Aia Group Ltd S/Adr

Good morning and thank you for joining AIA's 2026 Interim Results Presentation. We have delivered a strong set of results with double-digit growth across our key financial metrics. Value of new business increased by 10% to a record high of $3.2 billion. We saw growth across all distribution channels and reportable segments excluding Thailand, which had an exceptionally high comparative as previously disclosed. Underlying VOMB growth was 14% adjusting for Thailand. AIA's consistent delivery of high-quality new business has accelerated growth in earnings Operating profit after tax of $4.2 billion was up 13% per share, driving a record operating ROE of 17.5%. And we now expect to exceed our 9-11% OPEC per share CAGR target over 2023-2026. Operating cash generation grew strongly with underlying free surplus generation up 10% per share and net free surplus generation up 12% per share. The Board has declared a 10% increase in the interim dividend per share. These results demonstrate that our strategy is working as intended. We are growing fast, returning substantial cash to shareholders generating higher returns on equity and maintaining a resilient balance sheet with low leverage. Sustained over time, that combination is the key driver of long-term value creation. Our strong results are underpinned by our position as the leading Pan-Asian life and health insurer. But what sets us apart is not just that we operate in the most attractive markets in the world. It is that we combine a long runway for growth with a unique business model and tangible competitive advantages that allow us to capture this significant opportunity consistently and profitably. Our proven track record of execution is demonstrated by VOMB compounding at 17% per annum over the last three years while maintaining strong margins. AIA's world-leading premier agency is at the core of our growth strategy, contributing 72% of Group VOMB. We train and develop the highest quality agents, equipping them with the best possible tools to meet customer needs. This is why our tight agency has been the number one in MDRT globally for the last 12 years, with more than double the members of our nearest competitor. The success of our strategy is evident in our agency's excellent track record of growth, achieved through consistent investment in growing active agent numbers and productivity. Continued disciplined execution of this strategy drove first half VOMB growth of 11%, excluding Thailand, at a very strong VOMB margin of 68%. The significant investments we have already made in technology and AI across recruitment, training, sales and service are delivering strong results. New agency leaders grew by 19% and new recruits by 24%. We are giving them the best possible opportunities to succeed through structured career development and targeted schemes that identify and nurture our most promising talent. And as we bring more AI-powered capabilities into this platform, the opportunity multiplies. AI helps our agents work more effectively, identify customer needs more precisely and deliver more timely, personalised advice. That means the potential of Premier Agency can be unlocked faster than before, supporting continued value creation and sustainable performance over the long term. Partnerships complement our premier agency by extending our reach to millions of potential new customers. Our approach is selective and we focus on a small number of high-quality partnerships that share our ambitions to drive customer value and long-term growth. Partnership VOMB increased by 18% in the first half, supported by double-digit growth in both Bank Assurance and RFA and broker channels. Bank Assurance VOMB grew by 15% as we focused on driving higher share of wallet in the affluent and high net worth customer segments. This approach is translating into higher productivity for bank staff with VOMB margin remaining healthy at over 45%. We maintain a disciplined approach to distribution through IFAs and brokers. VOMB from this channel grew by 21%, supported by excellent performances in Hong Kong and Singapore. AIA creates financial value by compounding layers of new business which generate earnings and cash well into the future. Our first half results show that strong new business flows in recent years have driven a step up in operating profit growth. As a result of this, we achieved OPEC growth of 13% per share in the first half. Combined with consistent improvements in the efficiency of our balance sheet, the rise in profits led to a record operating ROE of 17.5%. The strength of the momentum in our earnings gives us confidence in our outlook and we now expect to exceed our OPEC per share target. Strong new business flows are also driving growing cash generation as you can see from our surplus generation numbers. Garth will address this in more detail later. Moving now to the business highlights from our four growth engines. AIA China delivered an excellent performance in the first half, with VOMB growth of 20%. The result was driven by our market-leading Premier Agency, which is our key competitive advantage in the Chinese mainland. AIA's agents are three times more productive than the market average, reflecting the depth of customer relationships built on the provision of personalised advice. Premier Agency achieved a 24% increase in VOMB and accounted for nearly 90% of new business. We continue to build capacity for future growth. with active agents up 14% and active new agents up 25%. This stands out in an industry where agent numbers remain significantly below pre-COVID levels. We also delivered excellent growth in capital-efficient participating products and protection while maintaining an industry-leading VOMB margin of around 60%. We have built excellent momentum in our new geographies, contributing 11% of AIA China's VOMB, and we remain on track to deliver our VOMB target of 40% compound annual growth to 2030. Together, these results demonstrate the strength of our differentiated model, and AIA remains well-positioned to capture the long-term growth opportunities in the Chinese mainland. Turning now to Hong Kong, where we achieved another record first-half result. VOMB of $1.2 billion increased by 10%, with margin remaining strong at 72%. reflecting our financial discipline. Our premier agency accounts for the majority of our business and sets the standard for quality and professionalism. AIA Hong Kong was once again ranked the number one MDRT company globally. 30% of agents are MDRT members, following an 18% increase compared with the previous year. First half agency VOMB remained stable at a high level, while we continued to invest in recruitment, development and leadership to drive future growth. Active new agents grew by 7% and active new leaders by 22%. Partnership distribution delivered excellent VOMB growth. We saw strong performances in our IFA and broker channel as well as our strategic partnerships with Citibank and the Bank of East Asia. Closer engagement and tailored propositions for affluent and high net worth customers are driving significantly higher sales productivity. More broadly, AIA Hong Kong's performance reflects the quality of our distribution and the attractiveness of our products across key customer segments. Let me turn to this now. Our domestic business performed very strongly, with VOMB up 23%. This was supported by deeper engagement with our more than 3 million existing customers. a large contribution from new Hong Kong residents and average policy sizes increasing by 10%. DONB from Chinese mainland visitors was stable against a high comparative which benefited from a surge in demand ahead of product changes in the middle of 2025. Underlying demand remains strong Second quarter VOMB was higher than the first quarter, with June the strongest month. Customer flows also remained strong, with more than 25,000 new customers in the first half. Our customer base is diversified, with around two-thirds coming from outside the Greater Bay Area. AIA's products offer broad appeal to people seeking attractive long-term returns, protection and diversification. Many customers have multiple policies with us and the persistency remained high at 99% while premium finance business accounted for less than 1% of DOMB. Yet, with only 550,000 customers in total, the potential runway for future growth remains substantial. AIA Hong Kong's strong track record of growth across distribution channels and customer segments reflects the strength of our business and the depth of demand. Since these attractive fundamentals remain fully intact, I have every confidence that we can continue to deliver attractive long-term growth in this market. AIA is the leading life insurer across ASEAN, which contributed almost one-third of Group DOMB of more than $1 billion. Our premier agency ranks number one for MDRT and combined with high-quality partnerships, we have a very strong platform for sustained growth across the region. In Thailand, our largest ASEAN market, VOMB grew by 13% in the second quarter. Premier Agency remains the core strength of the business, complemented by very strong growth from our partnership with Bangkok Bank. Singapore delivered 10% VOMB growth, including a 19% increase in the second quarter, with growth from both agency and partnership distribution. Malaysia VOMB was up by 10% in the first half, with growth accelerating in the second quarter on the back of strong contributions from partnerships and continued improvement in agency momentum. The strong performance across our major ASEAN markets reinforces our belief in the long-term growth potential of the region. Moving now to India. Tata AIA Life delivered another excellent set of results with VOMB growth of 31% in the first half as we continue to capture the huge potential in the market. Agency represents 55% of our business in India and delivered excellent VOMB growth of 38%. We continued to build, scale and invest in future growth as evidenced by the strong increases in active agents, new recruits and new leaders. We expanded our customer reach with bank and broker distribution and continued to see sales growth with VOMB up 23% across these channels. Tata AIA ranks number one in retail protection and persistency in India, reflecting our focus on delivering high-quality advice and products to our customers. In summary, today's strong results are a continuation of AIA's exceptional track record of delivering growth across our key financial metrics. Our ability to deliver sustained, strong performance reflects our unique position as the leading Pan-Asian life and health insurer, delivering growth by capitalising on the huge opportunities set in the region. We are focused on driving high-quality, profitable new business growth with attractive reinvestment economics that adds further layers of recurring earnings and cash generation. I am confident in our ability to continue to drive future growth and attractive shareholder value creation. I will now hand over to our CFO, Garth Jones, who will take you through the details of our financial results.

Good morning. I am delighted to take you through another strong set of results for AIA, demonstrating the quality of the business we have built over many years. Let me start by highlighting three things that I see as key in these results. First, we achieved double-digit growth across new business, earnings and cash generation. Second, the profitable new business written over many years is now compounding visibly, driving higher operating profit and free surplus generation. Third, disciplined capital deployment is lifting returns to record levels. and we have continued to both grow strongly and return capital to shareholders. In combination, these results provide clear evidence that AIA's growth model is creating sustained shareholder value. Let me now take you through the results in more detail. VOMB increased to a record $3.2 billion, up by 10%, with growth across all distribution channels and reportable segments other than Thailand. OPAT increased to $4.2 billion, up 13% per share, and operating ROE reached a record 17.5%. This strong result gives us confidence in the outlook, and we now expect to exceed our OPAT per share growth target. UFSG, our key operating measure of cash generation, increased to $3.9 billion, up 10% per share. During the first half, we returned $3.6 billion to shareholders through dividend and share buyback. Based on this strong performance, the Board has declared a 10% increase in the interim dividend per share, reflecting both our sustained strong performance and our confidence in the future. Turning to new business. AIA is focused on writing large-scale, high-quality and profitable new business that creates value for both our customers and shareholders. Our proprietary premier agency accounted for 72% of Group BNB, with partnership distribution contributing the remaining 28%. BNB margins stood at 57.1%, broadly stable compared with prior year. The financial profile of our product mix is highly attractive. Traditional protection products generate underwriting profits, while participating and unit-linked products generate recurring fee-based earnings. Together, these products accounted for 96% of Group VNB in the first half. This high-quality product mix generates strong and predictable cash flows with highly attractive returns on the capital we invest. Every dollar of capital invested in your business is expected to generate $4 of distributable earnings within 10 years, and with a rapid payback period of just 3 years. The internal rate of return on our new business investment remains above 20%. Our ability to write profitable new business at scale while maintaining these attractive economics is a key differentiator for AIA and underpins our confidence in our ability to compound value over time. Our embedded value clearly demonstrates the financial dynamics of AIA's growth model. Each cohort of profitable new business adds another layer of future earnings and cash generation, supported by prudent assumptions and disciplined management of the Inforce portfolio. EV operating profit increased to $6.6 billion in the first half, up 12% per share. Growth was driven by the higher VOMB, increased expected return from our Inforce, and positive operating variances, reflecting the overall quality of our business and our focused operational management. As a result, operating ROEV increased by 220 basis points to a record 18%. Investment return variances added $1 billion to EV equity, mainly from positive equity market performance in the period, while exchange rates and other non-operating items were small. Overall, EV equity increased by 9% to $87.1 billion before returns to shareholders. After the $3.6 billion of dividend and share buyback, EV equity reached $83.4 billion, up by 6% per share over the first half. AIA's embedded value reflects the high quality of our Enforce portfolio, built from many years of profitable new business. Similar to our new business, future earnings from our Enforce book are predominantly sourced from protection and long-term savings products, which provide recurring and resilient cash flows. Our prudent assumptions and active management of the Enforce portfolio have consistently resulted in positive operating variances. In the first half, these added $742 million to EV operating profit. This included positive medical claims experience, reflecting claim savings of around $200 million for the half. At the same time, due to disciplined expense management and continued business growth, our expense ratio has improved by 130 basis points over two years to 6.9% this half. Since our IPO, operating variances have been positive every year and have now added over $5 billion to EV equity. This strong track record and the limited sensitivity to capital market movements demonstrates the prudence of our assumptions and the quality of the in-force portfolio. Overall, our EV provides a prudent and reliable measure of the economic value created for shareholders. Now moving to the IFRS results. First, on the left-hand side of the slide. The Contractual Service Margin represents the accumulated stock of expected future IFRS earnings from our in-force portfolio. Each new cohort of profitable new business adds a further layer to this stock, which is then released into earnings over time. During the first half, new business added $4.9 billion, while the expected return contributed a further $1.7 billion. After a release of $3.4 billion of CSM into earnings, together with small other items including variances and exchange rate movements, the CSM balance increased to $67.8 billion. Underlying CSM growth was 10%, driven by our strong organic growth. Turning to the right hand side. Since the adoption of IFRS 17, new business and the expected return on the Inforce portfolio have added $38.1 billion to the CSM. After releases of $20.5 billion into earnings, the CSM has increased by a net $17.5 billion, thereby expanding our stock of future earnings, while the release rate has remained broadly stable. This demonstrates how successive cohorts of profitable new business compound over time to support sustained growth in recurring earnings. The CSM release is the principal contributor to OPAT, our core measure of operating earnings. The greater release into profit due to a higher CSM is the main driver of the 11% increase in the insurance service result seen in the first half. Positive variances also flow into this, reflecting continued disciplined management of expenses and claims, including progress in executing our integrated health strategy. The net investment results after expenses also increased compared with last year. Overall, OPAT increased to $4.2 billion in the first half, up by 13% per share. Strong earnings growth, together with disciplined capital management, drove operating ROE up by 200 basis points to a record 17.5%. The growth in CSM and the quality and resilience of our enforced portfolio give us confidence in the earnings outlook and we now expect to exceed our 9-11% OPAP per share CAGR target for 2023-2026. The same compounding dynamic that drives earnings also underpins cash generation. Each new policy that we write adds a future stream of cash flows to our growing Inforce portfolio, which emerges progressively over future years. At the end of the first half, we expect our Inforce portfolio to generate $57 billion of distributable earnings over the next 10 years. This is 15% higher than at the end of the first half of 2025, reflecting the addition of profitable new business, together with an uplift from positive variances. As these distributable earnings emerge, they drive higher operating cash generation. In the first half, UFSG increased to $3.9 billion, up 10% per share. After investment in new business and central cost, net free surplus generation increased to $2.8 billion, up 12% per share. The stronger growth in net free surplus generation than UFSG reflects the increased capital efficiency of new business written. In particular, the shift in product mix towards participating business in the Chinese mainland. These results demonstrate the direct progression from profitable new business to growth in the infos portfolio and then into higher earnings and ultimately cash generation. We follow a clear and shareholder value focused capital management framework. Our capital management policy targets the return of 75% of annual net free surplus generation through dividends and share buyback. We also regularly review our capital position and return capital in excess of our needs. Since 2022, we have returned $26.6 billion to shareholders through dividends and share buyback, while continuing to invest in profitable growth. The shareholder capital ratio stood at 210% at 30 June 2026, following the $3.6 billion return to shareholders during the first half, in line with our expectations. Our capital position remains very strong, and we retain substantial financial flexibility given our low leverage and high financial strength ratings. Consistent with our long-established prudent, sustainable and progressive dividend policy, the Board has declared an interim dividend per share of HK$53.9, which represents an increase of 10% over last year. AIA has increased its dividend every year after IPO, ever since our first dividend in 2011, and including during the COVID period. Our ability to sustain this track record reflects the resilience of our earnings and cash generation from the growing in-force portfolio. As a reminder, the final dividend and the balance of shareholder returns under our capital management policy will be determined and announced with the 2026 annual results in March 2027. To conclude, AI has delivered another strong financial performance in the first half of 2026, with double-digit growth across new business, earnings and cash generation, and record operating returns. These results reflect the strength of AI's platform, the depth of our distribution, the quality of our product mix, and the disciplined way in which we manage capital. AIA is exceptionally well positioned in Asia, the most attractive region in the world for life and health insurance. I am confident in AIA's outlook, with a clear strategy, a proven model and a demonstrable ability to execute effectively. We continue to drive profitable growth and we are converting this into earnings, cash and shareholder returns with discipline and consistency. Thank you.

Good morning, everyone, from AIA Central in Hong Kong, and welcome to AIA's 2026 Interim Analyst Briefing. I'm Sami Taipalus, the Chief Investor Relations Officer of AIA. With me on the stage, I have Li Yuan Siong, Group CEO and President, Garth Jones, Group CFO, and Regional Chief Executives Jackie Chan, Fisher Jiang, Hak-Lei Tan, and Leo Greppi. We also have other members of the Executive Committee in the room with us. We will now begin the Q&A session. If you have a question to ask, please make sure you're logged into the Zoom call. Operator, over to you.

Ladies and gentlemen, if you wish to ask a question, please click the hand-raising button and wait for your name to be announced. After I call your name, please press the unmute button shown on your screen and ask your questions. 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 Thomas Wang of Goldman Sachs. Thomas, please press the unmute button shown on your screen and ask your question.

Thank you for allowing me to ask questions. I think Hong Kong obviously is the focus for this result. The number came, I think, a little bit below consensus, and also there's a lot of news flow. I'm just wondering whether you have sort of medium-term growth target in mind for the Hong Kong market so we can better track because it's kind of been volatile over the last couple of years. And then the second point, maybe on the capital planning part, I'm just wondering, you know, we're coming quite on the M&A front. What kind of target could be attractive for AIA? How are you evaluating the potential M&A opportunities? Thank you.

Thank you for your question, Thomas. We are confident about outlook for 2026 overall and for our major markets. I think the demand drivers for our products remain intact, including for CMV business in Hong Kong. Very strong competitive advantages in the Hong Kong market including our leading premier agency channel, our partnership distribution, our strategic bank partners in Citibank and Bank of East Asia. So we remain very confident of our outlook for Hong Kong. I will hand over to Jackie to elaborate.

Thomas, I'm very pleased AI Hong Kong Macau delivered a set of very strong results in the first half. We will be up 10% to record US$1.2 billion. This was really supported by our strong underlying distribution channel, especially the Premier Agency, as we keep emphasising the key differentiation channel for AI Hong Kong is our Premier Agency, and it achieved MDRT No. 1 globally as a company for 24 years. and almost 30% of our agents are MDRT. And as you see in our slide, in fact, after COVID in the last three years, we have double-digit growth in our agency V&B and double-digit growth in our agency productivity. And that said, we also have a diversified channel. We have a strong partnership distribution channel. We have a strong bank assurance result in this first half this year and our IRA broker also grows strongly. I want to emphasize that the 10% growth is against last year first half, a very strong high growth due to product changes in the middle of the year. and our domestic culture segment in first half this year actually grows strongly by 23% and our Chinese mainland visitor channel VNB was broadly stable against a very high base in last year and in our CNV Chinese mainland visitor segment our VNB growth actually is growing quarter to quarter from first kill to second kill and June was the highest CNV VNB for the whole first half As you talk about the recent news flow, actually since those recent news flow in May, we continue to see good demand from Chinese mainland visitor business in our Hong Kong result as you can see that. And also all those kind of news regarding cross-border fund flow or taxation, those are always there. There is no change in those regulatory requirements. And as I said before, I think many times, the Chinese mainland visitor business segment has been a major business segment in the Hong Kong life insurance industry for more than two decades. And the key reason for it, because of the strong underlying structural drivers, including the access of a diversified global investment opportunity, which support our long-term life insurance product, and also the assets to high quality advice and more flexible quality decided product and proposition. Those structural drive drivers remain unchanged. And as you can see that in the first half of this year, there are more than 25,000 new Chinese mainland visitor customer segment, customer added to our portfolio, which now have roughly 550,000 customer in our invoice book. This is still There is still a big opportunity going forward to grow the CNV customer segment. And in terms of the medium growth opportunity, I think you also know that we don't provide focus, and as Yuan Siong pointed out, we see continued strong opportunity in Hong Kong, and Air Hong Kong is well positioned to capture those opportunities.

Thomas, your question on capital management, as I said, we are very focused on driving strong new business growth that can translate to high-quality earnings and cash returns to shareholders. We have communicated our capital management policy. I will remain focused on implementing this capital management policy as we have communicated. The first half of the results and the past year's results have demonstrated that our strategy is actually working. We have seen a strong BOMB growth. We've seen this translate into strong OPEC per share growth. As we have said this time, we expect to exceed our OPEC per share CAGR target that we communicated to the market We have also seen record levels of our ROE of more than 17%, ROEV record levels as well. I hand over to Garth to elaborate further.

We've seen the way in which we've executed the capital management policy has been exactly as we intended. The shareholder capital ratio has reduced as we've increased the buyback but remains strong. We've seen how we've returned 3.6 billion to shareholders in the first half. Thank you very much. In these uncertain times, retaining financial strength is important, but as ever, we look at always to create value for our shareholders on an ongoing basis.

Thank you, Thomas. Next question, please.

The next question comes from M.W. Kim of J.P. Morgan. M.W., please press the unmute button shown on your screen and ask your question.

Thank you for the opportunity. I have two questions. Firstly, the long-term bond yields have continued to rise across a number of the markets, including the US, while the broad macro environment remains volatile. This may create some non-economic volatility in the company's reported financial figures. Could you remind us of the key actions companies have taken in recent years to reduce that accounting and also the solvency volatility? And how effective these measures have been in recent market environment? Secondly, on the holding company cash base, the core earning growth was very strong in first half, but capital flow from the subsidiaries appears to have much smaller than first half of 2025. Could you help us understand whether this mainly reflects the timing of the limitations, capital management choices at subsidiary level, or any other drivers? Thank you.

Okay, these are two financial questions which I'll hand over to Garth.

Yeah, thanks NWE.

Thanks NWE.

I mean the actions we're taking are not actions that are new, they're actions we've taken over many years. I think the first thing I'd point you to is our EV sensitivities to interest rates. You see that's very low and clearly that reflects the strong ALM management that we have and the prudence in our assumptions also. Pek-San Ang, Mark Konyn, Biswa Prakash The change in product mix that we've had towards power products in China will help more generally because the business will go into VFA rather than GMM. As you look at our business, some of the things that we've done, even reducing the shareholder funds over time, will also reduce some of the noise between net profit and OPAC. The move to IFRS 17 actually MW has helped a lot with that noise as IFRS 17 is more market based. So the actions we've taken you see it in the product portfolio of the new business and you see it in the product portfolio of the Inforce actually because it's been there for many years and you see it in our sensitivities. On the Holdco cash, I think you have to go back to the first half of 2025. We had some capital flows and it's really about strong liquidity management at the Holdco. If you look at the rate for the first half, it's broadly in line with where it normally is. And I would remind you that the second half is normally higher than the first half. And also, you know, look at it over the full year. But you can see that the flows up from the businesses continue to be strong and meet our needs.

All right. Thank you, MW. Next question, please.

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

Thank you for giving me this opportunity. This is Michelle Ma from City Research. First of all, congrats on this set of results despite a very high base for comparison. I have two questions. The first is to Jackie. Could you help us to understand how MCV customers' mentality has changed after decree 837? Do they feel more urgent to buy Hong Kong insurance products or more hesitant? And how do you access the impact from the recent rumour on the additional 20% tax to be imposed on the Hong Kong insurance or overseas insurance participating products dividends? And also, there is a The Federation of Insurers in Hong Kong will unify the definition of critical units. And there may be a stricter standards applied to those kind of minor critical illness diseases. How do you see it change our competitive edge or product competitiveness over our major competitors? So sorry, this is a bit long, but that's my first question to Jackie. Second question to Fisher, it's about the Document 65. We know that at the beginning of July, there was a lot of broader Redesign and new launch of products in the Bank Assurance Channel. There is a lot of business disruptions per our peers in the land. Even though Bank Assurance is not a major distribution channel of AIA China, how do you see it will impact our business going forward? Thank you.

Thank you, Michelle. You have a question for Jackie on competition and demand in Hong Kong. As I said earlier, I think the demand drivers for CNV business remain intact. I think CNV customers come to Hong Kong to purchase insurance for access to international investments, We continue to see good demand from CMV customers. I hand over to Jackie to elaborate on the product competitiveness.

Thank you, Michelle. So let me address the product competitive question. Yes, Hong Kong FI is launching a kind of unified definition on CI. And please note that this is a voluntary adoption for the insurance company. This is something to provide the advice, guidance for the insurance company. So it is voluntary. And for AIA, we look at it and we find that, in fact, majority, most of our CI definition are broadly in line with those guidance and we will continue to consider the innovative design in the proposition including CI going forward as we have been doing more innovative product proposition in the past so many years. May I just also add to the point about the CNV business, we continue to see good demand since all those news flow whether it is that number 837 or cross-border etc etc. And tax is never a key driver for the demand of a long-term life insurance product in Hong Kong. As Yun-Sung already pointed out, those drivers are really about the access to international diversified investment which help our long-term life insurance product and also more diversified or tailored design in proposition and quality advice. And we continue to see a strong good demand of CME business.

On Mainland China, we are very pleased with the first half results. BUMB growth of 20%, especially pleased with the performance from the agency channel. 24% BUMB growth, and this is supported by a very strong foundation. Pek-San Ang, Mark Konyn It's affected by one-off factors and one-off events. So overall for the year we are confident of our performance of the outlook for China. Now I hand over to Fisher to talk a bit more in detail about China's performance in the first half.

Thanks for the question. Firstly, I want to emphasise the overall performance. As Min Xiang said, we are very pleased about the excellent performance. Particularly, you know, it's driven by the The structural growth driver and AI China's unique differential strategy, particularly in the premium agency and also our new VU's great performance. The unique geography expansion opportunity actually also give us full confidence to deliver sustainable growth going forward. Your question actually about in the second half, You know, refining lots of products actually is mainly about the bank insurance. Maybe let me elaborate bank insurance a little bit more. So firstly, how we look at bank insurance. Actually, you know, as we said several times, we think bank insurance with various new regulations in place, especially, you know, like the PIR adjustment mechanism, Shifting to the Park, Boi Hsing He Yi. Actually the bank insurance is getting more healthy. So we think there is a huge opportunity in the future. Secondly, our strategy is to build and differentiate profitable bank insurance. That's why we say we collaborate with the selected bank partner. who have the same vision, same operating philosophy with us. We focus on those affluent and high-net-worth customers, do more POS management, stringent active management, and very importantly, customer relationship management. That's our target differential model. So, you know, since you mentioned since July, actually, you know, the regulators strengthened the Boqing He Yi, which means, you know, the whole market, the bank assurance will shift from the previous more faith-driven to the future It's kind of comprehensive capability driven. The insurance company need to do more on the POS management, on the customer management. That is exactly, you can find the direction of us. So we have verified all the product. to comply all the regular requirements. And this direction, although the whole market will have a transition period, but as I said, we are very well positioned to capture this long-term opportunity in future. So overall speaking, not just the premier agency, we also have full confidence in the overall business performance. Thank you.

Thank you, Michel. Next question, please. The next question comes from Charles Cho of UBS Securities. Charles, please press the unmute button shown on your screen and ask your question.

Okay, thanks. This is Charles Cho from UBS. I also have a few questions. The first question on the second page of your interim report. I know that Yuan Siong said the Group has achieved 70% compound annual growth rate since the first half of 2023. which I believe this also exceed the investor in business growth for the AIA Group. So may I know, you know, so how do you see this, you know, expectation about the meeting's growth including for this year and also in the medium term? As we know, you only achieved 10% in the first half. That means the growth probably have to accelerate in the second half to achieve this meeting's expectations. So, can you maybe just help us to understand how, you know, in which market, you know, we'll see finance getting bigger and bigger. So, in the medium term, if we are going to achieve, say, meeting growth, do we expect the growth will come from Hong Kong, China, or maybe more from Southeast Asia? So, that's my first question. Second question is for, you know, Hong Kong. I think the competition in Hong Kong has intensified over the past few years, especially in bank assurance and broker channel. Both are gaining shares in Hong Kong compared with agencies based on industry data. So how does AIA plan to sustain its competition? How does AIA view the Hong Kong competitive landscape and rapid growth of the bank-backed insurers? Last, maybe very quickly on AIA China, just regarding the margin, we saw the margin decline a little bit. In China, can you maybe just elaborate and talk about the margin? Thank you.

Thank you Charles and thank you for bringing us to this slide which I think is a very important slide because it exactly tells us that we are operating in the best region for life and health and long-term savings insurance business. This is our core business and we are in the best region. Very significant competitive advantages. And these competitive advantages, we continue to invest into strengthening these competitive advantages including building up our Premier Agency, building up our strategic bank partnerships and our partnerships with selective We have shown that over the long term, we are able to deliver a very strong record of consistent performance. Yes, in terms of UMV, there was a blip during the years of COVID, but COVID affected the whole world. You can see that post-COVID, we bounced back very quickly. and continue that you know trajectory of strong growth that's translating to earnings that's translating to cash returns to our shareholders so so the thesis for the investment thesis for AIA I think remains very very strong so this is the first thing I'd like to say now in terms of The growth engines, we operate in 18 markets but we have identified our 4 key growth engines mainly Chinese mainland Hong Kong, ASEAN and India. So these are our four growth engines and these four growth engines continue to deliver good growth from The power of our diversified Pan-Asian platform, the power of these four growth engines, means that we can consistently deliver the kind of growth trajectory that you see in slide 15. Now, on our competitive advantages, clearly the key competitive advantage for us is Premier Agency. We have the best in the market. I think Jackie and the team have talked Thank you very much. Through the use of technology and AI, we believe that technology and AI can be a growth accelerator for our key distribution channels and this is what we are investing into and we are devoting a lot of time and energy on leveraging AI to improve Pek-San Ang, Mark Konyn That's my answer to your first question. On the second question about market competition, again I go back to the point that we are focused on delivering high quality growth that translates to earnings We believe that if we consistently focus on this high quality growth, that in all our markets, we will become the leading life and health insurer in the market. We are already the leading life and health insurer in many of our markets that we operate in, but we believe that this focus on delivering high quality growth will anchor our ability to become the leading insurer in all the markets that we operate in. Now, we know that in Hong Kong, our strength is our primary agency and our bank partners in Citibank Bank of East Asia. They delivered very strong performances in the first half of 2026. And we are aware that, as I said, we continue to be very focused on high quality We are aware that in certain markets there will be companies that will adopt very aggressive pricing strategies. There will be companies that will adopt some short-term incentives to drive market share growth. But you know, as I emphasized again and again, we focus on high quality growth. Specifically about Hong Kong, I will hand over to Jackie to talk about it.

Thank you, Wing-Siong. Charles, as you point out, Hong Kong competition is intense. But it's always been there. Because Hong Kong is an international financial center, and you see that there are Almost all those are major global financial institutions. They have business in Hong Kong. So no wonder there is key combination here. And as Yuen Siong point out, AIA in Hong Kong and Macau, we focus on delivering sustainable quality growth in our business in the long term. And we do see that our differentiated PMI agency is the key differentiator. And we sell long term life insurance and long term saving product through our PMI agency channel. and we also have partnership with our exclusive bank partner Citi and BA and they both also focusing on selling long-term life insurance and long-term saving product and in the broker channel we are also there Hong Kong, Air Hong Kong is also having a multi-division channel because this is a very diversified financial center and we selectively partner with roughly 10% of the brokers in Hong Kong who are also aligned with us in the value proposition of long-term life insurance product for our customers. As you see in the so-called recent, I believe you see in the recent statistics in the Hong Kong life insurance market, there is a big growth in terms of AMP and mostly driven by single premium and short pay. Short pay meaning that premium paying period less than five years. and I'm sure you see that many of our competitors, they may really do go into that path and the margin will experience a drop. But in the case of Air Hong Kong, we deliver a set of strong real NP growth of 10% amid a very strong margin of 72%. So this shows that our financial discipline and focusing on delivering long-term sustainable quality growth.

On the China margin question, I think you need to look at it in terms of the Bank Assurance Channel and the Agency Channel. We are very happy with the level of the VWB margin of our Agency and Bank Assurance Channel. Bank Assurance Channel, our BNB margin was 35%. This compared to years ago, where it was the lowest single digits in the market in the industry, I think this is a very healthy level of BNB margin for Bank Assurance Channel in the Chinese mainland. With the increased focus on passing HEI and other regulations and the moves by the regulator, we believe that the profitability of the Bank Assurance Channel will continue to be at a healthy level, as Fisher described it just now. With the Agency Channel, our VNB Margin stands at 60%. This is a very attractive VNB Margin and we believe it is a market leading VNB Margin for the Agency Channel in this low interest environment. If you look at the product mix of our Chinese mainland business, it is a very attractive product mix. 35% of the new business is in protection business, 57% in participating savings, and 8% in tax-incentivized retirement products. Our products that we like in this low interest rate environment. I hand over to Fisher to further elaborate.

Basically, that's all. Firstly, Chas, as you know, we manage the business by focusing on growing the absolute amount of revenue. So as you can see in the first half, We are very pleased to deliver excellent performance in the MUP, which is 20%. Secondly, you notice that there is a slight drop in the margin, which is mainly because we've further shifted more to the par. As you know, it's more healthy. You must know, I'll give you a typical example. Last year, the first half of our CI product was still a non-par CI. In the second half, we launched PaaSai, which is very well received by the market. We continue to ship more healthy product mix. That's the main reason for the margin drop. Last but not least, as Yuan Siong said, we actually maintain a very decent margin. No matter agency around 60%, and 75% are all very well above the market. And very importantly, the product mix is healthy. We are very unique in the protection, you know, it's still a 15% growth. So, you know, consider all of this, you know, and have full confidence that we can continue to deliver, you know, decent margin in future. Thank you.

Thanks for the question Charles. Next question please.

The next question comes from Leon Chin of CLSA. Leon, please press the unmute button shown on your screen and ask your question.

Hi, thanks for taking my questions. This is Liangqi from CISA Research. Given a lot of my P&As have already asked quite a few questions on short-term quarterly dynamics, today I would like to ask three questions related to a bit longer-term perspectives, if I may. First one on financials, second one on AI, and third one on strategy and competitive edge. My first question is on our OPAT. I appreciate that in our pre-prepared remarks that Garth mentioned that we had a very strong OPAT growth in the last few years, turning into higher CSM release ratios, which supports our OPAT growth. Does management think this is a sustainable trend? Or put it differently, are we now starting to see the benefits of this BNP growth over the past few years feeding into more visible reported earnings growth in OPAT and possibly in free surplus as well? Second question is on AI. We've highlighted that we have a lot of investments in AI in different areas, including sales co-pilots, management co-pilots, and data-driven lead generation across agency forces. How do we measure the economic return on these investments? Over time, do you expect AI to be primarily reducing customer acquisition, increase process opportunities, or improve customer retention? In other words, if management could share which are the best KPIs that captures the value being generated from our AI investments. And the third one is on our strategy and the competitive edge. AIG has successfully combined a very productive agency model. Looking five years ahead down the road, where do you think are the greatest sources of competitive edge that comes from? Is it our preparatory distribution model, or customer data, AI-enabled productivity, ecosystem partners, or our brand trust? In particular, I guess this is probably a question for Yuan Xiang, if possible. Given Yuan Xiang, you've been in the office for six years, have your view towards this question changed over the past six years? Thanks a lot.

Okay, thank you. I'll just hand over to Garth on your question on OPAT.

Yeah, thanks Leon. Yeah, clearly we're very pleased to see the step up in the OPAT growth to 13% growth per share. And as we said, we now expect to exceed our OPAT growth target. I think that gives you some idea of the confidence we have. When you look at the OPAC growth, the biggest driver is the release from CSM, and you saw the 11% increase in the insurance service result with the flow-on from the CSM release. That's been fairly stable, and you can see how the successive layers of new business are really driving that OPAC growth. Our confidence in growing the new business is there, and that will drive growth in new business CSM. and that in turn will drive the CSM release and the OPEC growth. I think that what you see in these results actually is the financial flywheel that we have at AIA where that new business growth translates into earnings and then ultimately into the UFSD and cash over time. I think the other thing to point out I think in these results is the strong operating performance. You can see that the claims management has been strong. We've got good variances on the claims management Pek-San Ang, Mark Konyn So I think we look forward to growing OPAP further. I think, as you say, it's getting a new business and then seeing that flow through. You'll see how it comes through in the results as we go forward.

Now on your two questions, one on AI and one on the strategy. We are very excited about what AI can do for the business. We think there are huge opportunities that AI can We see the value from AI emerging in three areas. One is the improvement in the productivity of our distribution channels, in particular our primary agency channel. Second, it is in helping us to uplift The value from our customer base, we have an excellent and very, very high quality customer base. And the third clearly is to improve the efficiency and productivity of our employees. Garth talked about the reduction in the expense ratio. The contribution of it, a lot of it came from our investments into technology over the past few years and I think AI has the potential to help us further improve our efficiencies of our operations. So overall I think this is where we see AI creating value for AIA. I do think that the greatest value that we can extract from AI will come from the improvement in the productivity of our sales force and this is an area that we are working on with our investments into using AI to empower Thank you very much. Yes, I've been in AIA six years, more than six years now. And we also have a new chairman who's been on board for 10 months. And since he has been on board, we've gone through a very extensive I can say that we are very fully aligned on the strategy of EIA. We have reaffirmed Our growth strategy, we remain focused on life, health and long-term savings, and we remain very focused geographically in our existing Pan-Asian footprint. There continues to be tremendous upside and opportunities for AI as a whole. In terms of our strategic priorities, we are focused on continuing to meet customer needs through our professional Premier Agency force. This is a channel where we have clear differentiation and we are also aligned in terms of our focus of complementing our Premier Agency channel with our long-term strategic bank partnerships and the selective IRA and broker partners that we have. So I think in terms of the strategy, this is how we are seeing it through the review. We believe that we can further accelerate our growth through the use of technology. The growth accelerators for AIA would be the use of technology and AI in particular to strengthen and empower our distribution channels and our people and culture. So this will be the growth accelerators. and all this is anchored by our financial discipline. So all in all, that was the after 10 extensive review of our strategy and it's the right time for us to review it and going forward.

Perfect.

Thank you very much.

Very well said. Thanks Leon for the question. We'll move to the next one please.

The next question comes from Richard Hsu of Morgan Stanley Richard. Please press the email button shown on your screen and ask your question.

Thank you for the opportunity. A few questions for me as well. First of all, I want to get back to Hong Kong a little bit. I just want to see the product mix and customer mix. Are we basically seeing mix from changing to more large ticket items? And then for ASEAN, I think Charles touched on the question a little bit as well. I mean, it's healthy growth, but certainly lagging China and Hong Kong. Whether there's any initiative to drive some further growth there? For example, in Malaysia, we're seeing age and productivity of new crews up pretty decently. B&B 10% seems to be lower than those headline numbers. What are the drivers behind that and any potential pick-up in ASEAN growth? And lastly, obviously, we're expecting to exceed OPAC per share growth target. Are we going to give some new targets after 2026? So thank you very much.

Thank you. Hand over to Jackie on Hong Kong.

Yeah, very happy to talk about Hong Kong. So when you asked about product mix, product mix is driven by customer need. So it is right here in the domestic customer segment in Hong Kong. Due to ageing, the need for retirement saving, long-term saving and health insurance, these fundamentals continue to drive the customer need for the domestic segment. And in terms of the Chinese mainland visitor segment, as I said before, get access to globally diversified investment which back up our long-term life insurance and long-term saving product in Hong Kong. are really one of the key drivers for the CMV customers. So basically, in our product mix, we don't see a major change. We still sell a much bigger so-called percentage of sales of product in long-term life and long-term saving, which are and many more. Our domestic customer segment, the average case size increased by roughly 10%. It is mainly different by higher case size from an increasing segment within the domestic customer segment which have been mentioned before. Those are the new Hong Kongers. The new Hong Kongers now make up roughly 30% of our domestic customer segment and they are continuously growing. And in the Chinese mainland visitor customer segment, our average case size, roughly stable, increased a little bit from US$20,000 to US$21,000. So it's broadly roughly the same since after COVID. So I would say that those strong underlying structural demand for the customer continue to drive a very solid good demand from both domestic segment and Chinese mainland visitor segment.

ASEAN is a key growth engine for AIA, especially the key markets of Thailand, Singapore and Malaysia. ASEAN has consistently contributed to more than 30% of our V1B. We have a very strong brand power in the ASEAN region. In Thailand, we are number one for protection. We are number one for unit link. In Singapore, we are number one for protection. We are number one for corporate solutions. In Malaysia, similarly, we are number one for protection and for corporate solutions. We have leading premier agency channels. We are most MDRT in these markets. So, clearly a very, very important growth engine for AIE and I will ask I'll talk a bit about these markets in detail.

Thank you, Wing-Shing. Thank you, Richard, for the question. Yes, ASEAN is a significant growth engine for A Group, contributing to more than 30% of the overall Group VOMB. We'll be starting with Thailand. As previously reported, the first quarter VOMB was lower because of an extremely high comparative same period last year. But we're very pleased that business returned to strong growth in the second quarter, where VOMB was up 13%. If you look at the mix of our business, we continue to have a very healthy product mix, where 75% of total BNB are actually from traditional protection business. In fact, we have more than 50% of market share in Thailand for protection, particularly health and critical illness business. And in the second quarter this year, we see a strong return to growth of protection business overall in Thailand. So the fundamentals of our business in Thailand remain very strong. Our primary agency, which is MarketLink, continues to grow with a number of new recruits as well as a number of new leaders. Our business is also well complemented by our strategic partnership with Bangkok Bank. We are fully confident in AIA Thailand's ability to meet protection and long-term savings needs of the Thai population. Moving quickly to Singapore, as you can see, Singapore continues to grow. 10% for the first half, with stronger momentum in the second quarter of 19%. The 10% first-half growth of Singapore was against a very strong base in the first half of 2025. As you mentioned, we are the market leader in crime agency and judged by the strong growth in number of new leaders that's critical for the sustainable future growth of our agency in Singapore. We also achieved good growth from our partnership distribution, particularly strong growth from Citibank, as well as some strong support from the broker and IFA reflecting the strength of our proposition, both protection and long-term savings proposition. So we are pleased with our performance in Singapore. We believe that we are well positioned to ride on the growth potential. Moving on to Malaysia, Malaysia went through a period, especially in the first half last year, where our agency force has to devote a substantial proportion of their attention and effort to advise their customers as a result of the regulatory changes to the health insurance business in Malaysia. We are pleased that it has increased quarter by quarter. First half this year our business grew by 10% and it was also underpinned by a stronger growth of 13% in second quarter this year. So as Jin Xiao mentioned, we retain our market leadership in Malaysia. We are number one in protection. We are number one in overall health insurance business. We are also extremely pleased to see the strong growth momentum from our agency, China, particularly in the number of new recruits. New recruits increased by 16% for South this year. and that reflects the success of our agency model in Malaysia which we believe will put us in a good position to meet both the protection and long-term savings needs of our customers in Malaysia.

On the OPEC target, since we communicated the target externally, we have achieved 12% per share in 2024 and then 12% per share in 2025 and now the first half of 2026, 13% per share. As I said earlier in my speech, we expect to exceed the 9-11 target that we put out two or four years ago. I hand over to Garth to talk further.

Thanks, Richard. Clearly the context of the target that we gave out and the context at the time was we were coming out of COVID and I think the IFRS 17 The Financial Dynamics of Business If we look now, you see that the dynamics I described earlier to Leon's question are coming through. We've re-established our track record of growth and from the results in this half again, you see how the VOMV growth is translating into earnings growth and then into cash and UFSG growth and so on. So, you know, the earnings trajectory going forward is clearer now and how IFRS 17 works through the results is clear.

Great. Thank you, Richard. I think we've got time for one more question, probably.

The last question comes from Michael Chang of CJSI Securities. Michael, please press the button shown on your screen and ask your question.

Thanks. Can you hear me? Yes? Sure, alright, thanks. I actually have got three questions. So the first one is just on the VIF monetisation, I don't know if the distributable earnings from the Inforce business really accelerated this half. It's up 16%, last year it was up 7%. So what's really driving this acceleration? Which regions and which cohorts of business that you have written in past years? Secondly, on the non-Hong Kong China regions, just a few questions. Thailand, in one queue, I think it was mentioned that VOA and VMA margins can remain above 90%. First half, you did over 96%. Thailand is one of the highest margin regions. How sustainable are those margins? Secondly, in relation to Singapore, wealth management is a very strong growth driver. Can I just understand the outlook on that front in terms of targets in that segment and also on the India health insurance opportunity? I think one of your peers is quite excited about expansion on the Indian market. And then finally, my last question will just be on a comment made by Fisher on bank insurance in a transition period in China that obviously has been disrupted due to sales in 2Q. How long, you know, in terms of managing expectations, because we also have to talk to investors, how long should we be managing of this disrupted period? I mean, will it last until the end of 3Q? Thanks.

I think that's a fast question. So maybe I think we just pick three questions to answer in the interest of time. So on distributable earnings, Garth, can you please talk about it?

Yeah, I mean the distributable earnings we see coming from good results from Hong Kong and clearly the equity market performance that we had has helped to drive that through the power business in particular going forward. We've also seen good growth from the other markets across the region, but Hong Kong would be one of the primary sources. We've also seen, obviously, growth from China in the underlying free surplus generation because of the way that we have protection business and the way that flows through the numbers. So, yeah, it's a broad-based performance, but I think Hong Kong will be the one that really stands out, if anything.

Yeah, and then Hang Li on the Thailand VOMP margin.

Thank you, Siong. Thanks for the question. As you know, our focus is always to grow the absolute dollar view as opposed to just the margin or MP volume alone. I want to first state that We have a market share of more than 50% in the protection business, particularly health and critical illness. Now there was a slowdown in first half because of the high competitive first quarter last year. We are very pleased to see that our protection business is beginning to grow again in second quarter this year. And having said all that, we are also actively enhancing our long-term protection business and high net worth individuals in Thailand. So overall, we really believe that the fundamental of business remains very strong. We continue to grow protection business through our marketing agency force, as well as to grow long-term protection to the segment through our bank assurance partnership with Bangkok Bank as well as our agency force.

Finally, India is a very exciting long-term opportunity for AIA. It's growing very strongly. We are increasing our presence in the In the market, we are the number one in terms of retail summer shirt. We are market leading VOMB margin in India. Our agency channel contributes to 55% of the VOMB of the Tata AIA. We are growing our primary agency force very strongly. Leo, maybe you want to add a few points about India?

Good morning, Michael. More specifically on your question around the opportunity in health, as you know, Currently in India, under the current framework, life insurance companies can offer fixed benefit health products as opposed to indemnity or insurance or reimbursement products. Now within the Insurance Amendment Act of 2025, the IRDA now has the opportunity to add new additional classes of insurance business They have not been notified of any new clarity around that at this point in time. So within that framework, Tata AIA currently competes very strongly, offering a range of health and critical illness solutions that are complemented with wellness solutions like Vitality and Health Buddy. and that strategy has been very successful. We see tremendous upside potential in the Indian market driven by very strong underlying growth drivers such as very strong demographics, increasing household income and low penetration of life insurance. And so Tata Aya is very focused on executing on that strategy. and as Yuan Siong has mentioned, that's been very successfully executed. The last several years have shown very strong growth. And again, the first half of this year delivered very strong results with 31% B1B growth in the first half, well balanced across our premier agency with 38% B1B growth and our partnership distribution channel with 23% growth. So we're very, very pleased With the performance of that business and within the current framework, we see significant growth potential going forward.

I'll just end by saying again that we are very confident in our outlook for 2026 and beyond. The demand drivers in this best region for life and health insurance remain powerful and intact, including for MCMV business in Hong Kong. We have an excellent track record of delivering high-quality growth that translates to earnings and cash returns to shareholders. Thank you very much.

Thank you everyone for dialing in. We have no more questions now, so we'll call it ended at that. Please get in touch with us in IR if you have any further questions. Thank you.