Aia Group Ltd S/Adr

Good morning from AIA Central in Hong Kong, and welcome to our 2024 Interim Results Analyst Briefing. I'm Lance Burbage, Chief Investor Relations Officer for the AIA Group. With me on stage, I have Li-Yuan Song, our Group Chief Executive and President, Garth Jones, our Group Chief Financial Officer, and our three Regional Chief Executives, Jackie, Hak-Lei, and Liam. Also in the room, I have other members of our executive committee who can answer questions in case needed. With that, I will move over to our operator and open to questions.

Ladies and gentlemen, we will now begin our Q&A session. If you wish to ask a question, you need to make sure that you are logged in to the Zoom webinar. Please click the hand-raising button and wait for your name to be announced. After I call your name, please press the unmute button on your screen and ask your question. If at any time you need to cancel your request, please unclick the hand-raising button. Let's proceed, and our first question comes from Charles Zhou of UBS. Charles, please press the unmute button on your screen and ask your question.

Hello, hi, good morning. Congratulations. I think it's a very strong set of results, not only about the value of new business, we're also glad to see 10% growth per share CER basis for OPAT and also the USFG. So I have three questions. The first question is related to OPAT and USFG, 10% growth CER per share basis in the first half. So what are the reasons and drivers behind And I think for the first time, AI also were glad to see that you provide us a double-digit guidance for the OPAT, 9% to 11% for the next three years. Can you maybe walk us through the drivers behind? And do you have any USFG guidance? That's the first question. Second question is related to China. I think previously you said you have a target of one new branch per year to open a new branch. Now it's already late August. Do we have any update for this year, new branch opening? And third question, we know in China we are seeing falling rates. Equity market is also very challenging. Macro environment is very challenging in mainland China. How are you going to deal with this? Can you maybe answer it from both asset and liability? And if possible, can you also maybe give us some sensitivities or quantified impact? Thank you.

Okay, thank you, Charles, for your question. I'll just kick off by saying, as you know, we are a long-term business. Each year we write profitable new business, and this new business generates future streams of earnings, which is very predictable. And as we add on profitable new business each year, we add on new layers of future earnings, and that actually is the primary driver of growth. earnings growth. I'll hand over to Garth to talk about it in more detail.

Yeah, thanks for the question, Charles, and thanks for the congratulations. Again, a very strong performance, as you noted. We're very pleased with the performance, strong new business growth, translating into earnings growth and UFSG growth, as you can see. As Yunsheng just mentioned, the primary driver is the new business growth. You see that coming through the new business CSM that's being added. Again, a substantial addition in the first half. And active management of the in-force book to ensure that the assumptions actually occur in practice. And again, you saw positive variances in the first half that reflect that. I think that the target reflects our confidence in the future, our confidence to deliver new business and to manage the in-force portfolio. If you look forward, we set a target of 9% to 11%. I should stress the 11% isn't a cap. And I should also stress that it also includes allowance for the BEPS 2.0, the global minimum tax, at the illustrated level that we've shown today. So with that, I think the UFSG drivers are similar. Obviously, UFSG reflects a shareholder's view and is free surplus generation. It's not earnings, but the drivers are similar, new business and management of the enforce. And I think the slides we've shown you will give you some guidance as to how you might project that going forward.

On your second question on the China new territories, I'd like to just say that I'm very pleased with the progress that we are making in terms of the performance of the new geographies that we entered. In fact, this year I visited Tianjin, I visited Sichuan, I visited Hubei province, and I'm very encouraged by what I saw. I think they are making very good progress in terms of growing the The agency force, you know, as for the progress with regards to new licenses, I'll hand over to Jackie.

Thank you, Yuen Sir. And Charles, I just want to begin by saying that we are very pleased with AA China's very strong performance in the first half, 46% VOMB growth. And the growth is a broad base across both existing and new geographies. We opened since year 2020 and across both agency and bank assurance channel, as well as across both traditional protection and long-term savings products. And the reason why we are able to deliver such strong growth in view of this, as you said, economic challenge in China is because we focus on the middle income and above customer segment, and we have a differentiated premier professional agency force, and the underlying driver of our agency, you see, is 11% growth in the number of active agents. We continue to grow our recruitment by 26%, and even our total agency manpower has growth in the first half. And as to the new geographies, the growth of 44% will be supported by 37% growth in number of active agents. We continue to have dialogue with the regulators in both Beijing and also the provincial bureau that we would like to open new license. And we are happy to say that the discussion has been very positive and we continue to expect one to two new provincial license in a year.

On your third question about the China interest rates and macro environment, I'd just like to emphasize the fact that we've been in the region for more than 100 years. We've grown and built our business in the various markets, and we have operated through many economic cycles. So managing the asset and liability is something that we do as part of... part of our day-to-day business. I'll hand over to Gav to talk more about how we are handling the asset and liability situation.

Yeah, thanks. Thanks for the question, Charles. I think, obviously, we match our assets and liabilities as closely as we can. That's part of our active ALM management. And when we look at the assets, the first thing we look at is the liabilities. You'll see that our assets are predominantly in government bonds and predominantly in long government bonds. And that means our assets and liabilities are matched as closely as they can be. And you see that in the embedded value sensitivities that we gave out earlier with just a 1% reduction if we move to spot. And if we move the rates down by 50 basis points, then you see a 4% reduction in the embedded value. I think that reflects the ALM management. On an ongoing basis, we obviously reprice and redesign our products. And as interest rates have come down in China, we have positioned the portfolio more towards participating products in anticipation that if they move lower, we will again move more into participating products than the current product range.

Thanks, Garth. Charles, does that answer your questions?

Oh, yes, thanks.

Thank you. Next question, please.

The next question comes from Thomas Wong of Goldman Sachs. Thomas, please unmute yourself and start your question. Thank you.

Thank you. Thank you for the opportunity to ask a question. A few questions from me. I think, firstly, on the OPAP per share target, so it's great to see many providing more medium-term target I just want to clarify how much sort of buyback and share count reduction have been reflected in that target. If we can sort of simply have maybe an OPAT growth CAGR, what's the underlying assumption of OPAT growth CAGR underlying that OPAT per share CAGR target? And secondly, on the CSM, movements where we see that there's a change in the new business CSM to new NPV value multiple. So I think that comes from roughly 1.5, 1.6 versus previous. I think a couple of years back we were at 1.9. I just want to get a sense of where this should land if we think about, say, two or three years down the line. Thank you.

Yeah, Garth.

Yeah, thanks. As far as the OPAT, we said the target was a per share CAGR. The reason for that, Thomas, is that part of the earnings is the earnings on the surplus capital. We will obviously, as we go forward, following our new capital management policy, be providing returns to shareholders both through dividends and through buybacks, and we will look at the position in terms of our shareholder capital ratio and so on, on an ongoing basis. So by using a per share metric, we're saying that, well, if we use the capital to buy back more shares, then clearly the OPAT itself will reduce by the investment on that capital, but the per share will increase. So that's the reason for that. On the new business CSM, again, as I said earlier, one is an earnings metric. One is a shareholder volume metric and reflects not only the surplus that will be generated from the business, but also the cost of the capital, full expenses and so on, and uses much higher discount rates than the IFRS earnings. So they are quite different. I think the critical thing is that, you know, they're both very positive. And you can see that the new business CSM is added considerably to the existing CSM. And as you mentioned, the new business CSM is far above the value of new business at 1.5 times higher. I think it was Lance that said it should remain stable. It does vary by product and geography, but I think the critical thing is that the new business CSM will add to the existing CSM, and that's obviously reflected in our target that we gave out today.

Thanks, Garth. Any follow-up question, Thomas?

Yeah, just maybe if we can sort of get a sense of what's the driver of the changes on that new business ASM to WMB multiple. Is that, as I say, it's product mix or which geography or which product segment that was driving that change?

Yeah, there are a sort of variety of factors within that, Thomas. It's perhaps easier to talk to Lance offline about more of the detail. For example, if you look at the power and non-power products in China, they'll have different ratios and so on. So I think it's one of those things where it's better to look at it holistically and say, well, how does it look holistically and not lose sight of the bigger picture? Got it. Thank you.

Okay, thanks, Thomas. Next question, please.

The next question comes from M.W. Kim of J.P. Morgan. M.W., please unmute yourself and ask your question.

Good morning. Thank you so much for taking my question. And congratulations on the very good result. I have two questions. One is about India. So as the company communicated, relatively weaker, the India new business value growth in post half was due to the last year's high base. That said, the business looks very big scale. If the India government would allow the composite license in a foreseeable future, how would we think about the product margin outlook in India operation? And also, would you share the possible timeline of a separate India business disclosure, please? The next question is about the CSM. If we assume that the bond aid starts to decline from here, would we assume potentially the lower new business CSM margin or multiple, especially for the whole life? And also, under such a big and good new business CSM growth, is it reasonable to assume, luckily, that the middle single-digit CSM balance growth outlook in the next few years? Thank you.

Thank you for your question on India. India is obviously one of our growth engines. It's an exciting opportunity, a very large market. We have a strong presence. The business is performing very well. Our partnership with Tata, I think the relationship is excellent. We have a very high-quality business where the persistency, in fact, is market-leading. And we're number three in terms of the private insurers in India. So I'll hand over to Leo to talk about India a bit more.

Hi, good morning, MW, and thanks for your question on India. As Jansjan mentioned, the momentum is strong in India. If you look at the period April to June, following our one lag reported first half, which really covers October until March, where last year we had a strong first quarter because of a change in tax regulation in India. comparable very strong last year. But the latest quarter that you've seen reported through industry disclosures was very strong, and Tata EA was stronger than industry. So we continue to see very strong momentum, in particular from our agency and then our strengthening partnership distribution partnerships. For example, we expanded IDFC and then added two new bank-cap partnerships. So strong momentum. In terms of how this translates, if there's a change in regulation with the allowance of a composite license, I think there's still a lot of details to be figured out. This potential composite license has been in discussions now for a couple of years and has not been approved yet. The details of it also are changing quite a bit. So I think it's too early to really prognosticate on the impact that this would have on the industry dynamics or potential profit margins across the industry.

Gap on the CSM question.

Yeah, on the CSM question, thanks, NW. I think I'd refer you to the Financial Operating Review, which has the sensitivities in for interest rate movements. For the non-participating business, that's largely locked in at issue. And then for the participating business, that flows through the CSM and is amortized. So you can see the sensitivities are small. As far as new business, clearly we reprice, and while the market consistent basis of the IFRS basis is more market consistent than the value of new business, over time that will fluctuate out. So I think the sensitivities are small is the key thing to think about, and new business we can reprice and redesign and so on. And for India, I think it's a case of when it's big enough, so my challenge to Leo is to make it big enough. Thanks. Thanks, MW.

Does that answer the question?

Yes, thank you.

Thank you. And on to the next question, please.

The next question comes from Kalesh Mistry of HSBC. Kalesh, please unmute yourself and ask your question.

Morning, Kalesh.

Kailash, we cannot hear you. Please press the unmute button on your screen and ask your question.

There we go. Is that better? Yes. Hi, Kailash.

Hi, Kailash.

Hi. Morning, everyone. Thank you for taking my questions. Thank you also for the additional disclosure on free surplus disclosure on slides 31 and 32. So I just wanted to clarify a couple of points. I guess just on the expected return, the base for that is the 14 and a half billion free surplus plus 12 billion of medium term notes. On the diversification benefit, has that always trended around that 400 million number or How has it grown historically? Just so I can think about how that goes forward. Operating variances, are they consistent with the EV operating variances? And then on slide 32, the cash generation from the new business, I think it's the 3.4 billion number. Should we assume that breaks down into the five-year buckets the same as the enforce for our projections. Secondly, moving on to OPAT, obviously the target is welcome. Just wanted to understand, is the interest rate assumption as interest rates currently are, or are you assuming something different in setting that target? So, yeah, those two, please.

I guess the question is for you.

I can remember all the questions. Yeah, the expected return on free surface and assets back at MTN, so that is indeed, as it says, on the tin. The diversification benefit from new business, that's something that occurs every year as we write new business, and it's broadly been similar to the value of new business. It clearly varies by product and by market. but it's been broadly similar to volume new business growth. For the rest of it, the variances were similar. I think 0.3 is consistent with the EV and UFSG. They're both on the same basis. In terms of the buckets, I think you'll see each year how that adds going forward. And I think the critical thing here is that we've illustrated that the D from the imports is relatively stable. I think that's important.

Interesting assumption.

In the OPAP target.

Oh, yeah. Obviously, it's framed in the current environment, but we have run a range of scenarios. going forward and we remain confident that the target that we've set can be met.

Does that answer everything, Kaelish, or did we miss?

I think you answered it. I had one more that I forgot to ask, which is on Hong Kong, on the Hong Kong business. I guess two things. Firstly, I think it's the only one, if I haven't missed it, where you haven't talked about active agent growth or not. So if you could update us on that, that would be great. Secondly, on the offshore business, was the second quarter greater than the first quarter, which was greater than the quarters in the second half of last year, I think? And could you just update us on case sizes and protection versus savings mix, I think?

I'll hand over to Jackie to talk about Hong Kong, but I just want to start by saying they're very pleased with the performance in Hong Kong because we saw a very strong growth, both from domestic and MCV segments.

Yeah, thank you, Yuen Sang. In fact, the Hong Kong growth is also driven by a very strong fundamentals of the premier agency in Hong Kong. Number of active agent growth and our new recruit also grow by 19%. So adding more active manpower to both domestic and the MCV customer segment. And as to the MCV, as you talk about, on the second quarter, Air Hong Kong have increased quarter-to-quarter growth, Q2 over last year, Q2, double-digit growth in real MB. And we continue to see a strong demand from the MCV customers. And in fact, our MCV customer number, new business in the first half, continue to have a double-digit growth compared to last year, first half. So we continue to see that strong demand of MCV offshore coming to Hong Kong remain unchanged.

Thanks, Jackie. Thanks, Kailash, for the questions. Next question. Thank you.

The next question comes from Richard Shi of Morgan Stanley. Richard, please press the unmute button on your screen and ask your question.

Thank you for taking my question. Two questions for me. One is on China. Could you talk a little bit about the agent recruiting trends? Is the current environment actually better for agent recruitment, given some of the challenges in China's labor market at the moment? And what are the future plans? And then also on China, the product mix, could you talk a little bit on that as well? It seems like both agents and products are the key contribution for the very impressive growth in China. So a little bit more color on that will be very helpful. And then secondly, on the other markets, you know, talk a little bit about India. Obviously, clearly, as a whole, it was lagging on the markets. Any outlook on that? And, for example, Vietnam or other markets, we'll see, you know, in addition to India, will there be a rebound in other markets?

Thank you. I hand over to Jackie to talk about the China recruitment and product mix. Like I said, I've visited China frequently and have many interactions with the local management plus the agency force. I'm very happy with the quality of the agency force. I think in terms of the quality of the recruitment, we are really very selective. Even in the new geographies, it was commented to me by external parties that we recruit agents as rigorous, that the recruitment process for the new agents is as rigorous as the recruitment for a full-time employee in AIA.

Thank you, Yunsheng. I just want to reiterate this because the differentiation of A-China is really our premier full-time professional agency force. So as you say, now is a big economic challenge in mainland China, but we continue to be highly selective. All the new agents have to go through at least three rounds of interviews. And right now, our new recruit has growth of 26%. And in fact, more than 94% of those new recruit, they have a college degree or above. So we are really continue to focusing on increasing our quality and premium agents. And that's why you can see that we continue to drive a very strong growth of active agent from both the new recruit and also the existing agent. And as to the product, that is also closely related to our premier agency, because we are targeting the middle income above customer segment, which are more resilient under this so-called a bit economic challenge environment. And in terms of the product mix, you can also see that in first half this year, we also diversify more towards participating product. And our premier agency are more than capable of able to explain this more complicated participating product to the customers. So in the first half, you can see that our product mix, as I said, we have double-digit growth on our traditional protection products, as well as very strong growth from the long-term saving product. And as to long-term saving product, we have diversified it with participating long-term saving product. And our PM agency force also continue to sell quite a bit of those tax deductible personal pension benefit in the first half. That kind of retirement and personal pension benefit saving plan make up roughly 25% of our new business in the first half. And I just want to let you know, in fact, in July this year, we continue to launch new products which are tax-deductible, which is a very welcome tax-deductible long-term care product, which, in effect, is more a critical illness product. So this really reflects how our primary agency force targeting the F1 customer segment works very well in the current situation.

On other markets, I think Leo explained just now about the temporary fluctuation to the strong growth in India as a result of the very high base in January to March last year due to the tax cuts. changes. But if you take out India, other markets actually grew by 21%. We all know in the past we've talked about the challenges in the Vietnam market, but we've seen good recovery momentum in our Vietnam market. At the same time, we're very pleased with the fact that we were able to extend our bank assurance partnership with BCA in Indonesia to 2038. So, very encouraged by the performance of other markets. And as I said, India is a temporary fluctuation in the growth that's very specific to India. Thanks.

Does that get all the questions you had there, Richard? Yes, very clear. Thank you. Thank you. On to the next question, please.

The next question comes from Michelle Ma of Citi. Michelle, please press the unmute button on your screen and ask your question.

Thank you, management, for giving me this opportunity and a big congrats on the results with no... literally no weakness on this set of results. So I have two questions here. It's about Singapore and Thailand. For Singapore, actually that's a true surprise for me, very strong growth, 27%. And it's mentioned the growth can be attributable to the growing wealth opportunities. So could you shed more light on this? So I wonder whether, you know, this very strong growth, whether there is any like one of reason behind this or you are seeing a very sustainable drivers, what kind of underground observation you have so that you can share with us on these wealth opportunities you mentioned. And second, on Thailand. So Thailand has experienced a fairer margin expansion with product mix shifted towards higher margin products. but I think this year we noticed Thailand economy actually the growth has been a little bit soft and also we noticed the political turmoil taking place in the sub-quarter so Also on the ground, have you observed any change of product demand because of the economic development, or is there anything like the political turmoil can deter the business done by agents, especially in the Bangkok area? Thank you.

Okay, thank you, Michelle. I'll let Huxley talk about Singapore and Thailand in more detail, but I'd just like to say that, you know, as a Singaporean, I'm very proud of the performance of AIA Singapore. We have a great franchise in Singapore. We have an excellent, very professional agency force. As I mentioned in my speech, one in four agents in Singapore are MDRT qualified. It shows the high levels of productivity and professionalism of our agency. agency force in Singapore, and that really underpins the strong performance in Singapore. As for Thailand, I think it is, you know, after many, many years, I think really the foundation for our performance in Thailand is, you know, many, many years of hard work. to reform the agency force. You may recall that 10 years ago, we started this process to reform and professionalize the agency force in Thailand to introduce the FA program. And after many, many years of hard work, it's beginning to pay dividends. So I'll hand over to Hartley.

Thank you, Yen Siong. Thanks, Michelle, for the questions. Let me start with Singapore. Yes, we are very pleased with the excellent performance of Singapore, 27% VNB growth. I must stress that the growth was broad-based across multiple channels and all key product lines. We have a strong agency force. As Yen Siong mentioned, the VNB whole agency was up 31% from both increase in productivity as well as manpower. Our agency force in Singapore is very well supported by our superior ecosystem, as well as very compelling, competitive product propositions. From the product standpoint, the traditional protection business, which has been a key area of focus for us, continued to grow strongly in the first half, up 18%. And the long-term savings business delivered outstanding performance of 35% in the first half, driven by the success of our bespoke long-term savings products for the affluent and high-net-worth individuals in Singapore. And the product was backed by AIA's unique regional fund platform, managed by AIIM. So you see that while the excellent growth of long-term savings in Singapore lowered the overall portfolio margin, portfolio BME margin, the growth has actually contributed significantly to the overall VNB growth, which has always been our key focus area. We continue to strengthen our competitive edge in serving the high net worth and the front segment in Singapore, both domestic and offshore. April this year, we introduced the first of its kind, AIA International Wealth, AIA Wealth Center in Singapore, as well as continue to strengthen our untreated customer proposition via AIA Altitude. So with our market leading agency force, our big expertise in adapt manufacturing capability. That is it. That is our superior ecosystem. We are optimistic. We are confident that AIA Singapore is well-placed to capitalize on the future growth, especially from the rapidly emerging affluent and high-net-worth segments. I hope that answers your question. In Thailand, again, as Yin Xiong mentioned, we have a market-leading agency force, our agency force in Thailand. has close to 45% of the market share of the agency segment of the entire industry. It was a massive progress built upon multiple years of hard work. We are very pleased to see our FA programs continue to deliver excellent growth in the first half this year, growth by 33%. And from the product standpoint, we are the market leader in most key products. We are number one in unit link, number one in health insurance, number one in the whole range of protection riders. We do not see the... any major shift in product demand. We believe protection remains highly relevant to the large majority of the Thai population, to the large majority of our customers. And the bulk of our customers are the middle class and above. And because of that, the affordability for purchasing good value for money, the protection policies from us remain high. And of course, we've been in Thailand for 86, 87 years. We've managed our business through multiple cycles of both economic and political turmoil and changes. So I would say in summary, with the strength that we have in Thailand, we remain very confident of the future growth opportunity and our ability to capitalize on that.

Thank you. I just had one point about Singapore. Yes, we saw a strong demand for long-term savings products in Singapore. I'd like to highlight the fact that two-thirds of the long-term savings products is unit-linked and the remaining is participating policies. On Thailand, I think the the near-term economic challenges does not distract from the long-term attractiveness of the Thai market. The drivers for growth for the market that makes Thailand a highly attractive market for AIA remains intact. The young growing population, the large protection gap, increasing savings, all that, you know, continue to make us very excited about the prospects in Thailand. Thanks.

Did you have a follow-up there, Michelle?

Yeah, yeah. Thank you. Very clear. May I follow up on the split of Singapore business onshore versus offshore? Thank you.

Thanks, Michelle. The large majority of business in Singapore are still onshore business, although we are seeing the increasing contribution from offshore, capitalizing on Singapore's status as a very important financial hub for the region.

Can we say more than 90%?

I would say the large majority.

Okay, thank you.

Good try, Michelle. Thanks. Next question, please.

The next question comes from Michael Chang of CGS CIMB. Michael, please press the unmute button on your screen and ask your question.

Can you hear me? Hi. Hi, Michael. Can you hear me now?

Yes. Hi. Thanks for giving me the opportunity to ask questions. It's Michael Chang here. First question I have relates to the Hong Kong business. It's a very impressive result for the first half, but maybe could you shed some light on it on a quarterly basis? Because the first quarter was up 45%, the first half was up 26%. In terms of forecasting, just like to understand the quarterly year-on-year growth rates. And related to that, if I take a look at domestic, domestic is extremely strong, up 28% year-on-year, faster than the MCV portion of 24%. Can you maybe shed some light on what's driving the domestic Hong Kong business growth, you know, in terms of productivity, products, and the like? Second question relates to the CSM movement. So I noticed that the CSM movement, you had a negative variance of 172 million in the first half. The reason given was higher U.S. rates. But then if I take a look at the CSM sensitivity to a 50 basis points fall in interest rates, it seems to be positive at 50. So maybe you can just shed some light in terms of, say, if U.S. rates fall going forward. Is that positive or negative? And then maybe lastly, on the mainland China business, it's a very impressive result. shed some light on the bank assurance outlook. What kind of growth rates was that delivering in the first half? It's now a very material 16% of VONB. And maybe somewhat related to that, the product mix, because I see that the traditional protection mix for VONB in the first half was actually 45%. And that was actually higher than the second half last year of 39%. So it seems that that that the protection demand is not really falling away in the current environment. It's quite resilient. Could you maybe shed some light on that? Thanks a lot.

Jackie on Hong Kong.

Yeah. Really want to say that we are pleased with the AI Hong Kong's strong growth across both domestic and MCV customer segment. So it is not just MCV. It's both customer segment. And I want to say that, you know, last year, Q1, the border just opened somehow in February. So last year, Q1 was comparatively a lower base. And therefore, our Q1 this year growth is... much higher than the Q2 growth on year-on-year basis. But we still have quarter two, as I said, is a double-digit growth compared to last year Q2, and last year Q2 was a strong base because a bit of the so-called pent-up demand of MCV after the border opened. And you also see that we have this year, Q1 to Q2, we also have a quarter-to-quarter growth. And we remain very positive about the outlook of Air Hong Kong because we continue to see that this growth are driven by the strong underlying, the increase in number of active agents, increase in the agency recruitment, which will continue to drive the sustainable business going forward.

Yeah, and I think also I'd like to point out the fact that we don't actually manage our business on a quarterly basis. So, you know, I'm very pleased with the performance in the first half from Hong Kong and from the rest of the business. On MCV itself, you can also point to the fact that more and more cities are being allowed to, you know, have, you know, that more freedom to travel to Hong Kong from the mainland. Now on the CSM.

Yeah, firstly, just to say, Michael, I mean, obviously 172 million is very small. So it's a small number on a big CSM. There is some of the movement in the power fund resulting from interest rates will get put into the CSM, but clearly it's amortized by the release of the CSM. So that's what you see here.

On China Bank Assurance, our strategy is very differentiated. We are focused on working with a very selective number of banks, and we are very focused on working with them to sell to their affluent customers of these banks, as we demonstrated in our presentation. Thank you.

Yeah, and in mainland China, our bank account is really differentiated. So we are focusing on those really affluent and high net worth customer segment. You can see that the average case size is pretty large. It is US dollar 19,000. average case size. And the product mix basically are mostly long-term saving product and also some of the long-term protection product. And as you also point out, as a whole, our AI China product mix, we continue to see a strong growth in the traditional protection products, which are mostly driven by our agency force.

Thanks, Jackie. I think we have one question left in the queue.

The last question comes from Edwin Liu of CLSA. Edwin, please press the unmute button on your screen and ask your question.

Hi. Good morning. Thank you for the opportunity to ask question. I'm Edwin from CLSA. Maybe three questions from me. Firstly, just to follow up on previous analyst question. And let's double-click on the Hong Kong domestic market, because the growth is quite impressive at 28%. I know from supply-side perspective, we know there's growth in agents and growth in productivity, but just could you share from a demand-side perspective, from a customer perspective, any factors to drive such a high growth? So that's my first question on Hong Kong domestic market. Second question, just... on share buyback. Previously, I think you mentioned the enhanced capital management framework, but just to ask, is the current share price a factor when you consider your capital management? I think you mentioned you will consider your business needs, the current capital level, but I guess one would expect that the current share price would be another important factor when you consider capital return. Last question, given the new accounting, just curious, from a management perspective, any suggestion to the investment community how we should value AIA going forward, still on price-to-EV, or maybe we could change to price-to-earning, price-to-book, or use the CSM matrix, et cetera.

Yeah, thank you. Jackie, hand over you to talk about Hong Kong domestic customer demand. What I found coming to Hong Kong is that Hong Kong people like to buy insurance.

Yes, certainly. And I want to say that the protection gap in the domestic Hong Kong business remain very big, remain unfulfilled. And you also know that Hong Kong is also a fast aging population. Therefore, the demand for long-term saving, retirement, and medical health insurance is big. I also want to add one thing because I have been talking about this to many analysts about this. You can see that the Hong Kong population actually is growing. And why? Because we have new Hong Kong people adding to the Hong Kong population. And I let you know, we also track that. In a way, we may call them the new Hong Kongers. And you know, the Hong Kong government is really encouraging more of the migrants coming to Hong Kong through, for example, top talent pass scheme, quality migrants scheme. And there are also many college graduates coming from overseas. They may stay in Hong Kong. And this is actually adding to this Hong Kong population. And I can tell you, we do track these Hong Kongers. has a percentage of our new business in domestic. And I just let you know they make up something like now is double digit of our domestic new business. So I continue to see a very, very strong demand to grow their domestic customer segment.

On share buyback, I think quite rightly, Ed, when you looked at our capital management framework, it's about capital management, how much we need for the balance sheet and how much net free surplus generation we have. We'll come back to you and talk more about that in March next year when we have the full year results.

The final question?

What was the final question again?

As you know, I've explained before, our business is about writing profitable new business, growing our VOMB, which which translates to surplus that's disputable to shareholders. So, and, you know, obviously there's, as we have demonstrated, there's a link from, you know, growing new business to increasing operating earnings. So I think, you know, Internally, we really look at the EV and VOMB metric as the key driver of the value of the business.

Yeah, no, I'd agree with that. We think that the embedded value is a better reflection of the value to shareholders. Ultimately, it's based on distributable earnings that emerge over time and the value of the business we add each year. I think what the target does is give confidence that that will flow into earnings growth. And again, the capital management program shows how that VOMB will eventually turn into cash and be returned to shareholders either through dividends or through share buybacks. So embedded value is the key.

Thanks, Garth. Does that answer the questions, Edwin?

Yes, yes. Thank you very much.

Great. Thank you.

We don't have any more questions from the participants. I will now pass it back to Lance to conclude the session.

Thank you. Thanks, everyone, for watching. And thanks to everyone for participating that asked questions. Obviously, investor relations are available to answer any follow-up questions. Thank you very much.

Good morning. Ladies and gentlemen, this concludes AIA's 2024 Interim Results Q&A session. Thank you for your participation.