AIA reports strong financial performance, growth across metrics
AIA reports strong financial performance, growth across metrics | Insurance Business Asia
Life & Health
AIA reports strong financial performance, growth across metrics
Increased shareholder returns highlighted
Life & Health
By
Roxanne Libatique
AIA Group Limited has released its financial results for the first half of 2024, showing significant progress across various key performance indicators.
The report covered the six months ending June 30, (H1 2024), highlighting strong growth in new business value, embedded value, earnings, and surplus generation.
The VONB margin improved by 3.3 percentage points, now standing at 53.9%.
AIA’s embedded value and earnings under IFRS
AIA’s embedded value (EV) operating profit was reported at US$5.35 billion, a 29% increase per share. The operating return on EV (ROEV) rose to 16.5%, up from 12.9% at the end of 2023. After shareholder capital returns, AIA’s EV equity increased to US$70.9 billion, reflecting a 5% per share growth.
Operating profit after tax (OPAT) reached US$3.386 billion, a 10% per share increase compared to the previous year. The operating return on equity (ROE) also improved, climbing to 15.3% from 13.5% in 2023.
The company has set an OPAT per share compound annual growth rate (CAGR) target of 9% to 11% from 2023 to 2026.
AIA’s free surplus and shareholder returns
The group’s underlying free surplus generation amounted to US$3.391 billion, showing a 10% per share increase. Net free surplus generation, after investment in new business, was reported at US$2.243 billion. The company’s pro forma shareholder capital ratio stood at 242%.
During the first half of 2024, AIA returned US$3.4 billion to shareholders through dividends and share buy-backs. In addition, it announced an increase of US$2 billion to its share buy-back program in April, raising the total to US$12 billion.
An interim dividend of 44.50 Hong Kong cents per share was declared, a 5.2% increase.
AIA group chief executive and president, Lee Yuan Siong, credited the company’s performance to its ability to generate profitable new business, leading to sustained growth in earnings and cash flow.
“[The] headline figures, with VONB up by 25%, are a direct result of AIA’s ability to deliver successive layers of profitable new business that compound over time to sustain growth in earnings and cash generation,” he said.
He expressed confidence in achieving the company’s target of a 9% to 11% CAGR in OPAT per share from 2023 to 2026.
“AIA is exceptionally well positioned to leverage the long-term structural growth opportunities in Asia, the most attractive region in the world for life and health insurance. I am confident that, through the consistent execution of our clear and ambitious strategy, we will continue to build on AIA’s substantial competitive advantages to capture the opportunities ahead of us to generate long-term sustainable shareholder value,” he said.
AIA Singapore’s H1 2024 financial performance
AIA Singapore reported robust results for the first half of the year. The value of new business (VONB) increased by 27%, driven by strong performance across all distribution channels.
The annualised new premiums (ANP) rose by 57% to US$417 million, although the VONB margin declined by 12.6 percentage points to 52.4% due to a shift in the product mix toward lower-margin, long-term savings products.
Total weighted premium income (TWPI) increased by 12%, largely due to strong sales of new business.
The tied distribution channel of AIA Singapore experienced significant growth, supported by higher productivity and an increase in the number of active agents. The company also maintained its leadership in employee benefits, winning the Best Employee Provider of the Year (GOLD) for the eighteenth consecutive year at the HR Vendors of the Year 2023 awards.
The partnership distribution channel also showed strong performance, with double-digit growth driven by demand for high-net-worth and savings products.
Wong Sze Keed, CEO of AIA Singapore, highlighted the company’s focus on health and financial wellbeing.
“AIA Singapore remains steadfast in our mission to enable Singaporeans to live Healthier, Longer, Better Lives. Our focus extends beyond financial security to help Singaporeans build a prosperous future. We’re constantly innovating to build a robust healthcare ecosystem consisting of compelling protection products and services that safeguards Singaporeans’ wellbeing at every stage of life,” he said.
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