AIA Group Limited

Good morning, everybody. Welcome to AIA’s 2019 Annual Results Presentation.

I’m Lance Burbidge, Chief Investor Relations Officer for AIA Group. The ongoing impact of the COVID-19 virus means that today we’re not having our usual face-to-face meeting.

As a reminder, if you wish to ask a question later, you’ll need to use the telephone dial-in facility rather than the webcast. Today’s agenda is on Slide 3.

Our Group Chief Executive Keng Hooi will start with the key highlights of the Group’s financial performance in 2019 and an update on our strategic progress. Then our Group Chief Financial Officer, Garth Jones, will take you through the financial results in detail.

Our three Regional Chief Executive and the CEO of AIA China, Fisher Zhang will update on progress in the respective markets. Keng Hooi will then set out how AIA’s position to capture the significant growth opportunities available to us across the Asia Pacific region.

Finally we will open up the session to your questions. With that, let me hand over to Keng Hooi.

Thanks Lance and good morning everyone. I’m pleased to be here this morning to present AIA’s 2019 Annual Results.

Well it’s been a challenging year; AIA has continued to deliver growth in all our main financial metrics. Let me begin with the key highlights on Slide 5.

In 2019, headline value of new business grew by 6% to more than $4.1 billion. This supported a further increase in EV equity to $63.9 billion with 12% growth.

Operating profit after tax was up 9% to $5.7 billion and our operating return on equity remained strong at 14.4%. Underlying free surplus generation rose to $5.5 billion, an increase of 13% on the prior year.

The board continues to follow our prudent, sustainable and progressive dividend policy and has recommended an increase of 10% in the final dividend. This brings the total dividend to 126.6 Hong Kong cents per share up 11%.

These solid results with growth in all our key financial metrics reflect the continued success of our focus on executing our strategic priorities. While our 2019 results are healthy, they were clearly impacted by the operating environment in the second half.

Slide 6 shows the contrast in growth between Hong Kong and the rest of the Group. Our Hong Kong business saw very strong growth of 19% in the first half, but this was more than offset by the impact of social unrest in the second half.

The overall 5% decline reflects a significant fall in sales to Mainland China visitors in the second half which brought lead track the decline in visitor arrivals. Our domestic customer segment continues to perform well throughout the year and reported double-digit growth.

Looking beyond Hong Kong, the Group achieved strong growth of 16% in 2019. AIA China had another excellent year with 27% growth and our other markets also deliver very strong growth of 27% led by Vietnam, the Philippines and Australia.

The three RCE’s and Fisher will take you through the progress in our markets later on. Overall in the year, where our largest business saw a decline of more than 20% in the second half AIA has still achieved positive group in VONB.

This performance continues to demonstrate the benefits of our unique platform and our focus across the Asia Pacific region. Now onto Slide 7, all of our teams continue to focus on executing our key strategic priorities in 2019.

The scale and quality of our multi-channel distribution platforms enable us to provide professional, financial advice to millions of customers. Our agency remains the primary source of our new business and generated 74% of the Group’s VONB.

We continue to expand and enhance our premier agency programs with strong results overtime as we transform our agencies across the region. Excluding Hong Kong agency VONB grew by 16% in 2019.

Our strategic partnership compliments our agency and expand AIA’s distribution reach. In 2019, Bancassurance delivered excellent VONB growth with a substantial contribution to growth from our partnership in Vietnam, Thailand and New Zealand all activated within the past three years.

In December, we were pleased to start our new partnership with CBA in Australia. We’ve had another year in health and wellbeing as we continue our journey towards being a lifelong partner for our customers.

Overall membership of our wellness program has exceeded 1.7 million up more than 40% in 2019. AIA China launched a medical network for its high end customers and we rollout medic services to Malaysia, Thailand and Indonesia following the great results in Hong Kong and Singapore.

Digital is a key enabler for our business and we continue to invest and leverage technology. In 2019, more than 95% of agency new business was submitted digitally over 60% of all new business was auto-underwritten and more than 80% of customer interactions can be performed digitally.

Now onto progress in some of our key growth markets on Slide 8. In Mainland China, we’ve made significant progress in our geographic expansion.

In July, we opened new sales and service centers in Tianjin and Shijiazhuang starting operations in two cities at the same time has confirmed our capabilities and provided valuable experience for our future ambition. We recently announced the intention to subsidiarize AIA China.

This conversion will help us take advantage of the opening of China Life Insurance market. We have submitted our conversion application and are waiting for CBIRC approval.

AIA China has been preparing for some time and subject to regulatory approval. The new subsidiary will form the foundation for our geographical expansion plans in Mainland China.

We very much look forward to leveraging our differentiated model and help millions more Chinese families live healthier, longer, better lives. Onto our emerging Asian markets, Vietnam, Indonesia and Philippines.

Our business in Indonesia returned to growth in the second half helped by a strong result from our partnership with BCA. We deliver excellent performance from our businesses in Vietnam and Philippines with both agency and partnership distribution growing strongly.

In all three markets, we’re making good progress with quality recruitment programs in agency. I’ll talk about TATA AIA Life, our Indian JV interim results.

We have been excellent partner with Tata Sons, the country’s preeminent conglomerate. TATA AIA Life is a market leader in pure retail protection sales and our agency productivity is the best in the industry.

I’m excited of our progress we’ve made so far and believe that, our efforts, our positioning TATA AIA Life to capture the significant long-term growth opportunity in India. You will hear more about the potential of this growth markets throughout the presentation this morning.

Now turning to Slide 9, AIA’s long track record of delivery has been built on our consistent focus on executing our strategic priorities. Despite near term headwinds, AIA has continued to deliver growth in all our key metrics in 2019.

This results reflect the tremendous hard work from all our - of our exceptional teams across the Group. Now over to Garth, who will take you through the financial details.

Garth?

Thanks Keng Hooi and good morning, everyone. I’ll start with Slide 11, the financial performance in 2019 demonstrates our continuing ability to deliver growth across all our key financial metrics.

Value of new business grew by 6% to over $4.1 billion. EV operating profit of $8.7 billion increased by 6% reflecting VONB growth and the comparative opening EV.

Operating ROEV remain strong while declining slightly to 15.9% and EV equity increased 12% to nearly $64 billion. Operating profit after tax was up 9%, $5.7 billion with operating ROE of 14.4%.

Shareholder’s Allocated Equity increased by 15% to $42.8 billion after the payments of nearly $2 billion of dividends driven by the increased operating results and positive mark-to-market movements in our equity portfolio. Underlying free surplus generation increased by 13% to $5.5 billion and the AIA Co.

solvency position remain strong after the impact of the CMLA acquisition in Australia. Based on the strength of these results within the context of the macroeconomics and capital markets environment while also reflecting our financial resilience and our confidence in the Group’s prospects that is recommended an increase of 10% in the final dividend to 93.3 Hong Kong cents per share.

This brings the total dividend to share in 2019 to 126.6 Hong Kong cents per share up 11% of 2018. The Board continues to follow our prudent, sustainable and progressive dividend policy while retaining the financial flexibility to fund future growth.

These resilient financial results reflect AIA’s continuing focus on executing our strategic priorities while siding financial discipline to generate attractive returns. As usual I’ll now provide more detail in the three areas of growth, earnings and capital and dividends.

Starting with growth on Slide 13, AIA’s portfolio of businesses enables us to capitalize on the attractive growth opportunities that are available across Asia Pacific. Keng Hooi has already noted that our Hong Kong business reported a 5% decline in VONB.

AIA China continued its strong track record of growth with 27% increase and for the first time, delivered over $1 billion of VONB in a year. AIA Thailand delivered 6% growth as we continue to benefit from the FA agency transformation and strong momentum in our long-term partnership with Bangkok Bank.

Our business in Singapore was flat overall as low as single premiums in the high net worth segment, but balanced by growth in regular premium sales. The new quality recruitment program in Malaysia helped deliver solid agency growth and the business reported 7% growth overall.

Our other markets achieved a very strong result with 27% growth, while our contributions to growth coming from our businesses in Vietnam, the Philippines and Australia. In 2019, we’ve included our 49% share of the VONB of TATA AIA Life in India for the first time.

Excluding India and its growth of 66% other markets growth was very strong at 18%. Our other markets have now grown to be larger than AIA Thailand and our third largest geographic segment.

Overall the collective performance from our 18 businesses that delivered another year of VONB growth for the Group. AIA’s unique portfolio of businesses diverse product and high quality distribution enable us to deploy capital at highly attractive rates of return and optimize long-term shareholder value.

Slide 14, shows that ANP increased to $6.6 billion with more than 90% of ANP sourced from regular premium business. ANP grew by 12% for the Group excluding Hong Kong.

VONB margin increased by 2.9 percentage points to 62.9%. The increased margin was primarily driven by assumption changes in others with around half of the increase here from the positive effect of the tax rule change in Mainland China, a similar picture to the interim results.

New business margin on the PVNBP basis improved from 10% to 11% driven by higher margins in both our participating and traditional protection business. Our continued focus is on growing total VONB and as I’ve said many times, we do not target volume on margin alone.

Slide 15 shows the movement in EV equity during the year. VONB growth levels and the comparative opening EV impacted by the stock market fall in 2018 resulted in an EV operating profit increase of 6% to $8.7 billion and operating ROEV remained strong at 15.9%.

Operating variances remain positive and contributed $634 million. Other non-operating items added $1 billion and included currency translation effect.

Overall our EV increased by $7.7 billion to $63.9 billion. After the payments of shareholder dividends of nearly $2 billion.

Our closing EV equity is shown after deduction of $6.4 billion for additional consolidated reserving and capital requirements and the present value of an unallocated group office expenses. Moving onto Slide 16, AIA’s continuing positive operating experience reflects the quality of our inflows business and confirmed the appropriateness of our EV assumptions.

Mortality and morbidity claims experienced remained positive as is also the case for persistency and expense variances reflecting both our pricing discipline for new business and the proactive management of our existing book. Our EV results continue to demonstrate the prudence in our operating assumptions.

Overall cumulative operating variances since our IPO have added more than $2.6 to EV. Turning to Slide 17, in our interest rate spaces.

AIA’s EV methodology uses spot market yields and trends overtime to our long-term assumptions. Our long-term assumptions smooth our short-term volatility.

However you recall that at the interim results I noted we would likely lower our assumptions at year end if below interest rate environment persisted. As such we’ve reduced our long-term assumptions in several markets and our weighted rate was in line with forward rate at 31 December, 2019.

As interest rates have more markedly lower in some markets during the first months of 2020. We may lower our assumptions again and depending on how circumstances develop could potentially make adjustments at the interim rather than at the full year as it’s been our practice since IPO.

We’re not immune to short-term market volatility however our EV sensitivity is small and demonstrate the resilience of the Group’s EV. To provide further context, we’ve estimated the EV based on the recent extremely low levels of interest rate using a parallel downward shift in both spot rates and our long-term assumption.

For US rates, we used a reduction of 140 basis points at all durations since year end resulting in a spot yield of 50 basis points for the 10-year Treasury bond and a spot yield of 100 basis points for the third year. On this basis, the EV would fall by less than 7%.

We continue to actively reprice new business to reflect the changing environment and make adjustments to our pricing assumptions in light of current expectations of future experience of both economic and operating. As with our operating variances, our cumulative investment return variances since IPO are also both positive at $850 million.

Slide 18, clearly demonstrates that over the years we’ve progressively built a strong long-term track record by delivering sustainable, profitable growth that increased in scale. The compounding effect of which means that VONB in 2019 was more than six times the result in 2010.

Fixed earnings and I’ll turn to our IFRS results on Slide 20. Operating profit after tax increased by 9% to $5.7 billion.

This growth projects the 13% increase in total weighted premium income. Offset by the unfavorable effect of lower interest rates, high medical claims and operating expenses.

Our expense ratio overall increased slightly to 7.3% mainly driven by higher expenses in Australia and New Zealand where the expense ratio is above the Group average. Slide 21 shows the breakdown of our operating profit after tax and demonstrates the benefit of our geographic diversity at scale across the region.

AIA Hong Kong delivered 6% OPAT growth to $1.9 billion as underlying business growth was partially offset by the impact of lower interest rates in the second half particularly on participating business. OPAT from our business in Thailand grew by 3%, greater scale of the business and improved persistency offset by adverse medical claims experience and the further fall in interest rates in the second half.

AIA China results have increased by 28% and exceeded $1 billion for the first time. Growth of the size of the businesses in Malaysia and Singapore resulted in increased OPAT despite higher medical claims in Malaysia, continuing pressure on the profitability of our HealthShield portfolio in Singapore.

Finally, other markets delivered 2% higher OPAT. As increased earnings due to strong new business growth were offset by deterioration in operating experience in South Korea and higher operating expenses in Australia as I mentioned earlier.

In aggregate, OPAT grew by 9% in 2019 with each of our reportable market segments delivering positive growth. I mentioned the Hong Kong participating business saw a significant impact from lower interest rates.

Amplified due to the basis of our current IFRS 4 accounting policy for this business as I’ll now explain. The current treatment estimates the level of policy holder bonuses based on return expectations at the point of sale and maintains bonuses at this level when evaluating liabilities in all future periods despite interest rates and policy holder bonuses changing overtime.

We’re looking at enhancing our accounting policy at the interim results to better reflect the economic position bringing in more in line with market practice and our treatment of segregated participating business. There’s more explanation on Slide 62 in the presentation appendix.

On the next slide, Slide 22, as usual the movement Shareholders’ Allocated Equity is shown before the IFRS accounting treatment of AFS bonds. Allocated equity does however, allow for other market movements.

The increase in allocated equity reflects our solid growth in operating profits, positive mark-to-market impacts on equities and positive foreign exchange movements partly offset by the payment of shareholder dividends. A one-time adjustment was made for the initial adoption of IFRS 16 which added $482 million to opening IFRS equity.

Without this adjustment ROE would have slightly increased. Overall, allocated equity was up 16% over the year.

Onto Slide 23, our financial discipline over time has delivered increasing returns on equity on both an EV and IFRS basis. Progressively higher EV operating profit has driven ROEV of 440 basis points since IPO even as our EV equity has grown to be 2.6 times higher.

The same increasing trend committing for OPAT and ROE, while shareholders allocated equity is more than doubled. These charts clearly demonstrate the highly attractive financial dynamics and underlying quality of our business.

Finally, capital and dividends. Moving from left to right on Slide 25.

We took control of CommInsure Life in November with a net reduction of $1 billion in our free surplus as I guided previously. Underlying free surplus generation by 13% to $5.5 billion, reflecting further growth in the business and continuing proactive managements of the in-force.

As with the expected return on opening EV, USFD for 2,919 using start of period investment return assumptions and will reflect the changes to long-term assumptions made at the end of 2019 in the first half of 2020. New business investments of $1.5 billion was 2% lower than 2018, as the new business strain effect of increased sales volumes was balanced by the impact of the tax rule change in Mainland China.

Investment return variances, exchange rates and other items were negative $0.6 billion in aggregate. After the $2 billion payment for increased Shareholders dividends closing three surplus was $14.9 billion.

I’ve said consistently that we hold free surplus to enable investment in new business, to take advantage of inorganic opportunities and absorb the effects of capital market stress. The significant fall in government bond yields in 2019 have further declined in 2020 or an example of such stress.

We’ve provided more detail of the effect of investment return variances in other to highlight the impact from lower interest rates particularly in respect of AIA Thailand and AIA Hong Kong under the Hong Kong Insurance Ordinance. This is partly offset by a net positive for mark-to-market gains on equities and other items.

I would note the persistent very low interest rates cloud slow free surplus emergence the remittances from our some of our businesses. While the recent drop in US government bond yields has had an impact on our free surplus, the Group remains financially strong.

As of today, the solvency ratio of AIA Co remains above 300% and all our businesses meet their prescribed regulatory capital requirements. Overall and after the acquisition CMLA, free surplus was up over the years.

Slide 26 provides an update as for the changing capital framework in Hong Kong which I outlined at the interim results. Our Group supervisor, the Hong Kong Insurance Authority intends to make two major changes that will affect our regulatory capital position.

First; the HKIA will introduce the formal Group wide supervision framework for Hong Kong based multinational insurance groups such as AIA. We still expect that this will become effective in July 2020.

Second the HKIA is also working to replace the existing HKIA solvency requirements with a risk based capital framework. The HKIA has recently indicated that the new Hong Kong RBC basis is now expected to be tabled to the legislature in 2022.

We estimated that we will first report on this basis in 2024 later than I mentioned at the interim. While this changing capital landscape and extra timeline creates uncertainty.

We remain confident of the Group’s capital strength and our strong solvency position. Our primary objective is to achieve profitable new business growth at increasing scale and generate superior sustainable value for our shareholders.

We aim to demonstrate with our strong growth in value of new business translates over time into earnings growth, increased cash generation and shareholder dividends, as shown on this slide and the next slide, Slide 28. The board has recommended an increase in the final dividend to 93.3 Hong Kong cents per share bringing the total dividend for 2019 to $126.6 Hong Kong cents per share up by 11% over 2018.

The increase considered the strength of these results within the context of the macroeconomic and capital markets environment whilst also reflecting our financial resilience and our confidence in the Group’s prospect. In conclusion on Slide 29, the Group’s results in 2019 reflect a very strong first half, impacted in the second half by external factors particularly in Hong Kong.

We delivered growth in all our main financial metrics and we remained financially strong. We continue to invest capital in high quality business with attractive returns and continue to grow VONB.

IFRS operating profit increased further and benefitted from the effects of additional scale and geographic diversification. Underlying free surface generation rose 13%, enabling us to finance new business growth and a further significant increase in the shareholder dividend.

Our disciplined financial management and continuing ability to build sustainable value for our shareholders are reflected in today’s results. I’ll now hand back to Jacky, Hak Leh, Bill and Fisher who will cover our progress in their respective businesses.

Thank you, Garth. Good morning, everyone.

I’m very pleased here today to present AIA’s Hong Kong’s full year results as well as an update on our response to COVID-19 in Hong Kong. I will also share with you and overview of our Group’s premier agency strategy performance of its regional rollout.

Let me first review the full year results on Hong Kong, if you can please refer to Slide 31. While AIA Hong Kong delivered very strong 19% VONB growth in the first half, the impact of the social unrest in the second half drove a 5% reduction in VONB for 2019.

Our business was supported by double-digit growth in VONB from our domestic customers, but it was offset by a decline in VONB Mainland Chinese visitor customer segment in the second half of 2019 which broadly tracked the reduction in visitors arrival to Hong Kong. ANP decreased by 11% to $2.4 billion while VONB margin increased to 6.1% driven by enhanced profitability in our long-term savings and protection product.

This year we launched a series of marketing initiative to promote protection products and this focus on protection was also supported by AIA Vitality integrated products which saw more than 25% VONB growth during the year. Agency channel delivered positive VONB growth in 2019 demonstrating the quality of our people and execution of our premier agency strategy against challenging market backdrop.

Our quality recruit and active agents continued the growth throughout the year and we launched AIA Smart, a digital platform that help to improve user experience and enhanced agent activity. VONB from our partnership distribution reported double-digit growth in the first half.

But then experienced a substantial decline in the second half of 2019 due to lower sales from the Mainland Chinese visitor customer segment and increased competition in the retail IFA channel. Now let me give you an update on the latest COVID-19 situation for AIA Hong Kong, if you could refer to Slide 32.

In the current quarter, we see that people in Hong Kong are generally avoiding public places and are reluctant to conduct face-to-face meeting as a result of COVID-19. We have also observed a slump in retail business activities with additional impact from Mainland China suspension of Individual Visit Scheme to Hong Kong and Macau effective January 29.

Hong Kong’s average daily arrivals from Mainland China dropped by 98% year-on-year in February with a direct impact on our sales in our Mainland Chinese visitor customer segment. Sales to our domestic customers has been constrained given the reluctance to meet indoors.

It is critical that we help our agents succeed during these temporary challenges and we have proactively taken a number of supportive measures such as activating iAgency which increases digital engagement of our agency force by allowing our agents to conduct online recruitment, training, financial review and after sales services as well as remote signature and one-time-password submission. We have temporarily relaxed performance requirements for our agents.

We also welcome positive relief measures and acted by the Hong Kong Insurance Authority in light to help concern from COVID-19. This include temporary measures in the selling process of tax deductible voluntary insurance scheme and qualifying the further annuity policy.

In order to minimize face-to-face meetings between insurers and the client. At AIA Hong Kong we always prioritize the well-being and safety of our customers and the broader community, as the result we have extend extra coverage to our customers by launching free enhanced protection benefits, one-off lump sum diagnosis benefit and a waiver for the usual 30-day waiting period.

We are also offering complimentary one-off lump sum diagnosis and death benefit for front-line cleaning workers who are dedicated to safeguarding the health of our community. As we face this uncertain times together in Hong Kong, I want to reiterate our commitment to community, our customers, employees, partners and agents.

The importance of our agency channel in Hong Kong cannot be overstated and earlier I mentioned that some of the ways we are supporting our agency force during this near term challenges. Needless to say, AIA is also continuously dedicated to supporting our agency’s long-term success and I would like to now review what we have accomplished during our growth agency transformation and how our premier agency strategy has developed throughout the region.

If you could please turn to Slide 33. AIA’s proprietary premier agency remains our primary discussion channel and a core growth engine for the growth.

Our differentiated premier agency strategy is a key competitive advantage for AIA and its success is underpinned by an end-to-end agent customer value chain whereby we begin recruiting high caliber agent and providing agent with bespoke training and career development pathway, we then leverage extensive performance management to further enhance the professionalism and quality of our agency force and improve engagement with customer. We also continuously invest in digital technology that provides effective support for our agents and agency leaders across all of their key activities such as customer acquisition and servicing.

In order to provide best in class customer experience. In 2011, AIA Hong Kong was our first market to launch the quality recruitment program closely followed by AIA China in 2013 and then AIA Singapore in 2016 since then we have roll out these programs regionally to our business in Thailand, Malaysia, Vietnam, Indonesia and Philippines.

Since 2010, our number active agents has more than doubled and their productivity increased 2.7 times. This result testament to our focus on quality recruitment use of digital tools to enhance agents’ activities and also commitment to our differentiated premier agency strategy.

In closing, I’m pleased to share with you the results of our resilient Hong Kong business as well as the success of our long-term commitment to the premier agency strategy. Thank you very much and now let me hand over to Hak Leh.

Thank you, Jacky and good morning, everyone. I’ll cover the performance of AIA Singapore and AIA Malaysia and provide you with a brief update on progress we made in AIA Myanmar, the Groups US business unit.

Please refer to Slide 35. AIA Singapore $352 million of VONB in 2019 with a stable VONB margin of 65.5%.

Overall growth in regular and business was offset by lower single premium sales from the partnership distribution channel. In 2019 and for the fifth consecutive year, our agency channel maintains its market leadership with the largest number of MDRT registered members in Singapore.

We also deliver a healthy increase in number of active agents contributing to modest VONB growth. We remain committed to our premier agency strategy continuing focus on quality recruitment, professional career development and investment in next generation in the greater digital platforms.

Our strategic partnership with Citibank delivered double-digit VONB growth. This growth was supported by an increase in both number and productivity of insurance specialist serving domestic affluent and retail customer strategy.

We saw a decline in single premium high net worth [ph] cases especially from our non-exclusive channels due to intense market competition as we maintain our prudent pricing discipline or focusing on enhancing our product proposition and quality customer service. In 2019, we launch an innovative bespoke wealth solution which offers a combination of high protection and exclusive access to a select group of leading institutional asset managers.

We also launched two critical illness products reversing the market features. The first cover mental illness and the second provides comprehensive protection across all stages of critical illness starting from the diagnosis or chronic conditions.

As part of our roadmap towards a seamless customer digital experience, we rolled out our next-gen app which fully integrates our customer portal with AIA Vitality program since launch this has been very widely accepted. Now moving onto AIA Malaysia on Slide 36, our business in Malaysia continue to deliver positive results in 2019 with VONB growth of 7%.

Our focus on transforming the agency channel has delivered strong results with double-digit VONB growth. We implemented a new quality requirement program in 2019 which accounted for half of total new recruits.

Quality recruits are two times most active than standard new recruits contributing to excellent of VONB growth from new agents in 2019. Our strategic partnership with Public Bank delivered strong double-digit growth from advantage distribution supported by an increase in the number of active insurance specialist.

However, partnership distribution growth was offset by lower direct marketing sales due to a decline in consumer confidence for telemarketing. Our Takaful segment continued to perform well with double-digit VONB growth driven by strong credit live saves from Bancassurance channel.

AIA Malaysia continue to strengthen our product proposition in 2019. We introduced first in the market mental health benefit to further enhance our award winning innovative health rider.

We also launched customer medical case management services through our regional partnership with Medix. Our award winning AIA Vitality program continues to expand rapidly with membership increased by over 40% in 2019.

Now let me update you on our latest market AIA Myanmar, November 2019 AIA was granted a license to operate insurance business through 100% wholly owned subsidiary. We made good progress on building a multichannel distribution platform with a strong pipeline for agency recruits in the exclusive long-term strategy partnership with AYA Financial Group and Max Myanmar Group.

We’re delighted with a promising start in Myanmar, the market with immense long-term potential. In closing, as a market leader in both Singapore and Malaysia, we sphere our distribution channels, comprehensive product propositions and the focus on delivering quality service to our customers, we remain confident that AIA’s uniquely positioned to capitalize on the long-term growth potential of this market and to deliver our brand promise of helping our customers live healthier, longer, better lives.

With that I’ll now hand over to Bill Lisle.

Thank you Hak Leh and good morning, everyone. Let me update you on the progress we’ve made in Thailand, our other markets and India.

Please refer to Slide 38. AIA Thailand delivered 6% of VONB growth supported by strong sales momentum from both the Financial Adviser program and our exclusive partnership with Bangkok Bank.

Our FA program continues to transform with quality and professionalism of our market leading agency force. In 2019, FA represented 15% of our total agents in Thailand however contributed more than 30% of the total agency VONB.

The activity ratio of our new FA agents has more than doubled that of our standard new agents driven by our focused training and development program. We’ve also continued to focus on the productivity around our entire agency force resulting in a further reduction and a number of less productive agents.

Our strategic partnership with Bancassurance and Bangkok Bank delivered very strong VONB growth voting on the successful launch of the partnership in 2018. The overall productivity for the partnership was supported by increased training of the in-branch insurance specialist as well as bank’s separate bank staff across Bangkok Bank’s nationwide retail network.

Our market leading position in protection and unit linked products was reinforced by the activation of our retail partnership with Medix. A personal medical case management in the affluent customer segment.

Digitalization had played a significant role in AIA Thailand’s continued enhancement of distribution, customer experience and operational efficiency. In particular, we added new e-payment options which makes it easier for our customers to pay premiums and has also improved persistency.

Now onto our other markets on Slide 39, overall we delivered very strong VONB growth of 27% in 2019 just let me take you through some of the key highlights by market. AIA Vietnam continued its strong track record of performance with excellent VONB growth.

Agency delivered strong VONB growth by increasing productivity through a continued focus on our primer agency strategy. Our Bancassurance channel more than doubled VONB as we increased the number of active insurance specialist and our strategic partnership with VB Bank and our other domestic bank partners.

AIA Indonesia’s VONB declined in 2019 as we continued focusing on transforming our agency. However, our business returned to growth in the second half driven by the strong performance of our strategic partnership with BCA.

New recruitment and activity management initiatives, helped drive strong growth in a number of active in-branch insurance specialist. Our business in the Philippines delivered excellent VONB growth from both our agency and Bancassurance channels.

Agency VONB growth was supported by a shift in product mix towards a new traditional protection product with comprehensive critical illness benefits modeled on our flagship protection product in AIA China. Our joint venture with BPI also achieved very strong VONB growth supported by double-digit growth in the number of active in-branch insurance specialist.

Please move to Slide 40. AIA Australia and AIA New Zealand together delivered strong double-digit VONB growth despite subdued customer sentiment and a decline in total premiums for the life insurance industry in Australia.

In New Zealand, we took control of Sovereign in July 2018 and will complete the final steps of our integration in the first half of 2020. We have strong VONB growth in the independent financial advisor channel and having launched AIA Vitality by integrating the program into our new flagship protection products.

On November 1, 2019 we were pleased to announce the executed joint cooperation agreement with CBA in Australia which enables AIA to begin manage and integrate CMLA and such allows AIA to sell its product to CBA’s extensive customer base. We also extended our Bancassurance partnership with CBA in Australia and ASB in New Zealand from 20 to 25 years.

AIA Korea’s VONB decreased in 2019 despite positive growth in ANP as margins fell in the direct marketing channel following a regulating mandated repricing in the second quarter. We also launched a new digital direct channel aimed at accelerating insurance sales to AIA Vitality members from our strategic partnership with SK Telecom.

AIA Taiwan build a very strong VONB growth primarily driven by strong Bancassurance sales which focused on insurance solutions that meet targeted customer needs for legacy planning and retirement. Finally in our other markets, I will now update on the progress of our business in India.

Please refer to Slide 41. Our JV in India delivered 66% VONB growth.

We have a diversified multi-distribution channel business with the agency channel, our diversified portfolio of ownerships and our broker relationships all contributing substantially to ANP. The business differentiated itself in the Indian life insurance market with a protection focus product strategy wherein 2019 we maintained our industry leading position in pure retail protection.

In addition, our agency force is the most specific in India. We are committed to continue growing a high quality premier agency that measured on ANP per agent generates five times productivity of an average agent in the industry.

We are executing an end-to-end digitalization strategy to deliver enhanced capabilities and service that increase digital submission, automate the underwriting process and improve customer experience through self-service. In summary, we are very pleased with the progress of our other markets and we look forward to further strong diversify growth.

Thank you very much and now let me hand over to Fisher.

Thank you, Bill and good morning, everyone. I’ll update you on AIA China’s progress in 2019 as well as our initiatives to help our people and the communities in response to the recent outbreak of COVID-19.

I will also provide more details of AIA China’s differentiated health and well-being strategy. If you can please turn to Slide 43.

In 2019, AIA China delivered a very strong performance with 27% increasing VONB. We continue to focus our executing our differentiated premier agency strategy through quality recruitment, best-in-class training and our advanced digital support platforms.

These initiatives drove further double-digit increase in active agents and higher agent productivity. AIA Xiao You, our AI Chabot provide around 250,000 instant response amongst dealing with 95% of all agent inquiries.

We have met strong progress with our total health and well-being strategy. Enhancing support to our customers across their entire healthcare journey.

Our awareness program was enhanced with integration of features and partners. We upgrade our flagship all in one protection product with expanded coverage and benefits and we rolled out our hospital network treatment management and recovery support.

We also launched the innovative product invented with closing loop end-to-end solutions of insurance protection with health and medical subjects. In 2019, we open sales and service centers in Tianjin, Shijiazhuang, Hebei.

Earlier results are encouraging and our experience has been available as we plan for future expansion. Following the announcement of the further opening of Mainland China for foreign lifer, we have applied to convert our Shanghai branch into a subsidiary.

Subject to regulatory approval, this will form the foundation for our geographic expansion plans and if we continue our preparation for this opportunity. It will sustain our performance by AIA China in our industry contacts.

Once again demonstrate that we have the right strategy, the right distribution and right products to benefit from the structural growth drivers in Mainland China’s life insurance market. Moving to Slide 44, as the COVID-19 outbreak.

The spread of COVID-19 has impacted customer and business sentiment and people are generally avoiding public places and face-to-face meetings. AIA China has implemented initiatives to support our customers, employees and agency force.

While reluctance to have face-to-face activities for certain reasons, we rapidly enhanced our digital platforms to enable agent recruitment, training as well as activity management to be conducted fully online. Our newly enhanced sales portal enables our agents to complete the entire setting process remotely for our key products.

We have launched series of customer engagement agent recruitment and retention improvements to help them maintain our agency momentum and retention. Supporting our customers and communities is a priority.

For confirm the COVID-19 cases, our customers are entitled to extra death benefits and our OUM [ph] policy holders are offered 30% additional summer shop. A new green service channel including special case management services has been launched to support our customers.

We’ve provided free insurance coverage to volunteer medical workers in selected hospitals and we donate medical supplies throughout partner, charity organizations. We have also supported WeDoctor by funding their free online consolation services.

Our staff and our agents are fully committed to supporting our communities and customers during this current tough times. Next, I want to share some details of AIA China’s health and well-being strategy and how this further differentiate our business.

Please turn to Slide 45. AIA China has been expanding our customer proposition from protection focus to total health and well-being by providing value added support to our customers across their entire healthcare journey from prevention, protection to recovery.

Our enhanced awareness program offers a variety of healthcare activities and rewards to engaged members and to help them lead a healthy lifestyle. As end of 2019, we had over 500,000 members and they have upsell ratio more than two times non-members.

We launched our medical network at the beginning 2019 to support our high end customers and we have already directly contracted more than 650 domestic and international providers in major cities with direct billing services. We’ve provided technical services to them when they are in need including a 24-hour hotline, for appointment, claim service and personal kit management.

Our innovative products are tailored to specific customer needs and leverage our services from WeDoctor and other partners to support our customers throughout their individual medical and recovery journey. We also launched our new chronic disease management platform to provide expanded branch of the services for our group scheme members including online, consultation, diagnosis, prescription, medicine delivery and clearance [ph].

In closing, I’m pleased with strong progress we have met in Mainland China and I’m looking forward to continuing to capture opportunities available to us. Thank you very much and now let me hand back to Keng Hooi.

Thank you, Fisher. I’m now on Slide 47.

I’ve said many times that AIA is not immune to market volatility and external shocks. While 2019 saw some headwinds this morning we’ve heard that we have remained focus on executing our strategic priorities supporting continued growth across our key metrics.

The first few months of 2020 have seen the emergence of the COVID-19 virus. Jacky and Fisher covered some of the initiatives to support our agents, our customers and our wider communities.

Since late January we’ve seen a significant impact on the Group’s new business sales from reduced face-to-face meetings. AIA has successfully managed through many different economic cycles over the last century.

AIA remains financially strong and in 2019, we paid out more than $14 billion in benefits and claims to our customers. We had the leading insurance brand in Asia and we exist to support our customers when they need it.

While our business faces near term challenges we manage AIA for the long-term to capture the tremendous opportunities available to us across Asia Pacific. Slide 48 reminds you of the powerful structural drivers that underpin AIA’s continuing ability to deliver profitable growth over the long-term.

Rapid urbanization increasing wealth and low levels of private insurance continue to drive the substantial growth opportunities available for all of our business. Middle class growth provides an additional and powerful structural driver.

We are in a midst of a period where more than 1 billion people will enter the middle class across China, India and our emerging Asian countries by 2025. This structural drivers across all of our markets will generate a rapidly growing need for professional advice, long-term savings and protection.

Turning to Slide 49, AIA is a unique position to leverage this incredible Asia potential. We have 100% ownership of nearly all of our businesses across Asia Pacific and our brand and financial strength benefit from our 100 years history.

AIA’s strategic priorities are fully at line with structural growth drivers across our markets. We have worked hard for decades to build our distribution platforms.

Distribution is key and scale and quality of our platforms are sustainable, competitive advantages for AIA. You have heard today how we continue to strengthen and differentiate AIA using digital and value added services.

Our results today are impressive. In 2019, VONB from both agency and partnership distribution was six times the VONB at IPO.

Our businesses Hong Kong and Mainland China each delivered more VONB than the entire Group in 2010 and our other market segment has now surpassed Thailand. While we’re proud of this achievements the scale of our future opportunity is immense and growing.

All of AIA’s 18 [ph] markets offer excellent prospect for delivering sustainable growth for our shareholders. However I’m particularly excited about our opportunities in Mainland China, emerging Asian and India.

And AIA’s platform enables us to take advantage of all this opportunities at scale. In particular, we have unrivalled distribution strength as shown on Slide 50.

Scaled quality and breadth of our distribution platform makes it very difficult to replicate. Proprietary agency remains our core distribution channel.

You heard from Jacky about ongoing drive to improve agency quality and how we leverage technology. This helps to ensure that our agent are able to meet the growing demands of our customers.

The agency is complimented by our expanding group of strategic partners including some of the leading financial players in our markets. We’ve started a multi-year digital transformation of how we work with our strategic bank partners.

In spite of our excellent results since IPO, we’re not complacent and continue to focus on enhancing our capabilities. Across all of our markets distribution is key to assessing the tremendous opportunities for profitable growth that are available to AIA.

Finally Slide 51, AIA is a unique company in the right place at the right time. We have significant and sustainable comparative advantages.

Clear and aligned strategic priorities and we continue to focus on execution. AIA also benefit from an experienced and proven management team.

Although I will soon be leaving that team. I’m delighted to be passing the role of Group Chief Executive and President onto Lee Yuan Siong.

Lee Yuan Siong brings invaluable experience, skills and talent to AIA and I’m certain that he will drive the Group to new heights. He’s here with us today and I would like him to say a few words.

Thank you, Keng Hooi. I’m very excited to sit on the role of leading AIA.

A company which I’ve long admired. It is my job to take advantage of the immense opportunity in Asia.

Today I will not talk about my vision for AIA that is for later. After less than two weeks at AIA, it is already clear to me the depth of talent across the Group and I’m really looking forward to leading this incredible organization.

Thank you Lee Yuan Siong. As you know I will retire from my role as Group Chief Executive and President in May.

I’ve been privileged to lead this remarkable Group for the past three years as we’ve continue building on our track record since IPO. Our focus on executing our strategic priorities has enabled AIA to deliver continued growth across all of our key financial metric in 2019.

I’m confident that AIA is ideally position and we’ll continue to deliver long-term value for our shareholders as we help our millions of customers live healthier, longer, better lives. Now over to you for questions.

Thank you.

The first one is on interest rate, predictably. So just to clarify the sensitivity the graph [ph], the greater than 300% solvency ratio and 7% EV down, that was for mark-to-market earlier this week and was that for interest rate and equities and other asset classes or just interest rate?

Related to that, obviously we have the sensitivity for new business embedded value IFRS 4 lower interest rate but that’s a parallel shift. Can you help us understand what the impact would be a for a slightly more flatter yield curve environment?

And on Slide 62, what is the message here, is that if you change the accounting then the impacts that we saw in 2019 will not recur because you would make that change at the outset, but in order to achieve that, would you have to take a step change reduction in the OPAT to adjust that accounting standard? The second question is effectively around new business sales.

Just wanted to understand, I understand obviously restrictions will have an impact how much of that offset by online sales if at all because clearly you can do most things it would appear online. But obviously just wanted to understand if there has been a substitution effect or is that still remains a work in progress.

Thank you.

Let me get Garth to answer on the interest rate. Obviously, there’s a lot of volatility out there.

It’s on daily basis. Garth and then he’ll answer on the online sales.

Thanks Kailesh, few questions there. Clearly the business that we sell it long-term saves in protection business rather than spread products and then we have a both a robust financial position.

I said that our solvency at AIA. Co was above 300% and all our businesses meet their prescribed capital requirements that’s because we have a liability led approach matching our assets and liabilities as closely as possible.

The sensitivity I gave was to give some indication of the embedded value if interest rate is moved that was done by looking at a shift in interest rate. I mentioned a shift of 140 basis points reduction across the entire yield curve and also obviously adjusting the current rates.

So on that basis, does the EV would fall less than 7%? For our new business obviously we actively reprice to reflect the changing environment as we adjust our pricing assumptions based on expectations of future experience both economic and operating.

We also obviously invest in other things than government bonds. We have a portfolio of bonds, copper bonds that you see in the portfolio and equities.

With large part of our business being business where we can adjust the returns for policy holders through policy but hold the bonuses. So obviously any impact in market fluctuations emerges in investment variances in the EV analysis movement and we’ve seen the cumulative variances since IPO 850 million positive.

In terms of the one-time change, there’ll be slight adjustment and then obviously we’ll explain how that works through at the interim. We can go into more detail offline as to how exactly that works, but the big difference is that the - instead of the bonuses being fixed and the difference between the assumptions we have in setting the bonuses and the interest rate that we currently have coming straight through them we have a basis whereby we would reflect that as we do with our par funds effectively.

It’s technical and I’m happy to take it offline and or you can talk to us.

On your - Kailesh on your question on online sales, obviously the - because of the challenges of doing face-to-face meetings and all that, our business has shifted towards more digital and online. I just want to mention because China is one that is most affected the whole country is being locked down during the whole period of - the period until more really.

And the China team under the leadership of Fisher has been very quick to move a lot of people move to online. As it turns out, the online way of doing things has very quickly got a lot of our agents back into activities.

For instance in terms of online, morning meeting for agents, 70% of our agents log in online to participate in the meeting. Recruitment activity is very high and there are many - joined recruiting seminars that we run in China and there’s very strong recruitment of new agents that continue.

On the sales side, unfortunately there is some impact due to what is happening there. As you know most of our sales in the past are done face-to-face by the agent and people - our agents are slowly shifting towards online sales.

I’ll say that recently we see the number going up to about 60% of our sales done online, without any face-to-face interaction. But still it takes a bit more time for a lot more of the sales to move to online.

It’s not going to completely replicate what has been done in the past. But we’re pleased to see the development in China and when is to.

Can I just briefly come back on that second point about sales done online? Has it led to a shift in the type of product are sold?

Are you selling a different product mix online versus what you would have done if it was face-to-face? I’m not sure if Garth has answered the question around the impact of a flatter yield curve.

Let me address the question on online sales. There’s no change in terms of product mix.

I think it’s all about allowing our people to do digital signature and sign off the whole deal. So yes, it works out well.

But as I say, our business has always been done via agency on a face-to-face basis that is the strength of our business in China. So in a way the face-to-face part is still very critical here and overtime we hope to see that improving.

Garth on?

I think I gave the sensitivities there, Kailesh and I also gave an indication that would result in 10-year US treasury rates of 50 bps and 100 bps at 30-year and flat thereafter. Yes.

Thank you very much.

Two questions around bond and new interest rate. Firstly, for Garth just clarify a bit more, currently on EV since its 7%, what do you see 10 drift to what would be the EV sensitivity there.

And secondly on that accounting change, you’re allowed to the policy holder bonus assumptions and interest rate assumption locking all other assumptions as well mortality, morbidity recruitments. So I’m assuming locking all assumptions there so you have to [indiscernible] current assumptions, so is that the case and if that’s the case, that we mean your liability going forward will be moving whether investment result and operating variances.

And then one last is of clarity, on what’s your relative liability ratio at this moment. What was it - roughly?

Thank you.

Garth, you want to answer that. Maybe some of this you may have to take offline with Thomas.

Yes, especially the accounting treatment. I think the important thing to note is there, is the accounting treatment what we’re saying as on Slide 63.

You’ll see the current accounting treatment under IFRS 4 effectively assumes that policy holders, bonuses based on the investment expectations upon the sale and then those bonuses do not change. They basically set at issue and what happens in practice as we’re done with our equities and the treatment of equities in the IFRS 4 accounts, as equities move, bonuses move and that’s reflected in the IFRS 4 accounts now.

What we have in to-date is reflected the way that interest rates then impact bonuses but the intention is to do that to make it more reflective of the economics. But the other assumptions turn to the question would be remain at the locked in level it’s not case of unlocking it’s just a case of presentation in the IFRS 4 accounts.

Yes.

And your EV sensitivity don’t change your risk, is that right?

Yes you have the sensitivities in the pack.

Okay.

With risk discount rate as you’ll see from as we progressively changed our investment assumptions over the years, the difference between the risk free and the risk discount rate reflects the risk inherence in producing the profits that emerged and that usually changes consistently.

Garth, I also have a question for you about the sensitivity that you showed in your presentation, you mentioned that 50 bps decrease in interest will lead to 1.3% deduction for embedded value. Can you maybe explain to us, so do you mean that you just reduce both the interest rates and also the with these countries?

And also how do you trade with the adjusting that orders? And also for this one, do you assume that for the - and other things are unchanged?

Do you also consider is there any other factors they consider maybe policy holders in turn will also be reduce because of the lower yield? I mean what you offer to your customers - can you maybe just give us more color on this one?

So this is the first question. Second question is about, I think Keng Hooi mentioned about several times about the distribution very unique for AIA.

So maybe can you just give us some colors about how the recruitment is now in Hong Kong and also in China? And lastly, I know that we should not solely focus on your value of new business margin.

But I think the for China the margin is already 93%, 94% and some of other China insurance company also mention about intensive competition from small and medium sized company particularly for the protection products. So what is the overall value of new business sales and also the margin outlook in China?

Thank you.

Yes. I’ll take the EV question first because that’s very simple.

I think the critical thing to remember is that the EV is an economic approach and so as you reduce the interest rates in the sensitivity or you increased the rates in sensitivity then the current rates will change accordingly reflecting the same risk involved in producing future cash flows. And also policy holders and so on.

So it will be consistent, it’s looking forward and taking an economic approach. Whereas the IFRS 4 accounts non-economic.

You can see further details on Page 202 of the accounts.

First, Charles on the margin. I’ll say you actually answered the question.

We don’t focus on margin, we focus on the absolute VONB number. We expect competition all the time.

As we share with you our differentiated in terms of our agency in China allow us to sell protection products on consistent and long-term basis, that’s what we’ve been doing. Let me pass over to Fisher in terms of the agency recruitment and then after that perhaps Jacky can talk about the Hong Kong recruitment.

Just to say that, earlier I mentioned that because of the online approach the recruitment has been strong. Let me pass over to Fisher.

Fisher?

As Keng Hooi said, AIA China has responded very quickly with a comprehensive initiative to support our agency force. For example, we enhanced our digital platform and the leverage our solutions move our clients to smart meeting [ph] and also internet - video conference and broadcasting, to conduct online agency recruitment, interview.

We’re fully online. Our agents offer very high quality and the morale is very good.

As Keng Hooi said, we do have very strong recruitment during this lockdown period. I also want to talk about the competition.

At AIA China we have stay focused on executing our differentiated strategy. The premium agency strategy and also our total health and awareness proposition.

AIA China has most productive agency force, master key player. For example, revenue will be per agent is 4.9 times industry average.

I think our full time professional agents can provide high quality advice and are better able to serve the needs of our customer. Our total health and awareness solutions [indiscernible] long-term savings for our physician, design to meet specific needs of our customers who high value the professional service of offered by our premier agent.

So I think the competition has been and will always be there. But we’re confident that our differentiated strategy will continue to set AIA stand apart and put us in advantage position.

That’s all thank you. Let me pass to Jacky.

In respect of AIA Hong Kong agency I have to say that, we’re one of the best agency force in the world. This is relay model and our premium agency strategy and as I’ve said before in 2019 our number of active agent and recruitment in Hong Kong continue to grow throughout 2019 and in the current challenging environment because of COVID-19, Hong Kong agency force export a number of digital tools is really good testing of this situation.

Our agency force in Hong Kong conduct e-morning meeting. They go through iAcademy e-training and including recruitment we also have iRecruitment, digital tools to recruit agent.

So in the past, one or two month we continue to able to recruit agent prior to say that, in view of COVID-19 the impact is more social distancing, so there’s still an impact on this because of people avoiding face-to-face contact. But I have to say that we’re really one of the best agent force in the world and we’re well positioned to capture the long-term opportunities we have in Hong Kong.

Charles, I had to say these okay, Jacky is very modest. He says it’s one of the best.

I’ve been in this business 40 years. The Hong Kong agency is best in the world, to me and they’ve been very, very strong despite all challenges we’re facing.

Last year, domestic business in Hong Kong grew by double-digit and I’m confident when all the short-term impact of what we’re seeing are over, our Hong Kong business will continue to grow and will be strong going forward into future. We’ve always talked about our agency, our premier agency our differentiated agency in China.

Our strong agency in Hong Kong and all our agency all over markets. All our markets, we all focus on premier agency.

We’re not following other companies. Other company they focus on pure numbers.

We look at only premier agency, highly productive agents that is the difference between AIA Group and a lot of our competitors and that is a difference that continue to help us grow on a sustainable basis going into future.

I also have three questions today. Firstly, I want to follow-up on the COVID-19 impact on China or just want to go to a bit more specific.

I presume that currently in China most of the new recruits are predominantly done online. Are we actually seeing any significant changes in the profiles of these agents for education background, agents previous work experience etc.

when we’ve done these recruits online versus previously mostly offline? And also interestingly Fisher just now mentioned WeDoctor.

I understand that the new business contribution from WeDoctor might still be insignificant for us, but are we really seeing a pick up in the momentum in this kind of innovative channel recently given the virus outbreak and the lockdown situation in many cities in China. While secondly, is about our new branches.

I understand that our Tianjin and Shijiazhuang branches became operational all things last August. Is it possible, if management could share with us differences in terms of the agency background, productivity and product mixes and if these new areas versus our existing footprint in China?

Just want to look at our strategy in these areas. And lastly, just want to follow-up on the accounting changes related to the participating funds.

Just want to confirm with management on Page 62 of the presentation deck on the bottom right we’re taking liabilities lower to reflect the lower policy holder bonuses, is the magnitude of that revision on the liability side exactly the same as the SSI [ph] changes to just want to confirm, if this is the case. Thank you.

Leon, let me answer the question around the new branches and then I’ll pass the question on COVID-19. And also, WeDoctor to Fisher and of course Garth will answer the last bit.

Yes. I watched at the branch opening of both Tianjin and Shijiazhuang.

I can tell you the quality of the agent is as good as all our other agents. The number of percentage of our agents who are graduates.

They are consistent, the same as what we see in our other branches, so we are very pleased with the new joiner in both these branches. But let me pass over to Fisher to talk about the agents recruited online and also WeDoctor thing.

Thank you, Keng Hooi. For the first question, the recruitment during this COVID-19 period.

I think the short answer is, no. We won’t sacrifice the quality.

We look at the experience of last month, it is as good as past. With the second question about WeDoctor.

I want to point out, the WeDoctor is - China. It’s a strategic partner.

The partnership with WeDoctor presents excellent opportunity to further improve our customers healthcare experience in Mainland China by accessing their market leading network of healthcare specialist and hospitals. We have started off WeDoctor sales care service package to our policy holder since last year including online consultation and appointment, hospitalization, arrangement and health assessment.

We’ve gradually deepened our cooperation with WeDoctor. For example, we launch two single disease insurance product for breast cancer and leukemia, the two very important customer segment.

This kind of product provides end-to-end solution via close loop of service, managing service and the insurance protection. In September the breast cancer protection product being the outstanding piece of financial service of all granted by the Asian Financial Corporation Association and as I mentioned earlier, in addition we also launched chronic disease management platform with WeDoctor for our good scheme members in last year.

The platform provides a wide range of service including online consultation, diagnoses and the prescription, drug delivery and we expect to continue strengthen this kind of cooperation which can benefit for the customers of the two parties. That’s all.

Thank you.

Garth?

I think again going back to the accounting treatment for the par funds. And the critical thing to remember is, the IFRS 4 accounts are not economic and so what we are looking to at this change is to make IFRS 4 accounts and the presentation of them more reflective of the economics.

If you think about it, we do that already for the equity sweep example where the policy holder bonus are locked in and then we have a variation against the what we expected from the equities as a movement. So similarly, you’d expect as we go forward there will be a difference between the interest rates that were assumed in setting the bonuses and the interest rates that are currently prevalent and be variation in the actual bonuses against the bonuses that we’re expected that will might flow through into the accounts and be more reflective of the actual position.

It’s very similar to the way that we do the statutory participating firms in the markets and if you think that the current lower interest rates will reduce bonuses then the liabilities otherwise would have stayed the same and so what we should do is increase our OPAT volume.

Thanks, Garth. We’ll take the last two questions.

Yes.

This is Stan from CICC. I’ve two quick questions for Hong Kong market.

The first is, is there been a visible change in the product mix in the second half, 2019 Hong Kong, given less and less new business are coming from MCV? Also could you put some color on the current status of the agents including morale and living standard of agents and provided they have to level off much lower income for the past six months?

Should we worry about, thank you?

Thanks Dan. Let me pass this over to Jacky, since this is a Hong Kong question.

Jacky?

Yes, thank you. First of all in respect of the product mix and I’ve to say that in 2019 the VONB margin increased because of the shift to the more profitable long-term protection and long-term saving product and that already we know the second half impact of 2019.

We made financially disciplined in managing our product to all kinds of product repricing in view of the emerging and current situation. And with respect of the agency force, I have to say that we haven’t seen any impact in the attrition of our agents and as I said the number of active agents and the number of recruitment in 2019 grown throughout the whole year.

Current situation, we believe this is temporary situation and we already activate all kinds of digital tools and also support our agency force. I also want to say for Hong Kong, the Hong Kong Government is also very supportive.

They launched VHIS and QDAP sales for over the digital platform. So we are of course we’re fully supportive of this measure and we’ll continue to discuss and work with regulatory authorities to expand the product offering.

So far, we haven’t seen any impact in persistency or agent attrition.

Yes, I’d like to say that the - obviously the Coronavirus thing is a the most changing thing - facing the world today. Our expectation is temporary, but yes significant impact as we say in our announcement in our businesses.

So first in terms of the new business will be disrupted, but I just want to say that, the team has been very proactive in terms of moving a lot of our activities into digital online. We have business contingency plans and incident management in all our markets.

I must say that I’m proud that our people manage this whole thing - this whole disruption well. We’re clearly this safety of our people and our agency is top in our mind - and we’ll do all we could to ensure that - go through this disruption and come out stronger than when we enter this particular situation.

So I’m pleased that you know everyone working very hard to make sure that we minimize the impact on our business. Obviously during this period there’s a lot of our staff, we give them flexibility to work from home particularly in both Hong Kong and China.

China obviously is mandate by the government at one stage. Honestly in China, things are getting back to normal.

This week all our staff in our branches in China has gone back to office. During the lockdown period they can’t do it, but now they’re going back to office.

So we can’t say how long the impact will be, but you can see the both the Government of China and Hong Kong has taken some very firm and strong measures to try to stop this virus. Last question.

Two questions. One is also probably on this yield trend but slightly from a different perspective.

Are you expecting a significant change for the product strategy in Hong Kong in general? Given the kind of declining real and the potential impatient of the solvency 2 in couple of years.

Are you seeing any one exiting from guaranteed segment? We understand that for AIA some par funds with probably low guarantees.

Are you expecting that to change overtime to maybe losing product? And if you can give us some breakdown, say how big your savings products in Hong Kong, that will be great.

The second question is probably on China. So we’re applying for this China subsidization when do you expect this to be complete, in terms of impact we understand there’s going to be some capital release, can you give us some color around that?

And maybe you give us some full perspective of this change, any tax implications or other benefits you can enjoy being a subsidiary going forward for your China expansion? Thank you very much.

Let me get Garth to answer Jenny, your first question.

I think Jenny your first question was around our product strategy I believe in Hong Kong. That will remain as it already is focused on protection and long-term savings.

We sell a variety of products and I don’t think there’s an expectation to dramatically shift that product mix from a current mix. We’ll continue to sell the products that we’re selling.

The savings products are predominantly participating product and they’re based on long-term to create bonuses and returns for our policy holders.

Jenny as you know the announcement on the opening the full opening of the China market only recently, the opening was from 1 January, 2020. So we’re delighted that market is fully opened to foreign players.

We’ve been waiting for this for many years as you know. We’ve been asked many times, will this come?

So it comes, yes. We have submitted our application to subsidiarize at the end of December, so now is with CBIRC.

We’re working very closely with the regulators, CBIRC to again our business subsidiarize. Once we get the approval, our plan is to submit for new geographies.

So I think the whole process has gone as smoothly as we’re hoping for. And I’ll expect hopefully all these things to be done before I retire.

So I’m sure it will get done soon. So we’re hopeful that we’re making good progress in this area.

Okay, thank you everyone. If you have further questions come through to Investor Relations.

Thank you.