友邦保險控股有限公司
AIA GROUP LIMITED
STOCK CODES
1299
(HKD COUNTER)
81299
(RMB COUNTER)
DIFFERENCE
ANNUAL REPORT 2024
MAKING A
ABOUT AIA
AIA Group Limited and its subsidiaries (collectively
“AIA” or the “Group”) comprise the largest
independent publicly listed pan-Asian life insurance
group. It has a presence in 18 markets – wholly-owned
branches and subsidiaries in Mainland China,
Hong Kong SAR(1), Thailand, Singapore, Malaysia,
Australia, Cambodia, Indonesia, Myanmar,
New Zealand, the Philippines, South Korea, Sri Lanka,
Taiwan (China), Vietnam, Brunei and Macau SAR(2),
and a 49 per cent joint venture in India. In addition,
AIA has a 24.99 per cent shareholding in China Post
Life Insurance Co., Ltd.
The business that is now AIA was first established in
Shanghai more than a century ago in 1919. It is a
market leader in Asia (ex-Japan) based on life
insurance premiums and holds leading positions
across the majority of its markets. It had total assets
of US$305 billion as of 31 December 2024.
AIA meets the long-term savings and protection
needs of individuals by offering a range of products
and services including life insurance, accident and
health insurance and savings plans. The Group also
provides employee benefits, credit life and pension
services to corporate clients. Through an extensive
network of agents, partners and employees across
Asia, AIA serves the holders of more than 43 million
individual policies and 16 million participating
members of group insurance schemes.
AIA Group Limited is listed on the Main Board of
The Stock Exchange of Hong Kong Limited under
the stock codes “1299” for HKD counter and “81299”
for RMB counter with American Depositary Receipts
(Level 1) traded on the over-the-counter market
under the ticker symbol “AAGIY”.
Notes:
(1) Hong Kong SAR refers to the Hong Kong Special Administrative Region.
(2) Macau SAR refers to the Macau Special Administrative Region.
(3) Explanations of certain terms and abbreviations used in this report are
set forth in the Glossary.
HEALTHIER
LONGER
BETTER
LIVES
CONTENTS
OVERVIEW
012 Chairman’s Statement
016 Group Chief Executive and
President’s Report
FINANCIAL AND OPERATING
REVIEW
024 Group Chief Financial Officer’s
Review
054 Regulatory and International
Developments
055 Business Review
073 Risk Management
080 Our People and Culture
CORPORATE GOVERNANCE
087 Statement of Directors’
Responsibilities
088 Board of Directors
098 Executive Committee
103 Report of the Directors
115 Corporate Governance Report
137 Remuneration Report
FINANCIAL STATEMENTS
157 Independent Auditor’s Report
164 Consolidated Income Statement
165 Consolidated Statement of
Comprehensive Income
166 Consolidated Statement of
Financial Position
168 Consolidated Statement of
Changes in Equity
170 Consolidated Statement of
Cash Flows
172 Notes to the Consolidated
Financial Statements and
Material Accounting Policy
Information
321 Independent Auditor’s Report on the
Supplementary Embedded Value
Information
325 Supplementary Embedded
Value Information
ADDITIONAL INFORMATION
352 Information for Shareholders
355 Corporate Information
356 Glossary
AIA GROUP LIMITED
002
ANNUAL REPORT 2024
003
AIA AT-A-GLANCE
Note:
(1) As at 31 December 2024.
PRESENT IN
18 MARKETS AND
100% FOCUSED
ON ASIA
Provides protection with total
sum assured of over
US$2 TRILLION
to people across Asia
Benefits and claims of
US$21 BILLION
in 2024
Serving the holders of
more than
43 MILLION
individual policies and
16 MILLION
participating members of
group insurance schemes
THE LARGEST
INDEPENDENT
PUBLICLY LISTED
PAN-ASIAN LIFE
INSURANCE
GROUP(1)
A LEADING
LIFE INSURER IN
THE WORLD
by market capitalisation(1)
NO.1
WORLDWIDE FOR
MDRT REGISTERED
MEMBERS
The only multinational
company to top the table for
10 CONSECUTIVE
YEARS
Named
“DIGITAL INSURER
OF THE YEAR”
by InsuranceAsia News for
four consecutive years
FINANCIAL RESULTS AT-A-GLANCE
VALUE OF NEW BUSINESS(1)
ANNUALISED NEW PREMIUMS(2)
500
0
1,000
1,500
2,000
2,500
3,000
4,000
3,500
5,000
4,500
US$ MILLIONS
2020
2021
2022
2023
2024
3,366
4,034
3,092
2,765
4,712
US$ MILLIONS
0
1,000
2,000
3,000
4,000
7,000
6,000
5,000
9,000
8,000
2020
2021
2022
2023
2024
5,647
7,650
8,606
5,407
5,219
OPERATING PROFIT AFTER TAX(3)(7)
TOTAL WEIGHTED PREMIUM INCOME(4)
US$ MILLIONS
0
1,000
3,000
4,000
5,000
2,000
7,000
6,000
2020
2021
2022
2023
2024
6,605
6,409
5,942
6,213
6,421
US$ MILLIONS
0
5,000
10,000
15,000
20,000
30,000
25,000
45,000
40,000
35,000
2020
2021
2022
2023
2024
35,408
36,176
37,939
41,398
36,859
TOTAL ASSETS AND TOTAL LIABILITIES(7)
EV EQUITY(5)
US$ MILLIONS
0
10,000
20,000
30,000
40,000
60,000
50,000
70,000
80,000
2020
2021
2022
2023
2024
75,001
67,185
70,153
71,626
71,202
US$ BILLIONS
0
50
150
200
250
300
100
350
2020
2021
2022
2023
2024
326
262
340
279
286
305
265
270
225
245
TOTAL ASSETS TOTAL LIABILITIES
AIA GROUP LIMITED
004
2024 BREAKDOWN BY MARKET SEGMENT
Notes:
(1) Value of new business (VONB) is the present value, measured at
the point of sale, of projected after-tax statutory profits emerging
in the future from new business sold in the period less the cost of
holding the required capital in excess of regulatory reserves to
support this business.
(2) Annualised new premiums (ANP) is a measure of new business
activity that is calculated as the sum of 100 per cent of annualised
first year premiums and 10 per cent of single premiums, before
reinsurance ceded.
(3) Operating profit after tax (OPAT) is shown after non-controlling
interests.
(4) Total weighted premium income (TWPI) consists of 100 per cent of
renewal premiums, 100 per cent of first year premiums and 10 per
cent of single premiums, before reinsurance ceded.
(5) Embedded value (EV) is an actuarially determined estimate of the
economic value of a life insurance business based on a particular
set of assumptions as to future experience, excluding any economic
value attributable to future new business. EV Equity is the total of
embedded value, goodwill and other intangible assets, after allowing
for taxes.
(6) Based on local statutory basis, before the deduction of unallocated
Group Office expenses, Group Corporate Centre tax and non-
controlling interests.
(7) From 2022 onwards, the financial information is presented after the
adoption of IFRS 9 and IFRS 17, and amendment to IAS 16, unless
otherwise stated. The financial information for 2021 and prior
periods are presented before the above-mentioned change.
(8) ANP and VONB for Other Markets include the results from our
49 per cent shareholding in Tata AIA Life Insurance Company
Limited (Tata AIA Life). ANP and VONB do not include any
contribution from our 24.99 per cent shareholding in China Post Life
Insurance Co., Ltd. (China Post Life). The IFRS results of Tata AIA
Life and China Post Life are accounted for using the equity method.
The results of Tata AIA Life and China Post Life are accounted for on
a one-quarter-lag basis in AIA’s consolidated results. For clarity,
TWPI does not include any contribution from Tata AIA Life and
China Post Life.
VALUE OF NEW BUSINESS(1)(6)
ANNUALISED NEW PREMIUMS(2)
24%
35%
16%
9%
9%
7%
25%
30%
10%
10%
19%
6%
TOTAL WEIGHTED PREMIUM INCOME(4)
OPERATING PROFIT AFTER TAX(3)
24%
38%
15%
10%
8%
5%
24%
30%
11%
11%
17%
7%
MAINLAND CHINA HONG KONG THAILAND SINGAPORE MALAYSIA OTHER MARKETS(8)
ANNUAL REPORT 2024
005
2024
HIGHLIGHTS
As the largest pan-Asian life and health insurer,
AIA is the leader in our industry and has the scale
and influence to make a difference for millions
of people across Asia through our Purpose of
Healthier, Longer, Better Lives. We delivered
substantial value to shareholders, customers,
partners and communities in 2024, driving positive
change and materially contributing to the
economic and social development of the region.
ANNUAL REPORT 2024
007
STRONG FINANCIAL POSITION AND
INCREASED SHAREHOLDER RETURNS
AIA has accelerated our
geographical expansion in
Mainland China with
regulatory approvals to
prepare new branches in
Anhui, Shandong,
Chongqing and Zhejiang
BUSINESS GROWTH AND EXPANSION
In Singapore, we
successfully launched AIA
International Wealth in April
2024, providing professional
wealth management advice
and services designed to
meet the needs of high-net-
worth individuals across the
region.
in the fourth quarter of
2024. AIA now has access
to more than 340 million
target customers across
14 geographies in Mainland
China.
In August 2024, AIA also
announced a compound
annual growth rate (CAGR)(1)
target of 9 to 11 per cent for
operating profit after tax
(OPAT) per share from
2023 to 2026.
AIA has delivered an
excellent performance in
2024 with record new
business profits, strong
earnings growth and free
surplus generation.
In April 2024, we
announced AIA’s enhanced
capital management policy,
providing greater clarity on
returns to shareholders.
We target to pay out 75 per
cent of annual net free
surplus generation (net
FSG), which is UFSG less
new business investment
and expenses, each year
through dividends and
share buy-back.
Note:
(1) Compound annual growth rate (CAGR) from 2023 to 2026 calculated on a constant exchange rate basis.
AIA GROUP LIMITED
008
2024 HIGHLIGHTS
UNRIVALLED DISTRIBUTION
AIA’s unrivalled, proprietary Premier Agency
is the industry’s leading agency,
ranking number one internationally in terms of
Million Dollar Round Table (MDRT) members
for a record 10 years in a row.
AIA also holds the market-
leading position in nine
markets, with AIA China,
AIA Hong Kong and AIA
Thailand ranked as the top
three individual companies
with the highest number of
MDRT members globally.
MDRT membership
recognises agents who
demonstrate exceptional
professionalism, strict
ethical codes of conduct
and the highest standards
of customer service and
productivity.
ANNUAL REPORT 2024
009
REOPENING OF
GROUP HEADQUARTERS
On 27 May 2024, AIA
unveiled our redeveloped
Group headquarters at
1 Stubbs Road, Wan Chai in
Hong Kong. The state-of-
the-art AIA Building is Hong
Kong’s first urban campus,
designed to encourage
well-being, create
connection and foster
community among staff.
Environmental, Social and
Governance (ESG)
considerations were core to
the redevelopment of the
building, which obtained
leading green building
credentials including
platinum ratings across
LEED, WELL and BEAM+
pre-certifications.
HIGH-
PERFORMING
PEOPLE
AND INCLUSIVE
CULTURE
As an employer of choice
across our markets, AIA
fosters a connected,
collaborative workplace
that prioritises employee
engagement.
In 2024, AIA received the
Gallup Exceptional
Workplace Award for the
third consecutive year, a
testament to our strong
employee engagement and
performance-oriented
culture. AIA also ranked
first on the “Top
Workplaces in APAC 2024”
list by Best Places to Work.
AIA’s investment and
commitment to our learning
solutions were also externally
recognised, with the Group
receiving the Learning Impact
for Today and Tomorrow
(LIFT) certification from
EFMD, a globally recognised
accreditation body.
AIA GROUP LIMITED
010
AIA One Billion
is AIA’s bold
ambition to engage
one billion people to
live Healthier,
Longer, Better Lives
by 2030.
As part of the AIA One Billion
ambition, the Group launched
Rethink Healthy in June 2024,
a new campaign which seeks
to challenge stereotypes and
narrow depictions of health in
RETHINK HEALTHY
PARTNERSHIP
WITH
TOTTENHAM
HOTSPUR
AIA’s partnership with
Tottenham Hotspur
continues to be a
powerful vehicle to
deepen engagement
with communities
across the region,
PURPOSE
Asia, and calls for new
definitions of health that will
encourage more people to live
healthier. The campaign’s
anthemic film recorded over
157 million views and 513,000
engagements in the first four
months following its launch.
AIA Healthiest Schools
encourages healthy eating,
active lifestyles, mental
well-being and sustainability
among students aged five
to 16. Running annually,
the programme expanded
from four to six markets
comprising Australia, Hong
Kong, Thailand, Vietnam,
Indonesia and Malaysia, and
received 2,376 registrations
from primary and secondary
schools in the second year,
bringing the total to 3,120
registrations since its launch
in 2022. The Philippines and
Sri Lanka have also joined the
programme with eight markets
participating in the third year.
AIA HEALTHIEST
SCHOOLS
with more than 32,000
children attending football
camps during 2024.
ANNUAL REPORT 2024
011
AIA VITALITY
PARK AND
AIA VITALITY
HUB
IN ACTION
AIA VITALITY
AIA Vitality is a science-
backed wellness
programme that provides
participants with the
knowledge, tools and
motivation to help them
achieve their personal
health goals.
Present in 12 markets,
AIA Vitality members
performed more than
95 million physical
activity events and
completed more than
1.7 million mindfulness
sessions over the year.
THE GROUP HAS ENGAGED
496 MILLION
PEOPLE ACROSS THE REGION
SINCE THE LAUNCH OF
AIA ONE BILLION IN 2022.
AIA VOICES
AIA Voices is a
platform featuring
thought leaders,
brand ambassadors
and influencers to
educate, motivate
and inspire individuals
to improve health and
wellness. Throughout
the year, AIA Voices
content attracted over
71 million views and
731,000 audience
engagements.
AIA SCHOLARSHIPS
In October 2024,
AIA Scholarships supported
100 university students in Hong
Kong for the fourth year as part
of the Group’s US$100 million
scholarship pledge in 2020.
AIA also celebrated our first
batch of graduates, who are
now embarking on new
journeys.
In November 2024, AIA celebrated
the extension of our sponsorship
of the Hong Kong Observation
Wheel for another five years. The
AIA Vitality Park and AIA Vitality
Hub have elevated the vibrancy of
this iconic location, providing over
1,800 free health and wellness
classes in 2024.
AIA GROUP LIMITED
012
OVERVIEW
CHAIRMAN’S STATEMENT
AIA has delivered an excellent performance with double-digit growth in our key
financial metrics inclusive of profitable new business, core earnings and cash
generation in 2024. EV Equity per share also increased by 9 per cent, after returning
US$6.5 billion to shareholders. In addition, the Board has recommended a 10 per
cent increase in the final dividend per share and approved a new share buy-back
programme of US$1.6 billion. The focused execution of our strategy maximises the
unified strengths of our diversified business model and has enabled us to record
these strong results.
Mr. Edmund Sze-Wing Tse
Independent Non-executive Chairman
ANNUAL REPORT 2024
013
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
We have achieved another successful year of very strong growth, demonstrating the sound business fundamentals
that enable us to meet the expansive needs of our customers across Asia. The current opportunities for our business
are vast and will further strengthen over time.
AIA benefits from having the industry’s leading proprietary distribution network, which provides a diverse product
range, backed by technological innovation and a trusted brand. Customer satisfaction is central to fulfilling our
Purpose of helping people live Healthier, Longer, Better Lives and our actions in 2024 have further improved the
awareness, accessibility and relevance of AIA’s products and services to consumers.
Our excellent financial results in 2024 are in contrast to the performance of AIA’s share price. A combination of
factors has given rise to the volatility we have seen, and the Group Board and executive team remain committed to
driving the key outcomes that create shareholder value both now and in the future.
AIA remains dedicated to writing profitable new business, which compounds over time to support higher earnings
and cash-flow generation for the long term. In this way, we create a virtuous circle, funding further capital
investment in organic new business, which grows our large stock of future earnings and delivers cash returns to
shareholders.
In 2024, we announced an enhanced capital management policy and a compound annual growth rate target of 9
to 11 per cent for operating profit after tax (OPAT) per share from 2023 to 2026, underscoring our confidence in
AIA’s ability to reinstate its strong track record of performance post the pandemic disruptions. We very much value
the trust placed in us and we also expanded our disclosures to provide increased transparency and accountability.
The success of our strategy is demonstrated by double-digit growth in our key financial measures for profitable
new business, core earnings and cash generation with US$6.5 billion returned to shareholders in 2024. The Board
has also recommended a 10 per cent increase in the final dividend per share and approved a new share buy-back
programme of US$1.6 billion.
I am confident that AIA’s significant competitive advantages keep us well-positioned to achieve our ambitions for
the benefit of our customers and shareholders.
2024 KEY FINANCIAL ACHIEVEMENTS
The demand for AIA’s high-quality products and services was strong during the year with value of new business
(VONB), our core measure of new business profitability, growing by 18 per cent to a record US$4,712 million
following double-digit growth in all of our reportable market segments and distribution channels.
Profitable new business growth also supported an increase in EV operating profit to US$10,025 million, up 19 per
cent on a per share basis. EV Equity increased by 13 per cent to US$78,104 million before shareholder dividends
of US$2,328 million and US$4,150 million of capital returns through our share buy-back programme. Net of these
items, EV Equity was US$71,626 million at 31 December 2024, up by 9 per cent per share over the year.
Underlying free surplus generation (UFSG) of US$6,327 million grew by 10 per cent per share and OPAT reached
a record high of US$6,605 million, an increase of 12 per cent per share. This demonstrates our commitment to
the profitable growth of AIA’s high-quality in-force business and keeps us on track to achieve our OPAT per share
growth target, which we announced in August 2024.
The Group’s financial position remained very strong in 2024. Free surplus grew to US$19,032 million at 31
December 2024 before returning US$6,478 million to shareholders through dividends and a share buy-back
programme. Net of these items, free surplus was US$12,554 million at 31 December 2024.
AIA GROUP LIMITED
014
OVERVIEW
CHAIRMAN’S STATEMENT
ENHANCED CAPITAL MANAGEMENT POLICY
In April 2024, the Group announced an enhanced capital management policy, providing greater clarity on how we
deliver capital returns to shareholders. At the same time, we extended AIA’s inaugural share buy-back programme
by US$2.0 billion, bringing the total to US$12.0 billion. This programme successfully completed in February 2025,
repurchasing 1,409,427,600 shares in total, equivalent to 11.7 per cent of total issued shares at its announcement
in March 2022.
Today, I am pleased to share that the Board has approved a new share buy-back programme of US$1.6 billion
in line with our stated capital management policy, taking into account our very strong financial position and
confidence in AIA’s future operational and financial delivery. The Board has also recommended a final dividend of
130.98 Hong Kong cents per share, which is an increase of 10 per cent. This brings the total dividend for 2024 to
175.48 Hong Kong cents per share, up by 9 per cent.
The Board continues to follow AIA’s established prudent, sustainable and progressive dividend policy, a key
element of our overall capital management policy, allowing for future growth opportunities as well as the financial
flexibility of the Group.
VIEWS FROM THE GROUP BOARD
It is my honour to work with my fellow Board members who are united by a shared commitment to uphold the highest
standards of corporate governance. All our non-executive directors are independent and bring extensive global
leadership from both the public and private sectors, providing oversight of the Group’s governance framework
and risk management activities. By ensuring AIA has a robust risk culture embedded across the organisation, we
remain well-positioned to address emerging risks, which is essential to succeeding in an increasingly complex
operating environment.
AIA’s legacy spans generations and we have significant experience in navigating market cycles as well as staying
the course through near-term uncertainties. Our leading businesses are executing the right strategy aligned with
the powerful structural growth drivers in one of the fastest-growing regions globally. The Group’s geographical
diversification and prudent financial management provide structural support against complex economic markets,
and I am confident that our substantial competitive advantages will only strengthen over time.
By focusing on inspiring better health outcomes, championing financial inclusion and expanding access to quality
care, we are also creating a positive impact on society. In 2022, we announced a commitment to engage with one
billion people by 2030 to help them live Healthier, Longer, Better Lives in service of AIA’s Purpose. By the end of
2024, we have engaged 496 million people through a series of touchpoints including advice, partnerships, events,
community programmes and campaigns that drive behavioural change and create positive social impact.
Supporting the sustainable development of the markets in which we operate is another way in which we demonstrate
our Purpose and, in 2024, we took further strides to advance our Environmental, Social, and Governance (ESG)
strategy through our business operations. Our efforts once again earned us positive external recognition.
Sustainalytics, a global leader in ESG and Corporate Governance research and ratings, has consistently ranked AIA
in the top decile of the insurance industry in their ESG Risk Rating assessment. We have also been “ESG Industry
Top Rated”, as well as “ESG Regional Top Rated” by Sustainalytics for four consecutive years.
ANNUAL REPORT 2024
015
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
We maintained our inclusion in the FTSE4Good Index for the eighth year in a row as well as the STOXX Asia/Pacific
ESG Leaders 50 Index and STOXX Global ESG Leaders Index for the fifth consecutive year. In Hong Kong, we
maintained our presence on the Hang Seng Corporate Sustainability Index Series including the HSI ESG Enhanced
Select Index.
THANK YOU
Our financial results would not have been possible without AIA’s outstanding employees, agents and partners
who consistently demonstrate our Operating Philosophy of “Doing the Right Thing, in the Right Way with the Right
People… and the Right Results will come”.
I would also like to specially thank our Group Chief Executive and President, Lee Yuan Siong, and his executive
team for their leadership. AIA’s business achievements in 2024 are the outcome of the successful execution of
our strategy and the Group’s exceptional position as the leading life and health insurance franchise across Asia.
Finally, I would like to express my deepest appreciation to our millions of customers and shareholders for the
enduring trust they place in us to generate significant value for all our stakeholders, well into the future.
On behalf of the Board, thank you for your continuing support.
Edmund Sze-Wing Tse
Independent Non-executive Chairman
14 March 2025
Note:
Growth rates are shown on constant exchange rates as management believes this provides a clearer picture of the year-on-year performance of the underlying
business.
AIA GROUP LIMITED
016
OVERVIEW
GROUP CHIEF EXECUTIVE AND
PRESIDENT’S REPORT
Our excellent financial and operating results demonstrate that we have
the right strategic priorities executed by market-leading businesses. I am
confident that we are exceptionally well-positioned to deliver profitable
and sustainable growth, earnings and cash returns well into the future.
Mr. Lee Yuan Siong
Group Chief Executive and President
ANNUAL REPORT 2024
017
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
The combined strengths of our market-leading operations have delivered record value of new business (VONB)
of US$4,712 million, an increase of 18 per cent, with each reportable market segment achieving double-digit
growth in 2024. This very strong performance builds on the momentum we have generated in previous years, with
successive layers of profitable new business growing our large stock of future earnings, an important driver of
shareholder value creation. EV Equity was US$71,626 million at 31 December 2024, up by 9 per cent per share,
after capital returns to shareholders.
As a result, we achieved strong earnings growth in 2024 with operating profit after tax (OPAT) reaching a record
level of US$6,605 million, up by 12 per cent per share. Our key operating measure of cash generation, underlying
free surplus generation (UFSG) of US$6,327 million, also increased by 10 per cent per share.
We returned US$6,478 million to shareholders through dividends and our share buy-back programme during the
year. Our capital management actions and prudent, sustainable and progressive dividend policy have resulted in
total returns to shareholders of US$18.2 billion over 2022 to 2024.
In April 2024, we announced AIA’s enhanced capital management policy, providing greater clarity on returns to
shareholders. We target to pay out 75 per cent of annual net free surplus generation (net FSG), which is UFSG less
new business investment and expenses, each year through dividends and share buy-back. We will also regularly
review our capital position and return capital in excess of our needs.
Following our prudent, sustainable and progressive dividend policy, the Board has recommended an increase of
10 per cent in the final dividend per share to 130.98 Hong Kong cents per share. This brings the total dividend for
2024 to 175.48 Hong Kong cents per share, up by 9 per cent. The Board has also approved a new share buy-back
programme of US$1.6 billion. This comprises US$0.6 billion to meet the payout ratio target of 75 per cent of
annual net FSG, after total dividends of approximately US$2.4 billion for 2024, and an additional US$1.0 billion
following the regular review of the Group’s capital position. Together, the dividends and share buy-backs amount
to a total yield(1) of approximately 6 per cent for shareholders.
AIA’s excellent performance in 2024 is the outcome of executing a clear growth strategy that plays to our core
strengths. We are focused on the world’s most dynamic region for life and health insurance and Asia is the
fastest-growing market globally. The region’s rising, yet ageing, populations have limited social welfare coverage
and private insurance penetration remains low. This is driving an urgent need for quality life and health insurance
and AIA has the right distribution, products, services and talent to address these evolving consumer demands.
Our technology, digital and analytics transformation powers an unparalleled professional distribution platform,
expanding our reach and bringing high-quality advice and services to middle-class and affluent customers across
Asia. Our integrated product ecosystems empower consumers to achieve their financial security, health and
wellness goals in more relevant and personalised ways. At the same time, we continue to innovate and simplify
our processes to ensure greater transparency and elevate customer satisfaction with every interaction.
AIA’s considerable competitive advantages have been built over decades, and our ability to combine these
strengths for the benefit of our stakeholders sets us apart. I am confident that we will continue to draw upon
our deep heritage and expertise to deliver profitable new business that compounds over time, driving growth in
earnings and cash generation for shareholders over the long term.
AIA GROUP LIMITED
018
OVERVIEW
GROUP FINANCIAL PERFORMANCE HIGHLIGHTS
VALUE OF NEW BUSINESS
VONB increased by 18 per cent to a record US$4,712 million, with double-digit growth in every reportable market
segment. Annualised new premiums were up by 14 per cent to US$8,606 million and VONB margin also increased
by 1.9 pps to 54.5 per cent.
AIA’s ability to write large-scale, high-quality and profitable new business is a key differentiator, generating
attractive returns on capital with short payback periods and an internal rate of return (IRR) on new business
investment exceeding 20 per cent. We also delivered improvements in new business capital efficiency and higher
VONB margins, supported by a more favourable product mix.
EV EQUITY
EV operating profit of US$10,025 million was up by 19 per cent per share, mainly driven by the record VONB
result and increased positive operating experience compared with our assumptions. As a result, operating ROEV
increased by 200 basis points(2) to 14.9 per cent in 2024, supported by our capital management actions.
Strong EV operating profit led to a 13 per cent increase in EV Equity to US$78,104 million, before shareholder
dividends of US$2,328 million and share buy-back of US$4,150 million. Net of these items, EV Equity was
US$71,626 million at 31 December 2024, up 9 per cent per share.
IFRS EARNINGS
OPAT, our core measure of operating earnings, grew by 12 per cent per share and achieved a record level of
US$6,605 million in 2024. Operating margin remained strong at 16.0 per cent, reflecting our high-quality sources
of earnings and Operating ROE increased by 130 basis points(2) compared with 2023 to 14.8 per cent.
The contractual service margin (CSM) represents our stock of expected future earnings and is therefore a key
driver of OPAT growth. CSM increased by 9.1 per cent on an underlying basis after the release of CSM of US$5,625
million into OPAT. The closing CSM was US$56,231 million.
Shareholders’ allocated equity was US$50,882 million, an increase of 16 per cent before capital returns to
shareholders of US$6,478 million. Net of these items, shareholders’ allocated equity was US$44,404 million at 31
December 2024, up by 6 per cent per share compared with the end of 2023.
This performance underscores the strength of our business fundamentals as well as our clear and disciplined
approach to capital management. We are confident in achieving the 3-year OPAT per share CAGR(3) target of 9 to
11 per cent that we set out in August 2024.
CASH GENERATION, CAPITAL POSITION AND RETURNS TO SHAREHOLDERS
UFSG of US$6,327 million is a key measure of the Group’s operating cash generation and increased by 10 per cent
per share.
Free surplus grew to US$19,032 million at 31 December 2024 before returning US$6,478 million to shareholders
through dividends and a share buy-back. Net of these items, free surplus was US$12,554 million at 31 December
2024.
The Group’s shareholder capital ratio remained strong at 236 per cent as at 31 December 2024, compared with
269 per cent as at 31 December 2023, with the reduction in 2024 mainly due to capital returns to shareholders.
GROUP CHIEF EXECUTIVE AND PRESIDENT’S REPORT
ANNUAL REPORT 2024
019
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NEW BUSINESS PERFORMANCE BY MARKET
AIA Hong Kong was again the largest contributor to the Group’s new business results. VONB grew by 23 per cent
to US$1,764 million with both the domestic and Mainland Chinese visitor customer segments growing strongly.
The majority of new business sales came from our market-leading Premier Agency, delivering 23 per cent VONB
growth from an increase in the number of active agents and higher productivity with recruitment also up by 16 per
cent. Partnerships achieved 25 per cent VONB growth from our relationships with Citibank, N.A. (Citibank), The
Bank of East Asia, Limited, and select brokers. New product designs that enhanced customer returns, while also
improving profitability, contributed to an overall VONB margin increase of 8.0 pps to 65.5 per cent.
VONB from AIA China grew by 20 per cent to US$1,217 million reflecting the success of our differentiated strategy
of meeting the financial protection needs of middle-class and affluent customers, where demand for our products,
services and brand remains strong. We achieved this through our distinctive Premier Agency and a highly selective
approach to bancassurance, leveraging advanced digital technology, to expand and deepen our reach within both
established geographies and in new provinces.
In the first half of 2024, we successfully launched new operations in three major cities in Sichuan and Hubei
provinces and we received regulatory approvals to prepare for the establishment of branches in four new
geographies: Anhui, Shandong, Chongqing and Zhejiang in the fourth quarter of 2024. AIA now has access to
more than 340 million target customers across 14 geographies in Mainland China, as we replicate our high-quality
growth model across new territories.
AIA’s 24.99 per cent investment in China Post Life Insurance Co., Ltd. expands the Group’s exposure to growth
opportunities in Mainland China through additional distribution channels and customer segments that are highly
complementary to AIA China’s strategy. VONB(4) was RMB9,856 million in 2024, up 19 per cent compared with the
previous year. This is 5.3 times the VONB of RMB1,866 million in 2020, the year prior to AIA’s involvement.
AIA Thailand grew VONB by 15 per cent to a record US$816 million and reinforced its position as the undisputed
market leader. Our dominance across key segments spanning traditional protection and unit-linked business is
driven by having the most productive agency distribution in the market. We also delivered very strong growth
through Bangkok Bank Public Company Limited, the number one bank in Thailand and our strategic bancassurance
partner, as a result of increased productivity and more active insurance sellers.
AIA Singapore also delivered VONB growth of 15 per cent to US$454 million with strong performances across
all distribution channels. Growth in agency was supported by both higher productivity and numbers of active
new agents. Our partnerships with Citibank and independent financial advisers expand our reach in wealth
management and sales of our high-net-worth and long-term savings products were strong.
VONB grew by 10 percent to US$349 million at AIA Malaysia, primarily from strong double-digit VONB growth
in partnership distribution through our strategic relationship with Public Bank Berhad and our market-leading
corporate solutions business, as well as positive growth from agency. Our focus on unit-linked life and health
protection sales delivered a VONB margin of 67.3 per cent.
In our Other Markets, VONB increased by 18 per cent to US$467 million, with all markets in this segment reporting
positive VONB growth.
AIA GROUP LIMITED
020
OVERVIEW
EXCEPTIONALLY WELL-POSITIONED TO DELIVER FUTURE GROWTH
Over the past four years we have made substantial investments in our world-class technology, digital and
analytics programme, transforming AIA into a more intelligent, efficient and resilient organisation. Our processes
are now simpler, faster and more connected. In December 2024, 96 per cent of servicing requests were fully
digitally submitted and 92 per cent of all service transactions were straight-through processed. New business
e-submission rates reached 99 per cent, with 82 per cent of all policies automatically underwritten. Consequently,
back-office unit costs have reduced by 43 per cent from 2020 to 2024.
Our strategy makes it easier for individuals to obtain life and health insurance by delivering a leading customer
experience. Across the Group, more than 21 million existing and prospective customers engage with us digitally,
benefitting from superior digital experiences, primarily through AIA+, our comprehensive customer app. Now live
in nine markets (an increase of four markets since 2023), including all of our major businesses, AIA+ exemplifies
our commitment to digital excellence. We believe that satisfied customers exhibit higher levels of persistency and
are more inclined to purchase other products. In 2024, VONB from additional products sold to existing customers
grew by 20 per cent.
AIA’s proprietary digital and analytics tools further increased the professionalism and reach of our unrivalled
distribution channels, ensuring our customers receive the high-quality advice and services they need to achieve
their goals. Premier Agency is the main driver of profitable growth for the Group, comprising 74 per cent of the
Group’s total VONB, and this channel increased VONB by 16 per cent to US$3,707 million in 2024.
Our agents are regarded as the best in the world and AIA has ranked number one for Million Dollar Round Table
(MDRT) members, the hallmark of professionalism for distributors in our industry, for ten consecutive years. AIA
China, AIA Hong Kong and AIA Thailand individually rank as the top three companies globally and AIA holds the
market-leading position in nine markets.
The key to our success is the disciplined execution of agency development, training and activity management
programmes over many years, combined with the digital tools required to enhance the efficiency and productivity
of our agents. AIA’s differentiated model offers long-term career opportunities to entrepreneurial leaders and
agents. As we scale our platform across the region, new recruits increased by 18 per cent in 2024, with growth in
the majority of our markets.
AIA’s distribution is further strengthened by strategic partnerships with banks, financial intermediaries and
corporates. VONB from our partnerships channel grew by 28 per cent to US$1,301 million and accounted for 26
per cent of the Group’s total VONB.
Growth in VONB from bancassurance increased by 39 per cent with the majority of our partnerships reporting
double-digit growth through our focus on driving increased new business profitability with more active sellers and
higher productivity. We pursue a strategy of partnering for the long term and our bank relationships run for over
20 years on average, reflecting the aligned future growth ambitions of both partners. In 2024, we extended our
partnership with Bank Central Asia (BCA), one of the leading banks in Indonesia, until the end of 2038, expanding
our opportunity to unlock further growth and strengthen our position in this key market.
Our distribution success is enabled by AIA’s integrated ecosystems, which combine products and services into
compelling propositions. A balanced product mix is a cornerstone of our strategy, ensuring long-term profitability,
effective risk management through diverse revenue streams, and alignment with our customers’ evolving needs.
We design our products based on insights gained from extensive consumer research and data analytics, allowing
us to introduce highly sought-after products covering personal protection, long-term savings, retirement and
medical solutions.
GROUP CHIEF EXECUTIVE AND PRESIDENT’S REPORT
ANNUAL REPORT 2024
021
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
We have also advanced our Integrated Healthcare Strategy to enhance the sustainability of our insurance
business. AIA’s medical products support customers in avoiding unnecessary costs and delivering improved
health outcomes through preferred networks in key markets including Malaysia, Mainland China, the Philippines,
Indonesia, Vietnam, Thailand, Hong Kong and Singapore.
Additionally, we have expanded our day surgery centre networks and coverage across markets facilitating
appropriate care in outpatient clinics when feasible. We acquired New Medical Centre Holding Limited, one of
the largest clinic-based providers of gastroenterology and general surgery in Hong Kong. By integrating their
operating entities into our health insurance solutions, AIA’s customers will benefit from greater choice and an
enhanced healthcare experience.
Amplify Health is an innovative provider of AI-powered health technology and analytics solutions across Asia.
In 2024, we reached a major milestone with a new health analytics solution stack that combines health claims
management capabilities including fraud, waste and abuse detection with autonomous machine learning and AI-
driven decision-making to improve healthcare provider management and operational efficiencies.
Throughout the Group, we are building on our strong foundations by embedding generative AI solutions that will
reshape insurance delivery and customer service, ultimately achieving better outcomes for all.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE AND OUR PEOPLE
As the largest pan-Asian life and health insurer our actions have a material impact on the communities in which
we operate. The implementation of our Environmental, Social, and Governance (ESG) strategy is much more than
a reflection of our responsibility, it also makes good business sense. By integrating climate considerations into
our strategy and operations as well as ensuring sustainable investments while executing our ambition of net-zero
emissions by 2050, we ensure AIA remains responsible, forward-thinking and adaptable in the face of global
challenges.
Our dedication to health and wellness has helped us to engage with 496 million people across the region since
the launch of AIA One Billion in 2022 reinforcing our Purpose of helping people Live Healthier, Longer and Better
Lives. Effective governance ensures AIA continues to operate to the highest standards of business conduct, both
in terms of our engagement with stakeholders and how we manage risks. This framework provides the necessary
management oversight, clear incentives, organisational accountability, robust data governance and transparent
reporting that enables us to succeed.
Across our markets, we foster a distinctive culture of empowerment with accountability, developing critical
workforce capabilities and supporting our people so that they can achieve their full potential. As a result, we are
able to attract, retain and develop outstanding talent, making AIA an employer of choice. In 2024, AIA Group was
recognised as the number one workplace in Asia-Pacific by Best Places to Work, recognising our commitment to
creating a dynamic workplace where all our staff can thrive.
I firmly believe that a highly motivated and engaged workforce is more productive and successful, benefitting not
just our customers and shareholders but every member of our team. Our annual Gallup Q12 Employee Engagement
Survey was completed by 97 per cent of employees in 2024, with scores placing us in the 92nd percentile of
Gallup’s global finance and insurance industry benchmark. We have remained in the top quartile of this benchmark
for eight consecutive years, and in the top decile for the past four years. AIA’s consistent excellence in employee
engagement has earned us the Gallup Exceptional Workplace Award for the third consecutive year.
AIA GROUP LIMITED
022
OVERVIEW
We have incredibly talented people across the Group and our very strong execution capabilities are a product of
their hard work, dedication and commitment. I am immensely proud of and deeply grateful to all our employees for
the energy they bring to our business every day.
OUTLOOK
AIA’s financial and operating performance in 2024 reiterates my confidence in our strategy and business model.
Our enhanced capital management policy and OPAT per share growth target, introduced in 2024, reflect both our
ambition and proven execution ability, clearly demonstrated by today’s results.
The growth potential for our markets remains strong despite near-term geopolitical and macroeconomic
uncertainty. Asia offers us the most promising opportunities and the major demographic and social trends in the
region are only growing stronger over time. We are well-placed with the right priorities and competitive advantages
to fully capitalise on the immense opportunities available only to us.
AIA addresses the vast and growing financial protection needs of resilient middle-class and affluent customers
through personalised solutions provided by our highly productive and expanding distribution channels. This
approach enables us to deliver profitable new business, drive high-quality earnings growth and generate surplus
cash that can be returned to shareholders.
Importantly, our financial flexibility also provides the resilience needed to navigate market challenges, while
supporting long-term value creation. I am certain that AIA is in an excellent position to achieve our objectives in
2025 and beyond.
Lee Yuan Siong
Group Chief Executive and President
14 March 2025
Notes:
Growth rates are shown on constant exchange rates as management believes this provides a clearer picture of the year-on-year performance of the underlying
business.
(1) Calculated as total dividends for the financial year 2024 of approximately US$2.4 billion plus share buy-backs in 2025 of US$2.3 billion, as a percentage of
market capitalisation as of 31 December 2024. The share buy-backs of US$2.3 billion comprise US$0.7 billion under the US$12.0 billion share buy-back
programme, which completed in February 2025, plus the US$1.6 billion new share buy-back announced in the 2024 full year results as part of the Group’s
enhanced capital management policy and expected to complete within 2025.
(2) On an actual exchange rate (AER) basis.
(3) Compound annual growth rate (CAGR) from 2023 to 2026 calculated on a constant exchange rate basis.
(4) VONB is calculated by China Post Life based on its principles and methodology in accordance with the China Association of Actuaries embedded value
assessment guidance (CAA basis), consistent with the industry practice in Mainland China. China Post Life’s VONB for the twelve-month period ended 31
December 2024 reflects its latest long-term investment return assumptions used at 31 December 2024.
GROUP CHIEF EXECUTIVE AND PRESIDENT’S REPORT
ANNUAL REPORT 2024
023
024 Group Chief Financial Officer’s Review
054 Regulatory and International Developments
055 Business Review
073 Risk Management
080 Our People and Culture
FINANCIAL AND OPERATING REVIEW
AIA GROUP LIMITED
024
FINANCIAL AND OPERATING REVIEW
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA has delivered another excellent set of results with double-digit growth
in our key financial metrics: VONB was up 18 per cent with OPAT and UFSG
increasing by 12 per cent and 10 per cent per share respectively. EV Equity
per share also increased by 9 per cent, after returning US$6,478 million to
shareholders through dividends and our share buy-back programme.
We are confident that AIA’s unparallelled competitive advantages will drive
sustained new business growth, increased earnings and higher cash returns
in the years to come. As a result, in 2024 we set out a 3-year growth target for
Mr. Garth Jones
Group Chief Financial Officer
ANNUAL REPORT 2024
025
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUMMARY AND KEY FINANCIAL HIGHLIGHTS
EMBEDDED VALUE
VONB grew by 18 per cent to US$4,712 million with double-digit growth in all of our reportable segments. This
strong and broad-based performance was the result of both higher sales volumes and increased new business
profitability, with annualised new premiums (ANP) growing by 14 per cent and VONB margin up by 1.9 pps to 54.5
per cent.
EV Equity grew by 13 per cent to US$78,104 million, before returning US$6,478 million to shareholders through
dividends and share buy-back over the year.
EV operating profit of US$10,025 million was up by 19 per cent per share, driven by record VONB of US$4,712
million, an increase in expected return on EV and positive operating experience compared with assumptions.
As a result, operating ROEV increased by 200 basis points(2) to 14.9 per cent in 2024, supported by our capital
management actions.
Investment return variances and economic assumption changes were small, with a US$58 million reduction in EV
Equity overall as favourable equity markets broadly offset lower interest rates in Mainland China and Thailand.
Other non-operating variances reduced EV Equity by US$880 million, mainly due to a reduction in the present value
of expected future fees following the mandatory implementation of the new eMPF platform in Hong Kong. There is
a translation effect in the Group’s consolidated figures as we report in US dollars. As a result, the strengthening of
the US dollar against local market currencies reduced EV Equity by US$1,156 million.
After payment of shareholder dividends of US$2,328 million and share buy-back of US$4,150 million, EV Equity
was US$71,626 million at 31 December 2024, up by 9 per cent per share.
OPAT per share and disclosed an enhanced capital management policy to provide
greater clarity on how we will deliver annual capital returns to shareholders.
The Board has recommended a 10 per cent increase in the final dividend per share
and approved an additional share buy-back of US$1.6 billion, in line with our capital
management policy, contributing to a total yield(1) on AIA shares of approximately 6 per
cent. AIA’s dividend increase and additional capital returns reaffirm our confidence
in the resilience and future prospects of the Group, building on the excellent results
announced.
Growth rates and commentaries are provided on a constant exchange rate (CER) basis,
unless otherwise stated.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
026
FINANCIAL AND OPERATING REVIEW
IFRS EARNINGS
OPAT, our core measure of operating earnings, was at a record level of US$6,605 million and grew by 12 per cent per
share, driven mainly by a 12 per cent increase in the insurance service result, and supported by the share buy-back.
The growth in insurance service result was due to a 7 per cent increase in CSM release and a US$172 million
improvement in operating variances compared with 2023.
Underlying CSM growth(3) of 9.1 per cent underpins our OPAT growth and reflects the addition of further large-scale,
high-quality, profitable new business that compounds over time and adds substantial layers of recurring earnings
to our in-force business.
The strong growth in OPAT per share underscores the high quality of our business fundamentals as well as our
clear and disciplined approach to capital management. Combined with our effective management of the in-force
portfolio, we are confident in delivering our 3-year OPAT per share CAGR target of 9 to 11 per cent that we
announced in 2024(4).
Operating ROE increased by 130 basis points(2) to 14.8 per cent compared with 2023, driven by growth in OPAT
and supported by capital management actions. Operating margin remained strong at 16.0 per cent and reflects
our high-quality sources of earnings.
After shareholder dividends and share buy-back of US$6,478 million, shareholders’ allocated equity was
US$44,404 million at 31 December 2024, up by 6 per cent per share compared with the end of 2023.
FREE SURPLUS
UFSG, a key operating financial measure of the Group’s cash generation after tax, was US$6,327 million in 2024,
up by 10 per cent per share.
Net free surplus generation (net FSG) after allowing for investment in new business and expenses was US$4,020
million in 2024.
Free surplus increased from US$16,329 million at 31 December 2023 to US$19,032 million before returning
US$6,478 million to shareholders through dividends and share buy-back. Net of these items, free surplus was
US$12,554 million at 31 December 2024.
SHAREHOLDER CAPITAL RETURN
In April 2024, we added a further US$2.0 billion to our original US$10.0 billion share buy-back programme
announced in March 2022. Since we began buying back shares in March 2022, approximately 1,311 million shares
were repurchased for an aggregate value of US$11,335 million as at 31 December 2024. After share buy-back of
US$665 million in the first two months of 2025, the US$12.0 billion share buy-back programme was concluded
with a total of approximately 1,409 million shares repurchased, reducing the outstanding share count by 11.7 per
cent.
Over 2022 to 2024, we have returned US$18.2 billion to shareholders through dividends paid and share buy-back.
We also announced, in April 2024, an enhanced capital management policy to provide greater clarity on how
we will deliver annual capital returns to shareholders. We target to pay out 75 per cent of annual net FSG, as
determined at the annual full year results, through dividends and share buy-back. We also committed to regularly
review our capital position and to systematically return capital that is in excess of our needs.
ANNUAL REPORT 2024
027
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
As a result, the Board has recommended a 10 per cent increase in final dividend to 130.98 Hong Kong cents per
share in line with AIA’s established prudent, sustainable and progressive dividend policy. In addition, the Board has
approved a new share buy-back of US$1.6 billion. This comprises US$0.6 billion to meet the payout ratio target
of 75 per cent of annual net FSG, after dividends of approximately US$2.4 billion(5) for 2024, and an additional
US$1.0 billion following a further review of the Group’s capital position.
Together, the dividends and share buy-backs amount to a total yield(1) of approximately 6 per cent for shareholders.
The shareholder capital ratio(6), our principal measure of the overall capital and free surplus position for
shareholders, remained strong at 236 per cent at 31 December 2024. This compared with 269 per cent at 31
December 2023, with the reduction largely due to capital returns to shareholders, representing a decrease of 38
percentage points.
AIA remains exceptionally well positioned to capture the growth opportunities in Asia, the most attractive region in
the world for life and health insurance. We are focused on driving high-quality profitable new business growth that
adds substantial layers of recurring earnings and free surplus generation well into the future, giving us confidence
in delivering our OPAT growth target(4) as well as cash returns to shareholders in the years to come.
Notes:
(1) Calculated as total dividends for the financial year 2024 of approximately US$2.4 billion plus share buy-backs in 2025 of US$2.3 billion, as a percentage of
market capitalisation as of 31 December 2024. The share buy-backs of US$2.3 billion comprise US$0.7 billion under the US$12.0 billion share buy-back
programme, which completed in February 2025, plus the US$1.6 billion new share buy-back announced in the 2024 full year results as part of the Group’s
enhanced capital management policy and expected to complete within 2025.
(2) On an actual exchange rate (AER) basis.
(3) Underlying CSM growth refers to the growth in CSM after the CSM release and before variances and others and the effect of exchange rate movements,
expressed as a percentage of the opening CSM.
(4) OPAT per share compound annual growth rate (CAGR) target of 9 to 11 per cent from 2023 to 2026 calculated on a CER basis.
(5) As calculated in note 13 to the consolidated financial statements.
(6) Shareholder capital resources comprise free surplus and required capital (as used in our EV calculations) and eligible Tier 2 debt capital (as used in our
Group LCSM solvency position). The shareholder capital ratio is the shareholder capital resources as a percentage of required capital.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
028
FINANCIAL AND OPERATING REVIEW
NEW BUSINESS PERFORMANCE
VONB, ANP AND MARGIN BY SEGMENT
2024
2023
VONB Change
US$ millions, unless otherwise stated
VONB
VONB
Margin
ANP
VONB
VONB
Margin
ANP
YoY
CER
YoY
AER
Mainland China
1,217
56.1%
2,168
1,037
51.3%
2,023
20%
17%
Hong Kong
1,764
65.5%
2,609
1,430
57.5%
2,407
23%
23%
Thailand
816
99.5%
821
713
93.3%
765
15%
14%
Singapore
454
50.5%
897
394
67.2%
586
15%
15%
Malaysia
349
67.3%
517
319
67.3%
473
10%
9%
Other Markets
467
29.2%
1,594
406
28.9%
1,396
18%
15%
Subtotal
5,067
58.2%
8,606
4,299
55.6%
7,650
19%
18%
Consolidated capital requirements
(73)
n/m
–
(43)
n/m
–
74%
70%
Value of unallocated Group
Office expenses
(205)
n/m
–
(187)
n/m
–
10%
10%
Group Corporate Centre tax
(38)
n/m
–
–
n/m
–
n/m
n/m
Total before non-controlling interests
4,751
54.5%
8,606
4,069
52.6%
7,650
18%
17%
Non-controlling interests
(39)
n/m
n/m
(35)
n/m
n/m
11%
11%
Total
4,712
54.5%
8,606
4,034
52.6%
7,650
18%
17%
VONB grew by 18 per cent to US$4,712 million with double-digit increases in all our reportable segments,
demonstrating the strength of our business model and geographical diversification.
Premier Agency achieved 16 per cent growth in VONB, resulting from an increase in the number of active agents
and higher productivity. VONB from our partnership distribution grew by 28 per cent with excellent performances
from both bancassurance and intermediated channels.
Annualised new premiums (ANP) grew by 14 per cent to US$8,606 million. VONB margin of 54.5 per cent increased
by 1.9 pps compared with 2023, driven by a favourable product mix shift and repricing in Hong Kong and Mainland
China, partly offset by the effect of economic assumption changes. Margin reported on a present value of new
business premium (PVNBP) basis increased to 11 per cent, compared with 10 per cent in 2023.
AIA China delivered 20 per cent VONB growth, resulting from a double-digit increase in our agency channel and a
significant uplift from our bancassurance partnerships. VONB margin increased by 4.9 pps to 56.1 per cent from a
positive shift in the mix of savings products towards tax-incentivised retirement products.
AIA Hong Kong achieved 23 per cent VONB growth in 2024, with a 24 per cent increase from domestic customers
and 22 per cent growth from Mainland Chinese visitor (MCV) customers. Both segments made broadly equal
contributions to Hong Kong’s VONB in 2024, reflecting our well-diversified and growing customer base.
AIA Thailand achieved 15 per cent VONB growth in 2024, driven by an 8 per cent growth in ANP and a 6.2 pps
increase in VONB margin, demonstrating AIA Thailand’s dominance in health, protection and unit-linked business,
founded on our differentiated Premier Agency model.
ANNUAL REPORT 2024
029
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
AIA Singapore delivered 15 per cent VONB growth, supported by double-digit increases across both our agency
and partnership distribution channels.
AIA Malaysia delivered a 10 per cent increase in VONB, supported by ANP growth and a high-quality product mix
with a VONB margin of 67.3 per cent.
VONB for Other Markets increased by 18 per cent, with all markets in this segment reporting positive VONB growth.
Group Corporate Centre (GCC) tax of US$38 million relates to new corporate income tax rules enacted in Bermuda.
Further details are included in the Business Review section of this report.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
030
FINANCIAL AND OPERATING REVIEW
EV EQUITY
EV EQUITY MOVEMENT
EV Equity grew by 13 per cent to US$78,104 million, before returning US$6,478 million to shareholders through
shareholder dividends and share buy-back, compared with US$70,153 million at 31 December 2023.
EV operating profit of US$10,025 million was up by 19 per cent per share, driven by record VONB of US$4,712
million, an increase in expected return on EV due to growth in the value of in-force business and higher US interest
rates, together with more positive operating variances compared with 2023. As a result, operating ROEV increased
by 200 basis points(1) to 14.9 per cent in 2024, supported by our capital management actions.
Operating experience variances and assumption changes added US$188 million to EV Equity, compared with
US$36 million in 2023. This was supported by improvements in expense and persistency variances, as well as
management actions taken on medical business.
Cumulative operating experience variances and assumption changes, since our IPO in 2010, have added US$4.1
billion to EV Equity, demonstrating our focus on consistently writing high-quality new business and proactively
managing our in-force portfolio over many years.
Investment return variances and economic assumption changes were small, with a US$58 million reduction in EV
Equity overall as favourable equity markets broadly offset lower interest rates in Mainland China and Thailand.
Other non-operating variances reduced EV Equity by US$880 million, mainly due to a reduction in the present
value of expected future fees following the mandatory implementation of the new eMPF platform in Hong Kong.
As a result, total EV Equity profit in 2024 was US$9,087 million, up from US$5,163 million in 2023.
While our assets and liabilities are closely matched by local currency, there is a translation effect in the Group’s
consolidated figures as we report in US dollars. As a result, the strengthening of the US dollar against local market
currencies reduced EV Equity by US$1,156 million.
After payment of shareholder dividends of US$2,328 million and share buy-back of US$4,150 million during the
year, EV Equity was US$71,626 million at 31 December 2024, up by 9 per cent per share.
AIA’s EV methodology deducts the value of the Group’s outstanding medium-term notes and securities (MTNs)
at amortised cost. If MTNs were included at fair value, EV Equity would have increased by US$965 million to
US$72,591 million. Also, our investment in China Post Life is included in the Group’s EV Equity at IFRS net asset
value and does not reflect any value of in-force business.
Note:
(1) On an actual exchange rate (AER) basis.
ANNUAL REPORT 2024
031
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
An analysis of the movement in EV Equity is shown as follows:
2024
US$ millions, unless otherwise stated
ANW, goodwill
and other
intangible assets
VIF
EV Equity
Opening EV Equity
34,715
35,438
70,153
Value of new business
(245)
4,957
4,712
Expected return on EV
5,199
429
5,628
Operating experience variances
178
(18)
160
Operating assumption changes
279
(251)
28
Finance costs
(503)
–
(503)
EV operating profit
4,908
5,117
10,025
EV Equity before non-operating items
39,623
40,555
80,178
Investment return variances
1,380
(1,493)
(113)
Effect of changes in economic assumptions
(11)
66
55
Other non-operating variances
(712)
(168)
(880)
EV non-operating items
657
(1,595)
(938)
Total EV Equity profit
5,565
3,522
9,087
Other capital movements
20
–
20
Effect of changes in exchange rates
(704)
(452)
(1,156)
EV Equity before dividends and share buy-back
39,596
38,508
78,104
Dividends
(2,328)
–
(2,328)
Share buy-back
(4,150)
–
(4,150)
Closing EV Equity
33,118
38,508
71,626
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
032
FINANCIAL AND OPERATING REVIEW
2023
US$ millions, unless otherwise stated
ANW, goodwill
and other
intangible assets
VIF
EV Equity
Opening EV Equity
36,088
35,114
71,202
Value of new business
(45)
4,079
4,034
Expected return on EV
5,115
112
5,227
Operating experience variances
97
(22)
75
Operating assumption changes
286
(325)
(39)
Finance costs
(407)
–
(407)
EV operating profit
5,046
3,844
8,890
EV Equity before non-operating items
41,134
38,958
80,092
Investment return variances
(873)
(1,917)
(2,790)
Effect of changes in economic assumptions
(6)
(537)
(543)
Other non-operating variances
681
(1,075)
(394)
EV non-operating items
(198)
(3,529)
(3,727)
Total EV Equity profit
4,848
315
5,163
Other capital movements
(72)
–
(72)
Effect of changes in exchange rates
(219)
9
(210)
EV Equity before dividends and share buy-back
40,645
35,438
76,083
Dividends
(2,293)
–
(2,293)
Share buy-back
(3,637)
–
(3,637)
Closing EV Equity
34,715
35,438
70,153
EV EQUITY PER SHARE
US$ millions, unless otherwise stated
As at
31 December
2024
As at
31 December
2023
Change
CER
Change
AER
ANW
30,527
32,009
(3)%
(5)%
VIF
38,508
35,438
10%
9%
EV
69,035
67,447
4%
2%
Goodwill and other intangible assets(1)
2,591
2,706
(3)%
(4)%
EV Equity
71,626
70,153
4%
2%
Number of ordinary shares outstanding (millions)
10,793
11,362
(5)%
(5)%
EV Equity per share (US dollars)
6.64
6.17
9%
8%
Note:
(1) Goodwill and other intangible assets are consistent with the figures in the consolidated financial statements and are shown net of tax, amounts attributable
to participating funds and non-controlling interests.
ANNUAL REPORT 2024
033
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
EV OPERATING PROFIT PER SHARE
2024
2023
YoY
CER
YoY
AER
EV operating profit (US$ millions)
10,025
8,890
14%
13%
Weighted average number of ordinary shares
outstanding (millions)
11,063
11,518
(4)%
(4)%
Basic EV operating profit per share (US cents)
90.62
77.18
19%
17%
Weighted average number of ordinary shares
outstanding on diluted basis (millions)(1)
11,073
11,528
(4)%
(4)%
Diluted EV operating profit per share (US cents) (1)
90.54
77.12
19%
17%
Note:
(1) Diluted EV operating profit per share includes the effects of the awards under various share-based compensation plans as described in note 36 to the
consolidated financial statements.
EV AND VONB SENSITIVITIES
Sensitivities for EV and VONB to changes in equity prices and interest rate movements, including resulting
management actions, are shown below. Interest rate sensitivities apply a 50 basis points movement in current
bond yield curves, long-term investment return assumptions and risk discount rates, including the corresponding
effect on asset values. The direction of interest rate sensitivities varies by market.
As at 31 December 2024
As at 31 December 2023
US$ millions, unless otherwise stated
EV
% Change
EV
% Change
Central value
69,035
67,447
Effect of equity price changes
10 per cent increase in equity prices
2,233
3.2%
1,799
2.7%
10 per cent decrease in equity prices
(2,248)
(3.3)%
(1,823)
(2.7)%
Effect of interest rate changes
50 basis points increase in interest rates
(580)
(0.8)%
(981)
(1.5)%
50 basis points decrease in interest rates
500
0.7%
945
1.4%
2024
2023
US$ millions, unless otherwise stated
VONB
% Change
VONB
% Change
Central value
4,712
4,034
Effect of interest rate changes
50 basis points increase in interest rates
92
2.0%
129
3.2%
50 basis points decrease in interest rates
(120)
(2.5)%
(155)
(3.8)%
Please refer to Section 3 of the Supplementary Embedded Value Information for additional information.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
034
FINANCIAL AND OPERATING REVIEW
IFRS EARNINGS
OPERATING PROFIT AFTER TAX COMPOSITION
OPAT grew by 12 per cent per share and achieved a record level of US$6,605 million in 2024.
OPAT is AIA’s core measure of operating earnings and its growth over the year increased operating ROE by 130
basis points(1) to 14.8 per cent, supported by our capital management actions.
Operating margin remained strong at 16.0 per cent, reflecting our high-quality sources of earnings.
There are three main components of OPAT, as shown in the table below. The first is the insurance service result,
which increased by 12 per cent compared with 2023 and was the main driver of growth, representing 74 per cent
of operating profit before tax in 2024.
The insurance service result included 7 per cent growth in the CSM release, to US$5,625 million and benefitted
from an increase in operating variances by US$172 million compared with 2023, supported by management
actions taken on medical business.
The second component of OPAT is the net investment result after expenses of US$3,303 million. This was 1 per
cent lower compared with 2023 reflecting a reduction in investment return on surplus assets used to support the
share buy-back, and following the sale of our Savings and Investments (S&I) business in Australia, which was
completed in the second half of 2023. Adjusting for these items, the net investment result after expenses grew by
6 per cent.
Lastly, other fees, revenue and expenses remained stable compared with 2023. It included expenses not directly
attributable to insurance contracts under IFRS 17 of US$925 million, finance costs of US$489 million and net
other fees and revenue of positive US$144 million.
The strong growth in OPAT per share underscores the high quality of our business fundamentals as well as our
clear and disciplined approach to capital management. Combined with our effective management of the in-force
portfolio, we are confident in delivering our 3-year OPAT per share CAGR target of 9 to 11 per cent that we
announced in 2024.
US$ millions, unless otherwise stated
2024
2023(2)
YoY
CER
YoY
AER
CSM release
5,625
5,314
7%
6%
Operating variances
(56)
(271)
(75)%
(79)%
Risk adjustment release and other
122
81
69%
51%
Insurance service result
5,691
5,124
12%
11%
Net investment result
3,528
3,581
–
(1)%
Investment management expenses
(225)
(187)
22%
20%
Net investment result after expenses
3,303
3,394
(1)%
(3)%
Net other fees and revenue(3)
144
76
62%
89%
Non-attributable expenses under IFRS 17
(925)
(921)
3%
–
Finance costs
(489)
(453)
8%
8%
Other fees, revenue and expenses
(1,270)
(1,298)
1%
(2)%
Tax
(1,119)
(1,007)
10%
11%
OPAT
6,605
6,213
7%
6%
Basic OPAT per share (US cents)
59.70
53.94
12%
11%
Notes:
(1) On an actual exchange rate (AER) basis.
(2) 2023 OPAT composition is based on the updated presentation in note 7 to the consolidated financial statements.
(3) After adjusting for non-insurance expenses.
ANNUAL REPORT 2024
035
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
US$ millions, unless otherwise stated
2024
2023
YoY
CER
YoY
AER
OPAT
6,605
6,213
7%
6%
Weighted average number of ordinary shares
outstanding (millions)
11,063
11,518
(4)%
(4)%
Basic OPAT per share (US cents)
59.70
53.94
12%
11%
Weighted average number of ordinary shares
outstanding on diluted basis (millions)(1)
11,073
11,528
(4)%
(4)%
Diluted OPAT per share (US cents)(1)
59.65
53.89
12%
11%
Note:
(1) Diluted OPAT per share includes the effects of the awards under various share-based compensation plans as described in note 36 to the consolidated
financial statements.
CSM MOVEMENT, NET OF REINSURANCE
Underlying growth(1) in the CSM of US$4,849 million was 9.1 per cent, demonstrating the compounding effect of
the addition of large-scale, profitable new business over time.
We delivered a 11 per cent increase in new business CSM of US$7,675 million and the expected return on in-force
business added a further US$2,799 million. Together these increased the CSM to US$63,589 million, equivalent
to 20 per cent growth.
Variances and others reduced the CSM by US$956 million in 2024, largely driven by Hong Kong participating
business, as higher US interest rates led to a corresponding increase in discount rates, and modelling refinements.
Translation effects in the Group’s consolidated figures, as we report in US dollars, reduced the CSM by US$777
million.
The CSM increased to US$61,856 million before CSM release into OPAT of US$5,625 million. The closing CSM was
US$56,231 million at 31 December 2024.
US$ millions, unless otherwise stated
2024
2023
Opening CSM
53,115
50,225
New business CSM
7,675
6,974
Expected return on in-force
2,799
2,569
CSM before variances and others, exchange rates and release
63,589
59,768
Variances and others
(956)
(992)
Exchange rates
(777)
(347)
Closing CSM before release
61,856
58,429
CSM release
(5,625)
(5,314)
Closing CSM
56,231
53,115
CSM release rate(2)
9.4%
9.5%
Underlying CSM growth after CSM release(1)
9.1%
8.4%
Notes:
(1) Underlying CSM growth refers to the growth in CSM after the CSM release and before variances and others and the effect of exchange rate movements,
expressed as a percentage of the opening CSM.
(2) Calculated after variances and others and exchange rates. End-of-period exchange rates are used to derive the CSM release rate for the first half and the
second half of the year respectively, and the full year CSM release rate is based on a blended rate of the CSM release rates for the first half and the second
half of the year.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
036
FINANCIAL AND OPERATING REVIEW
OPAT BY SEGMENT
For each of our reportable segments, the compounding effect of successive layers of profitable new business
and broadly stable CSM release rates has driven a higher CSM release in all of our reportable segments, a key
contributor to OPAT growth.
AIA Hong Kong achieved 15 per cent growth in OPAT, driven mainly by strong business growth and positive
operating variances.
AIA China grew OPAT by 5 per cent as an increase in net investment result due to growth in our asset portfolio was
partly offset by the effect of lower interest rates.
Our business in Thailand delivered OPAT growth of 9 per cent, as strong business growth was partially offset by
negative operating variances after a prolonged flu season led to higher claims in the second half of 2024. We
continue to monitor claims experience and took further actions in the second half to enhance claims management.
AIA Singapore’s OPAT grew by 1 per cent as business growth was mostly offset by lower investment income on
surplus assets due to increased remittances to support the share buy-back, as well as lower positive non-medical
claims experience compared with 2023.
AIA Malaysia delivered OPAT growth of 10 per cent, supported by increased CSM release and net investment result
reflecting business growth and favourable equity market performance.
For Other Markets, strong growth in the CSM release was offset by increased disability claims in Australia in line
with market trends. In addition, the 2023 comparatives included the earnings from the S&I business in Australia
until its disposal in the second half of 2023.
OPAT for GCC is small overall and primarily includes the net investment result on surplus assets held in GCC,
unallocated Group Office operating expenses and finance costs.
US$ millions, unless otherwise stated
2024
2023
YoY
CER
YoY
AER
Mainland China
1,597
1,548
5%
3%
Hong Kong
2,499
2,180
15%
15%
Thailand
1,019
951
9%
7%
Singapore
669
669
1%
–
Malaysia
331
293
10%
13%
Other Markets
507
560
(5)%
(9)%
Group Corporate Centre
(17)
12
n/m
n/m
Total
6,605
6,213
7%
6%
ANNUAL REPORT 2024
037
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
OPAT NET INVESTMENT RESULT
The net investment result included in OPAT relates to non-participating business(1) and surplus assets.
The investment return on non-participating and surplus assets(2) increased by 4 per cent to US$5,816 million
compared with 2023.
Non-participating insurance finance expenses and others(3) of US$2,288 million increased by 11 per cent from
US$2,077 million for 2023.
Net investment result after expenses of US$3,303 million was 1 per cent lower compared with 2023, reflecting
a reduction in investment return on surplus assets used to support the share buy-back, and following the sale of
our S&I business in Australia, which was completed in the second half of 2023. Adjusting for these items, the net
investment result after expenses grew by 6 per cent.
US$ millions, unless otherwise stated
2024
2023(4)
YoY
CER
YoY
AER
Interest revenue on financial assets
4,432
4,295
5%
3%
Expected long-term investment return for equities
and real estate
1,384
1,363
2%
2%
Investment return on non-participating and surplus
assets(2)
5,816
5,658
4%
3%
Non-participating insurance finance expenses
and others(3)
(2,288)
(2,077)
11%
10%
Net investment result
3,528
3,581
–
(1)%
Investment management expenses
(225)
(187)
22%
20%
Net investment result after expenses
3,303
3,394
(1)%
(3)%
For participating(5) and unit-linked business, investment returns are offset by corresponding movements in
contract liabilities as shown below and therefore have no material net effect on the net investment result.
2024
US$ millions, unless otherwise stated
Participating
and
unit-linked
Non-
participating
and surplus
assets and
others
Total
Investment return
5,066
5,816
10,882
Insurance finance expenses and others
(4,455)(6)
(2,288)(3)
(6,743)
Movement in investment contract liabilities
(582)
–
(582)
Movement in third-party interests in consolidated investment funds
(29)
–
(29)
Net investment result
–
3,528
3,528
Notes:
(1) Non-participating business includes all insurance liabilities under the general measurement model (GMM), covering traditional protection, unit-linked
with significant protection benefits, universal life and other participating business without distinct portfolios.
(2) Non-participating and surplus assets are referred to as “Other policyholder and shareholder investments” in the IFRS Balance Sheet section of Group
Chief Financial Officer’s Review.
(3) Primarily represents the interest accreted on non-participating business liabilities.
(4) 2023 OPAT net investment result composition is based on the updated presentation in note 7 to the consolidated financial statements.
(5) Participating funds and other participating business with distinct portfolios under the variable fee approach (VFA).
(6) Primarily represents the insurance contract liability offset of participating and unit-linked investment return.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
038
FINANCIAL AND OPERATING REVIEW
TWPI BY SEGMENT
US$ millions, unless otherwise stated
2024
2023
YoY
CER
YoY
AER
Mainland China
9,874
8,589
18%
15%
Hong Kong
12,456
11,554
8%
8%
Thailand
4,674
4,425
7%
6%
Singapore
4,445
3,912
13%
14%
Malaysia
2,742
2,565
7%
7%
Other Markets
7,207
6,894
7%
5%
Total
41,398
37,939
10%
9%
TWPI increased by 10 per cent to US$41,398 million compared with 2023. All our reportable segments delivered
positive TWPI growth in 2024.
OPERATING EXPENSES
US$ millions, unless otherwise stated
2024
2023
YoY
CER
YoY
AER
Operating expenses
3,660
3,573
4%
2%
Expense ratio
8.8%
9.4%
(0.6) pps
(0.6) pps
While operating expenses grew by 4 per cent to US$3,660 million, the expense ratio based on TWPI improved by
60 basis points to 8.8 per cent for 2024, reflecting disciplined expense management.
NON-OPERATING MOVEMENT AND NET PROFIT
Net profit of US$6,836 million in 2024 increased by 92 per cent per share compared with 2023.
Net profit includes mark-to-market movements from equity and real estate investments backing non-participating
business and shareholder surplus. Short-term investment and discount rate variances mainly reflect the short-term
movements in these asset classes compared with our long-term investment return assumptions. While these
variances were negative US$427 million in 2024, they were more than offset by other non-operating investment
return and other items of US$836 million, mainly driven by fair value gains from derivatives held for interest rate
risk management.
US$ millions, unless otherwise stated
2024
2023(1)
YoY
CER
YoY
AER
OPAT
6,605
6,213
7%
6%
Short-term investment and discount rate variances,
net of tax(2)
(427)
(2,007)
(79)%
(79)%
Reclassification of revaluation gains for property held
for own use, net of tax(2)
(155)
(8)
1,838%
1,838%
Corporate transaction related costs, net of tax
(23)
(30)
(32)%
(23)%
Other non-operating investment return and other items,
net of tax
836
(404)
n/m
n/m
Net profit
6,836
3,764
84%
82%
Basic earnings per share (US cents)
61.79
32.68
92%
89%
Notes:
(1) 2023 non-operating movement is based on the updated presentation in note 5 to the consolidated financial statements.
(2) Short-term investment and discount rate variances include revaluation gains for property held for own use. This amount is then reclassified from net profit
to other comprehensive income to conform to IFRS® Accounting Standards measurement and presentation requirements.
ANNUAL REPORT 2024
039
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
US$ millions, unless otherwise stated
2024
2023
YoY
CER
YoY
AER
Net profit
6,836
3,764
84%
82%
Weighted average number of ordinary shares
outstanding (millions)
11,063
11,518
(4)%
(4)%
Basic earnings per share (US cents)
61.79
32.68
92%
89%
Weighted average number of ordinary shares
outstanding on diluted basis (millions)(1)
11,073
11,528
(4)%
(4)%
Diluted earnings per share (US cents)(1)
61.74
32.65
92%
89%
Note:
(1) Diluted earnings per share includes the effects of the awards under various share-based compensation plans as described in note 36 to the consolidated
financial statements.
MOVEMENT IN SHAREHOLDERS’ ALLOCATED EQUITY
Shareholders’ allocated equity is shown before fair value reserve and insurance finance reserve, which management
considers to be a view of shareholders’ equity that better reflects the long-term nature of our business.
US$ millions, unless otherwise stated
2024
2023
Opening shareholders’ allocated equity
44,754
47,171
Net profit
6,836
3,764
Dividends
(2,328)
(2,293)
Share buy-back
(4,150)
(3,637)
Foreign currency translation adjustments
(872)
(215)
Purchase of shares held by employee share-based trusts
(43)
(115)
Revaluation gains on property held for own use
144
28
Other capital movements
63
51
Total movement in shareholders’ allocated equity
(350)
(2,417)
Closing shareholders’ allocated equity
44,404
44,754
Shareholders’ allocated equity per share (US dollars)
4.11
3.94
Average shareholders’ allocated equity
44,579
45,963
After capital returns of US$6,478 million, shareholders’ allocated equity was US$44,404 million at 31 December
2024, up by 6 per cent per share compared with the end of 2023.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
040
FINANCIAL AND OPERATING REVIEW
CSM, NET OF REINSURANCE AND PROFIT BEFORE TAX SENSITIVITIES
Sensitivities for CSM and profit before tax to changes in equity prices and interest rate movements, including
resulting management actions, are shown below. Interest rate sensitivities apply a 50 basis points movement
in current bond yield curves to asset values with a corresponding movement in discount rates applied to the
calculation of liabilities.
As at 31 December 2024
As at 31 December 2023
US$ millions, unless otherwise stated
CSM
% Change
CSM
% Change
Central value
56,231
53,115
Effect of equity price changes
10 per cent increase in equity prices
893
1.6%
679
1.3%
10 per cent decrease in equity prices
(917)
(1.6)%
(694)
(1.3)%
Effect of interest rate changes
50 basis points increase in interest rates
(416)
(0.7)%
(487)
(0.9)%
50 basis points decrease in interest rates
427
0.8%
505
1.0%
2024
2023
US$ millions, unless otherwise stated
Profit before
tax
Profit before
tax
Central value
7,831
4,564
Effect of equity price changes
10 per cent increase in equity prices
1,448
1,170
10 per cent decrease in equity prices
(1,448)
(1,172)
Effect of interest rate changes
50 basis points increase in interest rates
(627)
(150)
50 basis points decrease in interest rates
681
165
Sensitivity analyses on foreign exchange rate risk are included in note 34 to the consolidated financial statements.
ANNUAL REPORT 2024
041
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
IFRS BALANCE SHEET
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
US$ millions, unless otherwise stated
As at
31 December
2024
As at
31 December
2023
Change
AER
Assets
Financial investments
272,151
248,958
9%
Investment property
4,570
4,504
1%
Cash and cash equivalents
8,101
11,525
(30)%
Insurance and reinsurance contract assets
6,702
7,504
(11)%
Other assets
13,930
13,828
1%
Total assets
305,454
286,319
7%
Liabilities
Insurance and reinsurance contract liabilities
221,667
203,607
9%
Investment contract liabilities
6,967
9,170
(24)%
Borrowings
13,329
11,800
13%
Other liabilities
22,678
20,148
13%
Less total liabilities
264,641
244,725
8%
Equity
Total equity
40,813
41,594
(2)%
Less non-controlling interests
323
483
(33)%
Shareholders’ equity
40,490
41,111
(2)%
Less
Fair value reserve
5,744
516
1,013%
Insurance finance reserve
(9,658)
(4,159)
132%
Shareholders’ allocated equity
44,404
44,754
(1)%
MOVEMENT IN SHAREHOLDERS’ EQUITY
US$ millions, unless otherwise stated
2024
2023
Opening shareholders’ equity
41,111
44,672
Net profit
6,836
3,764
Fair value gains on assets
5,228
4,253
Net finance expenses from insurance contracts and reinsurance contracts held
(5,499)
(5,397)
Dividends
(2,328)
(2,293)
Share buy-back
(4,150)
(3,637)
Foreign currency translation adjustments
(872)
(215)
Purchase of shares held by employee share-based trusts
(43)
(115)
Revaluation gains on property held for own use
144
28
Other capital movements
63
51
Total movement in shareholders’ equity
(621)
(3,561)
Closing shareholders’ equity
40,490
41,111
Number of ordinary shares outstanding (millions)
10,793
11,362
Shareholders’ equity per share (US dollars)
3.75
3.62
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
042
FINANCIAL AND OPERATING REVIEW
ASSETS
Total assets increased by US$19,135 million to US$305,454 million at 31 December 2024 from US$286,319
million at 31 December 2023, mainly due to positive net investment cash inflows and fair value movements on
financial investments, partly offset by the return of capital to shareholders.
LIABILITIES
Total liabilities increased to US$264,641 million at 31 December 2024 from US$244,725 million at 31 December
2023.
Insurance and reinsurance contract liabilities increased to US$221,667 million at 31 December 2024 compared
with US$203,607 million at 31 December 2023, mainly from net cash inflows and changes in liability discount
rates, partially offset by the reduction from foreign exchange rate movements.
Investment contract liabilities reduced to US$6,967 million at 31 December 2024 compared with US$9,170 million
at 31 December 2023, as our pension business in Macau SAR(1) including its assets are no longer reflected in the
IFRS balance sheet following updated custodial arrangements. This has no impact on our OPAT and shareholders’
equity.
Borrowings increased to US$13,329 million at 31 December 2024, compared with US$11,800 million at 31
December 2023. Net proceeds from the issuances and redemption of MTNs totalled US$1,553 million.
Other liabilities increased to US$22,678 million at 31 December 2024 compared with US$20,148 million at 31
December 2023, driven mainly by an increase in the repo balance.
Details of commitments and contingencies are included in note 39 to the consolidated financial statements.
EQUITY
Management considers that shareholders’ allocated equity better reflects the long-term nature of our business and
is shown before fair value reserve and insurance finance reserve. Shareholders’ allocated equity was US$44,404
million at 31 December 2024.
Shareholders’ equity includes other comprehensive income or expense from fair value gains on assets due to
unrealised market movements on debt securities. Correspondingly, it also includes the net finance expenses from
insurance contracts and reinsurance contracts held due to liability discount rate changes in our non-participating
business(2).
In 2024, fair value gains on debt securities were US$5,228 million, offset by net finance expenses from insurance
contracts and reinsurance contracts held of US$5,499 million.
Shareholders’ equity increased to US$46,968 million before capital returns to shareholders of US$6,478 million.
After capital returns, shareholders’ equity was US$40,490 million at 31 December 2024.
Comprehensive equity of US$87,600 million at 31 December 2024 comprised shareholders’ equity of US$40,490
million and net CSM of US$47,110 million and was up 10 per cent per share compared with the end of 2023.
Notes:
(1) Macau SAR refers to the Macau Special Administrative Region of the People’s Republic of China.
(2) Excluding unit-linked with significant protection benefits.
ANNUAL REPORT 2024
043
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Leverage ratio, which is defined as total borrowings expressed as a percentage of the sum of total borrowings,
total equity and CSM net of reinsurance and net of taxes, was 13.1 per cent at 31 December 2024, compared with
12.1 per cent at 31 December 2023. The increase was largely due to an increase in borrowings and reduced equity
resulting from capital returns to shareholders, partly offset by the increase in net CSM.
US$ millions, unless otherwise stated
As at
31 December
2024
As at
31 December
2023
Change
CER
Change
AER
Shareholders’ equity
40,490
41,111
1%
(2)%
Net CSM(1)
47,110
44,313
8%
6%
Comprehensive equity
87,600
85,424
4%
3%
Comprehensive equity per share (US dollars)
8.12
7.52
10%
8%
Leverage ratio
13.1%
12.1%
0.9 pps
1.0 pps
Note:
(1) After allowing for reinsurance, taxes and net of non-controlling interests.
TOTAL INVESTMENTS
US$ millions, unless otherwise stated
As at
31 December
2024
Percentage
of total
As at
31 December
2023
Percentage
of total
Total policyholder and shareholder
255,333
88%
235,936
88%
Total unit-linked contracts and consolidated
investment funds
33,288
12%
32,612
12%
Total investments
288,621
100%
268,548
100%
UNIT-LINKED CONTRACTS AND CONSOLIDATED INVESTMENT FUNDS
US$ millions, unless otherwise stated
As at
31 December
2024
Percentage
of total
As at
31 December
2023
Percentage
of total
Unit-linked contracts and consolidated
investment funds
Debt securities
5,883
18%
7,052
22%
Loans and deposits
71
–
65
–
Interests in investment funds and exchangeable
loan notes
18,110
54%
17,626
54%
Equity shares
8,413
25%
7,150
22%
Cash and cash equivalents
810
3%
713
2%
Derivative financial instruments
1
–
6
–
Total unit-linked contracts and consolidated
investment funds
33,288
100%
32,612
100%
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
044
FINANCIAL AND OPERATING REVIEW
POLICYHOLDER AND SHAREHOLDER INVESTMENTS
US$ millions, unless otherwise stated
As at
31 December
2024
Percentage
of total
As at
31 December
2023
Percentage
of total
Participating funds and other participating business
with distinct portfolios(1)
Government bonds
22,050
9%
21,027
9%
Government agency bonds
6,894
3%
6,838
3%
Corporate bonds and structured securities
39,499
15%
49,756
21%
Loans and deposits
392
–
470
–
Subtotal – Fixed income investments
68,835
27%
78,091
33%
Investment funds with debt instruments
as underlying
3,126
1%
–
–
Others
37,250
15%
22,676
10%
Subtotal – Interests in investment funds and
exchangeable loan notes(2)
40,376
16%
22,676
10%
Equity shares
6,115
2%
7,533
3%
Investment property and property held for own use
3,614
1%
3,574
2%
Cash and cash equivalents
1,917
1%
2,421
1%
Derivative financial instruments
338
–
376
–
Subtotal participating funds and other participating
business with distinct portfolios
121,195
47%
114,671
49%
Other policyholder and shareholder
Government bonds
65,870
26%
54,343
23%
Government agency bonds
7,508
3%
7,343
3%
Corporate bonds and structured securities
30,514
12%
31,399
13%
Loans and deposits
3,579
1%
3,460
2%
Subtotal – Fixed income investments
107,471
42%
96,545
41%
Investment funds with debt instruments
as underlying
2,188
1%
280
–
Others
8,366
3%
6,584
2%
Subtotal – Interests in investment funds and
exchangeable loan notes(2)
10,554
4%
6,864
2%
Equity shares
5,269
2%
4,604
2%
Investment property and property held for own use
4,755
2%
4,491
2%
Cash and cash equivalents
5,374
2%
8,391
4%
Derivative financial instruments
715
1%
370
–
Subtotal other policyholder and shareholder
134,138
53%
121,265
51%
Total policyholder and shareholder
255,333
100%
235,936
100%
Notes:
(1) Participating fund business is written in a segregated statutory fund with regulations governing the division of surplus between policyholders and
shareholders.
Other participating business with distinct portfolios, representing Hong Kong participating business, are supported by segregated investment assets and
explicit provisions for future surplus distribution.
(2) Interests in investment funds and exchangeable loan notes are based on the updated presentation in note 18 to the consolidated financial statements.
ANNUAL REPORT 2024
045
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Total financial investments held in respect of policyholders and shareholders increased to US$255,333 million at
31 December 2024 compared with US$235,936 million at 31 December 2023.
Aggregate investment funds with debt instruments as underlying totalled US$5,314 million at 31 December 2024,
compared with US$280 million at 31 December 2023. Other holdings within interests in investment funds and
exchangeable loan notes held in respect of policyholders and shareholders increased to US$45,616 million at 31
December 2024 from US$29,260 million at 31 December 2023, largely driven by asset allocation changes in our
participating funds and other participating business with distinct portfolios.
Government bonds and government agency bonds of US$102,322 million, which represented 58 per cent of fixed
income investments at 31 December 2024, increased from 51 per cent at 31 December 2023, reflecting lower
interest rates in Mainland China and Thailand at the end of 2024.
Corporate bonds and structured securities of US$70,013 million accounted for 40 per cent of fixed income
investments at 31 December 2024, compared with 47 per cent at 31 December 2023. The reduction in corporate
bonds and structured securities was driven by asset allocation changes within participating funds and other
participating business with distinct portfolios which resulted in an increase in interests in investment funds and
exchangeable loan notes.
The average credit rating of the fixed income portfolio including government bonds remained stable at A, compared
with the position at 31 December 2023. The average credit rating of the fixed income portfolio excluding domestic
government bonds(1) remained stable at A at 31 December 2024, compared with the position at 31 December
2023. The corporate bond portfolio was well diversified with over 1,700 issuers and an average holding size of
US$38 million.
At 31 December 2024, 2 per cent of the total bond portfolio was rated below investment grade or not rated,
representing approximately US$3.4 billion in value. Approximately US$118 million of bonds, representing 0.1 per
cent of our total bond portfolio, were downgraded to below investment grade during the period.
The expected credit loss (ECL) provision for bond asset holdings measured either at amortised cost or fair value
through other comprehensive income decreased by US$18 million during the year. The ECL provision represented
0.5 per cent of the bond portfolio at 31 December 2024, reflecting AIA’s overall high-quality investments.
Cash and cash equivalents held in respect of policyholders and shareholders decreased by US$3,521 million to
US$7,291 million at 31 December 2024 compared with US$10,812 million at 31 December 2023, largely due to
share buy-back and asset allocation changes.
Note:
(1) Domestic government bonds refer to bonds issued in local or foreign currencies by the government where the respective business unit operates.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
046
FINANCIAL AND OPERATING REVIEW
CAPITAL
FREE SURPLUS
The Group’s free surplus is the excess of adjusted net worth over required capital, including consolidated reserving
and capital requirements, after deducting certain assets not eligible for regulatory capital purposes. Free surplus
provides the Group with the financial flexibility to invest in profitable growth and absorb the effects of capital
market stress.
Free surplus increased from US$16,329 million at 31 December 2023 to US$19,032 million at 31 December 2024
before returning capital to shareholders through dividends and share buy-back. The increase was due to net FSG
of US$4,020 million, partly offset by investment return variances and other items of negative US$1,317 million
driven by interest rate movements, foreign exchange movements and changes to regulatory capital requirements
in South Korea.
After dividends of US$2,328 million and share buy-back of US$4,150 million, free surplus was US$12,554 million
at 31 December 2024.
The following table summarises the change in free surplus over the year:
US$ millions, unless otherwise stated
2024
2023
Opening free surplus
16,329
17,850
Effect of acquisitions
–
(238)
UFSG
6,327
6,041
Free surplus used to fund new business
(1,531)
(1,328)
Unallocated Group Office expenses
(293)
(302)
Finance costs and other capital movements
(483)
(479)
Net free surplus generation (Net FSG)
4,020
3,932
Investment return variances and other items
(1,317)
715
Free surplus before dividends and share buy-back
19,032
22,259
Dividends
(2,328)
(2,293)
Share buy-back
(4,150)
(3,637)
Closing free surplus
12,554
16,329
UNDERLYING FREE SURPLUS GENERATION (UFSG)
UFSG of US$6,327 million was up by 10 per cent per share.
UFSG is a key operating financial metric that measures the amount of free surplus after tax generated from
in-force business over the year before investment in new business, unallocated Group Office expenses, finance
costs, investment return variances and other non-operating items.
UFSG comprises expected distributable earnings from in-force business, expected return on free surplus and
assets backing MTNs, operating variances and a recurring diversification benefit from adding profitable new
business to our in-force portfolio.
ANNUAL REPORT 2024
047
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
US$ millions, unless otherwise stated
2024
2023
YoY
CER
YoY
AER
Expected return on free surplus and assets
backing MTNs
1,395
1,348
4%
3%
Expected distributable earnings from in-force business
4,302
4,536
(4)%
(5)%
Diversification benefit due to new business
757
634
21%
19%
Other operating variances
(127)
(477)
(74)%
(73)%
UFSG
6,327
6,041
6%
5%
Basic UFSG per share (US cents)
57.19
52.45
10%
9%
Expected distributable earnings from in-force business decreased by 4 per cent to US$4,302 million, following the
strengthening of claims assumptions at the end of 2023. The establishment of a provision for medical claims at
the end of 2023, along with our effective management of the in-force portfolio, has helped improve other operating
variances by US$355 million compared with 2023.
Adding new business to the in-force portfolio further diversifies underlying risks and leads to a lower total cost of
reserving and capital. This recurring diversification benefit from new business added US$757 million to UFSG in
2024, up by 21 per cent compared with 2023 which is broadly in line with the growth in VONB.
NET FREE SURPLUS GENERATION (NET FSG)
Net FSG is calculated as UFSG less free surplus used to fund new business, unallocated Group Office expenses,
finance costs and other capital movements. Net FSG and all of its components are shown net of relevant taxes.
Free surplus invested in writing new business increased by 17 per cent to US$1,531 million, in line with the growth
in VONB, and added a present value of future expected distributable earnings of US$6,243 million.
Unallocated Group Office expenses were lower at US$293 million while finance costs and other capital movements
was stable at negative US$483 million compared with 2023. Net FSG was US$4,020 million for 2024.
UFSG PER SHARE
2024
2023
YoY
CER
YoY
AER
UFSG (US$ millions)
6,327
6,041
6%
5%
Weighted average number of ordinary shares
outstanding (millions)
11,063
11,518
(4)%
(4)%
Basic UFSG per share (US cents)
57.19
52.45
10%
9%
Weighted average number of ordinary shares
outstanding on diluted basis (millions) (1)
11,073
11,528
(4)%
(4)%
Diluted UFSG per share (US cents) (1)
57.14
52.40
10%
9%
Note:
(1) Diluted UFSG per share includes the effects of the awards under various share-based compensation plans as described in note 36 to the consolidated
financial statements.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
048
FINANCIAL AND OPERATING REVIEW
CAPITAL MANAGEMENT POLICY
In April 2024, we added a further US$2.0 billion to our original US$10.0 billion share buy-back programme
announced in March 2022. Since we began buying back shares in March 2022, approximately 1,311 million shares
were repurchased for an aggregate value of US$11,335 million as at 31 December 2024. After share buy-back of
US$665 million in the first two months of 2025, the US$12.0 billion share buy-back programme was concluded
with a total of approximately 1,409 million shares repurchased, reducing the outstanding share count by 11.7 per
cent.
Over 2022 to 2024, we have returned US$18.2 billion to shareholders through dividends paid and share buy-back.
We also announced, in April 2024, our enhanced capital management policy to provide greater clarity on how
we will deliver annual capital returns to shareholders. The policy includes two key components, a payout ratio
target of 75 per cent of annual net FSG, as well as a commitment to regularly review our capital position and
systematically return capital in excess of our needs.
As a result, the Board has recommended a 10 per cent increase in final dividend to 130.98 Hong Kong cents per
share in line with AIA’s established prudent, sustainable and progressive dividend policy. In addition, the Board
has approved a new share buy-back of US$1.6 billion. This comprises US$0.6 billion to meet the payout ratio
target of 75 per cent of annual net FSG of US$3.0 billion, after dividends of approximately US$2.4 billion(1) for
2024, and an additional US$1.0 billion following a further review of the Group’s capital position.
The share buy-back will commence as soon as practicable and is expected to complete within 2025.
Note:
(1) As calculated in note 13 to the consolidated financial statements.
SHAREHOLDER CAPITAL RESOURCES
The shareholder capital ratio, our principal measure of the overall capital and free surplus position for shareholders,
remained strong at 236 per cent at 31 December 2024. This compared with 269 per cent at 31 December 2023,
with the reduction largely due to capital returns to shareholders, representing a decrease of 38 percentage points.
The following table shows a summary of the shareholder capital resources as at 31 December 2024.
US$ millions, unless otherwise stated
As at
31 December
2024
As at
31 December
2023
Shareholder capital ratio(1)
236%
269%
Shareholder capital resources
40,439
40,847
Free surplus(2)
12,554
16,329
Required capital(2)
17,154
15,177
Eligible Tier 2 debt capital(3)
10,731
9,341
Notes:
(1) The shareholder capital ratio is defined as the shareholder capital resources as a percentage of required capital.
(2) Free surplus and required capital are as shown in our EV reporting.
(3) Eligible Tier 2 debt capital is as shown in our Group LCSM.
The Group targets for the shareholder capital ratio to comfortably exceed 200 per cent.
ANNUAL REPORT 2024
049
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
GROUP LCSM SOLVENCY POSITION
Under the GWS capital adequacy rules, the Group’s solvency is measured based on the LCSM, which aggregates
the available capital, minimum capital requirements and prescribed capital requirements measured under the
regulatory requirements of each entity within the Group.
In 2024, the Group LCSM coverage ratio remained strong at 257 per cent, compared with 275 per cent at 31
December 2023. The reduction in Group LCSM coverage ratio is largely due to capital returns to shareholders.
Eligible group capital resources increased from US$73,156 million to US$77,650 million, mainly from in-force
generation and the issuance of eligible subordinated securities, partly offset by capital returns to shareholders.
The group prescribed capital requirement (GPCR) increased from US$26,646 million to US$30,159 million, mainly
due to new business written during the year and the HKRBC coming into effect on 1 July 2024(1).
As a result, the Group LCSM surplus increased from US$46,510 million to US$47,491 million.
Tier 1 group capital increased from US$46,980 million to US$49,316 million, mainly from in-force generation
partly offset by capital returns to shareholders.
The group minimum capital requirement (GMCR) increased from US$13,613 million to US$14,131 million, mainly
from new business written during the year.
The following table shows a summary of the Group LCSM solvency position on the GWS basis as at 31 December
2024.
US$ millions, unless otherwise stated
As at
31 December
2024
As at
31 December
2023
Group LCSM coverage ratio(2)
257%
275%
Tier 1 group capital coverage ratio(3)
349%
345%
Eligible group capital resources
77,650
73,156
Tier 1 group capital
49,316
46,980
Tier 2 group capital
28,334
26,176
Group prescribed capital requirement (GPCR)
30,159
26,646
Group minimum capital requirement (GMCR)
14,131
13,613
Group LCSM surplus
47,491
46,510
A shareholder view of the Group LCSM is also presented to show the position excluding the Group’s participating
business(4) and for comparability with other companies that report on this basis.
The Group LCSM coverage ratio on the shareholder basis is defined as the ratio of eligible group capital resources
to the GPCR with both items excluding participating business. The ratio reduced from 335 per cent at 31 December
2023 to 316 per cent at 31 December 2024 mainly due to capital returns to shareholders.
As at 31 December 2024
As at 31 December 2023
US$ millions, unless otherwise stated
GWS basis
Shareholder
basis(4)
GWS basis
Shareholder
basis(4)
Group LCSM coverage ratio
257%(2)
316%
275%(2)
335%
Eligible group capital resources
77,650
56,360
73,156
53,885
GPCR
30,159
17,814
26,646
16,076
Group LCSM surplus
47,491
38,546
46,510
37,809
Notes:
(1) The impact was mainly from AIA Co., AIA Everest and Blue Cross. AIA International, our principal operating entity in Hong Kong SAR, received the approval
from the Hong Kong Insurance Authority (HKIA) to early adopt the HKRBC regime with an effective date of 1 January 2022.
(2) The Group LCSM coverage ratio on the GWS basis is referred to as the “eligible group capital resources coverage ratio” in the GWS framework and is
defined as the ratio of the eligible group capital resources to the GPCR.
(3) The Tier 1 group capital coverage ratio is defined in the GWS framework as the ratio of the Tier 1 group capital to the GMCR.
(4) Excludes the contribution from participating funds and other participating business with distinct portfolios except for Brunei and Macau SAR. Participating
businesses in Brunei and Macau SAR are not considered as participating funds or other participating business with distinct portfolios under applicable
local regulatory regimes within our LCSM reporting.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
050
FINANCIAL AND OPERATING REVIEW
At 31 December 2024, eligible group capital resources on the GWS basis included the following items, which are
included within Tier 2 group capital:
(i) US$6,324 million(1) of subordinated securities. Subordinated securities with a fixed maturity receive full capital
credit up to the date that is 5 years prior to the date of maturity, with the capital credit then reducing at the rate
of 20 per cent per annum until maturity. Subordinated securities with a maturity where principal repayment
is subject to contractual conditions are not expected to be subject to capital credit amortisation. Perpetual
subordinated securities receive full capital credit unless they are redeemed; and
(ii) US$4,407 million(1) of senior notes issued before designation that have been approved by the HKIA as capital.
Prior to maturity, the approved senior notes receive full capital credit until 14 May 2031, after which the capital
credit reduces at the rate of 20 per cent per annum until 14 May 2036.
Note:
(1) The amounts represent the carrying value of MTNs contributing to eligible group capital resources.
GROUP LCSM COVERAGE RATIO SENSITIVITIES
Group LCSM coverage ratio sensitivities arising from changes to the central assumptions from equity prices and
interest rate movements, applied consistently as those used within EV reporting, are shown below.
Interest rate sensitivities apply a 50 basis points movement in current bond yield curves to asset values with a
corresponding movement in discount rates applied to the calculation of liabilities. The amount of eligible debt
capital is equal to the carrying value and is unchanged in the sensitivity calculations. The direction of interest rate
sensitivities varies by market.
As at
31 December
2024
As at
31 December
2023
Central value
257%
275%
Impact of equity price changes
10 per cent increase in equity prices
–
1 pps
10 per cent decrease in equity prices
–
(2) pps
Impact of interest rate changes
50 basis points increase in interest rates
(10) pps
(10) pps
50 basis points decrease in interest rates
10 pps
10 pps
RECONCILIATION BETWEEN GROUP LCSM SOLVENCY POSITION AND SHAREHOLDER CAPITAL
The table below shows a reconciliation of capital resources and capital requirement between the Group LCSM
solvency position and the shareholder capital.
As at 31 December 2024
As at 31 December 2023
US$ millions, unless otherwise stated
Capital
resources
Capital
requirement
Capital
resources
Capital
requirement
Group LCSM solvency position
77,650
30,159
73,156
26,646
Adjustments for:
Removal of participating surplus and others(1)
(21,594)
(12,913)
(18,680)
(10,478)
Different capital requirements under EV for
AIA China(2)
(7,403)
(4,117)
(9,261)
(3,603)
Reflecting EV consolidated reserving and
capital requirements
(8,214)
4,025
(4,368)
2,612
Shareholder capital
40,439
17,154
40,847
15,177
Notes:
(1) Mainly reflects the removal of surplus of participating funds and other participating business with distinct portfolios.
(2) Adjustment from C-ROSS solvency basis to China Association of Actuaries (CAA) EV basis in line with local requirements.
ANNUAL REPORT 2024
051
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
LOCAL SOLVENCY REQUIREMENTS
The Group’s individual branches and subsidiaries are also subject to supervision, including relevant capital
requirements, in the jurisdictions in which they and their parent entities operate. The local operating units were in
compliance with the capital requirements of their respective entity and local regulators in each of our geographical
markets at 31 December 2024.
The key developments in local solvency requirements are summarised as follows:
Hong Kong SAR(1)
The Insurance (Amendment) Ordinance 2023 introduced into the Hong Kong Insurance Ordinance (Cap. 41) the
legal basis for implementing the new Risk-based Capital regime and empowered the HKIA to prescribe detailed
requirements in subsidiary legislation. The revised Ordinance came into effect on 1 July 2024.
AIA International, our principal operating entity in Hong Kong SAR, previously obtained approval from the HKIA to
early-adopt the HKRBC regime with effect from 1 January 2022. The Group’s other operating entities in Hong Kong
SAR, including AIA Co., AIA Everest and Blue Cross, became subject to the revised legislation from 1 July 2024; the
resulting effect on the Group’s EV Equity was not material.
Malaysia
As part of a review of its capital adequacy framework for insurers, in June 2024 Bank Negara Malaysia (BNM)
released an Exposure Draft for consultation on Risk-based Capital Framework for Insurers and Takaful Operators
with a proposed effective date of 1 January 2027.
Macau SAR
In December 2023, the Monetary Authority of Macao (AMCM) began a consultation and assessment process to
develop an RBC framework for the insurance industry of Macau SAR, with a draft Bill expected in 2027.
Taiwan (China)
The Taiwan Financial Supervisory Commission is targeting to implement revised solvency rules based on the
Insurance Capital Standard, with effect from 1 January 2026.
Bermuda
The Bermuda Monetary Authority (BMA) enacted changes to the regulatory regime for commercial insurers in
2024 which included the enhancement of solvency rules and liquidity risk management requirements. The full
impact of the changes to solvency rules will be phased-in over a 10-year transition period.
Note:
(1) Hong Kong SAR refers to the Hong Kong Special Administrative Region of the People’s Republic of China.
GROUP CHIEF FINANCIAL OFFICER’S REVIEW
AIA GROUP LIMITED
052
FINANCIAL AND OPERATING REVIEW
HOLDING COMPANY FINANCIAL RESOURCES
Holding company financial resources increased to US$15,588 million before shareholder dividends of US$2,328
million and US$4,150 million capital returns to shareholders through the share buy-back programme.
Capital flows from subsidiaries increased from US$3,292 million in 2023 to US$5,642 million in 2024, reflecting
additional support for the expanded share buy-back programme.
Borrowings added US$1,553 million, while investment income, mark-to-market movements in debt securities and
others increased holding company financial resources by US$794 million.
After total capital returns to shareholders, holding company financial resources were US$9,110 million at 31
December 2024.
The movements in holding company financial resources are summarised as follows:
US$ millions, unless otherwise stated
2024
2023
Opening holding company financial resources
8,140
10,668
Capital flows from subsidiaries
5,642
3,292
Corporate activity including acquisitions
(74)
(112)
Net capital flows to holding company
5,568
3,180
Increase in borrowings(1)
1,553
396
Interest payments on borrowings(1)
(467)
(418)
Investment income, mark-to-market movements in debt securities and others
794
244
Closing holding company financial resources before dividends and share buy-back
15,588
14,070
Dividends paid
(2,328)
(2,293)
Share buy-back
(4,150)
(3,637)
Closing holding company financial resources
9,110
8,140
Assets recoverable and liabilities repayable within 12 months as follows:
US$ millions, unless otherwise stated
As at
31 December
2024
As at
31 December
2023
Loans to/amounts due from subsidiaries(2)
587
66
Medium-term notes and securities(3)
(251)
(831)
Net other assets and other liabilities
(250)
(135)
Notes:
(1) Borrowings principally include medium-term notes and securities; other intercompany loans; and amounts outstanding, if any, from the Company’s
US$2,980 million unsecured committed credit facilities.
(2) As at 31 December 2024, loans to/amounts due from subsidiaries was US$910 million (31 December 2023: US$895 million). US$587 million was
recoverable within 12 months after 31 December 2024 (31 December 2023: US$66 million).
(3) As at 31 December 2024, medium-term notes and securities placed to the market was US$13,246 million (31 December 2023: US$11,764 million).
US$154 million was repayable within 12 months after 31 December 2024 (31 December 2023: US$831 million). Details of the medium-term notes and
securities placed to the market are included in note 26 to the consolidated financial statements.
ANNUAL REPORT 2024
053
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
GLOBAL MEDIUM-TERM NOTE AND SECURITIES PROGRAMME
Under our Global Medium-term Note (GMTN) and Securities Programme, the Company issued three listed
subordinated dated securities and two unlisted Hong Kong dollar-denominated fixed rate medium-term notes in
2024.
On 5 April 2024, the Company issued US dollar-denominated fixed rate subordinated dated securities. The offering
comprised US$1,000 million of 10-year securities at an annual rate of 5.375 per cent. The securities are listed on
The Stock Exchange of Hong Kong Limited.
On 10 September 2024, the Company issued two unlisted Hong Kong dollar-denominated fixed rate medium-term
notes, which consisted of HK$3,900 million of 2.99-year notes at an annual rate of 3.70 per cent and HK$3,250
million of 5-year notes at an annual rate of 3.78 per cent. The US dollar equivalent issued were approximately
US$500 million and US$417 million respectively.
On 30 September 2024, the Company issued two US dollar-denominated fixed rate subordinated dated securities,
which consisted of US$750 million of 30-year securities at an annual rate of 5.40 per cent and US$500 million of
10.5-year securities at an annual rate of 4.95 per cent. These securities are listed on The Stock Exchange of Hong
Kong Limited.
As at 31 December 2024, the aggregate carrying amount of the debt issued to the market under the programme
was US$13,246 million compared with US$11,764 million at 31 December 2023.
CREDIT RATINGS
As at 31 December 2024, AIA Co. had financial strength ratings of AA (Very Strong) with a stable outlook from
Fitch; AA- (Very Strong) with a positive outlook from S&P Global Ratings; and Aa2 (Very Low Credit Risk) with a
negative outlook from Moody’s. S&P Global Ratings revised the outlook on AIA Co. from stable to positive on 23
December 2024 reflecting strengthened capital buffer levels and improved visibility on the future profits under
IFRS 17 results. Moody’s revised the outlook on AIA Co. from stable to negative on 8 December 2023 following the
agency’s decision to change both Mainland China and Hong Kong SAR sovereign ratings outlook from stable to
negative.
As at 31 December 2024, the Company had issuer credit ratings of AA- (Very High Credit Quality) with a stable
outlook from Fitch; A+ (Strong) with a positive outlook from S&P Global Ratings; and A1 (Low Credit Risk) with
a negative outlook from Moody’s. S&P Global Ratings revised the outlook on the Company from stable to positive
on 23 December 2024 reflecting strengthened capital buffer levels and improved visibility on the future profits
under IFRS 17 results. Moody’s revised the outlook on the Company from stable to negative on 8 December 2023
following the agency’s decision to change both Mainland China and Hong Kong SAR sovereign ratings outlook
from stable to negative.
054
AIA GROUP LIMITED
054
FINANCIAL AND OPERATING REVIEW
REGULATORY AND INTERNATIONAL
DEVELOPMENTS
INSURANCE CAPITAL STANDARD
In December 2024, the International Association of Insurance Supervisors (IAIS) formally adopted the Insurance
Capital Standard (ICS), a group-wide capital standard for Internationally Active Insurance Groups (IAIGs), as the
quantitative element of the IAIS Common Framework for the Supervision of IAIGs.
The ICS aims to provide a globally comparable risk-based measure of capital adequacy for IAIGs, based on
requirements for valuation, capital requirements and qualifying capital resources. IAIS member regulators will be
required to implement the minimum requirements of the ICS within local capital adequacy regimes for IAIGs, taking
into consideration specific market circumstances. It is expected that the Hong Kong Insurance Authority will do so
by building upon the existing capital adequacy requirements applying to insurance groups in Hong Kong under its
group-wide supervision regime.
Assessment by IAIS member regulators of their local regimes is expected to begin in 2026 following an assessment
methodology being developed by the IAIS. These self-assessments will be followed by in-depth targeted jurisdictional
assessments of ICS implementation in 2027.
OTHER STRATEGIC THEMES OF THE WORK OF THE IAIS
In addition to the ICS, the IAIS is working on key strategic themes that affect the insurance sector and the broader
financial system, including strengthening the supervisory response to climate change, adapting to increasing digital
innovation and cyber risks and supporting insurance to serve its societal purpose of building resilience. AIA will
continue to monitor these developments closely.
BEPS 2.0
In October 2021, the “Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the
Economy” developed by the Organisation for Economic Co-operation and Development (OECD) as a phase of the
OECD/G20 Base Erosion and Profit Shifting (BEPS) Project that is commonly referred to as “BEPS 2.0”, was agreed
by the OECD/G20 Inclusive Framework on BEPS (Inclusive Framework). In December 2021, the Inclusive Framework
published the Global Anti-Base Erosion (GloBE) Model Rules, on which jurisdictions may model new local tax laws to
give effect to the second pillar of BEPS 2.0 (Pillar Two), which seeks to impose a minimum effective tax rate (ETR) on
large multinational enterprises in respect of each jurisdiction in which they operate.
Under the Pillar Two income taxes, a multinational group is liable to pay top-up tax on the difference between its
Pillar Two ETR, calculated on a jurisdiction-by-jurisdiction basis, and a 15 per cent minimum rate, regardless of the
group’s overall ETR. As a result of specific adjustments set out in the Pillar Two income tax rules, which result in
different ETRs compared to those arising on an IFRS basis, jurisdictions with an accounting ETR above 15 per cent
may still be exposed to paying Pillar Two income taxes in any given year. Conversely, a jurisdiction’s accounting ETR
may be below 15 per cent, yet it still may not be exposed to Pillar Two income taxes.
At the reporting date, Pillar Two legislation was effective in certain jurisdictions in which the Group operates, including
Australia, South Korea and Vietnam. For these jurisdictions, the Group has no current tax exposure related to Pillar
Two legislation. However, several jurisdictions in which the Group operates, including Hong Kong and Mainland
China, have not yet enacted Pillar Two legislation.
For other jurisdictions in which the Group operates, including those such as Singapore and Thailand where Pillar Two
legislation was enacted but not yet effective at the reporting date, the quantitative impact of the Pillar Two legislation
is not yet known or reasonably estimable due to significant areas of uncertainty in the application of the legislation.
However, based on currently available information and management expectations, Pillar Two income taxes are likely
to adversely affect AIA’s ETR from 2025 onwards.
The Group expects to be able to determine its Pillar Two income tax liabilities for reporting periods ending after 31
December 2024, as the legislation becomes less uncertain.
055
ANNUAL REPORT 2024
055
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
BUSINESS REVIEW
UNRIVALLED DISTRIBUTION
AGENCY
US$ millions, unless otherwise stated
2024
2023
YoY CER
YoY AER
VONB
3,707
3,219
16%
15%
VONB margin
67.6%
65.4%
2.1 pps
2.2 pps
ANP
5,486
4,922
13%
11%
AIA’s unrivalled, proprietary Premier Agency is the industry’s leading agency, ranking number one internationally
in terms of Million Dollar Round Table (MDRT) members for the tenth consecutive year. MDRT membership
recognises agents who demonstrate exceptional professionalism, strict ethical codes of conduct and the highest
standards of customer service and productivity. AIA holds the market-leading position in nine markets, with AIA
China, AIA Hong Kong and AIA Thailand ranked as the top three individual companies with the highest number of
MDRT members globally.
In 2024, our agency channel delivered 16 per cent growth in VONB – our primary measure of profitable new
business – to US$3,707 million, with VONB margin increasing to 67.6 per cent. The agency channels in our four
largest markets – Mainland China, Hong Kong, Thailand and Singapore – each achieved double-digit VONB growth.
Agency distribution represented 74 per cent of the Group’s total VONB in 2024.
AIA’s 2024 results were achieved through the consistent execution of our Premier Agency strategy, which is focused
on quality recruitment, extensive training and structured career progression. We use advanced digital technology
to support a distinctive agency force that is well-equipped to advise across our broad and sophisticated range of
protection and wealth propositions. We strive for best-in-class activity, productivity and profitability while scaling
our Premier Agency. The professionalism of our agents sets AIA apart and enables us to deliver high-quality,
profitable new business growth, as demonstrated by the increase in VONB margin to 67.6 per cent.
Our agency is fully digitally enabled across the entire value chain, from recruitment and onboarding to activity
management, leads generation and career development. AIA prioritises attracting highly-educated and motivated
individuals by offering professional careers through a stringent selection process and mandatory training. We
shape the culture and provide the tools that agents need to succeed. The number of agency leaders increased
by 9 per cent, which is critical to ensuring high-quality recruitment, training and management. In 2024, we
introduced AI recruitment into our digital ecosystem, which was used in more than 85 per cent of our new agent
hires, supporting 18 per cent growth in the number of new recruits. Overall, we saw an increase in new recruits in
the majority of our markets.
Our interactive digital sales platform, iPoS, has an agency adoption rate of 99.5 per cent, and works alongside real-
time activity management tracking. This system enables our agents to engage with customers more efficiently and
manage their activities remotely, enhancing overall productivity and streamlining the sales process. Our integrated
approach leverages data analytics to connect agents with customers based on their specific needs, and ensures
agents remain focused on high-impact tasks that improve client engagement. It also supports agents in generating
new leads, enhancing conversion rates and improving customer satisfaction. This approach resulted in a 7 per
cent increase in the total number of active agents, and 5 per cent higher productivity in 2024.
AIA’s Premier Agency strategy is designed to enhance both customer satisfaction and agent performance. A highly
professional agency force enables AIA to advise more sophisticated and affluent customers with complex needs,
thereby improving our customers’ experience and increasing their demand for our services. This, in turn, attracts
more high-calibre agents to join AIA’s Premier Agency, creating a self-reinforcing cycle which contributes to our
sustainable new business growth and leadership in the insurance industry.
FINANCIAL AND OPERATING REVIEW
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BUSINESS REVIEW
AIA GROUP LIMITED
056
FINANCIAL AND OPERATING REVIEW
PARTNERSHIPS
US$ millions, unless otherwise stated
2024
2023
YoY CER
YoY AER
VONB
1,301
1,031
28%
26%
VONB margin
41.7%
37.8%
3.9 pps
3.9 pps
ANP
3,120
2,728
16%
14%
AIA has valuable distribution opportunities through partnerships with banks and financial intermediaries, as well
as corporate customers. Our extensive network of market-leading strategic partners significantly extends our
reach and enables us to engage with hundreds of millions of potential customers across Asia, providing a growing
source of profitable new business for AIA and our partners. The average duration of AIA’s long-term strategic bank
partnerships is more than 20 years; a critical factor in supporting our sustainable growth well into the future.
Partnership distribution delivered 28 per cent VONB growth to US$1,301 million and contributed 26 per cent of
AIA’s total VONB in 2024. The overall growth in VONB included a 39 per cent increase from bancassurance and 21
per cent growth from our intermediated channels.
AIA’s broad network of long-term bank partnerships is an important competitive advantage for the Group. In 2024,
we focused on increasing new business volumes and the profitability of our portfolio of existing partners. The 39
per cent growth in bancassurance VONB was driven by a 13 per cent increase in ANP due to a combination of more
active sellers and improved productivity, and an increase in margin to more than 40 per cent.
Our long-term local strategic bank partnerships reported excellent VONB growth in aggregate, supported by
very strong performances from Bangkok Bank Public Company Limited (Bangkok Bank) in Thailand, Public Bank
Berhad (Public Bank) in Malaysia, Bank Central Asia (BCA) in Indonesia and Bank of the Philippine Islands (BPI)
in the Philippines. During the year, we extended our partnership with BCA until the end of 2038. BCA is one
of Indonesia’s largest banks and this extension ensures AIA continues to leverage BCA’s expansive distribution
reach, unlocking further growth and strengthening our competitive position in an important market. Our exclusive
partnerships with Citibank, N.A. and The Bank of East Asia, Limited (BEA) in Mainland China, Hong Kong, and
Singapore delivered aggregate VONB growth of 33 per cent.
Our intermediated channels, including independent financial advisers (IFAs) and brokers, achieved 21 per cent
VONB growth through a combination of increased sales volumes and higher VONB margin. Hong Kong is the
largest contributor to this channel and our focus on high-quality standards and exceptional customer service
has resulted in strong growth while maintaining attractive profitability. Singapore delivered 24 per cent growth,
driven by our focus on deepening our relationships with key broker accounts and providing new high-net-worth
propositions.
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ANNUAL REPORT 2024
057
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
GEOGRAPHICAL MARKET HIGHLIGHTS
MAINLAND CHINA
US$ millions, unless otherwise stated
2024
2023
YoY CER
YoY AER
VONB
1,217
1,037
20%
17%
VONB margin
56.1%
51.3%
4.9 pps
4.8 pps
ANP
2,168
2,023
10%
7%
TWPI
9,874
8,589
18%
15%
AIA’s strategy in Mainland China focuses on meeting the evolving needs of middle-class and affluent customers
for protection, long-term savings and retirement, where demand for our products, services and brand remains
strong. We achieve this through our differentiated Premier Agency model and a highly selective approach to
bancassurance, leveraging our leading digital technology. We continue to expand and deepen our reach within
our established geographies and in new provinces.
AIA China delivered 20 per cent VONB growth, resulting from a double-digit increase in our agency channel and a
significant uplift from our bancassurance partnerships. VONB margin increased by 4.9 pps to 56.1 per cent from
a positive shift in the mix of savings products towards tax-incentivised retirement products. Product repricing and
lower commission rates to our bank partners helped to mitigate the effects of lower interest rates. VONB margin
improved in both our main distribution channels, increasing to around 60 per cent in agency and around 40 per
cent in bancassurance.
AIA is actively broadening its presence across Mainland China by establishing new branches in key provinces and
municipalities, offering tremendous additional growth potential. In the first half of 2024, we successfully launched
new operations in three major cities in Sichuan and Hubei provinces, and in the fourth quarter, we received further
regulatory approvals to prepare new branches in three provinces and one municipality: Anhui, Shandong, Zhejiang
and Chongqing. Together, these four geographies provide access to an additional 100 million target customers and
had a combined gross domestic product (GDP) of RMB27 trillion in 2024. As a result, AIA now has access to around
340 million target customers across our 14 geographies in Mainland China. By replicating our efficient and scalable
distribution model, our agency channel delivered 27 per cent VONB growth across the new branches established
since 2019, when AIA China began its geographical expansion strategy beyond our five original geographies.
Central to our approach across all our operations in Mainland China is our full-time, professional Premier Agency
model. AIA China is the number one ranked company in the world for MDRT members, and our proprietary agency
distribution offers us a unique, profitable growth strategy in the market. Consumers’ needs and buying habits
change considerably as they become wealthier and older, demanding personalised financial planning, high-quality
advisory services and long-term wealth protection. These requirements are fully aligned with the core strengths of
AIA’s professional Premier Agents, enabled by our leading digital technology.
We believe that AIA is uniquely placed with the right strategy to capture the enormous opportunities from the
growing middle-class in Mainland China. In turn, this leads to greater customer satisfaction and value creation
through higher average case sizes, better persistency, premium product offerings and high-quality new agency
recruits that can sustain full-time careers. This is demonstrated by each customer in this segment holding over
six AIA policies on average, and our agents continuing to earn incomes almost double the industry average. The
execution of our Premier Agency strategy saw an 18 per cent increase in the number of new recruits and 9 per
cent growth in active agents.
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BUSINESS REVIEW
AIA GROUP LIMITED
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FINANCIAL AND OPERATING REVIEW
We extend AIA China’s customer reach through highly selective partnerships with banks that share our long-term
vision and commitment to creating mutual value. We have an exclusive partnership with BEA, a strong collaboration
with Postal Savings Bank of China Co., Ltd., and strategic relationships with Shanghai Pudong Development Bank
Co., Ltd. and Bank of China.
While our bank partners include some of the largest financial institutions in the market, our focus is on serving
their most affluent clients, providing holistic protection and long-term savings solutions to drive high average case
sizes and improved profitability, thereby delivering a significant uplift in VONB.
AIA China’s distribution quality and focus on middle-class and affluent customers enable us to offer a broader
suite of products, supported by a powerful ecosystem of value-added services, including the following categories:
•
Traditional protection: This is a core and growing product category in which we are a market leader, providing
long-term protection for our customers. In 2024, more than 95 per cent of our agents sold a protection policy,
and agency VONB for traditional protection products increased by 26 per cent, accounting for 46 per cent of
the channel’s new business. We launched new high-end critical illness products, as well as a major medical
proposition, “Zhuo Yue Yi Sheng”, which offers middle-class customers access to more flexible lump-sum
protection coverage.
•
Tax-incentivised products: Our tax-incentivised private pensions products continued to be one of the top
selling savings offerings within AIA China, providing wealth preserving solutions to our affluent customers in a
higher tax bracket. In July 2024, we launched a new tax-incentivised private care product, targeted to be sold
with our pensions proposition, further enhancing our comprehensive product suite.
•
Long-term savings: We continued to see increasing demand for our participating products as they offer a
higher expected return for policyholders through access to a broader range of assets, particularly in a low-
interest rate environment. In the first two months of 2025, participating products accounted for the majority of
new business volumes from our long-term savings proposition.
Our world-leading Premier Agency, complemented by our high-calibre bank partnerships, allows us to capture
value by expanding our distribution reach and potential customer base.
China Post Life
AIA China’s reported results do not include any contribution from China Post Life Insurance Co., Ltd. (China Post
Life). China Post Life’s reported VONB(4) was RMB9.9 billion in 2024, an increase of 19 per cent compared to
2023, and 5.3 times the previously disclosed 2020 full year result. AIA’s investment in China Post Life enables us
to capture the significant value available from additional distribution channels and customer segments that are
highly complementary to AIA China’s strategy.
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ANNUAL REPORT 2024
059
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
HONG KONG
US$ millions, unless otherwise stated
2024
2023
YoY CER
YoY AER
VONB
1,764
1,430
23%
23%
VONB margin
65.5%
57.5%
8.0 pps
8.0 pps
ANP
2,609
2,407
8%
8%
TWPI
12,456
11,554
8%
8%
AIA Hong Kong achieved 23 per cent VONB growth in 2024, with a 24 per cent increase from domestic customers
and 22 per cent growth from Mainland Chinese visitor (MCV) customers. Both segments made broadly equal
contributions to Hong Kong’s VONB in 2024, reflecting our well-diversified and growing customer base.
Our market-leading Premier Agency in Hong Kong and Macau delivered 23 per cent VONB growth from an increase
in the number of active agents and higher productivity. The fourth quarter delivered strong quarter-on-quarter
growth and we had the highest quarter for agency VONB from MCV customers since the resumption of cross-
border travel in early 2023, carrying on the strong momentum from the third quarter of the year. In 2024, our
agency channel delivered its highest VONB from MCV customers since 2018. As our principal distribution channel,
agency contributed more than 70 per cent of AIA Hong Kong’s VONB.
In 2024, AIA Hong Kong maintained its number one position for MDRT members in Hong Kong and Macau,
demonstrating our success in building a strong agency brand and providing an exceptional customer experience.
As we accelerate our recruitment and training efforts, the number of new recruits increased by 16 per cent, while
active new agents were up 35 per cent, reinforcing our strong foundation for future growth.
VONB from our partnership distribution channel grew by 25 per cent, driven by double-digit growth in both our
bancassurance and intermediated channels. Growth in bancassurance was underpinned by improvements in
activity levels and productivity. AIA Hong Kong continues to be selective in its approach to broker partnerships and
we maintain our focus on high-quality new business supported by robust governance on sales practices. Despite
a slowdown in sales in the third quarter as previously disclosed, our IFA and broker channel regained momentum
in the fourth quarter of the year and achieved strong VONB growth for the full year.
In 2024, we enhanced our flagship participating savings product to capitalise on favourable interest rate conditions,
increasing expected customer returns while also improving profitability. This resulted in continued strong demand
across all channels and contributed to an 8.0 pps increase in VONB margin. Additionally, we launched a series
of compelling health solutions to address the growing demand for high-quality medical insurance products that
provide benefits in both Hong Kong and Mainland China. For example, we launched the Greater Bay Area (GBA)
Health Connect Outpatient Plan in the first half of 2024, providing customers with outpatient coverage in Hong
Kong, Macau and designated Mainland GBA cities.
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BUSINESS REVIEW
AIA GROUP LIMITED
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FINANCIAL AND OPERATING REVIEW
THAILAND
US$ millions, unless otherwise stated
2024
2023
YoY CER
YoY AER
VONB
816
713
15%
14%
VONB margin
99.5%
93.3%
6.2 pps
6.2 pps
ANP
821
765
8%
7%
TWPI
4,674
4,425
7%
6%
AIA Thailand has firmly established itself as the clear market leader by combining the country’s largest and most
effective agency with a diverse range of products, cutting-edge technological innovation and a leading brand
presence. Our comprehensive product portfolio encompassing protection, health, critical illness and unit-linked
insurance enables us to meet the evolving needs of Thai consumers. We are also ranked number one in corporate
solutions. Our market-leading positions in key product segments are due to our professional distribution and
advisory capabilities. Investments in AIA+ and AIA One, our super-apps, have further enhanced digital engagement,
streamlining our interactions with customers.
In 2024, we achieved 15 per cent VONB growth, driven by an 8 per cent growth in ANP and a 6.2 pps increase in
VONB margin, demonstrating AIA Thailand’s dominance in health, protection and unit-linked business, founded on
our differentiated Premier Agency model.
Agency VONB increased by 17 per cent, from 10 per cent higher productivity and a 6 per cent increase in the
number of active agents. We continued to drive higher agency quality through our proprietary Financial Adviser
(FA) programme. Our FAs are three times as productive as our standard agents and have an activity ratio of over
70 per cent. In 2024, we saw a 21 per cent increase in new FAs, bringing the total number of these high-quality
agents to over 11,000. AIA Thailand continued to rank number one in the market for MDRT members, a position
that it has held since our IPO in 2010.
Our strategic partner Bangkok Bank, Thailand’s largest bank by assets, delivered 18 per cent VONB growth. This
was supported by higher productivity and an 11 per cent increase in the number of active insurance sellers, as
well as the launch of a new long-term savings and retirement proposition.
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ANNUAL REPORT 2024
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OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SINGAPORE
US$ millions, unless otherwise stated
2024
2023
YoY CER
YoY AER
VONB
454
394
15%
15%
VONB margin
50.5%
67.2%
(16.8) pps
(16.7) pps
ANP
897
586
52%
53%
TWPI
4,445
3,912
13%
14%
Our Singapore business is well-positioned to capitalise on the growing demand for protection and long-term
savings within the mass affluent and high-net-worth segments, serving both domestic and international
customers. We drive sustainable growth by offering bespoke financial solutions, expert advice and integrated
health offerings. In April, we launched AIA International Wealth, providing professional wealth management
advice and services designed to meet the needs of high-net-worth individuals across the region. We are the
leading life and health insurer in the market and are ranked number one in corporate solutions.
AIA Singapore delivered 15 per cent VONB growth, supported by double-digit increases across both our agency
and partnership distribution channels. Our strategic focus on capturing the increasing wealth opportunities in
Singapore has contributed to very strong growth in sales of long-term savings products. While this product mix
shift contributed to a lower VONB margin of 50.5 per cent, broadly in line with the figure reported in the first
half, this was more than offset by excellent ANP growth, resulting in higher total VONB. VONB from traditional
protection products increased year-on-year and remains AIA Singapore’s largest product category with 41 per
cent of the VONB mix.
Our agency channel delivered a 15 per cent increase in VONB, supported by 9 per cent higher productivity, as
well as growth in the numbers of active agents by 6 per cent and active new agents by 15 per cent. AIA invests in
producing top-tier advisers who have the capabilities to provide personalised wealth protection, estate planning
and retirement solutions to our customers. As a result, we have the leading agency in Singapore and ranked
number one by MDRT members for ten years.
Partnership distribution further strengthens our reach in the wealth management segment and achieved 10 per
cent VONB growth driven by strong sales of high-net-worth and savings products, which were supported by our
new wealth propositions.
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BUSINESS REVIEW
AIA GROUP LIMITED
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FINANCIAL AND OPERATING REVIEW
MALAYSIA
US$ millions, unless otherwise stated
2024
2023
YoY CER
YoY AER
VONB
349
319
10%
9%
VONB margin
67.3%
67.3%
(0.2) pps
–
ANP
517
473
10%
9%
TWPI
2,742
2,565
7%
7%
AIA Malaysia delivered a 10 per cent increase in VONB, supported by ANP growth and a high-quality product
mix with a VONB margin of 67.3 per cent. Our strategy focuses on multi-channel distribution providing a diverse
product portfolio, including unit-linked life and health protection plans. We also place a strong emphasis on
wellness and digital engagement to meet the needs of our diverse customer base, ranging from mass affluent to
high-net-worth.
Premier Agency achieved positive growth, supported by an increase in VONB in our conventional business, partially
offset by the results of our Takaful business. While recruitment for the Takaful business remains challenging as we
continue to enforce stringent quality requirements, we have increased the agent activity ratio and average case
sizes. Overall, we saw improved productivity and activity levels in our agency channel. We ranked number one in
Malaysia for MDRT members in 2024, a position we have held for eight years.
Our strategic partnership with Public Bank achieved 21 per cent VONB growth, with an increased focus on our
high-net-worth propositions to the bank’s customers, supported by an improvement in the number of active sellers
and higher productivity.
Our market-leading corporate solutions business achieved 20 per cent VONB growth, driven by both new clients
and existing scheme renewals.
OTHER MARKETS
US$ millions, unless otherwise stated
2024
2023
YoY CER
YoY AER
VONB
467
406
18%
15%
VONB margin
29.2%
28.9%
0.4 pps
0.3 pps
ANP
1,594
1,396
17%
14%
TWPI
7,207
6,894
7%
5%
Overview
VONB for Other Markets increased by 18 per cent, with all markets in this segment reporting positive VONB growth.
Geographical Market Highlights
Australia: AIA Australia’s VONB growth was principally from group insurance schemes delivering strong double-
digit growth due to successful renewals. Adjusting for the disposal of the Savings and Investments (S&I) business
in the prior year, the retail IFA channel also reported positive VONB growth.
Cambodia: AIA Cambodia’s VONB increased in 2024, supported by a higher VONB margin from expense
improvements, partially offset by lower ANP within our bancassurance channel.
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
India: Our joint venture in India, Tata AIA Life, delivered positive VONB growth with a double-digit increase from
our agency channel, partially offset by a reduction in bancassurance due to a high volume of sales in the prior year
ahead of personal tax rate changes. We saw a return to very strong growth in our bancassurance channel for the
period from April to December 2024.
Tata AIA Life’s Premier Agency ranked first in the country for MDRT members. In 2024, we became the market
leader in protection, ranking number one across the whole industry by retail sum assured. We continued to rank
the third largest private life insurer in India in 2024, based on individual weighted new business premiums, and we
hold the market-leading position for persistency, underscoring our leadership in business quality.
Indonesia: Very strong VONB growth was driven by an excellent performance from our strategic partnership
with BCA. In June 2024, we extended our partnership until the end of 2038, unlocking further significant growth
potential for AIA in Indonesia. We continued to increase both agent activity and productivity levels over the year
as we executed our agency strategy.
Myanmar: AIA Myanmar delivered excellent ANP growth from both agency and partnership channels due to an
increase in active agents and growth in the number of our bank partner’s branches selling our products.
New Zealand: VONB growth in AIA New Zealand was moderated by a reduction in the IFA and broker channel,
which was impacted by economic conditions in 2024. Despite market challenges, our strategic partner ASB Bank
Limited recorded strong growth, supported by our focus on AIA Vitality.
Philippines: AIA Philippines achieved excellent VONB growth. An increase in agency VONB was supported by
a shift in product mix towards higher margin participating products. BPI AIA Life Assurance Corporation, our
joint venture with BPI, ranked number one bancassurance entity in the market by new business annual premium
equivalent in 2024, and delivered excellent VONB growth from higher average case sizes and an increase in the
number of active insurance sellers.
South Korea: AIA Korea delivered strong double-digit VONB growth from our bancassurance and direct marketing
channels. In particular, our differentiated US dollar-denominated products supported excellent performance
through our bank partners.
Sri Lanka: AIA Sri Lanka delivered excellent VONB growth with exceptional performances from both our agency and
partnership distribution channels. VONB from partnerships more than doubled, supported by our new long-term
exclusive bancassurance partnership with the Commercial Bank of Ceylon PLC.
Taiwan (China): AIA Taiwan reported excellent VONB growth, mainly from our IFA and broker channel.
Vietnam: AIA Vietnam achieved strong VONB growth in 2024, with momentum improving over the year. Growth
was driven by increased new business volumes in agency due to higher productivity and a favourable mix shift
towards sales of protection products.
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TECHNOLOGY, DIGITAL AND ANALYTICS
Technology, digital and analytics (TDA) is at the centre of our strategy, enabling every part of our business. Our
significant and targeted investments are improving customer experience, increasing distributor productivity and
making our operations more intelligent, efficient and resilient. TDA is also the key enabler of AIA’s Integrated
Healthcare Strategy, which aims to make healthcare more accessible, more affordable and more effective. Today,
AIA is recognised as an industry leader in the use of TDA as we transform into a customer-centric, world class
digitally-enabled insurer.
AIA’s adoption of cloud technology reached globally industry-leading levels of over 90 per cent at the end of
2024, up from just 15 per cent in June 2020. The shift to on-demand cloud technology and software as a service
(SaaS) solutions has enabled rapid deployment of digital tools and emerging technologies across the organisation.
Our modernisation efforts have effectively mitigated our technology risks and our systems and platforms have
maintained 99.98 per cent system stability.
Our digital platforms are making it easier for customers to obtain life and health insurance with superior and
personalised experiences while generating richer data sets and deeper customer insights. Across the Group, more
than 21 million existing and prospective customers now engage with us through digital channels, predominantly
through our comprehensive customer super app, AIA+. Our agents and distribution partners benefit from
high-quality digital tools and analytics, supporting increased productivity and professional financial advice to our
customers.
We have a single view of our customer through our integrated data platforms, providing a consistent data source
for all our analytical and generative AI solutions. Our analytics solutions have enhanced customer experiences
and increased the productivity of our distribution channels, and we are deploying generative AI solutions at
scale. We have deployed over 50 generative AI solutions across the Group spanning customer service, operations
and agency distribution with tangible results. There is immense potential for generative AI to reshape the way
insurance is delivered and customers are served, helping us further optimise distributor productivity, achieve
higher operational efficiency and enhance customer experience.
Our capabilities have been recognised externally through numerous awards including Celent Model Insurer Award
for Digital & Emerging Technologies, the second rank in the Fortune Fintech Innovators Asia 2024 List – Insurtech,
and InsuranceAsia News – Digital Insurer of the Year.
DELIVERING LEADING CUSTOMER DIGITAL EXPERIENCE
Central to our ambition to deliver leading customer experience is AIA+, our comprehensive customer super app,
that helps customers manage their insurance, health and wellness needs, and consolidates all policy and service
management. AIA+ delivers seamless digital experiences and is rated highly by customers with an average app
store rating of 4.7 out of 5. Across the Group, we have over 21 million registered users for AIA+, of which 30 per
cent are actively using our apps monthly including through our programmes which are designed to enhance
customer lifestyles and encourage healthier living.
Our focus on digital has supported a faster and simpler insurance application process and policy issuance,
enhancing customers’ overall experience and accessibility to coverage. Analytics and AI are used extensively to
support underwriting and claims process, helping increase automation, turnaround times and efficiency. In 2024,
we integrated generative AI into our operations in Thailand to support customer service staff with real-time
actionable insights during customer interactions. AI-powered chatbots deliver personalised customer calls to
support our renewal and persistency efforts in several of our major businesses, and Gen AI is supporting internal
processes by summarising underwriting and claims documentation.
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
ENABLING OUR UNRIVALLED DISTRIBUTION
AIA’s distribution channels are fully end-to-end digitally enabled, powering our Premier Agency, the most productive
agency in the world, and making us the partner of choice for banks across the region. Key to sustaining our
competitive advantage is continued investment in the digital and analytics capabilities that facilitate distribution
growth, boost productivity, help us reach new customers and respond to their evolving needs more rapidly.
In Premier Agency, powerful digital tools span the entire agency value chain. Our intelligent recruitment tool, the
Career Aptitude Test (CAT), automates the agent recruitment process at scale and uses insights to understand
prospects’ capabilities, enabling better hiring decisions and supporting customised career pathways for new
recruits. Currently deployed in Mainland China, Hong Kong and Malaysia, and in the process of being extended
to other markets, it has supported a double-digit growth in number of active new agents and higher new agent
activity ratios across these three markets. We are also deepening our use of AI role play, a generative AI-powered
intelligent agent training and development tool, designed to enhance our agents’ sales capabilities and product
knowledge through dynamic, scenario-based training. Generative AI enabled assistants are supporting agents in
real-time with up-to-date product knowledge, customer policy summaries and are helping agents navigate agency
processes.
Activity management tools enable our agents and agency leaders to manage their business more effectively.
Across the Group, we have implemented an advanced activity management tool, enriched with features such as
leads management, end-to-end sales performance tracking, customer insights and campaigns. Additionally, our
sales platform, iPoS is enhanced with a protection needs analysis and product recommendation tool to better
serve customers’ needs.
Working closely with our bancassurance partners, we have deployed digital and data-driven solutions to help
reach customers beyond the branch network, increase customer engagement and deliver a seamless customer
experience. Through digital integration with our partners’ systems, we are generating better quality sales leads
and higher sales volumes. With the support of integrated leads management systems, customers benefit from
a more efficient and effective insurance purchasing experience. In 2024, we deployed an integrated leads
management system with BEA in Hong Kong, supporting strong growth in sales. In Thailand, we launched a
generative AI-powered chatbot to help sellers access product specification and sales-related information.
STRENGTHENING HEALTH TECHNOLOGY FOUNDATIONS
A strong technology and data foundation is key to delivering AIA’s Integrated Healthcare Strategy. In 2024, we have
made significant progress with digital integration with our preferred healthcare providers, resulting in increased
pre-admission approvals and enhanced fraud, waste and abuse (FWA) detection.
Through higher digital integration we provide our customers a seamless and cashless experience, while
proactively guiding them along their healthcare journeys, avoiding unnecessary costs and delivering improved
health outcomes. In 2024, we saw 19 per cent increase in pre-authorisation requests across our markets. Our
health claims operations are increasingly using optical character recognition (OCR) technologies and AI-driven
auto-adjudication to deliver faster claims turnaround times.
Moving forward, our focus remains on strengthening our partnerships with our preferred providers, driving digital
pre-authorisation and improving our FWA detection capability.
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DATA GOVERNANCE AND RESPONSIBLE USE OF AI
AIA is committed to leading data quality and protection standards; we have implemented over 9,500 data quality
rules to ensure the quality and integrity of the data we use to serve our customers, delivering better decision-making
and enhanced user experiences.
Since 2021, we have employed our Responsible Use of Artificial Intelligence Standard, recognising the need to
ensure fairness and prevent unintended bias as our adoption of AI applications increases. We continue to strengthen
our governance on the responsible use of AI with additional controls and guidelines, particularly on generative AI.
Our Group AI Council, established in 2022, oversees AI governance across the Group and its framework has been
cascaded to each business unit. This approach ensures consistency across the organisation, while providing the
flexibility to meet local regulatory requirements and address emerging risks.
COMPREHENSIVE CYBERSECURITY FOR OUR TECHNOLOGY
Safeguarding the personal information of our customers, employees, and distributors is a fundamental priority for
AIA. We are dedicated to ensuring that our systems and processes are secure and well-protected. In 2024, AIA has
continued to obtain the Service Organization Controls ISAE 3000 Type II Report for AIA Company Limited’s Group
Information Security services, which provides assurance regarding our cybersecurity measures. Furthermore, AIA
maintained the International Organization for Standardization (ISO) 27001 certification, which pertains to identity
access management, cybersecurity and cloud security operations.
As part of our cyber defence strategy, we have integrated AI and machine learning to enhance our capabilities
in threat detection and response. This proactive approach ensures that we maintain robust operational controls
aligned with our information security objectives. We will continue to invest in information security safeguards and
provide education to all key stakeholders within the organisation on emerging threats.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
COMPELLING PROPOSITIONS
CUSTOMER CENTRIC APPROACH
AIA’s compelling and high-quality propositions are developed under a well-established and structured framework
based on shared value principles that align the interests of our customers, distributors and shareholders. Our
success is differentiated by our commitment to deliver relevant and personalised propositions that meet customer
needs for protection and savings, combining AIA’s ecosystem services with insurance coverages designed based
on data analytics and insights from in-depth customer research and delivered by our unrivalled distribution
network who guide customers to their ideal product from thousands of possible coverage combinations. For 2024,
our main focus of product development has been on two key areas. First, building on the strength in our core
segments and supported by our professional agency, we broadened the customer segments we serve, deepened
the coverages within each segment and made our propositions more relevant to meet a wider set of needs.
Second, we continued to progress our Integrated Healthcare Strategy, to deliver more accessible, more affordable
and, ultimately, more sustainable healthcare solutions for our customers through both proposition design and
health technology and analytics.
BROADENING THE SEGMENTS WE SERVE
Providing segment-specific propositions that most directly meet customers’ needs via insurance propositions and
relevant ecosystem services is key to our proposition strategy.
Holistic Retirement Propositions
AIA China continues to upgrade retirement propositions to address the diversified needs and lifestyle of customers
along their entire pre- and post-retirement journeys, supported by a dedicated retirement concierge to provide
professional advice and service arrangement. In 2024, AIA China further expanded its range of retirement
propositions including a new migrant retirement module that provides health and retirement services assistance
for customers who wish to retire in a different location, both within Mainland China and in several popular overseas
destinations. We further enhanced the retirement concierge with an affordable one-year service package for
individuals without access through an AIA China policy, bringing significant new opportunities for customer
acquisition and future cross-selling through our Premier Agency.
High Net Worth
Asian consumers continue to accumulate high levels of private savings at a rate faster than anywhere else globally
and the number of high-net-worth (HNW) customers is growing rapidly. Our innovative savings propositions, which
combine AIA’s proprietary investment strategies and ecosystems, are designed to capitalise on this substantial
and growing opportunity.
AIA Singapore’s range of goal-based propositions combine AIA’s Stewardship funds in the Regional Funds
Platform with insurance coverage to meet customers’ diverse goals and risk appetites. Platinum Indexed Legacy,
an indexed universal life plan, was launched in 2024 and gives customers access to potential upside from equity
markets with an underpin of long-term capital guarantees. Platinum Wealth Venture was enhanced to capture
more of the income needs of the upper affluent and HNW segments. The proposition leverages AIA’s Stewardship
funds and provides bespoke income solutions with exclusive access to attractive income-generating strategies
managed by leading institutional fund managers. This product has been a key driver in AIA Singapore’s very strong
growth in long-term savings in 2024.
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To further serve HNW customers living across border and looking for solutions in multiple markets, following the
footsteps of our business in Hong Kong, AIA Singapore launched our second HNW financial hub, AIA International
Wealth in April, offering wealth management advice and services that go beyond traditional wealth preservation
and accumulation consultation to give access to customers to a specialised panel of experts on areas such as
legal, tax and trusts. This multi-disciplinary approach ensures that clients achieve their personal financial goals
and well-being aspirations within a holistic framework.
In Hong Kong, we launched a high-end version of our market leading medical plan, OptimaCEO that provides
holistic product coverage in hospital and outpatient surgery treatments with carefully-curated provider networks
and health administration for more cost efficient and quality services. The newly-integrated Health Wallet
rewards and incentivises customers to utilise the preferred provider networks engaged by AIA, and the Signature
Healthcare Circle offering a new one-stop health concierge service to guide customers along their wellness and
medical journeys.
AIA Vitality continues to be at the centre of our promise to support our customers to live Healthier, Longer, Better
Lives and deliver shared value. It continues to deliver positive impacts on areas covering both health outcomes
and increasing numbers of customers. In 2024, our businesses in Hong Kong and Singapore fully integrated AIA
Vitality into their HNW product suite. AIA Vitality active membership grew by 9 per cent across the 12 AIA Vitality
markets in 2024. AIA Vitality members performed more than 95 million physical activity events and completed
more than 1.7 million mindfulness sessions over the year. A total of 36 new AIA Vitality integrated products were
launched across the region. Around 65 per cent of our new customers added AIA Vitality to their policies when
given the option to do so.
SUSTAINABLE MEDICAL
Our research shows that customers are increasingly concerned about both the quality of doctors they see and how
much they are charged. As a leading health insurer in the region, we address this by strengthening our protection
propositions and enhancing the ecosystem of health and wellness services to better support our customers
through increasingly complex health journeys.
AIA Malaysia’s A-Plus Health solutions are leading examples of integrating comprehensive medical coverage with
flexible cost saving options to cater to different customers’ needs. The proposition incorporates an enhanced
Health Wallet to support customers’ health journeys and rewards them for making healthier choices. With more
affordable options, we have been able to retain customers facing significant premium increases and also generate
sales from consumers who previously could not afford our insurance.
In Hong Kong, we are seeing a rapid growth in skilled Mainland Chinese relocating to Hong Kong under the various
government sponsored talent schemes in addition to the increasing traffic flows of domestic customers to the
wider Greater Bay Area. To better support the emerging needs of the domestic segment, we launched propositions
specifically targeting this growing opportunity, including a medical product giving customers access to a network
of selected providers for quality outpatient treatments within the Greater Bay Area.
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
AIA’S INTEGRATED HEALTHCARE STRATEGY
AIA’s Integrated Healthcare Strategy aims to make healthcare more accessible, more affordable and more
effective for millions of people in Asia. In 2024, we made good progress by delivering more integrated
health insurance where our propositions integrate with our healthcare provider networks to enhance
the sustainability of our business, more proactively managing healthcare providers and deploying
best-in-class health technology solutions across our markets, leveraging Amplify Health, AIA’s leading
health insurtech business.
Personalised Health Insurance
We are developing more personalised and relevant health propositions that help customers access
healthcare services with greater convenience and a more integrated experience, delivering better health
outcomes at lower cost. Health propositions that integrate with and steer to tailored provider networks,
such as AIA Malaysia’s SMART Option and AIA Hong Kong’s OptimaCEO propositions, ensure our customers
can continue to access affordable quality healthcare.
Integrated with Providers
We continue to improve our integration with healthcare providers, to proactively guide customers along
their healthcare journeys, helping to avoid unnecessary costs and delivering improved health outcomes.
In 2024, preferred networks that were tailored to proposition design, sustainability features and customer
need were further enhanced in our five largest markets (Mainland China, Hong Kong, Thailand, Singapore
and Malaysia) as well as in Indonesia, the Philippines and Vietnam. Leveraging proposition design and
steerage mechanisms in the Philippines, MediCard saw a substantial shift in customer preference to
our own clinic network in 2024 instead of unnecessary hospital visits and expansion of our own service
delivery such as pharmacy and diagnostic services.
We continue to widen our day surgery centre networks and coverage across our markets to provide a lower
cost setting, often by 20-25 per cent, compared with inpatient hospital treatments and avoid unnecessary
overnight hospitalisation. To further this integration, we recently announced the acquisition of New Medical
Centre Holding Limited (NMC), one of the largest clinic-based providers of gastroenterology and general
surgery in Hong Kong. By integrating NMC’s operating entities into our health insurance solutions, AIA’s
customers will benefit from greater choice and an enhanced healthcare experience. This complements
our wider AIA-owned clinics, including those in MediCard in the Philippines and Blue Care in Hong Kong,
providing our customers with greater choice and more cost-effective treatments.
Advanced Healthcare Administration and Management
AIA’s healthcare administration and management ensures that customers have the support of a high-quality
network that delivers more accessible, more affordable and more effective healthcare services. In 2024,
we continued to enhance our digital pre-approval processes and delivered improvements in customer
experience ensuring customers have greater clarity coverage prior to treatment. By further digitalising our
claims information with Amplify Health, we have additional health data to support improved fraud, waste
and abuse (FWA) detection, analytics for better health provider management such as benchmarking and
outlier management alongside enhanced product development integrating with our preferred providers.
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Amplify Health
Amplify Health, an independently operated joint venture between AIA and Discovery Group Limited,
achieved significant milestones in 2024.
As a provider of AI-powered health technology and analytics solutions across Asia, Amplify Health is
playing a pivotal role in building a more sustainable healthcare ecosystem. In 2024, Amplify Health’s
integrated solutions expanded to seven markets: Hong Kong, Thailand, Singapore, Malaysia, Indonesia,
the Philippines and Vietnam.
Amplify Health achieved a major milestone with the launch of an AI machine learning health analytics
solution stack. This platform combines a clinically enriched health claims management system with
autonomous machine learning capabilities, integrating healthcare provider management with FWA
detection and AI-driven decision-making to enable improved claims management cost effectiveness.
In Thailand, the use of AI-driven claims adjudication with built-in FWA detection with Amplify Health’s
Smart Claims solution reduced processing times to just 9.26 seconds per claim with a 120 times uplift
from manual claims adjudication processing times enabling efficiency and effectiveness in claims
management. Deployments in Malaysia have also delivered advanced analytic insights and benchmark
tools that have enabled the selection of hospital for the SMART network, a curated panel of partner
hospitals, in support of new insurance product development.
By combining advanced health AI with AIA’s commitment to improving lives, Amplify Health is setting a
new standard for healthcare innovation.
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
LEADING CUSTOMER EXPERIENCE
We continue to focus on implementing digitalisation and automation to deliver an outstanding experience in
every customer interaction, increasingly supported by the use of AI and analytics. Our commitment to seamless,
efficient, personalised and scalable processes has led to impressive improvements in operational efficiency and
customer satisfaction and loyalty.
In December 2024, 88 per cent of all transactions across buy, service and claims were completed within one day,
up from 50 per cent at the end of 2020, while unit costs per transaction have reduced by 43 per cent over the
same period. Customer Satisfaction Score (CSAT) reached 96 per cent and AIA ranked first in seven of our markets
by Net Promoter Score (NPS) in December 2024. Our efforts were recognised with the 2024 Future Enterprise
Awards for Hong Kong – IDC Future of Operations Award and the Digital CX Awards 2024 – Outstanding Digital CX
Insurance Strategy – Overall.
TRANSFORMING CUSTOMER JOURNEYS
Our customers demand high-quality and efficient interactions with a digital-first mindset. Since 2020, AIA has
extensively digitalised processes and shifted to digital servicing models, transforming customer journeys. Across
buy, service and claims, AIA had more than 58 million interactions with our customers in 2024. Our end-to-end
straight-through processing (STP) reached 85 per cent in December 2024, up from 35 per cent in June 2020,
providing quicker, accurate responses that meet customer expectations.
For customers buying a new policy, the STP rate reached 78 per cent in December 2024, compared with 36 per
cent in June 2020, driven by enhanced auto-underwriting capabilities, increased digital adoption and a higher
rate of e-payment. In 2024, 82 per cent of new business policies were underwritten automatically, streamlining
the purchase process for customers with simplified underwriting rules and leveraging AI and machine learning.
Our end-to-end service STP has increased from 42 per cent in June 2020 to 92 per cent in December 2024. 96 per
cent of servicing requests are now submitted digitally, supported by the successful launch of our comprehensive,
user-friendly customer super app, AIA+, in four more markets. We achieved a further increase in the one-day
turnaround rate for servicing to 95 per cent in December 2024, helped by greater deployment of powerful optical
character and facial recognition technologies.
Higher digital adoption and the redesign of our claims processes to leverage advances in technology have driven
the end-to-end STP for claims from 22 per cent in June 2020 to 73 per cent in December 2024. Auto-adjudication
of claims has also increased from 41 per cent to 75 per cent, while e-payment has now reached 99 per cent.
AIA is further enhancing customer journeys by integrating generative AI. In 2024, the introduction of Microsoft
Copilot to our contact centres in Thailand reduced overall processing time per call by 10 per cent, allowing
customer service representatives to handle more cases and significantly reducing customer waiting time. With
Microsoft Copilot summarising interaction history and offering insights for case management, our representatives
can focus on building customer relationships rather than on time-consuming administrative tasks.
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DRIVING REPURCHASES FROM EXISTING CUSTOMERS
Building deep, long-lasting customer relationships remains our focus. In 2024, AIA increased customer lifetime
value by leveraging data-driven insights to achieve higher customer repurchase rates. We saw a 15 per cent
growth in the number of existing customers buying another policy, contributing to a 20 per cent increase in VONB
from repurchases.
AIA’s strong delivery on customer repurchase in 2024 was driven by our robust customer campaigns designed
with data-driven insights. To support the launch of our tax-incentivised savings product for meeting private care
needs, AIA China leveraged data analytics in its marketing campaign to identify and target customers with higher
potential to purchase. In Hong Kong, a campaign leveraging deep customer insights with segment-led marketing
activities nearly tripled the repurchase rate when compared to non-targeted customers. In Singapore, a campaign
targeted at existing customers, who were identified to have critical illness protection needs according to our data
and digital insights, increased the conversion rate for critical illness protection products by 23 per cent, compared
to customers without such an exclusive offer.
ENGAGING CUSTOMERS THROUGH DIGITAL CHANNELS
As customers engage with AIA through digital channels more frequently, we have expanded our omnichannel
model by improving our digital capabilities and our online-to-offline (O2O) model for automated lead nurturing
and customer conversion. In 2024, AIA acquired more new customers compared with 2023 through our proprietary
direct-to-customer apps and websites as well as our partnerships with digital platforms. Overall, we saw a 61 per
cent growth in ANP from leads of digital channels, compared with 2023.
AIA China achieved strong growth in both number of new customers and ANP sourced through our proprietary
digital platform in 2024. Further enhancements were made to the lead scoring model on our integrated customer
platform One Experience, to measure each prospective customer’s engagement levels and provide actionable
insights. Lead conversion benefitted from the increase in actionable insights and the 360-degree view of customers
from the platform.
In Thailand, a higher number of leads were generated by our digital platform partners compared with previous
year, leading to a 72 per cent increase in number of new customers sourced from AIA’s digital channels in 2024.
In Malaysia, we delivered higher ANP from our successful partnership with TNG Digital Sdn. Bhd. by targeting
higher-income users of its TNG eWallet.
Our enhanced O2O model enabled more effective identification of prospective and existing customers with higher
intent to purchase, leading to a 33 per cent increase in the number of mature leads who were prioritised for timely
follow-up by our agents or telesales team. In Thailand, an AI-based lead scoring engine that assesses customers’
readiness to purchase improved conversion rates by six times and leads assignment accuracy by 55 per cent. In
India, Tata AIA Life’s telesales team connected 80 per cent of mature leads within five minutes after they completed
an online form.
Notes:
(1) Growth rates and commentaries are provided on a constant exchange rate (CER) basis.
(2) Throughout the Distribution section, VONB and VONB margin by distribution channel are based on local statutory reserving and capital requirements and
exclude pension business.
(3) AIA China’s financial results do not include any contribution from our 24.99 per cent shareholding in China Post Life.
(4) VONB is calculated by China Post Life based on its principles and methodology in accordance with the China Association of Actuaries embedded value
assessment guidance (CAA basis), consistent with the industry practice in Mainland China. China Post Life’s VONB for the twelve-month period ended 31
December 2024 reflects its latest long-term investment return assumptions used at 31 December 2024.
(5) ANP and VONB for Other Markets include the results from our 49 per cent shareholding in Tata AIA Life. ANP and VONB do not include any contribution
from our 24.99 per cent shareholding in China Post Life. For clarity, TWPI does not include any contribution from Tata AIA Life and China Post Life.
(6) The results of Tata AIA Life are reported on a one-quarter-lag basis. The results of Tata AIA Life are accounted for using the twelve-month period ended
30 September 2024 and the twelve-month period ended 30 September 2023 in AIA’s consolidated results for the year ended 31 December 2024 and the
year ended 31 December 2023, respectively.
ANNUAL REPORT 2024
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
RISK MANAGEMENT
FINANCIAL AND OPERATING REVIEW
OVERVIEW
The Group recognises the importance of sound risk management in every aspect of our business and for all
stakeholders. For our policyholders, it supports safeguarding their interests and our ability to meet our obligations
to them. For investors, it is key to protecting and enhancing the long-term value of their investment. Finally, for
regulators, sound risk management supports industry growth and enhances the public’s trust in the industry.
The Group’s Risk Management Framework (RMF) does not seek to eliminate all risks but rather to identify, understand
and manage them within acceptable limits in order to support the creation of long-term value. The Group’s RMF is
built around developing an appropriate and mindful Risk Culture at every level of the organisation in support of our
strategic objectives. The Group’s RMF provides business units with appropriate tools, processes and capabilities for
the ongoing identification, assessment, management and response, monitoring and reporting of the Group’s principal
risks in an integrated manner.
The Group’s RMF consists of the following key components:
•
Risk Governance;
•
Risk Culture;
•
Risk Strategy and Appetite;
•
Risk Management Process; and
•
Risk Reporting, Systems and Tools.
RISK GOVERNANCE
THREE LINES
The Group’s Risk Governance framework is built on the “Three Lines” model. The objective is to ensure that an
appropriate framework is in place, including an independent system of checks and balances, to provide assurance
that risks are identified, assessed, managed and governed properly. The framework clearly defines roles and
responsibilities for the management of risk between Executive Management (First Line), Risk and Compliance (R&C)
(Second Line) and Internal Audit (Third Line) functions.
The First Line is made up of the business, who are the Risk Takers and are responsible for operating within the
Group’s RMF, including implementing effective controls to mitigate risks within the Risk Appetite of the Group and
the relevant business units.
The Second Line consists of the R&C function, which provides independent challenge and advice to the First Line. It
ensures that the Group’s RMF remains appropriate and effective with respect to the risk profile and operations, and
risks are being managed appropriately within Risk Tolerances of the Group and the relevant business unit.
The Third Line is the Group Internal Audit (GIA) function, which is independent of the First and Second Lines and
reports to the Audit Committee. GIA is responsible for independently assess and report on the overall effectiveness
of risk management, internal controls and governance processes.
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AIA Group Limited Board
Risk
Committee
Nomination
Committee
Remuneration
Committee
Audit
Committee
Operational Risk
Committee
Financial Risk
Committee
The Three Lines converge at the Board, which retains overall responsibility for the Group’s RMF. The Board is supported
and advised by four Board Committees, namely the Audit Committee, the Risk Committee, the Remuneration
Committee and the Nomination Committee.
RISK COMMITTEE STRUCTURE
The Risk Committee structure is designed to:
•
ensure consistent application of the RMF across the Group;
•
provide streamlined processes for the timely identification, assessment and escalation of risk issues;
•
provide objective analysis of risk issues enabling informed decision-making; and
•
ensure discussion and challenge in relation to risk issues in suitable forums leading to optimal outcomes.
The Board
The Board retains overall responsibility for oversight of the Group’s risk management activities. In this regard, the
Board sets the Group’s Risk Appetite, approves the Group’s RMF (including amendments or refinements from time to
time) and monitors material group-wide risks. In fulfilling these responsibilities, the Board is supported and advised
by the Risk Committee.
Risk Committee
The Risk Committee oversees risk management across the Group and advises the Board on all risk-related issues
requiring Board attention. The members of the Risk Committee are all Board directors, with the majority of members,
including the Committee Chairperson, being Independent Non-executive Directors. The Risk Committee meets at
least four times a year.
Operational Risk and Financial Risk Committees
The Risk Committee is supported by two Executive Risk Committees which, between them, oversee the management
of all risks. The Operational Risk Committee (ORC) is chaired by the Group Chief Risk Officer (CRO) and oversees
risks associated with failure in internal processes, personnel and systems or from external events. The Financial Risk
Committee (FRC) is chaired by the Group Chief Executive and President and oversees risks associated with financial,
insurance and investment activities. The ORC and FRC each meet at least four times a year.
The above Risk Committee structure is replicated at the business unit level where applicable.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
RISK CULTURE
Risk Culture defines the Group’s attitude to risks and ensures its remuneration structure promotes the right
behaviour. Strong Risk Culture facilitates organisational resilience and supports sustainable success in delivering on
our commitment to customers in the long term.
ACCOUNTABILITY
A key component of the Group’s Risk Culture is accountability. The First Line generally consists of business unit
management and is responsible for managing risks associated with their businesses. The R&C function makes up
our Second Line and is headed by the Group CRO who has overall accountability for the R&C function across the
Group. Within each business unit, the business unit CRO is a senior position with a primary reporting line into the
Group CRO or Regional CROs, and a secondary reporting line to the business unit Chief Executive Officer (CEO). This
structure ensures independence of the Second Line while ensuring that business unit CROs have full access to local
business discussions to provide risk management perspectives and insights. The Group CRO is a member of the
Group Executive Committee while business unit CROs are, in most cases, also members of their respective business
unit Executive Committees.
REMUNERATION
The Company’s executive remuneration structure ensures appropriate consideration of the Group’s RMF within a
strong performance-oriented culture. This is supported by a performance management system where all staff are
measured on ‘how’ as well as ‘what’ they deliver. This structure places significant emphasis on conduct as well as
achievement, and is consistent with our fundamental Operating Philosophy of “Doing the Right Thing, in the Right
Way, with the Right People... and the Right Results will come”.
RISK STRATEGY AND APPETITE
Risk Strategy describes the types of risks, and how and to what extent they are taken in order to pursue the Group’s
strategy and business objectives. The Group’s Risk Appetite Framework establishes the quantum and nature of risks
the Group is prepared to take to achieve its strategic objectives.
1. The Risk Appetite Statement (RAS) is an overarching statement on the enterprise’s attitude to risk;
2. Risk Principles and Risk Tolerances are qualitative statements and quantitative metrics that expand and validate
the RAS; and
3. Risk Limits are used to manage specific risks.
RISK APPETITE STATEMENT
The Group has adopted the following RAS:
“The amount of risk taken by AIA in the ordinary course of its business will be sufficient to meet its customers’
reasonable requirements for protection and benefits while ensuring that the level and volatility of shareholder returns
are in line with a broadly-based risk profile appropriate for a pan-Asian life and health insurance group.”
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RISK PRINCIPLES AND RISK TOLERANCES
The RAS is supported by five Risk Principles:
Risk Principles
Regulatory Capital
“AIA has no appetite for regulatory non-compliance and as such will ensure that we hold
sufficient capital to meet our current statutory minimum solvency in all but the most
extreme market conditions.”
Financial Strength
“AIA will ensure the Group’s ability to meet all future commitments to our customers, both
financial obligations and in terms of the promises we make to them. We will maintain
sufficient capital to support a Financial Strength Rating that meets our business needs.”
Liquidity
“AIA will maintain sufficient liquidity to meet our expected financial commitments as they
fall due.”
Earnings Volatility
“AIA will seek to deliver reported operating earnings consistent with expectations and will
implement policies, limits and controls to contain operational risks, risk concentrations and
insurance risks within reasonable tolerances.”
Business Practice
“AIA will uphold high ethical standards and will implement sound internal controls to
minimise the downside risk from the impact of any operational failures within reasonable
tolerances.”
Risk Tolerances and Risk Limits, including granular measures and indicators, are used to monitor and control specific
risk types.
RISK MANAGEMENT PROCESS
The Group has a robust process that provides sufficient information, capability and tools to manage its key risks.
Risks which the Group proactively accepts are identified, quantified and managed to support the creation of long-
term value.
RISK IDENTIFICATION AND ASSESSMENT
Timely and complete identification of risks is an essential first step to the Risk Management Process. The R&C function
has developed a systematic process to identify existing and emerging risks in the business units. The Group’s risk
taxonomy enables a consistent identification and classification of existing and emerging risks inherent in business
activities.
Quantification of risk is important in establishing the level of exposure and in determining the appropriate management
actions within the Group’s Risk Tolerances. Specific approaches to quantifying risk are applied depending upon the
nature of the risk, including regular capital assessments, and stress and scenario testing.
MANAGEMENT AND RESPONSE
Executives working in the First Line are responsible for the execution of appropriate actions and other risk mitigation
strategies to transfer, mitigate or eliminate risks considered outside of Risk Tolerances. They are also responsible for
the timely escalation of material risk developments.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
RISK MONITORING
Risks are evaluated against approved Risk Tolerances and Risk Limits to ensure implications for both the current and
forward-looking risk profile are understood and appropriately considered in decision-making.
RISK CONTROLS
Risks which the Group seeks to mitigate are managed through an effective internal controls system to maintain
exposures within an acceptable residual level. The Operational Risk and Control Framework (ORCF) has been
designed to ensure that the Group operates in accordance with the expectations of stakeholders. A primary component
of the ORCF is the Risk and Control Assessment (RCA), which is a regular evaluation of the business’ operational
risks and control effectiveness to ensure that information and perspectives on the internal control environment are
appropriately considered.
RISK REPORTING, SYSTEMS AND TOOLS
Risk reporting represents the internal and external R&C reporting processes which support an ongoing evaluation of
the Group’s risk profile. Information is gathered from underlying systems and provided to the Board, respective Risk
Committees and other executive management to inform key decision-making, such as via the annual Group Own Risk
and Solvency Assessment (ORSA) Report.
THE GROUP’S PRINCIPAL RISKS
The Group’s principal risks, while not exhaustive, and the strategies to manage the risks are detailed below.
FINANCIAL RISKS
The Group’s primary financial risks are insurance risk and market risk. AIA’s insurance operations are exposed
to insurance risk primarily from changes in mortality and morbidity experience, the acquisition and persistency
of insurance business, and business expenses. This also includes changes to assumptions regarding future
experience for these risks. Market risk relates to the adverse price movements and credit defaults leading to
financial losses immediately, as well as losses over time due to a mismatch in asset and liability cashflows. It
includes credit risk, credit spread risk, interest rate risk, equity risk, foreign exchange rate risk, and liquidity risk.
Please refer to note 34 to the consolidated financial statements on pages 288 to 305 of this Annual Report for
details on financial risks, including exposures and sensitivity analysis.
OPERATIONAL RISKS
Operational risks arise from internal processes, personnel and systems or from external events which may result in
a direct or indirect business impact. The Group’s RMF includes a mechanism for identifying, assessing, managing,
monitoring and reporting operational risks to ensure that potential risk exposures arising from operational activities
do not exceed the Group’s Risk Tolerances.
Data Risk
As a data-driven organisation, AIA continues to focus on managing the risk of incomplete or invalid data, or
mishandling of data, through a variety of Information Security standards and protocols as well as our Group Data
Governance Standard and Group Data Protection Standard. Data Councils are established at the Group and business
unit level for enhanced data management governance and controls. In addition, a Group Data Privacy Standard is
in place which is aligned to leading industry standards and independent assurance is provided by GIA as part of its
risk-based cyclical audit plan for data privacy compliance controls.
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Environmental, Social and Governance-Related Risk
AIA’s Environmental, Social and Governance (ESG) Report 2024 is published on the websites of both the Company
at www.aia.com and the Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk and provides an update
on our ESG strategy, initiatives and progress. AIA’s ESG governance framework and strategy are embedded in the
organisation, enabling the Group to effectively manage ESG-related risks and opportunities across all businesses.
Financial Crime Risk
Financial crime risk refers to the risk of breach of Anti-Money Laundering (AML) and Counter-Terrorist Financing
(CTF) laws and regulations. AIA is committed to a strict programme of compliance with all applicable AML/CTF laws
and regulations to prevent the use of its products and services for money laundering and terrorist financing purposes.
The Group AML/CTF Policy sets out the detailed requirements of the Group AML/CTF Programme, including a risk-
based approach to conducting customer due diligence, ongoing monitoring, suspicious activity reporting, training
and record keeping. AIA uses appropriate AML/CTF monitoring software and tools to screen risk profile and monitor
customer activity. Employees and agents are required to complete AML/CTF training. In addition, our Group Economic
Sanctions Standard sets out standards to manage the risk of dealings with governments, individuals and entities
subject to sanctions programmes.
Fraud Risk
Fraud risk arises from fraudulent activities committed by internal and/or external parties to cause a loss (including
monetary loss, reputational loss or regulatory fines) to AIA or others. AIA adopts a zero-tolerance approach to fraud,
with clear standards for consequence management, including discipline. The Group Anti-Fraud Standard / Group
Whistleblowing Standard and respective trainings provide guidance to employees on their responsibilities to be
vigilant in identifying and reporting potential fraud impacting AIA or our customers, including through whistleblowing
channels. Detective controls include monitoring and modelling of intermediary conduct and checks on employees’
expenses.
Operational Resilience Risk
Operational resilience ensures effective preparedness and response to disruptive events, which involve the availability
of critical staff, critical systems, and premises. AIA has a robust Business Continuity Management (BCM) framework
in place, aligned with leading industry standards. Critical staffs have designated backups, with the required capability
and technology/systems to work remotely, whilst Disaster Recovery readiness and recovery objectives have been
defined, validated and tested for critical systems. The group-wide BCM system enables real-time monitoring,
automation of reports and digital dashboards. General BCM awareness as well as certified professional training
programmes are undertaken to enhance response capabilities of our people.
People Risk
Our organisation and people strategy enables us to attract, retain and develop outstanding people, making AIA an
employer of choice across our markets. We monitor engagement across our business units and functions each year
through the Gallup Q12 Employee Engagement Survey. This provides meaningful inputs that inform targeted and
impactful strategies to maintain and enhance our strong levels of engagement. AIA is also committed to developing
strong internal leadership capability, with a succession pipeline that drives personal growth for our people, shapes
our organisation, and ultimately supports sustainable business growth. Moreover, employees’ physical, mental, social,
and financial health continue to be a priority in retaining top talent and sustaining high performance. Please refer to
the Our People and Culture section on pages 80 to 85 of this Annual Report for additional details.
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Regulatory Risk
Regulatory risk concerns the risk of financial or reputational loss due to the failure to comply with or address
changes to regulatory requirements, guidelines and expectations. We continue to monitor adherence to various
new and existing regulatory requirements in various jurisdictions as well as international developments, including
Insurance Capital Standard (ICS) and Base Erosion and Profit Shifting (BEPS) 2.0. Please refer to the Regulatory and
International Developments section on page 54 of this Annual Report for details.
Sales Conduct Risk
Sales conduct risk arises from inappropriate marketing and sales practices which may result in poor outcomes for
customers and reputational damage or financial loss to the Group. It is managed in accordance with group-wide
standards on business quality, which set out the minimum requirements to promote the right outcomes for customers
and the right culture across intermediaries. Agents are licensed by the respective regulators and further trained by
AIA on the relevant regulatory and company policy requirements, including AIA Code of Conduct requirements. The
interactive Point of Sale (iPoS) tool facilitates the sale process, supported by minimum standards covering product
suitability, handling of vulnerable customers and non-face-to-face sales. Sales practices are monitored through
various means, including direct verification calls with customers, mystery shopping, sample-based quality assurance
reviews of controls, and investigation of inappropriate sales practices.
Technology Risk
AIA manages technology risk in accordance with industry policies, practices and benchmarks. In 2024, AIA maintained
International Organization for Standardization (ISO) 27001 certification covering identity access management,
cybersecurity and cloud security operations and we regularly perform an independent cybersecurity maturity
assessment against the standards of the United States’ National Institute of Standards and Technology (NIST). With
growing use cases of responsible artificial intelligence (AI) in the Group, AIA has established AI governance through
the Group Responsible Use of AI Standard and the Group and business units AI Councils.
Third-Party Risk
AIA engages a variety of third parties in the normal course of its business operations, and has in place minimum
requirements for assessing, managing and governing third parties, including with respect to third-party security,
operational resilience and regulatory compliance. AIA identifies, captures and monitors third-party risks through a
group-wide Third Party Management System. External and intra-group outsourcing arrangements that are material
from Group perspective are identified and a register of material group outsourcing arrangements is maintained.
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OUR PEOPLE AND CULTURE
At AIA, the work we do matters, and our people are central to our continued ability to deliver on our Purpose to
help millions of people across Asia live Healthier, Longer, Better Lives1. Representing different geographies and
communities, they enrich our social fabric, make up the culture of our business and enable us to create value for our
stakeholders.
Nurturing our culture, building leaders and workforce capability, and supporting and developing our people so that
they can achieve their potential are key organisational and people priorities for AIA. Our people strategy enables us
to attract, retain and develop outstanding people, making AIA an employer of choice across our markets.
NURTURING OUR CULTURE
The way we do work matters. We are mindful that our culture is what sets us apart. It brings us together, connects our
people to our shared Purpose, and it is something special that we continually nurture, promote, and protect.
Our Purpose guides the decisions and actions that our people make every day and inspires us to support and protect
the well-being of those we serve and each other.
We are guided by our Operating Philosophy of “Doing the Right Thing, in the Right Way, with the Right People… and
the Right Results will come”. To do this, we act with Clarity, Courage and Humanity, our Leadership Essentials.
Our operating model of empowerment within a framework, together with the principles that underpin our culture,
create an engaging environment for our employees to deliver on our people proposition of Believe in Better.
EMPLOYEE ENGAGEMENT
A collaborative and inclusive workplace that prioritises employee engagement is important to AIA. Each year, we
monitor engagement across our business units and functions through the Gallup Q12 Employee Engagement Survey
for meaningful inputs that inform targeted and impactful strategies to maintain and enhance our strong levels of
engagement.
Our 2024 survey was completed by 97 per cent of employees, with the Group’s employee engagement scores placing
AIA in the 92nd percentile of Gallup’s global finance and insurance industry benchmark. Our employee engagement
levels have remained in the top quartile of this benchmark for the eighth consecutive year, and in the top 10th
percentile for four consecutive years.
In 2024, we were again recognised for our strong employee engagement and performance-oriented culture with the
Group receiving the Gallup Exceptional Workplace Award for the third consecutive year.
Note:
(1) As at 31 December 2024, AIA had a total of 25,938 employees, which includes full-time and part-time employees as well as employees on fixed-term
contracts, and excludes interns, agents of the Group, employees of MediCard Philippines, Inc. (MediCard), Amplify Health Asia Pte. Limited (Amplify
Health), our joint venture Tata AIA Life, and our associate China Post Life. All figures related to the number of employees in this report exclude MediCard,
Amplify Health, our joint venture Tata AIA Life, and our associate China Post Life. Including MediCard and Amplify Health, AIA had a total of 27,421
employees.
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CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
BUILDING FUTURE LEADERS
Our leaders play a key role in strengthening our culture and sustaining employee engagement. AIA is committed to
developing strong internal leadership capability, providing ample opportunities for our people to grow and ultimately
support sustainable business growth.
LEADERSHIP DEVELOPMENT
At the AIA Leadership Centre (ALC), we partner with world-renowned business schools and consulting firms to
develop bespoke programmes. ALC programmes support AIA’s senior leaders, top agency leaders and key partner
executives to deliver on our strategic priorities and empower them to meet our commitments to our customers and
the communities in which we operate.
We continue to strengthen our talent pipeline through our four signature leadership programmes. AIA’s SPARK and
Leading Across Boundaries programmes support the development of future senior leaders in our business units and
senior Group Office leadership roles. We also support the development of existing and aspiring leaders to build their
people leadership capability through our Voyage and ASPIRE programmes.
SUCCESSION AND ORGANISATION PLANNING
Our annual Group Organisation and People Review process enables leaders to plan for the succession of all key
leadership roles. In 2024, more than 60 per cent of our leadership appointments were filled by internal leaders. We
also identify opportunities to increase diversity within AIA’s leadership team. This includes attracting top leadership
talent from different backgrounds, with the skills needed to shape and drive our future organisation.
BUILDING A FUTURE-READY WORKFORCE
We focus on building workforce capability and developing our people so they can achieve their potential. We continue
to invest in attracting talent and incubating capabilities in core and emerging business lines, strengthening our
approach to capability building, and designing new training programmes to reskill and upskill employees.
Ensuring that we have people with the right skills is critical to both support and leverage the Group’s technology,
digital and analytics (TDA) transformation. As at 31 December 2024, approximately 20 per cent of our employee
workforce comprises talent with TDA skill sets, an increase of 75 per cent since 1 July 2020. This material investment
marks a step change in our talent capabilities and underpins our ability to execute our growth strategy.
In support of the Group’s Integrated Healthcare Strategy, we have been investing in new capabilities in our business
units and at Group Office. At the same time, we have also launched new healthcare learning programmes and
solutions to upskill our existing leaders and employees.
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LEARNING AND DEVELOPMENT
Our learning culture supports our people in their current roles and as they grow and progress within AIA. Our focus
on learning is a key part of our ambition to ensure that our people can upskill, reskill, work more flexibly, and adapt to
the changing world of work. Our holistic learning approach empowers our people to learn new knowledge and skills,
including through on-the-job experiences, mobility, collaborative projects, in-person, and virtual lessons, digital self-
learning, mentoring, and coaching.
We believe career mobility and assignments in different business units or functions provide our employees with
new and valuable learning opportunities while building connections across the Group. These assignments provide
opportunities to learn new skills and help develop our people’s personal AIA networks.
We continuously research skills and knowledge requirements of our industry, deliver programmes that address these
needs and enhance programme designs with employee feedback. In addition, our people are required to complete
regular mandatory training on a range of technical, governance and conduct-related topics.
We have launched new learning programmes and enhanced existing programmes to develop new capabilities,
nurture talent and upskill employees in core lines of business across the Group, including:
•
Healthcare 101 was launched group-wide in October 2024. This digital learning module is designed to deepen
the understanding of AIA’s Integrated Healthcare Strategy. Within the first 60 days, nearly 5,900 employees
completed the course.
•
ASPIRE, a six-month, group-wide leadership development programme for mid-level talent was strengthened.
With greater emphasis on experiential learning and in-person experimentation, the refreshed programme aims
to equip participants with the leadership skills needed to navigate the complexities of the post-pandemic world
with greater agility. The programme has a positive impact on team engagement, with direct reports of ASPIRE
participants reporting higher engagement levels this year.
Digital learning content enables self-directed continuous learning and further strengthens our learning culture. The
AIA Learning Hub online platform hosts thousands of digital learning courses and is available to all business units
and employees. With thousands of digital courses available to support employee learning needs, we continue to see
a year-on-year increase in the adoption of digital learning.
In 2024, our investment into and commitment to our learning solutions were externally recognised, with the Group
receiving the Learning Impact for Today and Tomorrow (LIFT) certification from EFMD, a globally recognised
accreditation body.
EMPLOYEE COACHING AND INTERNSHIPS
Our leadership programmes incorporate employee coaching, and we encourage our employees to expand their
networks, seek guidance and foster communications across different departments and seniorities. Business unit
internship programmes provide interns with first-hand career experience with AIA and the opportunity to gain
experience and learn critical skills in a high-performing, customer-focused environment. These programmes also
enable us to identify future talent to join our business.
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ADDITIONAL INFORMATION
RECOGNISING AND REWARDING OUR PEOPLE
AIA is committed to providing our people with fair and equitable performance evaluations to recognise their
contributions and achievements. Our performance management framework and performance appraisal process
encourage regular and robust conversations about individual and team progress. This provides every employee at
AIA with the opportunity to receive regular feedback on their performance and participate in two-way conversations
about their progress and development opportunities.
Our people managers regularly check in with employees throughout the year to discuss their accomplishments and
how they achieved their performance objectives. These regular check-ins are also used to provide ongoing support,
feedback and coaching to further professional development and growth.
To attract, retain and engage our diverse talent, we seek to reward all employees competitively and fairly, irrespective
of gender, ethnicity, age, disability, or other non-performance-related factors. We believe our employees value our
existing reward programmes for their clarity, transparency, and market alignment. In addition, our Employee Share
Purchase Plan provides employees the opportunity to purchase AIA shares and receive matching shares over time
during their employment. This connects employees to the collective success of the organisation.
EMBEDDING OUR PURPOSE THROUGH WELL-BEING SUPPORT
Our Purpose to help people live Healthier, Longer, Better Lives is about our employees as well as our customers.
Through our group-wide benefits and workforce well-being programmes, we encourage our people and their families
to prioritise their physical, mental, social and financial well-being.
One of the ways we do this is through Wellbeing@AIA. This holistic employee well-being programme available to
employees in all markets is based on an offering for AIA’s corporate customers. The programme’s initiatives, benefits
and tools are tailored to each business unit, and they all encompass a broad range of solutions that may include well-
being learning sessions and on-site and virtual health activities.
Employees also have access to other well-being benefits including discounted gym memberships, access to sporting
and recreational facilities, and wellness spaces such as nursing rooms. We continue to offer flexible working
arrangements to support employees in balancing their personal and professional responsibilities. These include
hybrid work arrangements as a standard work pattern and alternative working hours.
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SUPPORTING A DIVERSE AND INCLUSIVE CULTURE
One of AIA’s strengths is our diversity, bringing together talented people from a range of backgrounds as one team to
deliver on our Purpose. We foster an inclusive workplace that welcomes and celebrates differences and encourages
open and constructive dialogues. Across our markets, we actively encourage and seek out diverse perspectives
because we believe that this results in greater innovation, better decision-making, increased adaptability, and
improved problem solving. Our commitment to an inclusive workplace is reflected in the AIA Group Diversity, Equity,
Inclusion, and Belonging Standard.
All employees joining AIA are required to complete training on AIA’s Code of Conduct as part of their onboarding,
which includes our approach to inclusion and non-discrimination. Moreover, our Employee Conduct Standard and
e-learning module on unconscious bias and anti-harassment outline these expectations for all employees as well as
appropriate standards of workplace conduct and professionalism, and channels for escalation. AIA is committed to
provide a work environment free of bullying and harassment, and we do not discriminate on the basis of race, religion,
gender, nationality, age, disability, military service, marital status, or sexual orientation.
We aim to create an inclusive workplace that values and embraces individuals from all backgrounds. Our efforts
mean people of all genders, backgrounds and experiences are drawn to work for AIA, and we have been recognised
as an employer of choice across the region. As at 31 December 2024, women represented 57.3 per cent of our
employee population and 41.8 per cent of our senior leaders across the Group were women.
Cultural and national diversity enriches our social fabric, with over 70 nationalities represented across AIA as at
31 December 2024. We recognise the importance of understanding different generational needs and our people
policies and practices enable us to create an inclusive workplace for all age groups. As at 31 December 2024, more
than 72 per cent of our employees were Gen Y and Gen Z2.
We continue to foster an inclusive and engaging workplace through 22 locally led employee networks in 13 markets,
providing our people with a platform to come together to share, learn and support each other. 9 markets have
women’s networks and 8 markets have employee networks for other diversity segments. This year we held various
initiatives at the Group level and across our local markets to raise employee awareness about diversity, equity, and
inclusion, including International Women’s Day and Pride month in support of the LGBT+ community and allies.
AIA values diverse perspectives for effective governance and decision-making. Having diverse perspectives on
our Board through the range of nationalities and backgrounds represented reflects our different communities and
improves our governance and decision-making processes.
Note:
(2) Gen Y is defined as the generation born between 1981 and 1996 and Gen Z is defined as the generation born from 1997 onwards.
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ADDITIONAL INFORMATION
RECOGNISED AS AN EMPLOYER OF CHOICE
Our continued focus on our people has resulted in several local and global accolades in 2024, including:
•
AIA received the “Gallup Exceptional Workplace Award” from Gallup and was ranked first on the “Top Workplaces
in APAC 2024” list by Best Places to Work.
•
AIA China received “Best Companies to Work” certification and “Inspiring Leadership” special award by Best
Places to Work, “Top Employer” certification by Top Employers Institute, “China’s Most Attractive Employers” by
Universum, and “Best ESG Employer” and “DE&I Best Practice” by Aon.
•
AIA Hong Kong was recognised with “Best Companies to Work for in Asia”, “Diversity, Equity, and Inclusion
Awards”, “Most Caring Company” and “Sustainable Workplace Award” by HR Asia, and in “Employer of the Year”
and “Grand Award in Leadership” by Jobsdb.
•
AIA Malaysia was ranked first on the “Top Workplaces in Malaysia 2024” list by Best Places to Work, and was
awarded “Top 10 Employer of Choice” and the insurance sector winner in “Malaysia’s 100 Leading Graduate
Employers” by GTI Media, and “Champion” in the insurance sector for “Graduate’ Choice Award” by Talentbank.
•
AIA Singapore was recognised as one of “Singapore’s Best Employers” by The Straits Times and “Singapore’s 100
Leading Graduate Employers” by GTI Media.
•
AIA Thailand was ranked second on the “Top Workplaces in Thailand 2024” list by Best Places to Work, and
recognised with “Top 50 Companies in Thailand” by WorkVenture.
•
AIA Vietnam was certified as a “Great Place to Work” by Great Place to Work and recognised in “Best Companies
to Work for in Asia” and “Most Caring Company” by HR Asia.
•
AIA Philippines was recognised in “Best Companies to Work for in Asia” and “Sustainable Workplace Award” by
HR Asia, certified as a “Great Place to Work” by Great Place to Work, and received “Best Companies to Work”
certification by Best Places to Work.
•
AIA New Zealand received the “Excellence Award” for “Employer of Choice >200 staff” by HRD New Zealand,
“5-Star DE&I award” by Insurance Business New Zealand, “Gender Tick Accreditation” by Gender at Work, and
“Accessibility Tick Accreditation” by New Zealand Disability Employers’ Network.
•
AIA Sri Lanka was recognised in “Top 50 Best Workplaces in Sri Lanka”, “Best Workplaces for Women”, “Best
Workplaces for Young Talent” and “Wellness Champion” by Great Place to Work.
•
AIA Taiwan was recognised in “Best Companies to Work for in Asia” and “Sustainable Workplace Award” by HR
Asia, and “The Best Employer Brand Award” and “DEI Generation Friendly Award” by 104 Job Bank.
•
AIA Operations Shared Services was the ‘Champion’ in the Shared Services sector for “Graduates’ Choice Award”
by Talentbank, Top 10 and Business Process Outsourcing and Shared Services sector first runner-up in “Malaysia’s
100 Leading Graduate Employers” awards by GTI Media, and among “2024 Employee Experience Leaders” by
Workleap.
•
AIA Digital+ Malaysia was recognised as a “Best Employer Brands” by LinkedIn.
Additional details about our People and Culture initiatives are contained in our Environmental, Social and Governance
Report 2024 which can be found on www.aia.com.
AIA GROUP LIMITED
086
087 Statement of Directors’ Responsibilities
088 Board of Directors
098 Executive Committee
103 Report of the Directors
115 Corporate Governance Report
137 Remuneration Report
CORPORATE GOVERNANCE
ANNUAL REPORT 2024
087
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CORPORATE GOVERNANCE
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Company’s consolidated financial statements in accordance with
applicable laws and regulations.
In preparing the consolidated financial statements of the Company, the Directors are required to:
•
select suitable accounting policies and apply them consistently;
•
make judgements and estimates that are reasonable and prudent;
•
state whether the consolidated financial statements have been prepared in accordance with HKFRS and IFRS
Accounting Standards; and
•
prepare the consolidated financial statements on a going concern basis, unless it is inappropriate to presume that
the Group will continue in business.
The Directors are responsible for keeping proper accounting records that give a true and fair view of the state of the
Company’s affairs and explain its transactions.
The Directors are responsible for taking reasonable steps to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities. The Directors are also responsible for preparing a Report of the Directors and
the Corporate Governance Report as set out on pages 103 to 136 of this Annual Report.
The Directors confirm that to the best of their knowledge:
1. the consolidated financial statements of the Company, prepared in accordance with HKFRS and IFRS Accounting
Standards, give a true and fair view of the assets, liabilities, financial position, cash flows and results of the
Company and its undertakings included in the consolidated financial statements taken as a whole; and
2. the section headed “Financial and Operating Review” included in this Annual Report presents a fair review of the
development and performance of the business and the position of the Company and its undertakings included
in the consolidated financial statements taken as a whole, together with a description of the principal risks and
uncertainties that the Group faces.
Under the group-wide supervision (GWS) framework by the Hong Kong Insurance Authority, AIA is expected to have
in place a corporate governance framework which provides for sound and prudent management and oversight of the
Group’s businesses including in regard to the protection of the interests of policyholders of the insurers within the
Group. As such, the Board strives to oversee the implementation of the corporate culture, business objectives and
strategies for achieving those objectives, in line with the long-term interests and viability of the Group.
The Board is required, amongst other requirements, to ensure there is an appropriate number and mix of individuals
with sufficient knowledge and experience commensurate with its governance structure. Under the GWS framework,
the Board provides oversight in respect of the design and implementation of risk management and internal controls
across the Group. This includes having a framework to take effective measures to deter, prevent, detect, report and
remedy non-compliance with relevant legal and regulatory requirements and fraud in insurance. The Group has also
adopted a remuneration policy which does not induce excessive or inappropriate risk taking.
In summary, the Board exercises independent judgement and objectivity in its decision-making, taking due account
of the interests of the Group and its policyholders.
AIA GROUP LIMITED
088
CORPORATE GOVERNANCE
BOARD OF DIRECTORS
MR. JACK
CHAK-KWONG SO
MR. ONG CHONG
TEE
MR. JOHN BARRIE
HARRISON
DR. NARONGCHAI
AKRASANEE
MS. SUN JIE
(JANE)
MR. EDMUND
SZE-WING TSE
ANNUAL REPORT 2024
089
MR. LEE YUAN
SIONG
MR. CESAR VELASQUEZ
PURISIMA
MR. CHUNG-KONG
CHOW
PROFESSOR LAWRENCE
JUEN-YEE LAU
MS. MARI ELKA
PANGESTU
MS. NOR SHAMSIAH
MOHD YUNUS
MR. GEORGE
YONG-BOON YEO
AIA GROUP LIMITED
090
CORPORATE GOVERNANCE
BOARD OF DIRECTORS
INDEPENDENT NON-EXECUTIVE CHAIRMAN AND INDEPENDENT NON-EXECUTIVE DIRECTOR
Mr. Edmund Sze-Wing TSE
Aged 87, is the Independent Non-executive Chairman and an Independent Non-executive Director of the Company.
He was appointed Non-executive Director of the Company on 27 September 2010 and elected Non-executive
Chairman on 1 January 2011. He was re-designated as the Independent Non-executive Chairman and an Independent
Non-executive Director of the Company on 23 March 2017. Mr. Tse is also the Chairman of the Nomination Committee
and a member of the Remuneration Committee and the Risk Committee of the Company. He is a director of AIA
Foundation. Mr. Tse’s appointments during the period for over 60 years with the Group and its predecessor, AIG Group,
include serving as Honorary Chairman of AIA Co. from July 2009 to December 2010, Chairman and Chief Executive
Officer from 2000 to June 2009 and President and Chief Executive Officer from 1983 to 2000. He also served as
Chairman of AIA Philippines Life and General Insurance Company Inc. (formerly known as The Philippine American
Life and General Insurance (PHILAM LIFE) Company) from 2005 to 2015. Mr. Tse is a non-executive director of
PCCW Limited (listed on the Hong Kong Stock Exchange), a director of Bridge Holdings Company Limited (formerly
known as PineBridge Investments Limited) and the non-executive Chairman of PineBridge Investments Asia Limited.
Mr. Tse is also a member of the Chief Executive’s Council of Advisers of the HKSAR Government, a member of the
membership committee and a fellow of the Hong Kong Academy of Finance. He served as a non-executive director
of PICC Property and Casualty Company Limited (listed on the Hong Kong Stock Exchange) from 2004 to July 2014.
In recognition of his outstanding contributions to the development of Hong Kong’s insurance industry, Mr. Tse was
awarded the Gold Bauhinia Star by the HKSAR Government in 2001. Mr. Tse received an honorary degree of Doctor
of Social Science from The Hang Seng University of Hong Kong in 2024. He also received an honorary fellowship and
an honorary degree of Doctor of Social Sciences from The University of Hong Kong in 1998 and 2002, respectively.
In 2018, he was awarded an honorary degree of Doctor of Business Administration from Lingnan University. In
2003, Mr. Tse was elected to the prestigious Insurance Hall of Fame and in 2017, he was awarded the first ever
Lifetime Achievement Award at the Pacific Insurance Conference in recognition of his outstanding contribution to
the insurance industry.
EXECUTIVE DIRECTOR AND GROUP CHIEF EXECUTIVE AND PRESIDENT
Mr. LEE Yuan Siong
Aged 59, is an Executive Director and the Group Chief Executive and President of the Company, having been appointed
on 1 June 2020. Mr. Lee is also a member of the Risk Committee of the Company. He joined the Group in March 2020
and has more than 30 years of experience in the insurance sector. He is a director of various companies within the
Group including acting as Chairman and Chief Executive Officer of AIA Co. Prior to his current role, Mr. Lee was an
executive director of Ping An Insurance (Group) Company of China, Ltd. from June 2013 and serving as its co-CEO
and Chief Insurance Business Officer. Before joining Ping An, Mr. Lee held a number of senior leadership positions
with Prudential plc of the United Kingdom, including President of CITIC-Prudential Life Insurance Company Limited,
a life insurance joint venture in Mainland China. He also has significant experience across a number of Asian markets
including Hong Kong SAR, India, Indonesia, Taiwan (China), Thailand and Vietnam. Mr. Lee began his career at the
Monetary Authority of Singapore. He currently serves as Chairman of The Geneva Association and has also been a
member of the Hong Kong Academy of Finance since 2020. He holds a Master of Philosophy (Finance) degree from
the University of Cambridge and is a Fellow of the Society of Actuaries (US).
ANNUAL REPORT 2024
091
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
INDEPENDENT NON-EXECUTIVE DIRECTORS
Mr. Jack Chak-Kwong SO
Aged 80, is an Independent Non-executive Director of the Company. He was appointed as Non-executive Director of
the Company on 28 September 2010 and re-designated as an Independent Non-executive Director of the Company on
26 September 2012. He is also a member of the Audit Committee, the Nomination Committee and the Remuneration
Committee of the Company. From August 2007 to September 2010, Mr. So served as an independent non-executive
director of AIA Co. He is currently an independent non-executive director of China Resources Power Holdings Co. Ltd.
(listed on the Hong Kong Stock Exchange) and a member of the Chief Executive’s Council of Advisers of the HKSAR
Government. Mr. So was previously the Chairman of Airport Authority Hong Kong from June 2015 to May 2024.
Mr. So was awarded the Gold Bauhinia Star and the Grand Bauhinia Medal by the HKSAR Government in 2011 and
2017, respectively. Mr. So served as an executive director of the Hong Kong Trade Development Council from 1985
to 1992 and served as its Chairman from 2007 to 2015. He was an independent non-executive director of Cathay
Pacific Airways Limited (listed on the Hong Kong Stock Exchange) from 2002 to 2015, a non-executive director of
The Hongkong and Shanghai Banking Corporation Limited from 2000 to 2007, the Chairman of the Hong Kong Film
Development Council from 2007 to 2013 and a member of the Chinese People’s Political Consultative Conference
from 2008 to 2018.
Mr. Chung-Kong CHOW
Aged 74, is an Independent Non-executive Director of the Company, having been appointed on 28 September 2010.
He is also the Chairman of the Risk Committee and a member of the Nomination Committee of the Company. Mr. Chow
was appointed as the Chairman of the Advisory Committee on Admission of Quality Migrants and Professionals of
the HKSAR from 1 July 2016, a member of the InnoHK Steering Committee from 4 February 2019 and the Chairman
of the Urban Renewal Authority Board from 1 May 2019. Mr. Chow was knighted in the United Kingdom for his
contribution to industry in 2000 and was awarded the Gold Bauhinia Star and the Grand Bauhinia Medal by the HKSAR
Government in 2015 and 2021, respectively. Mr. Chow was also a non-official member of the Human Resources
Planning Commission of the HKSAR Government from 2018 to 2024, a non-official member of the Executive Council
of the HKSAR from 2012 to 2022, a member of the Financial Leaders Forum set up by the HKSAR Government
from 2017 to 2022, the Chairman of the Advisory Committee on Corruption of the Independent Commission Against
Corruption from 2013 to 2018, the Chairman of Hong Kong Exchanges and Clearing Limited (listed on the Hong Kong
Stock Exchange) from 2012 to 2018, Chief Executive Officer of MTR Corporation Limited (listed on the Hong Kong
Stock Exchange) from 2003 to 2011, Chief Executive Officer of Brambles Industries plc, a global support services
company, from 2001 to 2003, and Chief Executive of GKN plc, a leading industrial company based in the United
Kingdom, from 1997 to 2001. He was an independent non-executive director of Anglo American plc from 2008 to
2014, independent non-executive director of Standard Chartered plc from 1997 to 2008, the Chairman of the Hong
Kong General Chamber of Commerce from 2012 to June 2014 and an independent non-executive representative of
EYG Global Governance Council from 2016 to 2024.
AIA GROUP LIMITED
092
CORPORATE GOVERNANCE
BOARD OF DIRECTORS
Mr. John Barrie HARRISON
Aged 68, is an Independent Non-executive Director of the Company, having been appointed on 1 July 2011. He is
also a member of the Audit Committee and the Nomination Committee of the Company. He also acts as a Board
Representative on the ESG Committee, a management committee of the Company. Mr. Harrison was appointed an
Honorary Court Member of The Hong Kong University of Science and Technology with effect from 20 September
2016. He was an independent non-executive director of Cathay Pacific Airways Limited (listed on the Hong Kong
Stock Exchange) from 2015 to 2024, an independent non-executive director of Grosvenor Asia Pacific Limited
from 2017 to 2022, an independent non-executive director of BW Group Limited from 2010 to 2020 and the Vice
Chairman of BW LPG Limited from 2013 to 2020. Mr. Harrison was also an independent non-executive director of
Hong Kong Exchanges and Clearing Limited (listed on the Hong Kong Stock Exchange) from 20 April 2011 to 26 April
2017, The London Metal Exchange Limited from 6 December 2012 to 26 April 2017 and LME Clear Limited from 16
December 2013 to 26 April 2017. From 2012 to May 2015, he was also a member of the Asian Advisory Committee
of AustralianSuper Pty Ltd. From 2008 to 2010, Mr. Harrison was Deputy Chairman of KPMG International. In 2003,
he was elected Chairman and Chief Executive Officer of KPMG, China and Hong Kong and Chairman of KPMG Asia
Pacific. Mr. Harrison began his career with KPMG in London in 1977, becoming a partner of KPMG Hong Kong in
1987. Mr. Harrison received an honorary fellowship from The Hong Kong University of Science and Technology in
2017. Mr. Harrison is a Fellow of the Institute of Chartered Accountants in England and Wales and a member of the
Hong Kong Institute of Certified Public Accountants.
Mr. George Yong-Boon YEO
Aged 70, is an Independent Non-executive Director of the Company, having been appointed on 2 November 2012.
He is also the Chairman of the Remuneration Committee and a member of the Audit Committee and the Nomination
Committee of the Company. Mr. Yeo is a non-executive and independent director of Wilmar International Limited
(listed on the Singapore Exchange), an independent director of Pinduoduo Inc. (listed on the Nasdaq Global Select
Market) and an independent non-executive director of Creative Technology Ltd (listed on the Singapore Exchange).
He has been a member of Global Advisory Board of Mitsubishi UFJ Financial Group, Inc. since July 2019 and is a
member of the International Advisory Board of the Berggruen Institute on Governance. In 2012, Mr. Yeo was presented
with the Order of Sikatuna by the Philippines Government and the Padma Bhushan by the Indian Government, and
became an Honorary Officer of the Order of Australia. He was a member of the Vatican Council for the Economy
from 2014 to 2020, a member of the International Advisory Committee of Mitsubishi Corporation from 2014 to
2022 and a senior advisor to Brunswick Group LLP for its Geopolitical Initiatives from 2018 to 2024. Mr. Yeo was
previously the Chairman, an executive director and a senior advisor of Kerry Logistics Network Limited (listed on the
Hong Kong Stock Exchange) from 2012 to 2019, from 2013 to 2019, and from 2019 to 2021 respectively. He was
also a director of Kerry Holdings Limited from 2016 to 2019, a senior advisor of Kerry Group Limited from 2019 to
2021, as well as a director of New Yangon Development Company Limited from 2017 to 2021. During 2013 to 2014,
Mr. Yeo was a member of the Pontifical Commission for Reference on the Economic-Administrative Structure of
the Holy See. During 1988 to 2011, Mr. Yeo was a member of the Singapore Parliament and held various Cabinet
positions, including Minister for Foreign Affairs, Minister for Trade and Industry, Minister for Health, Minister for
Information and the Arts and Minister of State for Finance. During 1972 to 1988, Mr. Yeo served in the Singapore
Armed Forces and attained the rank of Brigadier-General in 1988 when he was Director of Joint Operations and
Planning in the Ministry of Defence.
ANNUAL REPORT 2024
093
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Professor Lawrence Juen-Yee LAU
Aged 80, is an Independent Non-executive Director of the Company, having been appointed on 18 September 2014.
He is also a member of the Nomination Committee and the Risk Committee of the Company. Professor Lau has been
serving as the Ralph and Claire Landau Professor of Economics at The Chinese University of Hong Kong (CUHK)
since 2007 and the Chairman of the Council of Shenzhen Finance Institute of CUHK, Shenzhen since 12 January
2017. He currently serves as a member of the Currency Board Sub-committee of the Exchange Fund Advisory
Committee of the HKSAR, a non-official member of Candidate Eligibility Review Committee of the HKSAR and a non-
official member of the board of directors of Hong Kong Investment Corporation Limited. In addition, he serves as a
Fellow of the Hong Kong Academy of Finance and a Director of the Chiang Ching-Kuo Foundation for International
Scholarly Exchange, Taipei. He was formerly a member of the Exchange Fund Advisory Committee of the HKSAR,
Chairman of its Governance Sub-committee and a member of its Investment Sub-committee until 2019, a Vice
Chairman of China Center for International Economic Exchanges, Beijing until 2021, a member and Chairman of
the Prize Recommendation Committee of the LUI Che Woo Prize Limited from 2015 to 2021, a member of the Hong
Kong Trade Development Council Belt and Road & Greater Bay Area Committee from 2019 to 2021, as well as the
C.V. Starr Distinguished Fellow of China Development Research Foundation, Beijing from 2019 to 2023. He was
appointed a Justice of the Peace by the HKSAR Government in 2007 and awarded the Gold Bauhinia Star by the
HKSAR Government in 2011. From 2004 to 2010, Professor Lau served as Vice-Chancellor (President) of CUHK.
From 2009 to 2012, he served as a Non-official Member of the Executive Council of the HKSAR. He was appointed
Chairman of CIC International (Hong Kong) Co., Limited, a wholly-owned subsidiary of China Investment Corporation,
in November 2010 and retired from the position in September 2014. He was a member of the 11th and 12th National
Committees of the Chinese People’s Political Consultative Conference from 2008 to 2012 and from 2013 to 2018
respectively, a Vice-Chairman of the Sub-committee of Population, Resources and Environment from 2010 to 2013,
and a Vice-Chairman of the Sub-committee of Economics from 2013 to 2018. He was also an independent non-
executive director of Hysan Development Company Limited (listed on the Hong Kong Stock Exchange) from 2014 to
2020, an independent non-executive director of CNOOC Limited (listed on the Hong Kong Stock Exchange and the
Shanghai Stock Exchange and previously listed on the New York Stock Exchange) from 2005 to 2023, a non-executive
director and an independent non-executive director of Semiconductor Manufacturing International Corporation
(listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange and previously listed on the New York
Stock Exchange) from 2011 to 2014 and from 2018 to 2024 respectively, and an independent non-executive director
of Far EasTone Telecommunications Co., Ltd. (listed on the Taiwan Stock Exchange) from 2005 to 2024. He received
his B.S. degree (with Great Distinction) in Physics from Stanford University in 1964 and his M.A. and Ph.D. degrees
in Economics from the University of California at Berkeley in 1966 and 1969, respectively. He joined the faculty of
the Department of Economics at Stanford University in 1966, becoming its Professor of Economics in 1976 and the
first Kwoh-Ting Li Professor in Economic Development in 1992. From 1992 to 1996, he served as a Co-Director of the
Asia-Pacific Research Center at Stanford University, and from 1997 to 1999 as the Director of the Stanford Institute
for Economic Policy Research. He became its Kwoh-Ting Li Professor in Economic Development, Emeritus, upon his
retirement from Stanford University in 2006.
AIA GROUP LIMITED
094
CORPORATE GOVERNANCE
BOARD OF DIRECTORS
Dr. Narongchai AKRASANEE
Aged 79, is an Independent Non-executive Director of the Company, having been appointed on 15 January 2016.
He is also a member of the Audit Committee and the Nomination Committee of the Company and the Chairman
of advisory board of AIA Thailand. He also acts as a Board Representative on the ESG Committee, a management
committee of the Company. Dr. Narongchai was previously an Independent Non-executive Director of the Company
from 21 November 2012 to 31 August 2014. He is the former Minister of Energy and Minister of Commerce for
the Kingdom of Thailand and served as a Senator. Dr. Narongchai served as Chairman of the Export-Import Bank
of Thailand from December 2005 to June 2010, a Director of the Office of the Insurance Commission of Thailand
from October 2007 to August 2012, a Director of the National Economic and Social Development Board from July
2009 to July 2013 and a member of the Monetary Policy Committee of the Bank of Thailand from November 2011
to September 2014. He is currently the Chairman of the Steering Committee and Vice-Chairman of the Council of
Mekong Institute, the Chairman of the Thailand National Committee for the Pacific Economic Cooperation Council
and the Chairman of the Khon Kaen University Council in Thailand. Dr. Narongchai also acts as the Chairman and
an independent director of three entities listed on the Stock Exchange of Thailand, namely MFC Asset Management
Public Company Limited, Ananda Development Public Company Limited and Thai-German Products Public Company
Limited. He is the Chairman and an independent director of The Brooker Group Public Company Limited, which is
listed on the Stock Exchange of Thailand’s Market for Alternative Investment. Dr. Narongchai is also the Chairman of
the Seranee Group of companies. He previously served as an independent director of each of Malee Sampran Public
Company Limited and ABICO Holdings Public Company Limited and as the Vice-Chairman and an independent
director of Thai-German Products Public Company Limited, all of which are listed on the Stock Exchange of Thailand.
Dr. Narongchai received his Bachelor’s degree in Economics with Honours from the University of Western Australia
and a M.A. and Ph.D. in Economics from Johns Hopkins University.
Mr. Cesar Velasquez PURISIMA
Aged 64, is an Independent Non-executive Director of the Company, having been appointed on 1 September 2017.
He is also the Chairman of the Audit Committee and a member of the Nomination Committee and the Risk Committee
of the Company. Mr. Purisima currently serves as an independent director of Bank of the Philippine Islands (BPI),
Ayala Corporation, Ayala Land, Inc., Universal Robina Corporation and Jollibee Foods Corporation, all of which are
listed on The Philippine Stock Exchange. He is also an independent director of BPI Capital Corporation, a wholly owned
subsidiary of BPI, a founding partner of Ikhlas Capital Singapore Pte. Ltd., a member of the Global Advisory Council of
Sumitomo Mitsui Banking Corporation, and a member of Singapore Management University’s International Advisory
Council in the Republic of the Philippines (the Philippines) and a member of the Bloomberg Task Force on Fiscal
Policy for Health. He also serves on the board of trustees of the International School of Manila. He is an Asia Fellow
at the Milken Institute, a global, non-profit, non-partisan think tank. Mr. Purisima served in the government of the
Philippines as Secretary of Finance from July 2010 to June 2016 and as Secretary of Trade and Industry from January
2004 to February 2005. He also previously served on the boards of a number of government institutions, including
as a member of the Monetary Board of the Bangko Sentral ng Pilipinas (Central Bank of the Philippines), Governor
of the World Bank Group for the Philippines, Governor of the Asian Development Bank for the Philippines, Alternate
Governor of the International Monetary Fund for the Philippines and Chairman of Land Bank of the Philippines.
ANNUAL REPORT 2024
095
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Mr. Purisima received the Centenary Award of Excellence from the Professional Regulatory Board of Accountancy of
the Philippines in 2023. He was conferred the Chevalier dans l’Ordre national de la Légion d’Honneur (Knight of the
National Order of the Legion of Honour) by the President of the French Republic in 2017, the Order of Lakandula,
Rank of Grand Cross (Bayani) by the President of the Philippines in 2016 and the Chevalier de l’Ordre national du
Mérite (Knight of the National Order of Merit) by the President of the French Republic in 2001. Mr. Purisima is a
certified public accountant. He has extensive experience in public accounting both in the Philippines and abroad.
He was Chairman and Managing Partner of SyCip, Gorres, Velayo & Co. (a member firm of Andersen Worldwide until
2002 when it became a member firm of Ernst & Young Global Limited) from 1999 until 2004. During the period,
Mr. Purisima was also the Asia-Pacific Area Managing Partner for Assurance and Business Advisory Services of
Andersen Worldwide from 2001 to 2002 and Regional Managing Partner for the ASEAN Practice of Andersen
Worldwide from 2000 to 2001. Mr. Purisima obtained his Bachelor of Science in Commerce (Majors in Accounting &
Management of Financial Institutions) degree from De La Salle University (Manila) in 1979, Master of Management
degree from J. L. Kellogg Graduate School of Management, Northwestern University in 1983 and Doctor of Humanities
honoris causa degree from Angeles University Foundation (the Philippines) in 2012.
Ms. SUN Jie (Jane)
Aged 56, is an Independent Non-executive Director of the Company, having been appointed on 1 June 2021. She is
also a member of the Nomination Committee and the Remuneration Committee of the Company. Ms. Sun is the Chief
Executive Officer and a member of the board of directors of Trip.com (listed on the Hong Kong Stock Exchange and
the Nasdaq Global Select Market), one of the leading global travel services companies that operates the sub-brands
Trip.com, Ctrip, Skyscanner and Qunar. She is also a director of Tripadvisor, Inc. and MakeMyTrip, both listed on the
Nasdaq Global Select Market. Ms. Sun was previously an independent director of iQIYI, Inc. (listed on the Nasdaq
Global Select Market) and TAL Education Group (listed on the New York Stock Exchange). Ms. Sun has extensive
experience in operating and managing online businesses, mergers and acquisitions, and financial reporting and
operations. Ms. Sun was named one of Fortune’s Top 50 Most Powerful Women in Business for four consecutive years
from 2017 to 2020. In 2019, she was named in the Forbes World’s Most Powerful Women List and awarded the Asia
Game Changer Award by Asia Society. She was also named one of Emergent 25 Asia’s Latest Star Businesswomen in
2018, and one of the Most Influential and Outstanding Businesswomen in China in 2017 by Forbes. Ms. Sun received
her Bachelor’s degree from the business school of the University of Florida with high honours. She also obtained a
LLM degree from Peking University Law School.
AIA GROUP LIMITED
096
CORPORATE GOVERNANCE
BOARD OF DIRECTORS
Ms. Mari Elka PANGESTU
Aged 68, is an Independent Non-executive Director of the Company, having been appointed on 1 July 2023. She
is also a member of the Audit Committee and the Nomination Committee of the Company. Ms. Pangestu currently
serves as a Professor of International Economics at the University of Indonesia, adjunct senior research scholar at
the Columbia University and Professor of the University of Prasetiya Mulya. She was appointed as the Presidential
Special Envoy for International Trade and Multilateral Cooperation in October 2024 and the Deputy Chair of the
National Economic Council of Indonesia in November 2024. She is also a member of the Advisory Board of Indonesia
Bureau of Economic Research, Co-chair of Indonesian National Committee for Pacific Economic Cooperation,
member of the Board of Trustees of United in Diversity, Indonesia and the Centre for Strategic and International
Studies Foundation, and Distinguished Fellow of Asia Global Institute, The University of Hong Kong. Ms. Pangestu
was appointed as the Managing Director, Development Policy and Partnerships for the World Bank in March 2020
and retired from the position in March 2023. She was also a Minister of Trade of the Republic of Indonesia from 2004
to 2011 and Minister of Tourism and Creative Economy of the Republic of Indonesia from 2011 to 2014. She served
as Chair of the Board of Trustees of International Food Policy Research Institute, Washington DC from 2017 to 2020,
a member of the Global Future Council on Trade and Investment, World Economic Forum from 2016 to 2018 and a
board member of the International Chamber of Commerce, Paris from 2015 to 2020. She was also a commissioner
for the Low Carbon Development Initiative of Indonesia and Co-chair of the expert group for the High Level Panel for
a Sustainable Ocean Economy. In addition, Ms. Pangestu was previously an Independent President Commissioner
of PT Mitra Adiperkasa Tbk from 2018 to 2020, the President Commissioner (Independent) of PT Bank BTPN Tbk
from 2016 to 2020 and an Independent Commissioner of PT Astra International Tbk from 2015 to 2017, all of which
are listed on the Indonesia Stock Exchange. Ms. Pangestu has received the Mahaputra Award, the Highest Order for
Public Service awarded by the President of Republic Indonesia, in 2013. She was also awarded the Distinguished
Fellow Award 2018 by Eisenhower Fellowships and the Economic and Social Science Prize at the Asia Cosmopolitan
Awards NARA Forum in 2023. Ms. Pangestu received her Bachelor of Economics (Honours) degree and Master of
Economics degree from the Australian National University in 1979 and 1981, respectively. She also obtained a Ph.D.
degree from the Department of Economics of the University of California, Davis in 1986.
Mr. ONG Chong Tee
Aged 63, is an Independent Non-executive Director of the Company, having been appointed on 1 July 2023. He is
also a member of the Audit Committee and the Nomination Committee of the Company. Mr. Ong currently serves as
the Chairman of the Accounting and Corporate Regulatory Authority in Singapore. He has 35 years of experience
with the Monetary Authority of Singapore (MAS), in the areas of reserve management, monetary policy, investment
management, financial development and financial supervision. He last served as the Deputy Managing Director of
Financial Supervision from 2013 to 2021, overseeing the banking and insurance, capital markets, and policy, risk
and surveillance groups. Mr. Ong also served on the boards of Central Provident Fund Board from 2000 to 2009,
Singapore Land Authority from 2005 to 2009, Urban Redevelopment Authority from 2006 to 2012 and Housing &
Development Board from 2012 to 2018. Mr. Ong is also a member of the risk committee of GIC Private Limited, an
independent non-executive director of United Overseas Bank Limited (listed on the Singapore Exchange), and an
independent director of Arab Regional Payments Clearing and Settlement Organization. He is also a member of the
Board of Trustees of the National University of Singapore and a Trustee of the IFRS Foundation®. Mr. Ong graduated
with a Bachelor of Engineering (Hons) from the National University of Singapore. He was also awarded the Public
Administration Medal (Gold) (Bar) in 2021 by the President of Singapore.
ANNUAL REPORT 2024
097
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Ms. Nor Shamsiah MOHD YUNUS
Aged 60, is an Independent Non-executive Director of the Company, having been appointed on 21 September 2023.
She is also a member of the Nomination Committee and the Risk Committee of the Company. Ms. Mohd Yunus
currently serves as the Chancellor of INCEIF (International Centre for Education in Islamic Finance) University in
Malaysia. Ms. Mohd Yunus has over 34 years of experience with Bank Negara Malaysia (BNM) (the Central Bank
of Malaysia). She joined BNM in 1987 and was appointed as Deputy Governor from November 2010 to June 2016
and Governor from July 2018 to June 2023. She was the Chairperson of each of BNM’s Board of Directors, Monetary
Policy Committee, Financial Stability Committee, Financial Stability Executive Committee, Reserve Management
Committee, Risk Management Committee and Digital Technology Committee. During her time at BNM, she served in
diverse areas including overseeing work of the financial stability division, encompassing regulation and supervision
of banks and insurance companies, as well as financial sector development and enforcement. During her tenure,
Ms. Mohd Yunus also represented BNM as an ex-officio Director of Perbadanan Insurans Deposit Malaysia (Malaysian
Deposit Insurance Corporation), Chairman of the Board of Directors of the South East Asian Central Banks (SEACEN)
Research and Training Centre, and a non-executive member of the Audit Oversight Board of Malaysia. She also served
as the Assistant Director of the Monetary and Capital Markets Department of the International Monetary Fund from
April 2017 to June 2018. Ms. Mohd Yunus graduated with a Bachelor of Arts in Accountancy from the University of
South Australia in 1986. She is a fellow of the CPA Australia and a member of the Malaysian Institute of Accountants.
AIA GROUP LIMITED
098
CORPORATE GOVERNANCE
EXECUTIVE COMMITTEE
MR. LEO GREPIN
MR. LEE YUAN SIONG
MR. MITCHELL NEW
MR. JACKY CHAN
MS. CARA ANG
DR. MARK KONYN
ANNUAL REPORT 2024
099
MR. GARTH JONES
MR. TAN HAK LEH
MR. FISHER ZHANG
DR. KELVIN LOH
MS. JAYNE PLUNKETT
MR. BISWA MISRA
MR. STUART A. SPENCER
AIA GROUP LIMITED
100
CORPORATE GOVERNANCE
EXECUTIVE COMMITTEE
Mr. LEE Yuan Siong
Mr. Lee’s biography is set out above.
Mr. Garth Brian JONES
Aged 62, is the Group Chief Financial Officer responsible for leading the Group in all aspects of capital and financial
management, as well as managing relationships with key external stakeholders, including independent auditors and
actuaries, rating agencies and international accounting and regulatory bodies. He is a director of various companies
within the Group, including Tata AIA Life, AIA Co. and AIA International. He joined the Group in April 2011. Prior
to joining the Group, Mr. Jones was the Executive Vice President of China Pacific Life Insurance Co., Ltd., the life
insurance arm of China Pacific Insurance (Group) Co., Ltd. He also held a number of senior management positions
during his 12 years with Prudential Corporation Asia Limited, including Chief Financial Officer of the Asian life
insurance operations. Prior to joining Prudential, Mr. Jones led the development of Swiss Re’s Asia life business.
Mr. Jones is a Fellow of the Institute and Faculty of Actuaries.
Mr. Wing-Shing CHAN (Jacky)
Aged 61, is the Regional Chief Executive and Group Chief Distribution Officer responsible for the Group’s businesses
operating in Hong Kong SAR, Macau SAR, Taiwan (China), the Philippines, as well as the Group’s agency distribution,
partnership distribution and corporate solutions. He is a director of various companies within the Group, including
AIA Co. and AIA International. Mr. Chan has extensive experience having worked at AIA for the past 37 years. Prior to
becoming a Regional Chief Executive, Mr. Chan was Chief Executive Officer of AIA Hong Kong and Macau since 2009.
Previously, he held several senior positions including the Country Head of AIA China, Executive Vice President –
Distribution & Marketing of Nan Shan Life Insurance of Taiwan and Senior Vice President & Head of Life Profit Centre
of AIA - Asia (ex-Japan & Korea). Mr. Chan holds a Bachelor of Science degree from The University of Hong Kong.
He is a Fellow of the Society of Actuaries (FSA), a member of the American Academy of Actuaries (MAAA) and a
Fellow of the Canadian Institute of Actuaries (CIA).
Mr. ZHANG Xiaoyu (Fisher)
Aged 49, is the Regional Chief Executive, responsible for the Group’s businesses operating in Mainland China,
South Korea and Vietnam. He is the Chairman of AIA Life Insurance Company Limited (Mainland China). Prior to
becoming a Regional Chief Executive, Mr. Zhang was Chief Executive Officer of AIA China from 2017 through 2025.
Mr. Zhang also occupied a range of senior leadership positions during his 24 years of service with AIA China. Prior
to being appointed Chief Executive Officer, his roles included acting as Chief Distribution Officer, Chief Agency
Officer and Chief Marketing Officer. Mr. Zhang holds a Master’s degree in Applied Mathematics from Fudan University.
He is a Fellow of the Society of Actuaries (FSA) and a council member of the 4th Council of the China Association
of Actuaries (CAA).
Mr. TAN Hak Leh
Aged 59, is the Regional Chief Executive responsible for the Group’s businesses operating in Thailand, Singapore,
Brunei, Malaysia, Cambodia and Myanmar. He is a director of various companies within the Group and is a key
member in the Global Asia Insurance Partnership (GAIP) Advisory Council. Mr. Tan was Chief Executive Officer of
AIA’s operation in Thailand from 2016 to 2019, Group Chief Risk Officer in 2015 and Chief Executive Officer of AIA’s
operation in Singapore from 2011 to 2015. Prior to joining the Group, Mr. Tan was Chief Executive Officer of Great
Eastern Life, Singapore. Prior to joining Great Eastern Life, Mr. Tan was Director of the Insurance Department of the
MAS. Mr. Tan has played an active role in the life insurance industry since 2005. His appointments include: President
of the Life Insurance Association (LIA), Singapore from 2010 to 2013, Vice Chair of Singapore College of Insurance
from 2011 to 2013 and Vice President of Thailand Life Assurance Association from 2017 to 2018. He was also a
board member of Financial Industry Disputes Resolution Centre Ltd from 2008 to 2015.
ANNUAL REPORT 2024
101
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Mr. Leo Michel GREPIN
Aged 49, is the Regional Chief Executive and Group Chief Strategy Officer responsible for the Group’s businesses
operating in Australia, India and Indonesia as well as leading the Group’s Strategy and Corporate Development
functions. He is a director of various companies within the Group, including Tata AIA Life, AIA Co., and Amplify Health.
Mr. Grepin joined the Group in January 2022. Prior to joining the Group, Mr. Grepin was President of Sun Life, Asia.
Before joining Sun Life, he was at Bridgewater Associates, a global hedge fund, where he led the team managing
portfolio construction and trade generation. He also spent 15 years at McKinsey & Company and led the global
client service teams serving several multinational insurers and asset managers as Senior Partner. Mr. Grepin has a
Master of Science in Aeronautics and Astronautics from the Massachusetts Institute of Technology and a Bachelor of
Engineering in Mechanical Engineering (Hons) from McGill University.
Mr. Mitchell David NEW
Aged 61, is the Group General Counsel responsible for providing leadership to legal and corporate governance
functions within Group Office and the country operations. He also has executive responsibility for the Group’s ESG
Programme, including acting as Chairman of the Group’s ESG Committee. He has previously also acted as Group
Chief Risk Officer. He is Chairman of AIA International and a director of various companies within the Group including
AIA Reinsurance Limited, AIA Investment Management Private Limited and the Group’s operating subsidiaries in
Vietnam, Indonesia and the Philippines. He joined the Group in April 2011. Prior to joining the Group, Mr. New occupied
various senior roles with Manulife Financial, including Senior Vice President and Chief Legal Officer for Asia and
Japan, based in Hong Kong and Senior Vice President and General Counsel to Manulife’s Canadian division. He also
practised law with Fasken Martineau in Canada where he is a qualified barrister and solicitor and member of the Law
Society of Ontario. Mr. New holds a Bachelor of Commerce degree and Master’s degree in Business Administration
from McMaster University and a Bachelor of Laws degree from the University of Western Ontario.
Mr. Biswa Prakash MISRA
Aged 47, is the Group Chief Technology and Life Operations Officer responsible for providing leadership to the
Group’s technology, digital and analytics areas as well as Group Operations and Operations Shared Services.
He is also responsible for the Group’s businesses operating in New Zealand and Sri Lanka. He is a director of various
companies within the Group. He joined the Group in June 2013. Prior to joining the Group, Mr. Misra served as the
Regional Chief Technology Officer for ING Insurance Asia Pacific. Previously, he spent six years with information
technology consulting firm Capgemini, leading the company’s insurance practice for Asia. Mr. Misra holds a degree
in electrical engineering from the National Institute of Technology, Surat, India.
Dr. Mark KONYN
Aged 63, is the Group Chief Investment Officer responsible for providing oversight of the management of the
investment portfolios of the Group as well as supervising and supporting the many investment professionals
throughout the Group. He is a director of various companies within the Group including Chairman of AIA Investment
Management Private Limited and AIA Investment Management HK Limited. He joined the Group in September 2015.
Dr. Konyn joined AIA from Cathay Conning Asset Management, where he was Chief Executive Officer responsible for
the company’s investment business and strategic expansion in the region. He had held senior positions at Allianz
Global Investors (where he was Asia-Pacific CEO for RCM Global Investors), Fidelity Investments and Prudential UK.
He is a Fellow of the Royal Statistical Society, and holds a Diploma from the London Business School in Investment
Management, having previously completed his Ph.D. in Operational Research sponsored by the UK Government.
AIA GROUP LIMITED
102
CORPORATE GOVERNANCE
EXECUTIVE COMMITTEE
Ms. Pek-San ANG (Cara)
Aged 56, is the Group Chief Human Resources Officer responsible for the development of overall human capital
strategies and their implementation across the Group, as well as leading and providing support to the human
resources functions in country market operations. She joined the Group as the Chief Human Resources Officer for AIA
Singapore in May 2016. Prior to joining AIA, Ms. Ang was the Head of Human Resources of Standard Chartered Bank
Singapore. During her time with Standard Chartered, she spent more than 10 years in a variety of country, regional
and global HR leadership roles based in Singapore and Thailand. Prior to joining Standard Chartered Bank Singapore,
Ms. Ang was the Senior Vice President and Head of Human Resources for Marsh Asia.
Mr. Stuart Anthony SPENCER
Aged 59, is the Group Chief Marketing Officer and oversees AIA Vitality, propositions, branding, communications,
sponsorships, events, customer engagement and marketing digitalisation. He is a director of various companies
within the Group. Mr. Spencer occupied numerous leadership roles at AIG and AIA from 1996 to 2009, in the United
States, Latin America and in Asia where he served as global President of Accident & Health Worldwide for the AIG
Life Companies. Mr. Spencer re-joined AIA in May 2017 from Zurich Insurance Group, where he was CEO, General
Insurance, Asia Pacific. Mr. Spencer started his career in New York at American Express Travel Related Services
in Marketing. He is an alumnus of the Harvard Business School, The Fletcher School of Law and Diplomacy and
Brandeis University.
Ms. Jayne Lynn PLUNKETT
Aged 55, is the Group Chief Risk Officer responsible for the Group’s risk and compliance functions. She is also a
director of various companies within the Group, including AIA Co., AIA Singapore Private Limited, AIA Philippines
Life and General Insurance Company Inc. and AIA New Zealand Limited. Ms. Plunkett joined AIA in November 2019
from Swiss Re, where she was most recently Chief Executive Officer Reinsurance Asia, Regional President Asia
and member of the Group Executive Committee. During her time with Swiss Re, she held several senior positions,
including Division Head Casualty Reinsurance and Head of Casualty Underwriting for Asia. Prior to that, she was with
GE Insurance Solutions. Ms. Plunkett holds a Bachelor of Science in Business Administration from Drake University.
She is a Fellow of the Casualty Actuarial Society (FCAS) and a member of the American Academy of Actuaries
(MAAA).
Dr. Kelvin Chi-Keon LOH
Aged 51, is the Group Chief Healthcare Officer with responsibility for the execution of AIA’s Integrated Healthcare
Strategy as well as AIA’s health-related businesses. He is a director of various companies within the Group. Dr. Loh
joined the Group in May 2023, bringing more than 25 years of experience backed by a strong track record of delivery
in various leadership roles across public and private healthcare sectors. Prior to joining AIA, Dr. Loh was Managing
Director and CEO of IHH Healthcare Berhad, a leading global integrated healthcare provider operating more than 80
hospitals across 10 markets. Before that, he was Group CEO of the Columbia Asia Group, a private healthcare provider
with operations across Asian markets including Malaysia, Indonesia and Vietnam. Dr. Loh began his career as a
physician in Singapore. He holds a Master of Business Administration as well as a Bachelor of Medicine and Bachelor
of Surgery (MBBS) from the National University of Singapore.
ANNUAL REPORT 2024
103
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CORPORATE GOVERNANCE
REPORT OF THE DIRECTORS
The Board is pleased to present this report and the audited consolidated financial statements of the Company for the
year ended 31 December 2024.
PRINCIPAL ACTIVITIES
The Group is a life insurance based financial services provider operating in 18 markets throughout Asia. The Group’s
principal activity is the life insurance business. In that context, the Group, through its various operating entities,
provides individual life insurance, individual accident and health insurance and savings plans throughout Asia. The
Group also distributes related investment and other financial services products to its customers and is active in the
provision of group insurance and pension schemes in a number of its markets.
Details of the activities and other particulars of the Company’s principal subsidiaries are set out in note 40 to the
consolidated financial statements.
RESULTS
The results of the Group for the year ended 31 December 2024 and the state of the Group’s affairs at that date are set
out in the consolidated financial statements on pages 164 to 320 of this Annual Report.
BUSINESS REVIEW
The review of the business of the Group for the year ended 31 December 2024, including a description of its principal
risks and uncertainties and an indication of likely future developments as required by Schedule 5 to the Hong Kong
Companies Ordinance, is contained in the Group Chief Executive and President’s Report (pages 16 to 22), Group
Chief Financial Officer’s Review (pages 24 to 53), Business Review (pages 55 to 72), Risk Management (pages 73
to 79) and Our People and Culture (pages 80 to 85) sections in this Annual Report, and note 39 and note 41 to the
consolidated financial statements. These discussions form part of this report.
As a significant asset owner and investor in Asia, the Group recognises its potential to lead positive transformation
in the region. AIA takes a proactive approach to understanding and addressing the impacts posed to its business
by the environment, while also managing its own environmental footprint and influencing its stakeholders to take
positive climate action. The Group continues its efforts to understand the risks posed to its insurance and investment
operations from climate change.
The Group also continues to monitor its operational impact and measure the progress against its near-term
sustainability targets and long-term commitments. Its commitment to achieve net-zero greenhouse gas (GHG)
emissions by 2050 has been announced, and in 2023 AIA became the first pan-Asian life and health insurer to have
its near-term emissions reduction targets validated by the Science Based Targets initiative (SBTi). These targets
include both its operations and in-scope general account portfolio. The Group has also published its first Climate
Transition Plan in 2023, which outlines AIA’s near-term science-based targets alongside the plans for meeting these
targets. In 2024, the Group starts disclosing its progress towards these near-term targets. Its Group Investment
Committee and Business Unit Investment Committees integrated SBTi-related internal reporting metrics into their
decision-making as a governance mechanism, including the incorporation of the achievement of its SBTi-validated
targets into investment portfolios which supports strategic, evidence-based investment decisions that align with its
sustainability commitments. The Group also engages with companies in its investment portfolio to set and validate
their own SBTi-validated targets.
AIA GROUP LIMITED
104
CORPORATE GOVERNANCE
REPORT OF THE DIRECTORS
In the area of sustainable finance, AIA aims to deliver long-term sustainable returns for its shareholders while
ensuring compliance with applicable regulations. ESG considerations have been structurally embedded through its
Investment Standards on ESG, research process, and proxy voting. Its ESG scoring methodology quantifies ESG risks
and opportunities for investee companies and potential investments. A new platform has also been implemented
to track progress of investee engagement and alignment with AIA’s net-zero objectives, SBTi targets and other ESG
metrics across in-scope asset classes.
The Group commits to high standards of information security and protection of its customers’ data. In 2024, it
maintained the International Organization for Standardization (ISO) 27001 certification for its identity access
management cybersecurity and cloud security controls and also obtained the Service Organization Control (SOC)
Type 2 certification for its Group Information Security function, which provides control assurance on cybersecurity
protection. It will continue to invest in physical, administrative and technical measures to safeguard personal and
business data and avoid any cyber breach.
As a health partner to millions of customers across Asia, the Group continues to transform its role as an insurer, going
beyond being a payor to a provider of healthcare solutions, and ultimately a shaper of Asia’s healthcare systems. This
move represents a crucial step forward in its Integrated Healthcare Strategy and reinforces its position as the leading
health insurer in Asia.
AIA actively promotes ESG best practice among its suppliers. Its Supplier Code of Conduct outlines how it considers
and embeds sustainability within its supply chain and sets out the obligations to which it holds its suppliers
accountable. It has integrated compliance to its Supplier Code of Conduct in its procurement process and expect
its suppliers to be fully compliant with the code. It has also conducted several capacity building and knowledge
sharing sessions with its suppliers to orient them on its expectations and the Company’s vision for sustainability and
climate change.
To understand more about the Group’s progress on ESG initiatives, please refer to the Company’s ESG Report 2024
which is available on the Company’s website at www.aia.com and the website of Hong Kong Exchanges and Clearing
Limited at www.hkexnews.hk.
The Group is licensed to conduct insurance business and subject to extensive local regulatory oversight in each
of the geographical markets in which its branches and subsidiaries operate. While the extent of regulation varies
from jurisdiction to jurisdiction, it typically includes laws and regulations regarding corporate governance, solvency/
capital adequacy, market conduct, investment management, financial reporting and distribution. The Group dedicates
substantial resources and appropriate personnel to support compliance with relevant laws and regulations. AIA has
monitored during the year ended 31 December 2024 the Group’s compliance with all material laws and regulations
applicable to it including the solvency and capital adequacy requirements applied by its regulators, details of which
are contained in note 33 to the consolidated financial statements.
Please see the Corporate Governance Report for a discussion on the Company’s high standards of corporate
governance and the Board’s responsibility for compliance with statutory obligations.
Details of significant events affecting the Group that have occurred since 31 December 2024 are set out in note 41
to the consolidated financial statements.
ANNUAL REPORT 2024
105
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
DIVIDENDS
An interim dividend of 44.50 Hong Kong cents per share for the six-month period ended 30 June 2024 (2023: 42.29
Hong Kong cents per share) was paid on 25 September 2024. The Board has recommended an increase of 10 per
cent in the payment of a final dividend to 130.98 Hong Kong cents per share for the year ended 31 December 2024
(2023: 119.07 Hong Kong cents per share), consistent with AIA’s established prudent, sustainable and progressive
dividend policy.
Under the respective trust deeds of the Company’s restricted share unit schemes, employee share purchase plans
and agency share purchase plans, Shares are held in trust by the trustee of each of these schemes or plans. These
Shares are held against the future entitlements of scheme/plan participants. Provided the Shares are held by the
trustee and no beneficial interest in those Shares has been vested in any beneficiary, the trustee shall waive any right
to dividend payments or other distributions in respect of those Shares (unless the Company determines otherwise).
As of 10 September 2024 (being the record date of the 2024 interim dividend), the trustee held 91,074,041 Shares
under the Company’s restricted share unit schemes, employee share purchase plans and agency share purchase
plans. The amount of interim dividend payments waived was approximately US$1.83 million. Pursuant to the relevant
trust deeds, the trustee will waive the right to final dividend payment if it is declared.
Subject to Shareholders’ approval at the AGM to be held by the Company, the final dividend will be payable on
Thursday, 12 June 2025 to Shareholders whose names appear on the register of members of the Company at the close
of business on Thursday, 29 May 2025, being the record date for determining the entitlement to the final dividend.
DIRECTORS
The Directors of the Company during the year under review and up to the date of this report are as follows:
Independent Non-executive Chairman and Independent Non-executive Director
Mr. Edmund Sze-Wing TSE
Executive Director
Mr. LEE Yuan Siong (Group Chief Executive and President)
Independent Non-executive Directors
Mr. Jack Chak-Kwong SO
Mr. Chung-Kong CHOW
Mr. John Barrie HARRISON
Mr. George Yong-Boon YEO
Professor Lawrence Juen-Yee LAU
Dr. Narongchai AKRASANEE
Mr. Cesar Velasquez PURISIMA
Ms. SUN Jie (Jane)
Ms. Mari Elka PANGESTU
Mr. ONG Chong Tee
Ms. Nor Shamsiah MOHD YUNUS
In accordance with Article 100 of the Company’s Articles of Association, Mr. George Yong-Boon Yeo, Professor
Lawrence Juen-Yee Lau, Dr. Narongchai Akrasanee and Ms. Sun Jie (Jane) will retire from office by rotation. Ms. Sun
has informed the Board that she will not offer herself for re-election as an Independent Non-executive Director of
the Company at the AGM, and she will retire upon the conclusion of the AGM. Each of Mr. George Yong-Boon Yeo,
Professor Lawrence Juen-Yee Lau and Dr. Narongchai Akrasanee, being eligible, will offer themselves for re-election
at the AGM.
AIA GROUP LIMITED
106
CORPORATE GOVERNANCE
REPORT OF THE DIRECTORS
CHANGES IN DIRECTORS’ INFORMATION
Changes in the Directors’ information which are required to be disclosed pursuant to Rule 13.51B(1) of the Listing
Rules are set out below:
Name of Directors
Details of Changes
Mr. Chung-Kong CHOW
• Ceased to be a non-official member of the Human Resources Planning
Commission of the HKSAR Government with effect from 1 January 2025
Mr. George Yong-Boon YEO
• Ceased to be a senior advisor to Brunswick Group LLP with effect from
31 August 2024
Ms. Mari Elka PANGESTU
• Appointed as the Presidential Special Envoy for International Trade and
Multilateral Cooperation with effect from October 2024 and the Deputy
Chair of the National Economic Council of Indonesia with effect from
November 2024
Save as disclosed above, no other information is required to be disclosed pursuant to Rule 13.51B(1) of the Listing
Rules.
DIRECTORS’ SERVICE CONTRACTS
No Director proposed for re-election at the AGM has a service contract with the Company which is not determinable
by the Company within one year without payment of compensation (other than statutory compensation).
DIRECTORS OF SUBSIDIARIES
The names of all directors who have served on the boards of the subsidiaries of the Company during the year under
review and up to the date of this report are kept at the Company’s registered office and available for inspection by the
Shareholders during business hours.
PERMITTED INDEMNITY PROVISION
Pursuant to the Company’s Articles of Association, subject to the relevant statutes, every Director shall be indemnified
out of the assets of the Company against all costs, charges, expenses, losses and liabilities which he/she may sustain
or incur in or about the execution of his/her office or which may attach thereto. The Company has taken out insurance
against the liabilities and costs associated with proceedings which may be brought against directors of the Group.
The relevant provisions in the Company’s Articles of Association were in force during the financial year ended 31
December 2024 and as at the date of this report.
ANNUAL REPORT 2024
107
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
DIRECTORS’ AND THE CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES AND
UNDERLYING SHARES
As at 31 December 2024, the Directors’ and the Chief Executive’s interests and short positions in the Shares,
underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of
the SFO) as recorded in the register required to be kept under Section 352 of the SFO, or as otherwise notified to the
Company and the Hong Kong Stock Exchange pursuant to the Model Code are as follows:
Interests and short positions in the Shares and underlying Shares:
Name of Directors
Number of
Shares or
underlying
Shares
Long Position (L)
Class
Percentage
of the total
number of
Shares in issue(1)
Capacity
Mr. LEE Yuan Siong(2)
1,998,769(L)
2,743,051(L)
3,682,864(L)
2,434(L)
(3)
(4)
(5)
(6)
Ordinary
0.01
0.02
0.03
<0.01
Beneficial owner
Beneficial owner
Beneficial owner
Beneficial owner
Mr. Edmund Sze-Wing TSE(7)
3,330,400(L)
230,000(L)
(3)
(3)
Ordinary
0.03
<0.01
Beneficial owner
Interest of controlled
corporation(8)
Mr. Jack Chak-Kwong SO
190,000(L)(3)
Ordinary
<0.01
Interest of controlled
corporation(9)
Mr. Chung-Kong CHOW
126,000(L)(3)
Ordinary
<0.01
Beneficial owner
Mr. John Barrie HARRISON
80,000(L)(3)
Ordinary
<0.01
Interests held jointly
with another person(10)
Mr. George Yong-Boon YEO
50,000(L)(3)
Ordinary
<0.01
Beneficial owner
Professor Lawrence Juen-Yee LAU
250,000(L)(3)
Ordinary
<0.01
Interest of spouse(11)
Notes:
(1) Based on 10,831,704,133 Shares in issue as at 31 December 2024.
(2) The aggregate number of the Shares and underlying Shares held by Mr. Lee Yuan Siong was 8,427,118, representing 0.07 per cent of the total number
of Shares in issue.
(3) The interests were in the Shares.
(4) The interests were in RSUs granted to Mr. Lee Yuan Siong under the restricted share unit schemes adopted by the Company from time to time, of which
522,031 RSUs were awarded compensation for unvested long-term incentives and deferred payments that Mr. Lee Yuan Siong forfeited on leaving his
prior employment as also disclosed in the Company’s announcement dated 22 November 2019.
(5) The interests were in SOs granted to Mr. Lee Yuan Siong under the share option schemes adopted by the Company from time to time.
(6) The interests were in matching RSPUs granted under the employee share purchase plans adopted by the Company from time to time.
(7) The aggregate number of the Shares and underlying Shares held by Mr. Edmund Sze-Wing Tse was 3,560,400, representing 0.03 per cent of the total
number of Shares in issue.
(8) The 230,000 Shares were held by Edmund & Peggy Tse Foundation Limited, one-third interest of which is beneficially held by Mr. Edmund
Sze-Wing Tse.
(9) The 190,000 Shares were held by Cyber Project Developments Limited, a company beneficially wholly owned by Mr. Jack Chak-Kwong So.
(10) The 80,000 Shares were jointly held by Mr. John Barrie Harrison and his spouse, Ms. Rona Irene Harrison, as beneficial owners.
(11) The 250,000 Shares were held by Ms. Ayesha Abbas Macpherson, the spouse of Professor Lawrence Juen-Yee Lau, as beneficial owner.
Save as disclosed above, as at 31 December 2024, neither the Directors nor the Chief Executive of the Company
had any interest or short position in the Shares, underlying Shares or debentures of the Company or its associated
corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section
352 of the SFO, or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the Model
Code.
AIA GROUP LIMITED
108
CORPORATE GOVERNANCE
REPORT OF THE DIRECTORS
INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES OF PERSONS OTHER
THAN THE DIRECTORS OR THE CHIEF EXECUTIVE
As at 31 December 2024, the following persons, other than the Directors or the Chief Executive of the Company,
had interests and short positions in the Shares and underlying Shares as recorded in the register required to be kept
under Section 336 of the SFO:
Name of Shareholders
Number of Shares
or underlying Shares
(Note 1)
Long Position(L)
Short Position(S)
Lending Pool(P)
Class
Percentage of
the total number
of Shares in issue
(Note 2)
Capacity
The Bank of New York Mellon
Corporation
1,152,420,823(L)
326,741,568(S)
793,262,466(P)
Ordinary
10.63
3.01
7.32
Note 3
JPMorgan Chase & Co.
853,115,664(L)
37,486,378(S)
551,174,805(P)
Ordinary
7.87
0.34
5.08
Note 4
Citigroup Inc.
641,584,665(L)
36,001,848(S)
584,103,111(P)
Ordinary
5.92
0.33
5.39
Note 5
BlackRock, Inc.
639,521,339(L)
3,086,248(S)
Ordinary
5.90
0.02
Interest of controlled
corporations
Notes:
(1) Amongst the interests and short positions in the Shares and underlying Shares set out in the table above, the following interests and short positions
were related to derivative interests held by the Shareholders:
Name of
Shareholders
Long Position
Short Position
Physically
settled
listed
derivatives
Cash
settled
listed
derivatives
Physically
settled
unlisted
derivatives
Cash
settled
unlisted
derivatives
Convertible
instruments
listed
derivatives
Physically
settled
listed
derivatives
Cash
settled
listed
derivatives
Physically
settled
unlisted
derivatives
Cash
settled
unlisted
derivatives
Convertible
instruments
listed
derivatives
The Bank of
New York
Mellon
Corporation
4,941,108
–
–
–
–
–
– 326,741,568
–
–
JPMorgan
Chase & Co.
10,735,000
62,440
2,586,563 11,126,600
2,323,927
4,420,000 1,320,123
20,460,159
8,546,335
–
Citigroup Inc.
8,345,566
– 18,668,207 12,335,730
–
10,701,344
–
5,602,432 17,830,441
–
BlackRock, Inc.
–
–
–
5,875,448
826,909
–
–
–
3,083,448
–
(2) Based on 10,831,704,133 Shares in issue as at 31 December 2024.
(3) The Bank of New York Mellon Corporation held the interests and short positions in the following capacity:
Capacity
Number of Shares or
underlying Shares
(Long Position)
Number of Shares or
underlying Shares
(Short Position)
Interest of controlled corporations
1,152,420,823
326,741,568
(4) JPMorgan Chase & Co. held the interests and short positions in the following capacities:
Capacity
Number of Shares or
underlying Shares
(Long Position)
Number of Shares or
underlying Shares
(Short Position)
Approved lending agent
551,174,805
–
Investment manager
242,513,140
651,018
Beneficial Owner
47,782,829
36,835,360
Person having a security interest in Shares
11,262,051
–
Trustee
382,839
–
ANNUAL REPORT 2024
109
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
(5) Citigroup Inc. held the interests and short positions in the following capacities:
Capacity
Number of Shares or
underlying Shares
(Long Position)
Number of Shares or
underlying Shares
(Short Position)
Approved lending agent
584,103,111
–
Interest of controlled corporations
57,481,554
36,001,848
Save as disclosed above, as at 31 December 2024, no person, other than the Directors or the Chief Executive of the
Company, whose interests are set out in the section entitled “Directors’ and the Chief Executive’s Interests and Short
Positions in Shares and Underlying Shares”, had any interest or short position in the Shares or underlying Shares as
recorded in the register required to be kept under Section 336 of the SFO.
DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES
Under the service contract in the role of Group Chief Executive and President with the Company, Mr. Lee Yuan Siong
was entitled to an annual discretionary earned incentive award, which includes payment in the form of Shares.
Details of the incentive awards of Mr. Lee Yuan Siong are set out in the Remuneration Report in this Annual Report.
DIRECTORS’ INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS
No transactions, arrangements or contracts of significance to which the Company or any of its subsidiaries was
a party, and in which any Director of the Company or his/her connected entity has a material interest, directly or
indirectly, subsisted as at 31 December 2024 or at any time during the year under review.
RESERVES
As at 31 December 2024, the aggregate amount of reserves available for distribution to Shareholders, as calculated
under the provisions of Part 6 of the Hong Kong Companies Ordinance, was US$4,550 million (31 December 2023:
US$4,853 million).
DONATIONS
Donations for charitable and/or other purposes made by the Group during the year ended 31 December 2024
amounted to approximately US$7.8 million (2023: US$6.8 million).
MAJOR CUSTOMERS AND SUPPLIERS
During the year ended 31 December 2024, the percentage of the aggregate purchases attributable to the Group’s
five largest suppliers was less than 30 per cent of the Group’s total value of purchases and the percentage of the
aggregate sales attributable to the Group’s five largest customers was less than 30 per cent of the Group’s total value
of sales.
AIA GROUP LIMITED
110
CORPORATE GOVERNANCE
REPORT OF THE DIRECTORS
SHARES ISSUED
Details of the Shares issued during the year ended 31 December 2024 are set out in note 31 to the consolidated
financial statements.
DEBENTURES ISSUED
Details of the debentures issued during the year ended 31 December 2024 are set out in notes 26 and 34 to the
consolidated financial statements.
EQUITY-LINKED AGREEMENTS
During the year ended 31 December 2024, the Company did not enter into any equity-linked agreements and there
did not subsist any equity-linked agreement entered into by the Company as at 31 December 2024, save for the
outstanding awards made to employees and agents under the 2010 SO Scheme, the 2020 SO Scheme, the 2010 RSU
Scheme, the 2020 RSU Scheme, the 2020 ESPP and the 2021 ASPP, each described below and in the Remuneration
Report and note 36 to the consolidated financial statements.
The purpose of these share schemes of the Company is to align senior employees with the Group’s long-term strategic
goals and ambitions and stakeholders’ interests, as well as to provide employees and agents with a share investment
opportunity with matching share grants to facilitate and encourage long-term share ownership.
SHARE OPTION SCHEMES
The Company adopted the 2010 SO Scheme on 28 September 2010 for a term of 10 years from the date of adoption.
It sought and obtained the approval from the Shareholders at its annual general meeting held on 29 May 2020 for
the termination of the 2010 SO Scheme and the adoption of a new share option scheme (2020 SO Scheme), effective
from 29 May 2020 (2020 SO Scheme Adoption Date). The 2020 SO Scheme is also effective for a period of 10 years
from the 2020 SO Scheme Adoption Date.
During the 10-year period from the 2020 SO Scheme Adoption Date, the aggregate number of Shares available for
issue upon exercise of all SOs granted by the Company (excluding SOs that have lapsed) pursuant to the 2020 SO
Scheme and any other share option scheme of the Company (i.e., the 2010 SO Scheme) shall not exceed 2.5 per cent
of the number of Shares in issue on the 2020 SO Scheme Adoption Date, being 302,264,978 Shares. 9,306,819 SOs
had been granted under the 2020 SO Scheme since its adoption till 31 December 2024.
No consideration is payable for the SOs granted under the SO Schemes upon acceptance by the grantees, who may
subscribe for the Shares upon exercise of the SOs at the price set out in the relevant grant letter.
During the year ended 31 December 2024, the Company awarded 3,019,542 SOs under the 2020 SO Scheme, while
869,729 SOs were exercised under the 2010 SO Scheme and the Company issued 869,729 new Shares accordingly.
The proceeds received amounted to approximately US$6.15 million.
The exercise conditions of the SOs are generally contingent on the continued employment of the participant. Further
information, including a summary of the terms, of the 2020 SO Scheme is set out in the Remuneration Report and
note 36 to the consolidated financial statements.
ANNUAL REPORT 2024
111
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
RESTRICTED SHARE UNIT SCHEMES
The 2010 RSU Scheme adopted by the Company on 28 September 2010 with a term of 10 years from the date of
adoption was terminated with effect from 31 July 2020. The Company adopted the 2020 RSU Scheme on 1 August
2020 (2020 RSU Scheme Adoption Date) in place of and under substantially the same terms as the 2010 RSU
Scheme. The 2020 RSU Scheme is also effective for a period of 10 years from the 2020 RSU Scheme Adoption Date.
The RSU awards granted pursuant to the 2020 RSU Scheme may be satisfied through the issuance of new Shares
or the on-market purchase of Shares by the scheme trustee upon vesting. No consideration shall be payable by the
grantees on acceptance or vesting of any RSU awards.
During the 10-year period from the 2020 RSU Scheme Adoption Date, the aggregate number of Shares available for
issue underlying the RSU awards granted by the Company under the 2020 RSU Scheme and any other restricted
share unit scheme of the Company (i.e., the 2010 RSU Scheme) shall not exceed 2.5 per cent of the number of
Shares in issue on the reference date as specified under the rules of the 2020 RSU Scheme (i.e., 18 May 2023), being
290,494,815 Shares.
During the year ended 31 December 2024, the Company awarded 17,620,057 restricted share units under the 2020
RSU Scheme. No new Shares have been issued upon vesting of the RSU awards under both the 2010 RSU Scheme
and the 2020 RSU Scheme since their adoption.
The vesting of RSU awards is conditional upon the participant remaining in employment with the Group at the time of
vesting and subject to the achievement of pre-defined performance levels. Further information, including a summary
of the terms, of the 2020 RSU Scheme is set out in the Remuneration Report and note 36 to the consolidated financial
statements.
EMPLOYEE SHARE PURCHASE PLAN
The 2011 ESPP adopted by the Company on 25 July 2011 with a term of 10 years from the date of adoption was
terminated with effect from 31 October 2020. The 2020 ESPP, with substantially the same terms as the 2011 ESPP,
was adopted by the Company on 1 August 2020 (2020 ESPP Adoption Date). The 2020 ESPP is also effective for a
period of 10 years from the 2020 ESPP Adoption Date.
Under the 2020 ESPP, eligible employees of the Group may elect to purchase the Shares and, through the grant of
matching RSPUs, employees who are still in employment with the Group will receive one matching Share for every
two Shares purchased and held until the vesting of the matching RSPUs, which generally takes place three years
from the day of the first Share purchase in a plan year. Each eligible employee’s participation level is capped at the
lower of 10 per cent of the monthly base salary or HK$12,500 (or local currency equivalent) per calendar month. The
matching Shares can either be awarded through the issuance of new Shares or the purchases of existing Shares on
market by the plan trustee.
During the 10-year period from the 2020 ESPP Adoption Date, the aggregate number of Shares available for issue
pursuant to the 2020 ESPP and any other employee share purchase plan (i.e., the 2011 ESPP) shall not exceed 2.5
per cent of the number of Shares in issue on the reference date (i.e., 18 May 2023) as specified under the rules of the
2020 ESPP, being 290,494,815 Shares.
AIA GROUP LIMITED
112
CORPORATE GOVERNANCE
REPORT OF THE DIRECTORS
During the year ended 31 December 2024, 2,603,278 matching RSPUs were granted and 1,553,991 matching RSPUs
were vested under the 2020 ESPP. No new Shares have been issued upon vesting of the matching RSPUs under both
the 2011 ESPP and the 2020 ESPP since their adoption.
The vesting of RSPUs is conditional upon the participant remaining in employment with the Group at the time of
vesting. Further information, including a summary of the terms, of the 2020 ESPP is set out in the Remuneration
Report and note 36 to the consolidated financial statements.
AGENCY SHARE PURCHASE PLAN
The 2012 ASPP adopted by the Company on 23 February 2012 with a term of 10 years from the date of adoption was
terminated with effect from 31 March 2021. The 2021 ASPP was adopted by the Company on 1 February 2021 (2021
ASPP Adoption Date) and has substantially the same terms as the 2012 ASPP. The 2021 ASPP is also effective for a
period of 10 years from the 2021 ASPP Adoption Date.
Under the 2021 ASPP, certain agents and agency leaders of the Group are selected to participate in the plan and
may elect to purchase Shares and, through the grant of matching RSSUs, receive one matching Share for every two
Shares purchased that are held until the vesting of the matching RSSUs, which generally takes place three years from
the day of the first Share purchase in a plan year. Each eligible agent’s participation level is capped at HK$12,500
(or local currency equivalent) per calendar month. The matching Shares are awarded through the issuance of new
Shares by the Company.
During the 10-year period from the 2021 ASPP Adoption Date, the aggregate number of Shares available for issue
pursuant to the 2021 ASPP and any other agency share purchase plan (i.e., the 2012 ASPP) shall not exceed 2.5 per
cent of the number of Shares in issue on the reference date (i.e., 18 May 2023) as specified under the rules of the
2021 ASPP, being 290,494,815 Shares. Since the 2021 ASPP Adoption Date and up till 31 December 2024, 877,146
new Shares were issued under the 2021 ASPP.
During the year ended 31 December 2024, 1,433,727 matching RSSUs were granted, 877,146 matching RSSUs
were vested, and 877,146 new Shares (Awarded Shares) were issued for RSSUs vested pursuant to the 2021 ASPP.
The Awarded Shares were issued at the subscription price of US$1.00 each to Computershare Hong Kong Trustees
Limited (being the plan trustee) to hold the same on trust for certain eligible agents upon vesting of their matching
RSSUs.
As disclosed in the Company’s announcement dated 2 April 2024, the Company estimated that a total of 1,878,120
RSSUs will be granted to the participants for the 2024 ASPP plan year which runs from 1 May 2024 to 30 April 2025.
During the year ended 31 December 2024, the actual number of matching RSSUs granted in relation to the 2024
ASPP plan year was 986,845. During the same period, no matching RSSUs were vested, and 877,146 new Shares
were issued pursuant to the 2021 ASPP.
The vesting of matching RSSUs is conditional upon the participant remaining as an agent with the Group at the time
of vesting. Further information, including a summary of the terms, of the 2021 ASPP is set out in the Remuneration
Report and note 36 to the consolidated financial statements.
NON-EXEMPT CONNECTED TRANSACTIONS
During the year ended 31 December 2024, the Group had not entered into any connected transactions which are not
exempt from the annual reporting requirement under Chapter 14A of the Listing Rules.
ANNUAL REPORT 2024
113
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
RELATED PARTY TRANSACTIONS
Details of the related party transactions undertaken by the Group during the year ended 31 December 2024 in
the ordinary course of business are set out in note 38 to the consolidated financial statements. Such related party
transactions are all exempt connected transactions under Chapter 14A of the Listing Rules.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES
During the year ended 31 December 2024, the Company bought back a total of 571,028,800 Shares on the Hong Kong
Stock Exchange with the aggregate consideration paid (before expenses) amounting to approximately HK$32,325
million (equivalent to approximately US$4,144 million) pursuant to its US$12 billion share buy-back programme as
announced on 11 March 2022 and 29 April 2024, which also set out the reasons for implementing the programme by
the Company. All the Shares bought back were subsequently cancelled. As at 31 December 2024, the total number
of Shares in issue was 10,831,704,133. Particulars of the Shares bought back are as follows:
Price paid per Share
Aggregate
consideration
Month
Number of Shares
bought back
(Average)
(HK$)
(Highest)
(HK$)
(Lowest)
(HK$)
(before expenses)
(HK$ millions)
January 2024
41,873,000
62.83
68.10
58.10
2,631
February 2024
26,355,000
62.80
66.55
59.65
1,655
March 2024
55,654,000
57.80
64.90
50.20
3,217
April 2024
2,915,200
51.72
54.90
45.30
151
May 2024
35,533,800
60.57
66.10
59.55
2,152
June 2024
57,602,600
56.40
61.15
52.85
3,249
July 2024
86,702,000
52.40
55.45
50.50
4,543
August 2024
95,869,200
52.27
56.95
50.10
5,011
September 2024
28,897,800
54.60
61.55
52.30
1,578
October 2024
18,172,200
64.22
74.15
61.15
1,167
November 2024
82,276,200
57.87
63.75
56.15
4,761
December 2024
39,177,800
56.41
60.45
54.15
2,210
Total
571,028,800
56.61
–
–
32,325
In addition, the Company also purchased 5,466,874 Shares under the 2020 RSU Scheme and the 2020 ESPP for a
total consideration of approximately HK$330 million (equivalent to approximately US$42 million) during the year
ended 31 December 2024. These purchases were made by the trustee of these share schemes on the Hong Kong
Stock Exchange. These Shares are held on trust for the participants of the relevant schemes and therefore were not
cancelled. Please refer to note 36 to the consolidated financial statements for details.
As announced by the Company, the Company also redeemed and cancelled all of its outstanding US$750,000,000
3.200 per cent. notes due 2025 on 11 December 2024 which was listed on the Hong Kong Stock Exchange prior to
redemption.
Save as disclosed above, during the year ended 31 December 2024, neither the Company nor any of its subsidiaries
purchased, sold or redeemed any of the Company’s listed securities.
AIA GROUP LIMITED
114
REPORT OF THE DIRECTORS
CORPORATE GOVERNANCE
PUBLIC FLOAT
Based on information that is publicly available to the Company and within the knowledge of the Directors, the
Company has maintained the amount of public float permitted under the Listing Rules as at the date of this report.
AUDITOR
PricewaterhouseCoopers was re-appointed auditor of the Company in 2024.
PricewaterhouseCoopers will retire and, being eligible, offer itself for re-appointment at the AGM. A resolution for the
re-appointment of PricewaterhouseCoopers as auditor of the Company for the year ending 31 December 2025 will
be proposed at the AGM.
Further to the update provided in the 2024 Interim Report, the Group’s audit tender process is ongoing. The shortlisted
accounting firms, including AIA’s incumbent auditor, PricewaterhouseCoopers (PwC), have been invited to the tender
process. An announcement will be made by the Company when the Board approves the recommendation from
the Tender Committee (comprising all members of the Audit Committee) on the selection and appointment of the
prospective auditor of the Group for the 2026 financial year. Such proposed appointment is subject to approval by the
Company’s shareholders at the 2026 annual general meeting.
By Order of the Board
Edmund Sze-Wing Tse
Independent Non-executive Chairman
14 March 2025
ANNUAL REPORT 2024
115
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
CORE PRINCIPLES
The Company is listed on the Main Board of the Hong Kong Stock Exchange and is a constituent stock of the Hang
Seng Index. The Board believes that strong corporate governance is essential both to the delivery of sustainable value
and to maintaining a culture of business integrity, which in turn supports investor confidence. The Board is ultimately
responsible for the performance of the Group, including the consistent achievement of business plans, compliance
with statutory as well as corporate obligations and the long-term sustainability of the Company’s operations.
The Board is also ultimately responsible for the development and implementation of the Group’s corporate governance
practices. This Corporate Governance Report sets out the corporate governance practices and undertakings of the
Group underscoring the Board’s belief in the value of such practices and undertakings.
Throughout the year ended 31 December 2024, with the exception of Code Provision C.6.3, the Company applied
the principles and complied with all applicable code provisions of the Corporate Governance Code. Code Provision
C.6.3 provides that the company secretary should report to the chairman of the board and/or the chief executive. The
Company operates under a variant of this model whereby the Group Company Secretary reports to the Group General
Counsel, who is ultimately accountable for the company secretarial function of the Company and who in turn reports
directly to the Group Chief Executive and President, being the sole Executive Director on the Board.
CORPORATE CULTURE AND STRATEGY
The Company’s corporate culture is guided by its Operating Philosophy of “Doing the Right Thing, in the Right Way,
with the Right People… and the Right Results will come”. This philosophy permeates all levels of the Group, from the
Board and senior management and throughout all operating levels of the organisation. It is embedded in AIA’s Code
of Conduct, which sets the framework for a culture of professionalism, ethics, respect, diversity and inclusion; all in
support of helping the Company deliver on its Purpose of helping people live Healthier, Longer, Better Lives.
BOARD OF DIRECTORS
CORPORATE GOVERNANCE FRAMEWORK
The Board is supported by a structure that enables appropriate delegation between the Board, its Committees and
management, whilst ensuring that the Board retains overall control.
To promote effective governance, the Board has approved a governance framework which maps out internal approval
processes including those matters that may be delegated.
The Company has also implemented a system for group-wide and business unit-level policies, standards and
guidelines to ensure high governance standard is maintained across the Group and compliance with applicable laws
and regulations.
In addition, a comprehensive mandatory training programme for the Group’s employees and contingent
workers covering the key policies of the Company is put in place to facilitate groupwide compliance of relevant laws
and regulations.
AIA GROUP LIMITED
116
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
BOARD GOVERNANCE STRUCTURE
The Company’s board governance structure is set out below:
Notes:
(1) The Board is ultimately responsible for the sustainable performance of the Group, including the consistent achievement of business plans and
compliance with statutory as well as corporate obligations.
(2) The Board has established committees to assist it in meeting its different areas of responsibilities. The terms of reference for such Board committees
are approved by the Board, including any revisions thereto from time to time.
(3) The Board established the Environmental, Social and Governance (ESG) Committee as a shared Board and management committee to oversee the
Group’s ESG strategy and reporting, as well as the ESG aspects of risk management and internal control system. It comprises members from the Group
Executive Committee and two representatives from the Board. More details on the ESG Committee (including its roles and responsibilities) are set out
in the section headed “ESG Governance” of the Company’s ESG Report 2024.
(4) The Board delegates authority to the Group Chief Executive and President to act on behalf of the Board in the executive management of the Company.
(5) More details of the ExCo are set out in the section headed “Chairman and Group Chief Executive” of this report.
(6) Management committees are set up by the Group Chief Executive and President and other senior executives to provide oversight of the Group’s core
functions and businesses.
Board of Directors1
Board Committees2
Nomination
Committee
Remuneration
Committee
ESG
Committee3
Risk
Committee
Audit
Committee
Group Chief Executive and President4
Group Executive Committee5 (ExCo)
Management Committees6
ANNUAL REPORT 2024
117
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
KEY ROLES AND RESPONSIBILITIES
The Board is accountable to Shareholders for the affairs of the Company. It meets these obligations by ensuring
the maintenance of high standards of governance in all aspects of the Company’s business, setting the strategic
direction for the Group and maintaining appropriate levels of review, challenge and guidance in its relationship with
Group management. It is also the ultimate decision-making body for all matters considered material to the Group
and is responsible for ensuring that, as a collective body, Board members have the appropriate skills, knowledge and
experience to perform their roles effectively.
In these matters, the Board provides leadership to management in respect of operational issues through the Group
Chief Executive and President, who is authorised to act on behalf of the Board in the operational management of the
Company. Any responsibilities not so delegated by the Board to the Group Chief Executive remain the responsibility
of the Board.
The Board also discharges the following responsibilities either by itself or through delegation to the Audit Committee,
the Nomination Committee, the Remuneration Committee and the Risk Committee:
(a) the development and review of the Company’s policies and practices on corporate governance;
(b) the review and monitoring of the training and continuous professional development of Directors and senior
management;
(c) the review and monitoring of the Company’s policies and practices on compliance with legal and regulatory
requirements;
(d) the development, review and monitoring of the Code of Conduct applicable to all officers and employees of the
Group; and
(e) the review of the Company’s compliance with the Corporate Governance Code and disclosure in this Corporate
Governance Report.
Corporate and
Business Strategies
Annual Business
Management Plan
Corporate
Governance and ESG
Financial Reporting
and Controls
Risk Management and
Internal Control Effectiveness
Captial Structure
Changes
People and
Remuneration Policy
Major Transactions
and Projects
Legal and Regulatory
Compliance
AIA GROUP LIMITED
118
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
During the year under review, the Board discharged its responsibilities under the Board Charter of the Company,
which is available on the Company’s website at www.aia.com. Those responsibilities included the following:
Areas of focus
Board activities
Strategy, capital and
business plan
• Active participation in the annual Board Strategy meetings to identify, refine and
support the development of the strategic priorities of the Group.
• Review and approval of the 2025 business and capital management plan, which
covers the annual operating and capital expenditure budgets of the Group.
• Review of the Group’s leadership capability and succession plans and programmes
to ensure alignment with the Group’s strategy and ambitions.
Financial performance and
material transactions
• Review and approval of the preliminary announcements of the Group’s 2023 annual
results and 2024 interim results, as well as other documents prepared to comply
with the Listing Rules and other applicable laws, codes or regulations.
• Consideration and approval of the proposed final dividend for 2023 and the interim
dividend for 2024.
• Consideration and approval of material capital, investment and acquisition projects
of the Group and receiving post-transaction risk assessment updates on the projects.
Risk management and
regulatory compliance
• Oversight and regular review of the implementation of the Group’s enterprise risk
management framework, including an annual review on the risk appetite framework
of the Group and the approval of supervisory reports to be submitted to the Hong
Kong Insurance Authority during the year.
• Review and approval of the adequacy and effectiveness of the risk management and
internal control systems of the Group for the year ended 31 December 2023.
• Review and consideration of an annual update on information security from the
Company’s management.
Governance and
sustainability
• Review and consideration of periodic management reports, as well as quarterly
reports from the chairperson of each of the Board committees.
• Review and consideration of updates on the Group’s performance in the areas of
ESG and approving the ESG Report 2023 of the Company.
• Consideration and re-appointment of the external auditor of the Company for the
2025 financial year.
• Consideration and approval of the long-term incentive (LTI) target pool for the LTI
grants to be made to employees in 2025 under the Company’s share schemes.
• Attendance at a special annual business unit review to evaluate local operations
with senior management and to meet with other local stakeholders. In 2024, the
Board attended a detailed review programme for AIA’s operations in Thailand.
The Company has also adopted its own Dealing Policy on terms no less exacting than those set out in the Model Code
in respect of dealings by the Directors and Group Chief Executive in the securities of the Company. All of the Directors
(including the Group Chief Executive) confirmed that they have complied with the required standards set out in the
Model Code and the Dealing Policy throughout the year ended 31 December 2024.
ANNUAL REPORT 2024
119
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
BOARD COMPOSITION AND DIVERSITY
The Board consists of thirteen members, comprising one Executive Director and twelve Independent
Non-executive Directors (INEDs). The composition of the Board is well balanced with each Director having sound
board level experience and expertise relevant to the business operations and development of the Group. The Board
also demonstrates diversity of age, gender, nationality, ethnicity, educational background, functional expertise
and experience.
The following diagram illustrates the diversity profile of the Board:
Independence
Executive
Independent Non-Executive
1 Director
12 Directors
Board Tenure
1-3 years
4-6 years
7-9 years
Over 9 years
4 Directors
1 Director
2 Directors
6 Directors
Nationality
Chinese
Singaporean
British
Filipino
Indonesian Malaysian
Thai
4 Directors
4 Directors
1 Director 1 Director 1 Director 1 Director 1 Director
Age Group
55-64
65-74
Over 75
5 Directors
4 Directors
4 Directors
Gender
Female
Male
3 Directors
10 Directors
The Board is comprised of members with extensive business, financial, government, regulatory and policy experience
from a variety of backgrounds. Their skills, knowledge, experience and background have contributed meaningfully
to the Board’s understanding of the ongoing development of the major markets of the Group, and are relevant and
valuable to the development of the Group’s corporate strategies, as well as to support its purpose, values and culture.
The Company does not have mandatory retirement ages or term limits for its directorship.
The Company’s approach to ensuring diversity is set out in the Board Diversity Policy (first adopted by the Board
in 2013 and last revised in 2021) which includes consideration of diversity in the Board’s composition across all
measures, including in relation to race, gender, religion and national origin, as well as diversity of experience from
both the private and public sectors. While the Policy does not enumerate specific targets across any specific aspect
of diversity, the depth and diversity of experience represented on the Board, including experience in all of the Group’s
major markets as well as a broad base of public sector and private company experience, allows the Board to bring a
diversity of perspectives to the governance of the Group and its operations. The Board has, through the Nomination
Committee, performed a review of the implementation and effectiveness of the Board Diversity Policy during the
year. That review concluded that the Board benefits from robust diversity and the Board Diversity Policy continued to
operate effectively in achieving its purpose.
A summary of the Board Diversity Policy is set out below:
•
The Company understands that a Board composed of appropriately qualified members with a broad range of
relevant experience, in addition to diversity in thought and background, is essential to the effective governance of
its business and ensuring long-term sustainable growth;
•
The Company remains committed to non-discrimination in all aspects of its business, including the appointment
of Board members. Consideration and selection of candidates for appointment to the Board will be based on merit
which shall include a review of the candidate’s integrity, experience, educational background, industry or related
experience and more general experience;
•
Within that overriding emphasis on merit, the Nomination Committee shall seek to address Board vacancies by
actively considering candidates who bring a diversity of background and opinion from amongst those candidates
with the appropriate background and industry or related expertise and experience. The Nomination Committee’s
considerations shall include achieving an appropriate level of diversity having regard to factors such as gender,
age, ethnicity, nationality, cultural and educational background;
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•
The Nomination Committee will (a) in reviewing Board composition, consider the benefits of all aspects of diversity
including, but not limited to, those described above, in order to maintain an appropriate range and balance of
skills, experience, knowledge and character on the Board; and (b) as part of the performance evaluation of the
Board, consider the balance of skills, experience, knowledge and independence of the Board;
•
As part of the Nomination Committee’s annual review of the structure, size and composition of the Board, the
Nomination Committee will expressly consider and include commentary to the Board on the Board’s diversity;
and
•
The measurable objectives on board diversity under the Board Diversity Policy include (a) to select candidates for
nomination as a Director based on the Directors’ Nomination Policy with due regard to the diversity perspectives
set out in the policy; (b) to maintain the Board with a majority of independent non-executive directors; and (c)
to ensure that the Board be made up of members with diverse backgrounds and experience, including diversity
of nationality, ethnicity and gender, with such members demonstrating appropriate knowledge, experience and
understanding of the markets in which the Company operates its business. All of the measurable objectives have
been achieved for each new appointment to the Board.
The Group has in place a Diversity, Equity, Inclusion, and Belonging Standard, which seeks to ensure AIA continues
to be an employer of choice for employees with diverse backgrounds. The standard helps ensure that the Group
continues to foster an open, safe and inclusive environment for all employees, free from discrimination and
harassment of any form. The Group is committed to maintaining a gender-balanced workforce with at least 40 per
cent female representation overall as well as a target of at least 40 per cent women in its senior leadership positions.
To continue building the Group’s pipeline of female leaders, the Group has set a target of at least 45 per cent
female participation in its leadership programmes by the end of 2026. As at 31 December 2024, women represented
57.3 per cent of the Group’s employee population and 41.8 per cent of its senior leaders (including senior management)
across the Group were women. Further details on the progress for workforce diversity in 2024 are disclosed in the
Company’s ESG Report 2024.
APPOINTMENT AND RE-ELECTION OF DIRECTORS
The Company has put in place a formal and transparent process for the appointment of Directors. When a need
is identified, the Nomination Committee engages in a robust search process to identify suitably qualified Director
candidates, including the use of independent executive search firms. Prospective candidates will then be shortlisted
through a comprehensive evaluation process that includes consideration of a candidate’s ability and willingness to
devote sufficient time to the duties required. Following meetings with candidates by each member, the Nomination
Committee will deliberate prior to recommending an appropriate candidate to the Board for approval.
The focus of the Nomination Committee has always been to identify individuals best qualified to serve the interests of
the Shareholders and policyholders. Within this broader mandate, the Committee also has regard to ensuring that the
Board is appropriately representative of the communities that the Company serves. To promote greater transparency,
the Directors’ Nomination Policy was adopted by the Board in 2019 and revised in 2022. A summary of the Policy is
set out in the subsection headed “Nomination Committee” under the “Committees of the Board” section of this report.
All Directors are subject to retirement by rotation at least once every three years pursuant to the Corporate Governance
Code and are subject to re-election at the general meetings of the Company in accordance with the Articles of
Association of the Company.
ANNUAL REPORT 2024
121
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
BOARD INDEPENDENCE
The Company recognises that Board independence is critical to ensuring good corporate governance. Twelve of the
thirteen Board members are INEDs, which far exceeds the independence requirements under the Listing Rules.
The Board has put in place robust mechanisms to ensure a strong independent element on the Board, which include:
Areas of Governance
Mechanisms
Board and Board
Committees Structure
• The Board maintains a supermajority of INEDs with diversified backgrounds and
expertise to ensure a wide spectrum of independent views are available to the Board.
• All of the Board committees are chaired by INEDs and comprise of a majority of INEDs.
Appointment of INEDs
• Independent executive search firms are engaged to facilitate the identification of
potential candidates for appointment of INEDs.
• In assessing the suitability of the candidates, the Nomination Committee reviews
the candidates’ profiles, including their qualification and independence from the
Company, as well as other selection criteria set out in the Directors’ Nomination Policy
and Board Diversity Policy of the Company.
• Each potential candidate is required to confirm in writing to the Company his/her
independence upon his/her appointment as Director.
Annual review of
independence of INEDs
• The independence of INEDs is assessed annually by reference to the independence
criteria as set out in Rule 3.13 of the Listing Rules to ensure independent views and
input continue to be available to the Board.
• Directors’ independence is assessed with regard to the full range of relevant factors
concerned rather than focusing exclusively on the length of service of an individual.
Non-executive Directors’
remuneration
• The INEDs receive fixed fees for their roles as members of the Board and Board
committees and their remuneration does not involve any equity-based rewards with
performance related elements.
Robust communication
channels
• The Chairman promotes a culture of openness to facilitate effective contribution of
independent views and inputs by the INEDs.
• The Company has put in place robust processes to facilitate active participation and
constructive discussions by Board members on matters material to the Company.
INEDs can provide their independent views and inputs through formal and informal
channels, including formal and informal meeting sessions with the Board Chairman
and the management.
Professional advice
• To facilitate proper discharge of their duties, Board members are entitled to request
further information from management and obtain, at the Company’s expense, external
independent professional advice if and when necessary.
Board effectiveness review
• Board evaluation is conducted by external consultant about once every three years,
with internal survey conducted in the intervening period. The review covers the
quality and efficiency of discussions at Board and Board committees meetings.
INED’s tenure
• Where an INED has served on the Board for over nine years, the Nomination
Committee will consider and satisfy itself that the length of his/her tenure has
not affected his/her independence having regard to his/her actual contributions,
continuing impartiality and ability to continue to demonstrate effective oversight of
the Company’s management.
Conflict of interest
• All Directors are required to declare their past or present financial or other
interests in the Group’s business, or their connection with any of the Company’s
connected persons.
• All Directors are subject to ongoing obligations to notify the Board Chairman as
soon as practicable of any direct conflict of interest which may arise due to his/her
duties as an INED and any other duties or business interests which he/she may have
and to seek the Board’s written approval before any other duties or business can
be undertaken.
• All Directors are required to consult with and obtain the written approval of the Board
Chairman prior to accepting any other directorships of listed companies.
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CORPORATE GOVERNANCE REPORT
During the year, the Nomination Committee has conducted a review on behalf of the Board and considered the
mechanisms to ensure independent views and inputs are available to the Board had operated effectively.
The Nomination Committee has also affirmed that for the year ended 31 December 2024, each of the INEDs of
the Company continued to be independent. While Board Chairman, Mr. Tse, remains a director of AIA Foundation
(a subsidiary of the Company), the Company has satisfied itself that he is independent pursuant to Rule 3.13 of
the Listing Rules on the basis that his directorship with AIA Foundation does not require his performance of any
executive or management role or function.
BOARD REFRESHMENT AND SUCCESSION
Board succession is an ongoing process for the Company. There are regular reviews and discussions on succession
planning, complemented by an active search when required for people presenting the right skill and diversity mix.
The Nomination Committee manages Board succession in light of the Board’s overall needs. It considers prospective
candidates based on merit and takes a long-term, strategic view of Board succession, considering the competencies
and experience necessary for effective oversight of the Company given its current operations, strategy and ambitions
for the future. It also reviews Board composition in light of the annual Board assessment results and recommends
any changes as appropriate.
The Nomination Committee remains focused on ensuring that the Board is composed of appropriately experienced
and capable individuals who are representative of the communities in which the Group operates. To the extent that
needs are identified for additions to the Board, diversity, including in regard to gender, will remain a priority.
The structure, size and composition of the Board is reviewed at least annually by the Nomination Committee. This
review includes consideration of the existing composition (including skills, experience, background and gender)
of the Board as well as the Company’s business strategies to ensure that the Board is able to oversee all material
matters relating to the Group.
BOARD EVALUATION
The Board regularly undertakes a formal evaluation of its own performance and that of its committees and Directors
to ensure they continue to perform effectively. The evaluation is conducted either by way of internal assessment or
with the support of independent external consultants.
During 2024, a tailored board evaluation questionnaire was prepared to collect views and comments from Board
members, the findings of which were reviewed and discussed by the Board at its meeting held in March 2024.
A comprehensive range of topics was considered, including Board structure and composition, Board dynamics and
interactions, Board committees, and Board processes, with special focus in the areas which could be strengthened
to further enhance the overall effectiveness of the Board and its committees. The Board evaluation has helped to
identify a broader scope of topics to be further covered in Board meetings and Directors’ trainings, to facilitate greater
interactions amongst the Board members and senior management, as well as to enhance the Board processes and
governance practices.
BOARD PROCESS
Board meetings are held at least four times a year to determine overall strategies, receive management updates,
approve business plans as well as interim and annual results, and to consider other significant matters. Senior
management also provide regular updates to the Board with respect to the Group’s business activities and the
progress of the Group against its business objectives.
During the year under review, there were four scheduled Board meetings, all of which were convened in accordance
with the Articles of Association of the Company.
ANNUAL REPORT 2024
123
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
The attendance of individual Directors, either in person or through electronic means of communication, at the Board
meetings, committees’ meetings and the 2024 annual general meeting (2024 AGM) held during the year under
review are as follows:
Number of Meetings Attended / Number of Meetings Held
Name of Director
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
Risk
Committee
2024
AGM
Independent Non-executive
Chairman and Independent
Non-executive Director
Mr. Edmund Sze-Wing TSE
5/5
–
1/1
3/4
4/4
1/1
Executive Director,
Group Chief Executive and President
Mr. LEE Yuan Siong
5/5
–
–
–
4/4
1/1
Independent Non-executive
Directors
Mr. Jack Chak-Kwong SO
4/5
5/6
1/1
4/4
–
1/1
Mr. Chung-Kong CHOW
5/5
–
1/1
–
4/4
1/1
Mr. John Barrie HARRISON(1)
5/5
6/6
1/1
–
2/2
1/1
Mr. George Yong-Boon YEO
5/5
6/6
1/1
4/4
–
1/1
Professor Lawrence Juen-Yee LAU
5/5
–
1/1
–
4/4
1/1
Dr. Narongchai AKRASANEE
5/5
6/6
1/1
–
–
1/1
Mr. Cesar Velasquez PURISIMA
5/5
6/6
1/1
–
4/4
1/1
Ms. SUN Jie (Jane)(2)
4/5
1/3
1/1
3/4
–
0/1
Ms. Mari Elka PANGESTU(3)
5/5
3/3
1/1
–
–
1/1
Mr. ONG Chong Tee(4)
5/5
3/3
1/1
–
–
1/1
Ms. Nor Shamsiah MOHD YUNUS(5)
5/5
–
1/1
–
2/2
1/1
Notes:
(1) Mr. John Barrie Harrison ceased to be a member of the Risk Committee with effect from 8 July 2024.
(2) Ms. Sun Jie (Jane) ceased to be a member of the Audit Committee with effect from 8 July 2024.
(3) Ms. Mari Elka Pangestu was appointed as a member of the Audit Committee with effect from 8 July 2024.
(4) Mr. Ong Chong Tee was appointed as a member of the Audit Committee with effect from 8 July 2024.
(5) Ms. Nor Shamsiah Mohd Yunus was appointed as a member of the Risk Committee with effect from 8 July 2024.
Minutes of the meetings of and resolutions in writing passed by the Board and all committees are kept by the
Company Secretary. These minutes and resolutions are open for inspection on reasonable notice by the Directors.
INDUCTION AND ONGOING DEVELOPMENT
The Company provides each Director with personalised induction, training and development. On appointment, each
Director receives a comprehensive and tailored induction covering, amongst other things, the role of the Board and
its key committees, group structure, governance structure and the duties and responsibilities of a director under
applicable laws and regulations.
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Directors receive detailed briefings on the Group’s principal businesses, the markets in which it operates and the
overall competitive environment. Other areas addressed include legal and compliance issues affecting directors
of financial services companies, the Group’s governance arrangements, the principal basis of accounting for the
Group’s results, the internal audit and risk management functions, its investor relations programme and remuneration
policies. In addition to being updated on the Group’s business, the Directors also receive regular updates on material
developments to the Listing Rules and other applicable statutory requirements to ensure continuing compliance and
appropriate oversight.
During the year under review, the Directors had visited the Group’s Bangkok operations to acquire a deeper
understanding of its latest business development and receive market updates on Thailand. The Company also
organised a Board Strategy Day and provided a number of trainings and briefings to the Directors on topics such
as risks and opportunities for the adoption of generative artificial intelligence, the Group’s generative artificial
intelligence strategy, and the global capital markets outlook.
All Directors are encouraged to participate in continuous professional development to extend and refresh their
knowledge and skills, and are required to provide their training records to the Company. The training received by the
Directors during the year under review is summarised as follows:
Name of Director
Types of Training
Reading or attending briefings /
seminars / conferences
relevant to regulatory and
governance updates
Attending corporate events /
executive briefings relevant to
the Group’s business
Independent Non-executive Chairman and
Independent Non-executive Director
Mr. Edmund Sze-Wing TSE
√
√
Executive Director, Group Chief Executive
and President
Mr. LEE Yuan Siong
√
√
Independent Non-executive Directors
Mr. Jack Chak-Kwong SO
√
√
Mr. Chung-Kong CHOW
√
√
Mr. John Barrie HARRISON
√
√
Mr. George Yong-Boon YEO
√
√
Professor Lawrence Juen-Yee LAU
√
√
Dr. Narongchai AKRASANEE
√
√
Mr. Cesar Velasquez PURISIMA
√
√
Ms. SUN Jie (Jane)
√
√
Ms. Mari Elka PANGESTU
√
√
Mr. ONG Chong Tee
√
√
Ms. Nor Shamsiah MOHD YUNUS
√
√
ANNUAL REPORT 2024
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OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
COMMITTEES OF THE BOARD
The Board’s governance and oversight is implemented through a structured hierarchy, which includes the Board
and its Board committees. The Board delegates oversight of audit, board nomination, remuneration and risk-related
matters to specific committees established by the Board, namely the Audit Committee, the Nomination Committee,
the Remuneration Committee and the Risk Committee. Each of the Board committees is chaired by an INED who
is responsible for the leadership and governance of the respective committee, setting agenda for the committee
meetings and reporting regularly to the Board of its activities and decisions. Each committee operates under its
own terms of reference which are subject to regular review. In addition to the four Board committees, a number of
management committees have been established including, amongst others, the ExCo and the ESG Committee.
AUDIT COMMITTEE
Composition
Independence
All members
of this committee are INEDs
of this committee are INEDs
Mr. Cesar Velasquez PURISIMA (Chair)
Mr. John Barrie HARRISON
Mr. Jack Chak-Kwong SO
Mr. George Yong-Boon YEO
Dr. Narongchai AKRASANEE
Ms. Mari Elka PANGESTU
Mr. ONG Chong Tee
The Audit Committee is delegated with authority from the Board to oversee the Group’s financial reporting system,
the internal control systems, the relationship with the external auditor of the Company, to review the Group’s financial
information and its preparation, to endorse the Group’s financial and accounting policies and practices and its
whistleblowing programme, as well as to monitor the adequacy of resources for and effectiveness of the internal
audit function.
The Audit Committee also provided oversight for and management of the relationship with the Company’s external
auditor, including reviewing and monitoring the external auditor’s independence and objectivity, and the effectiveness
of the audit process in accordance with applicable standards.
The Audit Committee held six meetings during the year ended 31 December 2024. The attendance records of the
Audit Committee are set out on page 123 of this Annual Report.
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CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
The duties performed by the Audit Committee during the year under review included, but not limited to, the following:
Areas of focus
Summary of activities
Periodic Financial Results
• Review and approval of the draft preliminary results announcement, interim/annual
report, consolidated financial statements and supplementary embedded value
information of the Company for each of the year ended 31 December 2023 and the six
months ended 30 June 2024.
• Review and approval of the Company’s new business highlights announcements for the
first and third quarters of 2024.
Audit, Tax and
Regulatory Matters
• Review and approval of the audit plan of the external auditor in relation to the 2024
consolidated financial statements and supplementary embedded value information of
the Company.
• Quarterly reviews on the developments in international tax regulations and significant
uncertain tax matters of the Group.
• Receiving quarterly updates on major regulatory developments relevant to the Group.
Internal Audit and Controls
• Reviewing the Group’s internal control environment for the year ended 31 December
2023.
• Reviewing the results of the quality assurance services provided by an external
consultant on the internal audit function.
• Receiving quarterly updates on the internal audit function, fraud and whistleblowing
programme report and major litigations.
• Reviewing the governance, risk and compliance environment of selected business
units.
• Reviewing the five-year independent quality assurance review of the Group’s internal
audit function.
• Conducting regular private sessions with Group Internal Audit.
External Auditor
• Recommending to the Board the re-appointment of the external auditor for the 2025
financial year and the pre-approved audit fees, as well as other fees for audit-related,
tax and other pre-approved services.
• Regular reviews on the total fees paid to the Company’s external auditor in respect of
audit, audit-related and non-audit services performed.
• Recommending to the Board for an audit tender for the Group for the 2026 financial
year and receiving updates on the audit tender process.
• Conducting regular private sessions with the Company’s external auditor.
ANNUAL REPORT 2024
127
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOMINATION COMMITTEE
Composition
Independence
All members
of this committee are INEDs
of this committee are INEDs
Mr. Edmund Sze-Wing TSE (Chair)
Mr. Jack Chak-Kwong SO
Mr. Chung-Kong CHOW
Mr. John Barrie HARRISON
Mr. George Yong-Boon YEO
Professor Lawrence Juen-Yee LAU
Dr. Narongchai AKRASANEE
Mr. Cesar Velasquez PURISIMA
Ms. SUN Jie (Jane)
Ms. Mari Elka PANGESTU
Mr. ONG Chong Tee
Ms. Nor Shamsiah MOHD YUNUS
The Nomination Committee is delegated with authority from the Board to review the Board’s composition and
diversity, formulate and implement the Directors’ Nomination Policy, oversee the identification and assessment of
potential candidates for directorship and make recommendations to the Board on the appointment/re-appointment of
Directors and members of the Board committees. It also provides oversight and direction in respect of the succession
planning for directors and assesses the independence of the INEDs annually ensuring independent views and input
are available to the Board.
The Nomination Committee held one meeting during the year ended 31 December 2024. The attendance records
of the Nomination Committee members are set out on page 123 of this Annual Report. The duties performed by the
Nomination Committee during the year under review included, but not limited to, the following:
Areas of focus
Summary of activities
Board and Board
Committees Composition
and Diversity
• Reviewing the effectiveness of the Board and its Board committees in respect of their
structure, size and composition with due regard to the skills, knowledge, experience
and diversity of background and experience of their respective members.
• Reviewing the implementation and effectiveness of the Board Diversity Policy.
• Reviewing the changes to the composition of the Audit Committee and the Risk
Committee.
Director’s Independence
Assessment
• Conducting annual assessment on the independence of the INEDs.
• Reviewing the Company’s framework to ensure independent views and inputs are
available to the Board.
Director Appointment /
Re-appointment and/or
Succession Planning
• Identifying and assessing potential candidates for directorship and make
recommendations to the Board on the re-election of Directors.
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CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
Directors’ Nomination Policy
To ensure ongoing transparency in respect of its deliberations, the Directors’ Nomination Policy was adopted by the
Board in 2019 and revised in 2022 upon the recommendation of the Nomination Committee.
A summary of the Directors’ Nomination Policy is set out below:
•
In assessing the suitability of a candidate proposed for appointment, election or re-election as a Director, the
Nomination Committee shall consider the candidate on the basis of the selection criteria set out in the Directors’
Nomination Policy, which includes, amongst other things, whether his/her skills, knowledge, experience and
background can complement and enhance those of the existing Board members with due regard to the benefits
of diversity as set out in the Board Diversity Policy; his/her character, reputation, integrity and standard of
competence; and the ability to devote sufficient time to discharge his/her duties as a Director. For any candidate
proposed for nomination as an INED, the satisfaction of the independence requirement under Rule 3.13 of the
Listing Rules is also required.
•
For appointment or election of a new Director, the Nomination Committee shall take the lead in identifying
qualified candidates. It may consider referrals from existing Directors, and use external advisers to facilitate the
search based on selection criteria set out in the Directors’ Nomination Policy. Shareholders may also propose a
person for election as a Director at a general meeting, with the relevant procedures therefor set out on the website
of the Company. The Nomination Committee shall evaluate the suitability of a candidate through interviews,
background checks, third party reference checks, and/or any process as it deems necessary and appropriate.
•
For re-election of a Director, the Nomination Committee will review the prior contributions of the Director, and
determine whether he/she continues to meet the selection criteria set out in the Directors’ Nomination Policy. In
particular, in recommending the re-election of a retiring INED who has served on the Board for more than nine
years, the Nomination Committee shall take into consideration all relevant factors in assessing their continuing
independence.
REMUNERATION COMMITTEE
Composition
Independence
All members
of this committee are INEDs
Mr. George Yong-Boon YEO (Chair)
Mr. Jack Chak-Kwong SO
Ms. SUN Jie (Jane)
Mr. Edmund Sze-Wing TSE
The Remuneration Committee is delegated with authority from the Board to, amongst other things, establish and
oversee the implementation of the Group’s remuneration policies, oversee and approve the Company’s equity-based
remuneration plans, and determine specific remuneration for the executive director, senior management and other
personnel of the Company.
The Remuneration Committee held four meetings during the year ended 31 December 2024. The attendance records
of the Remuneration Committee members are set out on page 123 of this Annual Report. Details of the role of the
Remuneration Committee, and the key activities performed by the Remuneration Committee during the year under
review have been set out in the Remuneration Report, which forms part of this Corporate Governance Report.
ANNUAL REPORT 2024
129
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
RISK COMMITTEE
Composition
Independence
5 out of 6 members
of this committee are INEDs
Mr. Chung-Kong CHOW (Chair)
Professor Lawrence Juen-Yee LAU
Mr. Cesar Velasquez PURISIMA
Ms. Nor Shamsiah MOHD YUNUS
Mr. Edmund Sze-Wing TSE
Mr. LEE Yuan Siong
The Risk Committee is delegated with authority from the Board to, amongst other things, determine the Group’s risk
appetite, including the risk appetite statement, risk principles and risk tolerances, oversee and review the adequacy
and effectiveness of the Risk Management Framework (RMF) of the Group, ensure that the material risks facing
the Group have been identified and that the risk profile adequately represents any significant issues relating to the
Group’s control environment with mitigating actions put in place, and to advise the Board on the risk management
strategy and major risk-related issues of the Group. It also reviews the Group’s risk management-related policies and
the risk-related disclosures in the publications of the Company.
The duties performed by the Risk Committee during the year under review included, but not limited to the following:
Areas of focus
Summary of activities
Risk management and
compliance
• Quarterly reviews on the Group’s risk management and compliance activities for the
period, including its financial and operational risk profiles, which set out the solvency
positions, risk appetite and other metrics.
• Approving the revised risk appetite framework of the Group.
• Receiving updates on the artificial intelligence governance framework and the
derivatives governance framework.
• Annual review of the information security landscape within the Group and its information
security incidents.
• Assessing the adequacy and effectiveness of the risk management framework of the
Group for the year ended 31 December 2023.
Regulatory matters
• Receiving quarterly regulatory development updates and assessing management
actions.
• Reviewing and making recommendations to the Board to approve the supervisory
reports to be submitted to the Hong Kong Insurance Authority during the year, including
those relate to the Group’s own risk and solvency assessment, capital adequacy,
recovery plan, liquidity risk management, group internal economic capital assessment
methodology and results.
Others
• Reviewing the Group’s clinical governance policy, which sets out AIA’s approach to
implementing, maintaining, and continuously improving clinical governance across the
Group.
• Reviewing the Group’s Code of Conduct revision.
• Reviewing the risk disclosures in the “Risk Management” section of the Company’s
2023 Annual Report.
• Approving the Group’s policyholder dividend declaration policy, which governs the
dividend and bonus distribution of participating business offered by the business units
of the Group.
• Annual review of the Remuneration Committee’s report on the Group’s compensation
and benefits arrangements to ensure that incentives are provided to executives
consistent with the interests of the Group’s stakeholders that do not encourage
excessive or inappropriate risk taking by them.
• Conducting regular private sessions with the Group Chief Risk Officer.
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Details of how the Risk Committee reviews the effectiveness of the risk management and internal control systems
of the Group are set out in the subsection headed “Risk Management and Internal Control” under the “Accountability
and Audit” section of this report.
The Risk Committee held four meetings during the year ended 31 December 2024. The attendance records of the
Risk Committee members are set out on page 123 of this Annual Report.
CHAIRMAN AND GROUP CHIEF EXECUTIVE
Mr. Edmund Sze-Wing Tse, Independent Non-executive Chairman of the Company, plays the critical role of leading
the Board in fulfilling its responsibilities. With the support of the Group Chief Executive and President and senior
management, Mr. Tse seeks to ensure that all Directors are properly briefed and receive adequate and reliable
information in a timely manner.
Mr. Lee Yuan Siong, Group Chief Executive and President of the Company, reports to the Board and is responsible
for the overall leadership, strategic and executive management and profit performance of the Group, including all
operations and administration. Mr. Lee attends Board meetings as the sole Executive Director and, in his capacity
as Group Chief Executive and President, ensures that the Board is updated at least monthly in respect of material
aspects of the Company’s performance. Mr. Lee discharges his responsibilities within the framework of the Company’s
policies, reserved powers and routine reporting requirements and is advised and assisted by the senior management
of the Group.
Under the leadership of the Group Chief Executive and President, the ExCo is set up with specific terms of reference
to support the Group Chief Executive and President in the discharge of the responsibilities delegated to him by
the Board for the day-to-day management of the Group. The ExCo comprises senior executives of the Company. It
acts as a sounding board and source of advice for the Group Chief Executive and President on major aspects of the
Group’s business. ExCo members have been delegated authority to manage and supervise aspects of the day-to-day
operations of the business according to their experience and functional expertise. They meet regularly to review the
Group’s business performance, business plans and major initiatives as well as risk, compliance matters and human
resources related matters of the Group. Biographies and responsibilities of the members of the ExCo are set out on
pages 100 to 102 of this Annual Report.
The roles and responsibilities of the Board, the Chairman of the Board and the Group Chief Executive are set out in
the Board Charter of the Company, which is available on the Company’s website.
The Chairman of the Board, the Group Chief Executive and other Directors do not have any financial, business, family
or other relationships with each other.
EXTERNAL AUDITOR
The external auditor of the Company is PricewaterhouseCoopers. The Audit Committee is responsible for making
recommendations to the Board on the external auditor’s appointment, re-appointment and removal, which are subject
to approval by the Board and by the Shareholders at a general meeting of the Company. In assessing the external
auditor, the Audit Committee will take into account relevant experience, performance, objectivity and independence
of the external auditor. The Board has adopted policies on nomination and appointment of and services performed by
the external auditor to enhance related governance practices.
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131
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
The Audit Committee also reviews the non-audit services provided by the external auditor and its remuneration on
a regular basis. For the year ended 31 December 2024, the total estimated remuneration payable by the Group to
PricewaterhouseCoopers was US$31.8 million (2023: US$32.7 million), an analysis of which is set out below:
US$ millions
2024
2023
Audit services
26.1
27.0
Non-audit services, including:
Audit-related services(1)
4.8
4.9
Tax services
0.3
0.7
Other services
0.6
0.1
Total
31.8
32.7
Note:
(1) Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Group’s financial
statements. They include, amongst others, due diligence services pertaining to potential business acquisitions (excluding valuation services); services
related to implementation of new accounting and financial reporting guidance from regulatory authorities; and agreed-upon or expanded audit
procedures related to compliance with financial, accounting or regulatory reporting matters.
ACCOUNTABILITY AND AUDIT
FINANCIAL REPORTING
The annual results of the Company and other financial information were published in accordance with the
requirements of the Listing Rules and other applicable regulations and industry best practice. When preparing the
Company’s financial reports, the Board endeavours to present this information in a comprehensible, informative and
user-friendly manner.
The Directors acknowledge their responsibility for preparing the Company’s consolidated financial statements and
ensuring that the preparation of the Company’s consolidated financial statements is in accordance with the relevant
requirements and applicable standards.
The statement of the Company’s external auditor concerning its reporting responsibilities on the Company’s
consolidated financial statements is set out in the Independent Auditor’s Report on pages 157 to 163 of this Annual
Report.
RISK MANAGEMENT AND INTERNAL CONTROL
The Board, assisted by its committees, is responsible for overseeing the Group’s risk management and internal
control systems on an ongoing basis. The Board reviews the effectiveness of risk management and internal control
systems on an annual basis.
The Group’s RMF does not seek to eliminate all risks but rather to identify, understand and manage them within
acceptable limits in order to support the sustainability of the business and the creation of long-term value in alignment
with the Group’s culture and strategy, and can only provide reasonable and not absolute assurance against material
misstatement or loss. The main features and other information on the RMF and the process used to identify, evaluate
and manage significant risks are set out in the Risk Management section of this Annual Report.
AIA GROUP LIMITED
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CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
The Group has an internal audit function (Internal Audit). The key features of the Group’s internal control system
include independent reviews and testing of internal controls, taking a risk-based approach and developing an annual
audit plan presented to the Audit Committee. Reports of significant audit findings are prepared and communicated
to management and the Audit Committee and where control weaknesses or defects are identified, recommendations
are provided to resolve them. This includes issues formally identified from internal audits, forensic investigations,
regulatory reports and special projects. Management is responsible for the design, implementation and evaluation of
the internal control system, including ongoing mitigation, across the business and processes.
The Board has, through the Risk Committee and the Audit Committee, reviewed the adequacy and effectiveness of the
Group’s risk management and internal control systems (covering all material controls such as financial, operational
and compliance controls), including:
•
the adequacy of resources, staff qualifications and experience, training programmes and the budget of the Group’s
accounting, internal audit, financial reporting functions, as well as those relating to the Group’s ESG performance
and reporting;
•
areas of risk identified by management as well as the quality and scope of management’s ongoing monitoring of
risks and the risk management system;
•
the changes in the nature and extent of significant risks (including ESG risks) since the previous review and the
Group’s ability to respond to changes in the external environment and its business;
•
the quality and scope of the internal control system implemented by management and the work and effectiveness
of Internal Audit as well as any significant risks reported by Internal Audit;
•
the extent and frequency of communication of monitoring results to the Board and its committees, to enable the
assessment of the effectiveness of the Group’s risk management and internal control systems;
•
the incidence of any significant control failings or weaknesses that have been identified during the year under
review and the extent to which they have resulted in a material impact on the Group’s financial performance or
condition;
•
the effectiveness of the Group’s processes in relation to financial reporting and regulatory compliance;
•
the scope of work performed by both internal and external auditors and any significant issues arising from internal
and external audit reports; and
•
the results of management’s control self-assessment exercises.
The annual review of the Group’s risk management and internal control systems was conducted by an internal risk
management, compliance and internal controls framework certification process performed by management (at
both the Company’s and subsidiaries’ levels) and the Risk and Compliance function, supported by the Internal Audit
function which confirmed the adequacy and effectiveness of internal control environment.
Management has confirmed to the Board that the Group’s risk management and internal control systems are adequate
and effective. Based on the review result and management’s confirmation, the Board considered the Group’s risk
management and internal control systems to be adequate and effective for the year ended 31 December 2024.
The AIA Group Compliance Policy governs the Group’s compliance in areas such as whistleblowing, anti-corruption
and anti-bribery, anti-fraud, as well as anti-money laundering and counter-terrorist financing.
ANNUAL REPORT 2024
133
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
INSIDE INFORMATION
The Company has implemented proper procedures and internal controls for the handling and dissemination of inside
information:
•
The Company has established the Disclosure of Inside Information Policy to ensure that all current and prospective
investors of the Company, market participants and the public are provided with appropriate information relating
to the Group in a timely and simultaneous manner. The policy has been communicated to all relevant staff and
related training has also been provided to them; and
•
A written communications protocol has also been established to implement a control process within the Group
for the management of communications with various internal and external stakeholders. Such protocol identifies
a list of spokespersons who are authorised to provide information about the Group to the relevant stakeholders.
The Company’s Code of Conduct further contains a strict prohibition on the unauthorised use of confidential or
non-public information.
COMPANY SECRETARY
All the Directors have access to the advice and services of the Company Secretary at any time in respect of their
duties and the effective operation of the Board and Board committees. The Company Secretary advises the Board on
all corporate governance matters; facilitates the induction and professional development of Directors; and ensures
appropriate information flows and communications within the Board and its committees, and between management
and the Non-executive Directors. The Company Secretary also plays an important role in ensuring that Board and
Board committee policies and procedures are followed and the Board’s obligations to Shareholders pursuant to the
Listing Rules are discharged. During the year under review, the Company Secretary undertook at least 15 hours of
relevant continuing professional education.
ENGAGEMENT WITH SHAREHOLDERS
The Board recognises the importance of maintaining an ongoing dialogue with the Shareholders and does so
through general meetings, press releases, announcements and corporate communications. The Board is committed
to the timely disclosure of information. The latest information regarding the Group’s activities, announcements,
results presentations, webcasts and corporate communications is made available on the Company’s website at
www.aia.com in a timely manner. The key dates for Shareholders are set out on page 352 of this Annual Report.
The Investor Relations function oversees the Company’s engagement with investors. The institutional Shareholder
base is geographically diversified and the Company is also extensively covered by research analysts from a wide
range of broker houses.
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134
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
The Company’s approach to shareholders communication and engagement includes:
Communication Channels
Activities
2024 AGM
• An annual general meeting of the Company was held on 24 May 2024 (the “2024
AGM”) at which Shareholders attended to vote on the resolutions proposed and ask
questions which were addressed by the Board and the Company’s management.
Reports and
announcements
• Corporate communications, which include financial reports and announcements, were
published throughout the year as required by the Listing Rules.
Investor meetings
• An active and open dialogue with institutional investors is maintained through regular
investor interactions, including meetings, investment conferences and roadshows.
• During the year, the Company’s management attended 447 meetings with over 1,500
investor contacts representing 80 per cent of the Company’s active institutional
investor holdings.
• Investors’ feedback and analysts’ reports on the Company are circulated to the
Board and the Executive Committee on a regular and systematic basis to promote an
understanding of external views on the Company’s performance.
AIA website
• A dedicated ‘Investor Relations’ section on the Company’s website (www.aia.com)
offers timely access to the Company’s latest information to the Shareholders, which
also includes the corporate governance documents of the Company for Shareholders’
information.
“AIA IR Library” App
• An “AIA IR Library” App is available to allow Shareholders an alternative means of
access to selected information of the Company (including the Company’s annual/
interim reports, results presentations, results transcripts, press releases and investor
presentations). The IR chatbot on the App provides answers on investors’ frequently
asked questions anytime anywhere.
Shareholders’
Communication Policy
• The Shareholders’ Communication Policy sets out, amongst other things, the Company’s
protocols on communication with the Shareholders with the aim of ensuring that both
individual and institutional Shareholders are given timely access to accurate, clear and
balanced information to enable them to exercise their rights in an informed manner
and to engage actively with the Company.
• It also sets out the Company’s contact details to enable Shareholders to provide their
comments or direct their questions to the Company. The Shareholders’ Communication
Policy is reviewed on an annual basis to ensure its effectiveness.
• During the year ended 31 December 2024, the Board has reviewed the implementation
and effectiveness of the Shareholders’ Communication Policy. Having considered
the active engagement by the Company with the Shareholders via the different
means in accordance with the Policy, the Board is satisfied that the Shareholders’
Communication Policy continues to be effective.
• The Shareholders’ Communication Policy is available on the Company’s website at
www.aia.com.
ANNUAL REPORT 2024
135
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
2024 ANNUAL GENERAL MEETING
The 2024 AGM was held on 24 May 2024. Except Ms. Sun, the Chairman and all other members of the Board at that
time, together with the Group’s senior management and external auditor, attended the 2024 AGM in person. The poll
voting results are available on the Company’s website at www.aia.com and the website of Hong Kong Exchanges and
Clearing Limited at www.hkexnews.hk. The matters resolved at the 2024 AGM are summarised below:
•
Receipt of the audited consolidated financial statements of the Company, the Report of the Directors and the
Independent Auditor’s Report for the year ended 31 December 2023;
•
Declaration of a final dividend of 119.07 Hong Kong cents per share for the year ended 31 December 2023;
•
By way of separate ordinary resolutions, the re-election of Mr. Lee as Executive Director and Mr. Chow,
Mr. Harrison, Mr. Purisima, Ms. Pangestu, Mr. Ong and Ms. Mohd Yunus as INEDs of the Company;
•
Re-appointment of PricewaterhouseCoopers as auditor of the Company for the year ending 31 December 2024
and authorising the Board to fix its remuneration;
•
General mandate to the Directors to cause the Company to issue additional Shares, not exceeding 10 per cent
of the aggregate number of Shares in issue on the date of the 2024 AGM, and the discount for any Shares to be
issued not exceeding 10 per cent to the benchmarked price; and
•
General mandate to the Directors to cause the Company to buy back Shares, not exceeding 10 per cent of the
aggregate number of Shares in issue on the date of the 2024 AGM.
The forthcoming annual general meeting of the Company will be held on Friday, 23 May 2025. Further details will be
set out in the Company’s circular to be issued to the Shareholders for the AGM.
SHAREHOLDERS’ RIGHTS
GENERAL MEETING
Shareholder(s) representing at least 5 per cent of the total voting rights of all the Shareholders having a right to
vote at general meetings, may request to call a general meeting. If such request is made, a general meeting must be
called. Such request, either in hard copy form or in electronic form and being authenticated by the person or persons
making it, must be deposited at the registered office of the Company at 35/F, AIA Central, No. 1 Connaught Road
Central, Hong Kong or sent by email to ir@aia.com for the attention of the Company Secretary. Shareholder(s) should
make reference to the provisions under Sections 566 to 568 of the Hong Kong Companies Ordinance for calling a
general meeting.
MOVING A RESOLUTION AT AN ANNUAL GENERAL MEETING
Shareholder(s) may request the Company to give notice of a resolution and move such resolution at an annual general
meeting. Such notice of resolution must be given by the Company if it has received such request from:
(a) Shareholder(s) representing at least 2.5 per cent of the total voting rights of all the Shareholders who have a right
to vote on the resolution at the annual general meeting to which the request relates; or
(b) at least 50 Shareholders who have a right to vote on the resolution at the annual general meeting to which the
request relates.
AIA GROUP LIMITED
136
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
Such a request must identify the resolution of which notice is to be given, be either in hard copy form or in electronic
form and be authenticated by the person or persons making it, and be received by the Company not later than six
weeks before the annual general meeting to which the request relates or, if later, the time at which notice is given
of that meeting. The request must be deposited at the registered office of the Company at 35/F, AIA Central, No. 1
Connaught Road Central, Hong Kong or sent by email to ir@aia.com for the attention of the Company Secretary.
Shareholder(s) should make reference to Sections 615 and 616 of the Hong Kong Companies Ordinance for the
relevant procedures to move a resolution at an annual general meeting.
PROPOSING A PERSON FOR ELECTION AS A DIRECTOR
Shareholders can propose a person (other than a retiring Director himself/herself) for election as a Director at a
general meeting of the Company. Relevant procedures are available on the Company’s website at www.aia.com.
CONSTITUTIONAL DOCUMENTS
The Company’s Articles of Association (in both English and Chinese) is available on the Company’s website at
www.aia.com and the website of Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk. During the year
under review, there has been no change to the Articles of Association of the Company.
By Order of the Board
Nicole Pao
Company Secretary
14 March 2025
ANNUAL REPORT 2024
137
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CORPORATE GOVERNANCE
STATEMENT OF THE CHAIRMAN OF THE REMUNERATION COMMITTEE
On behalf of the Remuneration Committee, I am pleased to present
the Report on Remuneration for Directors and Key Management
Personnel for the year ended 31 December 2024.
AIA continues to be committed to responsible remuneration practices emphasising a balanced approach of providing
for competitive remuneration, and rewarding for impact and behaviours whilst ensuring proper governance is in
place. The Group’s remuneration framework is pivotal to attract, motivate and retain the talents required to deliver
the Group’s strategy and is aligned with stakeholders’ interests.
In 2024, the Remuneration Committee reviewed the latest remuneration market trends and regulatory developments
closely to ensure that AIA’s remuneration approach continues to be competitive, whilst supporting the Group’s
ambitions and taking into account key stakeholders’ interests and AIA’s risk management framework as well as the
applicable regulatory landscape.
Starting from the 2024 long-term incentive grant, enhanced features were adopted to strengthen retention of key
talents and better align with the long-term strategic business objectives. This includes the introduction of time-vesting
restricted share units to the vehicle mix for plan participants other than the Group Chief Executive and President and
Key Management Personnel, and the adoption of an additional key financial performance measure (underlying free
surplus generation) whilst adjusting the weightings for the other three financial performance measures (value of
new business, EV equity and total shareholder return). Further information is included in the “Long-Term Incentive
Plan” section of the Remuneration Report.
The Remuneration Committee continues to work closely with its independent external advisor to ensure that AIA’s
remuneration framework and delivery remain compliant, adhering to recommended corporate governance and
market best practices, and at the same time, ensuring that the talents required to drive the business strategy are
attracted, motivated and retained. The remuneration framework is regularly reviewed by the independent external
advisor and during the year, it has recommended, and the Remuneration Committee has approved, the introduction
of dividend equivalent units in the form of share units commencing from 2025. The purpose is to further align with
market practices and ensure stronger shareholder alignment. Further information is included in the “Looking Ahead”
section of the Remuneration Report.
As part of a regular review, the Terms of Reference for the Remuneration Committee and the Group’s Remuneration
Policy were updated and approved by the Board. The review ensured that principles of good corporate governance
are achieved and recommended best practices are considered.
The overall remuneration framework for senior executives and employees remains unchanged in 2024 and will
continue to apply in 2025, focusing on encouraging behaviours which create impact and sustainable value for all our
stakeholders and in alignment with our risk management framework.
George Yong-Boon Yeo
Chairman, Remuneration Committee
14 March 2025
REMUNERATION REPORT
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138
REMUNERATION REPORT
CORPORATE GOVERNANCE
REMUNERATION GOVERNANCE
ROLE OF THE REMUNERATION COMMITTEE
The Remuneration Committee is responsible for establishing and overseeing the implementation of the Group’s overall
remuneration policies, overseeing and approving the Company’s equity-based remuneration plans, and determining
specific remuneration for all Directors, the Group Chief Executive and President, Key Management Personnel (the
members of the Group Executive Committee who, by the nature and accountabilities of their respective positions,
participate directly in the development, implementation, monitoring and reporting of the overall business strategy of
the Group) and the Key Persons in Control Functions.
As part of its duties, the Remuneration Committee is responsible for establishing a formal and transparent
procedure in developing and approving such remuneration. In making its determinations and recommendations, the
Remuneration Committee considers various factors such as the responsibilities of the Group Chief Executive and
President and Key Management Personnel, the remuneration paid by comparable companies, remuneration levels
within the Group and AIA’s risk management framework.
The Remuneration Committee is responsible for reviewing and assessing the remuneration framework and relevant
policies to ensure that they align with the strategy and the interests of the Company’s stakeholders. Working closely
with other relevant Committees, such as the Risk Committee, the impact of the remuneration framework and relevant
remuneration policies is assessed to ensure that excessive risk taking is not encouraged.
The Remuneration Committee also oversees the design and operation of the Company’s equity-linked and other Group
incentive schemes, recommending equity-based employee grants for approval by the Board as well as reviewing and,
where appropriate, amending the terms of the schemes.
The Remuneration Committee is authorised by the Board to discharge its duties as outlined in its Terms of Reference.
It is also authorised to seek any remuneration information it requires from the Group Chief Executive and President
and/or Key Management Personnel and may obtain external independent professional advice as it deems necessary.
The full Terms of Reference for the Remuneration Committee can be accessed at www.aia.com.
MEMBERS AND MEETINGS
As of 31 December 2024, the Remuneration Committee consisted of four Independent Non-executive Directors,
being Mr. George Yong-Boon Yeo, who is the Chairman of the Remuneration Committee, Mr. Edmund Sze-Wing Tse,
Mr. Jack Chak-Kwong So and Ms. Sun Jie (Jane).
The Remuneration Committee held four meetings during the year ended 31 December 2024. The attendance records
of the Remuneration Committee members are set out on page 123 of this Annual Report.
ANNUAL REPORT 2024
139
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
KEY ACTIVITIES OF THE REMUNERATION COMMITTEE
The Remuneration Committee performed the following key activities in 2024.
Area
Summary of activities
Remuneration decisions for
the Group Chief Executive
and President and Key
Management Personnel
• Reviewed and approved the 2024 remuneration for the Group Chief Executive and
President and Key Management Personnel
• Recommended the 2024 long-term incentive grant for the 2024 to 2026 performance
period for the Group Chief Executive and President for approval by the Independent
Non-executive Directors
• Reviewed and approved terms and conditions including remuneration arrangements
for the promoted Regional Chief Executive
• Reviewed the executive benchmarking results ahead of the 2024/25 annual
review cycle
Design and operation
of the Group’s
incentive schemes
• Reviewed the achievement of relevant performance levels and approved the 2023
short-term incentive plan awards for the Group Chief Executive and President and
Key Management Personnel, and the vesting of the 2021 long-term incentive grants
for all plan participants including the Group Chief Executive and President and
Key Management Personnel
• Reviewed and approved the 2024 long-term incentive grants for the 2024 to 2026
performance period
• Reviewed and approved the performance measures and targets for the 2025 short-
term incentive plan, and the 2025 long-term incentive plan for the 2025 to 2027
performance period
• Reviewed and approved the implementation of dividend equivalent units to all
RSU grants
Remuneration governance
and disclosure
• Reviewed and approved the 2023 Remuneration Report
• Reviewed and made recommendation to the Board to approve the updated Terms of
Reference for the Remuneration Committee
• Reviewed and made recommendation to the Board to approve the updated
Remuneration Policy
• Reviewed and assessed the Group’s remuneration framework to ensure alignment
with stakeholders’ interests, including appropriate safeguards, and provided the Risk
Committee with a report of this review
• Reviewed the regulatory and corporate governance environment impacting executive
remuneration practices and governance in the Group’s key markets, including Hong
Kong and Mainland China
• Reviewed the emerging remuneration trends for AIA’s international insurance peer
companies and for the Asia Pacific and other regions, including trends related to
Environmental, Social and Governance (ESG)
In conducting its business, the Remuneration Committee is advised by an independent external advisor appointed
by the Remuneration Committee, who provides independent advice for any remuneration topics requested by the
Remuneration Committee, including reviewing the remuneration framework and executive remuneration terms and
arrangements.
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140
REMUNERATION REPORT
CORPORATE GOVERNANCE
REMUNERATION AND RISK
The Remuneration Committee regularly reviews, and as necessary, amends the remuneration framework and oversees
its implementation in view of effective risk management, and regulatory requirements of relevant jurisdictions.
A report of the remuneration and risk matters is provided annually by the Remuneration Committee and shared with
the Risk Committee. This report contains an assessment of AIA’s remuneration framework including the incentive
framework, remuneration governance practices, and the key topics discussed and approved by the Remuneration
Committee over the course of the year. This ensures a robust dialogue concerning risk issues between the two
Committees. The Group Risk Management function evaluated the 2024 remuneration framework and concluded that
it does not encourage inappropriate risk-taking behaviours.
Control functions are actively involved in monitoring the operational implementation of AIA’s policies and practices
and ensuring compliance across the Group. If applicable, relevant control functions are consulted in reviewing
remuneration design elements and in defining remuneration policies and rules, in order to ensure that the
remuneration framework complies with legal and regulatory requirements across the Group and does not encourage
excessive risk-taking behaviours.
When reviewing the incentive plans’ design for 2024, the control functions were engaged to ensure that any plan
design enhancements are compliant with relevant rules and regulations and are assessed in respect to AIA’s risk
management framework.
AIA’s remuneration framework contains multiple design and policy safeguards to adhere to prudent risk taking and
to discourage excessive risk-taking behaviours.
These safeguards include guidelines on employment and remuneration terms and conditions for the most senior
positions including a consistent, centrally managed framework for contractual agreements and a robust remuneration
benchmarking approach conducted by an independent external advisor. Other safeguards include clear incentive
funding and vesting framework aligned with Board approved performance targets, short-term incentive awards
and long-term incentive vesting levels approved by the Remuneration Committee with target and maximum pay
opportunities aligned with market practices, malus and clawback mechanism as part of the incentive framework and
share ownership guidelines for the Group Chief Executive and President.
In addition, a robust Group-wide performance management framework is applied, assessing employees’ and
executives’ contributions and behaviours based on individual goals established at the beginning of the year. This
ensures that reward outcomes reflect both results achieved and behaviours demonstrated balancing the financial
and non-financial aspects.
Senior control function employees’ short-term incentive awards are fully aligned to Group Office results to avoid
potential conflict of interest and to ensure their independence.
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141
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
REMUNERATION FRAMEWORK
REMUNERATION POLICY
AIA is committed to responsible remuneration practices to attract, motivate and retain employees at all levels across
the Group. AIA’s remuneration programmes aim to reward all individuals competitively and fairly, irrespective of
gender, ethnicity, age, disability or other non-performance related factors, and is based on principles of impact and
contribution with sound risk management in balance.
AIA’s performance and rewards approach supports the achievement of AIA’s business strategy, which includes
rewarding for the achievement of strategic objectives by taking into consideration the Group’s capital position
and long-term performance whilst not inducing excessive risk-taking behaviours or violation of applicable laws,
guidelines or regulations.
Our remuneration policy serves to support the above objectives through appropriate governance, design,
implementation and monitoring of AIA’s remuneration and risk management framework. This framework applies
across the Group and is implemented consistently across our business units, subject to local rules and regulations as
necessary and appropriate for the Group.
TOTAL REMUNERATION AND REMUNERATION ELEMENTS
At AIA, total remuneration is reviewed holistically and is determined by taking into consideration scope and complexity
of the role, professional experience, market competitiveness, internal relativities, compliance with relevant legal and
regulatory requirements and other factors.
For Key Management Personnel, the Remuneration Committee reviews total remuneration annually, including base
salaries, short-term and long-term incentive opportunities, against AIA’s international insurance peer companies and
wider market levels, and approves remuneration including the individual short-term incentive awards.
The table below summarises the Company’s remuneration elements and their application to the Group Chief Executive
and President and Key Management Personnel for the year ended 31 December 2024.
Element
Basis of determination
Notes on practices
Base salary
This is the fixed portion
provided as a cash
element of remuneration
Base salary is determined with
reference to the scope and complexity
of the role, geographical location,
and relevant professional experience,
whilst also considering market
competitiveness and internal
relativities.
Base salary increases, where
applicable, generally take effect from
1 March.
The fixed portion of remuneration
should be set appropriately to not
induce any excessive risk-taking
behaviour by leveraging the
variable component.
Short-term incentives
These are delivered in the
form of a discretionary,
performance-based cash
award to incentivise and
reward the achievement
of business objectives and
individual contributions
and behaviours
Short-term incentives are discretionary
and recognise both business and
individual performance, taking
into consideration an individual’s
contributions and behaviours.
Short-term incentive target
opportunities are determined with
reference to the individual’s roles
and responsibilities and the market
competitiveness of variable and
total remuneration.
Short-term incentive awards are based
on the achievement of the Group’s
pre-defined financial performance
targets as well as an individual’s
contributions and behaviours.
As such, both financial and non-
financial performance measures
are taken into consideration.
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REMUNERATION REPORT
CORPORATE GOVERNANCE
Element
Basis of determination
Notes on practices
Long-term incentives
These are delivered in the
form of performance-vesting
RSUs, time-vesting RSUs and
time-vesting SOs generally
vesting after a three-year
vesting period to align with
the Group’s strategy and
long-term interests of
shareholders
Long-term incentives are discretionary
and are exclusive for senior employees
and critical talents to align their interest
with the Group’s long-term strategic
vision and shareholders’ interests,
and to promote risk awareness whilst
encouraging to operate in a
sustainable manner.
Participation is determined annually,
and individual long-term incentive
grants are determined with
reference to the individual’s roles
and responsibilities, performance
and impact of contribution whilst
considering market competitiveness of
variable and total remuneration.
For the Group Chief Executive and
President and Key Management
Personnel, long-term incentive
grants are made in the form of
performance-vesting RSUs and
time-vesting SOs, with a significant
portion of senior executives’ variable
remuneration being deferred.
Long-term incentives generally vest
after a three-year period and are
settled in Shares, with performance-
vesting RSUs subject to pre-defined
performance-vesting requirements.
Benefits and allowances
These include benefits that
may be required by regulations
and/or in line with local market
practices
Benefits are designed to ensure market
competitiveness of the overall rewards
delivery and are fully compliant with
local regulations.
The Group Chief Executive and
President and Key Management
Personnel participate in retirement
schemes and receive welfare related
benefits, for example, medical and
life insurance.
Employee share purchase plan
(ESPP)
This benefit provides employees
with an investment
opportunity with matching
Share grants to facilitate and
encourage long-term
AIA share ownership
Except where prohibited by local
regulations, ESPP is open to all
employees who have completed
probation and is subject to a maximum
contribution indicated as a percentage
of base salary or the plan’s maximum
dollar limit.
Participants receive matching Shares
for Shares they have purchased,
subject to an investment limit approved
by the Remuneration Committee.
Matching Shares vest after three years.
Further details on the operation of our short-term and long-term incentives, along with the ESPP, are provided on the
following pages.
ANNUAL REPORT 2024
143
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
VARIABLE REMUNERATION
Variable remuneration opportunities are designed to motivate employees to deliver on key short-term and long-term
objectives and are aligned with the interests of the stakeholders of AIA, including those of customers, long-term
shareholders and employees. Depending on business and individual performance and behaviours, such incentives
may result in award levels above or below target, reflecting superior performance and behaviours, and performance
and behaviours below expectations, respectively.
AIA’s short-term and long-term incentive plans are described below.
SHORT-TERM INCENTIVE PLAN
Short-term incentives are discretionary and incentivise participants for the achievement of annual business
objectives linked to financial, operational and individual performance over the relevant financial year. Individual
performance is measured based on the achievements of individual goals focusing on achievements and behaviours,
including a balance of financial and non-financial measures. The short-term incentive plan is reviewed regularly to
ensure that its design, process and governance work together to balance incentives and risk.
2024 short-term incentive plan performance levels, including target and maximum opportunities, were determined
by the Remuneration Committee and communicated to the Group Chief Executive and President and Key Management
Personnel at the beginning of the year ended 31 December 2024.
Performance Measures And Weightings
For 2024, the performance measures used in the short-term incentive plan are as follows:
For business units, performance measures and weightings may vary from the illustration above and include a
weighting for strategic initiatives.
The total value of short-term incentive awards that will be paid to Mr. Lee Yuan Siong (Group Chief Executive and
President) and Key Management Personnel for the year ended 31 December 2024 is US$18,968,600.
The short-term incentive amounts for the year ended 31 December 2024 are included in note 37 to the consolidated
financial statements as “Bonuses” for Mr. Lee Yuan Siong, and as part of the “Salaries and other short-term employee
benefits” for Key Management Personnel.
15%
WEIGHTING
25%
WEIGHTING
60%
WEIGHTING
Underlying free surplus generation (UFSG) is the free surplus generated by the
business excluding the free surplus invested in new business, investment return
variances and other items
Operating profit after tax (OPAT) is the operating profit after tax based on the
financial results calculated and reported under the IFRS Accounting Standards
published by the Company
Consistent with prior years, an individual’s performance contribution was also considered when determining the amounts to
be paid to the Group Chief Executive and President and Key Management Personnel
Value of new business (VONB) is an estimate of the economic value of one year’s
sales as published by the Company
UFSG
OPAT
VONB
AIA GROUP LIMITED
144
REMUNERATION REPORT
CORPORATE GOVERNANCE
LONG-TERM INCENTIVE PLAN
Long-term incentives intend to align senior employees and key talents with the Group’s long-term strategic ambitions
and stakeholders’ interests through ownership of the Shares and/or the increase in value of the Shares. Long-term
incentives encourage engagement to operate in a sustainable manner and are designed to motivate and retain
employees, provide risk awareness and support long-term wealth creation with increase in the shareholder value.
The long-term incentive schemes are reviewed regularly to ensure that their design, process and governance work
together to balance incentives and risk.
Long-term incentives are reserved for the most senior positions in the Group that have significant impact on
the sustainable financial results and the overall risk profile of the Group. Other individuals may be considered for
long-term incentives, for example, on the basis of market competitiveness due to their skills and areas of expertise.
Long-term incentive grants are determined on an annual basis with reference to an individual’s role and
responsibilities, performance and impact of contribution whilst considering market competitiveness of variable and
total remuneration. The long-term incentive grants are delivered in the form of performance-vesting RSUs, time-
vesting RSUs and time-vesting SOs.
The grants vest in Shares after a three-year vesting period, subject to the participant remaining in employment with
the Group at the time of vesting.
For performance-vesting RSUs, vesting occurs when performance conditions are met and the vesting level is subject
to the Remuneration Committee’s approval. For time-vesting RSUs and time-vesting SOs, there are no performance
conditions attached. Performance conditions are not applied to time-vesting RSUs to support retention. The value of
the SOs is linked to the future Share price, which in turn depends on the performance of the Company.
Performance Measures And Weightings
For 2024, the performance measures used in the long-term incentive plan are as follows:
The vesting of performance-vesting RSUs is subject to the achievement of pre-defined performance levels assessed
over a three-year performance period (i.e., for 2024 long-term incentive plan, performance period is from 1 January
2024 to 31 December 2026). For the vesting of the RSU grants, the threshold performance level for TSR is the 25th
percentile of peer companies’ performance, while the maximum performance level is the 75th percentile or above
of peer companies’ performance, at which 250 per cent of the target number of performance-vesting RSUs will vest.
* TSR peer companies for the performance-vesting RSUs granted include 19 life and health or multi-line insurance companies identified within the
Dow Jones Insurance Titans 30 Index (DJTINN) at the start of the performance period.
28%
WEIGHTING
28%
WEIGHTING
28%
WEIGHTING
16%
WEIGHTING
Equity attributable to shareholders of the Company on the embedded value basis
(EV Equity) is the total of embedded value, goodwill and other intangible assets as
published by the Company. Embedded value is an estimate of the economic value
of in-force life insurance business, including the net worth on the Group’s balance
sheet but excluding any economic value attributable to future new business
VONB is an estimate of the economic value of one year’s sales as published by
the Company
UFSG is the free surplus generated by the business excluding the free surplus
invested in new business, investment return variances and other items
Relative total shareholder return (TSR) is the compound annual return from the
ownership of a share over a period of time measured by calculating the change in the
share price and the gross value of dividends received (and reinvested) during that
period. AIA’s TSR is compared with the TSR of the peer companies* over the
performance period
EV EQUITY
VONB
TSR
UFSG
ANNUAL REPORT 2024
145
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
DIRECTORS AND KEY MANAGEMENT PERSONNEL EMOLUMENTS
KEY MANAGEMENT PERSONNEL
The total remuneration cost charged to the consolidated income statement for Key Management Personnel during
the year ended 31 December 2024 was US$55,136,947.
Details of remuneration provided during the year ended 31 December 2024 are included in note 37 to the consolidated
financial statements.
EXECUTIVE DIRECTOR
Mr. Lee Yuan Siong received remuneration exclusively for his role as Group Chief Executive and President and received
no separate fees for his role as a Board Director or for acting as a director of any subsidiary company.
The table below provides details of annualised target level of remuneration, excluding benefits and allowances, for
the Group Chief Executive and President.
Annualised Target Compensation (1)
US$ thousands
2024
Mr. Lee Yuan Siong
2023
Mr. Lee Yuan Siong
Base Salary (2)
1,216
1,177
Short-term Incentive Target Amount
2,640
2,515
Long-term Incentive Target Grant Value
4,750
4,611
Total Target Direct Compensation
8,606
8,303
Notes:
(1) The target remuneration levels shown in the table above represent the annualised amount for each of them excluding benefits and allowances. Mr. Lee
Yuan Siong also received an annualised housing allowance of HK$3,000,000 for each of the years 2023 and 2024.
(2) Mr. Lee Yuan Siong’s base salary represents the annualised amount as of 1 March (being the annual review salary effective date) for each of the years
2023 and 2024. Base salaries are paid in Hong Kong dollars and converted to US dollars using exchange rates as of the end of each year.
Details of the actual remuneration costs incurred by the Company during the year ended 31 December 2024 in
relation to the Group Chief Executive and President are included in note 37 to the consolidated financial statements.
NON-EXECUTIVE DIRECTORS
Remuneration for the Non-executive Directors was paid during the year ended 31 December 2024 and included fees
for their services provided to the Board committees. All remuneration of the Non-executive Directors was on a flat
annual fee basis, with no variable component linked to either corporate or individual performance.
Details of the Non-executive Directors’ remuneration cost incurred by the Company during the year ended
31 December 2024 are included in note 37 to the consolidated financial statements.
Board Chairman
The Board Chairman Basic Fees, inclusive of Board Membership fee, was US$750,000 per annum for the year ended
31 December 2024.
Non-executive Directors
Board Membership fees for the Non-executive Directors were US$220,000 per annum for the year ended
31 December 2024.
AIA GROUP LIMITED
146
REMUNERATION REPORT
CORPORATE GOVERNANCE
Additional annual fees for Committee Membership and Chair positions are also provided to the Non-executive
Directors as follows:
Chair
Member
Audit Committee
US$75,000
US$50,000
Nomination Committee
US$30,000
US$20,000
Remuneration Committee
US$65,000
US$40,000
Risk Committee
US$65,000
US$40,000
Non-executive Directors who have also acted as representatives of the Board to attend the ESG Committee, being a
management committee of the Company, are provided with an additional annual fee of US$20,000.
ADDITIONAL INFORMATION REGARDING SHARE SCHEMES
The Board has delegated to the Remuneration Committee the duty to administer the Company’s share schemes.
None of the members of the Remuneration Committee (being Independent Non-executive Directors only) is eligible
to participate in any of the Company’s share schemes. Any proposed grant to be made to a director or chief executive
of the Company under a share scheme will be subject to approval by all Independent Non-executive Directors.
RESTRICTED SHARE UNIT SCHEMES
The purpose of the 2020 RSU Scheme is to align the participants’ interests with those of the Group through ownership
of the Shares and/or the increase in value of the Shares. Under the 2020 RSU Scheme, the Company may grant RSUs
to employees, directors (excluding independent non-executive directors) or officers of any member of the Group.
The 2010 RSU Scheme, adopted by the Company on 28 September 2010, was terminated with effect from 31 July
2020, and no further grants may be made under this scheme although outstanding grants will continue to vest based
on their original terms. The 2020 RSU Scheme, with substantially the same terms as the 2010 RSU Scheme, was
adopted by the Company on 1 August 2020 (2020 RSU Scheme Adoption Date) and is effective for a period of 10
years from the 2020 RSU Scheme Adoption Date and has a remaining life of approximately five years.
During the 10-year period from the 2020 RSU Scheme Adoption Date, the aggregate number of Shares available for
issue underlying the RSUs granted by the Company under the 2020 RSU Scheme and any other restricted share unit
scheme of the Company (i.e., the 2010 RSU Scheme) shall not exceed 2.5 per cent of the number of Shares in issue
on the RSU Scheme Limit Reference Date (i.e. 18 May 2023) as specified under the rules of the 2020 RSU Scheme,
being 290,494,815 Shares, representing 2.72 per cent of the number of Shares in issue as at the date of this report.
ANNUAL REPORT 2024
147
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
No consideration shall be payable by the participant on acceptance or vesting of any RSUs granted under the 2020
RSU Scheme. The maximum number of Shares underlying all grants (i.e., the new Shares issued and to be issued in
respect of all options and awards granted) to any one participant under the Company’s share schemes (including the
RSU Scheme) in any 12-month period is 1 per cent (or 0.1 per cent for a substantial shareholder or a director or chief
executive of the Company) of the number of Shares in issue as at the date of the relevant grant.
The vesting period under the long-term incentive plan is three years. In addition, the minimum period between the
date of the acceptance and the date of the vesting shall not be shorter than 12 months, except in cases where a grant
is made to (i) new hires to compensate for any forfeited compensation and benefits in respect of prior employment
and/or (ii) persons who fall within certain good leaver criteria. The Remuneration Committee is of the view that
allowing for a shorter vesting period in each of the above specific circumstances is appropriate and in line with the
purposes of the 2020 RSU Scheme, as it allows the Company to make buyout grants to new hires so as to attract key
talents and to adhere to addressing forgone remuneration, as well as to compensate good leavers with accelerated
vesting to address for specific good leaver’s circumstances.
During the year ended 31 December 2024, the Company granted 17,620,057 RSUs under the 2020 RSU Scheme.
The 2024 performance-vesting RSU grants will be assessed over a three-year period from 1 January 2024 to 31
December 2026 taking into consideration the performance measures described above. During the same period,
315,561 RSUs vested under the 2010 RSU Scheme and 3,489,344 RSUs vested under the 2020 RSU Scheme. The
Remuneration Committee approved the vesting level for the 2021 performance-vesting RSUs at 92.55 per cent of
target, all of which were satisfied with purchases of existing Shares on market by the scheme trustee.
Since the 2020 RSU Scheme Adoption Date and up to 31 December 2024, a cumulative total of 20,584,129 RSUs
vested under the 2010 RSU Scheme and the 2020 RSU Scheme, underlying Shares of which represent 0.18 per cent
of the number of Shares in issue as at the RSU Scheme Limit Reference Date. During the same period, no new Shares
were issued upon vesting of the awards under the 2010 RSU Scheme and the 2020 RSU Scheme.
As at 31 December 2024, there were a total of 37,367,688 RSUs outstanding under the 2010 RSU Scheme and
the 2020 RSU Scheme, representing 0.34 per cent of the number of Shares in issue as at 31 December 2024.
260,581,438 and 253,127,127 RSUs were available for grant pursuant to the scheme mandate as at 1 January 2024
and 31 December 2024, respectively.
AIA GROUP LIMITED
148
REMUNERATION REPORT
CORPORATE GOVERNANCE
RSU Movements During the Year Ended 31 December 2024
The table below summarises the movements in RSUs under the 2010 RSU Scheme and the 2020 RSU Scheme
during the year ended 31 December 2024.
Date of
grant
(day /
month /
year) (1)
Date of
vesting
(day /
month /
year) (2)
RSUs
outstanding
as at
1 January
2024
RSUs
granted
during the
year ended
31 December
2024 (3)
RSUs
vested
during the
year ended
31 December
2024
RSUs
cancelled /
lapsed /
reclassified
during the
year ended
31 December
2024
RSUs
outstanding
as at
31 December
2024
Weighted
average
closing price
of Shares
immediately
before the
dates on
which RSUs
vested
(HK$)
Group Chief Executive
and President
Mr. LEE Yuan Siong
2010 RSU Scheme
13/3/2020
See note (4)
837,592
–
(315,561)
–
522,031
63.75
2020 RSU Scheme
24/3/2021
24/3/2024 (5)
429,546
–
(198,773)
(230,773)
–
55.95
17/3/2022
17/3/2025 (5)
586,664
–
–
–
586,664
n/a
17/3/2023
17/3/2026 (5)
599,256
–
–
–
599,256
n/a
19/3/2024
19/3/2027 (6)
–
1,035,100
–
–
1,035,100
n/a
All eligible employees
and participants
Date of
grant
(day /
month /
year) (1)
Date of
vesting
(day /
month /
year) (2)
RSUs
outstanding
as at
1 January
2024
RSUs
granted
during the
year ended
31 December
2024 (3)
RSUs
vested
during the
year ended
31 December
2024
RSUs
cancelled /
lapsed /
reclassified
during the
year ended
31 December
2024
RSUs
outstanding
as at
31 December
2024
Weighted
average
closing price
of Shares
immediately
before the
dates on
which RSUs
vested
(HK$)
Five highest-paid
individuals
2010 RSU Scheme
13/3/2020
See note (4)
837,592
–
(315,561)
–
522,031
63.75
2020 RSU Scheme
24/3/2021
24/3/2024 (5)
787,498
–
(364,417)
(423,081)
–
55.95
14/3/2022
See note (7)
47,147
–
(47,147)
–
–
64.85
17/3/2022
17/3/2025 (5)
2,042,596
–
–
–
2,042,596
n/a
17/3/2022
17/3/2025 (8)
21,891
–
–
–
21,891
n/a
17/3/2023
17/3/2026 (5)
1,217,852
–
–
–
1,217,852
n/a
19/3/2024
19/3/2027 (6)
–
2,115,941
–
–
2,115,941
n/a
Other eligible
employees and
participants
2020 RSU Scheme
24/3/2021
24/3/2024 (5)
6,156,838
–
(2,771,130)
(3,385,708)
–
56.10
24/3/2021
24/3/2024 (8)
77,480
–
(77,480)
–
–
55.95
2/6/2021
2/6/2024 (5)
34,634
–
(15,871)
(18,763)
–
61.47
2/6/2021
2/6/2024 (8)
4,484
–
(4,484)
–
–
60.45
30/9/2021
30/9/2024 (5)
51,994
–
(24,061)
(27,933)
–
68.35
17/12/2021
17/12/2024 (8)
58,773
–
(58,773)
–
–
55.10
17/3/2022
17/3/2025 (5)
8,777,543
–
(77,891)
(863,621)
7,836,031
61.56
17/3/2022
17/3/2025 (8)
60,449
–
–
–
60,449
n/a
28/3/2022
17/3/2025 (5)
12,030
–
–
–
12,030
n/a
19/5/2022
17/3/2025 (5)
9,002
–
–
–
9,002
n/a
19/5/2022
19/5/2025 (5)
20,374
–
–
–
20,374
n/a
15/9/2022
15/9/2025 (5)
36,748
–
–
–
36,748
n/a
17/3/2023
17/3/2026 (5)
9,658,452
–
(45,466)
(978,576)
8,634,410
60.21
19/3/2024
19/3/2027 (6)
–
12,325,643
(1,837)
(545,012)
11,778,794
56.84
19/3/2024
19/3/2027 (8)
–
1,859,170
(787)
(92,231)
1,766,152
56.84
19/3/2024
See note (9)
–
266,576
–
–
266,576
n/a
4/6/2024
4/6/2027 (6)
–
22,123
–
(22,123)
–
n/a
4/6/2024
4/6/2027 (8)
–
3,793
–
(3,793)
–
n/a
1/11/2024
See note (10)
–
53,246
–
–
53,246
n/a
2/12/2024
1/12/2027 (6)
–
893,877
–
–
893,877
n/a
31/12/2024
31/12/2027 (6)
–
79,688
–
–
79,688
n/a
Grand Total
2010 RSU Scheme
837,592
–
(315,561)
–
522,031
2020 RSU Scheme
29,075,785
17,620,057
(3,489,344)
(6,360,841)
36,845,657
Total
29,913,377
17,620,057
(3,804,905)
(6,360,841)
37,367,688
ANNUAL REPORT 2024
149
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Notes:
(1) The measurement dates (i.e., the dates used to determine the value of the grants for accounting purposes) for grants are the same as the respective
date of grant. These measurement dates were determined in accordance with IFRS 2 Share-based Payment.
(2) The date of vesting is subject to applicable dealing restrictions.
(3) No consideration shall be payable by the participant on acceptance of any RSUs granted.
(4) Reference is made to the Company’s announcement dated 22 November 2019. These RSUs relate to the awarded compensation for unvested long-
term incentives and deferred payments that Mr. Lee Yuan Siong forfeited on leaving his prior employment. The vesting of these time-vesting RSUs is
service-based only (i.e., there are no further performance conditions attached except for continued employment). The first five tranches of 315,561
RSUs each had vested on 13 September 2020, 21 February 2021, 21 February 2022, 21 February 2023 and 21 February 2024 respectively. Subject
to continued employment, 522,031 RSUs are scheduled to vest on 21 February 2025.
(5) The vesting of these performance-vesting RSUs is subject to service requirements and the achievement of performance measures shown on page 135
of the Company’s Annual Report 2023.
(6) The vesting of these performance-vesting RSUs is subject to service requirements and the achievement of performance measures shown on page 144
of this Annual Report. For the RSUs granted on 19 March 2024, the closing price of the Shares immediately before the date on which RSUs were
granted was HK$59.05 and the fair value of the RSUs at the date of grant was determined to be HK$39.90. For the RSUs granted on 4 June 2024, the
closing price of the Shares immediately before the date on which RSUs were granted was HK$59.85 and the fair value of the RSUs at the date of grant
was determined to be HK$40.96. For the RSUs granted on 2 December 2024, the closing price of the Shares immediately before the date on which
RSUs were granted was HK$58.15 and the fair value of the RSUs at the date of grant was determined to be HK$39.57. For the RSUs granted on 31
December 2024, the closing price of the Shares immediately before the date on which RSUs were granted was HK$56.30 and the fair value of the
RSUs at the date of grant was determined to be HK$38.47.
(7) The vesting of these time-vesting RSUs is service-based only (i.e., there are no further performance conditions attached except for continued
employment). The three tranches of 47,147 RSUs each had vested on 14 September 2022, 14 March 2023 and 14 March 2024 respectively.
(8) The vesting of these time-vesting RSUs is service-based only (i.e., there are no further performance conditions attached except for continued
employment). For the RSUs granted on 19 March 2024, the closing price of the Shares immediately before the date on which RSUs were granted was
HK$59.05 and the fair value of the RSUs at the date of grant was determined to be HK$54.55. For the RSUs granted on 4 June 2024, the closing price
of the Shares immediately before the date on which RSUs were granted was HK$59.85 and the fair value of the RSUs at the date of grant was
determined to be HK$55.97.
(9) The vesting of these performance-vesting RSUs is subject to service requirements and the achievement of performance measures shown on page 144
of this Annual Report. The closing price of the Shares immediately before the date on which RSUs were granted was HK$59.05. As required by the
relevant jurisdiction for deferred variable remuneration, the first tranche of 123,090 RSUs is scheduled to vest on 19 March 2028 (fair value was
determined to be HK$39.22), the second tranche of 123,086 RSUs is scheduled to vest on 19 March 2029 (fair value was determined to be HK$38.57)
and the third tranche of 20,400 RSUs is scheduled to vest on 19 March 2030 (fair value was determined to be HK$37.91) respectively.
(10) The vesting of these time-vesting RSUs is service-based only (i.e., there are no further performance conditions attached except for continued
employment). The closing price of the Shares immediately before the date on which RSUs were granted was HK$61.45. Subject to continued
employment, the two tranches of 26,623 RSUs each are scheduled to vest on 1 December 2025 (fair value was determined to be HK$61.05) and
1 December 2026 (fair value was determined to be HK$59.96) respectively.
SHARE OPTION SCHEMES
The purpose of the SO Scheme is to align the participants’ interests with those of the Group through ownership of
Shares and/or the increase in value of Shares. Under the 2020 SO Scheme, the Company may grant SOs to employees,
directors (excluding independent non-executive directors) or officers of any member of the Group.
The 2010 SO Scheme, adopted by the Company on 28 September 2010, was terminated with effect from 29 May
2020, and no further grants may be made under this scheme although outstanding grants will continue to vest
based on their original terms. The 2020 SO Scheme, with substantially the same terms as the 2010 SO Scheme, was
adopted by the Company on 29 May 2020 (2020 SO Scheme Adoption Date). The 2020 SO Scheme is effective for
a period of 10 years from the 2020 SO Scheme Adoption Date and has a remaining life of approximately five years.
During the 10-year period from the 2020 SO Scheme Adoption Date, the aggregate number of Shares available for
issue upon exercise of all SOs granted by the Company (excluding SOs that have lapsed) pursuant to the 2020 SO
Scheme and any other share option scheme of the Company (i.e., the 2010 SO Scheme) shall not exceed 2.5 per cent
of the number of Shares in issue on the 2020 SO Scheme Adoption Date, being 302,264,978 Shares (representing
2.83 per cent of the number of Shares in issue as at the date of this report). The maximum number of Shares
underlying all grants (i.e., the new Shares issued and to be issued in respect of all options and awards granted) to any
one participant under the Shares schemes (including the SO Scheme) in any 12-month period is 1 per cent (or 0.1
per cent for a substantial shareholder of the Company) of the number of Shares in issue as at the date of the relevant
grant. No SOs have been granted to substantial shareholders or in excess of the individual limit pursuant to the SO
Schemes since their adoption.
AIA GROUP LIMITED
150
REMUNERATION REPORT
CORPORATE GOVERNANCE
No consideration is payable by the participant on acceptance of any SO granted under the 2020 SO Scheme. Each SO
entitles the participant to subscribe for one ordinary Share. The exercise price of SOs is the higher of (i) the closing
price of the Shares on the date of grant and (ii) the average closing price of the Shares for the five business days
immediately preceding the date of grant.
The vesting period under the long-term incentive plan is three years. In addition, the minimum holding period of an
SO is 12 months from date of acceptance and an SO shall have a maximum life of 10 years from grant. The SOs are
generally exercisable three years after the date of grant and remain exercisable for another seven years, except in
cases where a grant is made to (i) new hires to compensate for any forfeited compensation and benefits in respect
of prior employment and/or (ii) persons who fall within certain good leaver criteria. The Remuneration Committee is
of the view that allowing for a shorter vesting period in each of the above specific circumstances is appropriate and
in line with the purposes of the 2020 SO Scheme, as it allows the Company to make buyout grants to new hires so as
to attract key talents and to adhere to addressing forgone remuneration, as well as to compensate good leavers with
accelerated vesting to address for specific good leaver’s circumstances.
During the year ended 31 December 2024, the Company granted 3,019,542 SOs under the 2020 SO Scheme. During
the same period, 869,729 new Shares were issued upon exercise of the SOs granted under the 2010 SO Scheme and
no new Shares were issued under the 2020 SO Scheme. The Remuneration Committee is of the view that SOs (with
no performance conditions attached to them) are granted to drive long-term focus and shareholder value creation.
The value of the SOs is linked to the future Share price, which in turn depends on the performance of the Company.
Since the 2020 SO Scheme Adoption Date and up to 31 December 2024, a cumulative total of 8,639,189 new Shares
were issued under the 2010 SO Scheme, representing approximately 0.07 per cent of the number of Shares in issue
as at the 2020 SO Scheme Adoption Date. During the same period, no new Shares were issued under the 2020 SO
Scheme.
As at 31 December 2024, there were a total of 27,205,934 SOs outstanding under the 2010 SO Scheme and the 2020
SO Scheme, representing 0.25 per cent of the number of Shares in issue as at 31 December 2024. 269,390,346 and
266,419,855 SOs were available for grant pursuant to the scheme mandate as at 1 January 2024 and 31 December
2024, respectively.
As at the date of this report, the total number of Shares which are available for issue underlying the SOs granted
under the 2020 SO Scheme and the 2010 SO Scheme is 293,025,720 Shares, representing approximately 2.74 per
cent of the number of Shares in issue.
ANNUAL REPORT 2024
151
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SO Movements During the Year Ended 31 December 2024
The table below summarises the movements in SOs under the 2010 SO Scheme and the 2020 SO Scheme during the
year ended 31 December 2024.
All eligible
employees and
participants
Date of
grant
(day /
month /
year) (1)
Period during
which SOs
are exercisable
(day / month / year) (2)
SOs
outstanding
as at
1 January
2024
SOs
granted
during the
year ended
31 December
2024
SOs
vested
during the
year ended
31 December
2024
SOs
cancelled /
lapsed /
reclassified
during the
year ended
31 December
2024
SOs
exercised
during the
year ended
31 December
2024
Exercise
price
(HK$)
SOs
outstanding
as at
31 December
2024
Weighted
average
closing price
of Shares
immediately
before the
dates on
which SOs
were
exercised
(HK$)
Group Chief
Executive and
President
Mr. LEE Yuan Siong
2010 SO Scheme
25/3/2020
25/3/2023 - 24/3/2030 (3)
1,197,133
–
–
–
–
68.10
1,197,133
n/a
2020 SO Scheme
24/3/2021
24/3/2024 - 23/3/2031 (3)
464,526
–
464,526
–
–
97.33
464,526
n/a
17/3/2022
17/3/2025 - 16/3/2032 (3)
660,259
–
–
–
–
79.85
660,259
n/a
17/3/2023
17/3/2026 - 16/3/2033 (3)
552,217
–
–
–
–
80.73
552,217
n/a
19/3/2024
19/3/2027 - 18/3/2034 (4)
–
808,729
–
–
–
62.33
808,729
n/a
Other eligible
employees and
participants
2010 SO Scheme
5/3/2014
5/3/2017 - 4/3/2024 (3)
54,711
–
–
–
(54,711)
37.56
–
62.81
12/3/2015
12/3/2018 - 11/3/2025 (3)
956,899
–
–
–
(356,830)
47.73
600,069
64.47
9/3/2016
9/3/2019 - 8/3/2026 (3)
1,637,947
–
–
–
–
41.90
1,637,947
n/a
10/3/2017
10/3/2020 - 9/3/2027 (3)
3,439,715
–
–
–
(111,312)
50.30
3,328,403
68.35
31/7/2017
1/6/2020 - 30/7/2027 (3)
830,436
–
–
–
–
61.55
830,436
n/a
15/3/2018
15/3/2021 - 14/3/2028 (3)
3,690,126
–
–
–
(346,876)
67.15
3,343,250
68.35
27/3/2019
27/3/2022 - 26/3/2029 (3)
3,300,258
–
–
–
–
76.38
3,300,258
n/a
15/5/2019
1/5/2022 - 14/5/2029 (3)
82,221
–
–
–
–
78.70
82,221
n/a
25/3/2020
25/3/2023 - 24/3/2030 (3)
3,721,940
–
–
(35,241)
–
68.10
3,686,699
n/a
2020 SO Scheme
24/3/2021
24/3/2024 - 23/3/2031 (3)
1,306,113
–
1,153,622
(13,810)
–
97.33
1,292,303
n/a
17/3/2022
17/3/2025 - 16/3/2032 (3)
1,844,289
–
–
–
–
79.85
1,844,289
n/a
17/3/2023
17/3/2026 - 16/3/2033 (3)
1,366,382
–
–
–
–
80.73
1,366,382
n/a
19/3/2024
19/3/2027 - 18/3/2034 (4)
–
2,187,374
–
–
–
62.33
2,187,374
n/a
19/3/2024
See note (5)
–
23,439
–
–
–
62.33
23,439
n/a
Grand Total
2010 SO Scheme
18,911,386
–
–
(35,241)
(869,729)
18,006,416
2020 SO Scheme
6,193,786
3,019,542
1,618,148
(13,810)
9,199,518
Total
25,105,172
3,019,542
1,618,148
(49,051)
(869,729)
27,205,934
Notes:
(1) The measurement date (i.e., the date used to determine the value of the grants for accounting purposes) for grants are the same as the respective date
of grant. These measurement dates were determined in accordance with IFRS 2 Share-based Payment.
(2) The date of vesting is the first day of the period during which SOs are exercisable and subject to applicable dealing restrictions.
(3) The vesting of SOs is service-based only.
(4) The vesting of SOs is service-based only. The closing price of the Shares immediately before the date on which SOs were granted was HK$59.05. The
fair value of the SOs at the date of grant was determined to be HK$17.37.
(5) The vesting of SOs is service-based only. The closing price of the Shares immediately before the date on which SOs were granted was HK$59.05. As
required by the relevant jurisdiction for deferred variable remuneration, the first tranche of 7,735 SOs will vest on 19 March 2028 and be exercisable
from 19 March 2028 to 18 March 2034 (fair value was determined to be HK$17.93) , the second tranche of 7,735 SOs will vest on 19 March 2029 and
exercisable from 19 March 2029 to 18 March 2034 (fair value was determined to be HK$18.40), the third tranche of 7,969 SOs will vest on 19 March
2030 and exercisable from 19 March 2030 to 18 March 2034 (fair value was determined to be HK$18.81).
AIA GROUP LIMITED
152
REMUNERATION REPORT
CORPORATE GOVERNANCE
EMPLOYEE SHARE PURCHASE PLANS
The 2011 ESPP and the 2020 ESPP (together, ESPPs) are designed to facilitate and encourage long-term AIA share
ownership by employees to strengthen employees’ sense of belonging and encourage retention. Under the ESPPs,
the Company may grant restricted stock purchase units (RSPUs) to the participants (being permanent employees of
the Group) to match their Share purchases.
Following the expiry of the 2011 ESPP, the 2020 ESPP was adopted by the Company on 1 August 2020 (2020 ESPP
Adoption Date). It is effective for a period of 10 years from the 2020 ESPP Adoption Date and has a remaining life of
approximately five years.
Under the 2020 ESPP, eligible employees of the Group may elect to purchase Shares and, through the grant of
matching RSPUs, employees who are still in employment with the Group will receive one matching Share for every
two Shares purchased that are held until the vesting of the matching RSPUs, which generally takes place three years
from the day of the first Share purchase in a plan year. Each eligible employee’s participation level is capped at the
lower of 10 per cent of the monthly base salary or HK$12,500 (or local currency equivalent) per calendar month. The
matching Shares can either be awarded through the issuance of new Shares or the purchases of existing Shares on
market by the plan trustee.
The vesting period of the RSPUs granted is three years. In the case where a participant fulfills the good leaver
criteria or if there is a change in control or winding-up of the Company each participant’s matching RSPUs shall vest
immediately. The Remuneration Committee is of the view that allowing for a shorter vesting period in these specific
circumstances is appropriate and in line with the purposes of the ESPP as it allows the Company to compensate good
leavers with accelerated vesting to address for specific good leaver’s circumstances.
During the 10-year period from the 2020 ESPP Adoption Date, the aggregate number of Shares available for issue
pursuant to the 2020 ESPP and any other employee share purchase plan (i.e., the 2011 ESPP) shall not exceed 2.5
per cent of the number of Shares in issue on the reference date (i.e. 18 May 2023) as specified under the rules of the
2020 ESPP, being 290,494,815 Shares, representing 2.72 per cent of the number of Shares in issue as at the date
of this report. The maximum number of Shares underlying all grants (i.e., the new Shares issued and to be issued in
respect of all options and awards granted) to any one participant under the Company’s share schemes (including
the ESPPs) in any 12-month period is 1 per cent (or 0.1 per cent for a substantial shareholder or a director or chief
executive of the Company) of the number of Shares in issue as at the date of filing the election form for participation
in the ESPP.
No performance targets and clawback provisions are attached to RSPUs under the ESPPs. The Remuneration
Committee is of the view that the grants under the ESPPs are time-vesting and intended for eligibility wider than
directors and senior management and focused on strengthening employees’ sense of belonging and engagement by
holding an equity stake in the Company.
ANNUAL REPORT 2024
153
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
During the year ended 31 December 2024, 2,603,278 matching RSPUs were granted, 1,553,991 matching RSPUs
vested and no new Shares were issued under the 2020 ESPP.
Since the 2020 ESPP Adoption Date and up to 31 December 2024, no new Shares were issued upon vesting of the
RSPUs granted under the 2020 ESPP and the 2011 ESPP.
As at 31 December 2024, there were a total of 4,415,455 RSPUs outstanding under the 2020 ESPP, representing
0.04 per cent of the number of Shares in issue as at 31 December 2024. 286,751,826 and 286,079,360 RSPUs were
available for grant pursuant to the plan limit as at 1 January 2024 and 31 December 2024, respectively.
The table below summarises the movements in RSPUs under the 2020 ESPP during the year ended 31 December
2024.
RSPUs
outstanding
as at
1 January
2024
RSPUs
granted
during the
year ended
31 December
2024 (1) (2)
RSPUs
vested
during the
year ended
31 December
2024
RSPUs
cancelled /
lapsed /
reclassified
during the
year ended
31 December
2024
RSPUs
outstanding
as at
31 December
2024
Weighted
average
closing price
of Shares
immediately
before the
dates on
which RSPUs
vested
(HK$)
Group Chief Executive
and President
Mr. LEE Yuan Siong
2,095
1,300
(960)
–
2,434
57.85
All eligible
employees and
participants
RSPUs
outstanding
as at
1 January
2024
RSPUs
granted
during the
year ended
31 December
2024 (1) (2)
RSPUs
vested
during the
year ended
31 December
2024
RSPUs
cancelled /
lapsed /
reclassified
during the
year ended
31 December
2024
RSPUs
outstanding
as at
31 December
2024
Weighted
average
closing price
of Shares
immediately
before the
dates on
which RSPUs
vested
(HK$)
Five highest-paid individuals
6,284
3,900
(2,880)
–
7,304
57.85
Other eligible employees
and participants
3,736,704
2,599,378
(1,551,111)
(376,820)
4,408,151
57.90
Grand Total
3,742,988
2,603,278
(1,553,991)
(376,820)
4,415,455
Notes:
(1) The measurement dates (i.e. the dates used to determine the value of the grants for accounting purposes) for grants made during the year ended 31
December 2024 were determined to be the first day of the month after participants enrolled in the ESPP, in accordance with IFRS 2 Share-based
Payment. The weighted average fair value per matching RSPUs granted during the year ended 31 December 2024 were measured to be HK$51.84 for
January 2024 grant, HK$51.39 for February 2024 grant, HK$50.88 for March 2024 grant, HK$52.60 for April 2024 grant, HK$51.87 for May 2024
grant, HK$52.08 for June 2024 grant, HK$52.34 for July 2024 grant, HK$55.05 for August 2024 grant, HK$61.06 for September 2024 grant, HK$49.54
for October 2024 grant, HK$48.56 for November 2024 grant and HK$47.12 for December 2024 grant.
No consideration is payable by participants on the grant of RSPUs.
(2) Monthly Share purchases and the grant of matching RSPUs under the 2020 ESPP are conducted on the 15th of each month (or, if such day is not a
business day, the next succeeding business day). For the 2021 ESPP plan year, such monthly purchases were conducted from November 2021 to
October 2022, with a vesting date of 15 November 2024. For the 2022 ESPP plan year, such monthly purchases were conducted from November 2022
to October 2023, with a vesting date of 15 November 2025. For the 2023 ESPP plan year, such monthly purchases were conducted from November
2023 to October 2024, with a vesting date of 15 November 2026. For the 2024 ESPP plan year, such monthly purchases were/will be conducted from
November 2024 to October 2025, with a vesting date of 15 November 2027.
For details of the closing price of Shares immediately before the dates on which RSPUs were granted, please refer to share price on www.aia.com.
AIA GROUP LIMITED
154
REMUNERATION REPORT
CORPORATE GOVERNANCE
AGENCY SHARE PURCHASE PLANS
The 2012 ASPP and the 2021 ASPP (together, ASPPs) are designed to facilitate and encourage long-term AIA share
ownership by selected agency leaders and agents of the Group. Under the ASPPs, the Company may grant restricted
stock subscription units (RSSUs) to the participants to match their Share purchases.
Following the expiry of the 2012 ASPP, the 2021 ASPP was adopted by the Company on 1 February 2021 (2021
ASPP Adoption Date). It is effective for a period of 10 years from the 2021 ASPP Adoption Date and has a remaining
life of approximately six years.
During the 10-year period from the 2021 ASPP Adoption Date, the aggregate number of Shares available for issue
pursuant to the 2021 ASPP and any other agency share purchase plan (i.e., the 2012 ASPP) shall not exceed 2.5 per
cent of the number of Shares in issue on the reference date (i.e. 18 May 2023) as specified under the rules of the
2021 ASPP, being 290,494,815 Shares, representing 2.72 per cent of the number of Shares in issue as at the date
of this report. The maximum number of Shares underlying all grants (i.e., the new Shares issued and to be issued in
respect of all options and awards granted) to any one participant under the Company’s share schemes (including
the ASPPs) in any 12-month period is 1 per cent of the number of Shares in issue as at the date of filing the election
form for participation in the ASPP.
Under the 2021 ASPP, the participants may elect to purchase Shares and, through the grant of matching RSSUs,
receive one matching Share for every two Shares purchased that are held until the vesting of the matching RSSUs,
which generally takes place three years from the day of the first Share purchase in a plan year. Each eligible agent’s
participation level is capped at HK$12,500 (or local currency equivalent) per calendar month.
No performance targets and clawback provisions are attached to RSSUs under the ASPPs. The Remuneration
Committee is of the view that the grants under the ASPPs are time-vesting and focused on strengthening agents’
sense of belonging and engagement by holding an equity stake in the Company.
During the year ended 31 December 2024, 1,433,727 matching RSSUs were granted, 877,146 matching RSSUs
vested and 877,146 new Shares were issued under the 2021 ASPP. The new Shares were issued at a subscription
price of US$1.00 each to Computershare Hong Kong Trustees Limited (being the plan trustee) to hold the same on
trust for certain eligible agents upon vesting of their matching RSSUs.
Since the 2021 ASPP Adoption Date and up to 31 December 2024, a cumulative total of 4,175,623 matching RSSUs
vested and 4,175,623 new Shares were issued under either the 2012 ASPP or the 2021 ASPP.
As at 31 December 2024, there were a total of 2,975,989 RSSUs outstanding under the 2012 ASPP and the 2021
ASPP, representing 0.03 per cent of the number of Shares in issue as at 31 December 2024. 284,622,774 and
283,343,203 RSSUs were available for grant pursuant to the plan limit as at 1 January 2024 and 31 December 2024,
respectively.
ANNUAL REPORT 2024
155
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
The table below summarises the movements in RSSUs under the 2021 ASPP during the year ended 31 December
2024 for the eligible participants.
RSSUs
outstanding
as at
1 January
2024
RSSUs
granted
during the
year ended
31 December
2024 (1)(2)(3)
RSSUs
vested
during the
year ended
31 December
2024
RSSUs cancelled /
lapsed / reclassified
during the
year ended
31 December
2024
RSSUs
outstanding
as at
31 December
2024
Weighted average
closing price of Shares
immediately before the
dates on which
RSSUs vested
(HK$)
Eligible participants
2,573,564
1,433,727
(877,146)
(154,156)
2,975,989
60.45
Notes:
(1) The measurement date (i.e., the date used to determine the value of the grants for accounting purposes) for grants made during the year ended
31 December 2024 was determined to be 25 March 2024, being the last date of the enrolment period of the 2024 ASPP plan year, in accordance with
IFRS 2 Share-based Payment. The weighted average fair value per matching RSSU granted during the year ended 31 December 2024 was measured
to be HK$43.00.
Monthly Share purchases and the grant of matching RSSUs under the 2021 ASPP are conducted on the 27th day of each month (or, if such day is not
a business day, the next succeeding business day). For the 2021 ASPP plan year, such monthly purchases were conducted from May 2021 to
April 2022 with a vesting date of 27 May 2024. For the 2022 ASPP plan year, such monthly purchases were conducted from May 2022 to April 2023
with a vesting date of 27 May 2025. For the 2023 ASPP plan year, such monthly purchases were conducted from May 2023 to April 2024 with a
vesting date of 29 May 2026. For the 2024 ASPP plan year, such monthly purchases were/will be conducted from May 2024 to April 2025, with a
vesting date of 27 May 2027.
For details of the closing price of Shares immediately before the dates on which RSSUs were granted, please refer to the share price on www.aia.com.
(2) As disclosed in the Company’s announcement dated 4 April 2023, the Company estimated that a total of 1,055,863 RSSUs will be granted to the
participants for the 2023 ASPP plan year which runs from 1 May 2023 to 30 April 2024. The actual number of matching RSSUs granted in relation to
the 2023 ASPP plan year was 1,208,797.
(3) As disclosed in the Company’s announcement dated 2 April 2024, the Company estimated that a total of 1,878,120 RSSUs will be granted to the
participants for the 2024 ASPP plan year which runs from 1 May 2024 to 30 April 2025. During the year ended 31 December 2024, the actual number
of matching RSSUs granted in relation to the 2024 ASPP plan year was 986,845.
The number of Shares that may be issued in respect of SOs and awards granted under the share schemes of the
Company during the year ended 31 December 2024 divided by the weighted average number of Shares in issue as
at 31 December 2024 is 0.22 per cent.
Details regarding the fair value measurement of the SOs and awards granted under the share schemes of the
Company during the year ended 31 December 2024 and the accounting standard and policy adopted are set out in
note 36 to the consolidated financial statements.
LOOKING AHEAD
This section sets out further information regarding remuneration for the performance year 2025.
As part of a regular review of the remuneration framework conducted by the Remuneration Committee’s independent
external advisor, a proposal to introduce dividend equivalent units was approved by the Remuneration Committee
during 2024. This serves to further align with market practices and ensure stronger shareholder alignment.
Commencing from 2025, for grants made by the Company under the 2020 RSU Scheme, dividend equivalent units
in the form of share units will be credited on each dividend payment date of the Company during the vesting period.
Such dividend equivalent units reference the value of the corresponding dividends during the vesting period and are
subject to the same performance and/or vesting conditions of the underlying RSU grants.
The Remuneration Committee will continue to assess the remuneration framework taking into consideration the
compliance and risk landscape, market practices and other factors to ensure that AIA is well positioned to attract and
retain the best talents to support the Group’s strategy.
AIA GROUP LIMITED
156
157 Independent Auditor’s Report
164 Consolidated Income Statement
165 Consolidated Statement of
Comprehensive Income
166 Consolidated Statement of
Financial Position
168 Consolidated Statement of
Changes in Equity
170 Consolidated Statement of
Cash Flows
172 Notes to the Consolidated
Financial Statements and
Material Accounting Policy
Information
1. Corporate information
2. Material accounting policy information
3. Critical accounting estimates and judgements
4. Exchange rates
5. Operating profit after tax
6. Total weighted premium income and
annualised new premiums
7. Segment information
8. Insurance revenue
9. Net investment result
10. Expenses
11. Income tax
12. Earnings per share
13. Dividends
14. Intangible assets
15. Investments in associates and joint ventures
16. Property, plant and equipment
17. Investment property
18. Financial investments
19. Derivative financial instruments
20. Fair value measurement
21. Other assets
22. Cash and cash equivalents
23. Impairment of financial assets
24. Insurance contracts and
reinsurance contracts held
25. Investment contracts
26. Borrowings
27. Obligations under repurchase agreements
28. Offsetting of financial assets and
financial liabilities
29. Provisions
30. Other liabilities
31. Share capital and reserves
32. Non-controlling interests
33. Group capital structure
34. Risk management
35. Employee benefits
36. Share-based compensation
37. Remuneration of directors and
key management personnel
38. Related party transactions
39. Commitments and contingencies
40. Subsidiaries
41. Events after the reporting period
42. Statement of financial position of the Company
43. Statement of changes in equity of the Company
321 Independent Auditor’s Report on the
Supplementary Embedded Value
Information
325 Supplementary Embedded
Value Information
FINANCIAL STATEMENTS
157
ANNUAL REPORT 2024
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF AIA GROUP LIMITED
(incorporated in Hong Kong with limited liability)
Opinion
What we have audited
The consolidated financial statements of AIA Group Limited (the “Company”) and its subsidiaries
(the “Group”), which are set out on pages 164 to 320, comprise:
•
the consolidated statement of financial position as at 31 December 2024;
•
the consolidated income statement for the year then ended;
•
the consolidated statement of comprehensive income for the year then ended;
•
the consolidated statement of changes in equity for the year then ended;
•
the consolidated statement of cash flows for the year then ended; and
•
the notes to the consolidated financial statements, comprising material accounting policy
information and other explanatory information.
Our opinion
In our opinion, the consolidated financial statements give a true and fair view of the consolidated
financial position of the Group as at 31 December 2024, and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with Hong
Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified
Public Accountants (“HKICPA”) and IFRS Accounting Standards issued by the International
Accounting Standards Board (“IASB”) and have been properly prepared in compliance with the
Hong Kong Companies Ordinance.
Basis for Opinion
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued
by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Consolidated Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional
Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in accordance
with the Code.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
158
AIA GROUP LIMITED
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
The key audit matter identified relate to the valuation of insurance contracts.
Key audit matter
How our audit addressed the key audit matter
Valuation of insurance contracts
Refer to the relevant references in the consolidated financial statements:
Note 2.3 to the consolidated financial statements and material accounting policy information:
Material accounting policy Information – Insurance contracts, investment contracts with
discretionary participation features (DPF) and reinsurance contracts held, pages 174-189.
Note 3.1 to note 3.3 to the consolidated financial statements and material accounting policy
information: Critical accounting estimates and judgements, pages 197-198.
Note 24 to the consolidated financial statements and material accounting policy information:
Insurance contracts and reinsurance contracts held, pages 259-278.
As at 31 December 2024, the Group had
net
insurance
contract
liabilities
of
US$220,440 million.
The insurance contracts are measured as
the total of the fulfilment cash flows (“FCF”)
and the contractual service margin (“CSM”),
the
determination
of
which
requires
judgement
about
uncertain
future
outcomes. Contracts which are accounted
for as insurance contracts, are dependent
on the contract features, measured using
one of the three measurement approaches
– the general measurement model, the
variable fee approach (“VFA”) or the
premium allocation approach (“PAA”). The
degree of judgement involved is generally
higher for the general measurement model
and the VFA compared with the PAA.
We tested certain controls in place relating to
methodologies, their application, significant
assumptions and data used in the valuation of
insurance contracts. These included controls
relating to:
•
Review and determination of methodologies
used, and their applications in the models.
This includes changes in methodologies
applied;
•
Assumption setting;
•
The determination of the coverage units for
new products, and changes to the coverage
units for existing products; and
•
Policy
data
reconciliations
from
the
policyholder administration systems to the
actuarial valuation models.
FINANCIAL STATEMENTS
159
ANNUAL REPORT 2024
Key audit matter
How our audit addressed the key audit matter
Valuation of insurance contracts (continued)
The application of the general measurement
model and the VFA includes the use of
complex methodologies that are applied in
models, and for insurance contracts with
significant financial options and guarantees,
stochastic modelling techniques are applied
in measuring those contracts’ FCF.
We
particularly
focused
on
material
changes made to methodologies applied in
models in determining the FCF under the
general measurement model and the VFA,
as well as methodologies applied to material
new product types (as applicable).
The methodologies applied in models use
various assumptions, both economic and
noneconomic in nature. These assumptions,
which are subject to estimation uncertainty,
are
derived
from
a
combination
of
management’s
judgement,
historic
experience, market data or other relevant
information.
With
the
assistance
of
our
actuarial
professionals,
we
perform
the
following
substantive audit procedures to assess the
methodologies, their applications, significant
assumptions, data and disclosures:
•
We assessed the appropriateness of the
methodologies used, and their application
in models. This included testing on a sample
basis that material changes made to
methodology are reflected in the models in
determining the FCF under the general
measurement model and VFA as well as
assessing
the
appropriateness
of
methodologies applied to material new
product types (as applicable);
•
We challenged the appropriateness of the
judgements made in setting significant
assumptions
under
the
general
measurement model and VFA. We have
assessed these significant assumptions and
obtained relevant corroborating evidence.
We
further
considered
whether
the
judgements made in setting the significant
assumptions would give rise to indicators of
management bias;
Key Audit Matters (continued)
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
INDEPENDENT AUDITOR’S REPORT
160
AIA GROUP LIMITED
Key audit matter
How our audit addressed the key audit matter
Valuation of insurance contracts (continued)
The assumptions used that we focused on
for insurance contracts were those with
greater levels of management judgement,
and for which variations have the most
significant impact on the net insurance
contract liabilities. For FCF under the
general measurement model and the VFA,
these significant assumptions included
mortality/morbidity, persistency, policyholder
dividends for other participating business
without distinct portfolios, and economic
assumptions.
The CSM represents the unearned profits
that the Group is expected to recognise as it
provides services under the insurance
contracts.
The carrying amount of the CSM includes
an adjustment for the amount recognised as
insurance revenue for services provided in
the period, measured based on the coverage
units provided in the period.
The coverage units represent the quantity of
services being provided by the contracts.
In the determination of coverage units used
in the CSM measurement, we particularly
focused on the judgement applied in
determination of coverage units for new
products launched in the current year which
have or should have a material impact on
the valuation of insurance contracts and
changes of coverage units for existing
material products, if any.
•
On a sample basis, we challenged the
appropriateness of the judgement applied
in determination of coverage units for new
products launched in the current year which
have or should have a material impact on
the valuation of insurance contracts and
challenged
the
appropriateness
of
judgement applied in determining changes
of coverage units for existing material
products, if any;
•
We tested on sample basis data used in the
valuation of insurance contracts; and
•
We assessed the adequacy of the relevant
disclosures in the context of the applicable
financial reporting framework.
Based upon the work outlined above, we found
the
methodologies
applied,
significant
assumptions and data used in the valuation of
insurance contracts to be acceptable based on
available evidence.
Key Audit Matters (continued)
FINANCIAL STATEMENTS
161
ANNUAL REPORT 2024
Other Information
The Directors of the Company are responsible for the other information. The other information
comprises all of the information included in the annual report other than the consolidated financial
statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
Other Matter
The Group has prepared Supplementary Embedded Value Information as at and for the year
ended 31 December 2024 in accordance with the embedded value basis of preparation set out in
Sections 4 and 5 of the Supplementary Embedded Value Information, on which we issued a
separate auditor’s report to the Board of Directors of the Company dated 14 March 2025.
Responsibilities of Directors and Those Charged with Governance for the Consolidated
Financial Statements
The Directors of the Company are responsible for the preparation of the consolidated financial
statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and
IFRS Accounting Standards issued by the IASB and the Hong Kong Companies Ordinance, and for
such internal control as the Directors determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the Directors either intend
to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting
process.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
INDEPENDENT AUDITOR’S REPORT
162
AIA GROUP LIMITED
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. We report our opinion solely to you, as a body,
in accordance with Section 405 of the Hong Kong Companies Ordinance and for no other purpose.
We do not assume responsibility towards or accept liability to any other person for the contents
of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with HKSAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the Directors.
•
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
FINANCIAL STATEMENTS
163
ANNUAL REPORT 2024
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
(continued)
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business units within the Group as a basis for forming
an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and review of the audit work performed for purposes of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the consolidated financial statements of the
current period and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Lars
Christian Jordy Nielsen.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
14 March 2025
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
INDEPENDENT AUDITOR’S REPORT
164
AIA GROUP LIMITED
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
US$m
Notes
Year ended
31 December
2024
Year ended
31 December
2023
Insurance revenue
8, 24
19,314
17,514
Insurance service expenses
10, 24
(13,136)
(12,078)
Net expenses from reinsurance contracts held
24
(409)
(345)
Insurance service result
5,769
5,091
Interest revenue on
9
Financial assets not measured at fair value through profit or loss
4,275
4,062
Financial assets measured at fair value through profit or loss
3,713
3,758
Other investment return
9
3,965
4,941
Net impairment loss on financial assets
9
(16)
(195)
Investment return
9
11,937
12,566
Net finance expenses from insurance contracts
9
(7,612)
(10,456)
Net finance income from reinsurance contracts held
9
105
65
Movement in investment contract liabilities
9, 25
(791)
(572)
Movement in third-party interests in consolidated investment funds
9
(29)
(56)
Net investment result
9
3,610
1,547
Fee income
89
114
Other operating revenue
353
294
Other expenses
10
(1,771)
(1,752)
Other finance costs
10
(570)
(463)
Profit before share of profit/(losses) from associates and joint ventures
7,480
4,831
Share of profit/(losses) from associates and joint ventures
351
(267)
Profit before tax
7,831
4,564
Tax expense
11
(978)
(783)
Net profit
6,853
3,781
Net profit attributable to:
Shareholders of AIA Group Limited
6,836
3,764
Non-controlling interests
17
17
Earnings per share (US$)
Basic
12
0.62
0.33
Diluted
12
0.62
0.33
165
ANNUAL REPORT 2024
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Net profit
6,853
3,781
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Fair value gains on financial assets at fair value through other
comprehensive income (net of tax of: 2024: US$(1,725)m; 2023: US$(997)m)
4,528
3,589
Fair value (gains)/losses on financial assets at fair value through other
comprehensive income reclassified to profit or loss on disposal
(net of tax of: 2024: US$3m; 2023: US$20m)
(62)
95
Foreign currency translation adjustments
(768)
(215)
Cash flow hedges
(3)
(8)
Net finance expenses from insurance contracts
(net of tax of: 2024: US$1,591m; 2023: US$1,403m)
(4,830)
(4,400)
Net finance income from reinsurance contracts held
(net of tax of: 2024: US$(35)m; 2023: US$(51)m)
64
60
Share of other comprehensive expense from associates and joint ventures
(75)
(496)
Subtotal
(1,146)
(1,375)
Items that will not be reclassified subsequently to profit or loss:
Revaluation gains on property held for own use
(net of tax of: 2024: US$4m; 2023: US$(19)m)
144
28
Effect of remeasurement of net liability of defined benefit schemes
(net of tax of: 2024: US$5m; 2023: US$2m)
(30)
(8)
Subtotal
114
20
Total other comprehensive expense
(1,032)
(1,355)
Total comprehensive income
5,821
2,426
Total comprehensive income attributable to:
Shareholders of AIA Group Limited
5,804
2,417
Non-controlling interests
17
9
Note:
(1) Where applicable, amounts are presented net of tax.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
166
AIA GROUP LIMITED
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
US$m
Notes
As at
31 December
2024
As at
31 December
2023
Assets
Intangible assets
14
3,478
3,615
Investments in associates and joint ventures
15
1,710
1,331
Property, plant and equipment
16
4,447
4,058
Investment property
17
4,570
4,504
Insurance contract assets
24
972
1,457
Reinsurance contract assets
24
5,730
6,047
Financial investments:
18, 20
At amortised cost
Debt securities
2,399
2,165
Loans and deposits
3,770
3,723
At fair value through other comprehensive income
Debt securities
98,289
88,612
At fair value through profit or loss
Debt securities
77,530
86,981
Loans and deposits
272
272
Equity shares
19,797
19,287
Interests in investment funds and exchangeable loan notes
69,040
47,166
Derivative financial instruments
19
1,054
752
272,151
248,958
Deferred tax assets
11
549
301
Current tax recoverable
219
207
Other assets
21
3,527
4,316
Cash and cash equivalents
22
8,101
11,525
Total assets
305,454
286,319
Liabilities
Insurance contract liabilities
24
221,412
203,271
Reinsurance contract liabilities
24
255
336
Investment contract liabilities
25
6,967
9,170
Borrowings
26
13,329
11,800
Obligations under repurchase agreements
27
4,616
3,461
Derivative financial instruments
19
8,615
8,035
Provisions
29
202
174
Deferred tax liabilities
11
4,116
3,204
Current tax liabilities
220
387
Other liabilities
30
4,909
4,887
Total liabilities
264,641
244,725
167
ANNUAL REPORT 2024
US$m
Notes
As at
31 December
2024
As at
31 December
2023
Equity
Share capital
31
14,183
14,176
Employee share-based trusts
31
(376)
(367)
Other reserves
31
(11,733)
(11,788)
Retained earnings
44,691
44,333
Other comprehensive income
(6,275)
(5,243)
Total equity attributable to:
Shareholders of AIA Group Limited
40,490
41,111
Non-controlling interests
32
323
483
Total equity
40,813
41,594
Total liabilities and equity
305,454
286,319
Approved and authorised for issue by the Board of Directors on 14 March 2025.
Lee Yuan Siong
Edmund Sze-Wing Tse
Director
Director
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
168
AIA GROUP LIMITED
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Other comprehensive income
US$m
Note
Share
capital
Employee
share-
based
trusts
Other
reserves
Retained
earnings
Fair value
reserve
Foreign
currency
translation
reserve
Insurance
finance
reserve
Property
revaluation
reserve
Others
Non-
controlling
interests
Total
equity
Balance at 1 January 2024
14,176
(367)
(11,788)
44,333
516
(2,950)
(4,159)
1,307
43
483
41,594
Net profit
–
–
–
6,836
–
–
–
–
–
17
6,853
Fair value gains/(losses) on financial assets at
fair value through other comprehensive income
–
–
–
–
4,531
–
–
–
–
(3)
4,528
Fair value gains on financial assets at fair value
through other comprehensive income
reclassified to profit or loss on disposal
–
–
–
–
(62)
–
–
–
–
–
(62)
Foreign currency translation adjustments
–
–
–
–
–
(761)
–
–
–
(7)
(768)
Cash flow hedges
–
–
–
–
–
–
–
–
(3)
–
(3)
Net finance (expenses)/income from
insurance contracts
–
–
–
–
–
–
(4,840)
–
–
10
(4,830)
Net finance income from reinsurance contracts held
–
–
–
–
–
–
64
–
–
–
64
Share of other comprehensive income/(expense)
from associates and joint ventures
–
–
–
–
759
(111)
(723)
–
–
–
(75)
Revaluation gains on property held for own use
–
–
–
–
–
–
–
144
–
–
144
Effect of remeasurement of net liability of
defined benefit schemes
–
–
–
–
–
–
–
–
(30)
–
(30)
Total comprehensive income/(expense)
for the year
–
–
–
6,836
5,228
(872)
(5,499)
144
(33)
17
5,821
Dividends
13
–
–
–
(2,328)
–
–
–
–
–
(5)
(2,333)
Share buy-back
–
–
–
(4,150)
–
–
–
–
–
–
(4,150)
Shares issued under share option scheme and
agency share purchase plan
7
–
–
–
–
–
–
–
–
–
7
Increase in non-controlling interests
–
–
(12)
–
–
–
–
–
–
28
16
Acquisition of non-controlling interests
–
–
14
–
–
–
–
–
–
(200)
(186)
Share-based compensation
–
–
87
–
–
–
–
–
–
–
87
Purchase of shares held by employee
share-based trusts
–
(43)
–
–
–
–
–
–
–
–
(43)
Transfer of vested shares from employee
share-based trusts
–
34
(34)
–
–
–
–
–
–
–
–
Balance at 31 December 2024
14,183
(376)
(11,733)
44,691
5,744
(3,822)
(9,658)
1,451
10
323
40,813
Note:
(1) Where applicable, amounts are presented net of tax.
169
ANNUAL REPORT 2024
Other comprehensive income
US$m
Note
Share
capital
Employee
share-
based
trusts
Other
reserves
Retained
earnings
Fair value
reserve
Foreign
currency
translation
reserve
Insurance
finance
reserve
Property
revaluation
reserve
Others
Non-
controlling
interests
Total
equity
Balance at 1 January 2023
14,171
(290)
(11,812)
46,499
(3,737)
(2,735)
1,238
1,279
59
476
45,148
Net profit
–
–
–
3,764
–
–
–
–
–
17
3,781
Fair value gains on financial assets at fair value
through other comprehensive income
–
–
–
–
3,581
–
–
–
–
8
3,589
Fair value losses on financial assets at fair value
through other comprehensive income
reclassified to profit or loss on disposal
–
–
–
–
95
–
–
–
–
–
95
Foreign currency translation adjustments
–
–
–
–
–
(213)
–
–
–
(2)
(215)
Cash flow hedges
–
–
–
–
–
–
–
–
(8)
–
(8)
Net finance expenses from insurance contracts
–
–
–
–
–
–
(4,386)
–
–
(14)
(4,400)
Net finance income from reinsurance contracts held
–
–
–
–
–
–
60
–
–
–
60
Share of other comprehensive income/(expense)
from associates and joint ventures
–
–
–
–
577
(2)
(1,071)
–
–
–
(496)
Revaluation gains on property held for own use
–
–
–
–
–
–
–
28
–
–
28
Effect of remeasurement of net liability of
defined benefit schemes
–
–
–
–
–
–
–
–
(8)
–
(8)
Total comprehensive income/(expense)
for the year
–
–
–
3,764
4,253
(215)
(5,397)
28
(16)
9
2,426
Dividends
13
–
–
–
(2,293)
–
–
–
–
–
(19)
(2,312)
Share buy-back
–
–
–
(3,637)
–
–
–
–
–
–
(3,637)
Shares issued under share option scheme and
agency share purchase plan
5
–
–
–
–
–
–
–
–
–
5
Increase in non-controlling interests
–
–
(15)
–
–
–
–
–
–
17
2
Share-based compensation
–
–
77
–
–
–
–
–
–
–
77
Purchase of shares held by employee
share-based trusts
–
(115)
–
–
–
–
–
–
–
–
(115)
Transfer of vested shares from employee
share-based trusts
–
38
(38)
–
–
–
–
–
–
–
–
Balance at 31 December 2023
14,176
(367)
(11,788)
44,333
516
(2,950)
(4,159)
1,307
43
483
41,594
Note:
(1) Where applicable, amounts are presented net of tax.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
170
AIA GROUP LIMITED
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
US$m
Notes
Year ended
31 December
2024
Year ended
31 December
2023
Cash flows from operating activities
Profit before tax
7,831
4,564
Adjustments for:
Financial investments
(20,800)
(9,435)
Insurance contracts
16,282
15,772
Reinsurance contracts held
43
(269)
Investment contracts
(2,110)
(2,718)
Obligations under repurchase agreements
27
1,239
1,739
Other non-cash operating items, including investment income and
the effect of exchange rate changes on certain operating items
(8,453)
(7,008)
Operating cash items:
Interest received
7,742
7,486
Dividends received
2,242
1,663
Interest paid
(139)
(82)
Tax paid
(614)
(793)
Net cash provided by operating activities
3,263
10,919
Cash flows from investing activities
Payments for intangible assets
14
(237)
(326)
Distribution or dividend from associates
15
1
1
Payments for increase in interests in associates and joint ventures
(94)
(68)
Payments for investment property and property, plant and equipment
16, 17
(612)
(1,420)
Acquisition of subsidiaries, net of cash acquired
(3)
(324)
Net cash used in investing activities
(945)
(2,137)
Cash flows from financing activities
Issuances of medium-term notes and securities
26
3,134
996
Redemption of medium-term notes
26
(1,581)
(500)
Proceeds from other borrowings
26
112
150
Repayment of other borrowings
26
(65)
(114)
Capital contribution from non-controlling interests
16
2
Payments for lease liabilities(1)
(149)
(150)
Interest paid on medium-term notes and securities
(450)
(394)
Acquisition of non-controlling interests
(186)
–
Dividends paid during the year
(2,333)
(2,312)
Share buy-back
(4,150)
(3,637)
Purchase of shares held by employee share-based trusts
(43)
(115)
Shares issued under share option scheme and agency share purchase plan
7
5
Net cash used in financing activities
(5,688)
(6,069)
171
ANNUAL REPORT 2024
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Net (decrease)/increase in cash and cash equivalents
(3,370)
2,713
Cash and cash equivalents at beginning of the financial year
11,450
8,766
Effect of exchange rate changes on cash and cash equivalents
(98)
(29)
Cash and cash equivalents at end of the financial year
7,982
11,450
Note:
(1) The total cash outflow for leases for the year ended 31 December 2024 was US$151m (2023: US$157m).
Cash and cash equivalents in the above consolidated statement of cash flows can be further analysed as follows:
US$m
Note
As at
31 December
2024
As at
31 December
2023
Cash and cash equivalents in the consolidated statement of financial position
22
8,101
11,525
Bank overdrafts
(119)
(75)
Cash and cash equivalents in the consolidated statement of cash flows
7,982
11,450
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENT OF CASH FLOWS
172
AIA GROUP LIMITED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
1. CORPORATE INFORMATION
AIA Group Limited (the “Company”) was established as a company with limited liability incorporated in Hong Kong on 24
August 2009. The address of its registered office is 35/F, AIA Central, No. 1 Connaught Road Central, Hong Kong.
AIA Group Limited is listed on the Main Board of The Stock Exchange of Hong Kong Limited under the stock codes “1299”
for HKD counter and “81299” for RMB counter with American Depositary Receipts (Level 1) traded on the over-the-counter
market under the ticker symbol “AAGIY”.
AIA Group Limited and its subsidiaries (collectively “AIA” or the “Group”) is a life insurance based financial services provider
operating in 18 markets. The Group’s principal activity is the writing of life insurance business, providing life insurance,
accident and health insurance and savings plans throughout Asia, and distributing related investment and other financial
services products to its customers.
2. MATERIAL ACCOUNTING POLICY INFORMATION
2.1 Basis of preparation and statement of compliance
The consolidated financial statements have been prepared in accordance with all applicable Hong Kong Financial
Reporting Standards (HKFRS), IFRS® Accounting Standards and the Hong Kong Companies Ordinance. IFRS Accounting
Standards are substantially consistent with HKFRS and the accounting policy selections that the Group has made in
preparing these consolidated financial statements are such that the Group is able to comply with both HKFRS and IFRS
Accounting Standards. References to IFRS Accounting Standards, IAS® Standards and IFRIC® Interpretations in these
consolidated financial statements should be read as referring to the equivalent HKFRS, Hong Kong Accounting Standards
(HKAS) and Hong Kong (IFRIC) Interpretations (HK(IFRIC) – Int) as the case may be. Accordingly, there are not any
differences of accounting practice between HKFRS and IFRS Accounting Standards affecting these consolidated financial
statements.
The consolidated financial statements have been approved for issue by the Board of Directors on 14 March 2025.
The consolidated financial statements have been prepared using the historical cost convention, as modified by the
revaluation of financial assets measured at fair value through other comprehensive income, financial assets and liabilities
measured at fair value through profit or loss, derivative financial instruments, property held for own use and investment
properties, all of which are carried at fair value. Additionally, insurance and reinsurance contract assets and liabilities are
measured using a fulfilment cash flow and contractual service margin (CSM) basis.
The presentation currency of the Company and the Group is the US dollar. The consolidated financial statements are
presented in millions of US dollar (US$m) unless otherwise stated.
The accounting policies adopted are consistent with those of the previous financial year, except as described as follows.
(a) The following relevant new amendments to standards have been adopted for the first time for the financial year ended
31 December 2024 and have no material impact to the Group:
•
Amendments to IAS 1, Classification of Liabilities as Current or Non-current;
•
Amendments to IAS 1, Non-current Liabilities with Covenants;
•
Amendments to IAS 7 and IFRS 7, Supplier Finance Arrangements; and
•
Amendments to IFRS 16, Lease Liability in a Sale and Leaseback.
173
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.1 Basis of preparation and statement of compliance (continued)
(b) The following relevant new standard and amendments to standards have been issued but are not effective for the
financial year ended 31 December 2024 and have not been early adopted (the financial years for which the adoption is
required for the Group are stated in parentheses):
•
IFRS 18, Presentation and Disclosure in Financial Statements (2027) introduces new presentation requirements in
the income statement, including among others, the classification of income and expense items by categories,
specific totals and subtotals. It also sets out new requirements on management-defined performance measures, as
well as aggregation and disaggregation of financial information. The standard is expected to change the presentation
and disclosures of the Group’s consolidated financial statements but is not expected to impact the financial position
or net results of the Group; and
•
Amendments to IFRS 9 and IFRS 7, Amendments to the Classification and Measurement of Financial Instruments
(2026) provide guidance on a number of areas such as the derecognition of financial liabilities settled through an
electronic payment system, classification of financial assets with Environmental, Social and Governance (ESG) and
similar features, contractually linked instruments and certain new disclosure requirements. The Group is assessing
the impacts on the Group’s consolidated financial statements.
In addition, the Group has assessed the impact of the below amendments on its financial position and results of
operations and they are not expected to have a material impact on the financial position or results of operations of the
Group:
•
Amendments to IAS 21, Lack of Exchangeability (2025); and
•
Annual Improvements to IFRS Accounting Standards – Volume 11 (2026).
The material accounting policies adopted in the preparation of the Group’s consolidated financial statements are set out
below. These policies have been applied consistently in all periods presented. The Company’s statement of financial
position and the statement of changes in equity, as set out in notes 42 and 43 respectively, have been prepared in
accordance with the Group’s accounting policies.
2.2 Operating profit
The long-term nature of much of the Group’s operations means that, for management’s decision-making and internal
performance management purposes, the Group evaluates its results and its operating segments using a financial
performance measure referred to as “operating profit”. Operating profit includes among others the expected long-term
investment returns for investments in equities and real estate. The assumptions used to determine expected long-term
investment return are the same, in all material respects, as those used by the Group in determining its embedded value and
are disclosed in Supplementary Embedded Value Information. The Group defines operating profit after tax as net profit
excluding the following non-operating items:
•
Short-term investment and discount rate variances
– Variances between expected and actual investment returns across relevant asset classes and the corresponding
impact on the measurement of relevant insurance contract liabilities;
– Variances between expected and actual discount rates impacting the measurement of fulfilment cash flows of
relevant insurance and reinsurance contract assets and liabilities;
– Other investment returns; and
•
Other significant items that management considers to be non-operating income and expenses.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
174
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.2 Operating profit (continued)
The Group considers that the presentation of operating profit enhances the understanding and comparability of its
performance and that of its operating segments. The Group considers that trends can be more clearly identified without
the fluctuating effects of these non-operating items, many of which are largely dependent on market factors.
Operating profit is provided as additional information to assist in the comparison of business trends in different reporting
periods on a consistent basis and enhance overall understanding of financial performance.
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held
Consistent accounting policies for the measurement and recognition of insurance, reinsurance and investment contracts
have been adopted throughout the Group. The Group has elected an accounting policy where the estimates made in
previous interim financial statements are not changed when applying IFRS 17 in subsequent interim periods or in the
annual reporting period.
2.3.1 Insurance contracts, investment contracts with DPF and reinsurance contracts held classification
The Group classifies its contracts written as either insurance contracts or investment contracts, depending on the level of
insurance risk. Contracts under which the Group transfers significant insurance risk are classified as insurance contracts,
while those contracts which have the legal form of insurance contracts but do not transfer significant insurance risk are
classified as financial liabilities and are referred to as investment contracts. Some insurance and investment contracts,
referred to as traditional participating life business, have DPF, which may entitle the customer to receive, as a supplement
to guaranteed benefits, additional non-guaranteed benefits, such as policyholder dividends or bonuses. The Group applies
the same accounting policies for the recognition and measurement of obligations arising from investment contracts with
DPF as it does for insurance contracts.
In the event that a scenario (other than those lacking commercial substance) exists in which an insured event would
require the Group to pay significant additional benefits to its customers and has a possibility of incurring a loss on a
present value basis, the contract is considered as transferring significant insurance risk and is accounted for as an
insurance contract. Contracts held by the Group under which it transfers significant insurance risk related to underlying
insurance contracts are classified as reinsurance contracts held. Insurance contracts and reinsurance contracts held can
also expose the Group to financial risk. For investment contracts that do not contain DPF, IFRS 9, Financial Instruments,
and, if the contract includes an investment management element, IFRS 15, Revenue from Contracts with Customers, are
applied. Once a contract has been classified as an insurance, reinsurance or investment contract, reclassification is not
subsequently performed unless the terms of the agreement are later amended.
FINANCIAL STATEMENTS
175
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.1 Insurance contracts, investment contracts with DPF and reinsurance contracts held classification (continued)
Certain contracts with DPF supplement the amount of guaranteed benefits due to policyholders. These contracts are
distinct from other insurance and investment contracts as the Group has discretion in the amount and/or timing of the
benefits declared, and how such benefits are allocated between groups of policyholders. Policyholders may be entitled to
receive, as a supplement to guaranteed benefits, additional benefits or bonuses:
•
that are expected to be a significant portion of the total contractual benefits;
•
the timing or amount of which are contractually at the discretion of the Group; and
•
that are contractually based on:
– the returns on a specified pool of contracts or a specified type of contract;
– realised and/or unrealised investment returns on a specified pool of assets held by the Group; or
– the profit or loss of the Group, fund or other entity that issues the contract.
In some jurisdictions traditional participating life business is written in a participating fund which is distinct from the other
assets of the company or branch. The allocation of benefits from the assets held in such participating funds is subject to
minimum policyholder participation mechanisms which are established by regulation. Other participating business with
distinct portfolios refers to business where it is expected that the policyholder will receive, at the discretion of the insurer,
additional benefits based on the performance of underlying segregated assets where this asset segregation is supported
by an explicit statutory reserve and reporting in the relevant territory. The allocation of benefit from the assets held in such
other participating business with distinct portfolios is set according to the underlying bonus rule as determined by the
relevant Board based on applicable regulatory requirements after considering the Appointed Actuary’s recommendation.
The extent of such policyholder participation may change over time. The current policyholder participation ratio applied for
recognition and measurement of the insurance contract liabilities for locations with participating funds and other
participating business with distinct portfolios is set out below.
By Geography
Current policyholder
participation
Participating funds
Mainland China
70%
Singapore
90%
Brunei
80%
Malaysia
90%
Australia
80%
New Zealand
80%
Vietnam
70% – 80%
Other participating business with distinct portfolios
Hong Kong
70% – 90%
In some jurisdictions participating business is not written in a distinct fund and the Group refers to this as other participating
business without distinct portfolios.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
176
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.1 Insurance contracts, investment contracts with DPF and reinsurance contracts held classification (continued)
Contracts with direct participation features are contracts for which, at inception:
•
the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying
items;
•
the Group expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the
underlying items; and
•
the Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the
change in fair value of underlying items.
The Group’s products may be divided into the following main categories:
Basis of accounting for:
Policy type
Description of benefits payable
Insurance contracts
Investment contracts
Traditional
participating
life
Participating
funds and other
participating
business with
distinct
portfolios
Participating products include protection
and savings elements. The basic sum
assured, payable on death or maturity, may
be enhanced by dividends or bonuses, the
aggregate amount of which is determined
by the performance of a distinct fund of
assets and liabilities. The timing of
dividend and bonus declarations is at the
discretion of the insurer
For participating funds, local regulations
generally prescribe a minimum proportion
of policyholder participation in declared
dividends
For other participating business with
distinct portfolios, the allocation of benefit
from the assets held in such distinct
portfolios is set according to the
underlying bonus rule as determined by
the relevant Board based on applicable
regulatory requirements after considering
the Appointed Actuary’s recommendation.
The extent of such policyholder
participation may change over time
Participating products where there is a distinct
portfolio meet the definition of an insurance
contract with direct participation features and is
measured under an approach commonly referred
to as the Variable Fee Approach (VFA)
measurement model. The VFA modifies the
general measurement model in IFRS 17 to reflect
the nature of the income to the insurer is a
variable fee
Investment contracts with DPF
are accounted for in the same
way as insurance contracts
under IFRS 17
Other
participating
business
without distinct
portfolios
Participating products include protection
and savings elements. The basic sum
assured, payable on death or maturity, may
be enhanced by dividends or bonuses, the
timing or amount of which are at the
discretion of the insurer taking into account
factors such as investment experience
The general measurement model is applied to
these insurance contracts
Investment contracts with DPF
are accounted for in the same
way as insurance contracts
under IFRS 17
Non-participating life, annuities
and other protection products
Benefits payable are not at the discretion
of the insurer
The general measurement model is applied to
these insurance contracts except for some
insurance contracts where the permitted premium
allocation approach (PAA) simplification (see note
2.3.7) is applied
Investment contract liabilities
are measured at amortised cost
Universal life
Benefits are based on an account
balance, credited with interest at a rate
set by the insurer, and a death benefit,
which may be varied by the customer
The general measurement model is applied to
these insurance contracts
Not applicable as such
contracts generally contain
significant insurance risk
Unit-linked
These may be primarily savings products
or may combine savings with an element
of protection
Unit-linked products that meet the definition of an
insurance contract with direct participation
features are measured under the VFA
measurement model, otherwise they follow the
IFRS 17 general measurement model
Investment contract liabilities
under IFRS 9 are measured at
fair value (determined with
reference to the accumulation
value)
The basis of accounting for insurance contracts and reinsurance contracts held is discussed in notes 2.3.2 to 2.3.10 below.
FINANCIAL STATEMENTS
177
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.2 Separating components from insurance contracts and reinsurance contracts held
At inception, the Group separates the following components from an insurance contract or a reinsurance contract held and
accounts for them as if they were stand-alone financial instruments:
•
derivatives embedded in the contract whose economic characteristics and risks are not closely related to those of the
host contract, and whose terms would not meet the definition of an insurance contract or a reinsurance contract held
as a stand-alone instrument; and
•
distinct investment components – i.e. investment components that are not highly inter-related with the insurance
components and for which contracts with equivalent terms are sold, or could be sold, separately in the same market or
the same jurisdiction.
After separating any financial instrument components, the Group separates any promises to transfer distinct goods or
services other than insurance coverage and investment services and accounts for them as separate contracts with
customers (i.e. not as insurance contracts). A good or service is distinct if the policyholder can benefit from it either on its
own or with other resources that are readily available to the policyholder. A good or service is not distinct and is accounted
for together with the insurance component if the cash flows and risks associated with the good or service are highly inter-
related with the cash flows and risks associated with the insurance component, and the Group provides a significant
service of integrating the good or service with the insurance component.
2.3.3 Level of aggregation and recognition of group of insurance contracts and reinsurance contracts held
Insurance contracts
Insurance contracts are aggregated into groups for measurement purposes. Groups of contracts are determined by
identifying portfolios of insurance contracts, each comprising contracts subject to similar risks and managed together, and
dividing each portfolio into semi-annual cohorts and each semi-annual cohort into three groups based on the profitability
of contracts:
•
any contracts that are onerous on initial recognition;
•
any contracts that, on initial recognition, have no significant possibility of becoming onerous subsequently; and
•
any remaining contracts in the portfolio.
An insurance contract issued by the Group is recognised from the earliest of:
•
the beginning of its coverage period (i.e. the period during which the Group provides services in respect of any premiums
within the boundary of the contract);
•
when the first payment from the policyholder becomes due or, if there is no contractual due date, when it is received
from the policyholder; and
•
when facts and circumstances indicate that the contract is onerous.
An insurance contract acquired in a transfer of contracts or a business combination is recognised on the date of acquisition.
When the contract is recognised, it is added to an existing group of contracts or, if the contract does not qualify for inclusion
in an existing group, it forms a new group to which future contracts are added. Groups of contracts are established on initial
recognition and their composition is not revised once all contracts have been added to the group.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
178
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.3 Level of aggregation and recognition of group of insurance contracts and reinsurance contracts held (continued)
Reinsurance contracts held
Reinsurance contracts held by the Group cover underlying insurance contracts.
A group of reinsurance contracts held is recognised on the following dates:
•
Reinsurance contracts held that provide proportionate coverage: Generally later of the beginning of the coverage
period of the group of reinsurance contracts held, or the date on which any underlying insurance contract is initially
recognised.
•
Other reinsurance contracts held: The beginning of the coverage period of the group of reinsurance contracts held.
However, if the Group recognises an onerous group of underlying insurance contracts on an earlier date and the related
reinsurance contract held was entered into on or before that earlier date, then the group of reinsurance contracts held
is recognised on that earlier date.
•
Reinsurance contracts acquired: The date of acquisition.
2.3.4 Fulfilment cash flows and contract boundaries
Fulfilment cash flows
Fulfilment cash flows comprise:
•
estimates of future cash flows;
•
an adjustment to reflect the time value of money and the financial risks related to future cash flows, to the extent that
the financial risks are not included in the estimates of future cash flows; and
•
a risk adjustment for non-financial risk.
Further details of the related methodology and assumptions in respect of estimation of fulfilment cash flows are provided
in note 24.
Contract boundaries
The measurement of a group of contracts includes all of the future cash flows within the boundary of each contract in the
group, determined as follows.
Insurance contracts
Cash flows are within the boundary of a contract if they arise from substantive rights and obligations that exist during the
reporting period under which the Group can compel the policyholder to pay premiums or has a substantive obligation to
provide insurance contract services.
A substantive obligation to provide insurance contract services ends when:
•
the Group has the practical ability to reassess the risks of the particular policyholder and can set a price or level of
benefits that fully reflects those reassessed risks; or
•
the Group has the practical ability to reassess the risks of the portfolio that contains the contract and can set a price or
level of benefits that fully reflects the risks of that portfolio; and the pricing of the premiums for coverage up to the
reassessment date does not take into account risks that relate to periods after the reassessment date.
FINANCIAL STATEMENTS
179
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.4 Fulfilment cash flows and contract boundaries (continued)
Contract boundaries (continued)
Reinsurance contracts held
Cash flows are within the contract boundary if they arise from substantive rights and obligations that exist during the
reporting period in which the Group is compelled to pay amounts to the reinsurer or has a substantive right to receive
services from the reinsurer.
A substantive right to receive services from the reinsurer ends when the reinsurer:
•
has the practical ability to reassess the risks transferred to it and can set a price or level of benefits that fully reflects
those reassessed risks; or
•
has a substantive right to terminate the coverage.
The contract boundary is reassessed at each reporting date to include the effect of changes in circumstances on the
Group’s substantive rights and obligations and, therefore, may change over time.
2.3.5 Insurance acquisition cash flows
Insurance acquisition cash flows are allocated to groups of contracts using a systematic and rational allocation method
and considering, in an unbiased way, all reasonable and supportable information that is available without undue cost or
effort. At each reporting date, the Group revises the amounts allocated to groups to reflect any changes in assumptions that
determine the inputs to the allocation method used. Amounts allocated to a group are not revised once all contracts have
been added to the group.
Insurance acquisition cash flows arising before the recognition of the related groups of contracts are recognised as an
asset. Such an asset is recognised for each group of contracts to which the insurance acquisition cash flows are allocated.
The asset is derecognised, fully or partially, when the insurance acquisition cash flows are included in the measurement of
the related groups of contracts.
When the Group acquires insurance contracts in a transfer of contracts or a business combination, at the date of acquisition
it recognises an asset for insurance acquisition cash flows at the fair value for the rights to obtain:
•
renewals of contracts recognised at the date of acquisition; and
•
other future contracts after the date of acquisition without paying again insurance acquisition cash flows that the
acquiree has already paid.
Recoverability assessment
At each reporting date, if facts and circumstances indicate that an asset for insurance acquisition cash flows may be
impaired, then the Group:
•
recognises an impairment loss in profit or loss so that the carrying amount of the asset does not exceed the expected
net cash inflow of the related group; and
•
if the asset relates to future renewals, recognises an impairment loss in profit or loss to the extent that it expects those
insurance acquisition cash flows to exceed the net cash inflow for the expected renewals and this excess has not
already been recognised as an impairment loss.
The Group recognises any reversal of impairment losses in profit or loss when the impairment conditions no longer exist or
have improved.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
180
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.6 Measurement – insurance contracts not measured under the PAA
2.3.6.1 Initial measurement
On initial recognition, the Group measures a group of contracts as the total of: (a) the fulfilment cash flows, which comprise
estimates of future cash flows, an adjustment to reflect time value of money and associated financial risks, and a risk
adjustment for non-financial risk; and (b) the contractual service margin (CSM).
The measurement of the fulfilment cash flows of a group of contracts does not reflect the Group’s non-performance risk.
The risk adjustment for non-financial risk for a group of contracts, determined separately from the other estimates, is the
compensation required for bearing uncertainty about the amount and timing of the cash flows that arises from non-
financial risk.
The CSM of a group of contracts represents the unearned profit that the Group will recognise as it provides services under
those contracts. On initial recognition of a group of contracts, if the total of the fulfilment cash flows, any cash flows arising
at that date and any amount arising from the derecognition of any assets or liabilities previously recognised for cash flows
related to the group (including assets for insurance acquisition cash flows) is a net inflow, then the group is not onerous.
In this case, the CSM is measured as the equal and opposite amount of the net inflow, which results in no income or
expenses arising on initial recognition.
If the total is a net outflow, then the group is onerous. In this case, the net outflow is recognised as a loss in profit or loss. A
loss component is created to depict the amount of the net cash outflows, which determines the amounts that are
subsequently presented in profit or loss as reversals of losses on onerous groups and are excluded from insurance revenue.
In the case of a business combination, the net outflow is recognised as an adjustment to goodwill or a gain on a bargain
purchase for contracts acquired.
For groups of contracts acquired in a transfer of contracts or a business combination, the consideration received for the
contracts is included in the fulfilment cash flows as a proxy for the premiums received at the date of acquisition. In a
business combination, the consideration received is the fair value of the contracts at that date.
2.3.6.2 Subsequent measurement
The carrying amount of a group of insurance contracts at each reporting date is the sum of the liability for remaining
coverage (LRC) and the liability for incurred claims (LIC). The LRC comprises (a) the fulfilment cash flows that relate to
services that will be provided under the contracts in future periods and (b) any remaining CSM at that date. The LIC
includes the fulfilment cash flows for incurred claims and expenses that have not yet been paid, including claims that have
been incurred but not yet reported.
The fulfilment cash flows of groups of contracts are measured at the reporting date using current estimates of future cash
flows, current discount rates and current estimates of the risk adjustment for non-financial risk. Changes in fulfilment cash
flows are recognised as follows.
•
changes relating to future services are adjusted against the CSM (or recognised in the insurance service result in profit
or loss if the group is onerous);
•
changes relating to current or past services are recognised in the insurance service result in profit or loss; and
•
effects of the time value of money, financial risk and changes therein on estimated future cash flows are recognised as
insurance finance income or expenses for insurance contracts without direct participation features or adjusted against
CSM for insurance contracts with direct participation features.
FINANCIAL STATEMENTS
181
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.6 Measurement – insurance contracts not measured under the PAA (continued)
2.3.6.2 Subsequent measurement (continued)
The CSM of each group of contracts is calculated at each reporting date as follows.
Insurance contracts without direct participation features
The carrying amount of the CSM at each reporting date is the carrying amount at the start of the reporting period, adjusted
mainly for:
•
the CSM of any new contracts that are added to the group in the period;
•
interest accreted on the carrying amount of the CSM during the period, measured at the discount rates determined on
initial recognition that are applied to nominal cash flows that do not vary based on the returns on underlying items;
•
changes in fulfilment cash flows that relate to future services, except to the extent that:
– any increases in the fulfilment cash flows exceed the carrying amount of the CSM, in which case the excess is
recognised in insurance service expenses and recognised as a loss component in LRC; or
– any decreases in the fulfilment cash flows adjust the loss component in the LRC and the corresponding amount is
recognised in insurance service expenses. If the loss component is reduced to zero, the excess reinstates the CSM;
•
the effect of any currency exchange differences on the CSM; and
•
the amount recognised as insurance revenue for services provided in the period.
Changes in fulfilment cash flows that relate to future services mainly comprise:
•
experience adjustments arising from premiums received in the period that relate to future services and related cash
flows, measured at the discount rates determined on initial recognition;
•
changes in estimates of the present value of future cash flows in the LRC, measured at the discount rates determined
on initial recognition, except for those that relate to the effects of the time value of money, financial risk and changes
therein;
•
differences between (a) any investment component expected to become payable in the period, determined as the
payment expected at the start of the period plus any insurance finance income or expenses related to that expected
payment before it becomes payable; and (b) the actual amount that becomes payable in the period;
•
differences between (a) any loan to a policyholder expected to become repayable in the period, determined as the
repayment expected at the start of the period plus any insurance finance income or expenses related to that expected
repayment before it becomes repayable; and (b) the actual amount that becomes repayable in the period; and
•
changes in the risk adjustment for non-financial risk that relate to future services.
To determine how to identify a change in discretionary cash flows, the basis is generally determined at inception of the
contract. Changes in cash flows arising from the Group’s discretion are regarded as relating to future services and
accordingly adjust the CSM, these cash flows are determined based on the relevant contract terms, dividend and bonus
philosophy.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
182
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.6 Measurement – insurance contracts not measured under the PAA (continued)
2.3.6.2 Subsequent measurement (continued)
Insurance contracts with direct participation features
Contracts with direct participation features are contracts under which the Group’s obligation to the policyholder is the net
of:
•
the obligation to pay the policyholder an amount equal to the fair value of the underlying items; and
•
a variable fee in exchange for future services provided by the contracts, being the amount of the Group’s share of the
fair value of the underlying items less fulfilment cash flows that do not vary based on the returns on underlying items.
The Group provides investment services under these contracts by promising an investment return based on underlying
items, in addition to insurance coverage.
When measuring a group of contracts with direct participation features, the Group adjusts the fulfilment cash flows for the
changes in the obligation to pay policyholders an amount equal to the policyholder’s share of the fair value of the underlying
items. These changes do not relate to future services and are recognised in profit or loss.
The carrying amount of the CSM at each reporting date is the carrying amount at the start of the reporting period, adjusted
mainly for:
•
the CSM of any new contracts that are added to the group in the period;
•
the change in the amount of the Group’s share of the fair value of the underlying items and changes in fulfilment cash
flows that relate to future services, except to the extent that:
– a decrease in the amount of the Group’s share of the fair value of the underlying items, or an increase in the fulfilment
cash flows that relate to future services, exceeds the carrying amount of the CSM. The excess is recognised in
insurance service expenses and recognised as a loss component in LRC; or
– an increase in the amount of the Group’s share of the fair value of the underlying items, or a decrease in the fulfilment
cash flows that relate to future services, which adjust the loss component in the LRC and the corresponding amount
is recognised in insurance service expenses. If the loss component is reduced to zero, the excess reinstates the
CSM;
•
the effect of any currency exchange differences on the CSM; and
•
the amount recognised as insurance revenue for services provided in the period.
Changes in fulfilment cash flows not varying based on the return on underlying items that relate to future services include
the changes relating to future services specified above for contracts without direct participation features (measured at
current discount rates) and changes in the effect of the time value of money and financial risks that do not arise from
underlying items – e.g. the effect of financial guarantees.
FINANCIAL STATEMENTS
183
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.7 Measurement – insurance contracts measured under the PAA
The Group generally uses the PAA to simplify the measurement of groups of contracts in the following circumstances:
•
where the coverage period of each contract in the group of contracts is one year or less; or
•
the Group reasonably expects that the resulting measurement of the LRC would not differ materially from the result of
applying the accounting policies of contracts not measured under the PAA.
2.3.7.1 Initial measurement
On initial recognition of each group of contracts, the carrying amount of the LRC is measured as the premiums received on
initial recognition minus any insurance acquisition cash flows allocated to the group at that date, and adjusted for amounts
arising from the derecognition of any assets or liabilities previously recognised for cash flows related to the group. The
Group has elected the accounting policy choice to defer insurance acquisition cash flows through the LRC.
2.3.7.2 Subsequent measurement
Subsequently, the carrying amount of the LRC is increased by (i) any premiums received; and (ii) any amortisation of the
insurance acquisition cash flows, and decreased by (i) insurance acquisition cash flows paid; (ii) the amount recognised
as insurance revenue for coverage provided; and (iii) any investment component paid or transferred to the LIC. On initial
recognition of each group of contracts, the Group expects that the time gap between providing each part of the coverage
and the related premium due date is not significant. Accordingly, the Group has chosen not to adjust the LRC to reflect the
time value of money and the effect of financial risk.
If at any time during the coverage period, facts and circumstances indicate that a group of contracts is onerous, then the
Group recognises a loss in profit or loss and increases the LRC to the extent that the current estimates of the fulfilment
cash flows that relate to remaining coverage (including the risk adjustment for non-financial risk) exceed the carrying
amount of the LRC as loss component. The fulfilment cash flows are adjusted for the time value of money and the effect of
financial risk (using current estimates) if the LIC is also adjusted for the time value of money and the effect of financial risk.
In subsequent periods, unless facts and circumstances indicate that the group of contracts is no longer onerous, the loss
component is remeasured at each reporting date as the difference between the current estimates of the fulfilment cash
flows that relate to remaining coverage (including the risk adjustment for non-financial risk) and the carrying amount of
the LRC without loss component.
The Group recognises the LIC of a group of insurance contracts for the amount of the fulfilment cash flows relating to
incurred claims. The fulfilment cash flows are discounted (at current rates) unless the cash flows are expected to be paid
in one year or less from the date the claims are incurred.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
184
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.8 Reinsurance contracts held
For groups of reinsurance contracts held, the Group applies the same accounting policies as that applied to insurance
contracts without direct participation features, with the following modifications.
The carrying amount of a group of reinsurance contracts held at each reporting date is the sum of the asset for remaining
coverage and the asset for incurred claims. The asset for remaining coverage comprises (a) the fulfilment cash flows that
relate to services that will be received under the contracts in future periods and (b) any remaining CSM at that date.
The Group measures the estimates of the present value of future cash flows using assumptions that are consistent with
those used to measure the estimates of the present value of future cash flows for the underlying insurance contracts, with
an adjustment for any risk of non-performance by the reinsurer. The effect of the non-performance risk of the reinsurer is
assessed at each reporting date and the effect of changes in the non-performance risk is recognised in profit or loss.
The risk adjustment for non-financial risk is the amount of risk being transferred by the Group to the reinsurer.
On initial recognition, the CSM of a group of reinsurance contracts held represents a net cost or net gain on purchasing
reinsurance. It is measured as the equal and opposite amount of the total of (a) the fulfilment cash flows, (b) the amount
arising from assets or liabilities previously recognised for cash flows related to the group, before the group is recognised,
(c) cash flows arising from the contracts in the group at that date and (d) any income recognised in profit or loss because
of onerous underlying contracts recognised at that date. However, if any net cost on purchasing reinsurance coverage
relates to insured events that occurred before the purchase of the reinsurance, then the Group recognises the cost
immediately in profit or loss as an expense.
The carrying amount of the CSM at each reporting date is the carrying amount at the start of the reporting period, adjusted
for:
•
the CSM of any new contracts that are added to the group in the period;
•
interest accreted on the carrying amount of the CSM during the period, measured at the discount rates determined on
initial recognition that are applied to nominal cash flows;
•
income recognised in profit or loss in respect of a loss recognised for onerous underlying contracts. A loss-recovery
component is established or adjusted in the asset for remaining coverage of reinsurance contracts held for the amount
of income recognised;
•
reversals of a loss-recovery component to the extent that they are not changes in the fulfilment cash flows of the group;
•
changes in fulfilment cash flows that relate to future services, measured at the discount rates determined on initial
recognition, unless the changes result from changes in fulfilment cash flows of onerous underlying contracts, in which
case they are recognised in profit or loss and create or adjust a loss-recovery component;
•
the effect of any currency exchange differences on the CSM; and
•
the amount recognised in profit or loss for the services received in the period.
FINANCIAL STATEMENTS
185
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.8 Reinsurance contracts held (continued)
Reinsurance of onerous underlying insurance contracts
The Group adjusts the CSM of the group to which a reinsurance contract held belongs and as a result recognises income
when it recognises a loss on initial recognition of onerous underlying contracts, if the reinsurance contract held is entered
into before or at the same time as the onerous underlying contracts are recognised. The adjustment to the CSM is determined
by multiplying:
•
the amount of the loss that relates to the underlying contracts; and
•
the percentage of claims on the underlying contracts that the Group expects to recover from the reinsurance contracts
held.
For reinsurance contracts acquired in a transfer of contracts or a business combination covering onerous underlying
contracts, the adjustment to the CSM is determined by multiplying:
•
the amount of the loss that relates to the underlying contracts at the date of acquisition; and
•
the percentage of claims on the underlying contracts that the Group expects at the date of acquisition to recover from
the reinsurance contracts held.
For reinsurance contracts held which were acquired in a business combination, the adjustment to the CSM reduces
goodwill or increases a gain on a bargain purchase.
If the reinsurance contract held covers only some of the insurance contracts included in an onerous group of contracts,
then the Group uses a systematic and rational method to determine a portion of losses recognised on the onerous group of
contracts containing the insurance contracts covered by the reinsurance contract held.
A loss-recovery component is established or adjusted in the asset for remaining coverage of reinsurance contracts held,
which determines the amounts that are subsequently presented in profit or loss as reversals of recoveries of losses from
the reinsurance contracts held and are excluded from the allocation of reinsurance premiums paid.
Reinsurance contracts held measured under the PAA
The Group applies the same accounting principles to measure a group of insurance contracts or reinsurance contracts held
under the PAA.
If a loss-recovery component is established for a group of reinsurance contracts held measured under the PAA, the Group
adjusts the carrying amount of the asset.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
186
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.9 Derecognition and contract modification
The Group derecognises a contract when it is extinguished – i.e. when the specified obligations in the contract expire or are
discharged or cancelled.
The Group also derecognises a contract if its terms are modified in a way that would have changed the accounting for the
contract significantly had the new terms always existed, in which case a new contract based on the modified terms is
recognised. If a contract modification does not result in derecognition, then the Group treats the changes in cash flows
caused by the modification as changes in estimates of fulfilment cash flows.
On the derecognition of a contract in a group of contracts not measured under the PAA:
•
the fulfilment cash flows allocated to the group are adjusted to eliminate those that relate to the rights and obligations
derecognised;
•
the CSM of the group is adjusted for the change in the fulfilment cash flows that relate to future services, except where
such changes are allocated to a loss component; and
•
the number of coverage units for the expected remaining services is adjusted to reflect the coverage units derecognised
from the group.
If a contract is derecognised because it is transferred to third party, then the CSM is also adjusted for the premium charged
by the third party, unless the contract is onerous.
If a contract is derecognised because its terms are modified, then the CSM is also adjusted for the premium that would
have been charged had the Group entered into a contract with the new contract’s terms at the date of modification, less
any additional premium charged for the modification. The new contract recognised is measured assuming that, at the date
of modification, the issuer received the premium that it would have charged less any additional premium charged for the
modification.
FINANCIAL STATEMENTS
187
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.10 Presentation
Portfolios of insurance contracts and reinsurance contracts held in an asset position are presented separately from those
in a liability position. Portfolios of insurance contracts issued are presented separately from portfolios of reinsurance
contracts held. Any assets recognised for insurance acquisition cash flows arising before the recognition of the related
group of insurance contracts are included in the carrying amount of the related portfolios of insurance contracts. Any
assets or liabilities for cash flows arising before the recognition of the related group of reinsurance contracts held are
included in the carrying amount of the related portfolios of reinsurance contracts held.
The Group disaggregates amounts recognised in the consolidated income statement and the consolidated statement of
comprehensive income into (a) an insurance service result, comprising insurance revenue and insurance service expenses,
and (b) insurance finance income or expenses.
Income and expenses from reinsurance contracts held are presented separately from income and expenses from insurance
contracts. Income and expenses from reinsurance contracts held, other than insurance finance income or expenses, are
presented on a net basis as “net expenses from reinsurance contracts held” in the insurance service result.
The Group does not disaggregate changes in the risk adjustment for non-financial risk between the insurance service
result and insurance finance income or expenses. All changes in the risk adjustment for non-financial risk are included in
the insurance service result.
Insurance revenue and insurance service expenses exclude any investment components and are recognised as follows.
2.3.10.1 Insurance revenue – insurance contracts not measured under the PAA
The Group recognises insurance revenue as it satisfies its performance obligations – i.e. as it provides services under
groups of contracts. For contracts not measured under the PAA, the insurance revenue relating to services provided for
each period represents the total of the changes in the LRC that relate to services for which the Group expects to receive
consideration, but excludes expected investment components and mainly comprises the following items:
•
A release of the CSM, measured based on coverage units provided;
•
Changes in the risk adjustment for non-financial risk relating to current services;
•
Claims and other insurance service expenses incurred in the period, generally measured at the amounts expected at
the beginning of the period; and
•
Other amounts, including experience adjustments for premium receipts for current or past services and amounts
related to incurred policyholder tax expenses.
For insurance acquisition cash flows recovery, the Group allocates a portion of premiums related to the recovery in a
systematic way based on the passage of time over the expected coverage of a group of contracts. The allocated amount is
recognised as insurance revenue with the same amount recognised as insurance service expenses.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
188
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.10 Presentation (continued)
2.3.10.2 Release of the CSM – insurance contracts not measured under the PAA
The amount of the CSM of a group of insurance contracts that is recognised as insurance revenue in each reporting period
is determined by identifying the coverage units in the group, allocating the CSM remaining at the end of the reporting
period (before any allocation) equally to each coverage unit provided in the current period and expected to be provided in
future periods, and recognising in profit or loss the amount of the CSM allocated to coverage units provided in the current
period. The number of coverage units is the quantity of services provided by the contracts in the group, determined
considering for each contract the quantity of benefits provided and its expected coverage period.
2.3.10.3 Insurance revenue – insurance contracts measured under the PAA
For contracts measured under the PAA, the insurance revenue for each period is the amount of expected premium for
providing services in the period. The Group allocates the expected premium to each period on the following bases:
•
the passage of time; or
•
the expected timing of incurred insurance service expenses, if the expected pattern of release of risk during the
coverage period differs significantly from the passage of time.
2.3.10.4 Loss components – insurance contracts not measured under the PAA
For contracts not measured under the PAA, the Group establishes a loss component of the LRC for onerous groups of
contracts. The loss component determines the amounts of fulfilment cash flows that are subsequently excluded from
insurance revenue when they occur. When the fulfilment cash flows occur, they are allocated between the loss component
and the LRC excluding the loss component on a systematic basis.
Changes in estimates of fulfilment cash flows relating to future services and changes in the Group’s share of the fair value
of underlying items are allocated solely to the loss component. If the loss component is reduced to zero, then any excess
over the amount allocated to the loss component creates or reinstates the CSM for the group of contracts.
2.3.10.5 Insurance service expenses
Insurance service expenses arising from insurance contracts are recognised in profit or loss generally as they are incurred.
They exclude repayments of investment components and mainly comprise the following items:
•
Incurred claims and other insurance service expenses;
•
Amortisation of insurance acquisition cash flows: for contracts not measured under the PAA, this is equal to the amount
of insurance revenue recognised in the period that relates to recovering insurance acquisition cash flows. For contracts
measured under the PAA, the Group amortises insurance acquisition cash flows on a straight-line basis over the
coverage period of the group of contracts;
•
Losses on onerous contracts and reversals of such losses; and
•
Adjustments to the liabilities for incurred claims that do not arise from the effects of the time value of money, financial
risk and changes therein.
FINANCIAL STATEMENTS
189
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.3 Insurance contracts, investment contracts with discretionary participation features (DPF) and reinsurance
contracts held (continued)
2.3.10 Presentation (continued)
2.3.10.6 Net expenses from reinsurance contracts held
Net expenses from reinsurance contracts held mainly comprise an allocation of reinsurance premiums paid less amounts
recovered from reinsurers.
The Group recognises an allocation of reinsurance premiums paid as reinsurance expenses within net expenses from
reinsurance contracts held for the coverage or other services received by the Group under groups of reinsurance contracts
held. For contracts not measured under the PAA, the allocation of reinsurance premiums paid relating to services received
for each period represents the total of the changes in the asset for remaining coverage that relate to services for which the
Group expects to pay consideration.
For contracts measured under the PAA, the allocation of reinsurance premiums paid for each period is the amount of
expected premium payments for receiving services in the period.
For a group of reinsurance contracts held covering onerous underlying contracts, the Group establishes a loss-recovery
component of the asset for remaining coverage to depict the recovery of losses recognised:
•
on recognition of onerous underlying contracts, if the reinsurance contract held covering those contracts is entered
into before or at the same time as those contracts are entered into; and
•
for changes in fulfilment cash flows of the group of reinsurance contracts held relating to future services that result
from changes in fulfilment cash flows of the onerous underlying contracts.
2.3.10.7 Insurance finance income or expenses
Insurance finance income or expenses comprise changes in the carrying amounts of groups of insurance contracts and
reinsurance contracts held arising from the effects of the time value of money, financial risk and changes therein. This
includes changes in the measurement of groups of contracts caused by changes in the value of underlying items (excluding
additions and withdrawals).
For certain portfolios, the Group has chosen to disaggregate insurance finance income or expenses between profit or loss
and other comprehensive income. The amount included in profit or loss is determined by a systematic allocation of the
expected total insurance finance income or expenses over the duration of the group of contracts. The systematic allocation
is determined as follows:
•
Contracts for which changes in assumptions that relate to financial risk have a substantial effect on the amounts paid
to the policyholders: for insurance finance income or expenses arising from the estimates of future cash flows, using
either a rate that allocates the remaining revised expected insurance finance income or expenses over the remaining
duration of the group of contracts at a constant rate (i.e. the effective yield) or an allocation that is based on the
amounts credited in the period and expected to be credited in future periods; and for insurance finance income or
expenses arising from the CSM, the discount rates determined on initial recognition of the group of contracts. This
selection of the rate applied is based on the characteristics of contracts.
•
Contracts for which changes in assumptions that relate to financial risk do not have a substantial effect on the amounts
paid to the policyholders: the discount rates determined on initial recognition of the group of contracts.
Amounts presented in other comprehensive income are accumulated in the insurance finance reserve. If the Group
derecognises a contract without direct participation features as a result of a transfer to a third party or a contract
modification, then any remaining amounts of accumulated other comprehensive income for the contract are reclassified to
profit or loss.
The Group presents insurance finance income or expenses for all other contracts in profit or loss.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
190
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.4 Investment contracts
Investment contracts do not contain sufficient insurance risk to be considered insurance contracts and are accounted for
as a financial liability, other than investment contracts with DPF which are excluded from the scope of IFRS 9 and are
accounted for as insurance contracts.
Revenue from these contracts consists of various charges (policy fees, handling fees, management fees and surrender
charges) made against the contract for the cost of insurance, expenses and early surrender. First year charges are amortised
over the life of the contract as the services are provided.
Investment contract fee revenue
Customers are charged fees for policy administration, investment management, surrenders or other contract services. The
fees may be fixed amounts or vary with the amounts being managed, and will generally be charged as an adjustment to the
policyholder’s account balance. The fees are recognised as revenue in the period in which they are received unless they
relate to services to be provided in future periods, in which case they are deferred and recognised as the service is provided.
When part of the fee received from a policyholder is expected to be refunded in the future, the related fee is not recognised
as a revenue and a sales inducement liability is established which forms part of the investment contract liabilities.
Origination and other “upfront” fees (fees that are assessed against the account balance as consideration for origination of
the contract) are charged on some non-participating investment and pension contracts. Where the investment contract is
recorded at amortised cost, these fees are amortised and recognised over the expected term of the policy as an adjustment
to the effective yield. Where the investment contract is measured at fair value, the front-end fees that relate to the provision
of investment management services are amortised and recognised as the services are provided.
Deferred origination costs
The costs of acquiring investment contracts with investment management services, including commissions and other
incremental expenses directly related to the issue of each new contract, are deferred and amortised over the period that
services are provided. Deferred origination costs are tested for recoverability at each reporting date.
The costs of acquiring new investment contracts without investment management services are included as part of the
effective interest rate used to calculate the amortised cost of the related investment contract liabilities.
Investment contract liabilities
Deposits received in respect of investment contracts are not accounted for through the consolidated income statement,
except for the investment income and fees attributable to those contracts, but are accounted for directly through the
consolidated statement of financial position as an adjustment to the investment contract liability, which reflects the
account balance.
The majority of the Group’s contracts classified as investment contracts are unit-linked contracts, with measurement
directly linked to the underlying investment assets. These represent investment portfolios maintained to meet specific
investment objectives of policyholders who generally bear the credit and market risks on those investments. The liabilities
are carried at fair value determined with reference to the accumulation value (current unit value) with changes recognised
in profit or loss. The costs of policy administration, investment management, surrender charges and certain policyholder
taxes assessed against customers’ account balances are included in revenue, and accounted for as described under
“Investment contract fee revenue” above.
FINANCIAL STATEMENTS
191
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.4 Investment contracts (continued)
Investment contract liabilities (continued)
Non unit-linked investment contract liabilities are carried at amortised cost, being the fair value of consideration received
at the date of initial recognition, less the net effect of principal payments such as transaction costs and front-end fees, plus
or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and
the maturity value, and less any write-down for surrender payments. The effective interest rate equates the discounted
cash payments to the initial amount. At each reporting date, the unearned revenue liability is determined as the value of
the future best estimate cash flows discounted at the effective interest rate. Any adjustment is immediately recognised as
income or expenses in the consolidated income statement.
The amortised cost of the financial liability is never recorded at less than the amount payable on surrender, discounted for
the time value of money where applicable, if the investment contract is subject to a surrender option.
Deferred fee income liability
Deferred fee income liability represents upfront fees and other non-level charges that have been collected and released to
the consolidated income statement over the estimated life of the business. A separate liability for accumulation value is
established.
2.5 Financial instruments
2.5.1 Classification and designation of financial instruments
On initial recognition, a financial asset is classified as measured at amortised cost, fair value through other comprehensive
income or fair value through profit or loss.
Financial assets are not reclassified subsequent to their initial recognition, unless the Group changes its business model
for managing financial assets in which case all affected financial assets are reclassified at the beginning of the reporting
period during which the business model has changed.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at fair
value through profit or loss:
•
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
•
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
A debt security is measured at fair value through other comprehensive income if it meets both of the following conditions
and is not designated as at fair value through profit or loss:
•
it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets; and
•
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity security that is not held for trading, the Group may irrevocably elect to present subsequent
changes in fair value in other comprehensive income on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or fair value through other comprehensive income as
described above are measured at fair value through profit or loss. In addition, on initial recognition the Group may irrevocably
designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at fair value through
other comprehensive income as at fair value through profit or loss if doing so eliminates or significantly reduces an
accounting mismatch that would otherwise arise.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
192
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.5 Financial instruments (continued)
2.5.1 Classification and designation of financial instruments (continued)
Financial assets and liabilities at fair value through profit or loss
Financial assets and liabilities at fair value through profit or loss comprise two categories:
•
financial assets or liabilities mandatorily classified as at fair value through profit or loss; and
•
financial assets or liabilities designated at fair value through profit or loss upon initial recognition.
Management designates financial assets and liabilities at fair value through profit or loss if this eliminates a measurement
or recognition inconsistency or if the liabilities are actively managed on a fair value basis, including among others debt
securities held in participating funds and other participating business with distinct portfolios.
Dividend income from equity instruments measured at fair value through profit or loss is recognised in other investment
return in the consolidated income statement, generally when the security becomes ex-dividend. Interest revenue is
recognised on an accrued basis. For all financial assets and liabilities measured at fair value through profit or loss, changes
in fair value are recognised in profit or loss as part of net investment result.
Transaction costs in respect of financial assets and liabilities at fair value through profit or loss are expensed as they are
incurred.
Financial assets at fair value through other comprehensive income
These principally consist of the Group’s debt securities (other than those backing participating funds, other participating
business with distinct portfolios and unit-linked contracts). These financial assets are initially recognised at fair value plus
attributable transaction costs and are subsequently measured at fair value. The difference between their cost and par
value is amortised. Interest revenue is recognised in investment return in the consolidated income statement using the
effective interest method.
Unrealised gains and losses on securities are analysed between differences resulting from foreign currency translation,
and other fair value changes. Foreign currency translation differences are calculated as if they were carried at amortised
cost and so are recognised in the consolidated income statement as other investment return. For impairments, reference
is made to the section “Impairment of financial assets”.
Changes in the fair value of securities, except for impairment losses and relevant foreign exchange gains and losses, are
recognised in other comprehensive income. Impairment losses and relevant foreign exchange gains and losses are
recognised in the consolidated income statement.
Realised gains and losses on financial assets
Realised gains and losses on financial assets measured at fair value through profit or loss excludes any interest revenue or
dividend income.
Realised gains and losses on financial assets measured at fair value through other comprehensive income are determined
as the difference between the sale proceeds and its original cost or amortised cost as appropriate. Amortised cost is
determined by specific identification.
Recognition of financial instruments
Purchases and sales of financial instruments are recognised on the trade date, which is the date at which the Group
commits to purchase or sell the assets.
FINANCIAL STATEMENTS
193
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.5 Financial instruments (continued)
2.5.1 Classification and designation of financial instruments (continued)
Derecognition, contract modification and offset
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where
the Group has transferred substantially all risks and rewards of ownership. If the Group neither transfers nor retains
substantially all the risks and rewards of ownership of a financial asset, it derecognises the financial asset if it no longer
has control over the asset. In transfers where control over the asset is retained, the Group continues to recognise the asset
to the extent of its continuing involvement. The extent of continuing involvement is determined by the extent to which the
Group is exposed to changes in the fair value of the asset.
Financial liabilities are generally derecognised when their contractual obligations expire or are discharged or cancelled.
Notwithstanding, when, and only when, the Group repurchases its financial liability and includes it as underlying items of
contracts with direct participation features or investment contracts with DPF, the Group may elect not to derecognise the
financial liability. Instead, the Group may elect to continue to account for that instrument as a financial liability and to
account for the repurchased instrument as if it were a financial asset and measure it at fair value through profit or loss. This
election is irrevocable and is made on an instrument-by-instrument basis.
If the terms of a financial instrument are modified, then the Group evaluates whether the cash flows of the modified
financial instrument are substantially different. If the cash flows are substantially different, in which case, a new financial
instrument based on the modified terms is recognised at fair value. If a financial instrument is modified but not substantially,
then it is not derecognised.
Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position
only when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net
basis, or realise the asset and settle the liability simultaneously.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid
investments held for cash management purposes, which have maturities at acquisition of three months or less, or are
convertible into known amounts of cash and subject to insignificant risk of changes in value. Cash and cash equivalents
also include cash received as collateral for derivative transactions, and repo and reverse repo transactions, as well as cash
and cash equivalents held for the benefit of policyholders in connection with unit-linked products. Cash and cash
equivalents that are not mandatorily measured at fair value through profit or loss are measured at amortised cost using the
effective interest method.
Financial assets measured at amortised cost
Other than cash and cash equivalents, financial assets measured at amortised cost primarily include debt securities, loans
and deposits, and receivables. These financial assets are initially recognised at fair value plus transaction costs.
Subsequently, they are carried at amortised cost using the effective interest method less any impairment losses. Interest
revenue from debt securities measured at amortised cost is recognised in investment return in the consolidated income
statement using the effective interest method.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
194
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.5 Financial instruments (continued)
2.5.2 Fair values of non-derivative financial instruments
The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date, having regard to the specific characteristics
of the asset or liability concerned, assuming that the transfer takes place in the most advantageous market to which the
Group has access. The fair values of financial instruments traded in active markets (such as financial instruments at fair
value through profit or loss and fair value through other comprehensive income) are based on quoted market prices at the
date of the consolidated statement of financial position. The quoted market price used for financial assets held by the
Group is the current bid price, which is considered to be the price within the bid-ask spread that is most representative of
the fair value in the circumstances. The fair values of financial instruments that are not traded in active markets are
determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on
market conditions at the date of each consolidated statement of financial position. The objective of using a valuation
technique is to estimate the price at which an orderly transaction would take place between market participants at the
date of the consolidated statement of financial position.
Financial instruments carried at fair value are measured using a fair value hierarchy described in note 20.
2.5.3 Impairment of financial assets
The Group recognises loss allowances for expected credit losses (ECL) on financial assets measured at amortised cost and
debt securities measured at fair value through other comprehensive income. Loss allowances are measured at an amount
equal to lifetime ECL, except in the following cases, for which the amount recognised is 12-month ECL:
•
financial assets that are determined to have low credit risk at the reporting date; and
•
financial assets (other than trade receivables or lease receivables) for which credit risk has not increased significantly
since initial recognition.
Loss allowances for trade receivables and lease receivables are always measured at an amount equal to lifetime ECL.
Lifetime ECL are the ECL that result from possible default events over the expected life of the financial instrument, whereas
12-month ECL are the portion of ECL that results from default events that are possible within the 12 months after the
reporting date. In all cases, the maximum period considered when estimating ECL is the maximum contractual period over
which the Group is exposed to credit risk.
ECL are a probability-weighted estimate of credit losses and are measured as follows:
•
financial assets that are not credit-impaired at the reporting date: the present value of all cash shortfalls – i.e. the
difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group
expects to receive; and
•
other financial assets that are credit-impaired at the reporting date: the difference between the gross carrying amount
and the present value of estimated future cash flows.
Loss allowances for ECL of financial assets measured at amortised cost are deducted from the gross carrying amount of
the assets, and loss allowances for debt securities measured at fair value through other comprehensive income are
recognised in other comprehensive income and do not reduce the carrying amount of the financial assets in the statement
of financial position.
FINANCIAL STATEMENTS
195
ANNUAL REPORT 2024
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.5 Financial instruments (continued)
2.5.3 Impairment of financial assets (continued)
The gross carrying amount of financial assets is written off (either partially or in full) to the extent that there is no realistic
prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources
of income that could generate sufficient cash flows to repay the amounts subject to the write-off. This assessment is
carried out at the individual asset level. However, financial assets that are written off could still be subject to enforcement
activities in order to comply with the Group’s procedures for recovery of amounts due.
2.5.4 Derivative financial instruments
Derivative financial instruments primarily include foreign exchange contracts and interest rate swaps that derive their
value mainly from underlying foreign exchange rates and interest rates. All derivatives are initially recognised in the
consolidated statement of financial position at their fair value, which represents their cost excluding transaction costs,
which are expensed. They are subsequently remeasured at their fair value, with movements in this value recognised in
profit or loss. Fair values are obtained from quoted market prices or, if these are not available, by using valuation techniques
such as discounted cash flow models or option pricing models. All derivatives are carried as assets when the fair values are
positive and as liabilities when the fair values are negative.
Derivative instruments for economic hedging
Whilst the Group enters into derivative transactions to provide economic hedges under the Group’s risk management
framework, it adopts hedge accounting to these transactions only in limited circumstances. This is either because the
transactions would not meet the specific IFRS Accounting Standards rules to be eligible for hedge accounting or the
documentation requirements to meet hedge accounting criteria would be unduly onerous. Where hedge accounting does
not apply, these transactions are treated as held for trading and fair value movements are recognised immediately in other
investment return.
Cash flow hedge
The Group has, in a limited number of cases, designated certain derivatives as hedges of interest rate risk associated with
the cash flows of highly probable forecast transactions such as forecast purchases of debt securities. As permitted by IFRS
9, the Group has elected to continue to apply the hedge accounting requirements of IAS 39. To the extent these hedges are
effective, the change in fair value of the derivatives designated as hedging instruments is recognised in the cash flow
hedge reserve in other comprehensive income within equity. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss. Amounts accumulated in the cash flow hedge reserve are reclassified to profit or loss when
the hedged item affects profit or loss. In respect of a forecast purchase of a debt security classified as fair value through
other comprehensive income, the cash flows are expected to affect profit or loss when the coupons from the purchased
bond are recognised, or on disposal of the security. The application of hedge accounting is discontinued when one of the
following situations occurs: when a derivative designated as the hedging instrument expires or is sold, terminated or
exercised prior to the occurrence of the forecast transaction, when the hedge is no longer highly effective or expected to
be highly effective, or when the Group revokes the designation of the hedging relationship. In these situations, the
cumulative gain or loss on the hedging instrument that has been recognised in other comprehensive income from the
period when the hedge was effective remains separately in equity until the forecast transaction occurs. This amount is
reclassified to profit or loss when the hedged item affects profit or loss. If the forecast transaction is no longer expected to
occur, the entire amount is reclassified immediately to profit or loss.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
196
AIA GROUP LIMITED
2. MATERIAL ACCOUNTING POLICY INFORMATION (continued)
2.5 Financial instruments (continued)
2.5.4 Derivative financial instruments (continued)
Embedded derivatives
Embedded derivatives are derivatives embedded within other non-derivative host financial instruments to create hybrid
instruments. Where the economic characteristics and risks of the embedded derivatives are not closely related to the
economic characteristics and risks of the host instrument that is not a financial asset within the scope of IFRS 9, and where
the hybrid instrument is not measured at fair value with changes in fair value recognised in profit or loss, the embedded
derivative is bifurcated and carried at fair value as a derivative in accordance with IFRS 9.
2.6 Property, plant and equipment
Property held for own use, which is solely held as an underlying item of insurance contracts with direct participation
features, is measured initially at cost and subsequently at fair value, with any change therein recognised in profit or loss.
Any gain or loss on disposal of property held for own use measured at fair value (calculated as the difference between the
net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.
2.7 Presentation of the consolidated statement of financial position
The Group’s insurance and investment contract liabilities and related assets are realised and settled over periods of several
years, reflecting the long-term nature of the Group’s products. Accordingly, the Group presents the assets and liabilities in
its consolidated statement of financial position in approximate order of liquidity, rather than distinguishing current and
non-current assets and liabilities. The Group regards its deferred origination costs, intangible assets, investments in
associates and joint ventures, property, plant and equipment and investment property as non-current assets as these are
held for the longer-term use of the Group.
FINANCIAL STATEMENTS
197
ANNUAL REPORT 2024
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and assumptions that affect the reported amounts of assets, liabilities, and revenue and
expenses. All estimates are based on management’s knowledge of current facts and circumstances, assumptions based on
that knowledge and predictions of future events and actions. Actual results can always differ from those estimates, possibly
significantly.
Items that are considered particularly sensitive to changes in estimates and assumptions, and the relevant accounting
policies are those which relate to insurance contracts (including investment contracts with DPF), fair value measurement,
impairment of financial assets and impairment of goodwill and other intangible assets.
3.1 Level of aggregation and recognition of group of insurance contracts
For contracts issued to which the Group does not apply the premium allocation approach, the judgements exercised in
determining whether contracts are onerous on initial recognition or those that have no significant possibility of becoming
onerous subsequently are:
•
based on the likelihood of changes in assumptions which, if they occurred, would result in the contracts becoming
onerous; and
•
using information about profitability estimation for the relevant group of products.
The accounting policy on level of aggregation and recognition of group of insurance contracts is described in note 2.3.3.
3.2 Measurement of insurance contracts not measured under the premium allocation approach
The asset or liability for groups of insurance contracts is measured as the total of fulfilment cash flows and CSM.
The fulfilment cash flows of insurance contracts (including investment contracts with DPF) represents the present value
of estimated future cash outflows, less the present value of estimated future cash inflows and adjusted for a provision for
the risk adjustment for non-financial risk. The assumptions used and the techniques for estimating fulfilment cash flows
and risk adjustment for non-financial risk are based on actual experience by each geographical market and policy form.
The Group exercises significant judgement in making appropriate assumptions and techniques.
CSM represents the unearned profits that the Group will recognise as it provides services under the insurance contracts in
a group. The amounts of CSM recognised in profit or loss are determined by identifying the coverage units in the group,
allocating the CSM at the end of period equally to each coverage unit provided in the current period and expected to be
provided in the future. The number of coverage units in a group is the quantity of the services provided by the contracts in
the group, determined by considering for each contract the quantity of the services provided under a contract and its
expected coverage period. The Group exercises judgements in determining the quantity of the services provided under a
contract which will affect the amounts recognised in the consolidated financial statements as insurance revenue from
insurance contracts issued.
The judgements exercised in the valuation of insurance contracts (including investment contracts with DPF) affect the
amounts recognised in the consolidated financial statements as assets or liabilities of insurance contracts and investment
contracts with DPF. Further details of the related accounting policies, key risk and variables, and the sensitivities of
assumptions to the key variables in respect of insurance contracts are provided in notes 2.3, 24 and 34.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
198
AIA GROUP LIMITED
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.3 Determination of coverage unit
The CSM of a group of contracts is recognised as insurance revenue in each period based on the number of coverage units
provided in the period, which is determined by considering for each contract the quantity of the services provided, its
expected coverage period and time value of money.
The quantity of services provided by insurance contracts could include insurance coverage, investment-return service and
investment-related service, as applicable. In assessing the services provided by insurance contracts, the terms and benefit
features of the contracts are considered.
For contracts providing predominately insurance coverage, the quantity of services is determined for the contract as a
whole based on the expected maximum benefits less investment component. For contracts providing multiple services, the
quantity of services is determined based on the benefits provided to policyholder for each service with the relative
weighting considered in the calculation through the use of factors. Relevant elements are considered in determining the
quantity of services including among others, benefit payments and premiums. The Group applies judgement in these
determinations.
Expected coverage period is derived based on the likelihood of an insured event occurring to the extent they affect the
expected duration of contracts in the group. Determining the expected coverage period is judgemental since it involves
making an expectation of when claims and lapse will occur.
3.4 Fair value measurement
3.4.1 Fair value of financial assets
The Group determines the fair values of financial assets traded in active markets using quoted bid prices as of each
reporting date. The fair values of financial assets that are not traded in active markets are typically determined using a
variety of other valuation techniques, such as prices observed in recent transactions and values obtained from current bid
prices of comparable investments. More judgement is used in measuring the fair value of financial assets for which market
observable prices are not available or are available only infrequently.
The degree of judgement used in measuring the fair value of financial assets generally correlates with the level of pricing
observability. Pricing observability is affected by a number of factors, including the type of financial instrument, whether
the financial instrument is new to the market and not yet established, the characteristics specific to the transaction and
general market conditions.
Further details of the fair value of financial assets and the sensitivity analysis to interest rates and equity prices are
provided in notes 20 and 34.
FINANCIAL STATEMENTS
199
ANNUAL REPORT 2024
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.4 Fair value measurement (continued)
3.4.2 Fair value of property held for own use and investment property
The Group uses independent professional valuers to determine the fair value of properties on the basis of the highest and
best use of the properties that is physically possible, legally permissible and financially feasible. In most cases, current use
of the properties is considered to be the highest and best use for determining the fair value. Different valuation techniques
may be adopted to reach the fair value of the properties. Under the Market Data Approach, records of recent sales and
offerings of similar property are analysed and comparisons are made for factors such as size, location, quality and
prospective use. For investment properties, the discounted cash flow approach may be used by reference to net rental
income allowing for reversionary income potential to estimate the fair value of the properties. On some occasions, the cost
approach is used as well to calculate the fair value which reflects the cost that would be required to replace the service
capacity of the property.
Further details of the fair value of property held for own use and investment property are provided in note 20.
3.5 Impairment of financial assets
The Group recognises loss allowances for ECL on financial assets measured at amortised cost and debt securities measured
at fair value through other comprehensive income. The measurement of ECL requires the use of complex models and
significant assumptions about future economic conditions and credit behaviour. Details of the inputs, assumptions and
estimation techniques used for estimating ECL are further explained in note 23.
A number of significant judgements are also required in applying the accounting requirements for measuring ECL, such as:
•
Determining criteria for significant increase in credit risk since initial recognition;
•
Choosing appropriate models and assumptions for the measurement of ECL; and
•
Establishing the methodology for incorporating forward-looking information into the measurement of ECL.
3.6 Impairment of goodwill and other intangible assets
For the purposes of impairment testing, goodwill and other intangible assets are grouped into cash-generating units or
groups of cash-generating units. These assets are tested for impairment by comparing the carrying amount of the cash-
generating unit (group of units), including goodwill, to the recoverable amount of that cash-generating unit (group of
units). The determination of the recoverable amount requires significant judgement regarding the selection of appropriate
valuation techniques and assumptions.
Further details of the impairment of goodwill during the year are provided in note 14.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
200
AIA GROUP LIMITED
4. EXCHANGE RATES
The Group’s principal overseas operations during the reporting period were located within Asia. The results and cash flows
of these operations have been translated into the US dollar at the following average rates:
US dollar exchange rates
Year ended
31 December
2024
Year ended
31 December
2023
Mainland China
7.20
7.08
Hong Kong
7.80
7.83
Thailand
35.23
34.80
Singapore
1.34
1.34
Malaysia
4.57
4.56
Assets and liabilities have been translated into the US dollar at the following year-end rates:
US dollar exchange rates
As at
31 December
2024
As at
31 December
2023
Mainland China
7.30
7.10
Hong Kong
7.76
7.81
Thailand
34.26
34.24
Singapore
1.36
1.32
Malaysia
4.47
4.59
Exchange rates are expressed in units of local currency per US$1.
FINANCIAL STATEMENTS
201
ANNUAL REPORT 2024
5. OPERATING PROFIT AFTER TAX
Operating profit after tax may be reconciled to net profit as follows:
US$m
Note
Year ended
31 December
2024
Year ended
31 December
2023
Operating profit after tax
7
6,632
6,228
Non-operating items, net of related taxes:
Short-term investment and discount rate variances(1)
(427)
(2,007)
Reclassification of revaluation gains for property held for own use(1)
(155)
(8)
Other significant non-operating income and expenses
Corporate transaction related costs
(23)
(30)
Other non-operating investment return and other items(2)
826
(402)
Subtotal
221
(2,447)
Net profit
6,853
3,781
Operating profit after tax attributable to:
Shareholders of AIA Group Limited
6,605
6,213
Non-controlling interests
27
15
Net profit attributable to:
Shareholders of AIA Group Limited
6,836
3,764
Non-controlling interests
17
17
Operating profit after tax breakdown:
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Insurance service result:
CSM recognised for services provided
5,625
5,314
Other insurance service result(3)
66
(190)
Net investment result(3)
3,528
3,581
Other net expenses(3)
(1,468)
(1,470)
Operating profit before tax
7,751
7,235
Taxation(3)
(1,119)
(1,007)
Operating profit after tax
6,632
6,228
Notes:
(1) Short-term investment and discount rate variances include revaluation gains for property held for own use. This amount is then reclassified out of
net profit to conform to IFRS Accounting Standards measurement and presentation.
(2) Other non-operating investment return and other items include implementation costs for new accounting standards. The 2023 comparative
information in this report are presented on a consistent manner to conform with the enhanced presentation.
(3) The operating profit after tax disclosure has been enhanced in 2024 with no impact on the Group’s operating profit after tax or net profit. The
enhancement mainly relates to insurance contracts with direct participation features, to better represent the offsetting impact of certain operating
cash flow variances which were previously presented in net investment result. In 2024, they have been classified under:
–
Other insurance service result;
–
Other net expenses; and
–
Taxation.
The 2023 comparative information in this report are presented on a consistent manner to conform with the enhanced presentation.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
202
AIA GROUP LIMITED
6. TOTAL WEIGHTED PREMIUM INCOME AND ANNUALISED NEW PREMIUMS
For management decision-making and internal performance management purposes, the Group measures business
volumes during the year using a performance measure referred to as total weighted premium income (TWPI). The Group
measures new business activity using a performance measure referred to as annualised new premiums (ANP). The
presentation of this note is consistent with our reportable segment presentation in note 7.
TWPI consists of 100 per cent of renewal premiums, 100 per cent of first year premiums and 10 per cent of single premiums,
before reinsurance ceded.
Management considers that TWPI provides an indicative volume measure of transactions undertaken in the reporting
period that have the potential to generate profits for shareholders. The amounts shown are not intended to be indicative of
insurance revenue and fee income recorded in the consolidated income statement.
ANP is a key internal measure of new business activities, which consists of 100 per cent of annualised first year premiums
and 10 per cent of single premiums, before reinsurance ceded. ANP excludes new business of pension business, personal
lines and motor insurance.
TWPI
US$m
Year ended
31 December
2024
Year ended
31 December
2023
TWPI by geography
Mainland China
9,874
8,589
Hong Kong
12,456
11,554
Thailand
4,674
4,425
Singapore
4,445
3,912
Malaysia
2,742
2,565
Other Markets
7,207
6,894
Total
41,398
37,939
First year premiums by geography
Mainland China
2,105
1,961
Hong Kong
2,444
2,243
Thailand
779
725
Singapore
683
429
Malaysia
407
392
Other Markets
1,118
766
Total
7,536
6,516
Single premiums by geography
Mainland China
426
369
Hong Kong
1,442
1,205
Thailand
76
126
Singapore
1,368
944
Malaysia
342
255
Other Markets
872
693
Total
4,526
3,592
FINANCIAL STATEMENTS
203
ANNUAL REPORT 2024
6. TOTAL WEIGHTED PREMIUM INCOME AND ANNUALISED NEW PREMIUMS (continued)
TWPI (continued)
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Renewal premiums by geography
Mainland China
7,726
6,591
Hong Kong
9,868
9,190
Thailand
3,887
3,687
Singapore
3,625
3,389
Malaysia
2,301
2,147
Other Markets
6,002
6,060
Total
33,409
31,064
ANP
US$m
Year ended
31 December
2024
Year ended
31 December
2023
ANP by geography
Mainland China
2,168
2,023
Hong Kong
2,609
2,407
Thailand
821
765
Singapore
897
586
Malaysia
517
473
Other Markets
1,594
1,396
Total
8,606
7,650
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
204
AIA GROUP LIMITED
7. SEGMENT INFORMATION
The Group’s operating segments, based on the reports received by the Group’s chief operating decision-maker, considered
to be the Executive Committee (ExCo), are each of the geographical markets in which the Group operates. Each of the
reportable segments, other than the “Group Corporate Centre” segment, writes life insurance business, providing life
insurance, accident and health insurance and savings plans to customers in its local market, and distributes related
investment and other financial services products. The reportable segments are Mainland China, Hong Kong (including
Macau), Thailand, Singapore (including Brunei), Malaysia, Other Markets and Group Corporate Centre. Other Markets
includes the Group’s operations in Australia, Cambodia, India, Indonesia, Myanmar, New Zealand, the Philippines, South
Korea, Sri Lanka, Taiwan (China) and Vietnam. The activities of the Group Corporate Centre segment consist of the Group’s
corporate functions, shared services and eliminations of intra-group transactions.
As each reportable segment other than the Group Corporate Centre segment focuses on serving the life insurance needs
of its local market, there are limited transactions between reportable segments. The key performance indicators reported
in respect of each segment are:
•
ANP;
•
TWPI;
•
insurance service result;
•
net investment result;
•
operating expenses;
•
operating profit after tax attributable to shareholders of AIA Group Limited;
•
expense ratio, measured as operating expenses divided by TWPI;
•
operating margin, measured as operating profit after tax expressed as a percentage of TWPI; and
•
operating return on shareholders’ allocated equity measured as operating profit after tax attributable to shareholders
of AIA Group Limited expressed as a percentage of the simple average of opening and closing shareholders’ allocated
segment equity (being the segment assets less segment liabilities in respect of each reportable segment less non-
controlling interests, insurance finance reserve and fair value reserve).
Business volumes in respect of the Group’s five largest customers are less than 30 per cent of insurance revenue and net
investment result in this note.
The Group recognises deferred tax liabilities in respect of unremitted earnings in jurisdictions where withholding tax
charge would be incurred upon dividend distribution.
FINANCIAL STATEMENTS
205
ANNUAL REPORT 2024
7. SEGMENT INFORMATION (continued)
US$m
Mainland
China
Hong Kong
Thailand
Singapore
Malaysia
Other
Markets
Group
Corporate
Centre
Total
Year ended 31 December 2024
ANP
2,168
2,609
821
897
517
1,594
–
8,606
TWPI
9,874
12,456
4,674
4,445
2,742
7,207
–
41,398
Insurance revenue
3,248
4,552
2,402
2,466
1,831
4,815
–
19,314
Insurance service expenses(3)
(1,400)
(2,766)
(1,510)
(1,945)
(1,496)
(4,088)
–
(13,205)
Net expenses from reinsurance
contracts held(3)
(46)
(38)
(54)
(44)
(27)
(200)
(9)
(418)
Insurance service result
1,802
1,748
838
477
308
527
(9)
5,691
Investment return
3,720
(532)
1,169
3,039
1,307
1,438
741
10,882
– Participating(1) and unit-linked
2,521
(1,653)
138
2,599
1,160
294
7
5,066(2)
– Others
1,199
1,121
1,031
440
147
1,144
734
5,816
Net finance (expenses)/income from
insurance contracts and reinsurance
contracts held(3)
(3,370)
1,891
(651)
(2,561)
(1,103)
(950)
1
(6,743)(2)
Movement in investment contract
liabilities
(31)
(308)
(85)
(125)
–
(33)
–
(582)(2)
Movement in third-party interests in
consolidated investment funds
–
(29)
–
–
–
–
–
(29)(2)
Net investment result
319
1,022
433
353
204
455
742
3,528
Fee income and other operating revenue
1
258
29
26
15
132
12
473
Other expenses(3)
(166)
(259)
(64)
(156)
(66)
(388)
(340)
(1,439)
Other finance costs
(42)
(29)
(5)
(7)
(2)
(13)
(391)
(489)
Share of losses from associates
and joint ventures
–
–
–
–
–
(13)
–
(13)
Operating profit before tax
1,914
2,740
1,231
693
459
700
14
7,751
Tax on operating profit before tax(3)
(317)
(239)
(212)
(24)
(118)
(166)
(43)
(1,119)
Operating profit/(loss) after tax
1,597
2,501
1,019
669
341
534
(29)
6,632
Operating profit/(loss) after tax
attributable to:
Shareholders of AIA Group Limited
1,597
2,499
1,019
669
331
507
(17)
6,605
Non-controlling interests
–
2
–
–
10
27
(12)
27
Notes:
(1) Participating refers to participating funds and other participating business with distinct portfolios.
(2) Net finance (expenses)/income from insurance contracts and reinsurance contracts held include changes in fair value of underlying items of
contracts with direct participation features. Net finance (expenses)/income from insurance contracts and reinsurance contracts held, net of
investment return relating to participating and unit-linked businesses, movement in investment contract liabilities and movement in third-party
interests in consolidated investment funds amounted to US$(2,288)m, primarily related to other insurance contracts without direct participation
features.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
206
AIA GROUP LIMITED
7. SEGMENT INFORMATION (continued)
US$m
Mainland
China
Hong Kong
Thailand
Singapore
Malaysia
Other
Markets
Group
Corporate
Centre
Total
Key operating ratios:
Expense ratio
6.9%
5.7%
6.6%
6.8%
9.0%
14.9%
–
8.8%
Operating margin
16.2%
20.1%
21.8%
15.1%
12.4%
7.4%
–
16.0%
Operating return on shareholders’
allocated equity
26.6%
20.0%
16.1%
17.0%
13.8%
6.6%
–
14.8%
Operating profit before tax includes:
Operating expenses
682
713
310
301
246
1,074
334
3,660
Finance costs
62
35
12
19
2
13
391
534
US$m
Mainland
China
Hong Kong
Thailand
Singapore
Malaysia
Other
Markets
Group
Corporate
Centre
Total
31 December 2024
Total assets
60,121
104,669
29,205
42,990
16,475
35,290
16,704
305,454
Total liabilities
54,885
95,405
22,097
39,131
13,809
26,988
12,326
264,641
Total equity
5,236
9,264
7,108
3,859
2,666
8,302
4,378
40,813
Shareholders’ allocated equity
6,596
12,440
6,488
3,642
2,558
7,500
5,180
44,404
Total assets include:
Investments in associates and
joint ventures
–
–
–
–
1
892
817
1,710
FINANCIAL STATEMENTS
207
ANNUAL REPORT 2024
7. SEGMENT INFORMATION (continued)
Segment information may be reconciled to the consolidated income statement as shown below(3):
US$m
Segment
information
Short-term
investment and
discount rate
variances
Other non-
operating
items
Consolidated
income
statement
Year ended 31 December 2024
Insurance revenue
19,314
–
–
19,314
Insurance revenue
Insurance service expenses
(13,205)
–
69
(13,136)
Insurance service expenses
Net expenses from
reinsurance contracts
held
(418)
–
9
(409)
Net expenses from
reinsurance contracts
held
Insurance service result
5,691
–
78
5,769
Insurance service result
Investment return
10,882
(82)
1,137
11,937
Investment return
Net finance expenses from
insurance contracts and
reinsurance contracts
held
(6,743)
(181)
(583)
(7,507)
Net finance expenses from
insurance contracts and
reinsurance contracts
held
Movement in investment
contract liabilities
(582)
(209)
–
(791)
Movement in investment
contract liabilities
Movement in third-party
interests in consolidated
investment funds
(29)
–
–
(29)
Movement in third-party
interests in consolidated
investment funds
Net investment result
3,528
(472)
554
3,610
Net investment result
Fee income and other
operating revenue
473
–
(31)
442
Fee income and other
operating revenue
Other expenses
(1,439)
–
(332)
(1,771)
Other expenses
Other finance costs
(489)
–
(81)
(570)
Other finance costs
Share of losses from
associates and joint
ventures
(13)
–
364
351
Share of profit from
associates and joint
ventures
Operating profit before tax
7,751
(472)
552
7,831
Profit before tax
Tax on operating profit
before tax
(1,119)
45
96
(978)
Tax expense
Operating profit after tax
6,632
(427)
648
6,853
Net profit
Note:
(3) The segment information disclosure has been enhanced in 2024 with no impact on the Group’s operating profit after tax or net profit. The
enhancement mainly relates to insurance contracts with direct participation features, to better represent the offsetting impact of certain operating
cash flow variances which were previously presented in net finance expenses from insurance contracts and reinsurance contracts held. In 2024,
they have been classified under:
–
Insurance service expenses;
–
Net expenses from reinsurance contracts held;
–
Other expenses; and
–
Tax on operating profit before tax.
Furthermore, in the segment information disclosure, the Group has disclosed the tax on operating profit before tax and operating profit after tax.
The 2023 comparative information in this report are presented on a consistent manner to conform with the enhanced presentation.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
208
AIA GROUP LIMITED
7. SEGMENT INFORMATION (continued)
US$m
Mainland
China
Hong Kong
Thailand
Singapore
Malaysia
Other
Markets
Group
Corporate
Centre
Total
Year ended 31 December 2023
ANP
2,023
2,407
765
586
473
1,396
–
7,650
TWPI
8,589
11,554
4,425
3,912
2,565
6,894
–
37,939
Insurance revenue
3,122
3,816
2,264
2,196
1,574
4,542
–
17,514
Insurance service expenses(3)
(1,254)
(2,441)
(1,421)
(1,617)
(1,279)
(4,092)
–
(12,104)
Net (expenses)/income from
reinsurance contracts held(3)
(53)
(54)
(51)
(89)
4
(32)
(11)
(286)
Insurance service result
1,815
1,321
792
490
299
418
(11)
5,124
Investment return
1,679
6,221
1,048
2,373
908
1,685
786
14,700
– Participating(1) and unit-linked
676
5,116
2
1,915
772
563
(2)
9,042(2)
– Others
1,003
1,105
1,046
458
136
1,122
788
5,658
Net finance expenses from insurance
contracts and reinsurance contracts
held(3)
(1,374)
(4,916)
(521)
(1,965)
(756)
(978)
(2) (10,512)(2)
Movement in investment contract
liabilities
(25)
(197)
(86)
(67)
–
(176)
–
(551)(2)
Movement in third-party interests in
consolidated investment funds
–
(56)
–
–
–
–
–
(56)(2)
Net investment result
280
1,052
441
341
152
531
784
3,581
Fee income and other operating revenue
4
253
24
26
13
96
16
432
Other expenses(3)
(183)
(250)
(83)
(134)
(56)
(405)
(340)
(1,451)
Other finance costs
(41)
(27)
(1)
(8)
(2)
(8)
(366)
(453)
Share of (losses)/profit from associates
and joint ventures
–
(1)
–
–
–
31
(28)
2
Operating profit before tax
1,875
2,348
1,173
715
406
663
55
7,235
Tax on operating profit before tax(3)
(327)
(163)
(222)
(46)
(102)
(93)
(54)
(1,007)
Operating profit after tax
1,548
2,185
951
669
304
570
1
6,228
Operating profit after tax
attributable to:
Shareholders of AIA Group Limited
1,548
2,180
951
669
293
560
12
6,213
Non-controlling interests
–
5
–
–
11
10
(11)
15
Notes:
(1) Participating refers to participating funds and other participating business with distinct portfolios.
(2) Net finance expenses from insurance contracts and reinsurance contracts held include changes in fair value of underlying items of contracts with
direct participation features. Net finance expenses from insurance contracts and reinsurance contracts held, net of investment return relating to
participating and unit-linked businesses, movement in investment contract liabilities and movement in third-party interests in consolidated
investment funds amounted to US$(2,077)m, primarily related to other insurance contracts without direct participation features.
FINANCIAL STATEMENTS
209
ANNUAL REPORT 2024
7. SEGMENT INFORMATION (continued)
US$m
Mainland
China
Hong Kong
Thailand
Singapore
Malaysia
Other
Markets
Group
Corporate
Centre
Total
Key operating ratios:
Expense ratio
7.4%
6.2%
6.7%
7.1%
9.1%
16.2%
–
9.4%
Operating margin
18.0%
18.9%
21.5%
17.1%
11.9%
8.3%
–
16.4%
Operating return on shareholders’
allocated equity
29.8%
16.9%
15.4%
15.6%
13.3%
7.2%
–
13.5%
Operating profit before tax includes:
Operating expenses
633
718
295
277
233
1,115
302
3,573
Finance costs
51
29
2
17
2
8
366
475
US$m
Mainland
China
Hong Kong
Thailand
Singapore
Malaysia
Other
Markets
Group
Corporate
Centre
Total
31 December 2023
Total assets
46,394
104,506
26,204
41,921
14,529
36,511
16,254
286,319
Total liabilities
42,657
93,984
20,182
37,516
12,167
27,473
10,746
244,725
Total equity
3,737
10,522
6,022
4,405
2,362
9,038
5,508
41,594
Shareholders’ allocated equity
5,417
12,605
6,135
4,247
2,251
7,887
6,212
44,754
Total assets include:
Investments in associates and
joint ventures
–
–
–
–
1
828
502
1,331
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
210
AIA GROUP LIMITED
7. SEGMENT INFORMATION (continued)
Segment information may be reconciled to the consolidated income statement as shown below(3):
US$m
Segment
information
Short-term
investment and
discount rate
variances
Other non-
operating
items
Consolidated
income
statement
Year ended 31 December 2023
Insurance revenue
17,514
–
–
17,514
Insurance revenue
Insurance service expenses
(12,104)
–
26
(12,078)
Insurance service expenses
Net expenses from
reinsurance contracts
held
(286)
–
(59)
(345)
Net expenses from
reinsurance contracts
held
Insurance service result
5,124
–
(33)
5,091
Insurance service result
Investment return
14,700
(2,097)
(37)
12,566
Investment return
Net finance expenses from
insurance contracts and
reinsurance contracts
held
(10,512)
(99)
220
(10,391)
Net finance expenses from
insurance contracts and
reinsurance contracts
held
Movement in investment
contract liabilities
(551)
(21)
–
(572)
Movement in investment
contract liabilities
Movement in third-party
interests in consolidated
investment funds
(56)
–
–
(56)
Movement in third-party
interests in consolidated
investment funds
Net investment result
3,581
(2,217)
183
1,547
Net investment result
Fee income and other
operating revenue
432
–
(24)
408
Fee income and other
operating revenue
Other expenses
(1,451)
–
(301)
(1,752)
Other expenses
Other finance costs
(453)
–
(10)
(463)
Other finance costs
Share of profit from
associates and joint
ventures
2
–
(269)
(267)
Share of losses from
associates and joint
ventures
Operating profit before tax
7,235
(2,217)
(454)
4,564
Profit before tax
Tax on operating profit
before tax
(1,007)
210
14
(783)
Tax expense
Operating profit after tax
6,228
(2,007)
(440)
3,781
Net profit
Note:
(3) The segment information disclosure has been enhanced in 2024 with no impact on the Group’s operating profit after tax or net profit. The
enhancement mainly relates to insurance contracts with direct participation features, to better represent the offsetting impact of certain operating
cash flow variances which were previously presented in net finance expenses from insurance contracts and reinsurance contracts held. In 2024,
they have been classified under:
–
Insurance service expenses;
–
Net expenses from reinsurance contracts held;
–
Other expenses; and
–
Tax on operating profit before tax.
Furthermore, in the segment information disclosure, the Group has disclosed the tax on operating profit before tax and operating profit after tax.
The 2023 comparative information in this report are presented on a consistent manner to conform with the enhanced presentation.
FINANCIAL STATEMENTS
211
ANNUAL REPORT 2024
8. INSURANCE REVENUE
US$m
Note
Year ended
31 December
2024
Year ended
31 December
2023
Contracts not measured under the PAA
Amounts related to changes in liabilities for remaining coverage
Contractual service margin recognised for services provided
24
5,958
5,605
Change in risk adjustment for non-financial risk for risk expired
236
210
Expected incurred claims and other insurance service expenses
8,960
8,239
Others
134
85
Recovery of insurance acquisition cash flows
1,073
968
24
16,361
15,107
Contracts measured under the PAA
24
2,953
2,407
Total insurance revenue
19,314
17,514
Represented by:
Contracts under the modified retrospective approach
1,693
1,696
Contracts under the fair value approach
7,445
7,791
Other contracts
10,176
8,027
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
212
AIA GROUP LIMITED
9. NET INVESTMENT RESULT
A. Group’s net investment result in consolidated income statement and other comprehensive income
US$m
Notes
Year ended
31 December
2024
Year ended
31 December
2023
Investment return
Interest revenue on financial assets
7,988
7,820
Other investment return
3,965
4,941
Net impairment loss on financial assets
(16)
(195)
Amounts recognised in consolidated income statement
11,937
12,566
Amounts recognised in other comprehensive income
6,328
4,708
Total investment return
18,265
17,274
Net finance expenses from insurance contracts
Changes in fair value of underlying items of contracts with direct
participation features
(4,091)
(8,313)
Interest accreted
(2,949)
(2,516)
Effect of changes in interest rates and other financial assumptions
(6,246)
(5,119)
Effect of measuring changes in estimates at current rates and
adjusting the CSM at the rates on initial recognition
(196)
(638)
Net foreign exchange (losses)/gains
(551)
327
Total net finance expenses from insurance contracts
24
(14,033)
(16,259)
Net finance income from reinsurance contracts held
Interest accreted
75
9
Effect of changes in interest rates and other financial assumptions
211
247
Effect of measuring changes in estimates at current rates and
adjusting the CSM at the rates on initial recognition
(75)
(38)
Net foreign exchange losses
(7)
(42)
Total net finance income from reinsurance contracts held
24
204
176
Movement in investment contract liabilities
25
(791)
(572)
Movement in third-party interests in consolidated investment funds
(29)
(56)
Net investment result
3,616
563
Net investment result is represented by:
Amounts recognised in consolidated income statement
3,610
1,547
Amounts recognised in other comprehensive income
6
(984)
Total net investment result
3,616
563
FINANCIAL STATEMENTS
213
ANNUAL REPORT 2024
9. NET INVESTMENT RESULT (continued)
A. Group’s net investment result in consolidated income statement and other comprehensive income (continued)
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Net finance expenses from insurance contracts are
represented by:
Amounts recognised in consolidated income statement
(7,612)
(10,456)
Amounts recognised in other comprehensive income
(6,421)
(5,803)
Total net finance expenses from insurance contracts
(14,033)
(16,259)
Net finance income from reinsurance contracts held are
represented by:
Amounts recognised in consolidated income statement
105
65
Amounts recognised in other comprehensive income
99
111
Total net finance income from reinsurance contracts held
204
176
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
214
AIA GROUP LIMITED
9. NET INVESTMENT RESULT (continued)
B. Interest revenue on financial assets and other investment return
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Interest revenue on financial assets
Financial assets measured at amortised cost
701
546
Financial assets measured at fair value through other comprehensive income
3,574
3,516
Financial assets designated at fair value through profit or loss
3,331
3,403
Financial assets measured mandatorily at fair value through profit or loss
382
355
Total interest revenue on financial assets
7,988
7,820
Other investment return
Dividend income
1,739
1,488
Rental income(1)
167
154
Net gains/(losses) of financial assets not at fair value through profit or loss
Net realised gains/(losses) of debt securities measured at fair value through
other comprehensive income
65
(74)
Net realised losses of financial assets measured at amortised cost(2)
(33)
–
At fair value through profit or loss
Net (losses)/gains of financial assets designated at fair value through profit or loss
Net (losses)/gains of debt securities
(1,629)
3,390
Net losses of loans and deposits
–
(9)
Net losses of equity shares, interests in investment funds and exchangeable loan notes
(61)
–
Net gains/(losses) of financial instruments mandatorily at fair value through
profit or loss
Net gains of debt securities
27
120
Net gains of equity shares, interests in investment funds and exchangeable loan notes
5,864
1,013
Net fair value movement on derivatives
(2,946)
(827)
Net gains in respect of financial instruments at fair value through
profit or loss
1,255
3,687
Net fair value movement of investment property and property held for own use
(47)
(147)
Net foreign exchange gains/(losses)
946
(141)
Other net realised losses
(127)
(26)
Net gains
2,059
3,299
Total other investment return
3,965
4,941
Notes:
(1) Represents rental income from operating lease contracts in which the Group acts as a lessor.
(2) During the year ended 31 December 2024, the Group disposed certain debt securities measured at amortised cost (31 December 2023: nil) for
asset liability management.
FINANCIAL STATEMENTS
215
ANNUAL REPORT 2024
9. NET INVESTMENT RESULT (continued)
Foreign currency movements resulted in the following gains recognised in the consolidated income statement (other than
gains and losses arising on items measured at fair value through profit or loss):
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Foreign exchange gains
151
122
On transition to IFRS 17, for certain groups of contracts that the Group applies the modified retrospective approach or the
fair value approach, the cumulative insurance finance income or expenses recognised in other comprehensive income at
1 January 2022 was determined:
•
to be zero; or
•
retrospectively based on observable yield curve.
For those groups of contracts, the movement in the fair value reserve for the debt securities at fair value through other
comprehensive income was as follows:
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Balance at 1 January
(177)
(3,346)
Net change in fair value and others
3,304
2,945
Net amount reclassified to profit or loss
140
224
Balance at 31 December
3,267
(177)
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
216
AIA GROUP LIMITED
10. EXPENSES
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Claims and benefits
10,129
9,250
Commission and other acquisition expenses incurred
6,844
6,370
Losses on onerous insurance contracts
48
101
Employee benefit expenses(3)
2,321
2,235
Depreciation(3)
217
221
Amortisation(3)
190
152
Investment management expenses and others
497
554
Depreciation on property held for own use
66
43
Finance costs
615
485
Other operating expenses(3)
932
965
Restructuring and other non-operating costs(1)
211
166
22,070
20,542
Amounts attributed to insurance acquisition cash flows
(8,093)
(7,542)
Amortisation of insurance acquisition cash flows
1,500
1,293
Insurance service and other expenses
15,477
14,293
Insurance service and other expenses represented by:
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Insurance service expenses
13,136
12,078
– Contracts not measured under the PAA
10,256
9,775
– Contracts measured under the PAA
2,880
2,303
Other expenses(2)
1,771
1,752
Other finance costs
570
463
Total
15,477
14,293
Notes:
(1) Restructuring costs represent costs related to restructuring programmes and are primarily comprised of redundancy and contract termination
costs. Other non-operating costs primarily consist of corporate transaction related costs, implementation costs for new accounting standards and
other items that are not expected to be recurring in nature.
(2) Other expenses represent general expenses and investment management expenses that are not directly attributable to insurance contracts and
reinsurance contracts held. It includes payments for short-term leases of US$2m (2023: US$7m).
(3) Operating expenses comprise employee benefit expenses, depreciation, amortisation and other operating expenses.
FINANCIAL STATEMENTS
217
ANNUAL REPORT 2024
10. EXPENSES (continued)
Expenses include auditors’ remuneration of US$32m (2023: US$33m), an analysis of which is set out below:
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Audit services
26
27
Non-audit services, including:
Audit-related services
5
5
Tax services
–
1
Other services
1
–
Total
32
33
Depreciation consists of:
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Computer hardware, fixtures and fittings and others
78
75
Right-of-use assets
Property held for own use
138
145
Computer hardware
1
1
Total
217
221
Finance costs may be analysed as:
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Repurchase agreements
100
66
Medium-term notes and securities
469
403
Other loans
34
4
Lease liabilities
12
12
Total
615
485
Employee benefit expenses consist of:
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Wages and salaries
1,902
1,848
Share-based compensation
84
72
Pension costs – defined contribution plans
145
139
Pension costs – defined benefit plans
9
9
Other employee benefit expenses
181
167
Total
2,321
2,235
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
218
AIA GROUP LIMITED
11. INCOME TAX
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Tax charged in the consolidated income statement
Current income tax – Hong Kong Profits Tax
139
175
Current income tax – overseas
257
482
Deferred income tax on temporary differences
582
126
Total
978
783
Corporate income tax
Taxation is charged at the appropriate current rates of taxation ruling in the relevant jurisdictions of which the most
significant jurisdictions are outlined below.
Year ended
31 December
2024
Year ended
31 December
2023
Mainland China
25%
25%
Hong Kong
16.5%
16.5%
Thailand
20%
20%
Singapore
17%
17%
Malaysia
24%
24%
Other Markets
12% – 30%
12% – 30%
The table above reflects the principal rate of corporate income tax as at the end of each year. The rates reflect enacted or
substantively enacted corporate tax rates throughout the year in each jurisdiction.
In 2023, Bermuda enacted the Corporate Income Tax Act, which will introduce a corporate income tax at a rate of 15 per
cent from 1 January 2025.
FINANCIAL STATEMENTS
219
ANNUAL REPORT 2024
11. INCOME TAX (continued)
Corporate income tax (continued)
The Group continues to closely monitor developments in respect of the tax policy work led by the Organisation for Economic
Co-operation and Development (OECD) on the “Two-Pillar Solution to Address the Tax Challenges Arising from the
Digitalisation of the Economy”, a phase of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project that is commonly
referred to as “BEPS 2.0”, and constructively engages with relevant governments and the OECD on their work.
In 2021, the OECD/G20 Inclusive Framework on BEPS published the Global Anti-Base Erosion (GloBE) Model Rules, on
which jurisdictions may model new local tax laws to give effect to the second pillar of BEPS 2.0 (“Pillar Two”), which seeks
to impose a minimum effective tax rate on large multinational enterprises in respect of each jurisdiction in which they
operate across the globe.
The Group operates in certain jurisdictions that have enacted or substantively enacted Pillar Two legislation, including
Australia, Indonesia, Malaysia, New Zealand, Singapore, South Korea, Thailand and Vietnam. However, several jurisdictions
where the Group operates, including Hong Kong and Mainland China, have not yet substantively enacted Pillar Two
legislation.
Some of the jurisdictions where Pillar Two legislation has been enacted or substantively enacted have introduced Qualified
Domestic Minimum Top-up Taxes (QDMTT) that became effective for the Group from 1 January 2024. Broadly, a QDMTT in
a jurisdiction charges top-up tax on a group where the aggregate effective tax rate of constituent entities of that group
located in that jurisdiction, calculated under the rules of the QDMTT (that are based on the GloBE Model Rules), is below
the minimum rate of 15%.
In some cases, the Pillar Two legislation (substantively) enacted also introduced Undertaxed Profits Rules (UTPR), which
will be effective from 1 January 2025 or later. Broadly, UTPR are a backstop mechanism to charge top-up tax on an in-
scope, multinational group where the aggregate effective tax rate of constituent entities of that group located in a particular
jurisdiction, calculated under the GloBE Model Rules, is below the minimum rate of 15% but that group has not been
charged to top-up tax in respect of that jurisdiction under other Pillar Two taxes (i.e. under an Income Inclusion Rule or
QDMTT).
IAS 12 mandates that as a temporary exception to the standard’s requirements, entities shall neither recognise nor disclose
information about deferred tax assets and liabilities related to Pillar Two income taxes. The Group has applied this exception
and has not yet assessed the potential deferred tax impact of Pillar Two income taxes. The Group will continue to monitor
the application of this temporary exception and will assess the accounting implications accordingly.
For the twelve-month period ended 31 December 2024, the Group had no current tax exposure related to Pillar Two
legislation effective at the reporting date (twelve months ended 31 December 2023: nil).
Based on currently available information, the Group anticipates that such exposures may arise from 2025 onwards.
However, due to significant areas of uncertainty in the application of the legislation, the quantitative impact of the Pillar
Two legislation enacted or substantively enacted at the reporting date, but not yet effective, is not yet known or reasonably
estimable. The Group expects to be able to determine its Pillar Two income tax liabilities for reporting periods ending after
31 December 2024, as the legislation becomes less uncertain.
Withholding tax on dividends
In some jurisdictions in which the Group operates, dividends remitted by subsidiaries to the Group are subject to withholding
tax. The Group recognises deferred tax liabilities in respect of unremitted earnings of operations in jurisdictions where
withholding tax charge would be incurred upon dividend distribution.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
220
AIA GROUP LIMITED
11. INCOME TAX (continued)
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Income tax reconciliation
Profit before income tax
7,831
4,564
Tax calculated at domestic tax rates applicable to profits in the respective jurisdictions
1,390
932
Reduction in tax payable from:
Exempt investment income
(538)
(338)
Provisions for uncertain tax positions(2)
(57)
–
Adjustments in respect of prior years
–
(26)
Changes in tax rate and law
(181)
(196)
(776)
(560)
Increase in tax payable from:
Life insurance tax(1)
27
62
Withholding taxes
137
88
Disallowed expenses
118
111
Unrecognised deferred tax assets
40
39
Provisions for uncertain tax positions(2)
–
82
Adjustments in respect of prior years
11
–
Others
31
29
364
411
Total income tax expense
978
783
Notes:
(1) Life insurance tax refers to the differences which arise where the tax regime specific to the life insurance business does not adopt net income as
the basis for calculating taxable profit, for example Hong Kong, where life business taxable profit is derived from life premiums.
(2) Provisions for uncertain tax positions relate to situations where the Group’s interpretation of the relevant law or regulation may differ from that of
the tax authorities. Provisions are recognised based on management’s judgement and best estimate in relation to the probability or likelihood of
different outcomes arising, which is subject to periodic re-assessment. Due to the uncertainty associated with these items, there remains a
possibility that the final outcomes may differ on conclusion of the relevant tax matters at a future date.
FINANCIAL STATEMENTS
221
ANNUAL REPORT 2024
11. INCOME TAX (continued)
The movement in net deferred tax liabilities in the year may be analysed as set out below:
Credited/(charged) to other comprehensive income
US$m
Net deferred
tax asset/
(liability) at
1 January
Acquisition of
a subsidiary(3)
Credited/
(charged)
to the
consolidated
income
statement
Fair value
reserve(2)
Foreign
currency
translation
reserve
Insurance
finance
reserve
Others
Other
movements
Net deferred
tax asset/
(liability)
at year end
31 December 2024
Revaluation of financial
instruments
(373)
–
(1,012)
(1,739)
9
–
–
–
(3,115)
Insurance and investment
contract liabilities
(2,506)
–
726
–
124
1,556
(1)
16
(85)
Withholding taxes
(288)
–
(87)
–
10
–
–
–
(365)
Provision for expenses
118
–
48
–
(7)
–
5
–
164
Losses available for offset
against future taxable
income
507
–
(112)
–
(28)
–
(1)
(17)
349
Life surplus(1)
(431)
–
(60)
–
(10)
–
–
–
(501)
Others
70
(8)
(85)
–
(7)
–
4
12
(14)
Total
(2,903)
(8)
(582)
(1,739)
91
1,556
7
11
(3,567)
Credited/(charged) to other comprehensive income
US$m
Net deferred
tax asset/
(liability) at
1 January
Acquisition of
a subsidiary(3)
Credited/
(charged)
to the
consolidated
income
statement
Fair value
reserve(2)
Foreign
currency
translation
reserve
Insurance
finance
reserve
Others
Other
movements
Net deferred
tax asset/
(liability)
at year end
31 December 2023
Revaluation of financial
instruments
631
–
9
(1,002)
(11)
–
–
–
(373)
Insurance and investment
contract liabilities
(3,427)
–
(469)
–
25
1,352
–
13
(2,506)
Withholding taxes
(267)
–
(23)
–
2
–
–
–
(288)
Provision for expenses
102
–
15
–
(1)
–
2
–
118
Losses available for offset
against future taxable
income
103
–
398
–
6
–
–
–
507
Life surplus(1)
(366)
–
(71)
–
6
–
–
–
(431)
Others
68
3
15
–
3
–
(19)
–
70
Total
(3,156)
3
(126)
(1,002)
30
1,352
(17)
13
(2,903)
Notes:
(1) Life surplus relates to the temporary difference which arises where the taxable profits are based on actual distributions from the long-term fund.
This primarily relates to Singapore and Malaysia.
(2) Includes tax charge of US$1,742m (2023: tax charge of US$1,022m) relates to fair value gains or losses on debt securities measured at fair value
through other comprehensive income and tax credit of US$3m (2023: tax credit of US$20m) relates to fair value losses or gains on debt securities
measured at fair value through other comprehensive income reclassified to profit or loss.
(3) Includes a one-time adjustment of US$(8)m (2023: US$3m) in respect of the acquisition of a subsidiary.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
222
AIA GROUP LIMITED
11. INCOME TAX (continued)
The principal temporary differences arise from the basis of recognition of insurance and investment contract liabilities,
revaluation of certain financial assets and liabilities including derivative contracts and the future taxes arising on the
surplus in life funds where the relevant local tax regime is distributions-based.
Deferred tax assets are recognised to the extent that sufficient future taxable profits will be available for realisation. The
Group has not recognised deferred tax assets of US$156m (2023: US$106m) on tax losses and the temporary difference
on insurance and investment contract liabilities arising from different accounting and statutory/tax reserving methodology
for certain branches and subsidiaries on the basis that they have histories of tax losses and there is insufficient evidence
that future taxable profits will be available.
The Group has not provided deferred tax liabilities of US$238m (2023: US$251m) in respect of unremitted earnings of
operations in jurisdictions from which a withholding tax charge would be incurred upon distribution as the Group does not
consider it probable that this portion of accumulated earnings will be remitted in the foreseeable future.
The Group has unused income tax losses carried forward in Mainland China, Hong Kong, Thailand, Singapore, Malaysia,
Australia, Cambodia, Macau, Myanmar, New Zealand, the Philippines, South Korea, Taiwan (China) and Vietnam. The tax
losses in Hong Kong, Singapore, Australia and New Zealand can be carried forward indefinitely. The tax losses of remaining
branches and subsidiaries are due to expire within the periods ending 2026 (Macau), 2027 (Myanmar and the Philippines),
2028 (Thailand), 2029 (Cambodia, Mainland China and Vietnam) and 2034 (Malaysia, South Korea and Taiwan (China)).
FINANCIAL STATEMENTS
223
ANNUAL REPORT 2024
12. EARNINGS PER SHARE
Basic
Basic earnings per share is calculated by dividing the net profit attributable to shareholders of AIA Group Limited by the
weighted average number of ordinary shares outstanding during the year. The shares held by employee share-based trusts
and shares that have been repurchased are not considered to be outstanding from the date of the purchase for the purposes
of computing basic and diluted earnings per share.
Year ended
31 December
2024
Year ended
31 December
2023
Net profit attributable to shareholders of AIA Group Limited (US$m)
6,836
3,764
Weighted average number of ordinary shares outstanding (million)
11,063
11,518
Basic earnings per share (US cents)
61.79
32.68
Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares. The dilutive instruments are the share options, restricted share
units, restricted stock purchase units and restricted stock subscription units granted to eligible directors, officers,
employees and agents under various share-based compensation plans as described in note 36.
Year ended
31 December
2024
Year ended
31 December
2023
Net profit attributable to shareholders of AIA Group Limited (US$m)
6,836
3,764
Weighted average number of ordinary shares outstanding (million)
11,063
11,518
Adjustment for share options, restricted share units, restricted stock purchase units and
restricted stock subscription units granted under share-based compensation plans
(million)
10
10
Weighted average number of ordinary shares for diluted earnings per share (million)
11,073
11,528
Diluted earnings per share (US cents)
61.74
32.65
At 31 December 2024, 21,639,515 share options (2023: 6,276,007) were excluded from the diluted weighted average
number of ordinary shares calculation as they have no effect to the diluted earnings per share.
Operating profit after tax per share
Operating profit after tax (see note 5) per share is calculated by dividing the operating profit after tax attributable to
shareholders of AIA Group Limited by the weighted average number of ordinary shares outstanding during the year. The
dilutive instruments are the share options, restricted share units, restricted stock purchase units and restricted stock
subscription units granted to eligible directors, officers, employees and agents under various share-based compensation
plans as described in note 36.
Year ended
31 December
2024
Year ended
31 December
2023
Basic operating profit after tax per share (US cents)
59.70
53.94
Diluted operating profit after tax per share (US cents)
59.65
53.89
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
224
AIA GROUP LIMITED
13. DIVIDENDS
Dividends to shareholders of the Company attributable to the year:
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Interim dividend declared and paid of 44.50 Hong Kong cents per share
(2023: 42.29 Hong Kong cents per share)
623
621
Final dividend proposed after the reporting date of 130.98 Hong Kong cents per share
(2023: 119.07 Hong Kong cents per share)(1)
1,814
1,726
Total
2,437
2,347
Notes:
(1) Based upon shares outstanding at 31 December 2024 and 31 December 2023 that are entitled to a dividend, other than those held by employee
share-based trusts.
(2) Interim dividends on ordinary shares are recognised when they have been paid. Final dividends on ordinary shares are recognised when they have
been approved by shareholders.
The above final dividend was proposed by the Board on 14 March 2025 subject to shareholders’ approval at the AGM to be
held on 23 May 2025. The proposed final dividend has not been recognised as a liability at the reporting date.
Dividends to shareholders of the Company attributable to the previous financial year, approved and paid during the year:
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Final dividend in respect of the previous financial year, approved and
paid during the year of 119.07 Hong Kong cents per share
(2023: 113.40 Hong Kong cents per share)
1,705
1,672
FINANCIAL STATEMENTS
225
ANNUAL REPORT 2024
14. INTANGIBLE ASSETS
US$m
Goodwill
Computer
software
Distribution
and other
rights
Total
Cost
At 1 January 2023
1,956
1,222
1,144
4,322
Additions
–
329
46
375
Acquisition of subsidiaries(1)
186
9
59
254
Disposals
(46)
(43)
(2)
(91)
Foreign exchange movements
(13)
(11)
(7)
(31)
At 31 December 2023
2,083
1,506
1,240
4,829
Additions
36
274
1
311
Disposals
–
(57)
–
(57)
Foreign exchange movements
(54)
(48)
(18)
(120)
At 31 December 2024
2,065
1,675
1,223
4,963
Accumulated amortisation and impairment
At 1 January 2023
(180)
(652)
(213)
(1,045)
Amortisation charge for the year
–
(152)
(53)
(205)
Disposals
30
6
1
37
Foreign exchange movements
(4)
2
1
(1)
At 31 December 2023
(154)
(796)
(264)
(1,214)
Amortisation charge for the year
–
(190)
(69)
(259)
Disposals
–
47
–
47
Impairment loss
–
–
(97)
(97)
Foreign exchange movements
14
21
3
38
At 31 December 2024
(140)
(918)
(427)
(1,485)
Net book value
At 31 December 2023
1,929
710
976
3,615
At 31 December 2024
1,925
757
796
3,478
Note:
(1) The Group was in the process of finalising the purchase price adjustments within the measurement period. The values of consideration and
goodwill were therefore provisional as of 31 December 2023. The finalisation of the values of consideration and goodwill was expected to be
completed within 12 months of the acquisition date.
The Group holds other intangible assets for its long-term use and, accordingly, the annual amortisation charge approximates
to the amount expected to be recovered through consumption within 12 months after the end of the reporting period.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
226
AIA GROUP LIMITED
14. INTANGIBLE ASSETS (continued)
Impairment tests for goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable
assets of the acquired subsidiary at the date of acquisition.
Goodwill arises primarily in respect of the Group’s insurance businesses in Malaysia of US$656m (2023: US$640m), Hong
Kong of US$484m (2023: US$481m), Australia of US$382m (2023: US$420m), Philippines of US$174m (2023: US$143m)
and New Zealand of US$141m (2023: US$154m).
Goodwill is tested for impairment by comparing the carrying amount of the cash-generating unit (group of units), including
goodwill, to the recoverable amount of that cash-generating unit (group of units). If the recoverable amount of the unit
(group of units) exceeds the carrying amount of the unit (group of units), the goodwill allocated to that unit (group of units)
shall be regarded as not impaired. The recoverable amount is the value in use of the cash-generating unit (group of units)
unless otherwise stated.
The value in use is determined by calculating as an actuarially determined appraisal value, based on embedded value of
the business and the present value of expected future new business of the cash-generating unit (group of units). The
present value of expected future new business is based on financial budgets approved by management, typically covering
a three-year period unless otherwise stated. These financial budgets reflect management’s best estimate of future profit
based on historical experience and best estimate operating assumptions such as premium and expenses. Further, the
present value of expected future new business beyond this initial three-year period are extrapolated using a perpetual
growth rate, which typically does not exceed the long-term expected Gross Domestic Product (GDP) growth of the
geographical area in which the cash flows supporting the goodwill are generated.
The key assumptions used in the embedded value calculations include risk discount rate, investment returns, mortality,
morbidity, persistency, expenses and inflation. In the majority of instances these assumptions are aligned to those
assumptions detailed in Section 5 of Supplementary Embedded Value Information. The present value of expected future
new business is calculated based on a combination of indicators which include, among others, taking into account recent
production mix, business strategy, market trends and risk associated with the future new business projections. The risk
discount rates that are used in the value in use of in-force business and present value of expected future new business
ranges from 8 per cent to 14 per cent (2023: 7 per cent to 14 per cent) and the perpetual growth rates for future new
business cash flows of 3 per cent (2023: 3 per cent) was used, where applicable, to extrapolate the present value of
expected future new business beyond the initial three-year period; the rate was determined by reference to the long-term
expected GDP growth of the geographical area in which the cash flows supporting the goodwill are generated. The Group
may apply alternative methods to estimate the value of future new business if the described method is not appropriate
under the circumstances.
FINANCIAL STATEMENTS
227
ANNUAL REPORT 2024
15. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
US$m
As at
31 December
2024
As at
31 December
2023
Group
Investments in associates
1,710
1,331
Investments in joint ventures
–
–
Total
1,710
1,331
Associates are entities over which the Group has significant influence, but which it does not control or jointly control.
Generally, it is presumed that the Group has significant influence if it has between 20 per cent and 50 per cent of voting
rights. Joint ventures are entities whereby the Group and other parties undertake an economic activity which is subject to
joint control arising from a contractual agreement.
Investments in associates and joint ventures are accounted for using the equity method of accounting. Due to timing of the
information provided by China Post Life Insurance Co., Ltd. and Tata AIA Life Insurance Company Limited, these investments
are reported on a one-quarter-lag basis.
Goodwill arising on associates and joint ventures is included within the carrying value of those investments. These are held
for their long-term contribution to the Group’s performance, therefore all amounts are expected to be realised more than
12 months after the end of the reporting period.
The Group’s interests in its principal associates and joint ventures are as follows:
Group’s interests %
Place of
incorporation
Principal
activity
Type of
shares held
As at
31 December
2024
As at
31 December
2023
China Post Life Insurance Co., Ltd.
Mainland China
Insurance
Ordinary
24.99%
24.99%
Tata AIA Life Insurance Company Limited
India
Insurance
Ordinary
49%
49%
All associates and joint ventures are unlisted.
Aggregated financial information of associates and joint ventures
The investments in associates and joint ventures are measured using the equity method. The following table analyses, in
aggregate, the carrying amount and share of profit/(losses) and other comprehensive expense of these associates and
joint ventures.
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Carrying amount in the statement of financial position
1,710
1,331
Profit/(losses) from continuing operations
351
(267)
Other comprehensive expense
(75)
(496)
Total comprehensive income/(expense)
276
(763)
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
228
AIA GROUP LIMITED
16. PROPERTY, PLANT AND EQUIPMENT
US$m
Property
held for own
use using fair
value model
Other
property
held for
own use
Computer
hardware
Fixtures and
fittings and
others
Total
Cost or revaluation or fair value
At 1 January 2023
597
2,408
262
595
3,862
Additions
–
1,454
25
48
1,527
Acquisition of subsidiaries
–
8
1
6
15
Disposals
–
(174)
(15)
(92)
(281)
Net transfers from investment property
29
2
–
–
31
Decrease from valuation
(50)
(6)
–
–
(56)
Foreign exchange movements
–
(4)
–
–
(4)
At 31 December 2023
576
3,688
273
557
5,094
Additions
–
479
49
217
745
Disposals
–
(155)
(24)
(59)
(238)
Net transfers to investment property
(3)
(88)
–
–
(91)
(Decrease)/increase from valuation
(14)
102
–
–
88
Foreign exchange movements
–
(87)
(10)
(7)
(104)
At 31 December 2024
559
3,939
288
708
5,494
Accumulated depreciation
At 1 January 2023
–
(362)
(217)
(439)
(1,018)
Depreciation charge for the year
–
(188)
(28)
(48)
(264)
Disposals
–
138
11
49
198
Revaluation adjustment
–
47
–
–
47
Foreign exchange movements
–
–
–
1
1
At 31 December 2023
–
(365)
(234)
(437)
(1,036)
Depreciation charge for the year
–
(204)
(24)
(55)
(283)
Disposals
–
111
23
50
184
Revaluation adjustment
–
64
–
–
64
Foreign exchange movements
–
11
7
6
24
At 31 December 2024
–
(383)
(228)
(436)
(1,047)
Net book value
At 31 December 2023
576
3,323
39
120
4,058
At 31 December 2024
559
3,556
60
272
4,447
The Group leases various properties, computer hardware, fixtures, fittings and other small items as a lessee. These leases,
except for short-term leases and leases of low-value assets, are recognised as right-of-use assets and lease liabilities at
the date at which the leased assets are available for use by the Group. Right-of-use assets are presented as a component
of property, plant and equipment or investment property while lease liabilities are presented as a component of other
liabilities (see notes 17 and 30). The depreciation charge for right-of-use assets, by class of underlying asset, and finance
cost on lease liabilities are disclosed in note 10. Assets and liabilities arising from a lease are initially measured on a
present value basis. A maturity analysis of the Group’s lease liabilities is disclosed in note 34.
Extension and termination options are included in a number of leases across the Group. These terms are used to maximise
operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable
only by the Group and not by the respective lessor.
FINANCIAL STATEMENTS
229
ANNUAL REPORT 2024
16. PROPERTY, PLANT AND EQUIPMENT (continued)
Right-of-use assets in relation to leases are reported within property, plant and equipment. The carrying amount of right-
of-use assets, by class of underlying asset, is set out below:
US$m
As at
31 December
2024
As at
31 December
2023
Property held for own use using fair value model
493
507
Other property held for own use
911
827
Computer hardware
3
2
Fixtures and fittings and others
2
2
Total
1,409
1,338
Additions to right-of-use assets for the year ended 31 December 2024 were US$149m (2023: US$150m).
Property held for own use, which is solely held as an underlying item of insurance contracts with direct participation
features, is measured initially at cost and subsequently at fair value, with any change therein recognised in profit or loss.
Other properties held for own use and right-of-use assets with respect to the Group’s interests in leasehold land and land
use rights associated with property held for own use are carried at fair value at the reporting date less accumulated
depreciation. The fair value at the reporting date is determined by independent professional valuers. Details of valuation
techniques and process are disclosed in notes 3 and 20. All other property, plant and equipment and right-of-use assets in
relation to other leased property, plant and equipment are carried at cost less accumulated depreciation and any
accumulated impairment losses.
Properties held for own use using fair value model
During the year, nil expenditure (2023: nil) recognised in the carrying amount of property held for own use was in the
course of its construction. Decrease from revaluation on property held for own use of US$14m (2023: Decrease from
revaluation on property held for own use of US$50m) were taken to profit or loss, of which US$12m (2023: US$47m) was
related to right-of-use assets.
If property held for own use (excluding right-of-use assets) were stated on a historical cost basis, the carrying value would
be US$52m (2023: US$53m). Similarly, stated on a historical basis the carrying value of the right-of-use assets related to
the Group’s interests in leasehold land and land use rights associated with property held for own use would be US$524m
(2023: US$526m).
Properties held for own use using revaluation model
During the year, nil expenditure (2023: US$177m) recognised in the carrying amount of property held for own use was in
the course of its construction. Increase from revaluation on property held for own use of US$166m (2023: Increase from
revaluation on property held for own use of US$41m) were taken to other comprehensive income, of which US$118m
(2023: US$(17)m) was related to right-of-use assets.
If property held for own use (excluding right-of-use assets) were stated on a historical cost basis, the carrying value would
be US$1,780m (2023: US$1,565m). Similarly, stated on a historical basis the carrying value of the right-of-use assets
related to the Group’s interests in leasehold land and land use rights associated with property held for own use would be
US$294m (2023: US$302m). The Group holds property, plant and equipment for its long-term use and, accordingly, the
annual depreciation charge approximates to the amount expected to be recovered through consumption within 12 months
after the end of the reporting period.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
230
AIA GROUP LIMITED
17. INVESTMENT PROPERTY
US$m
Fair value
At 1 January 2023
4,600
Additions and capitalised subsequent expenditures
45
Acquisition of a subsidiary
1
Disposals
(4)
Net transfers to property, plant and equipment
(31)
Fair value losses
(97)
Foreign exchange movements
(10)
At 31 December 2023
4,504
Additions and capitalised subsequent expenditures
38
Net transfers from property, plant and equipment
91
Fair value losses
(33)
Foreign exchange movements
(30)
At 31 December 2024
4,570
Investment property, including land and buildings, is initially recognised at cost with changes in fair values in subsequent
periods recognised in the consolidated income statement. The fair values at the reporting date are determined by
independent professional valuers. Details of valuation techniques and process are disclosed in notes 3 and 20.
The Group leases out its investment property under operating leases. The leases typically run for an initial period of one to
ten years, with an option to renew the lease based on future negotiations. Lease payments are usually negotiated every one
to five years to reflect market rentals. There were not any material contingent rentals earned as income for the year. Rental
income generated from investment property amounted to US$167m (2023: US$154m). Direct operating expenses
(including repair and maintenance) on investment property that generates rental income amounted to US$37m (2023:
US$35m).
The Group owns investment property in the form of freehold land outside Hong Kong and leasehold land. Leasehold land
which is held for long-term rental or capital appreciation or both that is not occupied by the Group is classified as investment
property. They are leased out under operating leases and are initially recognised as right-of-use assets at cost, with
changes in fair values in subsequent periods recognised in the consolidated income statement. The Group does not hold
freehold land in Hong Kong.
The future undiscounted lease payments under operating leases that the Group expects to receive in future periods may
be analysed as follows:
US$m
As at
31 December
2024
As at
31 December
2023
Leases of investment property classified as operating leases
Expiring no later than one year
132
129
Expiring later than one year and no later than two years
91
87
Expiring later than two years and no later than three years
64
47
Expiring later than three years and no later than four years
34
28
Expiring later than four years and no later than five years
31
16
Expiring after five years or more
24
27
Total undiscounted lease receipts
376
334
FINANCIAL STATEMENTS
231
ANNUAL REPORT 2024
18. FINANCIAL INVESTMENTS
The following tables analyse the Group’s financial investments by type and nature, based on the characteristics of the
financial investments at the reporting date. The Group manages its financial investments in two distinct categories: unit-
linked investments and policyholder and shareholder investments. The investment risk in respect of unit-linked investments
is generally borne by our customers and is measured at fair value through profit or loss. Policyholder and shareholder
investments include all financial investments other than unit-linked investments. The investment risk in respect of
policyholder and shareholder investments is partially or wholly borne by the Group.
Policyholder and shareholder investments are further categorised as participating funds and other participating business
with discretionary expected sharing with policyholders and underlying distinct investment portfolios (Other participating
business with distinct portfolios), and other policyholder and shareholder. The Group has elected to separately analyse
financial investments held by participating funds and other participating business with distinct portfolios within
policyholder and shareholder investments as they are subject to local regulations that generally prescribe a minimum
proportion of policyholder participation in declared dividends. The Group measures debt securities, equity shares and
interests in investment funds of participating funds and other participating business with distinct portfolios at fair value
through profit or loss.
Other policyholder and shareholder investments are distinct from unit-linked investments and participating funds and
other participating business with distinct portfolios as there is not any direct contractual or regulatory requirement
governing the amount, if any, for allocation to policyholders. The Group measures equity shares, interests in investment
funds and exchangeable loan notes at fair value through profit or loss in this category and at fair value through other
comprehensive income in respect of the majority of debt securities in this category. The investment risk from investments
in this category directly impacts the Group’s financial statements. For certain benefits of business written in “Participating
funds and Other participating business with distinct portfolios” funds and “Unit-linked” funds that are not supported by the
underlying segregated assets, the backing assets are generally included in the “Other policyholder and shareholder” funds.
In the following tables, “FVTPL” indicates financial investments classified at fair value through profit or loss, “FVOCI”
indicates financial investments classified at fair value through other comprehensive income and “AC” indicates financial
investments classified at amortised cost.
Debt securities
In compiling the tables, external ratings have been used where available. External ratings have been used in accordance
with the Group’s credit risk assessment framework. Where external ratings are not readily available an internal rating
methodology has been adopted, if applicable.
Credit risk limits are set according to the Group’s credit risk assessment framework, which defines the relative risk level of
a debt security.
External ratings
Internal ratings
Reported as
Standard and Poor’s and Fitch
Moody’s
AAA
Aaa
1
AAA
AA+ to AA-
Aa1 to Aa3
2+ to 2-
AA
A+ to A-
A1 to A3
3+ to 3-
A
BBB+ to BBB-
Baa1 to Baa3
4+ to 4-
BBB
BB+ and below
Ba1 and below
5+ and below
Below investment grade
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
232
AIA GROUP LIMITED
18. FINANCIAL INVESTMENTS (continued)
Debt securities (continued)
Debt securities by type comprise the following:
Policyholder and shareholder
Participating
funds and
other
participating
business
with distinct
portfolios
Other policyholder and
shareholder
Unit-linked
Unit-linked(2)
Consolidated
investment
funds(1)
US$m
FVTPL
FVTPL
FVOCI
AC
Subtotal
FVTPL
FVOCI
FVTPL
Total
31 December 2024
Government bonds(3)
By jurisdiction
Mainland China
10,360
–
28,939
–
39,299
46
–
–
39,345
Thailand
–
2,493
13,222
–
15,715
–
–
–
15,715
United States
2,500
–
7,689
–
10,189
72
–
–
10,261
South Korea
–
–
5,924
–
5,924
195
–
–
6,119
Singapore
4,910
–
950
–
5,860
946
7
–
6,813
Philippines
189
81
1,532
42
1,844
227
–
–
2,071
Malaysia
1,874
189
559
–
2,622
422
114
–
3,158
Indonesia
682
–
1,125
16
1,823
115
30
–
1,968
Other
1,535
3
2,827
279
4,644
1
–
–
4,645
Subtotal, by jurisdiction
22,050
2,766
62,767
337
87,920
2,024
151
–
90,095
By credit rating
AAA
5,643
1
3,109
–
8,753
963
7
–
9,723
AA
2,700
–
12,974
223
15,897
251
–
–
16,148
A
11,534
103
29,170
46
40,853
377
14
–
41,244
BBB
2,120
2,662
16,670
68
21,520
433
130
–
22,083
Below investment grade
53
–
844
–
897
–
–
–
897
Not rated
–
–
–
–
–
–
–
–
–
Subtotal, by credit rating
22,050
2,766
62,767
337
87,920
2,024
151
–
90,095
Government agency
bonds(4)
AAA
1,860
–
1,039
19
2,918
63
7
–
2,988
AA
504
–
1,919
102
2,525
7
–
112
2,644
A
3,758
32
2,538
48
6,376
280
76
–
6,732
BBB
726
20
1,598
43
2,387
45
7
–
2,439
Below investment grade
46
–
150
–
196
–
–
–
196
Not rated
–
–
–
–
–
–
–
–
–
Subtotal
6,894
52
7,244
212
14,402
395
90
112
14,999
Notes:
(1) Investment funds in which the Group has interests and power to direct their relevant activities that affect the return of the funds are consolidated
in the financial statements. Consolidated investment funds reflect 100 per cent of assets and liabilities held by such funds.
(2) Represents primarily the financial assets backing non-unit reserves of unit-linked contracts.
(3) Government bonds include bonds issued in local or foreign currencies by either the government of the jurisdiction in which the respective business
unit operates or other governments.
(4) Government agency bonds comprise bonds issued by government-sponsored institutions such as national, provincial and municipal authorities;
government-related entities; multilateral development banks and supranational organisations.
FINANCIAL STATEMENTS
233
ANNUAL REPORT 2024
18. FINANCIAL INVESTMENTS (continued)
Debt securities (continued)
Debt securities by type comprise the following: (continued)
Policyholder and shareholder
Participating
funds and
other
participating
business
with distinct
portfolios
Other policyholder and
shareholder
Unit-linked
Unit-linked(2)
Consolidated
investment
funds(1)
US$m
FVTPL
FVTPL
FVOCI
AC
Subtotal
FVTPL
FVOCI
FVTPL
Total
31 December 2024
Corporate bonds
AAA
494
–
120
–
614
1
–
–
615
AA
2,906
–
2,222
168
5,296
33
–
169
5,498
A
18,960
110
12,238
1,150
32,458
655
78
506
33,697
BBB
16,352
352
10,126
518
27,348
972
135
80
28,535
Below investment grade
467
291
1,385
9
2,152
226
15
–
2,393
Not rated
–
12
–
5
17
195
–
–
212
Subtotal
39,179
765
26,091
1,850
67,885
2,082
228
755
70,950
Structured securities(5)
AAA
–
–
228
–
228
–
–
–
228
AA
4
–
227
–
231
–
–
–
231
A
97
11
683
–
791
46
–
–
837
BBB
158
40
580
–
778
–
–
–
778
Below investment grade
57
39
–
–
96
–
–
–
96
Not rated
4
–
–
–
4
–
–
–
4
Subtotal
320
90
1,718
–
2,128
46
–
–
2,174
Total(6)
68,443
3,673
97,820
2,399 172,335
4,547
469
867 178,218
Notes:
(1) Investment funds in which the Group has interests and power to direct their relevant activities that affect the return of the funds are consolidated
in the financial statements. Consolidated investment funds reflect 100 per cent of assets and liabilities held by such funds.
(2) Represents primarily the financial assets backing non-unit reserves of unit-linked contracts.
(5) Structured securities include collateralised debt obligations, mortgage-backed securities and other asset-backed securities.
(6) Debt securities of US$9,952m are restricted due to local regulatory requirements.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
234
AIA GROUP LIMITED
18. FINANCIAL INVESTMENTS (continued)
Debt securities (continued)
Debt securities by type comprise the following: (continued)
Policyholder and shareholder
Participating
funds and
other
participating
business
with distinct
portfolios
Other policyholder and
shareholder
Unit-linked
Unit-linked(2)
Consolidated
investment
funds(1)
US$m
FVTPL
FVTPL
FVOCI
AC
Subtotal
FVTPL
FVOCI
FVTPL
Total
31 December 2023
Government bonds(3)
By jurisdiction
Mainland China
7,791
–
23,277
–
31,068
54
–
–
31,122
Thailand
–
1,323
11,314
–
12,637
–
–
–
12,637
United States
3,645
–
3,514
–
7,159
91
–
–
7,250
South Korea
–
–
6,524
–
6,524
248
–
–
6,772
Singapore
5,073
–
1,201
–
6,274
975
10
–
7,259
Philippines
275
82
1,643
36
2,036
238
–
–
2,274
Malaysia
1,416
202
543
–
2,161
346
43
–
2,550
Indonesia
792
–
1,148
16
1,956
131
27
–
2,114
Other
2,035
2
3,237
281
5,555
133
–
–
5,688
Subtotal, by jurisdiction
21,027
1,609
52,401
333
75,370
2,216
80
–
77,666
By credit rating
AAA
6,211
–
3,807
–
10,018
977
10
–
11,005
AA
3,785
1
9,320
225
13,331
449
–
–
13,780
A
8,851
98
23,689
46
32,684
360
18
–
33,062
BBB
2,121
1,510
14,765
62
18,458
430
52
–
18,940
Below investment grade
59
–
820
–
879
–
–
–
879
Not rated
–
–
–
–
–
–
–
–
–
Subtotal, by credit rating
21,027
1,609
52,401
333
75,370
2,216
80
–
77,666
Government agency
bonds(4)
AAA
1,965
–
948
31
2,944
210
10
–
3,164
AA
633
1
2,089
102
2,825
72
–
131
3,028
A
3,467
33
2,244
50
5,794
170
44
–
6,008
BBB
705
19
1,586
50
2,360
45
3
–
2,408
Below investment grade
68
–
177
13
258
1
4
–
263
Not rated
–
–
–
–
–
12
–
–
12
Subtotal
6,838
53
7,044
246
14,181
510
61
131
14,883
Notes:
(1) Investment funds in which the Group has interests and power to direct their relevant activities that affect the return of the funds are consolidated
in the financial statements. Consolidated investment funds reflect 100 per cent of assets and liabilities held by such funds.
(2) Represents primarily the financial assets backing non-unit reserves of unit-linked contracts.
(3) Government bonds include bonds issued in local or foreign currencies by either the government of the jurisdiction in which the respective business
unit operates or other governments.
(4) Government agency bonds comprise bonds issued by government-sponsored institutions such as national, provincial and municipal authorities;
government-related entities; multilateral development banks and supranational organisations.
FINANCIAL STATEMENTS
235
ANNUAL REPORT 2024
18. FINANCIAL INVESTMENTS (continued)
Debt securities (continued)
Debt securities by type comprise the following: (continued)
Policyholder and shareholder
Participating
funds and
other
participating
business
with distinct
portfolios
Other policyholder and
shareholder
Unit-linked
Unit-linked(2)
Consolidated
investment
funds(1)
US$m
FVTPL
FVTPL
FVOCI
AC
Subtotal
FVTPL
FVOCI
FVTPL
Total
31 December 2023
Corporate bonds
AAA
643
1
205
–
849
–
–
–
849
AA
3,347
2
2,216
162
5,727
201
–
141
6,069
A
23,063
212
11,690
888
35,853
1,498
109
510
37,970
BBB
21,602
294
11,627
395
33,918
860
70
123
34,971
Below investment grade
748
317
1,459
132
2,656
244
17
–
2,917
Not rated
–
12
2
9
23
230
–
–
253
Subtotal
49,403
838
27,199
1,586
79,026
3,033
196
774
83,029
Structured securities(5)
AAA
20
–
142
–
162
–
–
–
162
AA
52
–
246
–
298
–
–
–
298
A
82
–
598
–
680
32
–
–
712
BBB
127
73
645
–
845
19
–
–
864
Below investment grade
67
71
–
–
138
–
–
–
138
Not rated
5
1
–
–
6
–
–
–
6
Subtotal
353
145
1,631
–
2,129
51
–
–
2,180
Total(6)
77,621
2,645
88,275
2,165
170,706
5,810
337
905
177,758
Notes:
(1) Investment funds in which the Group has interests and power to direct their relevant activities that affect the return of the funds are consolidated
in the financial statements. Consolidated investment funds reflect 100 per cent of assets and liabilities held by such funds.
(2) Represents primarily the financial assets backing non-unit reserves of unit-linked contracts.
(5) Structured securities include collateralised debt obligations, mortgage-backed securities and other asset-backed securities.
(6) Debt securities of US$8,869m are restricted due to local regulatory requirements.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
236
AIA GROUP LIMITED
18. FINANCIAL INVESTMENTS (continued)
Equity shares, interests in investment funds and exchangeable loan notes
Equity shares, interests in investment funds and exchangeable loan notes comprise the following:
Policyholder and shareholder
Participating
funds and other
participating
business
with distinct
portfolios
Other
policyholder
and
shareholder
Unit-linked
Consolidated
investment
funds(1)
US$m
FVTPL
FVTPL
Subtotal
FVTPL
FVTPL
Total
31 December 2024
Equity shares
6,115
5,269
11,384
8,413
–
19,797
Interests in investment funds and exchangeable loan notes
Investment funds with debt instruments as underlying(2) (3)
3,126
2,188
5,314
3,003
–
8,317
Others
37,250
8,366
45,616
15,107
–
60,723
Total
46,491
15,823
62,314
26,523
–
88,837
Policyholder and shareholder
Participating
funds and other
participating
business
with distinct
portfolios
Other
policyholder
and
shareholder
Unit-linked
Consolidated
investment
funds(1)
US$m
FVTPL
FVTPL
Subtotal
FVTPL
FVTPL
Total
31 December 2023
Equity shares
7,533
4,604
12,137
7,150
–
19,287
Interests in investment funds and exchangeable loan notes
Investment funds with debt instruments as underlying(2)
–
280
280
2,994
–
3,274
Others
22,676
6,584
29,260
14,632
–
43,892
Total
30,209
11,468
41,677
24,776
–
66,453
Notes:
(1) Investment funds in which the Group has interests and power to direct their relevant activities that affect the return of the funds are consolidated
in the financial statements. Consolidated investment funds reflect 100 per cent of assets and liabilities held by such funds.
(2) Investment funds with debt instruments as underlying refer to investment funds solely investing in debt securities and cash therefrom.
(3) The Group transferred securities along with the rights to cash flows to an externally managed investment vehicle. The risks and rewards of
ownership are retained by the Group. The carrying amount of the transferred assets is US$3,126m. Subsequent to the transfer, these investments
have the characteristics of equity instruments in line with the accounting standards.
FINANCIAL STATEMENTS
237
ANNUAL REPORT 2024
18. FINANCIAL INVESTMENTS (continued)
Interests in structured entities
The Group has determined that the investment funds and structured securities, such as collateralised debt obligations,
mortgage-backed securities and other asset-backed securities that the Group has interests are structured entities.
The Group has consolidated certain investment funds for which the Group provides guarantee on capital or rate of return
to the investors and deemed to have control based on an analysis of the guidance in IFRS 10. For these investment funds,
the Group has the ability to reduce the guaranteed rates of return, subject to obtaining approvals of applicable regulators.
The Group has an obligation to absorb losses in the event that the returns of the funds are insufficient to cover the capital
or rate of return guarantee provided to the investors.
The following table summarises the Group’s interests in unconsolidated structured entities:
As at 31 December 2024
As at 31 December 2023
US$m
Investment
funds
Structured
securities(1)
Investment
funds
Structured
securities(1)
Debt securities at amortised cost
42(2)
–
13(2)
–
Debt securities at fair value through other comprehensive
income
849(2)
1,718
830(2)
1,631
Debt securities at fair value through profit or loss
1,549(2)
451
1,965(2)
549
Interests in investment funds at fair value through
profit or loss
67,769
–
45,994
–
Total
70,209
2,169
48,802
2,180
Notes:
(1) Structured securities include collateralised debt obligations, mortgage-backed securities and other asset-backed securities.
(2) Balance represents the Group’s interests in debt securities issued by real estate investment trusts.
The Group’s maximum exposure to loss arising from its interests in these unconsolidated structured entities is limited to
the carrying amount of the assets. Dividend income and interest revenue are received during the reporting period from
these interests in unconsolidated structured entities.
In addition, the Group receives management fees and trustee fees in respect of providing trustee, management and
administrative services to certain retirement scheme funds and investment funds. These funds are not held and the
associated investment risks are not borne by the Group, the Group does not have exposure to loss in these funds.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
238
AIA GROUP LIMITED
18. FINANCIAL INVESTMENTS (continued)
Loans and deposits
Loans and deposits by type comprise the following:
US$m
As at
31 December
2024
As at
31 December
2023
Mortgage loans on residential real estate
469
452
Mortgage loans on commercial real estate
3
2
Other loans
212
203
Loss allowance for loans
(9)
(10)
Loans
675
647
Term deposits
1,850
1,834
Promissory notes(1)
1,523
1,524
Loss allowance for deposits measured at amortised cost
(6)
(10)
Total
4,042
3,995
Note:
(1) The promissory notes are issued by a government. Promissory notes of US$272m (2023: US$272m) are measured at fair value through profit or
loss.
Certain term deposits with financial institutions and promissory notes are restricted due to local regulatory requirements
or other pledge restrictions. At 31 December 2024, the restricted balance held within term deposits and promissory notes
was US$1,901m (2023: US$372m).
Other loans include receivables from reverse repurchase agreements (reverse repos) under which the Group does not take
physical possession of securities purchased under the agreements. Reverse repos are initially recorded at the cost of the
loan or collateral advanced. At 31 December 2024, the carrying value of such receivables was US$115m (2023: US$99m).
At 31 December 2024 and 31 December 2023, there was no material debt collateral received in respect of reverse repos.
Maturity profile of debt securities, loans and deposits
The table below shows the maturity profile of debt securities, loans and deposits based on contractual maturity dates. The
maturity profile below excludes unit-linked investments and consolidated investment funds as the investment risk is
generally borne by our customers.
US$m
Total
Due in one
year or less
Due after
one year
through
five years
Due after
five years
through
ten years
Due after
ten years
No fixed
maturity
31 December 2024
Debt securities
172,335
7,143
22,376
16,665
126,151
–
Loans and deposits
3,971
1,297
945
156
1,563
10
Total
176,306
8,440
23,321
16,821
127,714
10
US$m
Total
Due in one
year or less
Due after
one year
through
five years
Due after
five years
through
ten years
Due after
ten years
No fixed
maturity
31 December 2023
Debt securities
170,706
5,754
19,990
16,630
128,332
–
Loans and deposits
3,930
996
917
454
1,553
10
Total
174,636
6,750
20,907
17,084
129,885
10
FINANCIAL STATEMENTS
239
ANNUAL REPORT 2024
19. DERIVATIVE FINANCIAL INSTRUMENTS
The Group’s derivative exposure was as follows:
Fair value
US$m
Notional amount
Assets
Liabilities
31 December 2024
Foreign exchange contracts
Cross-currency swaps
10,661
214
(317)
Forwards
4,773
79
(35)
Foreign exchange futures
97
–
–
Total foreign exchange contracts
15,531
293
(352)
Interest rate contracts
Interest rate swaps
4,908
261
(108)
Swaptions
6,035
125
–
Total interest rate contracts
10,943
386
(108)
Other
Warrants and options
1,396
7
–
Forward contracts
35,103
368
(8,155)
Netting
(97)
–
–
Total
62,876
1,054
(8,615)
Fair value
US$m
Notional amount
Assets
Liabilities
31 December 2023
Foreign exchange contracts
Cross-currency swaps
8,429
342
(271)
Forwards
4,964
41
(78)
Foreign exchange futures
41
–
–
Total foreign exchange contracts
13,434
383
(349)
Interest rate contracts
Interest rate swaps
3,930
210
(109)
Other
Warrants and options
1,424
11
(2)
Forward contracts
36,758
148
(7,575)
Netting
(41)
–
–
Total
55,505
752
(8,035)
The notional amounts indicate the volume of transactions outstanding at the balance sheet date and are not representing
the amounts at risk.
Of the total derivatives, US$9m (2023: US$8m) are listed in exchange or dealer markets and the rest are over-the-counter
(OTC) derivatives. OTC derivative contracts are individually negotiated between contracting parties and not cleared through
an exchange. OTC derivatives include forwards, swaps, swaptions and options. Derivatives are subject to various risks
including market, liquidity and credit risks, similar to those related to the underlying financial instruments.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
240
AIA GROUP LIMITED
19. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
Derivative assets and derivative liabilities are recognised in the consolidated statement of financial position as derivative
financial assets at fair value through profit or loss and derivative financial liabilities respectively. The Group’s derivative
contracts are established to provide an economic hedge to financial exposures. The Group adopts hedge accounting in
limited circumstances. The notional or contractual amounts associated with derivative financial instruments are not
recorded as assets or liabilities in the consolidated statement of financial position as they do not represent the fair value of
these transactions. The notional amounts in the previous table reflect the aggregate of individual derivative positions on a
gross basis and so give an indication of the overall scale of derivative transactions.
Foreign exchange contracts
Foreign exchange forward and futures contracts represent agreements to exchange one currency for another currency at
an agreed price and settlement date. Currency options are agreements that give the buyer the right to exchange one
currency for another currency at agreed prices and settlement dates. Currency swaps are contractual agreements that
involve the exchange of both periodic and final amounts in two different currencies. Exposure to gains and losses on the
foreign exchange contracts will increase or decrease over their respective lives as a function of maturity dates, interest and
foreign exchange rates, implied volatilities of the underlying indices and the timing of payments.
Interest rate contracts
Interest rate swaps are contractual agreements between two parties to exchange periodic payments in the same currency,
each of which is computed on a different interest rate basis, on a specified notional amount. Most interest rate swaps
involve the net exchange of payments calculated as the difference between the fixed and floating rate interest payments.
Swaptions are options to enter into interest rate swaps with forward starting effective dates. Swaptions give an entity the
right, but not the obligation, to exchange fixed or floating interest rate payments through interest rate swaps. The Group’s
swaptions are used to provide an economic hedge to financial exposures in the participating funds and other participating
business with distinct portfolios.
Other derivatives
Warrants and options are option agreements that give the owner the right to buy or sell securities at an agreed price and
settlement date. Forward contracts are contractual obligations to buy or sell a financial instrument on a predetermined
future date at a specified price. Swaps are OTC contractual agreements between the Group and a third party to exchange
a series of cash flows based upon index, rates or other variables applied to a notional amount.
Netting adjustment
The netting adjustment is related to futures contracts executed through clearing house where the settlement arrangement
satisfies the netting criteria under IFRS Accounting Standards.
Collateral under derivative transactions
At 31 December 2024, the Group had posted cash collateral of US$111m (2023: US$213m) and pledged debt securities
with carrying value of US$9,692m (2023: US$8,639m) for liabilities, and held cash collateral of US$401m (2023:
US$340m) and debt securities collateral with carrying value of US$170m (2023: US$95m) for assets in respect of
derivative transactions. The Group did not sell or repledge the debt collateral received. These transactions are conducted
under terms that are usual and customary to collateralised transactions including, where relevant, standard repurchase
agreements.
FINANCIAL STATEMENTS
241
ANNUAL REPORT 2024
20. FAIR VALUE MEASUREMENT
Fair value of financial instruments
The Group classifies all financial assets as either at fair value through profit or loss (mandatory and designated), or as at
fair value through other comprehensive income, or at amortised cost. Financial liabilities are classified as either at fair
value through profit or loss (mandatory and designated) or at amortised cost, except for investment contracts with DPF
which are accounted for under IFRS 17.
The following tables present the fair values of the Group’s financial assets and financial liabilities:
Fair value
US$m
Notes
FVTPL –
mandatory
FVTPL –
designated
FVOCI
Amortised
cost
Total
carrying
value
Total
fair value
31 December 2024
Financial investments
18
Loans and deposits
–
272
–
3,770
4,042
4,292
Debt securities
6,396
71,134
98,289
2,399
178,218
177,858
Equity shares, interests in investment
funds and exchangeable loan notes
85,711
3,126(1)
–
–
88,837
88,837
Derivative financial instruments
19
1,054
–
–
–
1,054
1,054
Receivables
21
–
–
–
848
848
848
Accrued investment income
21
–
–
–
1,748
1,748
1,748
Cash and cash equivalents
22
1,628
–
–
6,473
8,101
8,101
Financial assets
94,789
74,532
98,289
15,238
282,848
282,738
Fair value
Notes
FVTPL –
mandatory
FVTPL –
designated
Amortised
cost
Total
carrying
value
Total
fair value
Financial liabilities
Investment contract liabilities
25
–
6,320
485
6,805
6,805
Borrowings
26
–
–
13,329
13,329
12,364
Obligations under repurchase agreements
27
–
–
4,616
4,616
4,616
Derivative financial instruments
19
8,615
–
–
8,615
8,615
Other liabilities
30
–
812
4,097
4,909
4,909
Financial liabilities
8,615
7,132
22,527
38,274
37,309
Note:
(1) Includes certain financial assets held through investment vehicles.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
242
AIA GROUP LIMITED
20. FAIR VALUE MEASUREMENT (continued)
Fair value of financial instruments (continued)
Fair value
US$m
Notes
FVTPL –
mandatory
FVTPL –
designated
FVOCI
Amortised
cost
Total
carrying
value
Total
fair value
31 December 2023
Financial investments
18
Loans and deposits
–
272
–
3,723
3,995
4,100
Debt securities
8,086
78,895
88,612
2,165
177,758
177,508
Equity shares, interests in investment
funds and exchangeable loan notes
66,453
–
–
–
66,453
66,453
Derivative financial instruments
19
752
–
–
–
752
752
Receivables
21
–
–
–
1,294
1,294
1,294
Accrued investment income
21
–
–
–
1,832
1,832
1,832
Cash and cash equivalents
22
4,970
–
–
6,555
11,525
11,525
Financial assets
80,261
79,167
88,612
15,569
263,609
263,464
Fair value
Notes
FVTPL –
mandatory
FVTPL –
designated
Amortised
cost
Total
carrying
value
Total
fair value
Financial liabilities
Investment contract liabilities
25
–
8,460
515
8,975
8,975
Borrowings
26
–
–
11,800
11,800
10,875
Obligations under repurchase agreements
27
–
–
3,461
3,461
3,461
Derivative financial instruments
19
8,035
–
–
8,035
8,035
Other liabilities
30
–
844
4,043
4,887
4,887
Financial liabilities
8,035
9,304
19,819
37,158
36,233
The carrying amount of assets included in the above tables represents the maximum credit exposure.
Foreign currency exposure, including the net positions of foreign currency derivative, is shown in note 34 for the Group’s
key foreign exchange exposures.
The fair value of investment contract liabilities measured at amortised cost is not considered to be materially different from
the amortised cost carrying value.
The carrying value of financial instruments expected to be settled within 12 months (after taking into account valuation
allowances, where applicable) is not considered to be materially different from the fair value.
FINANCIAL STATEMENTS
243
ANNUAL REPORT 2024
20. FAIR VALUE MEASUREMENT (continued)
Fair value measurements on a recurring basis
The Group measures at fair value property held for own use, investment property, financial instruments classified at fair
value through profit or loss, financial instruments classified at fair value through other comprehensive income, derivative
assets and liabilities, investments held by investment funds which are consolidated, investments in non-consolidated
investment funds and certain investment contract liabilities on a recurring basis.
The fair value of a financial instrument is the amount that would be received on sale of an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.
The degree of judgement used in measuring the fair value of financial instruments generally correlates with the level of
pricing observability. Financial instruments with quoted prices in active markets generally have more pricing observability
and less judgement is used in measuring fair value. Conversely, financial instruments traded in other than active markets
or that do not have quoted prices have less observability and are measured at fair value using valuation models or other
pricing techniques that require more judgement. An active market is one in which transactions for the asset or liability
being valued occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
An other than active market is one in which there are few transactions, the prices are not current, price quotations vary
substantially either over time or among market makers, or in which little information is released publicly for the asset or
liability being valued. Pricing observability is affected by a number of factors, including the type of financial instrument,
whether the financial instrument is new to the market and not yet established, the characteristics specific to the transaction
and general market conditions.
Fair value of properties is based on valuation by independent professional valuers.
The Group does not have assets or liabilities measured at fair value on a non-recurring basis during the years ended 31
December 2024 and 31 December 2023.
The following methods and assumptions were used by the Group to estimate the fair value of financial instruments and
properties.
Determination of fair value
Loans and receivables
For loans and advances that are repriced frequently and have not had any significant changes in credit risk, carrying
amounts represent a reasonable estimate of fair values. The fair values of other loans are estimated by discounting expected
future cash flows using interest rates offered for similar loans to borrowers with similar credit ratings.
The fair values of mortgage loans are estimated by discounting future cash flows using interest rates currently being
offered in respect of similar loans to borrowers with similar credit ratings. Loans with similar characteristics are aggregated
for purposes of the calculations.
Debt securities, equity shares, interests in investment funds and exchangeable loan notes
The fair values of equity shares, interests in investment funds and exchangeable loan notes are based on quoted market
prices or, if unquoted, on estimated market values generally based on quoted prices for similar securities. Fair values for
fixed interest securities are based on quoted market prices, where available. For those investments not actively traded, fair
values are estimated using values obtained from brokers, private pricing services or by discounting expected future cash
flows using a current market rate applicable to the yield, credit quality and maturity of the investment. Priority is given to
values from independent sources when available, but overall the source of pricing and/or valuation technique is chosen
with the objective of arriving at the price at which an orderly transaction would take place between market participants on
the measurement date. The inputs to determining fair value that are relevant to fixed interest securities include, but not
limited to risk-free interest rates, the obligor’s credit spreads, foreign exchange rates and credit default rates. For holdings
in hedge funds and limited partnerships, fair values are determined based on the net asset values provided by the general
partner or manager of each investment, the accounts of which are generally audited on an annual basis. The transaction
price is used as the best estimate of fair value at inception.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
244
AIA GROUP LIMITED
20. FAIR VALUE MEASUREMENT (continued)
Determination of fair value (continued)
Derivative financial instruments
The Group values its derivative financial assets and liabilities using market transactions and other market evidence
whenever possible, including market-based inputs to models, model calibration to market clearing transactions, broker or
dealer quotations or alternative pricing sources with reasonable levels of price transparency. When models are used, the
selection of a particular model to value a derivative depends on the contract terms of, and specific risks inherent in, the
instrument as well as the availability of pricing information in the market. The Group generally uses similar models to value
similar instruments. Valuation models require a variety of inputs, including contractual terms, market prices and rates,
yield curves, credit curves, measures of volatility, prepayment rates and correlations of such inputs. For derivatives that
trade in liquid markets, such as generic forwards, swaps and options, model inputs can generally be verified and model
selection does not involve significant management judgement. Examples of inputs that are generally observable include
foreign exchange spot and forward rates, benchmark interest rate curves and volatilities for commonly traded option
products. Examples of inputs that may be unobservable include volatilities for less commonly traded option products and
correlations between market factors.
When the Group holds a group of derivative assets and derivative liabilities entered into with a particular counterparty, the
Group takes into account the arrangements that mitigate credit risk exposure in the event of default (e.g. International
Swap and Derivatives Association (ISDA) Master Agreements and Credit Support Annex (CSA) that require the exchange of
collateral on the basis of each party’s net credit risk exposure). The Group measures the fair value of the group of financial
assets and financial liabilities on the basis of its net exposure to the credit risk of that counterparty or the counterparty’s
net exposure to our credit risk that reflects market participants’ expectations about the likelihood that such an arrangement
would be legally enforceable in the event of default.
Property held for own use and investment property
The Group engaged external, independent and qualified valuers to determine the fair value of the Group’s properties at
least on an annual basis. The valuation on an open market value basis by independent professional valuer for certain
investment properties was calculated by reference to net rental income allowing for reversionary income potential. The fair
values of certain other properties were derived using the Market Data Approach. In this approach, the values are based on
sales and listing of comparable property registered in the vicinity. Certain other properties are valued using a combination
of these two methods.
The properties held for own use and investment properties, in most cases, are valued on the basis of the highest and best
use of the properties that is physically possible, legally permissible and financially feasible. The current use of the properties
is considered to be its highest and best use; records of recent sales and offerings of similar property are analysed and
comparison made for such factors as size, location, quality and prospective use. On limited occasions, potential
redevelopment of the properties in use would be taken into account when they would maximise the fair value of the
properties; the Group is occupying these properties for operational purposes.
Cash and cash equivalents
The carrying amount of cash approximates to its fair value.
Fair value of securities sold under repurchase agreements and the associated payables
The contract values of payables under repurchase agreements approximate to their fair value as these obligations are
short-term in nature.
Other assets
The carrying amount of other financial assets is not materially different to their fair value. The fair values of deposits with
banks are generally based on quoted market prices or, if unquoted, on estimates based on discounting future cash flows
using available market interest rates offered for receivables with similar characteristics.
FINANCIAL STATEMENTS
245
ANNUAL REPORT 2024
20. FAIR VALUE MEASUREMENT (continued)
Determination of fair value (continued)
Investment contract liabilities
For investment contract liabilities, the fair values have been estimated using a discounted cash flow approach based on
interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts
being valued. For investment contracts where the investment risk is borne by the policyholder, the fair value generally
approximates to the fair value of the underlying assets.
Investment contracts with DPF enable the contract holder to receive additional benefits as a supplement to guaranteed
benefits. These are referred to as participating business and are measured and classified according to the Group’s practice
for insurance contract liabilities and hence are disclosed within note 24. These are not measured at fair value as the Group
applies the same accounting policies for the measurement of investment contracts with DPF as it does for insurance
contracts under IFRS 17.
Borrowings
The fair values of borrowings have been estimated based on discounting future cash flows using the interest rates currently
applicable to deposits of similar maturities or prices obtained from brokers.
Other liabilities
The fair values of other unquoted financial liabilities are estimated by discounting expected future cash flows using current
market rates applicable to their yield, credit quality and maturity, except for those without stated maturity, where the
carrying value approximates to fair value.
Fair value hierarchy for fair value measurement on a recurring basis
Assets and liabilities recorded at fair value in the consolidated statement of financial position are measured and classified
in a hierarchy for disclosure purposes consisting of three “levels” based on the observability of inputs available in the
marketplace used to measure their fair values as discussed below:
•
Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the Group has the ability to access as of the measurement date. Market price data is generally obtained from
exchange or dealer markets. The Group does not adjust the quoted price for such instruments. Assets measured at fair
value on a recurring basis and classified as Level 1 are actively traded equities. The Group considers that government
debt securities issued by G7 countries (the United States, Canada, France, Germany, Italy, Japan, the United Kingdom)
and traded in a dealer market to be Level 1, until they no longer trade with sufficient frequency and volume to be
considered actively traded.
•
Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for
the asset or liability, either directly (as prices) or indirectly (derived from prices). Level 2 inputs include quoted prices
for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets
that are not active and inputs other than quoted prices that are observable for the asset and liability, such as interest
rates and yield curves that are observable at commonly quoted intervals. Assets and liabilities measured at fair value
on a recurring basis and classified as Level 2 generally include government debt securities issued by non-G7 countries,
most investment grade corporate bonds, hedge fund investments and derivative contracts.
•
Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable.
Unobservable inputs are only used to measure fair value to the extent that relevant observable inputs are not available,
allowing for circumstances in which there is little, if any, market activity for the asset or liability. Assets and liabilities
measured at fair value on a recurring basis and classified as Level 3 include properties held for own use, investment
properties, certain classes of structured securities, certain derivative contracts, private equity and real estate fund
investments, and direct private equity investments.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases,
the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the
lowest level input that is significant to the fair value measurement in its entirety. The Group’s assessment of the significance
of a particular input to the fair value measurement in its entirety requires judgement. In making the assessment, the Group
considers factors specific to the asset or liability.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
246
AIA GROUP LIMITED
20. FAIR VALUE MEASUREMENT (continued)
Fair value hierarchy for fair value measurement on a recurring basis (continued)
A summary of assets and liabilities carried at fair value on a recurring basis according to fair value hierarchy is given below:
Fair value hierarchy
US$m
Level 1
Level 2
Level 3
Total
31 December 2024
Recurring fair value measurements
Non-financial assets
Property held for own use
–
–
2,711
2,711
Investment property
–
–
4,570
4,570
Financial assets
At fair value through other comprehensive income
Debt securities
–
95,318
2,971
98,289
At fair value through profit or loss
Debt securities
Participating funds and other participating business
with distinct portfolios
63
66,198
2,182
68,443
Unit-linked and consolidated investment funds
16
5,398
–
5,414
Other policyholder and shareholder
–
3,551
122
3,673
Loans and deposits
–
–
272
272
Equity shares, interests in investment funds and
exchangeable loan notes
Participating funds and other participating business
with distinct portfolios
24,963
3,835
17,693
46,491
Unit-linked and consolidated investment funds
25,137
1,363
23
26,523
Other policyholder and shareholder
6,035
2,885
6,903
15,823
Cash and cash equivalents
Participating funds and other participating business
with distinct portfolios
192
–
–
192
Other policyholder and shareholder
1,436
–
–
1,436
Derivative financial instruments
Foreign exchange contracts
–
293
–
293
Interest rate contracts
–
386
–
386
Other contracts
4
191
180
375
Total assets on a recurring fair value measurement basis
57,846
179,418
37,627
274,891
% of Total
21.0%
65.3%
13.7%
100.0%
Financial liabilities
Investment contract liabilities
–
4,280
2,040
6,320
Derivative financial instruments
Foreign exchange contracts
–
352
–
352
Interest rate contracts
–
108
–
108
Other contracts
–
8,155
–
8,155
Other liabilities
–
812
–
812
Total liabilities on a recurring fair value measurement
basis
–
13,707
2,040
15,747
% of Total
0.0%
87.0%
13.0%
100.0%
FINANCIAL STATEMENTS
247
ANNUAL REPORT 2024
20. FAIR VALUE MEASUREMENT (continued)
Fair value hierarchy for fair value measurement on a recurring basis (continued)
Fair value hierarchy
US$m
Level 1
Level 2
Level 3
Total
31 December 2023
Recurring fair value measurements
Non-financial assets
Property held for own use
–
–
2,565
2,565
Investment property
–
–
4,504
4,504
Financial assets
At fair value through other comprehensive income
Debt securities
78
86,177
2,357
88,612
At fair value through profit or loss
Debt securities
Participating funds and other participating business
with distinct portfolios
173
75,640
1,808
77,621
Unit-linked and consolidated investment funds
3
6,712
–
6,715
Other policyholder and shareholder
–
2,450
195
2,645
Loans and deposits
–
–
272
272
Equity shares, interests in investment funds and
exchangeable loan notes
Participating funds and other participating business
with distinct portfolios
15,149
1,283
13,777
30,209
Unit-linked and consolidated investment funds
24,374
379
23
24,776
Other policyholder and shareholder
4,805
1,285
5,378
11,468
Cash and cash equivalents
Other policyholder and shareholder
4,970
–
–
4,970
Derivative financial instruments
Foreign exchange contracts
–
383
–
383
Interest rate contracts
–
210
–
210
Other contracts
4
147
8
159
Total assets on a recurring fair value measurement basis
49,556
174,666
30,887
255,109
% of Total
19.4%
68.5%
12.1%
100.0%
Financial liabilities
Investment contract liabilities
–
6,607
1,853
8,460
Derivative financial instruments
Foreign exchange contracts
–
349
–
349
Interest rate contracts
–
109
–
109
Other contracts
4
7,573
–
7,577
Other liabilities
–
844
–
844
Total liabilities on a recurring fair value measurement
basis
4
15,482
1,853
17,339
% of Total
0.0%
89.3%
10.7%
100.0%
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
248
AIA GROUP LIMITED
20. FAIR VALUE MEASUREMENT (continued)
Fair value hierarchy for fair value measurement on a recurring basis (continued)
The Group’s policy is to recognise transfers of assets and liabilities between Level 1 and Level 2 at their fair values as at
the end of each reporting period, consistent with the date of the determination of fair value. Assets are transferred out of
Level 1 when they are no longer transacted with sufficient frequency and volume in an active market. During the year
ended 31 December 2024, the Group transferred US$5m (2023: US$1m) of assets measured at fair value from Level 1 to
Level 2. Conversely, assets are transferred from Level 2 to Level 1 when transaction volume and frequency are indicative
of an active market. The Group transferred US$11m (2023: US$58m) of assets from Level 2 to Level 1 during the year
ended 31 December 2024.
The Group’s Level 2 financial instruments include debt securities, equity shares, interests in investment funds, derivative
financial instruments, investment contract liabilities and other liabilities. The fair values of Level 2 financial instruments
are estimated using values obtained from private pricing services and brokers corroborated with internal review as
necessary. When the quotes from private pricing services and brokers are not available, internal valuation techniques and
inputs will be used to derive the fair value for the financial instruments.
The tables below set out a summary of changes in the Group’s Level 3 assets and liabilities measured at fair value on a
recurring basis for the years ended 31 December 2024 and 31 December 2023. The tables reflect gains and losses,
including gains and losses on assets and liabilities categorised as Level 3 as at 31 December 2024 and 31 December 2023.
Level 3 assets and liabilities
US$m
Property
held for
own use
Investment
property
Debt
securities
Loans and
deposits
Equity
shares,
interests in
investment
funds and
exchangeable
loan notes
Derivative
financial
assets/
(liabilities)
Investment
contracts
At 1 January 2024
2,565
4,504
4,360
272
19,178
8
(1,853)
Net movement on investment contract
liabilities
–
–
–
–
–
–
(187)
Total gains/(losses)
Reported under investment return and
other expenses in the consolidated
income statement
(62)
(33)
79
–
493
239
–
Reported under fair value reserve, foreign
currency translation reserve and
property revaluation reserve in the
consolidated statement of
comprehensive income
(13)
(30)
(24)
–
(145)
(1)
–
Transfer to/from investment property
(89)
91
–
–
–
–
–
Purchases
333
38
1,886
–
5,875
–
–
Sales
(23)
–
(198)
–
(779)
–
–
Settlements
–
–
(834)
–
–
(66)
–
Transfer into Level 3
–
–
6
–
–
–
–
Transfer out of Level 3
–
–
–
–
(3)
–
–
At 31 December 2024
2,711
4,570
5,275
272
24,619
180
(2,040)
Change in unrealised gains or losses
included in the consolidated income
statement for assets and liabilities held
at the end of the reporting period, under
investment return and other expenses
(62)
(33)
37
–
895
174
–
FINANCIAL STATEMENTS
249
ANNUAL REPORT 2024
20. FAIR VALUE MEASUREMENT (continued)
Fair value hierarchy for fair value measurement on a recurring basis (continued)
Level 3 assets and liabilities (continued)
US$m
Property
held for
own use
Investment
property
Debt
securities
Loans and
deposits
Equity
shares,
interests in
investment
funds and
exchangeable
loan notes
Derivative
financial
assets/
(liabilities)
Investment
contracts
At 1 January 2023
1,235
4,600
3,835
279
15,558
41
(2,184)
Net movement on investment contract
liabilities
–
–
–
–
–
–
331
Total gains/(losses)
Reported under investment return and
other expenses in the consolidated
income statement
(40)
(97)
119
(9)
(178)
42
–
Reported under fair value reserve, foreign
currency translation reserve and
property revaluation reserve in the
consolidated statement of
comprehensive income
57
(10)
(40)
2
(37)
(1)
–
Acquisition of subsidiaries
2
1
–
–
–
–
–
Transfer to/from investment property
9
(31)
–
–
–
–
–
Purchases
1,306
45
899
–
4,874
–
–
Sales(1)
(4)
(4)
(257)
–
(926)
–
–
Settlements
–
–
(198)
–
–
(74)
–
Transfer into Level 3
–
–
2
–
50
–
–
Transfer out of Level 3
–
–
–
–
(163)
–
–
At 31 December 2023
2,565
4,504
4,360
272
19,178
8
(1,853)
Change in unrealised gains or losses
included in the consolidated income
statement for assets and liabilities held
at the end of the reporting period, under
investment return and other expenses
(40)
(92)
63
(9)
(143)
(32)
–
Note:
(1) Includes amounts derecognised on disposal of held for sale assets and liabilities.
Movements in investment contract liabilities at fair value are offset by movements in the underlying portfolio of matching
assets. Details of the movement in investment contract liabilities are provided in note 25.
In 2023, assets transferred out of Level 3 mainly relate to interests in investment funds of which market-observable inputs
became available during the year and were used in determining the fair value.
There are not any differences between the fair values on initial recognition and the amounts determined using valuation
techniques since the models adopted are calibrated using initial transaction prices.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
250
AIA GROUP LIMITED
20. FAIR VALUE MEASUREMENT (continued)
Significant unobservable inputs for Level 3 fair value measurements
As at 31 December 2024 and 31 December 2023, the valuation techniques and applicable unobservable inputs used to
measure the Group’s Level 3 financial instruments are summarised as follows:
Description
Fair value at
31 December 2024 (US$m)
Valuation techniques
Unobservable inputs
Range
Debt securities
3,549
Discounted cash flows Risk adjusted discount rate 2.37% – 13.81%
Description
Fair value at
31 December 2023 (US$m)
Valuation techniques
Unobservable inputs
Range
Debt securities
2,553
Discounted cash flows
Risk adjusted discount rate
3.17% – 47.22%
For certain equity shares, interests in investment funds and exchangeable loan notes held by the Group, management
obtains values from independent professional valuers who use valuation techniques, such as the market approach, to
determine the fair value. Under the market approach, the most relevant valuation multiples based on a number of factors,
such as enterprise value to sales, or enterprise value to EBITDA (earnings before interest, taxes, depreciation and
amortisation), are used to determine the fair value of the financial assets.
Fair value of the Group’s properties are determined based on appropriate valuation techniques which may consider among
others income projection, value of comparable property and adjustments for factors such as size, location, quality and
prospective use. These valuation inputs are deemed unobservable.
Valuation processes
The Group has the valuation policies, procedures and analyses in place to govern the valuation of financial assets required
for financial reporting purposes, including Level 3 fair values. In determining the fair values of financial assets, the Group
in general uses private pricing providers and, only in rare cases when third-party prices do not exist, will use prices derived
from internal models. The Chief Investment Officers of each of the business units are required to review the reasonableness
of the prices used and report price exceptions, if any. Analysis of reported price exceptions and price challenge responses
from private pricing providers are reviewed before final recommendation on the appropriate price to be used is made. Any
changes in valuation policies are reviewed and approved by the Group Valuation Committee which is part of the Group’s
wider financial risk governance processes. Changes in Level 2 and 3 fair values are analysed at each reporting date.
The main Level 3 input used by the Group pertains to the discount rate for the debt securities and investment contracts.
The unobservable inputs for determining the fair value of these instruments include the obligor’s credit spread and/or the
liquidity spread. A significant increase/(decrease) in any of the unobservable input may result in a significantly lower/
(higher) fair value measurement. The Group has subscriptions to private pricing services for gathering such information. If
the information from private pricing services is not available, the Group uses the proxy pricing method based on
internally-developed valuation inputs.
FINANCIAL STATEMENTS
251
ANNUAL REPORT 2024
20. FAIR VALUE MEASUREMENT (continued)
Fair value of financial and insurance assets and liabilities for which the fair value is disclosed at the reporting
date
A summary of fair value hierarchy of assets and liabilities not carried at fair value but for which the fair value is disclosed
as at 31 December 2024 and 31 December 2023 is given below.
Fair value hierarchy
US$m
Level 1
Level 2
Level 3
Total
31 December 2024
Assets for which the fair value is disclosed
Financial assets
Debt securities
–
2,039
–
2,039
Loans and deposits
1,198
772
2,050
4,020
Receivables
22
769
57
848
Accrued investment income
18
1,730
–
1,748
Cash and cash equivalents
6,473
–
–
6,473
Total assets for which the fair value is disclosed
7,711
5,310
2,107
15,128
Liabilities for which the fair value is disclosed
Financial liabilities
Investment contract liabilities
–
–
485
485
Borrowings
10,647
1,717
–
12,364
Obligations under repurchase agreements
–
4,616
–
4,616
Other liabilities
338
3,697
62
4,097
Total liabilities for which the fair value is disclosed
10,985
10,030
547
21,562
Fair value hierarchy
US$m
Level 1
Level 2
Level 3
Total
31 December 2023
Assets for which the fair value is disclosed
Financial assets
Debt securities
–
1,915
–
1,915
Loans and deposits
1,025
914
1,889
3,828
Receivables
207
1,024
63
1,294
Accrued investment income
24
1,808
–
1,832
Cash and cash equivalents
6,555
–
–
6,555
Total assets for which the fair value is disclosed
7,811
5,661
1,952
15,424
Liabilities for which the fair value is disclosed
Financial liabilities
Investment contract liabilities
–
–
515
515
Borrowings
9,244
1,631
–
10,875
Obligations under repurchase agreements
–
3,461
–
3,461
Other liabilities
347
3,680
16
4,043
Total liabilities for which the fair value is disclosed
9,591
8,772
531
18,894
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
252
AIA GROUP LIMITED
21. OTHER ASSETS
US$m
As at
31 December
2024
As at
31 December
2023
Accrued investment income
1,748
1,832
Receivables
848
1,294
Pension scheme assets
Defined benefit pension scheme surpluses
49
57
Others(1)
882
1,133
Total
3,527
4,316
Note:
(1) Represents, among others, prepayments and deferred origination costs.
All amounts other than certain prepayments are generally expected to be recovered within 12 months after the end of the
reporting period.
22. CASH AND CASH EQUIVALENTS
US$m
As at
31 December
2024
As at
31 December
2023
Cash
3,324
3,152
Cash equivalents
4,777
8,373
Total(1)
8,101
11,525
Note:
(1) US$778m (2023: US$667m) are held to back unit-linked contracts and US$32m (2023: US$46m) are held by consolidated investment funds.
Cash comprises cash at bank and cash in hand. Cash equivalents comprise bank deposits and highly liquid short-term
investments with maturities at acquisition of three months or less and money market funds that are convertible into known
amounts of cash and subject to insignificant risk of changes in value. Accordingly, all such amounts are expected to be
realised within 12 months after the end of the reporting period.
FINANCIAL STATEMENTS
253
ANNUAL REPORT 2024
23. IMPAIRMENT OF FINANCIAL ASSETS
Inputs, assumptions and techniques used for estimating impairment
Significant increase in credit risk
When determining whether the credit risk (i.e. risk of default) on a financial instrument has increased significantly since
initial recognition, the Group considers reasonable and supportable information that is relevant and available without
undue cost or effort. This includes both qualitative and quantitative information and analysis based on the Group’s
experience, credit assessment performed by internal and external experts and forward-looking information.
The Group primarily identifies whether a significant increase in credit risk has occurred for an exposure by comparing the
internal rating as at the reporting date with the internal rating as at the date of initial recognition of the exposure. Where
external credit ratings are available, internal ratings are assigned consistent with such ratings in accordance with the
Group’s credit risk assessment framework. Where external credit ratings are not readily available, an internal rating
methodology has been adopted.
The Group monitors changes in credit risk by tracking the change in internal rating of the exposure. The Group also monitors
relevant information, including price movements of securities, and assess whether such information signifies a change in
credit risk.
The Group has assumed that the credit risk of a financial asset has not increased significantly since initial recognition if the
financial asset has low credit risk at the reporting date. The Group considers a financial asset to have low credit risk when
its credit risk rating is equivalent to the globally understood definition of “investment grade”. The Group considers this to
be BBB- (Standard and Poor’s rating), BBB- (Fitch rating), Baa3 (Moody’s rating) or higher, which is equivalent to an
internal rating of 4- or higher.
As a backstop, the Group considers that a significant increase in credit risk occurs no later than when an asset is more than
30 days past due, unless there are other indications that there is no significant increase in credit risk. Days past due are
determined by counting the number of days since the earliest elapsed due date in respect of which full payment has not
been received. Due dates are determined after considering any grace period that might be available to the debtor.
Modified financial assets
The contractual terms of a financial asset may be modified for a number of reasons including changing market conditions
and other factors not related to current or potential credit deterioration of the debtor. An existing financial asset whose
terms have been modified may be derecognised and the renegotiated asset recognised as a new financial asset at fair
value in accordance with the accounting policies in note 2.5.1.
When the terms of a financial asset are modified and the modification does not result in derecognition, the determination
of significant increase in credit risk is assessed based on the change in internal rating as at the reporting date and the date
of initial recognition. The internal rating as at the reporting date is rated based on the modified contractual terms while the
initial rating is rated based on the original contractual terms.
Definition of default
The Group considers a financial asset to be in default when the debtor is unlikely to pay its credit obligations to the Group
in full, without recourse by the Group to mitigating actions. The criteria of “default” are consistent with those of
“credit-impaired”.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
254
AIA GROUP LIMITED
23. IMPAIRMENT OF FINANCIAL ASSETS (continued)
Inputs, assumptions and techniques used for estimating impairment (continued)
Incorporation of forward-looking information
The Group incorporates forward-looking information into both its assessment of whether the credit risk of a financial
instrument has increased significantly since initial recognition and its measurement of ECL. It formulates a “base case”
view of the future direction of relevant economic variables and a representative range of other possible forecast scenarios
based on management knowledge and consideration of a variety of external actual and forecast information. This process
involves developing two or more additional economic scenarios and considering the relative probabilities of each outcome.
External information includes economic data and forecasts published by governmental bodies and monetary authorities in
the jurisdictions in which the Group operates, supranational organisations, and selected private-sector and academic
forecasters.
The base case represents a best estimate and the other scenarios represent more optimistic and more pessimistic
outcomes.
The Group has identified and documented key drivers of credit risk and ECL for each portfolio of financial instruments and,
using an analysis of historical data, has estimated relationship between macroeconomic variables and key drivers of credit
risk. The specific values of the core macroeconomic variable used by the Group for evaluating ECL for the years ended 31
December 2024 and 31 December 2023 are as follows:
As at
31 December
2024
As at
31 December
2023
GDP growth (5-year average of year-over-year %)
Base case scenario
2.7%
2.9%
Upside scenario
2.9%
3.5%
Downside scenario
2.2%
2.1%
Measurement of ECL
The key inputs into the measurement of ECL are the term structures of probability of default (PD), loss given default (LGD)
and exposure at default (EAD). They are calculated on a discounted cash flow basis using the effective interest rate as the
discounting factor.
To determine lifetime and 12-month PDs, the Group leverages on the internal rating and convert it into PD based on the
level of rating and obligor characteristics like industry type and country. Changes in the rating at the reporting date for a
counterparty or exposure lead to a change in the estimate of the associated PD.
LGD is the magnitude of the likely loss if there is a default. The Group leverages on recovery statistics to calculate LGD. The
LGD models consider a number of factors including among others, the structure, collateral and seniority of the claim, that
are integral to the financial asset. LGD estimates are recalibrated for different economic scenarios.
PDs and LGDs are adjusted to reflect forward-looking information and different economic scenarios as described above.
EAD represents the expected exposure in the event of a default. The EAD of a financial asset is its gross carrying amount
at the time of default. The Group derives the EAD from the current exposure to the counterparty, with any adjustments for
changes to the current exposure, such as amortisation, and prepayments.
FINANCIAL STATEMENTS
255
ANNUAL REPORT 2024
23. IMPAIRMENT OF FINANCIAL ASSETS (continued)
Inputs, assumptions and techniques used for estimating impairment (continued)
Measurement of ECL (continued)
As described above, and subject to using a maximum of a 12-month PD for financial assets for which credit risk has not
significantly increased, the Group measures ECL considering the risk of default over the maximum contractual period
(including any debtor’s extension options) over which it is exposed to credit risk.
Where modelling of a parameter is carried out on a collective basis, the financial instruments are grouped on the basis of
shared risk characteristics, which include instrument type, credit risk gradings, collateral type, date of initial recognition,
remaining term to maturity, industry and geographical location of debtor.
The groupings are subject to regular review to ensure that exposures within a particular group remain appropriately
homogeneous. When ECL are measured using parameters based on collective modelling, a significant input into the
measurement of ECL is the external information that the Group uses to derive the default rates of its portfolios.
Credit-impaired financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for impairment regularly. This requires
the exercise of management judgement. The Group assesses at each reporting date whether there is objective evidence
that a financial asset or a group of financial assets is credit-impaired. Objective evidence that a financial asset, or a group
of financial assets, is credit-impaired includes observable data that comes to the attention of the Group about the following
events:
•
significant financial difficulty of the issuer or debtor;
•
a breach of contract, such as a default or delinquency in payments;
•
the restructuring of an amount due to the Group on terms that the Group would not otherwise consider;
•
it becomes probable that the issuer or debtor will enter bankruptcy or other financial reorganisation; or
•
the disappearance of an active market for that financial asset because of financial difficulties.
A financial asset that has been renegotiated due to a deterioration in the debtor’s condition is usually considered to be
credit-impaired unless there is evidence that the risk of not receiving contractual cash flows has reduced significantly and
there are no other indicators of impairment.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
256
AIA GROUP LIMITED
23. IMPAIRMENT OF FINANCIAL ASSETS (continued)
Inputs, assumptions and techniques used for estimating impairment (continued)
Loss allowance
The following tables show reconciliation balances from the opening to the closing balance of the loss allowance by class
of financial instrument. Gross carrying amount is the amortised cost before adjusting for loss allowance.
12-month ECL
Lifetime ECL not
credit-impaired
Lifetime ECL
credit-impaired
Total
US$m
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Debt securities measured at
amortised cost
Balance at 1 January 2024
2,156
4
15
2
–
–
2,171
6
Transfer to 12-month ECL
–
–
–
–
–
–
–
–
Transfer to lifetime ECL not credit-
impaired
–
–
–
–
–
–
–
–
Transfer to lifetime ECL credit-impaired
–
–
–
–
–
–
–
–
Net remeasurement of loss allowance
–
(1)
–
–
–
–
–
(1)
New financial assets acquired
560
–
–
–
–
–
560
–
Financial assets derecognised other
than write-offs
(312)
–
(15)
(2)
–
–
(327)
(2)
Write-offs
–
–
–
–
–
–
–
–
Effects of movements in exchange
rates and other movements
(2)
–
–
–
–
–
(2)
–
Balance at 31 December 2024
2,402
3
–
–
–
–
2,402
3
12-month ECL
Lifetime ECL not
credit-impaired
Lifetime ECL
credit-impaired
Total
US$m
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Debt securities measured at
amortised cost
Balance at 1 January 2023
1,778
4
15
2
–
–
1,793
6
Transfer to 12-month ECL
10
–
(10)
–
–
–
–
–
Transfer to lifetime ECL not credit-
impaired
(10)
–
10
–
–
–
–
–
Transfer to lifetime ECL credit-impaired
–
–
–
–
–
–
–
–
Net remeasurement of loss allowance
–
–
–
–
–
–
–
–
New financial assets acquired
472
–
–
–
–
–
472
–
Financial assets derecognised other
than write-offs
(105)
–
–
–
–
–
(105)
–
Write-offs
–
–
–
–
–
–
–
–
Effects of movements in exchange
rates and other movements
11
–
–
–
–
–
11
–
Balance at 31 December 2023
2,156
4
15
2
–
–
2,171
6
FINANCIAL STATEMENTS
257
ANNUAL REPORT 2024
23. IMPAIRMENT OF FINANCIAL ASSETS (continued)
Inputs, assumptions and techniques used for estimating impairment (continued)
Loss allowance (continued)
12-month ECL
Lifetime ECL not
credit-impaired
Lifetime ECL credit-
impaired
Total
US$m
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Loans and deposits measured at
amortised cost
Balance at 1 January 2024
3,708
11
15
2
20
7
3,743
20
Transfer to 12-month ECL
16
1
(5)
–
(11)
(1)
–
–
Transfer to lifetime ECL not credit-
impaired
(11)
–
11
–
–
–
–
–
Transfer to lifetime ECL credit-impaired
(3)
–
(1)
–
4
–
–
–
Net remeasurement of loss allowance
–
(9)
–
(1)
–
–
–
(10)
New financial assets acquired
39,425
5
–
–
–
–
39,425
5
Financial assets derecognised other
than write-offs
(39,325)
–
(1)
–
(3)
–
(39,329)
–
Write-offs
–
–
–
–
–
–
–
–
Effects of movements in exchange
rates and other movements
(54)
–
–
–
–
–
(54)
–
Balance at 31 December 2024
3,756
8
19
1
10
6
3,785
15
12-month ECL
Lifetime ECL not
credit-impaired
Lifetime ECL
credit-impaired
Total
US$m
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Loans and deposits measured at
amortised cost
Balance at 1 January 2023
4,572
17
11
3
10
7
4,593
27
Transfer to 12-month ECL
6
1
(4)
–
(2)
(1)
–
–
Transfer to lifetime ECL not credit-
impaired
(8)
–
9
–
(1)
–
–
–
Transfer to lifetime ECL credit-impaired
(16)
–
–
–
16
–
–
–
Net remeasurement of loss allowance
–
(16)
–
–
–
2
–
(14)
New financial assets acquired
30,837
10
–
–
–
–
30,837
10
Financial assets derecognised other
than write-offs
(31,654)
(1)
(1)
–
(3)
(1) (31,658)
(2)
Write-offs
–
–
–
–
–
–
–
–
Effects of movements in exchange
rates and other movements
(29)
–
–
(1)
–
–
(29)
(1)
Balance at 31 December 2023
3,708
11
15
2
20
7
3,743
20
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
258
AIA GROUP LIMITED
23. IMPAIRMENT OF FINANCIAL ASSETS (continued)
Inputs, assumptions and techniques used for estimating impairment (continued)
Loss allowance (continued)
12-month ECL
Lifetime ECL not
credit-impaired
Lifetime ECL
credit-impaired
Total
US$m
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Debt securities measured at fair value
through other comprehensive income
Balance at 1 January 2024
87,509
133
266
17
366
327
88,141
477
Transfer to 12-month ECL
–
–
–
–
–
–
–
–
Transfer to lifetime ECL not credit-
impaired
(169)
(1)
169
1
–
–
–
–
Transfer to lifetime ECL credit-impaired
–
–
–
–
–
–
–
–
Net remeasurement of loss allowance
–
(25)
–
3
–
8
–
(14)
New financial assets acquired
26,182
25
–
–
–
–
26,182
25
Financial assets derecognised other
than write-offs
(20,518)
(17)
(178)
(7)
(1)
(1) (20,697)
(25)
Write-offs
–
–
–
–
–
–
–
–
Effects of movements in exchange
rates and other movements
(1,997)
(4)
7
2
–
1
(1,990)
(1)
Balance at 31 December 2024
91,007
111
264
16
365
335
91,636
462
12-month ECL
Lifetime ECL not
credit-impaired
Lifetime ECL
credit-impaired
Total
US$m
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Debt securities measured at fair value
through other comprehensive income
Balance at 1 January 2023
89,556
167
511
50
103
83
90,170
300
Transfer to 12-month ECL
214
20
(214)
(20)
–
–
–
–
Transfer to lifetime ECL not credit-
impaired
(312)
(15)
312
15
–
–
–
–
Transfer to lifetime ECL credit-impaired
–
–
(250)
(13)
250
13
–
–
Net remeasurement of loss allowance
–
(45)
–
(13)
–
231
–
173
New financial assets acquired
18,909
29
–
–
–
–
18,909
29
Financial assets derecognised other
than write-offs
(20,494)
(23)
(102)
(7)
–
–
(20,596)
(30)
Write-offs
–
–
–
–
–
–
–
–
Effects of movements in exchange rates
and other movements
(364)
–
9
5
13
–
(342)
5
Balance at 31 December 2023
87,509
133
266
17
366
327
88,141
477
FINANCIAL STATEMENTS
259
ANNUAL REPORT 2024
23. IMPAIRMENT OF FINANCIAL ASSETS (continued)
Inputs, assumptions and techniques used for estimating impairment (continued)
Loss allowance (continued)
12-month ECL
Lifetime ECL not
credit-impaired
Lifetime ECL credit-
impaired
Total
US$m
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Receivables
Balance at 1 January 2024
1,254
–
30
3
29
16
1,313
19
Transfer to lifetime ECL not credit-
impaired
(3)
(2)
3
2
–
–
–
–
Transfer to lifetime ECL credit-impaired
(14)
(1)
–
–
14
1
–
–
Net remeasurement of loss allowance
–
2
–
2
–
10
–
14
Net decrease in receivables
(416)
2
(3)
(1)
(9)
(3)
(428)
(2)
Write-offs
–
–
–
–
–
–
–
–
Effects of movements in exchange
rates and other movements
(5)
–
–
–
(2)
(1)
(7)
(1)
Balance at 31 December 2024
816
1
30
6
32
23
878
30
12-month ECL
Lifetime ECL not
credit-impaired
Lifetime ECL credit-
impaired
Total
US$m
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Gross
carrying
amount
Loss
allowance
Receivables
Balance at 1 January 2023
1,673
–
42
11
28
14
1,743
25
Transfer to lifetime ECL not credit-
impaired
3
–
(3)
–
–
–
–
–
Transfer to lifetime ECL credit-impaired
(3)
–
(2)
(2)
5
2
–
–
Net remeasurement of loss allowance
–
–
–
(5)
–
2
–
(3)
Net decrease in receivables
(415)
–
(7)
(1)
(1)
–
(423)
(1)
Write-offs
–
–
–
–
(3)
(2)
(3)
(2)
Effects of movements in exchange
rates and other movements
(4)
–
–
–
–
–
(4)
–
Balance at 31 December 2023
1,254
–
30
3
29
16
1,313
19
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD
Movement in carrying amounts
The following reconciliations show how the net carrying amounts of insurance contracts and reinsurance contracts held
changed during the year as a result of cash flows and amounts recognised in the consolidated income statement and
consolidated statement of comprehensive income. The Group presents a table separately analysing movements in the
liabilities for remaining coverage and movements in the liabilities for incurred claims and reconciles these movements to
the line items in the consolidated income statement and consolidated statement of comprehensive income. A second
reconciliation is presented for contracts not measured under the premium allocation approach, which separately analyses
changes in the estimates of the present value of future cash flows, the risk adjustment for non-financial risk and the
contractual service margin.
The estimates of the present value of future cash flows from insurance and reinsurance contract assets represent the
Group’s maximum exposure to credit risk from these assets.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
260
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by remaining coverage and incurred claims of insurance contracts not measured under the premium allocation
approach
Year ended 31 December 2024
Liabilities for remaining coverage
US$m
Notes
Excluding loss
component
Loss
component
Liabilities for
incurred claims
Total
Opening assets
(454)
42
627
215
Opening liabilities
196,080
305
7,382
203,767
Net opening balance
195,626
347
8,009
203,982
Insurance revenue
8
(16,361)
–
–
(16,361)
Insurance service expenses
Incurred claims and other insurance service expenses
–
(115)
9,251
9,136
Amortisation of insurance acquisition cash flows
1,073
–
–
1,073
Losses and reversal of losses on onerous contracts
–
163
–
163
Adjustments to liabilities for incurred claims
–
–
(116)
(116)
Total insurance service expenses
1,073
48
9,135
10,256
Investment components
(10,662)
–
10,662
–
Other changes
(13)
–
13
–
Insurance service result
(25,963)
48
19,810
(6,105)
Net finance expenses from insurance contracts
9
13,868
17
148
14,033
Effect of movements in exchange rates
(3,703)
(16)
(572)
(4,291)
Total changes in the consolidated income statement and
consolidated statement of comprehensive income
(15,798)
49
19,386
3,637
Cash flows
Premiums received
42,142
–
–
42,142
Claims and other insurance service expenses paid,
including investment components
–
–
(24,997)
(24,997)
Insurance acquisition cash flows paid
(7,058)
–
–
(7,058)
Other amounts received
–
–
5,291
5,291
Total cash flows
35,084
–
(19,706)
15,378
Adjusted for:
Non-cash operating expenses
(174)
–
(85)
(259)
Other non-cash items
(408)
–
–
(408)
Total non-cash items
(582)
–
(85)
(667)
Net closing balance
214,330
396
7,604
222,330
Closing assets
54
31
434
519
Closing liabilities
214,276
365
7,170
221,811
Net closing balance
214,330
396
7,604
222,330
FINANCIAL STATEMENTS
261
ANNUAL REPORT 2024
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by remaining coverage and incurred claims of insurance contracts not measured under the premium allocation
approach (continued)
Year ended 31 December 2023
Liabilities for remaining coverage
US$m
Notes
Excluding loss
component
Loss
component
Liabilities for
incurred claims
Total
Opening assets
(1,230)
20
640
(570)
Opening liabilities
176,319
250
7,003
183,572
Net opening balance
175,089
270
7,643
183,002
Insurance revenue
8
(15,107)
–
–
(15,107)
Insurance service expenses
Incurred claims and other insurance service expenses
–
(113)
8,974
8,861
Amortisation of insurance acquisition cash flows
968
–
–
968
Losses and reversal of losses on onerous contracts
–
214
–
214
Adjustments to liabilities for incurred claims
–
–
(268)
(268)
Total insurance service expenses
968
101
8,706
9,775
Investment components
(11,737)
–
11,737
–
Other changes
(14)
–
14
–
Insurance service result
(25,890)
101
20,457
(5,332)
Net finance expenses/(income) from insurance
contracts
9
15,923
(24)
360
16,259
Effect of movements in exchange rates
(508)
56
(19)
(471)
Total changes in the consolidated income statement and
consolidated statement of comprehensive income
(10,475)
133
20,798
10,456
Cash flows
Premiums received
38,761
–
–
38,761
Claims and other insurance service expenses paid,
including investment components
18
–
(24,074)
(24,056)
Insurance acquisition cash flows paid
(6,325)
–
–
(6,325)
Other amounts (paid)/received
(1)
–
3,770
3,769
Total cash flows
32,453
–
(20,304)
12,149
Adjusted for:
Non-cash operating expenses
(161)
–
(71)
(232)
Other non-cash items
(370)
–
–
(370)
Total non-cash items
(531)
–
(71)
(602)
Contracts derecognised on disposal of held for sale
assets and liabilities
(910)
(56)
(57)
(1,023)
Net closing balance
195,626
347
8,009
203,982
Closing assets
(454)
42
627
215
Closing liabilities
196,080
305
7,382
203,767
Net closing balance
195,626
347
8,009
203,982
Insurance contract assets of US$664m (2023: US$501m) and insurance contract liabilities of US$6,555m (2023:
US$5,633m) are expected to be recovered within 12 months after the reporting date.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
262
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by measurement component of insurance contracts not measured under the premium allocation approach
Year ended 31 December 2024
CSM
US$m
Notes
Estimates
of present
value of
future
cash flows
Risk
adjustment
for non-
financial risk
CSM
Total
Contracts
under
modified
retrospective
approach
Contracts
under fair
value
approach
Other
contracts
Total
Opening assets
(9,961)
888
9,288
215
–
5,640
3,648
9,288
Opening liabilities
154,587
2,950
46,230 203,767
9,882
24,663
11,685
46,230
Net opening balance
144,626
3,838
55,518 203,982
9,882
30,303
15,333
55,518
Insurance service result
Changes that relate to current services
CSM recognised for services provided
8
–
–
(5,958)
(5,958)
(976) (2,574)
(2,408)
(5,958)
Change in risk adjustment for
non-financial risk
–
(210)
–
(210)
–
–
–
–
Experience adjustments
167
–
–
167
–
–
–
–
Others
(151)
–
–
(151)
–
–
–
–
Changes that relate to future services
Contracts initially recognised in the year
(8,025)
435
7,700
110
–
–
7,700
7,700
Changes in estimates that adjust the CSM
(949)
125
824
–
393
580
(149)
824
Changes in estimates that result in
losses and reversal of losses on
onerous contracts
21
32
–
53
–
–
–
–
Changes that relate to past services
(48)
(68)
–
(116)
–
–
–
–
Total insurance service result
(8,985)
314
2,566
(6,105)
(583) (1,994)
5,143
2,566
Net finance expenses from insurance
contracts
9
12,620
–
1,413
14,033
446
453
514
1,413
Effect of movements in exchange rates
(3,250)
(119)
(922)
(4,291)
(244)
(379)
(299)
(922)
Total changes in the consolidated
income statement and consolidated
statement of comprehensive income
385
195
3,057
3,637
(381) (1,920)
5,358
3,057
Cash flows
15,378
–
–
15,378
–
–
–
–
Non-cash operating expenses
(259)
–
–
(259)
–
–
–
–
Other non-cash items
(408)
–
–
(408)
–
–
–
–
Net closing balance
159,722
4,033
58,575 222,330
9,501
28,383
20,691
58,575
Closing assets
(5,091)
698
4,912
519
–
1,374
3,538
4,912
Closing liabilities
164,813
3,335
53,663 221,811
9,501
27,009
17,153
53,663
Net closing balance
159,722
4,033
58,575 222,330
9,501
28,383
20,691
58,575
FINANCIAL STATEMENTS
263
ANNUAL REPORT 2024
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by measurement component of insurance contracts not measured under the premium allocation approach
(continued)
Year ended 31 December 2023
CSM
US$m
Notes
Estimates
of present
value of
future
cash flows
Risk
adjustment
for non-
financial risk
CSM
Total
Contracts
under
modified
retrospective
approach
Contracts
under fair
value
approach
Other
contracts
Total
Opening assets
(8,689)
739
7,380
(570)
–
4,983
2,397
7,380
Opening liabilities
135,747
2,796
45,029
183,572
10,627
26,411
7,991
45,029
Net opening balance
127,058
3,535
52,409
183,002
10,627
31,394
10,388
52,409
Insurance service result
Changes that relate to current services
CSM recognised for services provided
8
–
–
(5,605)
(5,605)
(1,009)
(2,670)
(1,926)
(5,605)
Change in risk adjustment for non-
financial risk
–
(125)
–
(125)
–
–
–
–
Experience adjustments
581
–
–
581
–
–
–
–
Others
(129)
–
–
(129)
–
–
–
–
Changes that relate to future services
Contracts initially recognised in the year
(7,380)
473
7,060
153
–
–
7,060
7,060
Changes in estimates that adjust the CSM
(971)
23
948
–
15
1,360
(427)
948
Changes in estimates that result in losses
and reversal of losses on onerous
contracts
17
44
–
61
–
–
–
–
Changes that relate to past services
(208)
(60)
–
(268)
–
–
–
–
Total insurance service result
(8,090)
355
2,403
(5,332)
(994)
(1,310)
4,707
2,403
Net finance expenses/(income) from
insurance contracts
9
15,129
(26)
1,156
16,259
471
335
350
1,156
Effect of movements in exchange rates
(32)
(2)
(437)
(471)
(222)
(103)
(112)
(437)
Total changes in the consolidated income
statement and consolidated statement
of comprehensive income
7,007
327
3,122
10,456
(745)
(1,078)
4,945
3,122
Cash flows
12,149
–
–
12,149
–
–
–
–
Non-cash operating expenses
(232)
–
–
(232)
–
–
–
–
Other non-cash items
(370)
–
–
(370)
–
–
–
–
Contracts derecognised on disposal of held
for sale assets and liabilities
(986)
(24)
(13)
(1,023)
–
(13)
–
(13)
Net closing balance
144,626
3,838
55,518
203,982
9,882
30,303
15,333
55,518
Closing assets
(9,961)
888
9,288
215
–
5,640
3,648
9,288
Closing liabilities
154,587
2,950
46,230
203,767
9,882
24,663
11,685
46,230
Net closing balance
144,626
3,838
55,518
203,982
9,882
30,303
15,333
55,518
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
264
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by remaining coverage and incurred claims of reinsurance contracts held not measured under the premium
allocation approach
Year ended 31 December 2024
Asset for remaining coverage
US$m
Note
Excluding
loss-recovery
component
Loss-recovery
component
Asset for
incurred claims
Total
Opening assets
2,091
133
3,746
5,970
Opening liabilities
(663)
9
326
(328)
Net opening balance
1,428
142
4,072
5,642
Changes in the consolidated income statement
and consolidated statement of comprehensive
income
Net (expenses)/income from reinsurance
contracts held (excluding effect of changes in
non-performance risk of reinsurers)
(2,258)
22
1,843
(393)
Effect of changes in non-performance risk of
reinsurers
–
–
–
–
Net (expenses)/income from reinsurance
contracts held
(2,258)
22
1,843
(393)
Investment components
(77)
–
77
–
Other changes
–
–
–
–
Net finance income from reinsurance contracts
held
9
167
–
37
204
Effect of movements in exchange rates
41
(14)
(282)
(255)
Total changes in the consolidated income
statement and consolidated statement of
comprehensive income
(2,127)
8
1,675
(444)
Cash flows
Premiums paid
2,119
–
–
2,119
Amounts received
–
–
(1,903)
(1,903)
Other amounts paid
–
–
5
5
Total cash flows
2,119
–
(1,898)
221
Adjusted for:
Non-cash operating expenses
–
–
–
–
Other non-cash items
–
–
–
–
Total non-cash items
–
–
–
–
Net closing balance
1,420
150
3,849
5,419
Closing assets
2,107
139
3,416
5,662
Closing liabilities
(687)
11
433
(243)
Net closing balance
1,420
150
3,849
5,419
FINANCIAL STATEMENTS
265
ANNUAL REPORT 2024
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by remaining coverage and incurred claims of reinsurance contracts held not measured under the premium
allocation approach (continued)
Year ended 31 December 2023
Asset for remaining coverage
US$m
Note
Excluding
loss-recovery
component
Loss-recovery
component
Asset for
incurred claims
Total
Opening assets
2,044
124
3,537
5,705
Opening liabilities
(775)
6
374
(395)
Net opening balance
1,269
130
3,911
5,310
Changes in the consolidated income statement
and consolidated statement of comprehensive
income
Net (expenses)/income from reinsurance
contracts held (excluding effect of changes in
non-performance risk of reinsurers)
(2,059)
10
1,762
(287)
Effect of changes in non-performance risk of
reinsurers
–
–
–
–
Net (expenses)/income from reinsurance
contracts held
(2,059)
10
1,762
(287)
Investment components
(136)
–
136
–
Other changes
–
–
–
–
Net finance income from reinsurance contracts
held
9
46
1
128
175
Effect of movements in exchange rates
138
1
(63)
76
Total changes in the consolidated income
statement and consolidated statement of
comprehensive income
(2,011)
12
1,963
(36)
Cash flows
Premiums paid
2,149
–
–
2,149
Amounts received
–
–
(1,807)
(1,807)
Other amounts paid
–
–
4
4
Total cash flows
2,149
–
(1,803)
346
Adjusted for:
Non-cash operating expenses
–
–
–
–
Other non-cash items
–
–
–
–
Total non-cash items
–
–
–
–
Contracts derecognised on disposal of held for
sale assets and liabilities
21
–
1
22
Net closing balance
1,428
142
4,072
5,642
Closing assets
2,091
133
3,746
5,970
Closing liabilities
(663)
9
326
(328)
Net closing balance
1,428
142
4,072
5,642
Reinsurance contract assets of US$401m (2023: US$1,547m) and reinsurance contract liabilities of US$(15)m (2023:
US$(51)m) are expected to be recovered/(settled) within 12 months after the reporting date.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
266
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by measurement component of reinsurance contracts held not measured under the premium allocation
approach
Year ended 31 December 2024
CSM
US$m
Note
Estimates
of present
value of
future
cash flows
Risk
adjustment
for non-
financial risk
CSM
Total
Contracts
under
modified
retrospective
approach
Contracts
under fair
value
approach
Other
contracts
Total
Opening assets
3,371
579
2,020
5,970
(855)
3,040
(165)
2,020
Opening liabilities
(908)
197
383
(328)
–
383
–
383
Net opening balance
2,463
776
2,403
5,642
(855)
3,423
(165)
2,403
Net (expenses)/income from reinsurance
contracts held
Changes that relate to current services
CSM recognised for services received
–
–
(333)
(333)
76
(341)
(68)
(333)
Change in risk adjustment for non-
financial risk
–
(40)
–
(40)
–
–
–
–
Experience adjustments
(135)
–
–
(135)
–
–
–
–
Changes that relate to future services
Changes in recoveries of losses on
onerous underlying contracts that
adjust the CSM
–
–
9
9
–
–
9
9
Contracts initially recognised in the year
(46)
30
16
–
–
–
16
16
Changes in estimates that adjust the CSM
(363)
6
357
–
103
108
146
357
Changes in estimates that relate to losses
and reversal of losses on onerous
underlying contracts
23
–
–
23
–
–
–
–
Changes that relate to past services
92
(9)
–
83
–
–
–
–
Effect of changes in non-performance risk
of reinsurers
–
–
–
–
–
–
–
–
Total net (expenses)/income from
reinsurance contracts held
(429)
(13)
49
(393)
179
(233)
103
49
Net finance income/(expenses) from
reinsurance contracts held
9
167
–
37
204
(48)
82
3
37
Effect of movements in exchange rates
(56)
(54)
(145)
(255)
24
(153)
(16)
(145)
Total changes in the consolidated income
statement and consolidated statement
of comprehensive income
(318)
(67)
(59)
(444)
155
(304)
90
(59)
Cash flows
221
–
–
221
–
–
–
–
Non-cash operating expenses
–
–
–
–
–
–
–
–
Other non-cash items
–
–
–
–
–
–
–
–
Net closing balance
2,366
709
2,344
5,419
(700)
3,119
(75)
2,344
Closing assets
3,054
530
2,078
5,662
(700)
2,938
(160)
2,078
Closing liabilities
(688)
179
266
(243)
–
181
85
266
Net closing balance
2,366
709
2,344
5,419
(700)
3,119
(75)
2,344
FINANCIAL STATEMENTS
267
ANNUAL REPORT 2024
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by measurement component of reinsurance contracts held not measured under the premium allocation
approach (continued)
Year ended 31 December 2023
CSM
US$m
Note
Estimates
of present
value of
future
cash flows
Risk
adjustment
for non-
financial risk
CSM
Total
Contracts
under
modified
retrospective
approach
Contracts
under fair
value
approach
Other
contracts
Total
Opening assets
3,356
523
1,826
5,705
(1,031)
3,110
(253)
1,826
Opening liabilities
(1,007)
254
358
(395)
–
115
243
358
Net opening balance
2,349
777
2,184
5,310
(1,031)
3,225
(10)
2,184
Net (expenses)/income from reinsurance
contracts held
Changes that relate to current services
CSM recognised for services received
–
–
(291)
(291)
89
(367)
(13)
(291)
Change in risk adjustment for non-
financial risk
–
(11)
–
(11)
–
–
–
–
Experience adjustments
(66)
–
–
(66)
–
–
–
–
Changes that relate to future services
Changes in recoveries of losses on
onerous underlying contracts that
adjust the CSM
–
–
15
15
–
–
15
15
Contracts initially recognised in the year
(143)
72
71
–
–
–
71
71
Changes in estimates that adjust the CSM
(320)
(44)
364
–
124
54
186
364
Changes in estimates that relate to losses
and reversal of losses on onerous
underlying contracts
36
(1)
–
35
–
–
–
–
Changes that relate to past services
45
(14)
–
31
–
–
–
–
Effect of changes in non-performance risk
of reinsurers
–
–
–
–
–
–
–
–
Total net (expenses)/income from
reinsurance contracts held
(448)
2
159
(287)
213
(313)
259
159
Net finance income/(expenses) from
reinsurance contracts held
9
39
3
133
175
(57)
199
(9)
133
Effect of movements in exchange rates
172
(6)
(90)
76
20
295
(405)
(90)
Total changes in the consolidated income
statement and consolidated statement
of comprehensive income
(237)
(1)
202
(36)
176
181
(155)
202
Cash flows
346
–
–
346
–
–
–
–
Non-cash operating expenses
–
–
–
–
–
–
–
–
Other non-cash items
–
–
–
–
–
–
–
–
Contracts derecognised on disposal of held
for sale assets and liabilities
5
–
17
22
–
17
–
17
Net closing balance
2,463
776
2,403
5,642
(855)
3,423
(165)
2,403
Closing assets
3,371
579
2,020
5,970
(855)
3,040
(165)
2,020
Closing liabilities
(908)
197
383
(328)
–
383
–
383
Net closing balance
2,463
776
2,403
5,642
(855)
3,423
(165)
2,403
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
268
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by remaining coverage and incurred claims of insurance contracts measured under the premium allocation
approach
Year ended 31 December 2024
Liabilities for
remaining coverage
Liabilities for
incurred claims
US$m
Notes
Excluding
loss
component
Loss
component
Estimate of
present value
of future
cash flows
Risk
adjustment
for non-
financial risk
Total
Opening assets
1
–
–
–
1
Opening liabilities
419
–
453
18
890
Net opening balance
420
–
453
18
891
Insurance revenue
8
(2,953)
–
–
–
(2,953)
Insurance service expenses
Incurred claims and other insurance service
expenses
–
–
2,390
13
2,403
Amortisation of insurance acquisition cash
flows
427
–
–
–
427
Losses and reversal of losses on onerous
contracts
–
–
–
–
–
Adjustments to liabilities for incurred claims
–
–
61
(11)
50
Total insurance service expenses
427
–
2,451
2
2,880
Investment components
(13)
–
13
–
–
Other changes
(4)
–
4
–
–
Insurance service result
(2,543)
–
2,468
2
(73)
Net finance expenses from insurance contracts
9
–
–
–
–
–
Effect of movements in exchange rates
(8)
–
(11)
–
(19)
Total changes in the consolidated income
statement and consolidated statement of
comprehensive income
(2,551)
–
2,457
2
(92)
Cash flows
Premiums received
2,979
–
–
–
2,979
Claims and other insurance service expenses
paid, including investment components
–
–
(2,431)
–
(2,431)
Insurance acquisition cash flows paid
(386)
–
–
–
(386)
Other amounts received
–
–
–
–
–
Total cash flows
2,593
–
(2,431)
–
162
Adjusted for:
Non-cash operating expenses
(13)
–
(3)
–
(16)
Other non-cash items
–
–
–
–
–
Total non-cash items
(13)
–
(3)
–
(16)
Net closing balance
449
–
476
20
945
Closing assets
3
–
2
–
5
Closing liabilities
446
–
474
20
940
Net closing balance
449
–
476
20
945
FINANCIAL STATEMENTS
269
ANNUAL REPORT 2024
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by remaining coverage and incurred claims of insurance contracts measured under the premium allocation
approach (continued)
Year ended 31 December 2023
Liabilities for
remaining coverage
Liabilities for
incurred claims
US$m
Notes
Excluding
loss
component
Loss
component
Estimate of
present value
of future
cash flows
Risk
adjustment
for non-
financial risk
Total
Opening assets
–
–
1
–
1
Opening liabilities
308
–
412
18
738
Net opening balance
308
–
413
18
739
Insurance revenue
8
(2,407)
–
–
–
(2,407)
Insurance service expenses
Incurred claims and other insurance service
expenses
–
–
2,099
12
2,111
Amortisation of insurance acquisition cash
flows
325
–
–
–
325
Losses and reversal of losses on onerous
contracts
–
–
–
–
–
Adjustments to liabilities for incurred claims
–
–
(120)
(13)
(133)
Total insurance service expenses
325
–
1,979
(1)
2,303
Investment components
(6)
–
6
–
–
Other changes
(3)
–
3
–
–
Insurance service result
(2,091)
–
1,988
(1)
(104)
Net finance expenses/(income) from insurance
contracts
9
–
–
–
–
–
Effect of movements in exchange rates
(16)
–
38
1
23
Total changes in the consolidated income
statement and consolidated statement of
comprehensive income
(2,107)
–
2,026
–
(81)
Cash flows
Premiums received
2,559
–
–
–
2,559
Claims and other insurance service expenses
paid, including investment components
–
–
(1,984)
–
(1,984)
Insurance acquisition cash flows paid
(328)
–
–
–
(328)
Other amounts received
–
–
1
–
1
Total cash flows
2,231
–
(1,983)
–
248
Adjusted for:
Non-cash operating expenses
(12)
–
(3)
–
(15)
Other non-cash items
–
–
–
–
–
Total non-cash items
(12)
–
(3)
–
(15)
Net closing balance
420
–
453
18
891
Closing assets
1
–
–
–
1
Closing liabilities
419
–
453
18
890
Net closing balance
420
–
453
18
891
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
270
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by measurement component of reinsurance contracts held measured under the premium allocation approach
Year ended 31 December 2024
Asset for remaining coverage
Asset for incurred claims
US$m
Note
Excluding
loss-recovery
component
Loss-recovery
component
Estimate of
present value
of future
cash flows
Risk
adjustment
for non-
financial risk
Total
Opening assets
(241)
–
316
2
77
Opening liabilities
(59)
–
50
1
(8)
Net opening balance
(300)
–
366
3
69
Changes in the consolidated income statement
and consolidated statement of
comprehensive income
Net (expenses)/income from reinsurance
contracts held (excluding effect of changes in
non-performance risk of reinsurers)
(328)
–
312
–
(16)
Effect of changes in non-performance risk of
reinsurers
–
–
–
–
–
Net (expenses)/income from reinsurance
contracts held
(328)
–
312
–
(16)
Investment components
(23)
–
23
–
–
Other changes
–
–
–
–
–
Net finance income from reinsurance contracts
held
9
–
–
–
–
–
Effect of movements in exchange rates
6
–
(8)
–
(2)
Total changes in the consolidated income
statement and consolidated statement of
comprehensive income
(345)
–
327
–
(18)
Cash flows
Premiums paid
318
–
–
–
318
Amounts received
–
–
(313)
–
(313)
Other amounts paid
–
–
–
–
–
Total cash flows
318
–
(313)
–
5
Adjusted for:
Non-cash operating expenses
–
–
–
–
–
Other non-cash items
–
–
–
–
–
Total non-cash items
–
–
–
–
–
Net closing balance
(327)
–
380
3
56
Closing assets
(253)
–
318
3
68
Closing liabilities
(74)
–
62
–
(12)
Net closing balance
(327)
–
380
3
56
FINANCIAL STATEMENTS
271
ANNUAL REPORT 2024
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Movement in carrying amounts (continued)
Analysis by measurement component of reinsurance contracts held measured under the premium allocation approach
(continued)
Year ended 31 December 2023
Asset for remaining coverage
Asset for incurred claims
US$m
Note
Excluding
loss-recovery
component
Loss-recovery
component
Estimate of
present value
of future
cash flows
Risk
adjustment
for non-
financial risk
Total
Opening assets
(248)
–
304
2
58
Opening liabilities
(77)
–
65
1
(11)
Net opening balance
(325)
–
369
3
47
Changes in the consolidated income statement
and consolidated statement of
comprehensive income
Net (expenses)/income from reinsurance
contracts held (excluding effect of changes in
non-performance risk of reinsurers)
(346)
–
288
–
(58)
Effect of changes in non-performance risk of
reinsurers
–
–
–
–
–
Net (expenses)/income from reinsurance
contracts held
(346)
–
288
–
(58)
Investment components
(26)
–
26
–
–
Other changes
–
–
–
–
–
Net finance income from reinsurance contracts
held
9
1
–
–
–
1
Effect of movements in exchange rates
11
–
(3)
–
8
Total changes in the consolidated income
statement and consolidated statement of
comprehensive income
(360)
–
311
–
(49)
Cash flows
Premiums paid
384
–
–
–
384
Amounts paid/(received)
1
–
(316)
–
(315)
Other amounts paid
–
–
2
–
2
Total cash flows
385
–
(314)
–
71
Adjusted for:
Non-cash operating expenses
–
–
–
–
–
Other non-cash items
–
–
–
–
–
Total non-cash items
–
–
–
–
–
Net closing balance
(300)
–
366
3
69
Closing assets
(241)
–
316
2
77
Closing liabilities
(59)
–
50
1
(8)
Net closing balance
(300)
–
366
3
69
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
272
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Effect of contracts initially recognised in the year
The following tables summarise the effect on the measurement components of insurance contracts and reinsurance
contracts held arising from the initial recognition of contracts not measured under the premium allocation approach that
were initially recognised in the year.
Insurance contracts
US$m
Profitable
contracts
issued
Onerous
contracts
issued
Profitable
contracts
acquired
Total
Year ended 31 December 2024
Estimates of present value of future cash outflows
Insurance acquisition cash flows
6,586
351
–
6,937
Claims payable and other expenses
29,878
2,179
–
32,057
Total estimates of present value of future cash outflows
36,464
2,530
–
38,994
Estimates of present value of future cash inflows
(44,571)
(2,448)
–
(47,019)
Risk adjustment for non-financial risk
407
28
–
435
Contractual service margin
7,700
–
–
7,700
Losses recognised on initial recognition
–
110
–
110
US$m
Profitable
contracts
issued
Onerous
contracts
issued
Profitable
contracts
acquired
Total
Year ended 31 December 2023
Estimates of present value of future cash outflows
Insurance acquisition cash flows
6,058
386
–
6,444
Claims payable and other expenses
28,637
2,217
–
30,854
Total estimates of present value of future cash outflows
34,695
2,603
–
37,298
Estimates of present value of future cash inflows
(42,195)
(2,483)
–
(44,678)
Risk adjustment for non-financial risk
440
33
–
473
Contractual service margin
7,060
–
–
7,060
Losses recognised on initial recognition
–
153
–
153
FINANCIAL STATEMENTS
273
ANNUAL REPORT 2024
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Effect of contracts initially recognised in the year (continued)
Reinsurance contracts held
Year ended 31 December 2024
Year ended 31 December 2023
US$m
Contracts
originated
Contracts
acquired
Total
Contracts
originated
Contracts
acquired
Total
Estimates of present value of future cash inflows
1,264
–
1,264
2,179
–
2,179
Estimates of present value of future cash outflows
(1,310)
–
(1,310)
(2,322)
–
(2,322)
Risk adjustment for non-financial risk
30
–
30
72
–
72
Income recognised on initial recognition
(9)
–
(9)
(15)
–
(15)
Contractual service margin
(25)
–
(25)
(86)
–
(86)
Analysis of assets for insurance acquisition cash flows
US$m
Year ended
31 December
2024
Year ended
31 December
2023
Opening balance presented in insurance contract assets
1,673
1,468
Opening balance presented in insurance contract liabilities
1,386
1,411
Total opening balance
3,059
2,879
Acquisitions through business combinations
–
–
Assets recognised for insurance acquisition cash flows paid during the year
247
294
Allocation to groups of insurance contracts
(218)
(217)
Impairment losses and reversals
–
–
Effect of movements in exchange rates
(253)
103
Total closing balance
2,835
3,059
Closing balance presented in insurance contract assets
1,496
1,673
Closing balance presented in insurance contract liabilities
1,339
1,386
Total closing balance
2,835
3,059
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
274
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Analysis of assets for insurance acquisition cash flows (continued)
The following table illustrates when the Group expects to derecognise the assets for insurance acquisition cash flows and
include those cash flows in the measurement of the group of insurance contracts to which they are allocated.
US$m
Total
Five years
or less
After
five years
through
ten years
After
ten years
31 December 2024
Assets for insurance acquisition cash flows
2,835
863
674
1,298
31 December 2023
Assets for insurance acquisition cash flows
3,059
794
613
1,652
Analysis of contractual service margin
The following table illustrates when the Group expects to recognise the remaining contractual service margin as revenue
for contracts not measured under the premium allocation approach.
US$m
Total
Five years
or less
After
five years
through
ten years
After
ten years
31 December 2024
Insurance contracts
58,575
21,823
13,216
23,536
Reinsurance contracts held
2,344
886
502
956
31 December 2023
Insurance contracts
55,518
20,319
12,691
22,508
Reinsurance contracts held
2,403
980
497
926
FINANCIAL STATEMENTS
275
ANNUAL REPORT 2024
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Fulfilment cash flows
Estimates of future cash flows
The Group’s objective in estimating future cash flows is to determine the expected value or probability-weighted mean of
the full range of possible outcomes. The Group incorporates, in an unbiased way, all reasonable and supportable information
that is available without undue cost or effort at the reporting date. This information includes both internal and external
historical data about claims and other experience, updated to reflect current expectations of future events.
The estimates of future cash flows reflect the Group’s view of current conditions at the reporting date and the estimates of
any relevant market variables are consistent with observable market prices.
When estimating future cash flows, the Group takes into account current expectations of future events that might affect
those cash flows. However, expectations of future changes in legislation that would change or discharge a present
obligation or create new obligations under existing contracts are not taken into account until the change in legislation is
substantively enacted.
Cash flows are within the boundary of a contract if they arise from substantive rights and obligations that exist during the
reporting period. They relate directly to the fulfilment of the contract, including those for which the Group has discretion
over the amount or timing. These include payments to (or on behalf of) policyholders, insurance acquisition cash flows and
other costs that are incurred in fulfilling contracts.
Insurance acquisition cash flows arise from the activities of selling, underwriting and starting a group of contracts that are
directly attributable to the portfolio of contracts to which the group belongs. Other costs that are incurred in fulfilling the
contracts include claims handling, maintenance and administration costs, and recurring commissions payable on
instalment premiums receivable within the contract boundary.
Insurance acquisition cash flows and other costs that are incurred in fulfilling contracts comprise both direct costs and an
allocation of fixed and variable overheads.
Methodology and assumptions
Mortality
Assumptions have been developed by each business unit based on their recent historical experience, and their expectations
of current and expected future experience including mortality improvement. Where historical experience is not credible,
reference has been made to pricing assumptions supplemented by market data, where available.
Mortality assumptions have been expressed as a percentage of either standard industry experience tables or, where
experience is sufficiently credible, as a percentage of tables that have been developed internally by the Group.
Morbidity
Assumptions have been developed by each business unit based on their recent historical experience, and their expectations
of current and expected future experience. Morbidity rate assumptions have been expressed as a percentage of standard
industry experience tables or as expected claims ratios.
Persistency
Persistency covers the assumptions required, where relevant, for policy lapse (including surrender), premium persistency,
premium holidays, partial withdrawals, policy loan take up and repayment and retirement rates for pension products.
Assumptions have been developed by each of the business units based on their recent historical experience, and their best
estimate expectations of currency and expected future experience. Persistency assumptions would vary by policy year and
product type with different rates for regular and single premium products where appropriate.
Where experience for a particular product was not credible enough to allow any meaningful analysis to be performed,
experience for similar products was used as a basis for future persistency experience assumptions.
In the case of surrenders, the valuation assumes that current surrender value bases will continue to apply in the future.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
276
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Fulfilment cash flows (continued)
Methodology and assumptions (continued)
Expenses
The expense assumptions have been set based on the most recent expense analysis. The purpose of the expense analysis
is to allocate total expenses between acquisition, maintenance and other activities, and then to allocate these acquisition
and maintenance expenses that can be directly attributed to the portfolio of insurance contracts to derive unit cost
assumptions.
Where the expenses associated with certain activities have been identified as being one-off, these expenses have been
excluded from the expense analysis.
Expense assumptions have been determined for acquisition and maintenance activities that can be directly attributed to
the portfolio of insurance contracts, split by product type, and unit costs expressed as a percentage of premiums, sum
assured and an amount per policy. Where relevant, expense assumptions have been calculated per distribution channel.
Expense assumptions do not make allowance for any anticipated future expense savings as a result of any strategic
initiatives aimed at improving policy administration and claims handling efficiency.
Assumptions for commission rates and other sales-related payments have been set in line with actual experience.
Reinsurance
Reinsurance assumptions have been developed by each business unit based on the reinsurance arrangements in-force as
at the reporting date and the recent historical and expected future experience.
Policyholder dividends, profit sharing and interest crediting
The projected policyholder dividends, profit sharing and interest crediting assumptions set by each business unit reflect
contractual and regulatory requirements, policyholders’ reasonable expectations (where clearly defined) and each
business unit’s best estimate of future policies, strategies and operations consistent with the investment return assumptions.
Participating funds and other participating business with distinct portfolios surpluses have been assumed to be distributed
between policyholders and shareholders via future final bonuses or at the end of the projection period so that there are no
residual assets at the end of the projection period.
The assumed estimated crediting rates and participation percentages are generally based on the actual rates and
percentages applied in the current year. The crediting rates applied vary between products and Group entities; in the
current economic environment, the amounts credited are often determined by interest rate guarantees.
FINANCIAL STATEMENTS
277
ANNUAL REPORT 2024
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Fulfilment cash flows (continued)
Methodology and assumptions (continued)
An adjustment to reflect the time value of money and the financial risks related to future cash flows
The Group adjusts the estimate of future cash flows to reflect the time value of money and the financial risks related to
those cash flows. The cash flows are discounted by the discount rates to reflect the time value of money, the characteristics
of the cash flows and the liquidity characteristics of the insurance contracts.
The top-down approach has been primarily adopted for the derivation of discount rates. A top-down approach starts with
considering a yield curve that reflects the current market rates of return of a reference portfolio of assets that have similar
characteristics of the insurance contracts, and adjust this downwards to eliminate any factors not relevant to the insurance
contracts (primarily the allowance for credit risk). The assessment of credit risk premium is done on external and internal
ratings when the reference portfolio contains assets which are locally rated. Alternatively, a bottom-up approach could be
used under which discount rates are determined by adjusting the liquid risk-free yield curve to reflect the liquidity
characteristics of the insurance contracts.
In constructing the discount rates, market observable rates are used up to the last available market data point which is
reliable and also relevant in reflecting the characteristics of the insurance contracts. The market observable rates are
extrapolated between this point and an ultimate forward rate derived using long-term estimates by applying generally
accepted technique such as Smith-Wilson method etc.
The tables below set out the spot rates used to discount the cash flows of insurance contracts for major currencies. To
reflect the liquidity characteristics of the insurance contracts, the risk-free spot rates are adjusted by an illiquidity premium.
As at 31 December 2024
1 year
5 years
10 years
15 years
20 years
Spot rates
Risk free
With
illiquidity
premium
Risk free
With
illiquidity
premium
Risk free
With
illiquidity
premium
Risk free
With
illiquidity
premium
Risk free
With
illiquidity
premium
USD
4.12%
4.72%
4.32%
4.93%
4.51%
5.35%
4.74%
5.61%
4.88%
5.73%
HKD
3.88%
4.48%
3.60%
4.21%
3.65%
4.49%
3.72%
4.59%
3.86%
4.71%
CNY
1.08%
1.65%
1.42%
1.81%
1.70%
2.03%
1.99%
2.34%
2.26%
2.68%
SGD
2.80%
3.45%
2.81%
3.78%
2.90%
3.42%
2.93%
3.36%
2.84%
3.31%
MYR
3.28%
3.71%
3.66%
3.97%
3.86%
4.10%
4.03%
4.31%
4.11%
4.49%
THB
1.99%
2.37%
2.11%
2.72%
2.33%
3.08%
2.54%
3.37%
2.75%
3.64%
As at 31 December 2023
1 year
5 years
10 years
15 years
20 years
Spot rates
Risk free
With
illiquidity
premium
Risk free
With
illiquidity
premium
Risk free
With
illiquidity
premium
Risk free
With
illiquidity
premium
Risk free
With
illiquidity
premium
USD
4.73%
5.33%
3.78%
4.56%
3.79%
4.78%
3.89%
4.98%
4.21%
5.24%
HKD
4.28%
4.88%
3.27%
4.05%
3.29%
4.28%
3.41%
4.50%
3.73%
4.76%
CNY
2.07%
2.55%
2.41%
2.84%
2.59%
2.96%
2.75%
3.16%
2.89%
3.37%
SGD
3.53%
4.28%
2.64%
4.07%
2.67%
3.95%
2.74%
3.97%
2.71%
3.90%
MYR
3.30%
3.75%
3.65%
3.94%
3.74%
4.11%
4.05%
4.50%
4.18%
4.70%
THB
2.39%
2.74%
2.47%
3.04%
2.73%
3.42%
3.11%
3.88%
3.37%
4.19%
For the insurance contracts with cash flows that vary based on the returns on any financial underlying items, the Group
applies risk-neutral measurement techniques. Stochastic modelling is applied for insurance contracts with significant
financial options and guarantees to estimate the expected present value. A large number of possible economic scenarios
for market variables such as interest rates and equity returns are considered using risk-neutral approach and consistent
with market observable price.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
278
AIA GROUP LIMITED
24. INSURANCE CONTRACTS AND REINSURANCE CONTRACTS HELD (continued)
Risk adjustments for non-financial risk
Risk adjustments for non-financial risk are generally determined by considering the expected cash flows arising from
insurance contracts in each segment for each of the geographical markets in which the Group operates, consistent with
the way that non-financial risk is managed. Risk adjustments are determined separately from estimates from the present
value of future cash flows, using the confidence level technique.
Applying a confidence level technique, the Group estimates the probability distribution of the expected present value of
the future cash flows from insurance contracts at each reporting date and calculates the risk adjustment for non-financial
risk as the excess of the value at risk at the 75th percentile (the target confidence level) over the expected present value
of the future cash flows.
Contractual service margin
The CSM of a group of contracts is recognised as insurance revenue in each period based on the number of coverage units
provided in the period, which is determined by considering for each contract the quantity of the services provided, its
expected coverage period and time value of money.
For a group of contracts that is onerous at the start of a reporting period and becomes profitable subsequently that CSM is
recognised during the reporting period, the total amount of recognised CSM is released to profit or loss if there are no more
future coverage units.
Investment components
The Group identifies the investment component of an insurance contract by determining the amount that it would be
required to repay to the policyholder in all circumstances, regardless of whether an insured event occurs. Investment
components are excluded from insurance revenue and insurance service expenses. Generally, for relevant contracts,
surrender value would be determined as an investment component.
Underlying items of contracts with direct participation features
The following table sets out the composition and the fair value of the underlying items for the Group’s contracts with direct
participation features at the reporting date.
US$m
As at
31 December
2024
As at
31 December
2023
Cash and cash equivalents
2,260
2,662
Financial investments and policy loans
142,592
133,092
Property held for own use and investment property
1,636
1,591
Investment in subsidiaries and associates
1,640
1,517
Other assets
5,578
5,813
Less: payables and other liabilities
(18,676)
(17,196)
Total
135,030
127,479
FINANCIAL STATEMENTS
279
ANNUAL REPORT 2024
25. INVESTMENT CONTRACTS
US$m
Year ended
31 December
2024
Year ended
31 December
2023
At beginning of financial year
9,170
11,986
Investment contract benefits
791
572
Fees charged
(52)
(54)
Net withdrawals and other movements(1)
(2,849)
(3,236)
Effect of foreign exchange movements
(93)
(98)
At end of financial year(2)
6,967
9,170
Notes:
(1) Includes derecognition of assets and liabilities for Macau pension schemes. (2023: Includes amounts derecognised on disposal of held for sale
assets and liabilities.)
(2) Of investment contract liabilities, US$162m (2023: US$195m) represents deferred fee income. Movement of deferred fee income of US$33m
(2023: US$35m) represents revenue recognised as a result of performance obligations satisfied during the year.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
280
AIA GROUP LIMITED
26. BORROWINGS
US$m
As at
31 December
2024
As at
31 December
2023
Other loans
83
36
Medium-term notes and securities
Senior notes
6,922
7,581
Subordinated securities
6,324
4,183
Total
13,329
11,800
Borrowings are recognised initially at their issue proceeds less transaction costs incurred. Subsequently, borrowings are
stated at amortised cost, and any difference between net proceeds and redemption value is recognised in the consolidated
income statement over the period of the borrowings using the effective interest method.
Interest expense on borrowings is shown in note 10. Further information relating to interest rates and the maturity profile
of borrowings is presented in note 34.
The following table summarises the Company’s outstanding medium-term notes and securities placed to the market at 31
December 2024:
Senior notes
Issue date
Nominal amount
Interest rate
Tenor at issue
Maturity
11 March 2014(1)
US$500m
4.875%
30 years
11 March 2044
16 March 2016(1)
US$750m
4.500%
30 years
16 March 2046
23 May 2017(2)
US$500m
4.470%
30 years
23 May 2047
6 April 2018(1)
US$500m
3.900%
10 years
6 April 2028
16 January 2019
HK$1,100m
3.680%
12 years
16 January 2031
9 April 2019(1)
US$1,000m
3.600%
10 years
9 April 2029
7 April 2020(1)
US$1,000m
3.375%
10 years
7 April 2030
24 June 2020
A$90m
2.950%
10 years
24 June 2030
24 October 2022
HK$1,200m
5.040%
2.99 years
17 October 2025
25 October 2022(1)
US$850m
5.625%
5 years
25 October 2027
4 April 2023(1)
US$600m
4.950%
10 years
4 April 2033
10 September 2024
HK$3,250m
3.780%
5 years
10 September 2029
10 September 2024
HK$3,900m
3.700%
2.99 years
2 September 2027
Subordinated securities
Issue date
Nominal amount
Interest rate
Tenor at issue
Maturity
16 September 2020(1)
US$1,750m
3.200%
20 years
16 September 2040
7 April 2021(1)(3)(4)
US$750m
2.700%
Perpetual
n/a
11 June 2021(1)(3)(4)
S$500m
2.900%
Perpetual
n/a
9 September 2021(1)(3)(4)
EUR750m
0.880%
12 years
9 September 2033
19 October 2021(1)(3)(4)
S$105m
3.000%
30 years
19 October 2051
12 September 2023(1)(3)(4)
S$550m
5.100%
Perpetual
n/a
5 April 2024(1)(5)
US$1,000m
5.375%
10 years
5 April 2034
30 September 2024(1)(5)
US$500m
4.950%
10.5 years
30 March 2035
30 September 2024(1)(5)
US$750m
5.400%
30 years
30 September 2054
Notes:
(1) These medium-term notes and securities are listed on The Stock Exchange of Hong Kong Limited.
(2) These medium-term notes are listed on The Taipei Exchange, Taiwan. The Company has the right to redeem these notes at par on 23 May of each
year beginning on 23 May 2022.
(3) The Company has the right to redeem these securities in whole, at par on predetermined dates as set out within the terms and conditions of the
securities, subject to regulatory approval.
(4) The coupon rate of these securities is fixed for a predetermined period as set out within the terms and conditions of the securities, and then resets
to the initial spread plus a then prevailing benchmark rate if the securities have not been redeemed.
(5) These securities include the ‘lock-in’ feature as set out within the terms and conditions of the securities. Payment of the final coupon and principal
at maturity is subject to the Company meeting regulatory capital requirements.
The net proceeds from issuance during the years ended 31 December 2024 and 31 December 2023 are used for refinancing
and general corporate purposes.
The Group has access to an aggregate of US$2,980m unsecured committed credit facilities, which includes a US$250m
revolving three-year credit facility expiring in 2027 and a US$2,730m five-year credit facility expiring in 2029. The credit
facilities will be used for general corporate purposes. There were no outstanding borrowings under these credit facilities
as of 31 December 2024 and 31 December 2023.
FINANCIAL STATEMENTS
281
ANNUAL REPORT 2024
27. OBLIGATIONS UNDER REPURCHASE AGREEMENTS
The Group has entered into repurchase agreements whereby securities are sold to third parties with a concurrent agreement
to repurchase the securities at a specified date. At 31 December 2024, the obligations under repurchase agreements were
US$4,616m (2023: US$3,461m).
The securities sold under repurchase agreements continue to be recognised within the appropriate financial asset
classification. A liability is established for the consideration received. During the term of the repurchase agreements, the
Group is restricted from selling or pledging the transferred debt securities. The following table specifies the amounts
included within financial investments subject to repurchase agreements which do not qualify for de-recognition at each
year end:
US$m
As at
31 December
2024
As at
31 December
2023
Debt securities – FVOCI
Repurchase agreements
4,177
2,665
Debt securities – FVTPL
Repurchase agreements
2,126
1,406
Total
6,303
4,071
Collateral under repurchase agreements
At 31 December 2024 and 31 December 2023, there was no material collateral in respect of repurchase agreements.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
282
AIA GROUP LIMITED
28. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Offsetting, enforceable master netting agreements and similar agreements
The following table shows the assets that are subject to offsetting, enforceable master netting agreements and similar
arrangements at each year end:
US$m
Gross
amount of
recognised
financial
assets
Gross amount
of recognised
financial
liabilities set
off in the
consolidated
statement
of financial
position
Net amount
of financial
assets
presented
in the
consolidated
statement
of financial
position
Related amounts
not set off in the
consolidated statement
of financial position
Net amount
Financial
instruments
Cash
collateral
received
31 December 2024
Financial assets:
Derivative assets
1,054
–
1,054
(170)
(401)
483
Reverse repurchase agreements
115
–
115
(115)
–
–
Total
1,169
–
1,169
(285)
(401)
483
US$m
Gross
amount of
recognised
financial
assets
Gross amount
of recognised
financial
liabilities set
off in the
consolidated
statement
of financial
position
Net amount
of financial
assets
presented
in the
consolidated
statement
of financial
position
Related amounts
not set off in the
consolidated statement
of financial position
Financial
instruments
Cash
collateral
received
Net amount
31 December 2023
Financial assets:
Derivative assets
752
–
752
(95)
(340)
317
Reverse repurchase agreements
99
–
99
(99)
–
–
Total
851
–
851
(194)
(340)
317
FINANCIAL STATEMENTS
283
ANNUAL REPORT 2024
28. OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
Offsetting, enforceable master netting agreements and similar agreements (continued)
The following table shows the liabilities that are subject to offsetting, enforceable master netting agreements and similar
arrangements at each year end:
US$m
Gross
amount of
recognised
financial
liabilities
Gross
amount of
recognised
financial assets
set off in the
consolidated
statement
of financial
position
Net amount
of financial
liabilities
presented in the
consolidated
statement
of financial
position
Related amounts
not set off in the
consolidated statement
of financial position
Net amount
Financial
instruments
Cash collateral
pledged
31 December 2024
Financial liabilities(1):
Derivative liabilities
8,615
–
8,615
(9,692)
(111)
(1,188)
Repurchase agreements
4,616
–
4,616
(6,303)
–
(1,687)
Total
13,231
–
13,231
(15,995)
(111)
(2,875)
US$m
Gross
amount of
recognised
financial
liabilities
Gross
amount of
recognised
financial assets
set off in the
consolidated
statement
of financial
position
Net amount
of financial
liabilities
presented in the
consolidated
statement
of financial
position
Related amounts
not set off in the
consolidated statement
of financial position
Net amount
Financial
instruments
Cash collateral
pledged
31 December 2023
Financial liabilities(1):
Derivative liabilities
8,035
–
8,035
(8,639)
(213)
(817)
Repurchase agreements
3,461
–
3,461
(3,461)
–
–
Total
11,496
–
11,496
(12,100)
(213)
(817)
Note:
(1) The amount of under-collateralised positions for derivative liabilities and repurchased agreements were US$212m and US$1m respectively
(2023: US$162m and nil respectively). The amount of over-collateralised positions for derivative liabilities and repurchased agreements were
US$(1,400)m and US$(1,688)m respectively (2023: US$(979)m and nil respectively).
The Group entered into enforceable master netting agreements for derivative transactions, as well as the repurchase
agreements for debt instruments with various counterparties. Except for certain futures contracts executed through
clearing house mechanism where the settlement arrangement satisfied the IFRS Accounting Standards netting criteria,
the transactions under the enforceable master netting agreements and similar agreements involving the exchange of
financial instruments or cash as collateral do not satisfy the IFRS Accounting Standards netting criteria. The provision in
the master netting agreement and similar agreements enables a party to terminate transactions early and settle at a net
amount if a default or termination event occurs.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
284
AIA GROUP LIMITED
29. PROVISIONS
US$m
Employee benefits
Other
Total
At 1 January 2023
133
20
153
Charged to the consolidated income statement
9
12
21
Charged to other comprehensive income
7
–
7
Exchange differences
1
–
1
Released during the year
–
(4)
(4)
Utilised during the year
(5)
(7)
(12)
Other movements
8
–
8
At 31 December 2023
153
21
174
Charged to the consolidated income statement
9
13
22
Charged to other comprehensive income
26
–
26
Exchange differences
1
–
1
Released during the year
–
(3)
(3)
Utilised during the year
(8)
(14)
(22)
Other movements
4
–
4
At 31 December 2024
185
17
202
Other provisions
Other provisions comprise provisions in respect of regulatory matters, litigation, reorganisation and restructuring. In view
of the diverse nature of the matters provided for and the contingent nature of the matters to which they relate, the Group
is unable to provide an accurate assessment of the term over which provisions are expected to be utilised.
30. OTHER LIABILITIES
US$m
As at
31 December
2024
As at
31 December
2023
Trade and other payables
3,756
3,678
Lease liabilities
341
365
Third-party interests in consolidated investment funds
812
844
Total
4,909
4,887
Third-party interests in consolidated investment funds consist of third-party unit holders’ interests in consolidated
investment funds which are reflected as a liability since they can be put back to the Group for cash.
Trade and other payables are generally expected to be settled within 12 months after the end of the reporting period. The
realisation of third-party interests in investment funds cannot be predicted with accuracy since these represent the
interests of third-party unit holders in consolidated investment funds held to back insurance and investment contract
liabilities and are subject to market risk and the actions of third-party investors.
FINANCIAL STATEMENTS
285
ANNUAL REPORT 2024
31. SHARE CAPITAL AND RESERVES
Share capital
As at 31 December 2024
As at 31 December 2023
Million shares
US$m
Million shares
US$m
Ordinary shares(1), issued and fully paid
At beginning of the financial year
11,399
14,176
11,781
14,171
Shares issued under share option scheme and
agency share purchase plan
2
7
1
5
Shares cancelled after repurchase under the share
buy-back programme(2)
(569)
–
(383)
–
At end of the financial year, issued and fully paid
10,832
14,183
11,399
14,176
Shares not yet cancelled after repurchase
under the share buy-back programme(2)
(39)
–
(37)
–
At end of the financial year, outstanding
10,793
14,183
11,362
14,176
Notes:
(1) Ordinary shares have no nominal value and there is no obligation to transfer cash or other assets to the holders of ordinary shares.
(2) During the year ended 31 December 2024, the Company acquired a total of 571,028,800 ordinary shares (2023: 373,591,400 ordinary shares) on
the Hong Kong Stock Exchange with the aggregate cost amounting to approximately HK$32,371m (2023: HK$28,472m) (equivalent to
approximately US$4,150m (2023: US$3,637m)). Of these shares, 531,851,000 shares were cancelled during the year (2023: 336,045,200 shares
were cancelled during the year) and 39,177,800 shares were in the process of share cancellation as at 31 December 2024 and were cancelled
subsequent to the reporting date on 8 January 2025 (2023: 37,546,200 shares were in the process of share cancellation as at 31 December 2023
and were cancelled subsequently).
The Company issued 869,729 shares under share option scheme (2023: 661,786 shares) and 877,146 shares under
agency share purchase plan (2023: 986,359 shares) during the year ended 31 December 2024.
During the year ended 31 December 2024, the employee share-based trusts purchased 5,466,874 shares (2023:
10,865,302 shares) and sold nil shares (2023: nil). These purchases were made by the relevant scheme trustees on the
Hong Kong Stock Exchange (HKSE). These shares are held on trust for participants of the relevant schemes and therefore
were not cancelled.
During the year ended 31 December 2024, 5,358,937 shares (2023: 6,268,286 shares) were transferred to eligible
directors, officers and employees of the Group from the employee share-based trusts under share-based compensation
plans as a result of vesting. As at 31 December 2024, 38,065,355 shares (2023: 37,957,417 shares) of the Company were
held by the employee share-based trusts.
Reserves
Fair value reserve
The fair value reserve comprises the cumulative net change in the fair value of debt securities measured at fair value
through other comprehensive income held at the end of the reporting period plus the related loss allowance recognised in
profit or loss until the assets are derecognised.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign currency exchange differences arising from the translation
of the financial statements of foreign operations.
Insurance finance reserve
The insurance finance reserve comprises the cumulative insurance finance income or expenses recognised in other
comprehensive income.
Employee share-based trusts
Trusts have been established to acquire shares of the Company for distribution to participants in future periods through the
share-based compensation plans. Where the Group is deemed to control the trusts, they are consolidated. Those shares
acquired by the trusts, to the extent not transferred to the participants upon vesting, are reported as “Employee share-based
trusts” and carried at cost.
Property revaluation reserve
Property revaluation reserve comprises the cumulative net change in the revalued amount of property held for own use at
the end of the reporting period. Property revaluation surplus is not considered to be a realised profit available for distribution
to shareholders.
Other reserves
Other reserves mainly include the impact of merger accounting for business combinations under common control and
share-based compensation.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
286
AIA GROUP LIMITED
32. NON-CONTROLLING INTERESTS
US$m
As at
31 December
2024
As at
31 December
2023
Equity shares in subsidiaries
135
107
Share of earnings
228
416
Share of other reserves
(40)
(40)
Total
323
483
33. GROUP CAPITAL STRUCTURE
Capital Management Approach
The Group’s capital management objectives focus on maintaining a strong capital base to support the development of its
business, maintaining the ability to move capital freely among Group members and satisfying regulatory capital
requirements at all times.
The Group’s capital management function oversees all capital-related activities of the Group and assists senior management
in making capital decisions. The capital management function participates in decisions concerning asset-liability
management, strategic asset allocation and ongoing solvency management. This includes ensuring capital considerations
are paramount in the strategy and business planning processes and when determining AIA’s capacity to pay dividends to
shareholders.
Group-wide Supervision Framework and the Local Capital Summation Method
The Group supervisor is the Hong Kong Insurance Authority (HKIA) and the Group is in compliance with its group capital
adequacy requirements.
The Insurance (Group Capital) Rules (GWS Capital Rules) set out the capital requirements and overall solvency position for
the Group under the Group-wide Supervision (GWS) framework. These requirements are based on a “summation approach”
and are referred to as the Local Capital Summation Method (LCSM). Under the LCSM, the eligible group capital resources
and group capital requirements are calculated as the sum of the eligible capital resources and capital requirements for
each entity within the Group according to the respective local regulatory requirements, subject to any variation considered
necessary by the HKIA.
The group prescribed capital requirement (GPCR) is the sum of the prescribed capital requirements of each entity within
the Group, and represents the level below which the HKIA may intervene on grounds of capital adequacy.
The Group LCSM coverage ratio is calculated as the ratio of the eligible group capital resources to the GPCR and the Group
LCSM surplus is defined as the excess of the eligible group capital resources over the GPCR.
The group minimum capital requirement (GMCR) is the sum of the minimum capital requirements of each entity within the
Group.
FINANCIAL STATEMENTS
287
ANNUAL REPORT 2024
33. GROUP CAPITAL STRUCTURE (continued)
Group-wide Supervision Framework and the Local Capital Summation Method (continued)
The table shows a summary of the Group capital adequacy position.
US$m
As at
31 December
2024
As at
31 December
2023
Group LCSM coverage ratio(1)
257%
275%
Tier 1 group capital coverage ratio(2)
349%
345%
Eligible group capital resources
77,650
73,156
Tier 1 group capital
49,316
46,980
Tier 2 group capital
28,334
26,176
Group prescribed capital requirement (GPCR)
30,159
26,646
Group minimum capital requirement (GMCR)
14,131
13,613
Group LCSM surplus
47,491
46,510
At 31 December 2024, eligible group capital resources on the GWS basis included the following items, which are included
within Tier 2 group capital:
(i) US$6,324m(3) of subordinated securities. Subordinated securities with a fixed maturity receive full capital credit up to
the date that is 5 years prior to the date of maturity, with the capital credit then reducing at the rate of 20 per cent per
annum until maturity. Subordinated securities with a maturity where principal repayment is subject to contractual
conditions are not expected to be subject to capital credit amortisation. Perpetual subordinated securities receive full
capital credit unless they are redeemed; and
(ii) US$4,407m(3) of senior notes issued before designation that have been approved by the HKIA as capital. Prior to
maturity, the approved senior notes receive full capital credit until 14 May 2031, after which the capital credit reduces
at the rate of 20 per cent per annum until 14 May 2036.
Notes:
(1) The Group LCSM coverage ratio is referred to as the “eligible group capital resources coverage ratio” in the GWS framework and is defined as the
ratio of the eligible group capital resources to the GPCR.
(2) The Tier 1 group capital coverage ratio is defined in the GWS framework as the ratio of the Tier 1 group capital to the GMCR.
(3) The amounts represent the carrying value of medium-term notes and securities contributing to the eligible group capital resources.
Local Regulatory Solvency
The Group’s individual branches and subsidiaries are also subject to the supervision of government regulators in the
jurisdictions in which those branches and subsidiaries and their parent entity operate and, in relation to subsidiaries, in
which they are incorporated.
The Group’s principal operating companies AIA Company Limited (AIA Co.) and AIA International Limited (AIA International),
as authorised insurers in Hong Kong, are required by the HKIA to meet the Hong Kong solvency requirements. The Hong
Kong Risk-based Capital (HKRBC) regime has become part of the Hong Kong Insurance Ordinance (HKIO) and has taken
effect from 1 July 2024 for AIA Co.. For AIA International, the company received the approval from the HKIA to early adopt
the HKRBC regime with an effective date of 1 January 2022 and since then this has been reflected where applicable.
During the years ended 31 December 2024 and 31 December 2023, these two principal operating companies were in
compliance with these solvency requirements.
Dividends, Remittances and Other Payments from Individual Branches and Subsidiaries
The ability of the Company to pay dividends to shareholders and to meet other obligations depends ultimately on dividends,
remittances and other payments being received from its operating branches and subsidiaries, which are subject to
contractual, regulatory and other limitations. The various regulators overseeing the individual branches and subsidiaries
of the Group have the discretion to impose additional restrictions on the ability of those regulated branches and subsidiaries
to make payment of dividends, remittances and other payments to AIA Co., including increasing the required margin of
solvency that an operating unit must maintain. For example, capital may not be remitted without the consent from regulators
for certain individual branches or subsidiaries of the Group.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
288
AIA GROUP LIMITED
34. RISK MANAGEMENT
Risk management framework
AIA recognises the importance of sound risk management in every aspect of our business and for all our stakeholders. The
Risk Management Framework (RMF) provides the structure for identifying, quantifying and mitigating risk across the
Group. An effective RMF is the key to avoiding the financial and reputational damage that arises from inadequate or
ineffective control of the risks in the business.
Insurance risk
Insurance risk relates to changes in claims experience, business expenses, and the acquisition and persistency of insurance
business. This also includes changes to assumptions regarding future experience for these risks.
The Group manages insurance risk concentration by diversification, reinsurance and establishing retention limits. For the
years ended 31 December 2024 and 31 December 2023, there were no significant insurance concentration risks.
Pandemic and catastrophe risk
The Group is also exposed to morbidity and mortality risk related to a single event, namely pandemics, natural catastrophic
events or human-made disasters.
Geographical concentration of insured individuals could increase the severity of this risk. However, the Group’s insured
populations are geographically dispersed, thereby diversifying the exposure to pandemic and catastrophe risk. In addition,
the Group limits its exposure to large claims arising from a catastrophe by purchasing reinsurance to cover losses due to a
single catastrophic event exceeding a pre-determined level.
Climate change could increase the odds of pandemic and/or catastrophic events. Whilst the effect of climate change to AIA
as a life and health insurer is expected to be relatively smaller than a general insurer, the Group will continue to evolve the
climate scenario analysis, with the advancement of reliable data and methodologies, in evaluating the impacts of climate
change to its portfolio.
Expense risk
Expense risk is the risk of greater than expected trends in, or sudden shocks to, the amount or timing of expenses incurred
by the business.
Operations follow a disciplined budgeting and control process that allows for the management of expenses based on the
Group’s very substantial experience within the markets in which we operate.
Morbidity and mortality risk
Morbidity and mortality risk is the risk that the incidence and/or amounts of medical, critical illness, disability, death or
survival claims are higher than the assumptions made in pricing and/or reserving.
The Group adheres to well-defined market-oriented underwriting and claims guidelines and practices that have been
developed based on extensive historical experience and with the assistance of professional reinsurers.
The Group’s actuarial teams conduct regular experience studies of all the insurance risk factors in its portfolio. These
internal studies together with external data are used to identify the impact of emerging trends, such as medical technology,
health and wellness, climate change and long COVID-19, which can then be used to inform product design, pricing,
underwriting, claims management and reinsurance needs.
The Group limits its exposure to new risks and large claims on any single insured life by applying retention limits that vary
by market and insurance benefit type to the amount of insurance coverage per insured. The exposure in excess of these
limits is ceded to reinsurers.
Persistency (Lapse) risk
Persistency (Lapse) risk arises from policies lapsing, on average, differently to that assumed in the pricing or reserving
assumptions. Persistency risk is assessed as part of the product development process and monitored through regular
experience studies.
Ensuring customers buy products that sustainably meet their needs is central to the Group’s Operating Philosophy. Through
effective implementation of the Business Quality Framework, comprehensive sales training programmes and active
monitoring of sales activities and persistency, the Group seeks to ensure that appropriate products are sold by qualified
sales representatives and that standards of service consistently meet our customers’ needs.
FINANCIAL STATEMENTS
289
ANNUAL REPORT 2024
34. RISK MANAGEMENT (continued)
Insurance risk (continued)
Sensitivity analysis on insurance risk
The table below sets out the sensitivity analysis in respect of insurance contracts and reinsurance contracts held to key
variables affecting insurance risk exposures. This analysis assumes that all other variables remain constant. Information
below presents the sensitivities both before and after risk mitigation by reinsurance, and illustrates the estimated impact
on profits, CSM, total equity and comprehensive equity arising from a change in a single variable before taking into account
the effects of taxation. The effects on these items are mainly as below:
•
The effects on profit or loss are changes relating to CSM recognised for services provided, loss components and
changes in insurance finance income or expenses that are recognised in profit or loss.
•
The effects on CSM reflect the change of the corresponding insurance risks that impacts CSM.
•
The effects on equity are the effects on profit or loss and the effects on other comprehensive income arising from
changes in insurance finance income or expenses.
•
The effects on comprehensive equity are the effects on shareholders’ equity and net CSM.
Sensitivity analysis before risk mitigation by reinsurance(1)
US$m
Impact on
profit before
tax
Impact on CSM
Impact on total
equity (before
the effects of
taxation)
Impact on
comprehensive
equity(2) (before
the effects of
taxation and
deduction of
non-controlling
interests)
31 December 2024
10% increase in attributable expenses
(73)
(796)
(90)
(886)
10% decrease in attributable expenses
74
794
90
884
10% increase in mortality/morbidity rates
(959)
(8,435)
(550)
(8,985)
10% decrease in mortality/morbidity rates
589
8,974
184
9,158
10% increase in lapse/discontinuance rates
(30)
(2,985)
426
(2,559)
10% decrease in lapse/discontinuance rates
27
3,304
(478)
2,826
US$m
Impact on
profit before
tax
Impact on CSM
Impact on total
equity (before
the effects of
taxation)
Impact on
comprehensive
equity(2) (before
the effects of
taxation and
deduction of
non-controlling
interests)
31 December 2023
10% increase in attributable expenses
(59)
(781)
(61)
(842)
10% decrease in attributable expenses
56
784
57
841
10% increase in mortality/morbidity rates
(921)
(7,905)
(504)
(8,409)
10% decrease in mortality/morbidity rates
552
8,433
137
8,570
10% increase in lapse/discontinuance rates
(3)
(2,838)
338
(2,500)
10% decrease in lapse/discontinuance rates
(2)
3,137
(396)
2,741
Notes:
(1) The sensitivity analysis on insurance risk includes the impact of unit-linked contracts under IFRS 17.
(2) Represents the total of shareholders’ equity and net CSM.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
290
AIA GROUP LIMITED
34. RISK MANAGEMENT (continued)
Insurance risk (continued)
Sensitivity analysis on insurance risk (continued)
Sensitivity analysis after risk mitigation by reinsurance(1)
US$m
Impact on
profit before
tax
Impact on CSM
Impact on total
equity (before
the effects of
taxation)
Impact on
comprehensive
equity(2) (before
the effects of
taxation and
deduction of
non-controlling
interests)
31 December 2024
10% increase in attributable expenses
(73)
(796)
(90)
(886)
10% decrease in attributable expenses
74
795
89
884
10% increase in mortality/morbidity rates
(717)
(6,856)
(139)
(6,995)
10% decrease in mortality/morbidity rates
378
7,327
(213)
7,114
10% increase in lapse/discontinuance rates
(29)
(2,770)
350
(2,420)
10% decrease in lapse/discontinuance rates
26
3,028
(381)
2,647
US$m
Impact on
profit before
tax
Impact on CSM
Impact on total
equity (before
the effects of
taxation)
Impact on
comprehensive
equity(2) (before
the effects of
taxation and
deduction of
non-controlling
interests)
31 December 2023
10% increase in attributable expenses
(58)
(781)
(61)
(842)
10% decrease in attributable expenses
56
784
56
840
10% increase in mortality/morbidity rates
(641)
(6,337)
(106)
(6,443)
10% decrease in mortality/morbidity rates
308
6,783
(238)
6,545
10% increase in lapse/discontinuance rates
1
(2,617)
259
(2,358)
10% decrease in lapse/discontinuance rates
(7)
2,861
(321)
2,540
Notes:
(1) The sensitivity analysis on insurance risk includes the impact of unit-linked contracts under IFRS 17.
(2) Represents the total of shareholders’ equity and net CSM.
FINANCIAL STATEMENTS
291
ANNUAL REPORT 2024
34. RISK MANAGEMENT (continued)
Investment and financial risks
Investment management objectives, policies and processes
The Group manages its financial investments in two distinct categories: unit-linked investments and policyholder and
shareholder investments. The investment risk in respect of unit-linked investments is generally borne by our customers,
and the investment return gains or losses are largely offset by the changes in fair value of underlying items. Policyholder
and shareholder investments include all financial investments other than unit-linked investments. The investment risk in
respect of policyholder and shareholder investments is partially or wholly borne by the Group and directly affects the profit
before tax.
Policyholder and shareholder investments are further categorised as participating funds, other participating business with
distinct portfolios and other policyholder and shareholder.
The primary investment objectives of our policyholder and shareholder investments are generally designed to achieve
optimal levels of risk-adjusted return for policyholders and shareholders over the long term, while preserving capital,
maintaining adequate solvency and liquidity levels, meeting our risk management and asset-liability management
objectives and ensuring full compliance with applicable regulations and internal policies.
The Group has comprehensive, integrated frameworks to ensure investments are properly authorised, monitored and
managed within internal policies that address asset-liability management, financial and operational risks, whether assets
are invested directly by the Group or through external investment managers. This framework consists of three elements: a
strategic asset allocation framework; a tactical asset allocation process; and a combination of internal and external
investment management for individual asset classes where appropriate.
The Group’s investment management function is empowered with decision-making authority and complies with exposure
limits as defined in Risk Standards.
Climate change, and the transition to net zero, create risks for the financial system. The Group recognises the potential
investment losses due to climate risk in the long term and, as a result, it mandates the consideration of various Environmental,
Social and Governance (ESG) factors, including climate change, in the bottom-up investment process applicable to its
general account assets. The Group has developed internal ESG scoring methodologies to assess relevant ESG factors in
potential and actual investee companies in relation to our directly managed general account assets and to assess external
asset managers on their approach to both ESG engagement with investee companies and the assessment of ESG factors
for investment decisions. The Group will continue to enhance its climate scenario analysis in assessing the impacts of
climate change on its investment assets.
Asset-liability management
Asset-liability management for the Group is overseen by the Group Asset-Liability Committee and by asset-liability
committees in each business unit. The Group manages its asset-liability risks in a variety of ways, including the strategic
asset allocation process under which the strategic asset allocation in each entity and for major different product groups is
governed, defining the asset allocation with consideration of the characteristics of the liabilities and related risks, capital
and other requirements on both economic and regulatory bases. The Group manages asset-liability risks predominantly on
an economic basis, while also considering the effect on all applicable regulatory solvency requirements and other
considerations such as earnings. Asset-liability management actions include product pricing and product design, reviews
of policyholder dividends, asset allocation, hedging using derivatives, reinsurance, and the management of discretionary
policyholder benefits. The asset-liability risks for the Group are credit risk, credit spread risk, interest rate risk, equity risk,
foreign exchange rate risk and liquidity risk. The exposures and sensitivity analysis are detailed below.
Credit risk
Credit risk arises from third parties failing to meet their obligations to the Group when they fall due. Although the primary
source of credit risk is the Group’s investment portfolio, such risk can also arise through reinsurance and treasury activities.
The Group’s credit risk management oversight process is governed centrally, but provides for decentralised management
and accountability by our lines of defence. Fundamental to AIA’s credit risk management is adherence to a well-controlled
underwriting process. Credit risk limits are applied to control concentrations in individual exposures, sector and cross-border
investments. A detailed analysis of each counterparty is performed and a rating is determined by the investment teams
according to an internal rating framework. The Group’s Risk Management function manages the Group’s internal ratings
framework and conducts periodic rating validations. Measuring and monitoring of credit risk is an ongoing process and is
designed to enable early identification of emerging risk.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
292
AIA GROUP LIMITED
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Exposure to credit risk
In compiling the tables, external ratings have been used where available. External ratings have been used in accordance
with the Group’s credit risk assessment framework. Where external ratings are not readily available an internal rating
methodology has been adopted, if applicable.
Credit risk limits are set according to the Group’s credit risk assessment framework, which defines the relative risk level of
a debt security.
External ratings
Internal ratings
Reported as
Standard and Poor’s and Fitch
Moody’s
AAA
Aaa
1
AAA
AA+ to AA-
Aa1 to Aa3
2+ to 2-
AA
A+ to A-
A1 to A3
3+ to 3-
A
BBB+ to BBB-
Baa1 to Baa3
4+ to 4-
BBB
BB+ and below
Ba1 and below
5+ and below
Below investment grade(1)
Note:
(1) Unless otherwise identified individually.
Measuring and monitoring of credit risk is an ongoing process and is designed to enable early identification of emerging
risk. The Group’s processes for measuring expected credit losses include processes for initial approval, regular validation
and back-testing of the models used, and incorporation of forward-looking information.
The Group monitors concentrations of credit arising from investment in debt securities by type, nature and rating as shown
in note 18. Reinsurance is ceded across all geographical regions in which the Group operates. The Group does not have
excessive credit risk with any single reinsurer.
The following table sets out information about the credit quality of reinsurance contract assets and financial assets not
measured at FVTPL.
Reinsurance contract assets
US$m
As at
31 December
2024
As at
31 December
2023
Investment grade
5,727
6,040
Below investment grade
–
–
Not rated
3
7
Total
5,730
6,047
FINANCIAL STATEMENTS
293
ANNUAL REPORT 2024
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Exposure to credit risk (continued)
Financial assets measured at amortised cost(1)
As at 31 December 2024
As at 31 December 2023
US$m
12-month
ECL
Lifetime
ECL not
credit-
impaired
Lifetime
ECL
credit-
impaired
Purchased
or
originated
credit-
impaired
Total
12-month
ECL
Lifetime
ECL not
credit-
impaired
Lifetime
ECL
credit-
impaired
Purchased
or
originated
credit-
impaired
Total
Debt securities
AAA
18
–
–
–
18
31
–
–
–
31
AA
495
–
–
–
495
490
–
–
–
490
A
1,247
–
–
–
1,247
985
–
–
–
985
BBB
627
–
–
–
627
509
–
–
–
509
Below investment
grade
10
–
–
–
10
132
15
–
–
147
Not rated
5
–
–
–
5
9
–
–
–
9
Total gross carrying
amount
2,402
–
–
–
2,402
2,156
15
–
–
2,171
Loss allowance
(3)
–
–
–
(3)
(4)
(2)
–
–
(6)
Amortised cost
2,399
–
–
–
2,399
2,152
13
–
–
2,165
Loans and deposits
AAA
14
–
–
–
14
15
–
–
–
15
AA
167
–
–
–
167
171
–
–
–
171
A
546
–
–
–
546
597
–
–
–
597
BBB
1,414
–
–
–
1,414
1,488
–
–
–
1,488
Below investment
grade
979
–
–
–
979
853
–
–
–
853
Not rated
636
19
10
–
665
584
15
20
–
619
Total gross carrying
amount
3,756
19
10
–
3,785
3,708
15
20
–
3,743
Loss allowance
(8)
(1)
(6)
–
(15)
(11)
(2)
(7)
–
(20)
Amortised cost
3,748
18
4
–
3,770
3,697
13
13
–
3,723
Note:
(1) The Group’s maximum exposure to credit risk of accrued investment income and cash and cash equivalents is limited to the carrying amounts of
the assets, the majority of which is arising from the financial assets rated as investment grade and deposits with reputable financial institutions.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
294
AIA GROUP LIMITED
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Exposure to credit risk (continued)
Financial assets measured at fair value through other comprehensive income
As at 31 December 2024
As at 31 December 2023
US$m
12-month
ECL
Lifetime
ECL not
credit-
impaired
Lifetime
ECL
credit-
impaired
Purchased
or
originated
credit-
impaired
Total
12-month
ECL
Lifetime
ECL not
credit-
impaired
Lifetime
ECL
credit-
impaired
Purchased
or
originated
credit-
impaired
Total
Debt securities
AAA
4,551
–
–
–
4,551
5,223
–
–
–
5,223
AA
17,938
–
–
–
17,938
14,735
–
–
–
14,735
A
38,046
–
–
–
38,046
35,814
–
–
–
35,814
BBB
28,504
–
–
–
28,504
29,618
–
–
–
29,618
Below investment
grade
1,968
264
365
–
2,597
2,117
266
366
–
2,749
Not rated
–
–
–
–
–
2
–
–
–
2
Total gross carrying
amount
91,007
264
365
–
91,636
87,509
266
366
–
88,141
Loss allowance
(111)
(16)
(335)
–
(462)
(133)
(17)
(327)
–
(477)
Amortised cost
90,896
248
30
–
91,174
87,376
249
39
–
87,664
Carrying amount –
fair value
98,010
252
27
–
98,289
88,355
219
38
–
88,612
Credit spread risk
Credit spread movements affect both the value of assets and liabilities. Credit spread risk is in a large part managed
through the strategic asset allocation process, whereby the two key drivers of spread risk – credit rating and spread
duration – are managed for capital efficiency, taking into account both the economic risk and the local solvency capital
considerations. The risk is monitored by the business units, with special attention paid to any issuers with credit ratings
close to the lower boundary of investment grade.
FINANCIAL STATEMENTS
295
ANNUAL REPORT 2024
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Interest rate risk
Interest rate risk is primarily measured through the duration gap, which provides an understanding of the implications of
interest rate movements on surplus. Since most markets do not have assets of sufficient tenor to match life insurance
contract liabilities, an uncertainty arises around the reinvestment of maturing assets to match the Group’s insurance
contract liabilities.
AIA manages interest rate risk primarily on an economic basis. Interest rate risk on the local solvency basis is also taken
into consideration for business units where local solvency regimes deviate from the economic basis. Furthermore, AIA
actively manages interest rate risk by extending asset duration, managing liability duration, repricing products, and
implementing appropriate hedging programmes and reinsurance solutions where possible. For products with discretionary
benefits, additional modelling of interest rate risk is performed to guide the determination of appropriate management
actions. Management also takes into consideration the asymmetrical impact of interest rate movements when evaluating
products with options and guarantees.
Exposure to interest rate risk
The table below summarises the nature of the interest rate risk associated with financial assets and financial liabilities. In
preparing this analysis, fixed rate interest bearing instruments that mature or reprice within 12 months of the reporting
date have been disclosed as variable rate instruments.
US$m
Variable
interest rate
Fixed
interest rate
Non-interest
bearing
Total
31 December 2024
Financial instruments
Financial assets
Loans and deposits
762
3,265
15
4,042
Receivables
74
–
774
848
Debt securities
14,541
163,677
–
178,218
Equity shares, interests in investment funds and
exchangeable loan notes
–
1,271
87,566
88,837
Accrued investment income
–
–
1,748
1,748
Cash and cash equivalents
4,384
–
3,717
8,101
Derivative financial instruments
–
–
1,054
1,054
Total financial assets
19,761
168,213
94,874
282,848
Financial liabilities
Investment contract liabilities
–
–
6,805
6,805
Borrowings
–
13,329
–
13,329
Obligations under repurchase agreements
3,222
1,394
–
4,616
Other liabilities
133
185
4,591
4,909
Derivative financial instruments
–
–
8,615
8,615
Total financial liabilities
3,355
14,908
20,011
38,274
Insurance contracts and reinsurance contracts held
Assets
5,206
Liabilities
223,006
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
296
AIA GROUP LIMITED
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Exposure to interest rate risk (continued)
US$m
Variable
interest rate
Fixed interest
rate
Non-interest
bearing
Total
31 December 2023
Financial instruments
Financial assets
Loans and deposits
687
3,295
13
3,995
Receivables
192
–
1,102
1,294
Debt securities
13,384
164,374
–
177,758
Equity shares, interests in investment funds and
exchangeable loan notes
–
1,172
65,281
66,453
Accrued investment income
–
–
1,832
1,832
Cash and cash equivalents
4,138
–
7,387
11,525
Derivative financial instruments
–
–
752
752
Total financial assets
18,401
168,841
76,367
263,609
Financial liabilities
Investment contract liabilities
–
–
8,975
8,975
Borrowings
–
11,800
–
11,800
Obligations under repurchase agreements
2,996
465
–
3,461
Other liabilities
95
196
4,596
4,887
Derivative financial instruments
–
–
8,035
8,035
Total financial liabilities
3,091
12,461
21,606
37,158
Insurance contracts and reinsurance contracts held
Assets
5,831
Liabilities
204,993
Equity risk
Equity risk arises from changes in the market value of equity shares, interests in investment funds and exchangeable loan
notes. Investments in equity shares, interests in investment funds and exchangeable loan notes on a long-term basis are
expected to align with policyholders’ reasonable expectations, provide diversification benefits and enhance returns. The
extent of exposure to equities at any time is subject to the terms of the Group’s strategic asset allocations. Equity risk
arising from the underlying items of participating contracts is generally borne by policyholders except to the extent of the
Group’s share of the performance of the underlying items. The Group is also exposed to equity price risk from equity
guarantees in variable contracts and hedges its exposure using equity derivatives.
Equity risk is managed through strategic asset allocation and tactical asset allocation. Equity investments are subject to
benchmarks and controls relating to maximum concentration and tracking errors. Equity limits are also applied to contain
concentration risk of individual stocks and sectors, liquidity as well as equity volatility. Equity exposures are included in the
aggregate exposure reports on each individual counterparty to ensure concentrations are avoided.
FINANCIAL STATEMENTS
297
ANNUAL REPORT 2024
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Concentration risk
The greatest aggregate concentration of fair value to an individual issuer (excluding all government bonds) was
approximately 1 per cent (2023: approximately 1 per cent) of the total equity and debt investments as at 31 December
2024.
Sensitivity analysis
Sensitivity analysis to the key variables, namely interest rate and equity risks, affecting insurance contracts and reinsurance
contracts held, and financial instruments held by the Group is set out below. The carrying values of other financial assets
are not subject to changes in response to movements in interest rates or equity prices. In calculating the sensitivity to
changes in interest rates and equity prices, the Group has made assumptions about the corresponding impact of asset
valuations on liabilities to policyholders. The market risk in respect of unit-linked investments is generally borne by our
customers, and the investment return gains or losses are largely offset by the changes in fair value of underlying items.
Policyholder and shareholder investments include all financial investments other than unit-linked investments.
Information is presented to illustrate the estimated impact on profits, total equity, allocated equity and CSM arising from a
change in a single variable before taking into account the effects of taxation. The effects on these items are mainly as
follows:
•
The effects on profit or loss are changes relating to CSM recognised for services provided, loss components and
changes in investment return, insurance finance income or expenses and foreign exchange differences that are
recognised in profit or loss.
•
The effects on equity are the effects on profit or loss, and the effects on other comprehensive income arising from net
changes in net investment result and net insurance finance income or expenses.
•
The effects on CSM reflects the change of the corresponding market risks that impacts CSM.
The impact of any impairments of financial assets has been ignored for the purpose of illustrating the sensitivity of profit
before tax, total equity, allocated equity and CSM before the effects of taxation to changes in interest rates and equity
prices on the grounds that default events reflect the characteristics of individual issuers.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
298
AIA GROUP LIMITED
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Sensitivity analysis on interest rate risk(1)
An analysis of the Group’s sensitivity to 50 basis points parallel increase or decrease in yield curves at the reporting date,
assuming that all other variables remain constant, is presented below.
US$m
Impact on
profit before
tax
Impact on total
equity (before
the effects of
taxation)
Impact on
allocated equity
(before the
effects of
taxation)
Impact on CSM
31 December 2024
+ 50 basis points shift in yield curves:
Insurance contracts and reinsurance contracts held
6,055
9,817
6,055
(416)
Financial instruments
(6,682)
(12,585)
(6,682)
–
(627)
(2,768)
(627)
(416)
– 50 basis points shift in yield curves:
Insurance contracts and reinsurance contracts held
(6,832)
(11,049)
(6,832)
427
Financial instruments
7,513
14,215
7,513
–
681
3,166
681
427
US$m
Impact on
profit before
tax
Impact on total
equity (before
the effects of
taxation)
Impact on
allocated equity
(before the
effects of
taxation)
Impact on CSM
31 December 2023
+ 50 basis points shift in yield curves:
Insurance contracts and reinsurance contracts held
6,633
9,859
6,633
(487)
Financial instruments
(6,783)
(11,916)
(6,783)
–
(150)
(2,057)
(150)
(487)
– 50 basis points shift in yield curves:
Insurance contracts and reinsurance contracts held
(7,444)
(11,060)
(7,444)
505
Financial instruments
7,609
13,414
7,609
–
165
2,354
165
505
Note:
(1) The scope of this sensitivity analysis excludes unit-linked investments on the basis that the market risk in respect of unit-linked investments is
generally borne by our customers.
FINANCIAL STATEMENTS
299
ANNUAL REPORT 2024
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Sensitivity analysis on equity risk(1)
An analysis of the Group’s sensitivity to 10 per cent increase or decrease in equity prices at the reporting date, assuming
that all other variables remain constant, is presented below.
US$m
Impact on
profit before
tax
Impact on total
equity (before
the effects of
taxation)
Impact on
allocated equity
(before the
effects of
taxation)
Impact on CSM
31 December 2024
10 per cent increase in equity prices:
Insurance contracts and reinsurance contracts held
(4,270)
(4,309)
(4,270)
893
Financial instruments
5,718
5,718
5,718
–
1,448
1,409
1,448
893
10 per cent decrease in equity prices:
Insurance contracts and reinsurance contracts held
4,270
4,306
4,270
(917)
Financial instruments
(5,718)
(5,718)
(5,718)
–
(1,448)
(1,412)
(1,448)
(917)
US$m
Impact on
profit before
tax
Impact on total
equity (before
the effects of
taxation)
Impact on
allocated equity
(before the
effects of
taxation)
Impact on CSM
31 December 2023
10 per cent increase in equity prices:
Insurance contracts and reinsurance contracts held
(2,998)
(3,039)
(2,998)
679
Financial instruments
4,168
4,168
4,168
–
1,170
1,129
1,170
679
10 per cent decrease in equity prices:
Insurance contracts and reinsurance contracts held
2,996
3,039
2,996
(694)
Financial instruments
(4,168)
(4,168)
(4,168)
–
(1,172)
(1,129)
(1,172)
(694)
Note:
(1) The scope of this sensitivity analysis excludes unit-linked investments on the basis that the market risk in respect of unit-linked investments is
generally borne by our customers.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
300
AIA GROUP LIMITED
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Foreign exchange rate risk
The Group’s foreign exchange rate risk arises mainly from the Group’s operations in multiple markets in Asia and the
translation of multiple currencies to the US dollar for financial reporting purposes. The balance sheet values of our
operating units and subsidiaries are not hedged to the Group’s presentation currency, the US dollar.
Assets, liabilities and local regulatory and stress capital in each business unit are generally currency matched except for
holdings of equities and other non-fixed income assets denominated in currencies other than the functional currency.
Bonds denominated in currencies other than the functional currency are hedged with cross-currency swaps or foreign
exchange forward contracts.
Exposure to foreign exchange rates(1)
US$m
United States
Dollar
China
Renminbi
Hong Kong
Dollar
Thai
Baht
Singapore
Dollar
Malaysian
Ringgit
31 December 2024
Insurance contracts and reinsurance
contracts held
Assets
290
1,694
5
539
1,230
9
Liabilities
(79,756)
(48,587)
(5,049)
(15,514)
(20,576)
(8,569)
Financial instruments
Assets
126,194
56,317
1,189
21,998
15,973
9,532
Liabilities
(25,451)
(5,035)
(3,329)
(2,167)
(3,784)
–
Net positions of currency derivatives
(975)
(3,249)
502
591
2,944
435
US$m
United States
Dollar
China
Renminbi
Hong Kong
Dollar
Thai
Baht
Singapore
Dollar
Malaysian
Ringgit
31 December 2023
Insurance contracts and reinsurance
contracts held
Assets
–
1,564
635
719
1,246
42
Liabilities
(75,807)
(37,088)
(5,934)
(14,874)
(19,854)
(8,113)
Financial instruments
Assets
118,532
44,699
1,418
19,675
15,954
8,961
Liabilities
(21,447)
(4,769)
(3,370)
(1,649)
(3,387)
(72)
Net positions of currency derivatives
(3,222)
(2,040)
390
2,190
2,684
441
Note:
(1) The scope of this exposure to foreign exchange rates excludes unit-linked investments on the basis that the market risk in respect of unit-linked
investments is generally borne by our customers.
FINANCIAL STATEMENTS
301
ANNUAL REPORT 2024
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Sensitivity analysis on foreign exchange rate risk(1)(2)
A reasonably possible strengthening or weakening of the following currencies against all other currencies at the reporting
date would have affected the measurement of insurance contracts and reinsurance contracts held and financial instruments
denominated in foreign currency and affected the profit before tax, total equity and CSM by the amounts shown below. This
analysis assumes that all other variables remain constant.
US$m
United States
Dollar
China
Renminbi
Hong Kong
Dollar
Thai
Baht
Singapore
Dollar
Malaysian
Ringgit
31 December 2024
5% strengthening of original currency
Impact on profit before tax
Insurance contracts and reinsurance
contracts held
(1,125)
(19)
14
–
(8)
–
Financial instruments
1,107
(121)
(89)
(49)
(45)
18
Impact on total equity
Insurance contracts and reinsurance
contracts held
–
(2,347)
(82)
(749)
(549)
(428)
Financial instruments
–
2,402
(82)
1,021
757
498
Impact on CSM
Insurance contracts and reinsurance
contracts held
–
846
69
350
152
137
5% strengthening of the US dollar
Impact on profit before tax
Insurance contracts and reinsurance
contracts held
(1,125)
17
(13)
–
2
–
Financial instruments
1,107
118
107
47
60
(17)
Impact on total equity
Insurance contracts and reinsurance
contracts held
–
2,235
78
713
533
408
Financial instruments
–
(2,287)
78
(972)
(721)
(475)
Impact on CSM
Insurance contracts and reinsurance
contracts held
–
(806)
(65)
(333)
(146)
(131)
Notes:
(1) The scope of this sensitivity analysis excludes unit-linked investments on the basis that the market risk in respect of unit-linked investments is
generally borne by our customers.
(2) The impact on total equity and CSM comprises primarily the effects from the translation of the financial statements of foreign operations recognised
in other comprehensive income, as well as the net foreign exchange gains or losses recognised in consolidated income statement and other
translation movement recognised in other comprehensive income.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
302
AIA GROUP LIMITED
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Sensitivity analysis on foreign exchange rate risk(1)(2) (continued)
US$m
United States
Dollar
China
Renminbi
Hong Kong
Dollar
Thai
Baht
Singapore
Dollar
Malaysian
Ringgit
31 December 2023
5% strengthening of original currency
Impact on profit before tax
Insurance contracts and reinsurance
contracts held
(1,055)
(11)
14
–
(6)
(3)
Financial instruments
1,011
8
(83)
27
(79)
12
Impact on total equity
Insurance contracts and reinsurance
contracts held
–
(1,777)
(94)
(708)
(539)
(404)
Financial instruments
–
1,894
(78)
1,011
763
467
Impact on CSM
Insurance contracts and reinsurance
contracts held
–
818
57
322
148
123
5% strengthening of the US dollar
Impact on profit before tax
Insurance contracts and reinsurance
contracts held
(1,055)
9
(13)
–
1
–
Financial instruments
1,011
(5)
88
(26)
94
(12)
Impact on total equity
Insurance contracts and reinsurance
contracts held
–
1,693
89
674
535
384
Financial instruments
–
(1,804)
74
(963)
(726)
(444)
Impact on CSM
Insurance contracts and reinsurance
contracts held
–
(779)
(55)
(307)
(143)
(117)
Notes:
(1) The scope of this sensitivity analysis excludes unit-linked investments on the basis that the market risk in respect of unit-linked investments is
generally borne by our customers.
(2) The impact on total equity and CSM comprises primarily the effects from the translation of the financial statements of foreign operations recognised
in other comprehensive income, as well as the net foreign exchange gains or losses recognised in consolidated income statement and other
translation movement recognised in other comprehensive income.
FINANCIAL STATEMENTS
303
ANNUAL REPORT 2024
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Liquidity risk
The Group defines liquidity risk as the risk of failure to meet current and future financial commitments as they fall due. This
incorporates the risks arising from the timing mismatch of cash inflows and outflows in day-to-day operations, including
policyholder and third-party payments, collateral requirements, as well as insufficient market liquidity of assets required
for policyholder liabilities.
AIA manages liquidity risk in accordance with the Group’s Board approved liquidity framework. This framework contains
the standards, procedures, and tools used by the Group to monitor and manage liquidity risk on a forward-looking basis in
base and stressed conditions across multiple time horizons from daily to monthly time steps for 12-month period, as well
as a projection in line with strategic planning. The forward-looking management of liquidity over short to longer-term
horizons allows for the early detection of risks and enables management to action the pre-defined liquidity contingency
plans. The framework is comprised of four pillars:
•
Daily Cash Forecasting and Liquidity Adequacy Ratio;
•
Structural Liquidity Adequacy Ratio;
•
Liquidity Projection over the Strategic Planning Period; and
•
Liquidity Management and Contingency Plans.
AIA supports its liquidity internally by maintaining appropriate pools of unencumbered high-quality liquid investment
assets. Liquidity is further supported externally via access to committed credit facilities, use of bond repurchase markets
and debt markets via the Group’s Global Medium-term Note and Securities Programme.
The Group’s liquidity framework builds liquidity resiliency in all our markets while providing central oversight and the
ability to take timely management action if required to ensure we meet all our financial commitments as they fall due.
The maturity profile of our financial liabilities, insurance contract liabilities and reinsurance contract liabilities are
presented below which provides a supplemental long-term view on the Group’s liquidity profile.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
304
AIA GROUP LIMITED
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Liquidity risk (continued)
Contractual maturities of financial liabilities
US$m
Total
Due in
one year
or less
Due after
one year
through
five years
Due after
five years
through
ten years
Due after
ten years
No fixed
maturity(2)
31 December 2024
Borrowings
19,650
770
5,179(1)
5,254
6,924
1,523
Obligations under repurchase agreements
4,616
4,616
–
–
–
–
Other liabilities excluding lease liabilities
3,756
3,680
48
4
1
23
Lease liabilities
368
132
214
21
1
–
Derivative financial instruments
8,478
3,954
4,155
227
142
–
Subtotal
36,868
13,152
9,596
5,506
7,068
1,546
Investment contract liabilities and third-party
interests in consolidated investment funds
7,741
86
251
209
176
7,019
Total
44,609
13,238
9,847
5,715
7,244
8,565
Notes:
(1) Including US$4,655m which fall due after 2 years through 5 years.
(2) Balances with no fixed maturity are repayable on demand as the counterparty has a choice of when the amount is paid.
US$m
Total
Due in
one year
or less
Due after
one year
through
five years
Due after
five years
through
ten years
Due after
ten years
No fixed
maturity(2)
31 December 2023
Borrowings
16,365
1,277
3,706(1)
4,842
4,994
1,546
Obligations under repurchase agreements
3,461
3,461
–
–
–
–
Other liabilities excluding lease liabilities
3,698
3,537
86
4
2
69
Lease liabilities
381
141
221
18
1
–
Derivative financial instruments
8,408
1,991
6,028
186
203
–
Subtotal
32,313
10,407
10,041
5,050
5,200
1,615
Investment contract liabilities and third-party
interests in consolidated investment funds
9,992
87
264
237
213
9,191
Total
42,305
10,494
10,305
5,287
5,413
10,806
Notes:
(1) Including US$2,410m which fall due after 2 years through 5 years.
(2) Balances with no fixed maturity are repayable on demand as the counterparty has a choice of when the amount is paid.
FINANCIAL STATEMENTS
305
ANNUAL REPORT 2024
34. RISK MANAGEMENT (continued)
Investment and financial risks (continued)
Liquidity risk (continued)
Maturity analysis of insurance and reinsurance contract liabilities(1)
US$m
Total
Due in
one year
or less
Due after
one year
through
two years
Due after
two years
through
three years
Due after
three years
through
four years
Due after
four years
through
five years
Due after
five years
31 December 2024
Insurance contract liabilities
165,733
(5,635)
(6,804)
(4,431)
(1,541)
1,409
182,735
Reinsurance contract liabilities
700
28
30
28
35
34
545
US$m
Total
Due in
one year
or less
Due after
one year
through
two years
Due after
two years
through
three years
Due after
three years
through
four years
Due after
four years
through
five years
Due after
five years
31 December 2023
Insurance contract liabilities
155,459
(4,778)
(5,496)
(3,214)
(1,452)
1,172
169,227
Reinsurance contract liabilities
917
59
44
43
41
48
682
Note:
(1) The amounts of payable on demand of insurance contracts are US$208,003m as at 31 December 2024 (2023: US$190,031m).
Transactions within the Group
Intra-group transactions are overseen by the relevant Group Office functions to ensure adherence with the relevant Group
policies. The Group Risk function oversees the processes to identify and assess material systematic intra-group transaction
risks, and ensure risks assumed are within the Group’s Risk Management Framework.
During the year ended 31 December 2024, material intra-group transactions were mainly related to support services
provided within the Group, a limited number of financing and reinsurance arrangements, and collective investment funds
that provide a simple return of capital guarantee and are backed by investment grade fixed income assets.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
306
AIA GROUP LIMITED
35. EMPLOYEE BENEFITS
Post-retirement benefit obligations
The Group operates a number of funded and unfunded post-retirement employee benefit schemes, whose members
receive benefits on either a defined benefit basis (generally related to salary and length of service) or a defined contribution
basis (generally related to the amount invested, investment return and annuity rates), the assets of which are generally
held in separate trustee-administered funds. The defined benefit plans provide life and medical benefits for employees
after retirement and a lump sum benefit on cessation of employment, and the defined contribution plans provide
post-retirement pension benefits.
Defined benefit plans
The Group operates funded and unfunded defined benefit plans that provide life and medical benefits for participating
employees after retirement and a lump sum benefit on cessation of employment. The locations covered by these plans
include Hong Kong, Thailand, Singapore, Malaysia, Cambodia, Indonesia, the Philippines, South Korea, Sri Lanka, Taiwan
(China) and Vietnam. The latest independent actuarial valuation of the plans was at 31 December 2024 and was prepared
by credentialed actuaries of Towers Watson Hong Kong Limited. All the actuaries are qualified members of professional
actuarial organisations to render the actuarial opinions.
For defined benefit plans, the costs are assessed using the projected unit credit method. Under this method, the cost of
providing benefits is charged to the consolidated income statement so as to spread the regular cost over the service lives
of employees, in accordance with the advice of qualified actuaries. The obligation is measured as the present value of the
estimated future cash outflows, using a discount rate based on market yields for high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms
of the related liability. The resulting scheme surplus or deficit appears as an asset or liability in the consolidated statement
of financial position.
The actuarial valuations indicate that the Group’s obligations under these defined benefit retirement plans are 43 per cent
(2023: 52 per cent) covered by the plan assets held by the trustees. The fair value of plan assets as at year end at the date
of valuation was US$101m (2023: US$109m). The total expenses relating to these plans recognised in the consolidated
income statement was US$9m (2023: US$9m).
Defined contribution plans
For defined contribution plans, the Group pays contributions to publicly or privately administered pension plans. Once the
contributions have been paid, the Group, as employer, does not have any further payment obligations. The Group’s
contributions are charged to the consolidated income statement in the reporting period to which they relate and are
included in employee benefit expenses. The total expense relating to these plans in the current year was US$145m (2023:
US$139m). Employees and the employer are required to make monthly contributions equal to 1 per cent to 22 per cent of
the employees’ monthly basic salaries, depending on years of service and subject to any applicable caps of monthly
relevant income in different jurisdictions. For defined contribution pension plans with vesting conditions, any forfeited
contributions by employers on behalf of employees who leave the scheme prior to vesting fully in such contributions are
used by the employer to reduce any future contributions. The amount of forfeited contributions used to reduce the existing
level of contributions is not material.
FINANCIAL STATEMENTS
307
ANNUAL REPORT 2024
36. SHARE-BASED COMPENSATION
Share-based compensation plans
The Group’s share-based compensation plans are equity-settled plans. Under equity-settled share-based compensation
plan, the fair value of the employee services received in exchange for the grant of shares and/or share options is recognised
as an expense in profit or loss over the vesting period with a corresponding amount recorded in equity.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the shares and/or
share options granted. Non-market vesting conditions are included in assumptions about the number of shares and/or
share options that are expected to be vested. At each period end, the Group revises its estimates of the number of shares
and/or share options that are expected to be vested. Any impact of the revision to original estimates is recognised in profit
or loss with a corresponding adjustment to equity. Where grants of share-based payment arrangements have graded
vesting terms, each tranche is recognised as a separate grant, and therefore the fair value of each tranche is recognised
over the applicable vesting period.
Where modification or cancellation of an equity-settled share-based compensation plan occurs, the grant date fair value
continues to be recognised, together with any incremental value arising on the date of modification if non-market conditions
are met.
During the year ended 31 December 2020, the 2010 Share Option (SO) Scheme, the 2010 Restricted Share Unit (RSU)
Scheme and the 2011 Employee Share Purchase Plan (ESPP) were terminated. There shall be no further grants under
either of these schemes. However, these schemes shall remain in full force and effect for all grants prior to its termination,
and the exercise and the vesting of these grants shall be subject to and in accordance with the terms on which they were
granted under the provisions of each of these schemes, and the Listing Rules, where applicable. In the same year, the
Group adopted the 2020 SO Scheme, the 2020 RSU Scheme and the 2020 ESPP Plan.
During the years ended 31 December 2024 and 31 December 2023, the Group made further grants of SOs, RSUs and
restricted stock purchase units (RSPUs) to certain directors, officers and employees of the Group under these schemes.
On 1 February 2021, the Company adopted the new 2021 Agency Share Purchase Plan (ASPP) with an effective period of
10 years from the date of adoption. The 2012 ASPP was terminated with effect from 31 March 2021, after which time no
further restricted stock subscription units (RSSUs) can be granted under such plan. The 2012 ASPP shall remain in full
force and effect for all RSSUs granted prior to this termination, and the vesting of such RSSUs shall be subject to and in
accordance with the terms on which they were granted under the provisions of the 2012 ASPP.
During the years ended 31 December 2024 and 31 December 2023, the Group made further grants of RSSUs to eligible
agents under the 2021 ASPP.
RSU Schemes
Under the RSU Schemes, the vesting of the granted RSUs is conditional upon the eligible participants remaining in
employment with the Group during the respective vesting periods. Time-vesting RSU grants are vested either entirely after
a specific period of time or in tranches over the vesting period during which, the eligible participants are required to remain
in employment with the Group. For RSU grants that are vested in tranches, each vesting tranche is accounted for as a
separate grant for the purposes of recognising the expense over the respective vesting period. For performance-vesting
RSUs, performance conditions are also attached which include both market and non-market conditions. Performance-vesting
RSUs subject to performance conditions are released to the participants at the end of the vesting period depending on the
actual achievement of the performance conditions. During the vesting period, the participants are not entitled to dividends
of the underlying shares. Except in jurisdictions where restrictions apply, the granted RSUs are expected to be settled in
equity.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
308
AIA GROUP LIMITED
36. SHARE-BASED COMPENSATION (continued)
Share-based compensation plans (continued)
RSU Schemes (continued)
Number of shares
Year ended
31 December
2024
Year ended
31 December
2023
Restricted Share Units
Outstanding at beginning of financial year
29,913,377
29,603,948
Granted
17,620,057
11,470,894
Forfeited
(6,360,841)
(6,337,282)
Vested
(3,804,905)
(4,824,183)
Outstanding at end of financial year
37,367,688
29,913,377
SO Schemes
The objectives of the SO Schemes are to align eligible participants’ interests with those of the shareholders of the Company
by allowing eligible participants to share in the value created at the point they exercise their share options. SO grants are
vested either entirely after a specific period of time or in tranches over the vesting period approximately three to five years,
during which the eligible participants are required to remain in employment with the Group. For SO grants that are vested
in tranches, each vesting tranche is accounted for as a separate grant for the purposes of recognising the expense over the
respective vesting periods. The granted SOs expire 10 years from the date of grant and each SO entitles the eligible
participant to subscribe for one ordinary share. Subject to restrictions in the applicable laws, regulations and rules of the
relevant jurisdictions, the granted SOs are expected to be settled in equity.
Information about SOs outstanding and SOs exercisable by the Group’s employees and directors as at the end of the
reporting period is as follows:
Year ended
31 December 2024
Year ended
31 December 2023
Number of
share options
Weighted
average
exercise price
(HK$)
Number of
share options
Weighted
average
exercise price
(HK$)
Share options
Outstanding at beginning of financial year
25,105,172
68.07
23,973,304
66.48
Granted
3,019,542
62.33
1,918,599
80.73
Exercised
(869,729)
55.16
(661,786)
44.16
Forfeited or expired
(49,051)
76.33
(124,945)
83.30
Outstanding at end of financial year
27,205,934
67.83
25,105,172
68.07
Share options exercisable at end of financial year
19,970,322
66.05
19,270,954
62.95
At the respective dates on which the SOs were exercised, the weighted average share price of the Company was HK$67.65
for the year ended 31 December 2024 (2023: HK$81.27).
FINANCIAL STATEMENTS
309
ANNUAL REPORT 2024
36. SHARE-BASED COMPENSATION (continued)
Share-based compensation plans (continued)
SO Schemes (continued)
The range of exercise prices for the SOs outstanding as of 31 December 2024 and 31 December 2023 is summarised in
the table below.
Year ended
31 December 2024
Year ended
31 December 2023
Number of
share options
outstanding
Weighted
average
remaining
contractual life
(years)
Number of
share options
outstanding
Weighted
average
remaining
contractual life
(years)
Range of exercise price
HK$36 – HK$45
1,637,947
1.18
1,692,658
2.12
HK$46 – HK$55
3,928,472
1.88
4,396,614
2.75
HK$56 – HK$65
3,849,978
7.78
830,436
3.58
HK$66 – HK$75
8,227,082
4.40
8,609,199
5.36
HK$76 – HK$85
7,805,626
6.16
7,805,626
7.17
Over HK$86
1,756,829
6.22
1,770,639
7.23
Outstanding at end of financial year
27,205,934
4.95
25,105,172
5.32
ESPP
Under the ESPPs, eligible employees of the Group can purchase ordinary shares of the Company with qualified employee
contributions and the Company will grant one matching RSPU to them at the end of the vesting period for each two shares
purchased through the qualified employee contributions (contribution shares). Contribution shares are purchased from
the open market. During the relevant vesting period, the eligible employees must hold the contribution shares purchased
and remain employed by the Group in order to qualify to receive the matching shares upon the vesting of the matching
RSPUs. The granted matching RSPUs are expected to be settled in equity. Under the 2020 ESPP, the level of qualified
employee contribution is subject to a maximum amount equal to 10 per cent of the monthly base salary or HK$12,500 (or
local currency equivalent) per month, whichever is lower. For the year ended 31 December 2024, eligible employees paid
US$38m (2023: US$39m) to purchase 5,243,069 ordinary shares (2023: 4,062,855 ordinary shares) of the Company
under the ESPPs.
ASPP
The structure of the ASPPs generally follows those of the ESPPs, the key difference is that the eligible agents are required
to pay a subscription price of US$1 to subscribe for each new share in the Company at the end of the vesting period. Under
the plans, eligible agents of the Group can purchase ordinary shares of the Company with qualified agent contributions and
the Company will grant one matching RSSU to them at the end of the vesting period for each two shares purchased
through the qualified agent contributions (agent contribution shares). Each RSSU entitles eligible agents to subscribe for
one new share of the Company. Agent contribution shares are purchased from the open market. During the vesting period,
the eligible agents must hold the contribution shares purchased and maintain their agent contracts with the Group in order
to qualify to receive the matching shares upon the vesting of the matching RSSUs. The granted matching RSSUs are
expected to be settled in equity. Under the 2021 ASPP, the level of qualified agent contribution is subject to a maximum
amount of HK$12,500 (or local currency equivalent) per month respectively. For the year ended 31 December 2024,
eligible agents paid US$24m (2023: US$20m) to purchase 3,155,824 ordinary shares (2023: 2,143,422 ordinary shares)
of the Company under the ASPPs.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
310
AIA GROUP LIMITED
36. SHARE-BASED COMPENSATION (continued)
Valuation methodology
The Group utilises a binomial lattice model to calculate the fair value of the SO grants, involving a few significant
assumptions such as the expected volatility, expected dividend yield and risk-free interest rate. The expected volatility of
the Company’s shares is estimated based on an analysis of historical data since they are traded in the HKSE. The expected
dividend yield is estimated based on an analysis of historical dividend relative to historical share price. The risk-free interest
rate is estimated based on implied yield of the Government Bonds and Exchange Fund Notes issued by the Hong Kong
Monetary Authority as at the grant date. The analysis period for expected volatility and risk-free interest rate is consistent
with the expected life of the SOs, which is derived from the output of the valuation model and is calculated based on an
analysis of expected exercise behaviour of the Company’s employees.
The Group utilises a Monte-Carlo simulation model and/or discounted cash flow technique to calculate the fair value of the
RSU, RSPU and RSSU grants, taking into account the terms and conditions upon which the grants were made. Significant
assumptions include expected dividend yield and risk-free interest rate. The value of expected dividends during the vesting
period is estimated based on an analysis of historical dividend relative to historical share price. The risk-free interest rate
is estimated based on implied yield of the Government Bonds and Exchange Fund Notes issued by the Hong Kong Monetary
Authority as at the grant date. For performance-vesting RSUs, the simulation for achievement of market condition depends
on assumptions of expected volatility of the Company’s shares and other market comparators as well as the correlations.
These assumptions are estimated based on an analysis of historical data over a period consistent with the expected life of
the RSUs.
Forfeitures prior to vesting are not allowed for in the valuation of the grants.
The fair values calculated for the grants are inherently subjective due to the assumptions made and the limitations of the
models utilised.
Year ended 31 December 2024
Share options
Restricted
share units
ESPP Restricted
stock purchase
units
ASPP Restricted
stock subscription
units
Assumptions
Risk-free interest rate
3.67% – 3.83%
3.20% – 3.69%*
2.54% – 3.87%
3.49%
Volatility
29%
29%
n/a
n/a
Dividend yield
1.70%
1.70% – 1.80%
1.70% – 1.80%
1.70%
Exercise price (HK$)
62.33
n/a
n/a
n/a
Share option life (in years)
10
n/a
n/a
n/a
Expected life (in years)
7.73 – 8.89
n/a
n/a
n/a
Weighted average fair value per option/unit
at measurement date (HK$)
17.38
41.45
49.65
43.00
Year ended 31 December 2023
Share options
Restricted
share units
ESPP Restricted
stock purchase
units
ASPP Restricted
stock subscription
units
Assumptions
Risk-free interest rate
3.19%
3.27%*
3.16% – 4.17%
2.87%
Volatility
28%
28%
n/a
n/a
Dividend yield
1.60%
1.60%
1.60% – 1.70%
1.60%
Exercise price (HK$)
80.73
n/a
n/a
n/a
Share option life (in years)
10
n/a
n/a
n/a
Expected life (in years)
7.47
n/a
n/a
n/a
Weighted average fair value per option/unit
at measurement date (HK$)
23.97
63.37
61.72
57.03
*
Applicable to RSU with market conditions.
FINANCIAL STATEMENTS
311
ANNUAL REPORT 2024
36. SHARE-BASED COMPENSATION (continued)
Valuation methodology (continued)
The weighted average share price for SO valuation for grants made during the year ended 31 December 2024 is HK$57.40
(2023: HK$78.95). The total fair value of SOs granted during the year ended 31 December 2024 is US$7m (2023: US$6m).
Recognised compensation cost
The total recognised compensation cost (net of expected forfeitures) related to various share-based compensation grants
made by the Group for the year ended 31 December 2024 is US$87m (2023: US$77m).
37. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
Directors’ remuneration
The Executive Director receives compensation in the form of salaries, bonuses, contributions to pension schemes, long-term
incentives, housing and other allowances, and benefits in kind subject to applicable laws, rules and regulations. Bonuses
and long-term incentives represent the variable components in the Executive Director’s compensation and are linked to
the performance of the Group and the Executive Director. Details of share-based payment schemes are described in note
36.
US$
Director’s
fees
Salaries,
allowances
and benefits
in kind(1)
Bonuses
Share-based
payments(2)
Pension
scheme
contributions
Other
benefits
Other
payments(3)
Total
Year ended 31 December 2024
Executive Director
Mr. Lee Yuan Siong(4)
– 1,773,661
5,280,460 5,644,406
72,642
–
959,978
13,731,147
Total
– 1,773,661
5,280,460 5,644,406
72,642
–
959,978
13,731,147
US$
Director’s
fees
Salaries,
allowances
and benefits
in kind(1)
Bonuses
Share-based
payments(2)
Pension
scheme
contributions
Other
benefits
Other
payments(3)
Total
Year ended 31 December 2023
Executive Director
Mr. Lee Yuan Siong(4)
–
1,716,746
5,029,000
4,819,618
70,224
–
1,785,500
13,421,088
Total
–
1,716,746
5,029,000
4,819,618
70,224
–
1,785,500
13,421,088
Notes:
(1) Includes non-cash benefits for housing, medical and life insurance, club and professional membership, company car and perquisites.
(2) Includes amortised expenses for unvested SOs, RSUs and matching shares under ESPP based on the fair value at the respective grant dates.
(3) This represents amortised expenses in relation to the awarded compensation for unvested long-term incentives and deferred payments that Mr.
Lee Yuan Siong forfeited on leaving his prior employments.
(4) Mr. Lee Yuan Siong is currently the Group Chief Executive and President of the Company. He receives his remuneration exclusively for his role as
Group Chief Executive and President of the Company and receives no separate fees for his role as a director of the Company or for acting as a
director of any subsidiary of the Company.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
312
AIA GROUP LIMITED
37. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL (continued)
Directors’ remuneration (continued)
The remuneration of Independent Non-executive Directors of the Company at 31 December 2024 and 31 December 2023
are included in the tables below:
US$
Director’s
fees(1)
Salaries,
allowances
and benefits
in kind(2)
Bonuses
Share-based
payments
Pension
scheme
contribution
Other
benefits
Other
payments
Total
Year ended 31 December
2024
Independent Non-executive
Directors
Mr. Edmund Sze-Wing Tse
860,000
413,275
–
–
–
–
–
1,273,275
Mr. Jack Chak-Kwong So
330,000
–
–
–
–
–
–
330,000
Mr. Chung-Kong Chow
305,000
–
–
–
–
–
–
305,000
Mr. John Barrie Harrison
330,656
–
–
–
–
–
–
330,656
Mr. George Yong-Boon Yeo
355,000
–
–
–
–
–
–
355,000
Professor Lawrence
Juen-Yee Lau
280,000
–
–
–
–
–
–
280,000
Dr. Narongchai Akrasanee(4)
410,000
–
–
–
–
–
–
410,000
Mr. Cesar Velasquez
Purisima
355,000
–
–
–
–
–
–
355,000
Ms. Sun Jie (Jane)
305,820
–
–
–
–
–
–
305,820
Ms. Mari Elka Pangestu
264,180
–
–
–
–
–
–
264,180
Mr. Ong Chong Tee
264,180
–
–
–
–
–
–
264,180
Ms. Nor Shamsiah Mohd
Yunus
259,344
–
–
–
–
–
–
259,344
Total
4,319,180
413,275
–
–
–
–
–
4,732,455
FINANCIAL STATEMENTS
313
ANNUAL REPORT 2024
37. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL (continued)
Directors’ remuneration (continued)
US$
Director’s
fees(1)
Salaries,
allowances
and benefits
in kind(2)
Bonuses
Share-based
payments
Pension
scheme
contribution
Other
benefits
Other
payments
Total
Year ended 31 December
2023
Independent Non-executive
Directors
Mr. Edmund Sze-Wing Tse
860,000
146,721
–
–
–
–
–
1,006,721
Mr. Jack Chak-Kwong So
330,000
–
–
–
–
–
–
330,000
Mr. Chung-Kong Chow
288,356
–
–
–
–
–
–
288,356
Mr. John Barrie Harrison
350,000
–
–
–
–
–
–
350,000
Mr. George Yong-Boon Yeo
355,000
–
–
–
–
–
–
355,000
Professor Lawrence
Juen-Yee Lau
280,000
–
–
–
–
–
–
280,000
Ms. Swee-Lian Teo(3)
216,370
–
–
–
–
–
–
216,370
Dr. Narongchai Akrasanee(4)
396,685
–
–
–
–
–
–
396,685
Mr. Cesar Velasquez
Purisima
355,000
–
–
–
–
–
–
355,000
Ms. Sun Jie (Jane)
330,000
–
–
–
–
–
–
330,000
Ms. Mari Elka Pangestu(5)
120,986
–
–
–
–
–
–
120,986
Mr. Ong Chong Tee(6)
120,986
–
–
–
–
–
–
120,986
Ms. Nor Shamsiah Mohd
Yunus(7)
67,068
–
–
–
–
–
–
67,068
Total
4,070,451
146,721
–
–
–
–
–
4,217,172
Notes:
(1) Save as disclosed below, all Directors receive the fees for their role as a director of the Company and not for acting as a director of any subsidiary
of the Company.
(2) Includes non-cash benefits for housing, club and professional membership, medical insurance and company car.
(3) Ms. Swee-Lian Teo retired as an Independent Non-executive Director of the Company with effect from 1 September 2023.
(4) US$100,000 (2023: US$100,000) represented remuneration to Dr. Narongchai Akrasanee in respect of his services as the Chairman of Advisory
Board of AIA Thailand for the year ended 31 December 2024 included in his fees stated above.
(5) Ms. Mari Elka Pangestu was appointed as an Independent Non-executive Director of the Company with effect from 1 July 2023.
(6) Mr. Ong Chong Tee was appointed as an Independent Non-executive Director of the Company with effect from 1 July 2023.
(7) Ms. Nor Shamsiah Mohd Yunus was appointed as an Independent Non-executive Director of the Company with effect from 21 September 2023.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
314
AIA GROUP LIMITED
37. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL (continued)
Remuneration of five highest-paid individuals
The aggregate remuneration of the five highest-paid individuals employed by the Group in each of the years ended 31
December 2024 and 31 December 2023 is presented in the table below.
US$
Director’s
fees
Salaries,
allowances
and benefits
in kind(1)
Bonuses
Share-based
payments(2)
Pension
scheme
contribution
Other
benefits
Other
payments(3)
Total
Year ended
31 December 2024
– 6,060,321
10,774,960 14,091,117
380,664
–
959,978
32,267,040
31 December 2023
– 5,898,388
10,372,280 12,352,364
369,727
–
1,785,500
30,778,259
Notes:
(1) Benefits in the years ended 31 December 2024 and 31 December 2023 include housing, medical and life insurance, children’s education, club and
professional membership, company car and perquisites.
(2) Includes amortised expenses for unvested SOs, RSUs and matching shares under ESPP to the five highest-paid individuals based on the fair value
at the respective grant dates.
(3) Includes amortised expenses in relation to the awarded compensation for unvested long-term incentives and deferred payments that Mr. Lee Yuan
Siong forfeited on leaving his prior employments.
The emoluments of the five individuals with the highest emoluments are within the following bands:
HK$
Year ended
31 December
2024
Year ended
31 December
2023
28,500,001 to 29,000,000
–
1
29,000,001 to 29,500,000
–
1
30,000,001 to 30,500,000
–
1
30,500,001 to 31,000,000
2
–
32,500,001 to 33,000,000
1
–
47,500,001 to 48,000,000
–
1
50,500,001 to 51,000,000
1
–
105,000,001 to 105,500,000
–
1
107,000,001 to 107,500,000
1
–
FINANCIAL STATEMENTS
315
ANNUAL REPORT 2024
37. REMUNERATION OF DIRECTORS AND KEY MANAGEMENT PERSONNEL (continued)
Key management personnel remuneration
Key management personnel have been identified as the members of the Group’s Executive Committee.
US$
Year ended
31 December
2024
Year ended
31 December
2023
Key management compensation and other expenses
Salaries and other short-term employee benefits
32,719,085
30,273,575
Post-employment benefits
680,287
631,999
Share-based payments(1)
21,737,575
19,053,974
Total
55,136,947
49,959,548
Note:
(1) Includes amortised expenses for unvested SOs, RSUs and matching shares under ESPP to the key management personnel based on the fair value
at the respective grant dates.
The emoluments of the key management personnel are within the following bands:
US$
Year ended
31 December
2024
Year ended
31 December
2023
Below 1,000,000
1
–
1,000,001 to 2,000,000
–
1
2,000,001 to 3,000,000
4
4
3,000,001 to 4,000,000
5
5
4,000,001 to 5,000,000
1
–
6,000,001 to 7,000,000
1
1
Over 10,000,000
1
1
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
316
AIA GROUP LIMITED
38. RELATED PARTY TRANSACTIONS
Remuneration of Directors and key management personnel is disclosed in note 37.
39. COMMITMENTS AND CONTINGENCIES
Investment and capital commitments
US$m
As at
31 December
2024
As at
31 December
2023
Not later than one year
15,149
17,624
Later than one and not later than five years
152
123
Total
15,301
17,747
Investment and capital commitments consist of commitments to invest in private equity partnerships and other assets.
Contingencies
The Group is subject to regulation in each of the geographical markets in which it operates from insurance, securities,
capital markets, pension, data privacy and other regulators and is exposed to the risk of regulatory actions in response to
perceived or actual non-compliance with regulations relating to suitability, sales or underwriting practices, claims
payments and procedures, product design, disclosure, administration, denial or delay of benefits and breaches of fiduciary
or other duties. The Group believes that these matters have been adequately provided for in these financial statements.
The Group is exposed to legal proceedings, complaints and other actions from its activities including those arising from
commercial activities, sales practices, suitability of products, policies, claims and taxes. The Group believes that these
matters are adequately provided for in these financial statements.
The Group operates in many jurisdictions across Asia and in certain of those jurisdictions, the Group’s interpretation of the
relevant law or regulation may differ from that of the tax authorities, which can result in disputes arising. The Group has
made provisions to cover the potential tax implications, based on management’s judgement and best estimate in relation
to the probability or likelihood of the potential outcomes, which is subject to periodic reassessment. Due to the uncertainty
associated with these items, there remains a possibility that the final outcomes may differ on conclusion of the relevant tax
matters at a future date.
FINANCIAL STATEMENTS
317
ANNUAL REPORT 2024
40. SUBSIDIARIES
The following is a list of AIA’s directly and indirectly held principal operating subsidiaries which materially contribute to the
net income of the Group or hold a material element of its assets and liabilities:
Name of entity
Place of
incorporation and
operation
Principal activity
Issued share capital
As at
31 December 2024
As at
31 December 2023
Group’s
interest %
NCI’s
interest %
Group’s
interest %
NCI’s
interest %
AIA Company Limited(1)
Hong Kong
Insurance
2,596,049,861 ordinary shares
of US$11,390,584,182
issued share capital
100%
–
100%
–
AIA Australia Limited
Australia
Insurance
2,125,462,500 ordinary shares
of A$2,207,267,000 issued
share capital
100%
–
100%
–
AIA Bhd.
Malaysia
Insurance
191,859,543 ordinary shares of
RM810,000,000 issued share
capital
100%
–
100%
–
AIA Life Insurance Company Limited
Mainland
China
Insurance
Registered share capital of
RMB3,777,399,440
100%
–
100%
–
AIA Philippines Life and General
Insurance Company Inc.
Philippines
Insurance
199,560,671 ordinary shares of
PHP10 each and 67,349,329
treasury shares
100%
–
100%
–
BPI AIA Life Assurance Corporation
Philippines
Insurance
749,993,979 ordinary shares of
PHP1 each and 6,000
treasury shares
51%
49%
51%
49%
AIA Singapore Private Limited
Singapore
Insurance
1,558,021,163 ordinary shares
of S$1 each
100%
–
100%
–
AIA Everest Life Company Limited
Hong Kong
Insurance
500,000,000 ordinary shares of
HK$2,496,291,000 issued
share capital
100%
–
100%
–
AIA International Limited
Bermuda
Insurance
6,500,000 ordinary shares of
US$1.20 each
100%
–
100%
–
PT AIA Financial
Indonesia
Insurance
1,910,844,141 ordinary shares
of Rp1,000 each
100%
–
100%
–
AIA (Vietnam) Life Insurance Company
Limited
Vietnam
Insurance
Contributed capital of
VND8,724,420,000,000
100%
–
100%
–
Bayshore Development Group Limited
British Virgin
Islands
Investment
holding
company
100 ordinary shares of US$1
each
100%
–
90%
10%
AIA Life Insurance Co. Ltd.
South Korea
Insurance
60,328,932 ordinary shares of
KRW603,289,320,000 issued
share capital
100%
–
100%
–
AIA New Zealand Limited
New Zealand
Insurance
248,217,572 ordinary shares of
NZD863,709,199 issued
share capital
100%
–
100%
–
AIA Reinsurance Limited
Bermuda
Reinsurance
250,000 common shares of
US$1 each
100%
–
100%
–
Notes:
(1) The Company’s subsidiary.
(2) All of the above subsidiaries are audited by PricewaterhouseCoopers.
All subsidiaries are unlisted.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
318
AIA GROUP LIMITED
41. EVENTS AFTER THE REPORTING PERIOD
On 14 March 2025, a Committee appointed by the Board of Directors proposed a final dividend of 130.98 Hong Kong cents
per share (2023: final dividend of 119.07 Hong Kong cents per share).
FINANCIAL STATEMENTS
319
ANNUAL REPORT 2024
42. STATEMENT OF FINANCIAL POSITION OF THE COMPANY
US$m
As at
31 December
2024
As at
31 December
2023
Assets
Investment in subsidiaries at cost(2)
22,646
22,506
Financial investments:
At fair value through other comprehensive income
Debt securities(3)
6,121
3,970
At fair value through profit or loss
Interests in investment funds(2)
2,240
502
Derivative financial instruments
199
57
8,560
4,529
Loans to/amounts due from subsidiaries
910
895
Other assets
72
126
Cash and cash equivalents
749
3,668
Total assets
32,937
31,724
Liabilities
Borrowings
13,739
12,257
Derivative financial instruments
98
42
Other liabilities
322
261
Total liabilities
14,159
12,560
Equity
Share capital
14,183
14,176
Employee share-based trusts
(376)
(367)
Other reserves
443
390
Retained earnings
4,550
4,853
Amounts reflected in other comprehensive income
(22)
112
Total equity
18,778
19,164
Total liabilities and equity
32,937
31,724
Notes:
(1) The financial information of the Company should be read in conjunction with the consolidated financial statements of the Group.
(2) The Company’s interests in investment funds such as mutual funds and unit trusts, including funds controlled by the Group, are measured at fair
value through profit or loss. Interests in other entities controlled by the Group are measured at cost, unless impaired, and presented as investment
in subsidiaries at cost. Interests in investment funds include US$2,238m (2023: US$494m) comprising the combined value of debt securities held
by an investment fund controlled by the Group and interests in an external fixed income fund. Fixed income fund refers to the investment fund
solely investing in fixed income instruments and cash equivalents, where investors of the fund own a pro-rata share of economic interests of the
fund according to the number of shares or units they own of the fund.
(3) Includes United States Treasury securities of US$5,965m (2023: US$2,112m) and China Government bonds of US$156m (2023: US$1,858m) as
at 31 December 2024.
Approved and authorised for issue by the Board of Directors on 14 March 2025.
Lee Yuan Siong
Edmund Sze-Wing Tse
Director
Director
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICY INFORMATION
320
AIA GROUP LIMITED
43. STATEMENT OF CHANGES IN EQUITY OF THE COMPANY
US$m
Share capital
Employee
share-based
trusts
Other
reserves
Retained
earnings
Amounts
reflected in other
comprehensive
income
Total
equity
Balance at 1 January 2024
14,176
(367)
390
4,853
112
19,164
Net profit
–
–
–
6,175
–
6,175
Fair value gains on debt securities at fair
value through other comprehensive
income
–
–
–
–
86
86
Fair value gains on debt securities at fair
value through other comprehensive
income reclassified to profit or loss on
disposal
–
–
–
–
(220)
(220)
Dividends
–
–
–
(2,328)
–
(2,328)
Share buy-back
–
–
–
(4,150)
–
(4,150)
Shares issued under share option scheme
and agency share purchase plan
7
–
–
–
–
7
Share-based compensation
–
–
87
–
–
87
Purchase of shares held by employee
share-based trusts
–
(43)
–
–
–
(43)
Transfer of vested shares from employee
share-based trusts
–
34
(34)
–
–
–
Balance at 31 December 2024
14,183
(376)
443
4,550
(22)
18,778
US$m
Share capital
Employee
share-based
trusts
Other
reserves
Retained
earnings
Amounts
reflected in other
comprehensive
income
Total
equity
Balance at 1 January 2023
14,171
(290)
351
6,990
44
21,266
Net profit
–
–
–
3,793
–
3,793
Fair value gains on debt securities at fair
value through other comprehensive
income
–
–
–
–
132
132
Fair value gains on debt securities at fair
value through other comprehensive
income reclassified to profit or loss on
disposal
–
–
–
–
(64)
(64)
Dividends
–
–
–
(2,293)
–
(2,293)
Share buy-back
–
–
–
(3,637)
–
(3,637)
Shares issued under share option scheme
and agency share purchase plan
5
–
–
–
–
5
Share-based compensation
–
–
77
–
–
77
Purchase of shares held by employee
share-based trusts
–
(115)
–
–
–
(115)
Transfer of vested shares from employee
share-based trusts
–
38
(38)
–
–
–
Balance at 31 December 2023
14,176
(367)
390
4,853
112
19,164
FINANCIAL STATEMENTS
321
ANNUAL REPORT 2024
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT ON THE SUPPLEMENTARY EMBEDDED VALUE INFORMATION
INDEPENDENT AUDITOR’S REPORT ON THE SUPPLEMENTARY EMBEDDED VALUE
INFORMATION AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2024
TO THE BOARD OF DIRECTORS OF AIA GROUP LIMITED
(incorporated in Hong Kong with limited liability)
Opinion
What we have audited
The Supplementary Embedded Value Information (the “EV Information”) of AIA Group Limited
(the “Company”) and its subsidiaries (the “Group”), which is set out on pages 325 to 351,
comprises:
•
the consolidated Embedded Value results as at and for the year ended 31 December 2024;
and
•
the sensitivity analysis, methodology, assumptions and other explanatory notes.
Our opinion
In our opinion, the EV Information of the Group as at and for the year ended 31 December 2024 is
prepared, in all material respects, in accordance with the EV basis of preparation set out in
Sections 4 and 5 of the EV Information.
Basis for Opinion
We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued
by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the EV
Information section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Independence
We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional
Accountants (“the Code”), and we have fulfilled our other ethical responsibilities in accordance
with the Code.
Emphasis of Matter – Basis of Preparation
We draw attention to Sections 4 and 5 of the EV Information, which describe the EV basis of
preparation. As a result, the EV Information may not be suitable for another purpose. Our opinion
is not modified in respect of this matter.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
322
AIA GROUP LIMITED
Other Matter
The Group has prepared a separate set of consolidated financial statements as at and for the year
ended 31 December 2024 in accordance with Hong Kong Financial Reporting Standards issued
by the HKICPA and IFRS Accounting Standards issued by the International Accounting Standards
Board, on which we issued a separate auditor’s report to the shareholders of the Company dated
14 March 2025.
Other Information
The Directors of the Company are responsible for the other information. The other information
comprises all of the information included in the annual report other than the EV Information and
our auditor’s report thereon.
Our opinion on the EV Information does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the EV Information, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the EV Information or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
FINANCIAL STATEMENTS
323
ANNUAL REPORT 2024
Responsibilities of Directors and Those Charged with Governance for the EV Information
The Directors of the Company are responsible for the preparation of the EV Information in
accordance with the EV basis of preparation set out in Sections 4 and 5 of the EV Information and
for such internal control as the Directors determine is necessary to enable the preparation of the
EV Information that is free from material misstatement, whether due to fraud or error.
In preparing the EV Information, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s EV Information
reporting process.
Auditor’s Responsibilities for the Audit of the EV Information
Our objectives are to obtain reasonable assurance about whether the EV Information as a whole
is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. We report our opinion solely to you, as a body, and for no other purpose.
We do not assume responsibility towards or accept liability to any other person for the contents
of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with HKSAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of this EV Information.
As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the EV Information, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
INDEPENDENT AUDITOR’S REPORT ON THE SUPPLEMENTARY EMBEDDED VALUE INFORMATION
324
AIA GROUP LIMITED
Auditor’s Responsibilities for the Audit of the EV Information (continued)
•
Evaluate the appropriateness of the EV basis of preparation used and the reasonableness of
accounting estimates and related disclosures made by the Directors.
•
Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the EV Information or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Group to cease to continue as a going concern.
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the
EV Information of the entities or business units within the Group as a basis for forming an
opinion on the EV Information. We are responsible for the direction, supervision and review of
the audit work performed for purposes of the group audit. We remain solely responsible for
our audit opinion.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.
The engagement partner on the audit resulting in this independent auditor’s report is Lars
Christian Jordy Nielsen.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
14 March 2025
FINANCIAL STATEMENTS
325
ANNUAL REPORT 2024
FINANCIAL STATEMENTS
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
CAUTIONARY STATEMENTS CONCERNING SUPPLEMENTARY EMBEDDED VALUE INFORMATION
This report includes non-IFRS results and should not be viewed as a substitute for IFRS results.
The results shown in this report are not intended to represent an opinion of market value and should not be interpreted in
that manner. This report does not purport to encompass all of the many factors that may bear upon a market value.
The results shown in this report are based on a series of assumptions as to the future. It should be recognised that actual
future results may differ from those shown, on account of the changes in the operating and economic environments and
natural variations in experience. The results shown are presented at the valuation dates stated in this report and no
warranty is given by the Group that future experience after these valuation dates will be in line with the assumptions made.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
326
AIA GROUP LIMITED
1. SUMMARY
The Embedded Value (EV) is a measure of the value of shareholders’ interests in the earnings distributable from assets
allocated to the in-force business after allowance for the aggregate risks in that business. AIA Group Limited (the
“Company”), together with its subsidiaries (collectively the “Group”) use a traditional deterministic discounted cash flow
methodology for determining its EV and value of new business (VONB) for all entities other than Tata AIA Life Insurance
Company Limited (Tata AIA Life). This methodology makes an implicit overall level of allowance for risk including the cost
of investment return guarantees and policyholder options, asset-liability mismatch risk, credit risk, the risk that actual
experience in future years differs from that assumed, and the economic cost of capital, through the use of a risk discount
rate. For Tata AIA Life, the Group uses the Indian Embedded Value (IEV) methodology as defined in Actuarial Practice
Standard 10 issued by the Institute of Actuaries of India, consistent with local practice in India.
The equity attributable to shareholders of the Company on the embedded value basis (EV Equity) is the total of EV, goodwill
and other intangible assets attributable to shareholders of the Company, after allowing for taxes. More details on the EV
results, methodology and assumptions are covered in later sections of this report.
Unless otherwise stated, the growth rates provided in the commentaries are shown on a constant exchange rate (CER)
basis, and the per-share information provided in the tables are based on the basic number of ordinary shares outstanding
as at the specified point in time, as disclosed in the consolidated financial statements.
FINANCIAL STATEMENTS
327
ANNUAL REPORT 2024
1. SUMMARY (continued)
Summary of Key Metrics(1) (US$ millions)
As at
31 December
2024
As at
31 December
2023
Change
CER
Change
AER
EV Equity
71,626
70,153
4%
2%
EV Equity per share (US$)
6.64
6.17
9%
8%
EV
69,035
67,447
4%
2%
EV per share (US$)
6.40
5.94
10%
8%
Free surplus
12,554
16,329
(22)%
(23)%
Adjusted net worth (ANW)
30,527
32,009
(3)%
(5)%
Value of in-force business (VIF)
38,508
35,438
10%
9%
Year ended
31 December
2024
Year ended
31 December
2023
YoY CER
YoY AER
VONB
4,712
4,034
18%
17%
Annualised new premiums (ANP)
8,606
7,650
14%
12%
VONB margin
54.5%
52.6%
1.9 pps
1.9 pps
EV operating profit
10,025
8,890
14%
13%
Operating return on EV (Operating ROEV)
14.9%
12.9%
n/a
2.0 pps
Underlying free surplus generation (UFSG)
6,327
6,041
6%
5%
Note:
(1) The results are after adjustment to reflect the consolidated reserving and capital requirements, the present value of future after-tax unallocated
Group Office expenses and Group Corporate Centre tax.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
328
AIA GROUP LIMITED
2. EMBEDDED VALUE RESULTS
2.1 Embedded Value by Business Unit
The EV as at 31 December 2024 is presented consistently with the segment information in the consolidated financial
statements.
Summary of EV by Business Unit (US$ millions)
As at 31 December 2024
Business Unit
ANW(1)
VIF before
CoC
CoC
VIF after
CoC
EV
AIA China
10,143
5,290
264
5,026
15,169
AIA Hong Kong
12,150
17,430
1,402
16,028
28,178
AIA Thailand
4,654
5,422
414
5,008
9,662
AIA Singapore
2,611
5,341
739
4,602
7,213
AIA Malaysia
1,256
2,853
211
2,642
3,898
Other Markets
5,233
4,254
1,531
2,723
7,956
Group Corporate Centre
2,922
–
–
–
2,922
Subtotal
38,969
40,590
4,561
36,029
74,998
Adjustment to reflect consolidated
reserving and capital requirements(2)
(8,214)
5,391
869
4,522
(3,692)
After-tax value of unallocated Group
Office expenses
–
(1,615)
–
(1,615)
(1,615)
Group Corporate Centre tax(3)
–
(302)
3
(305)
(305)
Total EV (before non-controlling interests)
30,755
44,064
5,433
38,631
69,386
Non-controlling interests
(228)
(192)
(69)
(123)
(351)
Total EV
30,527
43,872
5,364
38,508
69,035
Goodwill and other intangible assets(4)
2,591
Total EV Equity
71,626
FINANCIAL STATEMENTS
329
ANNUAL REPORT 2024
2. EMBEDDED VALUE RESULTS (continued)
2.1 Embedded Value by Business Unit (continued)
As at 31 December 2023
Business Unit
ANW(1)
VIF before
CoC
CoC
VIF after
CoC
EV
AIA China
5,439
8,227
140
8,087
13,526
AIA Hong Kong
12,523
15,098
1,315
13,783
26,306
AIA Thailand
4,508
4,971
862
4,109
8,617
AIA Singapore
2,899
5,126
652
4,474
7,373
AIA Malaysia
1,169
2,270
207
2,063
3,232
Other Markets
5,935
4,056
1,459
2,597
8,532
Group Corporate Centre
4,274
–
–
–
4,274
Subtotal
36,747
39,748
4,635
35,113
71,860
Adjustment to reflect consolidated
reserving and capital requirements(2)
(4,368)
2,816
597
2,219
(2,149)
After-tax value of unallocated Group
Office expenses
–
(1,625)
–
(1,625)
(1,625)
Total EV (before non-controlling interests)
32,379
40,939
5,232
35,707
68,086
Non-controlling interests
(370)
(298)
(29)
(269)
(639)
Total EV
32,009
40,641
5,203
35,438
67,447
Goodwill and other intangible assets(4)
2,706
Total EV Equity
70,153
Notes:
(1) ANW by Business Unit is after net capital flows between Business Units and Group Corporate Centre.
(2) Adjustment reflects the consolidated reserving and capital requirements as described in Section 4.4 of this report.
(3) Refers to corporate income tax in Bermuda as described in Section 5.10 of this report.
(4) Consistent with the consolidated financial statements, shown net of tax, amounts attributable to participating funds and non-controlling interests.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
330
AIA GROUP LIMITED
2. EMBEDDED VALUE RESULTS (continued)
2.2 Reconciliation of ANW from IFRS Equity
Derivation of the Consolidated ANW from IFRS Equity (US$ millions)
As at
31 December
2024
As at
31 December
2023
Shareholders’ allocated equity
44,404
44,754
Fair value reserve
5,744
516
Insurance finance reserve
(9,658)
(4,159)
IFRS equity attributable to shareholders of the Company
40,490
41,111
Difference between net policy liabilities calculated and reported under IFRS®
Accounting Standards and local statutory policy liabilities
2,610
(2,149)
Mark-to-market adjustment for property, mortgage loan and other
investments, net of amounts attributable to participating funds
(47)
(63)
Elimination of intangible assets
(3,478)
(3,615)
Recognition of deferred tax impacts of the above adjustments
(929)
980
Recognition of non-controlling interests impacts of the above adjustments
95
113
ANW (Business Unit)
38,741
36,377
Adjustment to reflect consolidated reserving requirements, net of tax
(8,214)
(4,368)
ANW (Consolidated)
30,527
32,009
2.3 Reconciliation of Free Surplus from ANW
Derivation of Free Surplus from ANW (US$ millions)
As at 31 December 2024
As at 31 December 2023
Business Unit
Consolidated
Business Unit
Consolidated
ANW
38,741
30,527
36,377
32,009
Adjustment for certain assets not eligible for regulatory
capital purposes
(819)
(819)
(503)
(503)
Less: Required capital
13,129
17,154
12,565
15,177
Free surplus(1)
24,793
12,554
23,309
16,329
Note:
(1) The free surplus is defined as the ANW in excess of the required capital adjusted for certain assets that are not eligible for regulatory capital
purposes. The free surplus on consolidated basis is further adjusted for the consolidated reserving and capital requirements.
FINANCIAL STATEMENTS
331
ANNUAL REPORT 2024
2. EMBEDDED VALUE RESULTS (continued)
2.4 Earnings Profile
The tables below show how the after-tax distributable earnings from the assets backing the statutory reserves and required
capital of the in-force business of the Group are projected to emerge over future years. The projected values reflect the
consolidated reserving and capital requirements.
Profile of Projected After-Tax Distributable Earnings for the Group’s In-force Business (US$ millions)
As at 31 December 2024
Expected period of emergence
Undiscounted
Discounted
1 – 5 years
22,156
18,195
6 – 10 years
24,480
13,696
11 – 15 years
23,153
8,832
16 – 20 years
21,476
5,567
21 years and thereafter
197,635
9,372
Total
288,900
55,662
As at 31 December 2023
Expected period of emergence
Undiscounted
Discounted
1 – 5 years
20,876
17,032
6 – 10 years
22,070
12,103
11 – 15 years
21,897
8,081
16 – 20 years
19,922
4,963
21 years and thereafter
204,392
8,436
Total
289,157
50,615
The profile of distributable earnings is shown on an undiscounted and discounted basis. The discounted value of after-tax
distributable earnings of US$55,662 million (2023: US$50,615 million) plus the free surplus of US$12,554 million (2023:
US$16,329 million) and the non-eligible assets excluded in the free surplus calculation of US$819 million (2023: US$503
million) as shown in Section 2.3 of this report is equal to the EV of US$69,035 million (2023: US$67,447 million) shown in
Section 2.1 of this report.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
332
AIA GROUP LIMITED
2. EMBEDDED VALUE RESULTS (continued)
2.5 Value of New Business
The VONB for the Group for the year ended 31 December 2024 is summarised in the table below. The VONB is defined as
the present value, at the point of sale, of the projected after-tax statutory profits less the cost of required capital. Results
are presented consistently with the segment information in the consolidated financial statements. Section 4.1 of this report
contains a list of the entities included in this report and the mapping of these entities to Business Units for the purpose of
this report.
The Group VONB for the year ended 31 December 2024 was US$4,712 million, an increase of US$678 million, or 18 per
cent, from US$4,034 million for the year ended 31 December 2023.
Summary of VONB by Business Unit (US$ millions)
Year ended 31 December 2024
Year ended 31 December 2023
Business Unit
VONB
before
CoC
CoC
VONB
after
CoC
VONB
before
CoC
CoC
VONB
after
CoC
AIA China
1,368
151
1,217
1,174
137
1,037
AIA Hong Kong
1,837
73
1,764
1,498
68
1,430
AIA Thailand
854
38
816
751
38
713
AIA Singapore
492
38
454
413
19
394
AIA Malaysia
367
18
349
336
17
319
Other Markets
673
206
467
547
141
406
Total before unallocated Group Office
expenses, Group Corporate Centre tax(1)
and non-controlling interests (Business
Unit)
5,591
524
5,067
4,719
420
4,299
Adjustment to reflect consolidated reserving
and capital requirements(2)
(25)
48
(73)
(43)
–
(43)
Total before unallocated Group Office
expenses, Group Corporate Centre tax(1)
and non-controlling interests
(Consolidated)
5,566
572
4,994
4,676
420
4,256
After-tax value of unallocated Group Office
expenses
(205)
–
(205)
(187)
–
(187)
Group Corporate Centre tax(1)
(38)
–
(38)
–
–
–
Total before non-controlling interests
(Consolidated)
5,323
572
4,751
4,489
420
4,069
Non-controlling interests
(44)
(5)
(39)
(39)
(4)
(35)
Total
5,279
567
4,712
4,450
416
4,034
Notes:
(1) Refers to corporate income tax in Bermuda as described in Section 5.10 of this report.
(2) Adjustment reflects the consolidated reserving and capital requirements as described in Section 4.4 of this report.
FINANCIAL STATEMENTS
333
ANNUAL REPORT 2024
2. EMBEDDED VALUE RESULTS (continued)
2.5 Value of New Business (continued)
The table below shows the breakdown of the VONB, ANP, VONB margin, and present value of new business premium
(PVNBP) margin for the Group, by quarter, for business written in the year ended 31 December 2024.
The VONB margin and PVNBP margin are defined as VONB, gross of non-controlling interests and excluding pension
business, expressed as a percentage of ANP and PVNBP, respectively. The VONB used in the margin calculation is gross of
non-controlling interests and excludes pension business to be consistent with the definition of ANP and PVNBP.
The Group VONB margin for the year ended 31 December 2024 was 54.5 per cent compared with 52.6 per cent for the year
ended 31 December 2023. The Group PVNBP margin for the year ended 31 December 2024 was 11 per cent compared
with 10 per cent for the year ended 31 December 2023.
Breakdown of VONB, ANP, VONB Margin and PVNBP Margin (US$ millions)
VONB
after
CoC
ANP
VONB
margin
PVNBP
margin
Year
Values for 2024
Twelve months ended 31 December 2024
4,712
8,606
54.5%
11%
Values for 2023
Twelve months ended 31 December 2023
4,034
7,650
52.6%
10%
Quarter
Values for 2024
Three months ended 31 March 2024
1,327
2,449
54.2%
11%
Three months ended 30 June 2024
1,128
2,097
53.6%
10%
Three months ended 30 September 2024
1,161
2,212
52.2%
10%
Three months ended 31 December 2024
1,096
1,848
58.9%
11%
Values for 2023
Three months ended 31 March 2023
1,046
1,998
52.3%
10%
Three months ended 30 June 2023
983
1,986
49.3%
9%
Three months ended 30 September 2023
994
1,938
51.2%
10%
Three months ended 31 December 2023
1,011
1,728
58.2%
11%
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
334
AIA GROUP LIMITED
2. EMBEDDED VALUE RESULTS (continued)
2.5 Value of New Business (continued)
The table below shows the VONB (excluding pension business), ANP, and VONB margin by Business Unit.
Summary of VONB Excluding Pension, ANP and VONB Margin by Business Unit (US$ millions)
Year ended 31 December 2024
Year ended 31 December 2023
Business Unit
VONB
excluding
pension
ANP
VONB
margin
VONB
excluding
pension
ANP
VONB
margin
AIA China
1,217
2,168
56.1%
1,037
2,023
51.3%
AIA Hong Kong
1,708
2,609
65.5%
1,384
2,407
57.5%
AIA Thailand
816
821
99.5%
713
765
93.3%
AIA Singapore
454
897
50.5%
394
586
67.2%
AIA Malaysia
348
517
67.3%
318
473
67.3%
Other Markets
465
1,594
29.2%
404
1,396
28.9%
Total before unallocated Group Office
expenses and Group Corporate Centre
tax(1) (Business Unit)
5,008
8,606
58.2%
4,250
7,650
55.6%
Adjustment to reflect consolidated reserving
and capital requirements(2)
(73)
–
(42)
–
Total before unallocated Group Office
expenses and Group Corporate Centre
tax(1) (Consolidated)
4,935
8,606
57.4%
4,208
7,650
55.0%
After-tax value of unallocated Group Office
expenses
(205)
–
(187)
–
Group Corporate Centre tax(1)
(38)
–
–
–
Total
4,692
8,606
54.5%
4,021
7,650
52.6%
Notes:
(1) Refers to corporate income tax in Bermuda as described in Section 5.10 of this report.
(2) Adjustment reflects the consolidated reserving and capital requirements as described in Section 4.4 of this report.
FINANCIAL STATEMENTS
335
ANNUAL REPORT 2024
2. EMBEDDED VALUE RESULTS (continued)
2.6 Analysis of EV Movement
Analysis of Movement in EV (US$ millions)
Year ended 31 December 2024
Year ended 31 December 2023
YoY AER
ANW
VIF
EV
ANW
VIF
EV
EV
Opening EV Equity
70,153
71,202
(1)%
Removal of goodwill and other
intangible assets(1)
(2,706)
(2,337)
16%
Opening EV
32,009
35,438
67,447
33,751
35,114
68,865
(2)%
Effect of acquisitions
–
–
–
(238)
–
(238)
n/m(2)
VONB
(245)
4,957
4,712
(45)
4,079
4,034
17%
Expected return on EV
5,199
429
5,628
5,115
112
5,227
8%
Operating experience variances
178
(18)
160
97
(22)
75
113%
Operating assumption changes
279
(251)
28
286
(325)
(39)
n/m
Finance costs
(503)
–
(503)
(407)
–
(407)
24%
EV operating profit
4,908
5,117
10,025
5,046
3,844
8,890
13%
Investment return variances
1,380
(1,493)
(113)
(873)
(1,917)
(2,790)
n/m
Effect of changes in economic
assumptions
(11)
66
55
(6)
(537)
(543)
n/m
Other non-operating variances
(643)
(168)
(811)
506
(1,075)
(569)
n/m
Total EV profit
5,634
3,522
9,156
4,673
315
4,988
84%
Dividends
(2,328)
–
(2,328)
(2,293)
–
(2,293)
2%
Share buy-back
(4,150)
–
(4,150)
(3,637)
–
(3,637)
14%
Other capital movements
20
–
20
(72)
–
(72)
n/m
Effect of changes in exchange
rates
(658)
(452)
(1,110)
(175)
9
(166)
n/m
Closing EV
30,527
38,508
69,035
32,009
35,438
67,447
2%
Inclusion of goodwill and other
intangible assets(1)
2,591
2,706
(4)%
Closing EV Equity
71,626
70,153
2%
Closing EV per share (US$)
6.40
5.94
8%
Closing EV Equity per share
(US$)
6.64
6.17
8%
Notes:
(1) Consistent with the consolidated financial statements, shown net of tax, amounts attributable to participating funds and non-controlling interests.
(2) Not meaningful (n/m).
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
336
AIA GROUP LIMITED
2. EMBEDDED VALUE RESULTS (continued)
2.6 Analysis of EV Movement (continued)
The opening EV Equity was US$70,153 million at 31 December 2023.
The opening EV was US$67,447 million at 31 December 2023 after removal of goodwill and other intangible assets of
US$2,706 million.
EV operating profit was US$10,025 million (2023: US$8,890 million), reflecting VONB of US$4,712 million (2023:
US$4,034 million), an expected return on EV of US$5,628 million (2023: US$5,227 million), operating experience variances
and operating assumption changes with a net positive impact of US$188 million (2023: US$36 million), net of finance
costs of US$503 million (2023: US$407 million).
The VONB is calculated at the point of sale for business written during the year. The expected return on EV is the expected
change in the EV over the year plus the expected return on the VONB up to 31 December 2024. Operating experience
variances reflect the impact on the ANW and VIF from differences between the actual experience over the year and that
expected based on the operating assumptions.
The operating experience variances, net of tax, increased EV by US$160 million (2023: increased EV by US$75 million),
driven by:
•
Expense variances of US$50 million (2023: US$(31) million), partly offset by development costs of US$18 million
(2023: US$13 million);
•
Mortality and morbidity claims variances of US$(122) million (2023: US$(85) million); and
•
Persistency and other variances of US$250 million (2023: US$204 million) which included persistency variances of
US$16 million (2023: US$(41) million) and other variances including management actions of US$234 million (2023:
US$245 million).
The effect of changes in operating assumptions during the year was an increase in EV of US$28 million (2023: a decrease
in EV of US$39 million).
The EV profit of US$9,156 million (2023: US$4,988 million) is the total of EV operating profit, investment return variances,
the effect of changes in economic assumptions and other non-operating variances.
The investment return variances decreased EV by US$113 million (2023: decreased EV by US$2,790 million) driven by the
effect of short-term fluctuations in interest rates, equities and other capital market movements, after allowing for
consolidated reserving and capital requirements, compared with the expected returns.
The effect of changes in economic assumptions was an increase in EV of US$55 million (2023: a decrease in EV of US$543
million).
Other non-operating variances decreased EV by US$811 million (2023: decreased EV by US$569 million) which mainly
comprised negative impacts from a reduction in the present value of future fees expected to be charged following the
mandatory implementation of the new eMPF platform in Hong Kong, adjustments to capital requirements on consolidation
and non-operating expenses, partly offset by positive impacts from model-related enhancements.
The Group paid total shareholder dividends of US$2,328 million (2023: US$2,293 million). The capital deployed for the
share buy-back programme, under which 571 million shares(1) (2023: 374 million shares) have been repurchased in the
year of 2024, was US$4,150 million (2023: US$3,637 million). Other capital movements increased EV by US$20 million
(2023: decreased EV by US$72 million).
Foreign exchange movements decreased EV by US$1,110 million (2023: decreased EV by US$166 million).
The closing EV was US$69,035 million at 31 December 2024.
The closing EV Equity was US$71,626 million as at 31 December 2024, after inclusion of goodwill and other intangible
assets of US$2,591 million.
Our EV methodology deducts the value of the Group’s outstanding medium-term notes and securities(2) (MTNs) at amortised
cost. If MTNs were included at fair value, EV Equity would increase by US$965 million to US$72,591 million (2023: increase
by US$932 million to US$71,085 million).
Notes:
(1) Of these shares, 532 million shares were cancelled during 2024, and the remaining 39 million shares have subsequently been cancelled as per
note 31 to the consolidated financial statements.
(2) Refers to medium-term notes and securities under note 26 to the consolidated financial statements.
FINANCIAL STATEMENTS
337
ANNUAL REPORT 2024
2. EMBEDDED VALUE RESULTS (continued)
2.6 Analysis of EV Movement (continued)
Operating ROEV (US$ millions)
Operating return on EV (operating ROEV) is calculated as EV operating profit expressed as a percentage of the opening EV
and was 14.9 per cent (2023: 12.9 per cent) for the year ended 31 December 2024.
Year ended
31 December
2024
Year ended
31 December
2023
YoY
CER
YoY
AER
EV operating profit
10,025
8,890
14%
13%
Opening EV
67,447
68,865
(2)%
(2)%
Operating ROEV
14.9%
12.9%
n/a
2.0 pps
EV operating profit per share (US cents)(1)
90.62
77.18
19%
17%
Note:
(1) Based on weighted average number of ordinary shares outstanding during the respective period.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
338
AIA GROUP LIMITED
2. EMBEDDED VALUE RESULTS (continued)
2.7 Free Surplus Generation
Free Surplus Generation (US$ millions)
Year ended
31 December
2024
Year ended
31 December
2023
YoY
CER
YoY
AER
Opening free surplus
16,329
17,850
(8)%
(9)%
Effect of acquisitions
–
(238)
n/m(1)
n/m
UFSG
6,327
6,041
6%
5%
Free surplus used to fund new business
(1,531)
(1,328)
17%
15%
Unallocated Group Office expenses
(293)
(302)
(3)%
(3)%
Finance costs and other capital movements
(483)
(479)
1%
1%
Net free surplus generation
4,020
3,932
3%
2%
Investment return variances and other items
(1,317)
715
n/m
n/m
Dividends
(2,328)
(2,293)
2%
2%
Share buy-back
(4,150)
(3,637)
14%
14%
Closing free surplus
12,554
16,329
(22)%
(23)%
Free surplus decreased by US$3,775 million (2023: decreased by US$1,521 million) to US$12,554 million (2023:
US$16,329 million) as of 31 December 2024, after reflecting the impact of share buy-back of US$4,150 million.
UFSG, as defined in Section 4.8, increased by 6 per cent, to US$6,327 million (2023: US$6,041 million), which comprised
expected return on free surplus and assets backing MTNs of US$1,395 million (2023: US$1,348 million), expected
distributable earnings from in-force business of US$4,302 million (2023: US$4,536 million), diversification benefit due to
new business of US$757 million (2023: US$634 million) and other operating variances of US$(127) million (2023:
US$(477) million). Investment in writing new business was US$1,531 million (2023: US$1,328 million).
Unallocated Group Office expenses amounted to US$293 million (2023: US$302 million).
Year ended
31 December
2024
Year ended
31 December
2023
YoY
CER
YoY
AER
UFSG
6,327
6,041
6%
5%
Expected return on free surplus and assets backing MTNs
1,395
1,348
4%
3%
Expected distributable earnings from in-force business
4,302
4,536
(4)%
(5)%
Diversification benefit due to new business
757
634
21%
19%
Other operating variances
(127)
(477)
(74)%
(73)%
Free surplus used to fund new business
(1,531)
(1,328)
17%
15%
Unallocated Group Office expenses
(293)
(302)
(3)%
(3)%
Finance costs and other capital movements
(483)
(479)
1%
1%
Net free surplus generation
4,020
3,932
3%
2%
Investment return variances and other items amounted to US$(1,317) million (2023: US$715 million). This mainly reflects
the effect of short-term fluctuations in interest rates, equities and other capital market movements, after allowing for
consolidated reserving and capital requirements, compared with the expected returns as well as other non-operating
variances as described in Section 2.6.
Note:
(1) Not meaningful (n/m).
FINANCIAL STATEMENTS
339
ANNUAL REPORT 2024
3. SENSITIVITY ANALYSIS
The EV as at 31 December 2024 and the VONB for the year ended 31 December 2024 have been recalculated to illustrate
the sensitivity of the results to changes in certain central assumptions discussed in Section 5 of this report.
The sensitivities analysed were:
•
Risk discount rates 200 basis points per annum higher than the central assumptions;
•
Risk discount rates 200 basis points per annum lower than the central assumptions;
•
Interest rates 50 basis points per annum higher than the central assumptions;
•
Interest rates 50 basis points per annum lower than the central assumptions;
•
Equity return, property return and risk discount rates 100 basis points per annum lower than the central assumptions;
•
The presentation currency (as explained below) appreciated by 5 per cent;
•
The presentation currency depreciated by 5 per cent;
•
Lapse and premium discontinuance rates increased proportionally by 10 per cent (i.e. 110 per cent of the central
assumptions);
•
Lapse and premium discontinuance rates decreased proportionally by 10 per cent (i.e. 90 per cent of the central
assumptions);
•
Mortality/morbidity rates increased proportionally by 10 per cent (i.e. 110 per cent of the central assumptions);
•
Mortality/morbidity rates decreased proportionally by 10 per cent (i.e. 90 per cent of the central assumptions);
•
Maintenance expenses 10 per cent lower (i.e. 90 per cent of the central assumptions); and
•
Expense inflation set to 0 per cent.
The EV as at 31 December 2024 has been further analysed for the following sensitivities:
•
Equity prices increased proportionally by 10 per cent (i.e. 110 per cent of the prices at 31 December 2024); and
•
Equity prices decreased proportionally by 10 per cent (i.e. 90 per cent of the prices at 31 December 2024).
For the interest rate sensitivities, the investment return assumptions and the risk discount rates were changed by 50 basis
points per annum; the projected bonus rates on participating business, the statutory reserving bases at 31 December 2024
and the values of debt instruments and derivatives held at 31 December 2024 were changed to be consistent with the
interest rate assumptions in the sensitivity analysis, while all the other assumptions were unchanged.
For the equity return, property return and risk discount rates sensitivity, the projected bonus rates on participating business
were changed to be consistent with the equity return assumptions and property return assumptions in the sensitivity
analysis, while all the other assumptions were unchanged.
As the Group operates in multiple geographical markets, the EV results for the Group are translated from multiple currencies
to the US dollar which is the Group’s presentation currency. In order to provide sensitivity results for EV and VONB of the
impact of foreign currency movements, a change of 5 per cent to the US dollar is included.
For the equity price sensitivities, the projected bonus rates on participating business and the values of equity securities
and equity funds held at 31 December 2024 were changed to be consistent with the equity price assumptions in the
sensitivity analysis, while all the other assumptions were unchanged.
For each of the remaining sensitivity analyses, the statutory reserving bases as at 31 December 2024 and the projected
bonus rates on participating business were changed to be consistent with the sensitivity analysis assumptions, while all
the other assumptions remain unchanged.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
340
AIA GROUP LIMITED
3. SENSITIVITY ANALYSIS (continued)
The sensitivities chosen do not represent the boundaries of possible outcomes, but instead illustrate how certain alternative
assumptions would affect the results.
Sensitivity of EV (US$ millions)
As at 31 December 2024
As at 31 December 2023
Scenario
EV
% Change
EV
% Change
Central value
69,035
67,447
Impact of:
200 bps increase in risk discount rates
(9,680)
(14.0)%
(8,450)
(12.5)%
200 bps decrease in risk discount rates
14,827
21.5%
13,167
19.5%
10% increase in equity prices
2,233
3.2%
1,799
2.7%
10% decrease in equity prices
(2,248)
(3.3)%
(1,823)
(2.7)%
50 bps increase in interest rates
(580)
(0.8)%
(981)
(1.5)%
50 bps decrease in interest rates
500
0.7%
945
1.4%
100 bps decrease in equity and property returns and
risk discount rates
2,615
3.8%
2,585
3.8%
5% appreciation in the presentation currency
(1,164)
(1.7)%
(1,374)
(2.0)%
5% depreciation in the presentation currency
1,164
1.7%
1,374
2.0%
10% increase in lapse/discontinuance rates
(1,879)
(2.7)%
(1,790)
(2.7)%
10% decrease in lapse/discontinuance rates
2,106
3.1%
1,984
2.9%
10% increase in mortality/morbidity rates
(5,612)
(8.1)%
(5,380)
(8.0)%
10% decrease in mortality/morbidity rates
5,546
8.0%
5,296
7.9%
10% decrease in maintenance expenses
1,056
1.5%
1,048
1.6%
Expense inflation set to 0%
1,199
1.7%
1,088
1.6%
Sensitivity of VONB (US$ millions)
Year ended 31 December 2024
Year ended 31 December 2023
Scenario
VONB
% Change
VONB
% Change
Central value
4,712
4,034
Impact of:
200 bps increase in risk discount rates
(993)
(21.1)%
(871)
(21.6)%
200 bps decrease in risk discount rates
1,504
31.9%
1,332
33.0%
50 bps increase in interest rates
92
2.0%
129
3.2%
50 bps decrease in interest rates
(120)
(2.5)%
(155)
(3.8)%
100 bps decrease in equity and property returns and
risk discount rates
492
10.4%
412
10.2%
5% appreciation in the presentation currency
(161)
(3.4)%
(142)
(3.5)%
5% depreciation in the presentation currency
161
3.4%
142
3.5%
10% increase in lapse/discontinuance rates
(265)
(5.6)%
(261)
(6.5)%
10% decrease in lapse/discontinuance rates
293
6.2%
284
7.0%
10% increase in mortality/morbidity rates
(509)
(10.8)%
(480)
(11.9)%
10% decrease in mortality/morbidity rates
509
10.8%
478
11.8%
10% decrease in maintenance expenses
118
2.5%
103
2.6%
Expense inflation set to 0%
84
1.8%
77
1.9%
FINANCIAL STATEMENTS
341
ANNUAL REPORT 2024
4. METHODOLOGY
4.1 Entities Included in This Report
The Group operates through a number of subsidiaries and branches. Its two main operating subsidiaries are AIA Company
Limited (AIA Co.), a company incorporated in Hong Kong and a subsidiary of the Company, and AIA International Limited
(AIA International), a company incorporated in Bermuda and an indirect subsidiary of the Company. Furthermore, AIA Co.
has branches located in Thailand and AIA International has branches located in Hong Kong, Macau and Taiwan (China).
The following is a list of the entities and their mapping to Business Units included in this report.
•
AIA Australia refers to AIA Australia Limited, a subsidiary of AIA Co.;
•
AIA Cambodia refers to AIA (Cambodia) Life Insurance Plc, a subsidiary of AIA Holdings Pte. Limited, a wholly-owned
subsidiary of the Company;
•
AIA China refers to AIA Life Insurance Company Limited, a subsidiary of AIA Co.;
•
AIA Hong Kong refers to the total of the following entities:
– the Hong Kong and Macau branches of AIA International;
– the Hong Kong business written by AIA Co.;
– AIA Pensions (BVI) Limited, a subsidiary of AIA Co.;
– AIA Everest Life Company Limited, a subsidiary of AIA Co.; and
– AIA Holdings (Hong Kong) Limited, a wholly-owned subsidiary of the Company and also the holding company of
Blue Cross (Asia-Pacific) Insurance Limited (Blue Cross);
•
AIA Indonesia refers to PT AIA Financial, a subsidiary of AIA International;
•
AIA Korea refers to AIA Life Insurance Co. Ltd., a subsidiary of AIA International;
•
AIA Malaysia refers to AIA Bhd., a subsidiary of AIA Co., and AIA PUBLIC Takaful Bhd., a 70 per cent owned subsidiary
of AIA Bhd., and AIA General Berhad, a subsidiary of AIA Bhd.;
•
AIA Myanmar refers to AIA Myanmar Life Insurance Company Limited, a subsidiary of AIA Co.;
•
AIA New Zealand refers to AIA New Zealand Limited, a subsidiary of AIA Sovereign Limited. AIA Sovereign Limited is a
subsidiary of AIA Holdings Pte. Limited, a wholly-owned subsidiary of the Company;
•
AIA Philippines refers to AIA Philippines Life and General Insurance Company Inc., a subsidiary of AIA Co., and its 51
per cent owned subsidiary BPI AIA Life Assurance Corporation;
•
AIA Singapore refers to AIA Singapore Private Limited, a subsidiary of AIA Co., and its Brunei branch;
•
AIA Sri Lanka refers to AIA Insurance Lanka Limited, a subsidiary of AIA Co.;
•
AIA Taiwan refers to the Taiwan (China) branch of AIA International;
•
AIA Thailand refers to the Thailand branches of AIA Co.;
•
AIA Vietnam refers to AIA (Vietnam) Life Insurance Company Limited, a subsidiary of AIA International; and
•
Tata AIA Life refers to Tata AIA Life Insurance Company Limited, an associate 49 per cent owned by AIA International.
In addition, the financial results from the entity China Post Life Insurance Co., Ltd. (China Post Life), which is 24.99 per cent
owned by AIA Co., are accounted for using the equity method and have been included in the Group ANW presented in the
report. For clarity, the Group’s ANP, VONB and VIF do not include any contribution from China Post Life.
Results are presented consistently with the segment information in the consolidated financial statements. The summary of
the EV by Business Unit in this report also includes the ANW for the “Group Corporate Centre” segment, which is derived
from the IFRS equity for this segment plus mark-to-market adjustments less the value of intangible assets. In the
presentation of EV and VONB, the present value of withholding tax payable on future remittances from local business units
is presented under the appropriate operating segment.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
342
AIA GROUP LIMITED
4. METHODOLOGY (continued)
4.2 Embedded Value and Value of New Business
The Group uses a traditional deterministic discounted cash flow methodology for determining its EV and VONB for all
entities other than Tata AIA Life. This methodology makes an implicit overall level of allowance for risk including the cost
of investment return guarantees and policyholder options, asset-liability mismatch risk, credit risk, the risk that actual
experience in future years differs from that assumed, and the economic cost of capital, through the use of a risk discount
rate. Typically, the higher the risk discount rate, the greater the allowance for these factors. This is a common methodology
used by life insurance companies in Asia currently.
The business included in the VIF and VONB calculations includes all life business written by the Business Units of the
Group, plus other lines of business which may not be classified as life business but have similar characteristics. These
include accident and health, group and pension businesses. The projected in-force business included in the VIF also
incorporates expected renewals on short-term business with a term of one year or less.
The VONB is the present value, measured at the point of sale, of projected after-tax statutory profits emerging in the future
from new business sold in the period less the cost of holding required capital in excess of regulatory reserves to support
this business. The VONB for the Group is calculated based on assumptions applicable at the point of sale, after allowing for
any acquisition expense overruns in excess of the relevant expense assumptions.
The EV is the sum of the ANW and VIF. The ANW is the market value of assets in excess of the assets backing the policy
reserves and other liabilities of the life (and similar) business of the Group, plus the IFRS equity value of other activities,
such as general insurance business, less the value of intangible assets. It excludes any amounts not attributable to
shareholders of the Company. The market value of investment property and property held for own use that is used to
determine the ANW is based on the fair value disclosed as per note 20 to the consolidated financial statements as at the
valuation date.
The VIF is the present value of projected after-tax statutory profits by Business Units emerging in the future from the
current in-force business less the cost arising from holding the required capital (CoC) to support the in-force business. CoC
is calculated as the face value of the required capital as at the valuation date less the present value of the net-of-tax
investment return on the shareholder assets backing required capital and the present value of projected releases from the
assets backing the required capital. Where the required capital may be covered by policyholder assets such as surplus
assets in a participating fund, there is no associated cost of capital included in the VIF or VONB.
EV Equity is the total of EV, goodwill and other intangible assets attributable to shareholders of the Company, after allowing
for taxes.
A deduction has been made from the EV and VONB for the present value of future after-tax unallocated Group Office
expenses, representing the expenses incurred by the Group Office which are not allocated to the Business Units. These
unallocated Group Office expenses have been allocated to acquisition and maintenance activities, and a deduction made
from the VONB and VIF respectively.
For Tata AIA Life, the Group uses the IEV methodology as defined in Actuarial Practice Standard 10 issued by the Institute
of Actuaries of India, consistent with local practice in India. The EV and VONB reported for Tata AIA Life are reported on a
one-quarter-lag basis.
FINANCIAL STATEMENTS
343
ANNUAL REPORT 2024
4. METHODOLOGY (continued)
4.3 Definition of New Business
New business includes the sale of new contracts during the period, additional single premium payments on recurrent
single premium contracts and increments to existing contracts where these are not variations allowed for in the calculation
of the VIF. The VONB also includes the present value of cash flows associated with new policies written during the reporting
period but subsequently terminated before the valuation date.
For group renewable business including group yearly renewable term business, new business is composed of new schemes
set up during the period plus any premium payable on existing schemes that exceeds the prior year’s premiums. For
individually significant group cases, the VONB is calculated over each premium rate guarantee period entered upon
contract inception or renewal.
For short-term accident and health business with a term of one year or less, renewals of existing contracts are not
considered new business, and the value of expected renewals on this business is included in the VIF.
For pension business, sales of new contracts during the period and any new contributions, including assets transferred in,
are considered as new business for the calculation of the VONB.
New business volumes shown in this report are measured using annualised new premiums (ANP), which is an internal
measure of new business sales.
4.4 Consolidation of Branches and Subsidiaries of AIA Co. and AIA International
The Company’s subsidiaries, AIA Co. and AIA International, are both Hong Kong-regulated entities and subject to the Hong
Kong reserving and capital requirements. In addition, AIA International, which is incorporated in Bermuda, is subject to the
Bermuda Monetary Authority (BMA) reserving and capital requirements. Since 2021, the Company is also subject to the
group-wide supervision (GWS) requirements implemented by the Hong Kong Insurance Authority (HKIA). AIA operates in
a number of territories as branches and subsidiaries of these entities. These regulatory and other consolidated reserving
and capital requirements as determined by the Group apply in addition to the relevant local requirements applicable to our
Business Units, and are discussed in Section 4.6.
The EV and VONB results for the Group shown in Section 2 of this report have been adjusted to reflect the consolidated
reserving and capital requirements. This approach was taken to reflect the distribution of profits from AIA Co. and AIA
International after allowing for the Hong Kong, BMA, local and group-wide regulatory requirements, and other reserving
and capital requirements as determined by the Group. The EV and VONB for each Business Unit reflect the local reserving
and capital requirements, as discussed in Section 4.6 of this report, before a Group-level adjustment to reflect the
consolidated reserving and capital requirements.
4.5 Valuation of Future Statutory Losses
For certain lines of business, projected future statutory profits are negative due to the local statutory reserves being
insufficient to meet the value of future policyholder cash flows. There are a number of acceptable methods for determining
the value of a combination of positive and negative statutory profits for different lines of business.
For the purposes of this valuation, future projected statutory losses have been valued by discounting them at the risk
discount rate for the relevant Business Unit, with any negative VIF eliminated for each reported segment by reducing the
ANW. This has been done because the allowance for risk in the range of selected risk discount rates for each Business Unit
has been set taking into account the presence of any such business lines with projected statutory losses. Also, the
consolidated reserving and capital requirements have the effect of reducing the level of any future projected statutory
losses. Based on the assumptions described in Section 5 of this report, and allowing for the consolidated statutory reserving
and capital requirements, the overall projected annual distributable profits from the current in-force business and the
assets backing the required capital of the Group are positive over the remaining lifetime of the business. Therefore, it is not
considered necessary to change the discounting approach described above.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
344
AIA GROUP LIMITED
4. METHODOLOGY (continued)
4.6 Capital Requirements
Each of the Business Units has a regulatory requirement to hold shareholder capital in addition to the assets backing the
insurance liabilities. The table below sets out the Group’s assumed level of capital requirement for each Business Unit:
Business Unit
Capital requirements
AIA Australia
100% of regulatory capital adequacy requirement
AIA China
100% of required capital following the China Association of Actuaries (CAA) EV
assessment guidance, updated to reflect C-ROSS II(1)
AIA Hong Kong(2)
100% of regulatory Risk-Based Capital requirement
AIA Indonesia
120% of regulatory Risk-Based Capital requirement
AIA Korea
150% of regulatory Risk-Based Capital requirement
AIA Malaysia
170% of regulatory Risk-Based Capital requirement
AIA New Zealand
100% of regulatory capital adequacy requirement
AIA Philippines
125% of regulatory Risk-Based Capital requirement
AIA Singapore
Higher of 135% of capital adequacy requirement and 80% of Tier 1 capital
requirement under the regulatory Risk-Based Capital framework
AIA Sri Lanka
120% of regulatory Risk-Based Capital requirement
AIA Taiwan
250% of regulatory Risk-Based Capital requirement
AIA Thailand
140% of regulatory Risk-Based Capital requirement
AIA Vietnam
100% of required minimum solvency margin
Tata AIA Life
175% of required minimum solvency margin
Notes:
(1) China Risk-Oriented Solvency System phase II (C-ROSS II).
(2) The capital requirement for the Hong Kong branch of AIA International reflects the early adoption approved by HKIA with effect from 1 January
2022 of the Hong Kong Risk-based Capital (HKRBC). AIA Everest Life Company Limited, which is a closed block of business under AIA Co., and the
Hong Kong business written by AIA Co., became subject to HKRBC regime from 1 July 2024. For clarity, the Macau branch of AIA International is
further subject to 150 per cent of Macau statutory requirement.
Capital Requirements on Consolidation
The Company’s subsidiaries, AIA Co. and AIA International, are both subject to the HKIA reserving and capital requirements.
Following the approval by HKIA to early adopt the new HKRBC regime for AIA International, starting from 1 January 2022,
AIA International is subject to the capital requirement under the new HKRBC regime, while AIA Co. became subject to the
HKRBC regime from 1 July 2024. Further, the branches of AIA Co. and AIA International hold required capital of no less
than 100 per cent of the HKRBC capital requirement.
In addition, AIA International, which is incorporated in Bermuda, is subject to the BMA reserving and capital requirements.
AIA International and its subsidiaries hold required capital of no less than 100 per cent of the BMA regulatory capital
requirement.
The above regulatory reserving and capital requirements, and other consolidated reserving and capital requirements as
determined by the Group, apply in addition to the relevant local requirements applicable to our Business Units.
The Company is also subject to the GWS capital adequacy rules, including group capital adequacy requirements based on
the Local Capital Summation Method (LCSM), under which the Group’s published eligible group capital resources, group
minimum capital requirement (GMCR) and group prescribed capital requirement (GPCR) are calculated as the sum of the
eligible capital resources, minimum capital requirements and prescribed capital requirements for each entity within the
Group according to the respective local regulatory requirements, subject to any variation considered necessary by the
HKIA. This has not imposed any additional capital requirement to those mentioned above.
FINANCIAL STATEMENTS
345
ANNUAL REPORT 2024
4. METHODOLOGY (continued)
4.7 Foreign Exchange
The EV as at 31 December 2024 and 31 December 2023 have been translated into the US dollar using exchange rates as
at each valuation date. The VONB results shown in this report have been translated into the US dollar using the corresponding
average exchange rates for each quarter. The other components of the EV profit shown in the analysis of EV movement
have been translated using average exchange rates for the period.
Change on actual exchange rates (AER) is calculated based on the translated figures as described above. Change on
constant exchange rates (CER) is calculated for all figures for the current year and for the prior year, using the current year
constant average exchange rates, other than for EV and its components as at the end of the current year and as at the end
of the prior year, which are translated using the CER as at the end of the current year.
4.8 Underlying Free Surplus Generation
The free surplus is defined as the ANW in excess of the required capital after reflecting the consolidated reserving and
capital requirements and the adjustment for certain assets not eligible for regulatory capital purposes. The underlying free
surplus generation represents free surplus generated from the in-force business, adjusted for certain non-recurring items,
and before free surplus used to fund new business, unallocated Group Office expenses, finance costs, investment return
variances and other non-operating items. The underlying free surplus generation is also calculated after reflecting the
consolidated reserving and capital requirements.
5. ASSUMPTIONS
5.1 Introduction
This section summarises the assumptions used by the Group to determine the EV as at 31 December 2024 and the VONB
for the year ended 31 December 2024 and highlights certain differences in assumptions between the EV as at 31 December
2023 and the EV as at 31 December 2024.
5.2 Economic Assumptions
Investment Returns
The Group has set the assumed long-term future returns for fixed income assets to reflect its view of expected returns
having regard to estimates of long-term forward rates from yields available on government bonds and current bond yields.
In determining returns on fixed income assets, the Group allows for the risk of default, and this allowance varies by the
credit rating of the underlying asset.
Where long-term views of investment return assumptions differ from current market yields on existing fixed income assets,
an adjustment was made to make allowance for the current market yields. In these cases, in calculating the VIF, adjustments
have been made to the investment return assumptions such that the investment returns on existing fixed income assets
were set consistently with the current market yield on these assets for their expected remaining term, to be consistent with
the valuation of the assets backing the policy liabilities.
The Group has set the equity return and property return assumptions by reference to the long-term return on 10-year
government bonds, allowing for an internal assessment of risk premia that vary by asset class and by territory.
For each Business Unit, the non-linked portfolio is divided into a number of distinct product groups, and the returns for
each of these product groups have been derived by considering current and future targeted asset allocations and associated
investment returns for major asset classes.
For unit-linked business, fund growth assumptions have been determined based on actual asset mix within the funds at
the valuation date and expected long-term returns for major asset classes.
For Tata AIA Life, the Group uses the IEV methodology as defined in Actuarial Practice Standard 10 issued by the Institute
of Actuaries of India for determining its EV and VONB. This methodology uses investment returns and risk discount rates
that reflect the market-derived government bond yield curve. Therefore, the risk discount rate and long-term investment
returns are not provided for Tata AIA Life.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
346
AIA GROUP LIMITED
5. ASSUMPTIONS (continued)
5.2 Economic Assumptions (continued)
Risk Discount Rates
The risk discount rates can be considered as the sum of the appropriate risk-free interest rate, to reflect the time value of
money, and a risk margin to make an implicit allowance for risk.
The table below summarises the current market 10-year government bond yields referenced in EV calculations.
Current market 10-year government
bond yields referenced in EV
calculations (%)
Business Unit
As at
31 December
2024
As at
31 December
2023
AIA Australia
4.36
3.89
AIA China
1.68
2.57
AIA Hong Kong(1)
4.57
3.84
AIA Indonesia
7.00
6.49
AIA Korea
2.87
3.18
AIA Malaysia
3.81
3.73
AIA New Zealand
4.41
4.31
AIA Philippines
6.18
5.95
AIA Singapore
2.86
2.70
AIA Sri Lanka
11.27
13.10
AIA Taiwan
1.61
1.21
AIA Thailand
2.30
2.70
AIA Vietnam
3.12
2.30
Note:
(1) The majority of AIA Hong Kong’s assets and liabilities are denominated in the US dollar. The 10-year government bond yields shown above are
those of US dollar-denominated bonds.
FINANCIAL STATEMENTS
347
ANNUAL REPORT 2024
5. ASSUMPTIONS (continued)
5.2 Economic Assumptions (continued)
Risk Discount Rates (continued)
The table below summarises the risk discount rates and long-term investment returns assumed in EV calculations. The risk
discount rates in 2024 reflect the weighted average of the risk margins of the in-force business at the start of 2024, and
those of the new business written during 2024 which are determined at a product level to better reflect the market and
non-market risks associated with the mix of products sold during the reporting period. In addition, the VONB results are
calculated based on start-of-quarter long-term investment return assumptions consistent with the measurement at the
point of sale. The present value of unallocated Group Office expenses was calculated using the AIA Hong Kong risk discount
rate. The investment returns on existing fixed income assets were set consistently with the market yields on these assets.
The investment returns shown are gross of tax and investment expenses.
Risk discount rates assumed in EV
calculations (%)
Long-term investment returns assumed in EV calculations (%)
10-year government bonds
Local equities
Business Unit
As at
31 Dec
2024
As at
30 Jun
2024
(Unaudited)
As at
31 Dec
2023
As at
31 Dec
2024
As at
30 Jun
2024
(Unaudited)
As at
31 Dec
2023
As at
31 Dec
2024
As at
30 Jun
2024
(Unaudited)
As at
31 Dec
2023
AIA Australia
7.92
7.92
7.93
3.80
3.80
3.80
8.10
8.10
8.10
AIA China
8.36
9.14
9.16
2.70
3.50
3.50
8.00
8.80
8.80
AIA Hong Kong(1)
7.95
7.96
7.97
3.50
3.50
3.50
8.00
8.00
8.00
AIA Indonesia
12.08
13.12
13.17
7.50
7.50
7.50
11.00
12.00
12.00
AIA Korea
8.55
8.68
8.81
3.00
3.00
3.00
7.30
7.30
7.30
AIA Malaysia
8.20
8.74
8.80
4.30
4.50
4.50
8.60
9.10
9.10
AIA New Zealand
7.54
7.85
7.85
3.80
3.80
3.80
8.00
8.30
8.30
AIA Philippines
11.10
12.10
12.10
6.00
6.00
6.00
9.80
10.80
10.80
AIA Singapore
7.34
7.36
7.38
3.10
3.10
3.10
7.60
7.60
7.60
AIA Sri Lanka
14.70
14.70
14.70
10.00
10.00
10.00
12.00
12.00
12.00
AIA Taiwan
7.62
7.62
7.62
1.50
1.50
1.50
6.10
6.10
6.10
AIA Thailand
7.42
7.77
7.81
3.40
3.40
3.40
7.80
8.10
8.10
AIA Vietnam
9.86
9.55
9.54
4.00
4.00
4.00
9.60
9.30
9.30
Note:
(1) The majority of AIA Hong Kong’s assets and liabilities are denominated in the US dollar. The 10-year government bond assumptions shown above
are those of US dollar-denominated bonds, and the local equities assumption shown is that of US dollar-denominated equities.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
348
AIA GROUP LIMITED
5. ASSUMPTIONS (continued)
5.3 Persistency
Persistency covers the assumptions required, where relevant, for policy lapse (including surrender), premium persistency,
premium holidays, partial withdrawals and retirement rates for pension products.
Assumptions have been developed by each of the Business Units based on their recent historical experience and expected
future experience. Persistency assumptions vary by policy year and product type with different rates for regular and single
premium products.
Where experience for a particular product was not credible enough to allow any meaningful analysis to be performed,
experience for similar products was used as a basis for future persistency experience assumptions.
In the case of surrenders, the valuation assumes that current surrender value bases will continue to apply in the future.
5.4 Expenses
The expense assumptions have been set based on the most recent expense analysis. The purpose of the expense analysis
is to allocate total expenses between acquisition and maintenance activities, and then to allocate these acquisition and
maintenance expenses to various product categories to derive unit cost assumptions.
Where the expenses associated with certain activities have been identified as being one-off, these expenses have been
excluded from the expense analysis.
Expense assumptions have been determined for acquisition and maintenance activities, split by product type, and unit
costs expressed as a percentage of premiums, sum assured and an amount per policy. Where relevant, expense assumptions
have been calculated per distribution channel.
Expense assumptions do not make allowance for any anticipated future expense savings as a result of any strategic
initiatives aimed at improving policy administration and claims handling efficiency.
Assumptions for commission rates and other sales-related payments have been set in line with actual experience.
Group Office Expenses
Group Office expense assumptions have been set, after excluding non-operating expenses, based on actual acquisition
and maintenance expenses in the year ended 31 December 2024. The Group Office acquisition expenses have been
deducted from the VONB. The present value of the projected future Group Office maintenance expenses has been deducted
from the Group EV. The maintenance expense assumptions in the VONB also allow for the allocation of Group Office
expenses.
FINANCIAL STATEMENTS
349
ANNUAL REPORT 2024
5. ASSUMPTIONS (continued)
5.5 Expense Inflation
The expected long-term expense inflation rates used by each Business Unit are set out below:
Expense Inflation Assumptions by Business Unit (%)
Business Unit
As at
31 December
2024
As at
31 December
2023
AIA Australia
2.25
2.25
AIA China
2.00
2.00
AIA Hong Kong
2.00
2.00
AIA Indonesia
3.50
3.50
AIA Korea
3.50
3.50
AIA Malaysia
3.00
3.00
AIA New Zealand
2.00
2.00
AIA Philippines
3.50
3.50
AIA Singapore
2.00
2.00
AIA Sri Lanka
6.50
6.50
AIA Taiwan
1.20
1.20
AIA Thailand
2.00
2.00
AIA Vietnam
4.00
4.00
Tata AIA Life(1)
6.35
6.85
Note:
(1) For Tata AIA Life, in accordance with the IEV methodology as defined in Actuarial Practice Standard 10 issued by the Institute of Actuaries of India,
the inflation assumption is derived by applying a spread to the reference interest rate.
Unallocated Group Office expenses are assumed to inflate by the weighted average of the Business Unit expense inflation
rates.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
350
AIA GROUP LIMITED
5. ASSUMPTIONS (continued)
5.6 Mortality
Assumptions have been developed by each Business Unit based on their recent historical experience and expected future
experience. Where historical experience is not credible, reference has been made to pricing assumptions supplemented by
market data, where available.
Mortality assumptions have been expressed as a percentage of either standard industry experience tables or, where
experience is sufficiently credible, as a percentage of tables that have been developed internally by the Group.
For annuity products that are exposed to longevity risk, an allowance has been made for expected future improvements in
mortality; otherwise no allowance has been made for mortality improvements.
5.7 Morbidity
Assumptions have been developed by each Business Unit based on their recent historical experience and expected future
experience. Morbidity rate assumptions have been expressed as a percentage of standard industry experience tables or as
expected claims ratios.
5.8 Reinsurance
Reinsurance assumptions have been developed by each Business Unit based on the reinsurance arrangements in force as
at the valuation date and the recent historical and expected future experience.
5.9 Policyholder Dividends, Profit Sharing and Interest Crediting
The projected policyholder dividends, profit sharing and interest crediting assumptions set by each Business Unit that
have been used in calculating the EV results presented in this report, reflect contractual and regulatory requirements,
policyholders’ reasonable expectations (where clearly defined) and each Business Unit’s expectation of future policies,
strategies and operations consistent with the investment return assumptions used in the EV results.
Participating fund surpluses have been assumed to be distributed between policyholders and shareholders via future final
bonuses or at the end of the projection period so that there are no residual assets at the end of the projection period.
FINANCIAL STATEMENTS
351
ANNUAL REPORT 2024
5. ASSUMPTIONS (continued)
5.10 Taxation
The EV and VONB presented in this report are net of tax based on current taxation legislation. The projected corporate
income tax payable in any year allows for the benefits arising from any tax loss carried forward where relevant. Where
applicable, tax payable on investment income has been reflected in the projected investment returns. Any withholding tax
payable on future remittances from local business units is also reflected under the appropriate operating segment.
The local corporate income tax rates used by each Business Unit are set out below:
Local Corporate Income Tax Rates by Business Unit (%)
Business Unit
As at
31 December
2024
As at
31 December
2023
AIA Australia
30.0
30.0
AIA China
25.0
25.0
AIA Hong Kong
16.5
16.5
AIA Indonesia
22.0
22.0
AIA Korea
23.1
23.1
AIA Malaysia
24.0
24.0
AIA New Zealand
28.0
28.0
AIA Philippines
25.0
25.0
AIA Singapore
17.0
17.0
AIA Sri Lanka
30.0
30.0
AIA Taiwan
20.0
20.0
AIA Thailand
20.0
20.0
AIA Vietnam
20.0
20.0
Tata AIA Life
14.6
14.6
In 2023, Bermuda had introduced and enacted a corporate income tax rate of 15 per cent, effective from 1 January 2025.
The impact of the introduction of corporate income tax in Bermuda has been reflected in Group EV since 31 December
2023.
The Group EV has not reflected the effects of Base Erosion and Profit Shifting (BEPS) as described under note 11 to the
consolidated financial statements. The Group anticipates that such exposures may arise from 2025 onwards. However, due
to significant areas of uncertainty in the application of the legislation, the quantitative impact of the Pillar Two legislation
enacted or substantively enacted at the reporting date, but not yet effective, is not yet known or reasonably estimable.
5.11 Statutory Valuation Bases
The projection of regulatory liabilities at future points in time assumes the continuation of the reserving methodologies
used to value policyholder liabilities as at the valuation date.
5.12 Product Charges
Management fees and product charges reflected in the VIF and VONB have been assumed to follow existing scales.
6. EVENTS AFTER THE REPORTING PERIOD
On 14 March 2025, a Committee appointed by the Board of Directors proposed a final dividend of 130.98 Hong Kong cents
per share (2023: final dividend of 119.07 Hong Kong cents per share).
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUPPLEMENTARY EMBEDDED VALUE INFORMATION
352
AIA GROUP LIMITED
INFORMATION FOR SHAREHOLDERS
ADDITIONAL INFORMATION
ANNUAL GENERAL MEETING
The AGM will be held at 11:00 a.m. (Hong Kong time) on Friday, 23 May 2025. Details of the venue and business to be
transacted at the AGM are set out in the Company’s circular to be issued to the Shareholders for the AGM. The register of
members of the Company will be closed from Tuesday, 20 May 2025 to Friday, 23 May 2025 (both days inclusive) for
determining the eligibility to attend and vote at the AGM. The record date for determining the eligibility to attend the AGM
is Friday, 23 May 2025.
Details of voting results at the AGM can be found on the Company’s website at www.aia.com and the website of Hong Kong
Exchanges and Clearing Limited at www.hkexnews.hk on Friday, 23 May 2025 after the AGM.
FINAL DIVIDEND
The Board has recommended an increase of 10 per cent in the payment of a final dividend to 130.98 Hong Kong cents per
Share for the year ended 31 December 2024 (2023: 119.07 Hong Kong cents per Share), consistent with AIA’s established
prudent, sustainable and progressive dividend policy.
Subject to Shareholders’ approval at the AGM, the final dividend will be payable on Thursday, 12 June 2025 to Shareholders
whose names appear on the register of members of the Company at the close of business on Thursday, 29 May 2025, being
the record date for determining the entitlement to the final dividend.
RELEVANT DATES FOR THE 2024 FINAL DIVIDEND
Ex-dividend date
Wednesday, 28 May 2025
Record date
Thursday, 29 May 2025
Payment date
Thursday, 12 June 2025
ANNUAL STATEMENT ISSUED PURSUANT TO THE OFFSHORE FUND TAX EXEMPTION REGIME IN SINGAPORE
An indirect wholly-owned subsidiary of the Company, AIA Investment Management Private Limited, was incorporated in
Singapore on 15 June 2016. Its businesses include the management of certain assets of the Company and its subsidiaries
and branches, and it is required by the Income Tax (Exemption of Income of Prescribed Persons Arising from Funds
Managed by Fund Manager in Singapore) Regulations 2010 to issue an annual statement to each Shareholder. To comply
with the above legal requirement in Singapore, an annual statement containing the profit and market capitalisation
information of the Company is available on the Company’s website. You may visit the Company’s website by clicking
“Annual Statements Issued Pursuant to the Offshore Fund Tax Exemption Regime In Singapore” under the subsection
headed “Shareholder Centre” in the section headed “Investor Relations” to view the annual statement.
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ANNUAL REPORT 2024
SHARE REGISTRAR
If you have any enquiries relating to your shareholding, please contact the Company’s share registrar with the contact
details set out below:
Computershare Hong Kong Investor Services Limited
17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong
Telephone:
+852 2862 8555
Website:
www.computershare.com
www.computershare.com/hk/contact (for general enquiries)
ANNUAL REPORT
The English and Chinese versions of this Annual Report are available on the website of the Company. If you would like to
have a printed version of this Annual Report, please contact the Company’s share registrar using the contact details
provided above.
The Company makes every effort to ensure consistency between the English and Chinese versions of this Annual Report.
In the event of any inconsistency, the English version shall prevail.
For environmental and cost reasons, Shareholders are encouraged to elect to receive the Company’s corporate
communications (as defined in the Listing Rules) by electronic means through the Company’s website at www.aia.com and
the website of Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk. You may at any time send written notice
to the Company c/o the Company’s share registrar or via email at aia.ecom@computershare.com.hk specifying your name,
address and request to change your choice of language and/or means of receipt of all of the Company’s corporate
communications.
INVESTMENT COMMUNITY AND NEWS MEDIA
Enquiries may be directed to:
Investment Community
News Media
Lance Burbidge
+852 2832 1398
Cecilia Ma Zecha
+852 2832 5666
Evelyn Lam
+852 2832 1633
Duke Malan
+852 2832 4726
Feon Lee
+852 2832 4704
Kitty Liu
+852 2832 1742
Ismar Tuzovic
+852 2832 1777
Rachel Poon
+852 2832 4792
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
INFORMATION FOR SHAREHOLDERS
354
AIA GROUP LIMITED
FORWARD-LOOKING STATEMENTS
This document may contain certain forward-looking statements relating to the Group that are based on the beliefs and
expectations of the Group’s management as well as assumptions made by and information currently available to the
Group’s management. These forward-looking statements are, by their nature, subject to significant risks and uncertainties.
These forward-looking statements include, without limitation, statements relating to the Group’s business prospects, future
developments, trends and conditions in the industry and geographical markets in which the Group operates, its strategies,
plans, objectives and goals, its ability to control costs, statements relating to prices, volumes, operations, margins, overall
market trends, risk management and exchange rates.
When used in this document, the words “anticipate”, “believe”, “could”, “estimate”, “expect”, “going forward”, “intend”, “may”,
“ought to”, “plan”, “project”, “seek”, “should”, “target”, “will”, “would” and similar expressions, as they relate to the Group or
the Group’s management, are intended to identify forward-looking statements. These forward-looking statements reflect
the Group’s views as of the date hereof with respect to future events and are not a guarantee of future performance or
developments. You are strongly cautioned that reliance on any forward-looking statements involves known and unknown
risks and uncertainties. Actual results and events may differ materially from information contained in the forward-looking
statements as a result of a number of factors, including any changes in the laws, rules and regulations relating to any
aspects of the Group’s business operations, general economic, market and business conditions, including capital market
developments, changes or volatility in interest rates, foreign exchange rates, equity prices or other rates or prices, the
actions and developments of the Group’s competitors and the effects of competition in the insurance industry on the
demand for, and price of, the Group’s products and services, various business opportunities that the Group may or may not
pursue, changes in population growth and other demographic trends, including mortality, morbidity and longevity rates,
persistency levels, the Group’s ability to identify, measure, monitor and control risks in the Group’s business, including its
ability to manage and adapt its overall risk profile and risk management practices, its ability to properly price its products
and services and establish reserves for future policy benefits and claims, seasonal fluctuations and factors beyond the
Group’s control. Subject to the requirements of the Listing Rules, the Group does not intend to update or otherwise revise
the forward-looking statements in this document, whether as a result of new information, future events or otherwise. As a
result of these and other risks, uncertainties and assumptions, forward-looking events and circumstances discussed in this
document might not occur in the way the Group expects, or at all. Accordingly, you should not place reliance on any
forward-looking information or statements. All forward-looking statements in this document are qualified by reference to
the cautionary statements set forth in this section.
ADDITIONAL INFORMATION
355
ANNUAL REPORT 2024
CORPORATE INFORMATION
ADDITIONAL INFORMATION
RISK COMMITTEE
Mr. Chung-Kong CHOW (Chairman)
Professor Lawrence Juen-Yee LAU
Mr. Cesar Velasquez PURISIMA
Ms. Nor Shamsiah MOHD YUNUS
Mr. Edmund Sze-Wing TSE
Mr. LEE Yuan Siong
REGISTERED OFFICE
35/F, AIA Central
No. 1 Connaught Road Central
Hong Kong
WEBSITE
www.aia.com
COMPANY SECRETARY
Ms. Nicole PAO
AUTHORISED REPRESENTATIVES
Mr. LEE Yuan Siong
Ms. Nicole PAO
SHARE REGISTRAR
Computershare Hong Kong Investor Services Limited
17M Floor
Hopewell Centre
183 Queen’s Road East, Wan Chai
Hong Kong
PRINCIPAL BANKERS
Citibank, N.A.
Standard Chartered Bank
The Hongkong and Shanghai Banking Corporation Limited
AUDITOR
PricewaterhouseCoopers
Certified Public Accountant
Registered Public Interest Entity Auditor
BOARD OF DIRECTORS
Independent Non-executive Chairman and
Independent Non-executive Director
Mr. Edmund Sze-Wing TSE
Executive Director,
Group Chief Executive and President
Mr. LEE Yuan Siong
Independent Non-executive Directors
Mr. Jack Chak-Kwong SO
Mr. Chung-Kong CHOW
Mr. John Barrie HARRISON
Mr. George Yong-Boon YEO
Professor Lawrence Juen-Yee LAU
Dr. Narongchai AKRASANEE
Mr. Cesar Velasquez PURISIMA
Ms. SUN Jie (Jane)
Ms. Mari Elka PANGESTU
Mr. ONG Chong Tee
Ms. Nor Shamsiah MOHD YUNUS
AUDIT COMMITTEE
Mr. Cesar Velasquez PURISIMA (Chairman)
Mr. John Barrie HARRISON
Mr. Jack Chak-Kwong SO
Mr. George Yong-Boon YEO
Dr. Narongchai AKRASANEE
Ms. Mari Elka PANGESTU
Mr. ONG Chong Tee
NOMINATION COMMITTEE
Mr. Edmund Sze-Wing TSE (Chairman)
Mr. Jack Chak-Kwong SO
Mr. Chung-Kong CHOW
Mr. John Barrie HARRISON
Mr. George Yong-Boon YEO
Professor Lawrence Juen-Yee LAU
Dr. Narongchai AKRASANEE
Mr. Cesar Velasquez PURISIMA
Ms. SUN Jie (Jane)
Ms. Mari Elka PANGESTU
Mr. ONG Chong Tee
Ms. Nor Shamsiah MOHD YUNUS
REMUNERATION COMMITTEE
Mr. George Yong-Boon YEO (Chairman)
Mr. Jack Chak-Kwong SO
Ms. SUN Jie (Jane)
Mr. Edmund Sze-Wing TSE
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
356
AIA GROUP LIMITED
ADDITIONAL INFORMATION
GLOSSARY
2010 RSU Scheme
Restricted Share Unit Scheme of the Company adopted on 28 September 2010 (as
amended) under which the Company granted restricted share units to employees,
directors (excluding independent non-executive directors) or officers of the Company
or any of its subsidiaries. It was terminated with effect from 31 July 2020 prior to the
adoption of the 2020 RSU Scheme.
2010 SO Scheme
Share Option Scheme of the Company adopted on 28 September 2010 (as amended),
under which the Company granted share options to employees, directors (excluding
independent non-executive directors) or officers of the Company or any of its
subsidiaries. It was terminated with effect from 29 May 2020 upon the adoption of the
2020 SO Scheme.
2011 ESPP
Employee Share Purchase Plan of the Company adopted on 25 July 2011 (as amended),
a voluntary share purchase plan with matching offer to facilitate and encourage
ownership of Shares by employees. It was terminated with effect from 31 October
2020 (being the last day of the 2019/2020 plan year).
2012 ASPP
Agency Share Purchase Plan of the Company adopted on 23 February 2012, a share
purchase plan with matching offer of new Shares to facilitate and encourage ownership
of Shares by agents. It was terminated with effect from 31 March 2021 (being the last
day of the 2020/2021 plan year).
2020 ESPP
Employee Share Purchase Plan of the Company adopted on 1 August 2020 (as
amended), a voluntary share purchase plan with matching offer to facilitate and
encourage ownership of Shares by employees, and is effective for a period of 10 years
from the date of adoption.
2020 RSU Scheme
Restricted Share Unit Scheme of the Company adopted on 1 August 2020 (as amended),
under which the Company may grant restricted share units to employees, directors
(excluding independent non-executive directors) or officers of the Company or any of
its subsidiaries, and is effective for a period of 10 years from the date of adoption.
2020 SO Scheme
Share Option Scheme of the Company adopted on 29 May 2020 (as amended), under
which the Company may grant share options to employees, directors (excluding
independent non-executive directors) or officers of the Company or any of its
subsidiaries, and is effective for a period of 10 years from the date of adoption.
2021 ASPP
Agency Share Purchase Plan of the Company adopted on 1 February 2021 (as
amended), a share purchase plan with matching offer of new Shares to facilitate and
encourage ownership of Shares by agents, and is effective for a period of 10 years from
the date of adoption.
active agent
An agent who sells at least one policy per month. The number of active agents is
calculated as the average number of active agents across the specific period.
active market
A market in which all the following conditions exist:
•
the items traded within the market are homogeneous;
•
willing buyers and sellers can normally be found at any time; and
•
prices are available to the public.
A financial instrument is regarded as quoted in an active market if quoted prices are
readily and regularly available from an exchange, dealer, broker, industry group, pricing
service or regulatory agency, and those prices represent actual and regularly occurring
market transactions on an arm’s length basis.
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ANNUAL REPORT 2024
adjusted net worth or ANW
ANW is the market value of assets in excess of the assets backing the policy reserves
and other liabilities of the life (and similar) business of AIA, plus the IFRS equity value
of other activities, such as general insurance business, less the value of intangible
assets. It excludes any amounts not attributable to shareholders of AIA Group Limited.
ANW for AIA is stated after adjustment to reflect consolidated reserving requirements.
ANW by market is stated before adjustment to reflect consolidated reserving
requirements, and presented on a local statutory basis.
AER
Actual exchange rates.
AGM
2025 Annual General Meeting of the Company to be held at 11:00 a.m. (Hong Kong
time) on Friday, 23 May 2025.
AIA or the Group
AIA Group Limited and its subsidiaries.
AIA Co.
AIA Company Limited, a company incorporated in Hong Kong and a wholly-owned
subsidiary of the Company.
AIA Everest
AIA Everest Life Company Limited.
AIA International
AIA International Limited, a company incorporated in Bermuda and an indirect wholly-
owned subsidiary of the Company.
AIA Vitality
A science-backed wellness programme that is integrated into AIA’s insurance products.
It leverages incentives, data and behavioural science to motivate customers to live
Healthier, Longer, Better Lives. AIA Vitality was launched through a joint venture
between AIA and Discovery Limited, a listed company in South Africa.
ALC
The AIA Leadership Centre located in Bangkok, Thailand.
amortised cost
Other than cash and cash equivalents, financial assets measured at amortised cost
primarily include debt securities, loans and deposits, and receivables. These financial
assets are initially recognised at fair value plus transaction costs. Subsequently, they
are carried at amortised cost using the effective interest method less any loss allowance.
Interest revenue from debt securities measured at amortised cost is recognised in
investment return in the consolidated income statement using the effective interest
method.
Amplify Health
Amplify Health Asia Pte. Limited.
annualised new premiums
or ANP
ANP represents 100 per cent of annualised first year premiums and 10 per cent of
single premiums, before reinsurance ceded. It is an internally used measure of new
business sales or activity for all entities within AIA. ANP excludes new business of
pension business, personal lines and motor insurance. For group renewable business,
it includes any premium payable on existing schemes that exceeds the prior year’s
premiums.
ASEAN
ASEAN, officially the Association of Southeast Asian Nations, refer to AIA’s operations
in Thailand, Singapore, Malaysia, Vietnam, Indonesia, the Philippines, Cambodia,
Myanmar and Brunei.
Asia
Mainland China, Hong Kong SAR, Thailand, Singapore, Malaysia, Australia, Cambodia,
Indonesia, Myanmar, New Zealand, the Philippines, South Korea, Sri Lanka, Taiwan
(China), Vietnam, Brunei, Macau SAR and India.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
GLOSSARY
358
AIA GROUP LIMITED
bancassurance
The distribution of insurance products through banks or other financial institutions.
BEPS 2.0
The common name for the tax policy work led by the Organisation for Economic Co-
operation and Development on the “Two-Pillar Solution to Address the Tax Challenges
Arising from the Digitalisation of the Economy”, a phase of the OECD/G20 Base Erosion
and Profit Shifting (BEPS) Project.
Blue Care
Blue Care Medical Services Limited.
Blue Cross
Blue Cross (Asia-Pacific) Insurance Limited.
Board
The board of Directors.
business model
Financial assets are classified on the basis of the business model within which they are
held and their contractual cash flow characteristics. Below are examples of business
model:
•
Whose objective is to hold financial assets to collect contractual cash flows;
•
Whose objective is achieved by both collecting contractual cash flows and selling
financial assets.
CER
Constant exchange rates. Change on constant exchange rates is calculated for all
figures for the current period and for the prior period, using constant average exchange
rates, other than for balance sheet items as at the end of the current period and as at
the end of the prior year, which is translated using the constant balance sheet exchange
rates.
China Post Life
China Post Life Insurance Co., Ltd.
Company
AIA Group Limited, a company incorporated in Hong Kong with limited liability, whose
shares are listed on the Main Board of the Hong Kong Stock Exchange (stock codes:
1299 (HKD counter) and 81299 (RMB counter)).
comprehensive equity
The total of shareholders’ equity and net contractual service margin (CSM).
consolidated investment funds
Investment funds in which the Group has interests and power to direct their relevant
activities that affect the return of the funds, and consist of third-party unit holders’
interests in these funds. These are consolidated in the financial statements.
contract boundary
The measurement of a group of contracts includes all of the future cash flows within
the boundary of each contract in the group. For details, please refer to note 2.3.4 to the
consolidated financial statements.
contractual service margin
or CSM
A component of the carrying amount of the asset or liability for a group of insurance
contracts representing the unearned profit the Group will recognise as it provides
insurance contract services under the insurance contracts in the group. For details,
please refer to note 2.3.6 to the consolidated financial statements.
ADDITIONAL INFORMATION
359
ANNUAL REPORT 2024
Corporate Governance Code
Corporate Governance Code set out in Appendix C1 to the Listing Rules, as amended
from time to time.
cost of capital or CoC
CoC is calculated as the face value of the required capital as at the valuation date less
the present value of the net-of-tax investment return on the shareholder assets backing
the required capital and the present value of projected releases from the assets backing
the required capital. Where the required capital may be covered by policyholder assets
such as surplus assets in participating funds, there is no associated cost of capital
included in the VIF or VONB. CoC for AIA is stated after adjustment to reflect
consolidated capital requirements. CoC by market is stated before adjustment to reflect
consolidated capital requirements, and presented on a local statutory basis.
coverage unit
The amount of the CSM of a group of insurance contracts that is recognised as insurance
revenue in each reporting period is determined by identifying the coverage units in the
group, allocating the CSM remaining at the end of the reporting period (before any
allocation) equally to each coverage unit provided in the current period and expected
to be provided in future periods, and recognising in profit or loss the amount of the CSM
allocated to coverage units provided in the current period. The number of coverage
units is the quantity of services provided by the contracts in the group, determined
considering for each contract the quantity of benefits provided and its expected
coverage period. Determination of coverage unit is further elaborated in note 3.3 to the
consolidated financial statements.
C-ROSS
China Risk-Oriented Solvency System.
Dealing Policy
Directors’ and Chief Executives’ Dealing Policy of the Company.
Director(s)
The director(s) of the Company.
eligible capital resources
For a regulated entity, eligible capital resources refers to the resources and financial
instruments eligible to be counted towards satisfying the prescribed capital requirement
according to the respective regulatory requirements. For a non-regulated entity, eligible
capital resources refers to IFRS equity less intangible assets, plus eligible financial
instruments, including subordinated securities as well as senior notes approved for
inclusion.
eligible group capital resources
The sum of the eligible capital resources of each entity within the Group according to
the respective local regulatory requirements, subject to any variation considered
necessary by the Hong Kong Insurance Authority (HKIA).
eligible group capital resources
coverage ratio or the Group
LCSM coverage ratio
The ratio of the eligible group capital resources to the group prescribed capital
requirement (GPCR).
embedded value or EV
An actuarially determined estimate of the economic value of a life insurance business
based on a particular set of assumptions as to future experience, excluding any
economic value attributable to future new business. EV for AIA is stated after
adjustments to reflect consolidated reserving and capital requirements, the after-tax
value of unallocated Group Office expenses and Group Corporate Centre tax. EV by
market is stated before adjustments to reflect consolidated reserving and capital
requirements, unallocated Group Office expenses and Group Corporate Centre tax, and
presented on a local statutory basis.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
GLOSSARY
360
AIA GROUP LIMITED
eMPF
The eMPF Platform is a central and integrated electronic platform to standardise,
streamline and automate MPF scheme administration work. It is built and operated by
eMPF Platform Company Limited, a wholly-owned subsidiary of the Mandatory
Provident Fund Schemes Authority (MPFA).
equity attributable to
shareholders of the
Company on the embedded
value basis or EV Equity
EV Equity is the total of embedded value, goodwill and other intangible assets
attributable to shareholders of the Company, after allowing for taxes.
ESG
Environmental, Social and Governance.
ExCo
The Executive Committee of the Group.
expected credit losses or ECL
The weighted average of credit losses with the respective risks of a default occurring
as the weights.
expense ratio
Expense ratio is measured as operating expenses divided by total weighted premium
income (TWPI).
fair value reserve
Fair value reserve comprises the cumulative net change in the fair value of debt
securities measured at fair value through other comprehensive income and the
cumulative related loss allowance recognised in profit or loss.
fair value through other
comprehensive income
or FVOCI
For financial assets and liabilities measured at fair value through other comprehensive
income, some changes in fair value are recognised in other comprehensive income. For
details, please refer to note 2.5.1 to the consolidated financial statements.
fair value through profit
or loss or FVTPL
For financial assets and liabilities measured at fair value through profit or loss, changes
in fair value are recognised in profit or loss as part of net investment result. For details,
please refer to note 2.5.1 to the consolidated financial statements.
first year premiums
First year premiums are the premiums received in the first year of a recurring premium
policy. As such, they provide an indication of the volume of new policies sold.
free surplus
ANW in excess of the required capital adjusted for certain assets that are not eligible
for regulatory capital purposes. Free surplus for AIA is stated after adjustment to reflect
consolidated reserving and capital requirements.
fulfilment cash flows
An explicit, unbiased and probability-weighted estimate (i.e. expected value) of the
present value of the future cash outflows minus the present value of the future cash
inflows that will arise as the Group fulfils insurance contracts, including a risk
adjustment for non-financial risk.
gross carrying amount
Gross carrying amount is the amortised cost before adjusting for loss allowance.
Group LCSM surplus
The excess of the eligible group capital resources over the GPCR.
group minimum capital
requirement or GMCR
The sum of the minimum capital requirements of each entity within the Group,
subject to any variation considered necessary by the HKIA.
ADDITIONAL INFORMATION
361
ANNUAL REPORT 2024
Group Office
Group Office includes the activities of the Group Corporate Centre segment consisting
of the Group’s corporate functions, shared services and eliminations of intragroup
transactions.
group prescribed capital
requirement or GPCR
The sum of the prescribed capital requirements of each entity within the Group, subject
to any variation considered necessary by the HKIA. It represents the level below which
the HKIA may intervene on grounds of capital adequacy.
GWS
Group-wide supervision.
GWS Capital Rules
Insurance (Group Capital) Rules (Chapter 41O of the Laws of Hong Kong).
HKFRS
Hong Kong Financial Reporting Standards.
holding company financial
resources
Debt securities, equity shares and interests in investment funds, deposits, cash and
cash equivalents and dividends paid but not settled by subsidiaries, net of obligations
under repurchase agreements, at the Group’s listed holding company, AIA Group
Limited. These are presented in note 42 to the consolidated financial statements.
Hong Kong or HKSAR
The Hong Kong Special Administrative Region (SAR) of the People’s Republic of China
(PRC); in the context of our reportable segments, Hong Kong includes the Macau SAR.
Hong Kong Companies
Ordinance
Companies Ordinance (Chapter 622 of the Laws of Hong Kong), as amended from time
to time.
Hong Kong Insurance Authority
or HKIA
Insurance Authority established under the Hong Kong Insurance Ordinance.
Hong Kong Insurance Ordinance
or HKIO
Insurance Ordinance (Chapter 41 of the Laws of Hong Kong), as amended from time to
time. It provides a legislative framework for the prudential supervision of the insurance
industry in Hong Kong.
Hong Kong Stock Exchange
or HKSE
The Stock Exchange of Hong Kong Limited.
IAIG
Internationally Active Insurance Group.
IAIS
International Association of Insurance Supervisors.
IASB
International Accounting Standard Board.
IFRS balance sheet
Balance sheet prepared in accordance with the IFRS Accounting Standards.
IFRS basis
The basis of preparation used in the IFRS results.
IFRS earnings
Earnings calculated and reported under the IFRS Accounting Standards.
IFRS equity
Equity position calculated and reported under the IFRS Accounting Standards.
OVERVIEW
FINANCIAL AND OPERATING REVIEW
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
GLOSSARY
362
AIA GROUP LIMITED
IFRS net asset value
Net asset value calculated and reported under the IFRS Accounting Standards.
IFRS results
Financial results calculated and reported under the IFRS Accounting Standards.
INED(s)
The independent non-executive director(s) of the Company.
insurance acquisition cash flows
Cash flows arising from the costs of selling, underwriting and starting a group of
insurance contracts (issued or expected to be issued) that are directly attributable to
the portfolio of insurance contracts to which the group belongs. Such cash flows
include cash flows that are not directly attributable to individual contracts or groups of
insurance contracts within the portfolio.
Insurance Capital Standard
or ICS
A risk-based global insurance capital standard applicable to IAIGs being developed by
the IAIS.
insurance contract services
The following services that the Group provides to a policyholder of an insurance
contract:
(a) coverage for an insured event (insurance coverage);
(b) for insurance contracts without direct participation features, the generation of an
investment return for the policyholder, if applicable (investment-return service);
and
(c) for insurance contracts with direct participation features, the management of
underlying items on behalf of the policyholder (investment-related service).
insurance finance reserve
Insurance finance reserve comprises the cumulative insurance finance income or
expenses recognised in other comprehensive income.
insurance revenue
Insurance revenue arising from insurance contracts and exclude any investment
components. For details, please refer to notes 2.3.10.1 and 2.3.10.3 to the consolidated
financial statements.
insurance service expenses
Insurance service expenses arising from insurance contracts and exclude repayments
of investment components. For details, please refer to note 2.3.10.5 to the consolidated
financial statements.
insurance service result
Insurance service result comprises insurance revenue, insurance service expenses
and net expenses from reinsurance contracts held.
interactive Point of Sale or iPoS
A secure, mobile point-of-sale technology that features a paperless sales process from
the completion of the customer’s financial-needs analysis to proposal generation with
electronic biometric signature of life insurance applications on tablet devices.
investment component
Amount that an insurance contract requires the Group to repay to a policyholder in all
circumstances, regardless of whether an insured event occurs. Generally, for relevant
contracts, surrender value would be determined as an investment component.
Investment experience
Realised and unrealised investment gains and losses recognised in the consolidated
income statement.
investment income
Investment income comprises interest income, dividend income and rental income.
ADDITIONAL INFORMATION
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ANNUAL REPORT 2024
investment return
Investment return comprises interest revenue on financial assets, other investment
return and net impairment loss on financial assets.
IPO
Initial Public Offering.
liability for incurred claims or LIC
The Group’s obligation to:
(a) investigate and pay valid claims for insured events that have already occurred,
including events that have occurred but for which claims have not been reported,
and other incurred insurance expenses; and
(b) pay amounts that are not included in (a) and that relate to:
(i) insurance contract services that have already been provided; or
(ii) any investment components or other amounts that are not related to the
provision of insurance contract services and that are not in the liability for
remaining coverage.
liability for remaining coverage
or LRC
The Group’s obligation to:
(a) investigate and pay valid claims under existing insurance contracts for insured
events that have not yet occurred (i.e. the obligation that relates to the unexpired
portion of the insurance coverage); and
(b) pay amounts under existing insurance contracts that are not included in (a) and
that relate to:
(i) insurance contract services not yet provided (i.e. the obligations that relate to
future provision of insurance contract services); or
(ii) any investment components or other amounts that are not related to the
provision of insurance contract services and that have not been transferred to
the liability for incurred claims.
Listing Rules
The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited, as amended from time to time.
Local Capital Summation Method
or LCSM
LCSM is the method used by the HKIA as a measure of group capital under the GWS
framework.
Under the LCSM, AIA’s published eligible group capital resources, GMCR and GPCR are
calculated as the sum of the eligible capital resources, minimum capital requirements
and prescribed capital requirements for each entity within the Group according to the
respective local regulatory requirements, subject to any variation considered necessary
by the HKIA. Adjustments are made to eliminate double counting.
loss component
Loss component for onerous contracts. For details, please refer to note 2.3 to the
consolidated financial statements.
MediCard
MediCard Philippines, Inc.
minimum capital requirement
or MCR
The level at which, if not maintained by the regulated entity, may result in the severest
penalty, the most extreme intervention measures, or the withdrawal of authorisation to
carry on the whole or any part of its business, being imposed on or taken against the
regulated entity under the laws relating to regulatory capital in the jurisdiction in which
the entity is authorised. (For details, please refer to the Insurance (Group Capital)
Rules, Rule 4 from the HKIA).
Million Dollar Round Table
or MDRT
A global professional trade association of life insurance and financial services
professionals that recognises significant sales achievements and high service
standards.
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AIA GROUP LIMITED
Model Code
Model Code for Securities Transactions by Directors of Listed Issuers set out in
Appendix C3 to the Listing Rules, as amended from time to time.
n/a
Not available.
n/m
Not meaningful.
net CSM
CSM after allowing for reinsurance, taxes and net of non-controlling interests.
net free surplus generation
or net FSG
Net free surplus generation is calculated as underlying free surplus generation less
free surplus used to fund new business, unallocated Group Office expenses, finance
costs and other capital movements as disclosed in the Supplementary Embedded
Value Information.
net investment result
Comprises investment return, net finance income or expenses from insurance contracts
and reinsurance contracts held, movement in investment contract liabilities and
movement in third-party interests in consolidated investment funds.
operating margin
Operating margin is measured as operating profit after tax expressed as a percentage
of TWPI.
operating profit after tax or OPAT
Operating profit after tax is the Group’s core measure of operating earnings, determined
using, among others, expected long-term investment return for equities and real estate.
Short-term fluctuations between expected long-term investment return and actual
investment return for these asset classes are excluded from operating profit. The
assumptions used to determine expected long-term investment return are the same, in
all material respects, as those used by the Group in determining its embedded value
and are disclosed in the Supplementary Embedded Value Information.
operating return on EV
or operating ROEV
Operating return on EV is calculated as EV operating profit, expressed as a percentage
of the opening embedded value.
operating return on shareholders’
allocated equity or
operating ROE
Operating return on shareholders’ allocated equity is calculated as operating profit
after tax attributable to shareholders of the Company, expressed as a percentage of the
simple average of opening and closing shareholders’ allocated equity.
OTC
Over-the-counter.
Other Markets
AIA’s Other Markets are Australia, Cambodia, India, Indonesia, Myanmar, New Zealand,
the Philippines, South Korea, Sri Lanka, Taiwan (China) and Vietnam.
other participating business
with distinct portfolios
Business where it is expected that the policyholders will receive, at the discretion of
the insurer, additional benefits based on the performance of underlying segregated
investment assets where this asset segregation is supported by an explicit statutory
reserve and reporting in the relevant territory.
ADDITIONAL INFORMATION
365
ANNUAL REPORT 2024
participating funds
Participating funds are distinct portfolios where the policyholders have a contractual
right to receive at the discretion of the insurer additional benefits based on factors
such as the performance of a pool of assets held within the fund, as a supplement to
any guaranteed benefits. The allocation of benefits from the assets held in such
participating funds is subject to minimum policyholder participation mechanisms
which are established by regulation.
persistency
The percentage of insurance policies remaining in force from month to month in the
past 12 months, as measured by premiums.
Pillar Two
BEPS 2.0’s second pillar, which seeks to impose a minimum effective tax rate on large
multinational enterprises in respect of each jurisdiction in which they operate.
policyholder and shareholder
investments
Investments other than those held to back unit-linked contracts as well as assets from
consolidated investment funds.
portfolio of insurance contracts
Insurance contracts subject to similar risks and managed together.
pps
Percentage points.
premium allocation approach
or PAA
Simplified measurement of insurance contracts where the coverage period of each
contract in the group of contracts is one year or less; or the Group reasonably expects
that the resulting measurement of the liabilities for remaining coverage would not
differ materially from the result of applying the accounting policies of contracts not
measured under PAA.
prescribed capital requirement
or PCR
The level at which, if maintained by the regulated entity, would not give rise to a power
to impose any penalty, sanction or intervention measures against, or withdrawal of
authorisation of, the regulated entity under the laws relating to regulatory capital in the
jurisdiction in which the entity is authorised. (For details, please refer to the Insurance
(Group Capital) Rules, Rule 5 from the HKIA).
PVNBP margin
VONB gross of non-controlling interests excluding pension business, expressed as a
percentage of present value of new business premiums (PVNBP). PVNBP margin for
AIA is stated after adjustments to reflect consolidated reserving and capital
requirements, the after-tax value of unallocated Group Office expenses and Group
Corporate Centre tax.
renewal premiums
Premiums receivable in subsequent years of a recurring premium policy.
reverse repo
Reverse repurchase agreement.
rider
A supplemental plan that can be attached to a basic insurance policy, typically with
payment of additional premiums.
risk adjustment
The compensation the Group requires for bearing the uncertainty about the amount
and timing of the cash flows that arises from non-financial risk as the Group fulfils
insurance contracts.
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366
AIA GROUP LIMITED
Risk-Based Capital or RBC
RBC represents an amount of capital based on an assessment of risks that a company
should hold to protect customers against adverse developments.
RSPUs
Restricted stock purchase units.
RSSUs
Restricted stock subscription units.
RSUs
Restricted share units.
SFO
Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended
from time to time.
Share(s)
For the Company, shall mean ordinary share(s) in the capital of the Company.
share buy-back
Buy-backs of Shares, including under a share buy-back programme, conducted by the
Company pursuant to the general mandate granted to the directors of the Company by
the Shareholders at annual general meetings from time to time, in compliance with the
Listing Rules, the Takeovers Codes, the Hong Kong Companies Ordinance and all other
applicable laws and regulations.
Shareholder(s)
Holder(s) of the Shares.
shareholders’ allocated equity
Shareholders’ allocated equity is total equity attributable to shareholders of the
Company less fair value reserve and insurance finance reserve.
shareholder capital ratio
Shareholder capital ratio is the shareholder capital resources as a percentage of the
required capital on consolidated basis as disclosed in the Supplementary Embedded
Value Information.
shareholder capital resources
Shareholder capital resources comprise free surplus and required capital on
consolidated basis as disclosed in the Supplementary Embedded Value Information
and eligible Tier 2 debt capital as used in the Group LCSM solvency position.
Singapore
The Republic of Singapore; in the context of our reportable segments, Singapore
includes Brunei.
single premium
A single payment that covers the entire cost of an insurance policy.
solvency
The ability of an insurance company to satisfy its policyholder benefits and claims
obligations.
SOs
Share options.
ADDITIONAL INFORMATION
367
ANNUAL REPORT 2024
Takeovers Code
Codes on Takeovers and Mergers and Share Buy-backs, as amended from time to time.
Tata AIA Life
Tata AIA Life Insurance Company Limited.
Tier 1 group capital
The resources and financial instruments of the group eligible to be included, in
accordance with the Insurance (Group Capital) Rules, Rule 7(1) from the HKIA.
Tier 1 group capital coverage
ratio
Tier 1 group capital coverage ratio is calculated as the ratio of the Tier 1 group capital
to the GMCR.
Tier 2 group capital
The resources and financial instruments of the group eligible to be included, in
accordance with the Insurance (Group Capital) Rules, Rule 7(3) from the HKIA.
total weighted premium income
or TWPI
TWPI consists of 100 per cent of renewal premiums, 100 per cent of first year premiums
and 10 per cent of single premiums, before reinsurance ceded. As such it provides an
indication of AIA’s longer-term business volumes as it smoothes the peaks and troughs
in single premiums. The amounts are not intended to be indicative of insurance revenue
and fee income recorded in the consolidated income statement.
underlying free surplus
generation or UFSG
The key operating financial measure of the Group’s capital and cash generation after
tax. It represents the free surplus generated from the in-force business, adjusted for
certain non-recurring items and before free surplus used to fund new business,
unallocated Group Office expenses, finance costs, investment return variances and
other non-operating items. The underlying free surplus generation is calculated after
reflecting consolidated reserving and capital requirements. It reflects free surplus
generated rather than a measure of holding company cash flow.
underlying items
Items that determine some of the amounts payable to a policyholder. Underlying items
can comprise any items; for example, a reference portfolio of assets, the net assets of
the Group, or a specified subset of the net assets of the Group.
unit-linked investments
Financial investments held to back unit-linked contracts.
unit-linked products
Unit-linked products are insurance products where the policy value is linked to the
value of underlying investments (such as collective investment schemes, internal
investment pools or other property) or fluctuations in the value of underlying investment
or indices. Investment risk associated with the product is usually borne by the
policyholder. Insurance coverage, investment and administration services are provided
for which the charges are deducted from the investment fund assets. Benefits payable
will depend on the price of the units prevailing at the time of death of the insured or
surrender or maturity of the policy, subject to surrender charges.
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368
AIA GROUP LIMITED
value of in-force business or VIF
VIF is the present value of projected after-tax statutory profits by Business Units
emerging in the future from the current in-force business less the cost arising from
holding the required capital (CoC) to support the in-force business. VIF for AIA is stated
after adjustments to reflect consolidated reserving and capital requirements, the after-
tax value of unallocated Group Office expenses and Group Corporate Centre tax. VIF by
market is stated before adjustments to reflect consolidated reserving and capital
requirements, unallocated Group Office expenses and Group Corporate Centre tax, and
presented on a local statutory basis.
value of new business or VONB
VONB is the present value, measured at the point of sale, of projected after-tax statutory
profits emerging in the future from new business sold in the period less the cost of
holding the required capital in excess of regulatory reserves to support this business.
VONB for AIA is stated after adjustments to reflect consolidated reserving and capital
requirements, the after-tax value of unallocated Group Office expenses and Group
Corporate Centre tax. VONB by market is stated before adjustments to reflect
consolidated reserving and capital requirements, unallocated Group Office expenses
and Group Corporate Centre tax, and presented on a local statutory basis.
variable fee approach or VFA
The VFA modifies the general measurement model in IFRS 17 to reflect the nature of
the income to the insurer is a variable fee.
VONB margin
VONB gross of non-controlling interests excluding pension business, expressed as a
percentage of ANP. VONB margin for AIA is stated after adjustments to reflect
consolidated reserving and capital requirements, the after-tax value of unallocated
Group Office expenses and Group Corporate Centre tax. VONB margin by market is
stated before adjustments to reflect consolidated reserving and capital requirements,
unallocated Group Office expenses and Group Corporate Centre tax, and presented on
a local statutory basis.
ADDITIONAL INFORMATION
AIA.COM
ANNUAL REPORT 2024
AIA GROUP LIMITED 友邦保險控股有限公司