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FINANCIAL AND OPERATING REVIEW
O
VERVIEW
FINANCIAL AND OPERA
TING REVIEW CORPORA TE GO VERNANCE FINANCIAL ST A TEMENTS ADDITIONAL INF ORMA TION
DISTRIBUTION
AGENCYAIA’s proprietary agency network remains our core distribution platform. Our agents are often the first point of contact for customers looking to obtain financial advice in our markets and our commitment to building the quality of our agency distribution ensures that we develop and maintain deep and long-term relationships with our customers. These provide us with many opportunities to offer advice and support to help meet their ongoing long-term savings and protection needs as individual circumstances change. Our agents remain an important competitive advantage for AIA and provide us with the scale and reach to realise the substantial growth opportunities that exist across the region.
The disciplined execution of our Premier Agency strategy has generated excellent growth in 2015 with agency VONB up by 25 per cent to US$1,691 million. This represents 72 per cent of the Group’s total VONB. ANP grew by 15 per cent to US$2,559 million and VONB margin increased by 5.1 pps to 66.1 per cent. These excellent results were achieved by further strengthening the selection of new agents, focusing on best-in-class training and by equipping agents with industry-leading technology to ensure consistent delivery of a high-quality customer experience. Quality recruitment and rapid activation of new recruits are important pillars of our Premier Agency strategy. We have adopted sophisticated recruitment practices through the
Note:
VONB and VONB margin by distribution channel are based on local statutory reserving and capital requirements and exclude pension business.
increasing use of segmentation to target high-calibre prospective agents with the ambition to develop a long-term professional career with AIA. We have expanded our in-house onboarding programmes for new agents to ensure our growing agency force is equipped with the required skills and knowledge to provide professional advice to our customers. As a result, the number of active new agents has increased alongside improvements in agent productivity levels in 2015.
Our efforts in agency segmentation include a focus on individuals who aspire to achieve Million Dollar Round Table (MDRT) status, an important industry benchmark for our agents to strive for. In 2015, the growth in the number of our MDRT qualifiers has again been strong with our operation in China, in particular, delivering an outstanding performance with an increase of 71 per cent compared with 2014. AIA is the world’s largest insurer for MDRT membership, thanks to our strong positions in Hong Kong, Thailand, Singapore as well as China. Alongside MDRT qualification, AIA’s extensive range of
development programmes for agents continue to drive growth in activity levels and productivity across the channel. Comprehensive skill-based training, targeted sales outcomes and effective selling practices have been embedded throughout our agency platform. In addition to our in-house training programmes, we worked closely with GAMA International and LIMRA, our international training partners, to continue to enhance our leaders’ capabilities to deliver effective sales leadership and practical training in the field.
AIA:#1
IN THE WORLD FOR
MDRTMEMBERS
Our agency force continues to benefit from our ongoing investment in innovative point-of-sale and management support technology. Our market-leading interactive Point of Sale (iPoS) platform has improved the efficiency, productivity and professionalism of our agents since its launch in 2012. iPoS is now the primary method of new business application submission for our agency channel. In 2015, we integrated iPoS into our next generation interactive Mobile Office (iMO) platform. iMO
comprises a comprehensive suite of applications that support our agents and agency leaders in managing their businesses, including daily sales activity levels, training and recruitment. This pioneering technology will help our agents continue to deliver a best-in-class experience for our customers.
PARTNERSHIPS
AIA’s partnership business is an important part of our distribution platform, extending our market reach and broadening our access to prospective customers across the region. By focusing on sustainable profitable growth through our long-term strategic relationships, our partnership business contributes an important and growing source of new business for AIA. In 2015, VONB grew by 29 per cent to US$658 million with ANP up by 13 per cent to US$1,432 million and VONB margin higher by 5.6 pps to 46.0 per cent. Partnership distribution accounted for 28 per cent of the Group’s total VONB in 2015.
Bancassurance
AIA’s bancassurance business delivered excellent results from our commitment to disciplined execution and our selective approach to the range of products we offer through this channel. We have continued to benefit from our collaborative partnerships with highly-regarded regional relationships and local domestic banks so that bancassurance now represents 38 per cent of our overall partnership distribution ANP. We have worked closely with our bank partners to improve lead generation with our proprietary iPoS platform and increase in-branch productivity through the roll-out of a broad range of sales management training programmes. At the same time as expanding our sales through branches, we have also developed new business streams with our bank partners, particularly through direct marketing opportunities to different customer segments within the bank’s existing customer base. VONB grew by 48 per cent compared with 2014 as a result.
By way of example, in the Philippines we worked closely with the Bank of Philippine Islands (BPI) to continue to grow our joint venture partnership by launching a new in-branch sales model. We continued to engage with BPI’s relationship managers to improve activity management and lead generation by increasing the penetration of in-branch insurance specialists across the network. During 2015, the average number of active BPI branches increased by 21 per cent and we more than doubled ANP production per branch leading to significant growth in VONB and making our joint venture with BPI the largest bancassurance player in the Philippines.
Our long-term strategic partnership with Citibank, N.A. (Citibank) across the region has also continued to make good progress. AIA, together with Citibank, carried out a number of initiatives during the year, including new training programmes for Citibank’s sales and distribution staff, increasing recruitment of in-branch insurance specialists and the introduction of iPoS for the bank’s in-branch specialists. This has led to average ANP per seller of more than two-and-a-half times the figure in 2014 leading to a significant uplift in VONB and the number of front-line sales staff has grown by 60 per cent since the end of 2014. We also expanded our telemarketing activities with Citibank’s customers during the year.
Direct Marketing and Other Partnership Channels
Our direct marketing channel achieved double-digit VONB growth in 2015, supported by strong growth in Malaysia and Taiwan in particular and the expansion of our direct marketing operation with Citibank during 2015. The Group’s overall performance was moderated by the changing industry environment in Korea following the stringent and wide-ranging regulatory restrictions imposed on the industry over the last 18 months. VONB from direct marketing increased by 34 per cent excluding Korea. Our other intermediated channels, including IFAs, brokers, private banks and specialist advisers, broaden our access to a wide range of demographic and socio-economic groups across the region. Our emphasis during 2015 was on deepening relationships with these partners by providing dedicated sales and service support and offering targeted propositions to meet the distinct needs of their customers. These channels continued to grow strongly and contributed significantly to our partnership distribution business in 2015.
FINANCIAL AND OPERATING REVIEW
O
VERVIEW
FINANCIAL AND OPERA
TING REVIEW CORPORA TE GO VERNANCE FINANCIAL ST A TEMENTS ADDITIONAL INF ORMA TION BUSINESS REVIEW GROUP INSURANCE
Group insurance remains an important part of our product strategy among the 1.8 billion employee population in Asia. AIA has a market-leadership position in the Asia-Pacific region underpinned by our distribution and product capabilities serving over 16 million individual in-force employee benefits and group scheme members from our more than 120,000 corporate clients. We offer flexible products and employee services, allowing us to support our multinational corporate and small-and-medium sized enterprise (SME) clients as they compete for the best talent. In 2015, we introduced new products in several of our key markets that enable scheme members to choose additional voluntary benefits beyond those provided by their employer representing a source of additional new business for AIA.
In addition to our existing well-established presence throughout the region, we strengthened our relationships with employee benefit consultants and brokers, working closely with them to develop tailored solutions and deepen penetration within their large corporate client base. In 2015, we enhanced our sales tools by adding new applications to iPoS specific to the group insurance market, and increased training to enable selected agents to better support the significant SME segment in Asia. Our work with our bank partners to provide solutions to their SME and corporate clients is also an important and growing source of new business. AIA also offers multi-territory risk-pooling solutions through the AIA Asia Benefits Network which was launched in 2014 and is the first and only Asian-domiciled pooling network operated by an Asian-headquartered life insurance group. It enables AIA to address the opportunity presented by the rapid rise of Asian-
headquartered multinational companies and the expansion of global corporations across the region. AIA remains well-positioned to capture the significant growth potential in group insurance as we continue to provide innovative products and enhance service levels for both employers and individual members.
MARKETING
AIA’s brand positioning as “The Real Life Company” provides a powerful platform to engage with our stakeholders and help us communicate our commitment to making a real and positive impact on people’s lives. In 2015, we used the significant potential of digital channels to communicate The Real Life Company story. Digital-led campaigns that featured mini-films supported by integrated television, print, outdoor and social media elements have achieved considerable success in Hong Kong, Malaysia and Korea, generating millions of views. In Hong Kong, the mini-film “Love is in Every Moment”, inspiring people to appreciate the time they spend with their loved ones, received an exceptional response with more than 10 million views within eight days of launch. We continued to leverage our partnership with Tottenham Hotspur Football Club (Spurs) to engage customers and highlight AIA’s commitment to promoting active participation in sport through events such as football coaching clinics, customer and employee engagement events and other media opportunities. AIA partnered with Spurs to engage young people and children from various markets including China, Malaysia, Korea and Australia, offering opportunities to take part in football tournaments with the chance to visit Spurs’ home ground in London, the White Hart Lane stadium.
Our next generation interactive Mobile Office (iMO) platform comprises a comprehensive suite of applications that support our agents and agency leaders in managing their businesses.
Our long-term strategic partnership with Citibank across the region has also continued to make good progress.
Note:
VONB and VONB margin by distribution channel are based on local statutory reserving and capital requirements and exclude pension business.
CUSTOMER ENGAGEMENT
AIA has an in-force customer base of more than 29 million individual policies and over 16 million participating members of group insurance schemes. Cross-selling and upselling initiatives using customer analytics offer AIA a significant and unrivalled opportunity to generate new business by meeting customers’ evolving needs. VONB from these targeted marketing initiatives to existing customers has trebled since the inception of this programme and now provide a growing source of new business for the Group.
As part of our ongoing efforts to better understand our customers’ needs and expectations, we launched a new online customer community platform under our ongoing Customer Understanding Programme. The platform aims to capture customer insights, supporting the development of new products and improving services through timely and targeted surveys. We have over 4,000 active customer members from across our key markets currently providing us with valuable feedback and we remain committed to enhancing customer experience by focusing on the services and products that matter most to our customers.
PRODUCT DEVELOPMENT
AIA has developed a comprehensive range of products to meet changing customer needs for financial protection and efficient long-term regular savings as they go through their lives. AIA’s regular premium unit-linked products provide flexibility for our customers, allowing them to personalise the mix between wealth accumulation and protection appropriate to their different life stages. In Malaysia, the take-up of life and health protection grew significantly over the year with the launch of the “Lifestage Plan Option” increasing protection rider attachments by 24 per cent
compared with 2014. In Thailand, we were the first provider to offer regular premium unit-linked products combined with protection rider policies and these products have received a very positive market response with VONB more than double the figure in 2014.
The provision of adequate critical illness cover has been one of our main areas of focus in 2015. In Thailand, our marketing campaign to raise awareness of the critical illness protection gap has continued throughout the year with the total amount of critical illness coverage on new business up by more than 60 per cent. We reinforced our protection market leadership position in China with a critical illness product enabling multiple claims, following our success with a similar design in Hong Kong. Our new participating products in Singapore with cover added for death, disability and critical illness alongside long-term savings have also contributed strongly to VONB growth during the year.
In 2015, AIA Vitality was launched in Hong Kong and the Philippines, joining our existing programmes in Australia and Singapore. This comprehensive, science-backed wellness programme is a key component of AIA’s commitment to promoting healthy living and differentiates our protection proposition to customers by rewarding healthy lifestyle choices.