest rates 703 118 1H2013 1H2013 (360) Group EV Group EV (

  21. Slide 21: Strong Cash Flow Generation

    Strong Cash Flow Generation Undiscounted Net Cash Flows(1) ($b) 40.6 11.8 11.6 10.7 9.6 2H13-17 2018-22 2023-27 2028-32 >2032 % of Total 14% 14% 13% 11% 48% Note: (1) Undiscounted net cash flows are defined as the after-tax surplus generated from the assets backing the statutory reserves and require

  22. Slide 22: 1H2013 Financial Results

    1H2013 Financial Results Value Creation IFRS Results Capital and Dividends 22

  23. Slide 23: Operating Profit Up to $1.6b; Diversified Earnings

    Operating Profit Up to $1.6b; Diversified Earnings Operating Profit Before Tax Operating Profit Before Tax ($m) by Segment ($m) 1,564 Corporate 6 Other Markets +19% 192 1,309 Korea Hong Kong 101 430 China 117 Malaysia 163 Thailand Singapore 340 215 1H2012 1H2013 23

  24. Slide 24: Investment Income Up to $2.5b; Stable Yield

    Investment Income Up to $2.5b; Stable Yield Investment Income ($m) Invested Assets Composition ($m) 2,465 As at As at 269 30 Nov 2012 31 May 2013 Dividend 2,089 and Fixed Income(1) 87% 86% 206 Rental Income Equity 10% 11% Fixed Income & Equity 97% 97% Interest 2,196 1,883 Cash 2% 2% Income Propertie

  25. Slide 25: OPAT Up 17% and Net Profit Up 34%

    OPAT Up 17% and Net Profit Up 34% Net Profit ($m) 1H2012 1H2013  Operating profit excludes any actual or assumed gains Operating Profit After Tax 1,080 1,268 17%  Net profit includes mark-to-market of Net gains from equities, equities as at 31 May 2013 net of tax 329 659  Net profit excludes unre

  26. Slide 26: IFRS Shareholders’ Equity of $27.2b

    IFRS Shareholders’ Equity of $27.2b Shareholders’ Equity Movement ($m) Net Profit $1.9b 659 7 (865) 1,268 (214) (380) 28,631 27,172 26,697 Equity Operating Net Movement Other Non- Equity Net Movement FX and Dividend Equity End of FY2012 Profit After from Equity operating before Other from Bonds Othe

  27. Slide 27: 1H2013 Financial Results

    1H2013 Financial Results Value Creation IFRS Results Capital and Dividends 27

  28. Slide 28: HKICO Solvency Ratio at 427%

    HKICO Solvency Ratio at 427% Solvency Surplus ($m) and Solvency Ratio on HKICO basis for AIA Co. 6,120  Ongoing capital strength 4,811  Disciplined approach to investment and capital management Solvency 3,969 Surplus 2,768  Positive impact from retained earnings generation and equity gains 150% 

  29. Slide 29: 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 1,939 (684) (1,434) (130) (380) 6,643 5,209 5,954 FS at Beginning Acquisitions FS at Beginning FS Generated FS Used Unallocated Divid

  30. Slide 30: Prudent, Sustainable and Progressive Dividend

    Prudent, Sustainable and Progressive Dividend Prudent, Invest in Robust Sustainable & Retain Profitable Financial Progressive Flexibility Growth Strength Dividend  Interim dividend increase of 13%  HK13.93 cents per share  Ex-dividend date: 8 August 2013  Payment date: 30 August 2013 30

  31. Slide 31: 1H2013 Business Review

    1H2013 Group Review Mark Tucker 1H2013 Financial Results Garth Jones Ng Keng Hooi 1H2013 Business Review Gordon Watson Creating Sustainable Value Mark Tucker 31

  32. Slide 32: Business Review: Creating Sustainable Value

    Business Review: Creating Sustainable Value Ng Keng Hooi China, Thailand, Singapore, Malaysia Gordon Watson Hong Kong, Korea, Other Markets 32

  33. Slide 33: China: Enhancing Product and Distribution Quality

    China: Enhancing Product and Distribution Quality VONB ($m)  Premier Agency 76  Focus on quality and professionalism +27%  Active new agents up over 30%  Strong growth in active agents 60  Improved product mix and productivity  Product Segmentation  Protection sales up 20%  Improved flagship

  34. Slide 34: Thailand: Reinforcing our Competitive Advantage

    Thailand: Reinforcing our Competitive Advantage VONB ($m)  Premier Agency 146  Quality recruitment, selection and training 131 +11%  Active new agents up over 20%  On track to retain no.1 MDRT ranking  Profitable Partnerships  VONB up 45%  Product Segmentation 1H2012 1H2013  Continued succes

  35. Slide 35: Singapore: Continuing to Innovate

    Singapore: Continuing to Innovate VONB ($m)  Premier Agency 110  New agency career structure supporting better recruitment +13% 97  Active new agents up 22%  Strong adoption of iPoS  Product Segmentation  Strengthened protection leadership  New critical illness plans and 1H2012 1H2013 protect

  36. Slide 36: ING Malaysia Integration On Track

    ING Malaysia Integration On Track Very Large Scale Single Licence Market Positioned for Integration Achieved Leadership Growth      3rd & 4th largest  Legal merger  No. 1 life insurer  Broader coverage completed  4 admin systems  No. 1 group insurer  New products  AIA brand adopted launc

  37. Slide 37: Malaysia: Strengthening our Growth Platform

    Malaysia: Strengthening our Growth Platform VONB ($m)  Combined 1H13 Results  Important milestone achieved 54  VONB uplift of 69% +69%  VONB margin reflects acquisition 32  Premier Agency  Broader geographic coverage  More than doubled agency force  Recruitment focused on younger agents 1H20

  38. Slide 38: Business Review: Creating Sustainable Value

    Business Review: Creating Sustainable Value Ng Keng Hooi China, Thailand, Singapore, Malaysia Gordon Watson Hong Kong, Korea, Other Markets 38

  39. Slide 39: Hong Kong: Sustaining Strong Performance

    Hong Kong: Sustaining Strong Performance VONB ($m)  Premier Agency  Focus on recruitment and productivity 168  New recruits up 11% +20%  Agency productivity up over 25% 140  Agency Executive Development focus within AIA Premier Academy  On track to exceed MDRT qualifiers record  Group Insuran

  40. Slide 40: Korea: Repositioning in Progress

    Korea: Repositioning in Progress VONB ($m)  Premier Agency  Recruitment and training focus 45  Active new agents doubled +36%  Active agents up over 30% 33  Agency productivity up over 30%  Successful launch of “Next AIA” recruiting and training programme  Direct Marketing 1H2012 1H2013  Tra

  41. Slide 41: Other Markets: Delivering Excellent Growth

    Other Markets: Delivering Excellent Growth  Excellent VONB results VONB ($m)  Expansion of Premier IFA model Australia 112  Reinforced independent risk specialist position +67%  Top 3 position in retail IFA market 67  Strong VONB growth Indonesia  New protection rider benefits for ULP  Number

  42. Slide 42: Creating Sustainable Value

    1H2013 Group Review Mark Tucker 1H2013 Financial Results Garth Jones Ng Keng Hooi 1H2013 Business Review Gordon Watson Creating Sustainable Value Mark Tucker 42

  43. Slide 43: AIA – Creating Sustainable Value

    AIA – Creating Sustainable Value  Rapid urbanisation with growing disposable incomes Asian Growth  Low social welfare provision and insurance take-up Opportunity  Vast latent need for all forms of life and health insurance  100% Asia-focused and advantaged ownership structure Advantaged  Scale

  44. Slide 44: 2013 Interim Results Presentation

    2013 Interim Results Presentation CREATING SUSTAINABLE VALUE

  45. Slide 45: Definitions and Notes

    Definitions and Notes  1H2013 figures include the financial and operational results of AIA’s acquisitions from the respective dates of completion.  Annualised new premium (ANP) excludes pension business.  Certain segmental reclassifications have been made in the prior period VONB and VONB margin

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