Aia Group Limited · HKEX:1299
Aia — H1 2020 Earnings Presentation
79 slides from Aia's earnings presentation, Aug 20, 2020
Slide 1: 2020 Interim Results Presentation
aN HEALTHIER, LONGER, BETTER LIVES Ale 2020 INTERIM RESULTS PRESENTATION 20 August 2020
Slide 2: Disclaimer
Disclaimer 4) 4m This document (“document”) has been prepared by AIA Group Limited (the “Company”) solely for use at the presentation held in connection with the announcement of the Company's financial results (the “Presentation”). References to “document” in this disclaimer shall be construed to in
Slide 3: [AIA - HIGHLY CONFIDENTIAL]
[AIA - HIGHLY CONFIDENTIAL]
Slide 4: Financial Results
Slide 5: 1H2020 Resilience in Unprecedented Environment
1H2020 Resilience in Unprecedented Environment (1) Comparatives for balance laa VONB $1,410m Ne 7 la EV Equity” ~ $61.4b sheet items are shown against the position as at 31 December 2019 a OPAT ~ $2,933m L J Shareholders’ ( Allocated Equity” > $43.3b Capital & Dividends laa UFSG \ $3,049m XN ZF 7 \n
Slide 6: Growth, Earnings, Capital & Dividends
BN HEALTHIER, LONGER, 4 I (vad BETTER LIVES Growth Earnings Capital & Dividends
Slide 7: Positive VONB Momentum as COVID-19 Measures Ease
Positive VONB Momentum as COVID-19 Measures Ease ES AIR AIA China the largest contributor to Group VONB VONB reflects timing and scale of restrictions 1H2020 VONB by Market Segment Monthly Group VONB™ Mainland China Singapore $1 41 Om 38% “ (37)% Thailand 13% Hong Kong Feb Mar Apr May Jun 20% Note:
Slide 8: Supporting Agents, Partners and Customers
Supporting Agents, Partners and Customers EX Recruitment and Training Remote Digital Sales Customer Loyalty Online Recruitment Seminars Remote Digital Sales Capability Renewal Premiums” (Sb) 14.5 Over 8,000 100%) Across 128 Sy all markets Across Asia-Pacific % of Products Virtual Sales Capability Ne
Slide 9: Strong Momentum in All Markets as Restrictions Ease
Strong Momentum in All Markets as Restrictions Ease eased remote sellin Resumption of fac Mainland China Hong Kong Rest of Group VONB VONB VONB Feb Mar Apr May Jun Feb Mar Apr May Jun Feb Mar Apr May Jun = Y-o-Y growth in 2Q 20202) = Minimal sales from MCV customer = Introduction or tightening of =
Slide 10: EV Equity Maintained before Dividend Payment
EV Equity Maintained before Dividend Payment 1H2020 EV Equity Movement (Sb) ; i ! +16 +04 (0.1) 678 (3.4) | ” H | 1 63.9 (0.9) +03 63.8 : (15) H ‘i (0.9) 61.4 \ ' — ' ' ' H ' EV Operating Profit ' ' H $3.9b ' . ' H Operating ROEV ' ' ' ' 12.9% - | | H Group Expected VONB Operating Finance Group Inve
Slide 11: Quality Business with Prudent Operating Assumptions
Quality Business with Prudent Operating Assumptions Consistently positive operating variances have added over $3b to EV since IPO Mortality and Morbidity Claims Experience Variances ($m) 273 rar 188 410 120 97 87 83 79 69 1H11 1H12 1H13 1H14 1H15 1H16 1H17 1H18 1H19 1H20 Note: (1) 2017 figure covers
Slide 12: 10 Year Market Forward vs AIA Long-term Assumption
10 Year Market Forward AIA Long-term Assumption (10-year Govt Bond) (10-year Govt Bond)
Slide 13: EV Equity 2.5x IPO to $61.4b Driven by Operating Profit
EV Equity 2.5x IPO to $61.4b Driven by Operating Profit Prudent assumptions with small net cumulative variances EV Equity ($b) EV Equity Movement Since IPO (Sb) 1434 (46)! +512 | ! ' 10.3) 614 614 H = H oO) "i 53.6 ' ' (2.8) 61.4 48.6 ' (1.5) H = H Net cumulative ! 40.5 41.7 : variances ' 36.9 ' 1 3
Slide 14: Growth, Earnings, Capital & Dividends
BN HEALTHIER, LONGER, 4 I (vad BETTER LIVES Growth Earnings Capital & Dividends
Slide 15: OPAT up 5% to $2.9b
OPAT up 5% to $2.9b ES Resilient and growing in-force portfolio of 1H2020 OPAT by Market Segment high-quality business with recurring premiums 7~ Hong Kong > /~ Mainland China > va Singapore ~\ $1,005m $640m $303m Singapore 35% NX wy Ne yy Ne Dy) 10% Thailand ~\ va Malaysia =~ Other Markets ~ Thaila
Slide 16: Shareholders' Allocated Equity up 5% before Dividend Payment
Shareholders’ Allocated Equity up 5% before Dividend Payment EX Shareholders’ Allocated Equity driven by operating profit growth IFRS Shareholders’ Allocated Equity Movement (Sb) i i Hl Hl Hl Hl H 1 H 1 ' +29 (1.3) +06 45.5 ' (1.5) 07 ; 43.3 — = 7) 433 H Hl Hl Hl Hl Hl H 1 H Hl Hl Hl Hl Hl H 1 H Hl
Slide 17: OPAT 3.0x IPO Reflects Growing and Resilient In-Force
OPAT 3.0x IPO Reflects Growing and Resilient In-Force ES Ale 99% of Total Weighted Premium Income (TWPI) are recurring OPAT (Sm) TWPI by Premium Type (Sb) 16.4 169 2,933 14.4 12.2 96 10.3 35 9.0 1,428 7.3 6.8 4,119 1,220 6.0 969 | } 1H10 1H11 1H12 1H13 1H14 1H15 1H16 1H17 1H18 1H19 1H20 1H10 1H11 1H
Slide 18: Shareholders' Allocated Equity 2.5x IPO Driven by OPAT Growth
Shareholders’ Allocated Equity 2.5x IPO Driven by OPAT Growth cx Ale Shareholders’ Allocated Equity (Sb) Shareholders’ Allocated Equity Movement Since IPO (Sb) Net Profit +35.8 if : i} 43.3 +37.3 (1.2) (0.3) (10.3) ~ ee 23.4 25.0 20.0 176 19.3 17.6 IPO) = 1H11 1H12 1H13° 1H14 1H15 1H16 1H17 1H18 1H1
Slide 19: Growth, Earnings, Capital & Dividends
BN HEALTHIER, LONGER, 4 I (vad BETTER LIVES Growth Earnings Capital & Dividends
Slide 20: Robust Solvency Position
Robust Solvency Position aN AIP Resilient HKIO Solvency Position Strong Group LCSM Cover Ratio AIA Co. HKIO Solvency Ratio Group LCSM Cover Ratio” 362% 366% 350% 328% End of 2019 End of 112020 End of 2019 End of 1H2020 Note: 20 (1) Ald estimated basis; excluding any contribution from medium-term not
Slide 21: Resilient Free Surplus with UFSG up 11%
Resilient Free Surplus with UFSG up 11% Free Surplus Movement (Sb) +3.0 (0.7) — (0.1) (0.1) 7.1 (3.9) 14.9 13.2 (1.5) | = (3.8) Interest Rates (0.1) Equities, Exchange Rates and Others Free Surplus Underlying New Business Unallocated Finance Costs Free Surplus Investment Return —_— Free Surplus Divi
Slide 22: UFSG 2.8x IPO from In-Force Growth
UFSG 2.8x IPO from In-Force Growth Growth of quality in-force value translates into Underlying Free Surplus Generation Value of In-Force Business ($b) 19.0 16.8 17.0 15.2 IPO 1H11 1H12 1H13 1H14 1H15 1H16 1H17 1H18 1H19 1H20 Underlying Free Surplus Generation ($m) 3,049 2,804 2,497 2,290 2,073 1,834
Slide 23: Financial Discipline Driving Shareholder Value
Financial Discipline Driving Shareholder Value Use of Free Surplus” Since IPO (Sb) Free Surplus” (Sb) 375 (138) > VONB of $23.5b (CAGR® of 23%) 11.8 > Paid over $10b dividends > Financed inorganic opportunities (10.3) >20% IRR > Minimal investment variances New Business Investment vi (3.8) 5.0 m= ;
Slide 24: Interim Dividend Increase of 5%
Interim Dividend Increase of 5% ES Ale Prudent, sustainable and progressive dividend policy Total Dividend Per Share (HK cents) Interim Dividend Per Share (HK cents) 126.60 35.00 33.30 a 33.00 37.00 2011 2012 2013 2014 2015 2016 2017 2018” 2019 1H2019 1H2020 Note: (1) Total dividend excluding specia
Slide 25: Resilient 1H2020 Results with Positive Momentum
Resilient 1H2020 Results with Positive Momentum 4) =" Strong VONB recovery as COVID-19 measures ease =" OPAT and UFSG growth supported by quality in-force portfolio = Resilient Embedded Value with prudent assumptions =" Growth in Shareholders’ Allocated Equity before dividend payment =" Robust finan
Slide 26: [AIA - HIGHLY CONFIDENTIAL]
[AIA - HIGHLY CONFIDENTIAL]
Slide 27: AIA's Growth Strategy is Built on Long-term Structural Drivers
AIA’s Growth Strategy is Built on 5 Long-term Structural Drivers EX Asia’s unprecedented wealth creation Fast-growing middle class population (1.4b increase by 2030) Substantial increase in personal financial assets ($70t increase by 2030) Growing need to optimise asset allocation (~50% of personal
Slide 28: Key Competitive Advantages of a Transformed AIA
Key Competitive Advantages of a Transformed AIA aN Unparalleled Asia Platform World-Class Digital Technology Best-in-Class istomer Experience Empowered ultu nancial D e and Strength Asia focus with leading market positions 100% ownership structures Customer and distribution digital tools powered by
Slide 29: Unparalleled Platform Focused on Asia
Unparalleled Platform Focused on Asia Growing Middle Class Unique Asia Footprint Middle Class Population Life Insurance Density Unmatched Scale and Presence Billion people Premiums per capita in US$ (2019) Over a century of experience Asia (ex-Japan) 41.4 4h j 3.0 3,383 puuinated ni Leading position
Slide 30: Mainland China: AIA's Unique Opportunity with 100% Ownership
Unparalleled Asia Platform Mainland China: AIA’s Unique Opportunity with 100% Ownership aN Geographic Expansion Multiplies AIA Opportunity Differentiated Strategy Drives Profitable Growth Middle Class Population“ (m) | Rest of Mainland China 129 Existing AIA Footprint 12 new 366 provinces and munici
Slide 31: Mainland China: AIA has a Proven Expansion Model
Unparalleled Asia Platform Mainland China: AIA has a Proven Expansion Model EX Premier Agency Digitally Enabled High-quality Management = Professional full-time agency platform End-to-end digitalised agency model: = Experienced local management team with recruit, train, manage, prospect, sell, servi
Slide 32: Transforming AIA through World-Class Technology
Transforming AIA through World-Class Technology Scalable Pe efficient sic = Complete, accurate and timely data = Technology needs met dynamically = Scalable near real time = Seamless plug and play integration with partners Cloud First Lead Time to Real Time & Scalable, efficient and agile platform M
Slide 33: Enabling Customer, Agent and Partner Digital Journeys
Enabling Customer, Agent and Partner Digital Journeys EX Agent Apps Bank Partner Integration Digital Platforms Customer Experience Digitally-equipped Integrated business Driving greater Z Exceptional salesforce supported models and shared engagement experience from and customer H purchase to acquisi
Slide 34: Analytics: Powering Everything We Do
Analytics: Powering Everything We Do Data Analytics Use Cases igital Technology Ale Personalised engagement Productaffinity based offers Predictive underwriting Dynamic pricing based on profiles Tailored propositions ‘Agent-customer Simplified claim matching Voice submission Propensity Al-powered an
Slide 35: Transforming Customer Journeys with Analytics
Transforming Customer Journeys with Analytics Product affinity recommend offers based on customer needs and segment Agent-customer matching based on customer profile and needs Coverage calculator analyse protection gap and recommend products Personalised experience targeted content based on preferen
Slide 36: Best-in-Class Experience with Compelling Outcomes
Best-in-Class Experience with Compelling Outcomes cs Leading customer service and claim Compelling and engaging propositions Superior experiences delivering greater journeys with relentless focus on with integrated and exclusive services persistency, larger case sizes and more simplicity, timeliness
Slide 37: Accelerating High-Quality Premier Agency Growth
Accelerating High-Quality Premier Agency Growth p Achievement Since IPO Significant Opportunity to Increase Scale Value Creation Agency VONB 5.6x since IPO) #1 MDRT Globally >12,700 Registered MDRT members iS MDRT over 7X since IPO Productivity VONB per 2.7X Active Agent since IPO) Note: (1) 2019 fu
Slide 38: Technology, Digital and Analytics Powering Agent Value Chain
Technology, Digital and Analytics Powering Agent Value Chain EX ces \ | OS tm | oN Recruit Train Manage Prospect Sell Service = Performance = Proactive and = Real-time performance = Al-enabled leads Next-gen prediction real-time coaching tracking management Leaders * Fast-track talent = Mentoring an
Slide 39: Bancassurance: Significantly Expanding Customer Reach via Digital
Differentiated Quality bution Bancassurance: Significantly Expanding Customer Reach via Digital EX Leading Portfolio of Long-term Partnerships Regional Strategic Bancassurance Partnership in 12 Markets Partnerships with Top 3 Domestic Banks in 9 Markets Existing base of >100 million in-branch, onlin
Slide 40: Digital Platforms: New Models, New Growth
Digital Platforms: New Models, New Growth nad > Increased new custome affic and greater leads conversio' rough personalised di al engagement ___ Complete @ AIA Purchase oe Additional Offer Digital + AIA Vitedity ; ; Platforms ae cuynow Reminder Assistance Special Offer fa . —| monet -— arketing —| f
Slide 41: Integrated and Personalised Health and Wellness Propositions
Integrated and Personalised Health and Wellness Propositions Helping people live Healthier, Longer, Better Lives Members Positive health outcomes Better value (dynamic pricing and benefits) e 6-8 AIA Vielity Ball a Ae Society Insurer Healthier society Lower claims Reduced healthcare burden Greater p
Slide 42: Compelling Propositions
Compelling Propositions AlA’s Differentiated Regional Health and Wellness Ecosystem Wellness an LFA community Home-based care Chronic disease management w Rehabilitation Personal Case Management Health concierge TREA Managed Care al PREDI AIA Vielity eft AIA Regional Health Passport Smartphone bioma
Slide 43: Long-term Savings: Powered by AIA Regional Funds Platform
Long-term Savings: Powered by AIA Regional Funds Platform aN Ale Customer Outcomes @ Peace of mind | Sy Value for money | matt Long-term outperformance we Hill AIA Regional Funds Platform Professional Stewardship Exclusive Access Flexibility and Choice = Manager selection = Innovative funds and stra
Slide 44: Organisation of the Future: Simpler, Faster, More Connected
Organisation of the Future: Simpler, Faster, More Connected ES Building on AIA’s empowerment culture through greater autonomy and collaboration between functions _- Streamline organisational structures to accelerate execution of strategy and provide new opportunities to retain talent ch Embed an agi
Slide 45: Financial Discipline and Strength
Financial Discipline and Strength Financial Discipline Delivering Sustainable Shareholder Value aN OPAT ($m) VONB ($m) EV Equity $61.4b 2.5x IPO Note: For 142020, unl Shareholders’ Allocated Equity $43.3b 2.5x IPO Ale Capital & Cash UFSG ($m) 5,501 2,113 Dividend Paid $10.3b since IPO 45
Slide 46: AIA Group — Delivering Sustainable Shareholder Value
AIA Group — Delivering Sustainable Shareholder Value at =" Focus 100% on Asia to capture structural growth =" Leverage unique Mainland China opportunity to access 4X larger market Transform technology, digital and analytics to drive growth and efficiency Accelerate Premier Agency growth in developin
Slide 47: Our Purpose: Helping People live Healthier, Longer, Better Lives
Our Purpose: Helping People live Healthier, Longer, Better Lives EX 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-c
Slide 48: Q&A Session
Q&A Session
Slide 49: Definitions and Notes
Definitions and Notes aN = In the context of our reportable market segments, Hong Kong refers to operations in Hong Kong Special Administrative Region and Macau Special Administrative Region; Singapore refers to operations in Singapore and Brunei; and Other Markets refers to operations in Australia
Slide 50: Definitions and Notes (Cont.)
Definitions and Notes (Cont.) = The Hong Kong Insurance Authority (HKIA) is introducing a group-wide capital framework for monitoring insurance groups under its supervision. The cover ratio of group available capital to group minimum capital requirement (MCR) under the Local Capital Summation Method
Slide 51: Appendix
aN HEALTHIER, LONGER, BETTER LIVES Ale APPENDIX
Slide 52: Regional Chief Executive Market Responsibilities
Regional Chief Executive Market Responsibilities ES Lee Yuan Siong Group Chief Executive and President Regional Chief Executives Bill Lisle Jacky Chan 9 Tan Hak Leh “P " Thailand = Mainland China " Singapore and Brunei = Australia (incl. New Zealand) = Hong Kong and Macau * Malaysia = India « Philip
Slide 53: 1H2020 Summary of Financial Results
1H2020 Summary of Financial Results VONB EV Operating Profit Operating ROEV EV Equity2) Operating Profit After Tax IFRS Operating ROE®) Earnings Shareholders’ Allocated Equity) Underlying Free Surplus Generation Capital & AIA Co. HKIO Solvency Ratio Dividends Group LCSM Cover Ratio“) Interim Dividen
Slide 54: Geographical Market Performance
Geographical Market Performance Mainland China ($m) 12019 AER Singapore ($m) 1H2019 AER VoNB VoNB 173 (27)% VONB Margin 81 VONB Margin 64.8% (5.5) pps TWPl 1 TWPI 1,456 : Hong Kong ($m) Te 112019 R Malaysia ($m) 442020 [Ret AER R AE VONB mm (68)% |eCoy VONB Te (30)% [Ney VONB Margin 68.0% (17.0)pps_
Slide 55: Uniquely Diversified Platform
Uniquely Diversified Platform % of VONB % of VONB % of VONB 6% Others Malaysia 22% Partnerships % Unit-linked 8% Singapore 13% Thailand 28% Participating 16% Other Markets 20% Hong Kong 78% Agency 59% Traditional Protection 38% Mainland China 1H2020 1H2020 1H2020 Notes: Distribution mis based on loc
Slide 56: Balanced Product Mix and Diversified Earnings
Balanced Product Mix and Diversified Earnings Sources of IFRS Operating Profit‘) Return on Net Worth 14% Participating and Spread 22% Insurance and Fee-based 64% Notes: For 1H2020 (1) Operating profit before tax and before Group Corporate Centre expenses OPAT by Market Segment Hong Kong Singapore 35
Slide 57: Shift in Product Mix; Stable Protection Margin
Shift in Product Mix; Stable Protection Margin Higher demand for long-term savings products; Successful upselling to existing customers in Mainland China and Hong Kong VONB Margin Movement PVNBP Margin by Product 6% Others 65.6% (6.5) pps H ma | 15% 15% (07) pPs_—_(4.0) pps 54.4% H 11% ' | . | 10% (
Slide 58: Resilient Working Capital Position
Resilient Working Capital Position Working Capital Movement (Sb) +44 (0.0) 13.5 (0.5) +06 — 129 (1.5) || 40.5 13.8 Working Capital PaymentforCMLA Working Capital Net Funds Remitted Increase in Purchase of Shares End of 2019 Acquisition After Acquisition Borrowings Held by Employee Share-based Trusts
Slide 59: Capital Fungibility
Capital Fungibility Net Remittances to Group ($m) 1,853 1,169 1,188 964 972 1,018 993 844 782 649 1H11 1H12 1H13 1H14 1H15 1H16 1H17 1H18 1H19 1H20 Working Capital (Sm) 13,750 12,031 10,647 9,138 8,268 7,077 5,383 5,908 4,290 3,088 1H11 1H12 1H13 1H14 1H15 1H16 1H17 1H18 1H19 1H20 59
Slide 60: 1H2020 ANW Movement
1H2020 ANW Movement ANW Movement (Sb) +28 (0.4) +03 (0.1) 31.0 (3.0) 28.2 | +04 (0.3) (1.5) 268 ANW Expected Contribution Operating Finance ANW Investment Other Non- Exchange Dividend ANW End of 2019 Return to Variances Costs Before Return operating Rates and Paid End of 1H2020 ANW from Non- Varianc
Slide 61: 1H2020 VIF Movement
1H2020 VIF Movement VIF Movement (Sb) +18 +00 34.9 (1.3) 33.7 (0.7) LC] (0.1) (0.6) bn ___ a 33.0 VIF Expected Contribution to Operating VIF Investment Other Exchange VIF End of 2019 Return VIF from VONB. Variances Before Return Non-operating Rates and End of 1H2020 Non-operating Variances Variances
Slide 62: 1H2020 IFRS Shareholders' Equity and ANW
1H2020 IFRS Shareholders’ Equity and ANW Reconciliation of IFRS Shareholders’ Equity to ANW (Sb) 56.8 (24.9) +33 (2.4) | +01 32.9 (6.3) a 256 Shareholders’ Difference Deferred Elimination of Non-controlling ANW Adjustment to ANW Equity between Tax Impacts Intangible Assets Interests (Business Unit)
Slide 63: Free Surplus vs Group LCSM Surplus
Free Surplus vs Group LCSM Surplus Reconciliation of Free Surplus to Group LCSM Surplus (Sb) +7.0 37.0 +75 +107 22.5 11.8 Free Surplus Adjustment to Free Surplus Adjustments to AIA China Group on Consolidated Basis Reflect Consolidated on Local Basis Reflect Shareholders’ Adjustment) LCSM Surplus En
Slide 64: Robust Capital Structure
Robust Capital Structure AIA Co. HKIO Solvency Ratio AIA Capital Structure 433% 427% 428% gouq, “46% 421% 353% 362% 337% 344% Borrowings $6.9b 328% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H2020 1H2020 Leverage Ratio 10.7% AIA International HKIO Solvency Ratio 385% 365% 380% 356% 334% 321%
Slide 65: Investment Asset Mix
Equities Real Estate 12% 3% Cash and Cash Equivalents 2%
Slide 66: Total Invested Assets
Total Invested Assets ES Ale Other Total Invested Assets $221.4b Par”) Funds Polieynolder Total (Sm) Shareholder Other Policyholder Fixed Income 69,789 114,856 184,645 shart der 60% Equities 17,716 6,473 24,189 Real Estate 1,011 5,478 6,489 Part?) Funds 40% Others” 1,033 5,007 6,040 Total Invested A
Slide 67: Prudent Investment Portfolio Summary
Prudent Investment Portfolio Summary IFRS Operating Profit Investment Return (Sm) 4,266 4,549 Expected " Return for 1,129 Equities and 1,086 Real Estate 3,180 3,420 Interest Income 1H2019 1H2020 Fixed Income Yield”) 4.6% © (FY19: 4.6%) Actual Investment Return 7.2% 1.8% (FY19: 5.9%) Notes: IFRS oper
Slide 68: Prudent and High-Quality Fixed Income Portfolio
Prudent and High-Quality Fixed Income Portfolio Total Fixed Income by Type Total $184.6b N Note: ‘As of 30 June 2020 = Government & Government Agency Bonds Corporate Bonds = Structured Securities = Loans and Deposits 42% 52% 1% 5% Total Fixed Income by Maturity Total $184.6b =>10 Years & 69% No Fixe
Slide 69: Prudent and High-Quality Fixed Income Portfolio
Prudent and High-Quality Fixed Income Portfolio Total Bonds by Accounting Classification Other Par) Funds Policyholder Total $175.3b and ($m) Shareholder = Other policyholder& 60% shareholder (AFS) Available For Sale (AFS) 41,459 105,670 147,129 Ne Par Funds (AFS) 24% Fair Value Through Profit or Lo
Slide 70: Government Bond Portfolio
Government Bond Portfolio 1 . Government Bonds) by Geography Other Government’) and Agency Bonds by Rating 1H2020 FY2019 Total $49.3b Total $28.4b 1H2020 FY2019 Average Rating At At = Thailand 30% 32% AAA 28% 30% = Mainland China 29% 29% South Korea 15% 15% = AA 19% 19% = Singapore 9% 9% A 31% 29% =
Slide 71: Corporate Bond Portfolio
Corporate Bond Portfolio Fee Tn AAA 762 AA 4,777 A 42,954 BBB 44,572 BB and below” 2,950 76018 Notes: ‘As of 30 June 2020 unless otherwise stated (1) Including not rated bonds Ale Corporate Bonds by Rating Total $96.0b 1H2020 FY2019 Average Rating A- A- VW. = AAA 1% 1% aAA 5% 5% aA 45% 45% BBB 46% 4
Slide 72: Structured Security Portfolio
Structured Security Portfolio aN Ale Structured Securities by Rating | ating Total (Sm) AAA 387 Total $1.5b 1H2020 FY2019 Average Rating At BBB AA 176 = AAA 26% 12% 5O7 =AA 12% 12% BBB 377 A 36% 32% BB and below’) 30 = BBB 26% 27% =BBandbelow? 2% 17% ay Notes: ‘As of 30 June 2020 unless otherwise st
Slide 73: AIA China — Prudent Investment Portfolio
AIA China — Prudent Investment Portfolio EX AIA China Invested Asset Mix Prudent ALM Approach Cash & Cash Equivalents y, 2% = Asset allocation driven by liability cash flow . matching in local currency Equities 11% = ~80% of earnings from insurance and fees = 87% of invested assets in fixed income =
Slide 74: Impairment Experience During Global Financial Crisis
Impairment Experience During Global Financial Crisis aN AIR AIA Impairments on Invested Assets (Sm) 2008 Impairment Charges as % of Invested Assets 9 142 5.6% 67 9 1.8% 1.5% 1.5% 1 0.3% — 2007 2008 2009 2010 2011 CoA Co.B CoC Co.D a 1%
Slide 75: Risk Discount Rate and Risk Premium
Risk Discount Rate and Risk Premium Risk Discount oem Risk Risk Discount oon Risk % Rates Gates Premium Rates Gates Premium Australia” 8.75 5.65 3.10 6.45 2.30 4.15 Mainland China 10.00 3.74 6.26 9.75 3.70 6.05 Hong Kong 8.00 LGN) 447 7.00 2.20 4.80 Indonesia 15.00 7.90 7.10 13.00 7.50 5.50 South Ko
Slide 76: Sensitivity Analysis — Shareholders' Allocated Equity
Sensitivity Analysis — Shareholders’ Allocated Equity Interest Rates ($m) 43,309 50 basis points decrease in interest rates 50 basis points increase in interest rates 1H2020 Shareholders’ Allocated Equity (295) 10% fall in equity prices Equities (Sm) 43,309 10% rise in equity prices 984 (984) 1H2020
Slide 77: Sensitivity Analysis — EV
Sensitivity Analysis — EV ES Sensitivity of EV as at 30 June 2020 Equity prices +10% 1.5% Equity prices -10% (1.5)% Interest rates +50 bps 2.7% Interest rates -50 bps (3.2)% Presentation currency 5% appreciation (3.1)% Presentation currency 5% depreciation 3.1% Lapse/discontinuance rates +10% (1.5)%
Slide 78: Sensitivity Analysis - VONB
Sensitivity Analysis - VONB Sensitivity of VONB for the six months ended 30 June 2020 Interest rates +50 bps Interest rates -50 bps Presentation currency 5% appreciation Presentation currency 5% depreciation Lapse/discontinuance +10% Lapse/discontinuance -10% Mortality/morbidity rates +10% Mortality
Slide 79: Currency Sensitivity — EV and VONB
Currency Sensitivity — EV (Sm) 59,574 EV and VONB 5% fall in 5% rise in local market local market currencies vs currencies vs US dollar US dollar 1,851 1H2020 Ev (1,851) Note: The currency sensitivities shown assume a constant Hong Kong dollar to US dollar exchange rate VONB ($m) 1,410 5% fall in 5%