Aia Group Ltd S/Adr

Good morning and thank you for joining AIA's 2025 Annual Results presentation. Today we have announced record results with double-digit growth in new business, earnings and cash generation, and a new share buyback of $1.7 billion. This performance demonstrates AIA's ability to convert our competitive advantages into strong growth for shareholders. Let me start with the financial highlights. Value of new business increased by 15% to a record $5.5 billion. EV equity rose to $79.7 billion, up by 14% per share, and this is after returning $4.7 billion to shareholders during the year. Underlying free surplus generation grew by 11% per share, and operating profit after tax was up by 12% per share. on track to meet or exceed our 2026 growth target. The Board has recommended a 10% increase in the final dividend per share and approved a new share buyback of $1.7 billion in accordance with our capital management policy. As you can see, we are delivering compounding new business that drives both cash generation and earnings growth. This performance reflects the execution of a clear and consistent strategy. It is fully aligned with Asia's long-term structural growth drivers and built on competitive strengths that are developed and enhanced over many years. Each of these strengths reinforces the other, and taken together, they are incredibly difficult to replicate. And this is what gives me confidence in AIA's ability to capture the significant opportunities across our markets. You can see this most clearly when we look at our individual businesses. In Hong Kong, we delivered record VOMB of $2.3 billion, an increase of 28%. Our premier agency continued to lead the market with almost 25% of agents achieving MDRT membership. Agency contributed 70% of Hong Kong's VOMB, growing by 26%. This reflected a 9% increase in active agent headcount and a 14% rise in productivity. New recruits grew by 12%, supporting growth in future capacity, while MDRT qualifiers rose by 20%, reinforcing our focus on professionalism and quality. Partnerships VOMV in Hong Kong grew by 46%, Within this, Bank Assurance delivered 41% growth supported by improved customer targeting and higher productivity. And our RFA and broker channel grew by 49% from deeper engagement with preferred brokers driving an increased share of wallet. Demand remained very strong from both domestic and mainland Chinese visitor customers. Across both segments, our focus is on sustainable growth through regular premium protection and long-term savings solutions. The domestic business, which accounts for around half of our VOMB, grew by 21%. The outlook for future growth is strong as we add new customers and deepen relationships with our 3 million existing customers, meeting even more of their needs. VOMB from mainland Chinese visitors increased by 35%, mainly driven by sales to more than 50,000 new customers. We now have around 530,000 MCV policyholders, highlighting the enormous potential remaining for future growth from new and returning customers. With the leading distribution platform and a comprehensive product range, AIA's Hong Kong business is exceptionally well positioned to meet growing demand well into the future. Moving now to AIA China. BOMB in 2025 exceeded $1.2 billion. For the full year, growth reflects economic assumption changes, but momentum accelerated materially in the second half to 14%. This strong momentum has continued into 2026 with combined VOMB for January and February up more than 20% year-on-year. AIA's geographical expansion in mainland China provides a unique long-term growth opportunity. Since 2019, we have established operations in nine additional regions, including four new launches in 2025, adding almost 200 million potential customers within our target market. VOMB from these new regions increased by 45% to $118 million, accounting for more than 9% of AIA China's total. Looking ahead, We expect VOMB from new geographies to grow by 40% per annum over the next five years to more than $600 million by 2030. Our differentiated professional premier agency sets AIA China apart, contributing 85% of VOMB in 2025. Agent productivity is three times the market average, built on long-term relationships and the provision of personalized advice. This results in a more advantage product mix and an industry-leading VOMB margin of 65%. Our premier agency model is fully digitally enabled and increasingly powered by AI. This helps to raise professionalism as we attract and retain the best candidates while driving scale and productivity. In 2025, active agents increased by 8% and new recruits grew by 14%. New agency leaders were up by 40%, strengthening the foundations for continued growth. Alongside agency, Selective bank partnerships broaden our reach in the growing affluent and high net worth segments, delivering higher average case sizes and attractive profitability. Our solid foundation and strong momentum give me confidence in AIA's ability to capture the large and growing opportunity in mainland China. Turning to ASEAN, where AIA is the number one life and health insurer. We delivered VOMB of $2 billion in 2025, representing 34% of the group's total. Thailand, our largest market, achieved VOMB of $1 billion, up 13%, driven by a strong agency performance and double-digit growth from partnerships. We have also provided a separate presentation on AIA Thailand's growth strategy, setting out how we intend to capture the tremendous life and health insurance opportunities in that market. VONB from Singapore increased by 14% to over half a billion dollars, with agency growth of 10% and partnerships up 31%, including strong momentum from offshore business. In Malaysia, Performance improved in the second half as agency productivity and recruitment began to recover. Partnerships DOMB grew by 17% in 2025 with strong results in bank assurance and our market-leading corporate solutions business. Across ASEAN, Premier Agency is our main source of new business, delivering a high-quality product mix, and we are the leader in protection products across the region. Overall, the quality of our distribution and product mix position AIA well to meet the evolving customer needs across the region. In India, Tata AIA Life delivered another excellent performance with VOMB increasing by 33%. The business continues to focus on quality, ranking number one for persistency and retail protection. Our agency is the market leader and contributed around 60% of VOMB. Agency VOMB grew by 44%, supported by improvements in activity levels, leader development and recruitment. Bank and broker partnerships are complementary to our agency distribution, extending customer reach and driving additional strong growth. Overall, Tata AIA Life's focus on protection, discipline distribution and consistent execution ensure we are well on our way to capturing India's huge potential. Across the group, this consistent focus on quality distribution underpins our performance. AIA's proprietary premier agency is the core driver of profitable new business, contributing 73% of the group's total VOMB. Our agents build lifelong relationships with customers, focus on meeting evolving needs through trusted advice and best-in-class products. We have the world's leading type agency. which has been the number one MDRT globally for the last 11 years. This is the outcome of a differentiated strategy, honed over decades, that supports high quality profitable new business growth, attractive agent incomes, and higher shareholder returns. The success of our model is self-reinforcing, as it helps us to hire and retain the best agents, further extending our industry leadership. Continued investment in talent development and advanced digital tools has driven growth in agent numbers and a step up in productivity. This has laid the right foundations to further strengthen our Premier Agency leadership through the use of artificial intelligence. Our agents provide ongoing reassurance and support through face-to-face guidance that helps individuals and families navigate complex choices and adapt as circumstances change. AI enables deeper customer engagement and helps agents focus on what matters most. High quality, tailored advice, grounded in empathy, accountability and understanding. AIA+, our all-in-one customer super app, now manages interactions for more than 23 million users, providing powerful insights on needs and preferences. In 2025, our customer data mart captured and structured around 200 million customer interactions, enabling advanced analytics and more personalized and targeted engagement. As a result, We provided 5 million actionable leads to agents with a 17% conversion into sales. These leads generated more than $2.1 billion of VOMB. This highlights how technology and analytics are amplifying our long-term advice-led model, supporting higher productivity and sustainable growth across our distribution. Fast-growing partnerships extend our reach to hundreds of millions of potential customers through strategic bank partnerships. We focus on selective, high-quality partnerships aligned around shared growth ambitions and long-term value creation. By integrating AI's technology and analytics capabilities into partner channels, we are able to improve customer targeting proposition relevance and productivity. As a result, Bank Assurance VOMB has more than doubled over the past three years from higher numbers of active insurance sellers, increased productivity and enhanced profitability with 45% margin. Together, our agency and partnership channels create a powerful distribution model that supports long-term growth and advances our purpose of helping people live healthier, longer, better lives. By delivering protection and long-term savings solutions that support financial security at every stage of life, we help customers guard against unforeseen risks, accumulate wealth and plan for the future. And we do this through best-in-class products, combined with an ecosystem of health and wellness services that is backed by personalized professional advice. In 2025, we added 2.3 million new customers, while existing policyholders accounted for around 50% of the group's new business through repeat purchases. 91% of the group's VOMB comes from protection and fee-based insurance products, ensuring sustainable and resilient earnings and cash generation for AIA's shareholders. In closing, today's record results demonstrate that we are executing a clear strategy that leverages our core strengths, deepens our competitive advantages, and delivers sustainable shareholder value. Our ambitions are bolder than ever, and the scale and resilience of our business ensure we are well-placed to realize AIA's full potential. I will now hand over to Garth, who will take you through the financial results in more detail. Thank you.

Good morning, everyone. I'll now take you through our excellent performance with double-digit growth across our key financial metrics. VUMV increased by 15% to $5.5 billion, driving EV equity up by 14% per share to $79.7 billion after returning $4.7 billion to shareholders during the year. UFSG, our key operating measure of cash generation, rose by 11% per share, while under IFRS, operating earnings were up 12% per share. Through strong profit growth and our disciplined capital management, both operating ROEV and ROE increased to over 15%. Following the Group's excellent performance, the Board has recommended a 10% increase in the final dividend. This brings the total dividend for 2025 to HK$193 per share, also up 10%. Under our established capital management policy, the Board has also approved a new share buyback of $1.7 billion. The increased dividend and new share buyback reflect our confidence in AIA's future prospects and financial strength. I will go through more details of the financial performance in three sections. First, the embedded value results to show how we create shareholder value. AA's growth strategy is focused on running profitable new business, which compounds over time to support higher earnings and cash generation for the long term. VOMB was up 15% from 9% AMP growth and a 3.6 percentage point increase in VOMB margin, driven by proactive product mix shifts and repricing. Agency distribution was the group's primary growth engine, delivering a 13% increase in VOMB. Partnership distribution grew by 22%, including strong double-digit growth from both bank assurance and our intermediated channels. With the majority of our markets delivering double-digit increases in BNB, we again saw broad-based growth in 2025. AA's product strategy creates value for both our customers and our shareholders. Traditional protection products generate underwriting profits that are not dependent on capital market movements, while participating and unit-linked solutions generate stable, fee-based insurance income. Over 90% of our VMB is generated from these most attractive product lines, with very low average guarantees and strong and predictable cash generation. Our new business is capital efficient, with $3.8 of VMB generated for every dollar invested. And as we've reduced capital intensity, so the ratio has increased. The financial profile of new business is very attractive, with rapid emergence of distributable earnings, driving high IRRs and short payback periods. Our capability to deliver large-scale, high-quality, profitable new business sets AIA apart and underpins our confidence in the group's future growth. By consistently adding layers of profitable new business, supported by prudent assumptions and active management of the Inforce portfolio, we grow EV equity and, in turn, cash generation. Higher VOMV was the main driver of a 13% per share increase in EV operating profit to $10.9 billion. The successful execution of our integrated healthcare strategy and disciplined expense management supported greater positive operating variances, which added over $300 million to EV operating profit. As a result of the strong growth in operating profit, ROEV increased by 90 basis points to 15.8%. Over the year, EV equity increased by 14% per share, after 4.7 billion paid to shareholders through dividends and buybacks. EV operating profit was the main contributor to the higher EV equity. Investment variances were positive, following an improvement in the second half reflecting favourable equity market movements in mainland China, Hong Kong and Thailand. Positive non-operating items of 1.7 billion mostly represent the effect of exchange rates. Dead of shareholder returns, EV equity finished the year at 79.7 billion. AA's strong track record of positive operating experience demonstrates the prudence in our assumptions and the quality of our in-force business. Overall, consistently favourable operating variances have added $4.4 billion to EV equity since our IPO. While AA is not immune to capital markets, you can see from the small sensitivities shown here that our EV remains highly resilient to short-term market volatility. A 50 basis point increase or decrease in interest rates has less than 1% impact on the group's embedded value. We also have a substantial allowance for risk in our discount rates, making EV equity a prudent estimate of the economic value to shareholders from the Inforce business. Similar to our new business, future earnings from our Inforce book are predominantly sourced from protection and long-term savings products, which provide recurring and resilient cash flows. The Inforce is highly cash generative, with earnings continuing for decades into the future. Over $53 billion is expected to emerge over the next 10 years. This figure is up 14% over the year as we added another layer of high-quality new business. Our strong cash generation allows us to both increase returns to shareholders and reinvest in growing new business, which further expands our stock of future earnings. UFSG is our key operating measure of cash generation and is shown before reinvestment in new business and central costs. The key component of UFSG is the expected distributable earnings from the Inforce business, which increased as we added new business written over the year. As a result of our proactive Inforce management, operating variances improved compared with 2024. After allowing for the first time effects of global minimum tax, UFSG grew by 11% per share. Moving on to the IFRS results. Similar to embedded value, continued growth in high-quality new business adds successive layers of future profit to the CSM balance, which is gradually released into earnings over time. New business CSM grew by a very strong 17%, and underlying CSM growth accelerated to 10.5%. Together with positive variances and currency effects, the CSM balance increased to $64.9 billion at the end of 2025. As a result of a stable release rate and the larger stock, the CSM release increased by 10% to $6.2 billion. The CSM release remained the principal contributor to OPAT, our core measure of operating earnings. Operating profit after tax increased to $7.1 billion. The higher CSM release and positive operating variances drove an 18% increase in the insurance service result. which added more than $1 billion to OPAT. This was partially offset by a small reduction in the net investment result, reflecting the effect of share buybacks, higher financing costs and tax. Overall, OPAT increased by 12% per share, putting us on track to meet or exceed our 2026 target. Strong growth in OPAT and our ongoing capital management actions supported a 70 basis points increase in operating ROE to 15.5%. After returns to shareholders, allocated equity increased by 10% per share to $47.5 billion. Comprehensive equity adds the CSM, on a net of tax basis, onto shareholders' equity. which provides a more economic view of shareholders' equity by including the value of future earnings. Comprehensive equity increased by 15% per share to $97.9 billion at the end of 2025. Finally, capital management. We follow a robust internal capital management framework. Backed by strong financial discipline, our unwavering focus on profitable growth delivers substantial free surplus generation. This supports a prudent, sustainable and progressive dividend. In addition, we look to return capital to shareholders that is surplus to our needs, while retaining sufficient financial flexibility to capture the huge growth opportunities available to us. AA's clear capital management policy sets out how we deliver sustainable and growing returns to shareholders over time through dividends and share buybacks. Strong growth in UFSG supported an increase in net free surplus generation of 14% per share. As I mentioned earlier, despite the strong increase in BOMB, a proactive shift towards less capital-intensive products, most notably in mainland China, saw a reduction in new business investment to $1.4 billion. Adjusting for unallocated expenses, finance costs and other items, net free surplus generation was $4.5 billion. As intended by our capital management policy, the shareholder capital ratio reduced over the year and remained strong at 221%. With respect to the 2025 financial year, total returns to shareholders under our capital management policy amount to $4.3 billion. Based on our excellent financial performance, the Board has recommended a 10% increase in the final dividend per share, which results in total dividends of $2.6 billion for the year. The Board has also approved a new share buyback of $1.7 billion. This comprises $0.7 billion to meet the 75% net FSG target, and an additional $1 billion following a further review of the Group's capital position. In aggregate, total returns to shareholders in respect of the 2025 financial results are $4.3 billion, up 13% per share compared with 2024. Our ability to write large-scale, high-quality and profitable new business with a very attractive financial profile is a key differentiator for AIA. Successive cohorts of profitable new business compound over time, adding substantial layers of recurring earnings to our large in-force book, driving UFSG and OPAC growth. With another excellent financial performance in 2025, we delivered double-digit growth across our key financial metrics of growth, earnings and cash generation, and further extended our strong track record. Since 2010, dividends and share buybacks now amount to $40 billion, We believe that AIA's ability to deliver compounding growth across new business, earnings and cash sets us apart. We remain confident in our outlook. AIA is exceptionally well positioned to capture the enormous growth opportunities in Asia, the most attractive region in the world for life and health insurance. Our strong balance sheet, financial flexibility and clear growth strategy give us great confidence in execution. We're focused on driving high-quality, profitable new business growth with highly attractive reinvestment economics. This adds further substantial layers of recurring earnings and cash generation that in turn will generate highly attractive returns for shareholders well into the future. Thank you.

Good morning from AIA Central in Hong Kong and welcome to AIA's 2025 Results Analyst Briefing. My name is Sami Taipoulos and I'm delighted to be joining you today in my new role as AIA's Chief Investor Relations Officer. With me on the stage today, we have Li Yongxiong, Group CEO. Garth Jones, Group CFO, and other regional chief executives, Jackie Chan, Fisher Zhang, Hak-Lei Tan, and Leo Grepping. We also have other members of the Group Executive Committee with us in the room. Before we begin the Q&A session, I want to highlight that we have a separate video on A Thailand's growth strategy, which we published on the website today. If you haven't had time to look at it yet, please do so later. We will now begin the Q&A session. If you want to ask a question, please make sure that you're logged in to the Zoom webinar. Operator, over to you.