AIA Group Limited has announced its financial results for the first half of 2022.

The company’s value of new business (VONB) reduced by 13 percent to US$1,536 million. However, a strong month-on-month improvement in the second quarter showcased positive VONB growth in June.

At the same time, AIA Group reported robust annualized new premiums (ANP) of US$2,778 million, a decline of 7 percent with a VONB margin of 55.2 percent. As movement restrictions have been eased in the region, AIA China returned to VONB growth in July.

In terms of earnings and capital, free surplus increased by US$3.6 billion to US$20.6 billion. Underlying free surplus generation (UFSG) rose by 5 percent to US$3,190 million, while operating profit after tax (OPAT) increased by 4 percent to US$3,223 million.

The company also reported a “very strong” Group LCSM cover ratio of 277 percent on the new PCR basis, and 567 percent on the previously reported MCR basis. In total, EV Equity was recorded at US$72.3 billion after returning US$3.0 billion to shareholders through the share buy-back program and dividend, with shareholders’ allocated equity of US$46.8 billion.

Overall, interim dividend increased by 6 percent to 40.28 Hong Kong cents per share.

AIA Group Chief Executive and President Lee Yuan Siong said in a statement that the company had delivered a resilient performance in the first half of 2022.

He noted that sales momentum in the second quarter had improved as the temporary disruption caused by the initial outbreak of the Omicron variant declined, which allowed AIA to deliver positive VONB growth in June.

“Our growing high-quality in-force portfolio supported an increase in both OPAT and UFSG.  The Group’s financial position remained very strong with free surplus increasing to US$20.6 billion and a Group LCSM cover ratio of 277 percent despite the significant stress in capital markets.

“EV Equity was US$72.3 billion, representing an increase of 3 percent in the first half before the return of US$3.0 billion to shareholders through our share buy-back program and payment of the 2021 final dividend,” he explained.

Highlighting the interim dividend’s increase, Lee Yuan Siong said it followed AIA’s established prudent, sustainable and progressive dividend policy, allowing for future growth opportunities and the financial flexibility of the group.

“AIA’s wide adoption of technology, digital and analytics throughout the group continues to enhance our business capabilities and resilience. Our agents rapidly switched from in-person to digital remote sales, helping to offset the effect of the initial Omicron wave on face-to-face sales activities and leveraged our social-media-integrated leads management platforms as a powerful way to generate new customer leads,” he said.

In July, AIA was ranked the number one global Million Dollar Round Table (MDRT) multinational for a record eighth year in a row.

“Our strategic partnerships with leading banks delivered double-digit VONB growth in the first  half, driven by very strong performances in Hong Kong, Malaysia and India. Overall, our partnership distribution business reported a positive increase in the first half and strong VONB growth in the second quarter, supported by double-digit growth in Malaysia, Indonesia and the  Philippines and a material contribution from our partnership with The Bank of East Asia [BEA],” he said.

Lee Yuan Siong acknowledged that sales activity in the second quarter for AIA China was substantially affected by stringent containment measures in Shanghai, Suzhou and Beijing. However, he continued, the company achieved positive VONB growth across other geographies.

“In the first half, VONB was lower due to the restrictions and following a record result in the first half of 2021, which was driven by an exceptionally high level of traditional protection sales, as previously reported. Our high-quality Premier Agency model remained resilient with growth in active agent productivity, new recruits and the overall agency force,” he said.

“The Mainland Chinese life insurance market remains significantly underpenetrated and offers tremendous growth potential for AIA. We continue to make strong progress in geographical expansion and our new branch in Wuhan, Hubei province, commenced sales in the first half, making a strong contribution to the excellent VONB growth from our new geographies.”

In May, AIA received regulatory approval to prepare a new branch in Henan, the third most populous province in Mainland China.

In Hong Kong, AIA Hong Kong delivered 3 percent VONB growth in the first half of the year, supported by growth in both agency and partnership distribution channels. Sales momentum in the company’s domestic customer segment rebounded from May as daily infections subsided.

“While travel across the Hong Kong border remains limited, we delivered strong VONB growth from sales to Mainland Chinese visitors through our Macau branch,” Lee Yuan Siong said.

The rest of AIA Group generated close to 50 percent of total VONB in the first half with progressive improvements in sales activities in Q2 2022. In June, AIA’s ASEAN businesses returned to growth with a very strong double-digit VONB increase. 

Lee Yuan Siong said Tata AIA Life, the company’s joint venture in India, was well positioned to capture the significant opportunities available in the life insurance market, noting its excellent VONB growth in the first half as supported by the success of its multi-channel distribution platform.

“I am confident that the long-term prospects for AIA’s broad and diverse business remain exceptional. AIA’s geographical diversity across Asia and our unrivaled distribution platform are key strengths. We are focused on the disciplined execution of our strategic priorities which will continue to deliver long-term sustainable value for all our stakeholders,” he concluded.

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