AAIGF - AIA Group Limited (AAGIY) Q4 2023 Earnings Call Transcript

2024-03-14 06:16:02 ET

AIA Group Limited (AAGIY)

Q4 2023 Earnings Conference Call

March 13, 2024, 09:30 PM ET

Company Participants

Lee Yuan Siong - Group Chief Executive and President

Garth Jones - CFO

Lance Burbidge - Chief IRO

Jacky Chan - CEO, AIA China

Kevin Loh - Group Chief Healthcare Officer

HakLeh Tan - Chief Life Operations

Leo Grepin - Regional Chief Executive and Group Chief Strategy Officer

Conference Call Participants

Charles Zhou - UBS

MW Kim - JP Morgan

Kailesh Mistry - HSBC

Thomas Wang - Goldman Sachs

Richard Xu - Morgan Stanley

Edwin Liu - CLSA

Michelle Ma - Citi

Michael Lee - Bank of America Securities

Leon Xi - Taiwan Securities

Presentation

Lee Yuan Siong

Good morning from Hong Kong. And a warm welcome to AIA’s Annual Results Presentation for 2023. Today, AIA has announced a return to very strong profitable new business growth, with VONB up 33% to over $4 billion and ANP at a record high. New business growth is the key driver of the 37% increase in EV operating profit per share and a 350 basis point uplift in operating return on EV to 12.9%. Operating profit after tax was up 7% per share on an underlying basis. We grew our CSM, the stock of future OPAT by 8.4% on an underlying basis, and operating return on equity was up by 50 basis points to 13.5%.

Strong capital generation saw a free surplus increased by 25%, before capital returns of $2.3 billion in dividends and $3.6 billion through the buyback. None of these returns to shareholders, our capital position remains very strong, with free surplus up $16.3 billion. Total dividend per share is up 5% and we have returned $7.2 billion through our ongoing share buyback program. These results again demonstrate the power of AIA's business model that enables us to capture the growth opportunities across Asia and deliver cash returns to shareholders.

Let me explain how we have achieved these strong results before Garth provides more detail on the financials. We have four key growth engines, which together generate 95% of the group's VONB and each of them reported double digit growth in 2023. ASEAN, our largest engine delivered over $1.5 billion, which is more than one-third of the group's total. Excluding Vietnam, where industry wide issues have been impacted new business sales, ASEAN was up 14%, driven by increased productivity from both agency and partnerships, alongside our focus on protection and unit link sales.

When Hong Kong fully reopened in February, we were ready to capture the returning demand from Mainland Chinese visitors for high quality comprehensive suite of products through our multi-channel distribution. Sales to the domestic customer segment also increase, resulting in an overall growth of 82% for AIA Hong Kong.

This excellent performance confirms, AIA as the overall market leader as well as number one in agency and the retail IA channels. And our leading agency is an attractive career choice with new recruits up by 59%. AIA China grew by 28% from February to December, following the removal of pandemic restrictions. Our high quality premier agency generated over 90% of China's VONB with margins exceeding 60% in the second half, and agent productivity more than double that of our peers.

Our joint venture in India, Tata AIA Life, ranked as the third largest private life insurer in 2023 and continue his track record across all channels with VONB up 37%. AIA's excellent new business performance was broad-base across our high quality growth engines, which are powered by an unrivaled distribution platform. Premier agency is at the heart of AIA's distribution and a key competitive advantage, generating over 75% of new business in 2023.

VONB grew by 23%, driven by an increase in active agent numbers and higher productivity. Full adoption of digital tools across the entire premier agency value chain has delivered a material improvement in productivity, recruitment and retention. This ensures that we are able to provide highly attractive opportunities for career agents with incomes up 17% and accelerating momentum in recruitment up 26% in the second half of the year.

We have the world's most professional agency that has been number one MDRT globally for the last nine years. We are also individually the number one in Mainland China, Hong Kong, ASEAN and India. And we have grown MDRT qualifiers by a further 20% in 2023. Proving the success of our high quality model.

Strategic Partnerships expand our distribution rich by bringing complimentary access to large customer pools across our markets. Overall performance in 2023 was excellent, with VONB growing by 58%. Bancassurance was up 42%. Powered by ASEAN, where we’ve flow standing relationships with leading banks, including Bangkok Bank in Thailand, Citibank in Singapore and Public Bank in Malaysia. ...

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