友邦保险(01299) - 2021 - 中期财报

Group Chief Executive and President's Report Overall Performance & Strategic Highlights AIA achieved strong performance in H1 2021 with growth in key metrics, driven by technology transformation and strategic partnerships 2021 H1 Key Financial Indicators | Indicator | 2021 H1 (USD million) | Y-o-Y Growth (Constant Exchange Rate) | | :--- | :--- | :--- | | Value of New Business (VONB) | 1,814 | 22% | | Operating Profit After Tax (OPAT) | 3,182 | 5% | | Underlying Free Surplus Generation | 3,374 | 6% | | Embedded Value (EV) Equity | 70,102 | 5% | | Free Surplus | 17,900 | 28% | | Group LCSM Coverage Ratio | 412% | 38 pps | | Interim Dividend (HK cents per share) | 38.00 | 8.6% | - Except for Hong Kong, the value of new business in all reported segments exceeded pre-pandemic levels of H1 2019, with the Hong Kong business affected by travel restrictions[4][14] - The company accelerated its technology upgrade, with over 50% of its infrastructure migrated to the cloud, significantly improving customer service and distribution efficiency[5][16] - A 15-year exclusive bancassurance partnership was established with The Bank of East Asia, and an agreement was made to subscribe for a 24.99% stake in China Post Life Insurance to expand market coverage and growth opportunities in Mainland China[16] Financial and Operating Review Group Chief Financial Officer's Review This section details AIA's H1 2021 financial performance, including VONB, embedded value, IFRS profit, balance sheet, capital position, and dividend policy Overview and Key Financial Summary AIA delivered strong H1 2021 financial results with a 22% increase in VONB and a 5% rise in operating profit after tax, supported by a robust capital position 2021 H1 Key Financial Summary | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 1,814 | 1,410 | 22% | | Operating Profit After Tax (OPAT) | 3,182 | 2,933 | 5% | | Underlying Free Surplus Generation | 3,374 | 3,049 | 6% | | Embedded Value (EV) Equity | 70,102 (at end of period) | 67,185 (at end of period) | 5% | | Free Surplus | 17,907 (at end of period) | 13,473 (at end of period) | 28% | | Group LCSM Coverage Ratio | 412% (at end of period) | 374% (at end of period) | 38 pps | | Dividend per Share (HK cents) | 38.00 | 35.00 | 8.6% | - The growth in value of new business was broad-based, with all reported segments exceeding pre-pandemic levels of H1 2019, except for Hong Kong[19] - The company entered into a 15-year exclusive bancassurance partnership with The Bank of East Asia and agreed to invest $1,860 million for a 24.99% stake in China Post Life Insurance to expand its market presence[21] New Business Performance VONB grew 22% to $1,814 million in H1 2021, driven by geographic diversification and multi-channel distribution, with a notable increase in VONB margin 2021 H1 New Business Performance Overview | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 1,814 | 1,410 | 22% | | Annualised New Premiums (ANP) | 3,060 | 2,579 | 13% | | VONB Margin | 59.0% | 54.4% | 4.2 pps | - The agency channel's VONB grew by 25%, accounting for 82% of the Group's total VONB[4][19][23] - Mainland China's VONB grew by 20% on a like-for-like basis, Hong Kong's local customer segment VONB grew by 16%, and Thailand, Singapore, and Malaysia grew by 52%, 32%, and 89% respectively[5][24] Embedded Value Equity Embedded value equity reached a new high of $70,102 million as of June 30, 2021, a 5% increase from year-end 2020, driven by strong operating profit and positive investment returns Embedded Value Equity and Operating Profit | Indicator | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Embedded Value (EV) Equity | 70,102 | 67,185 | 5% | | EV Operating Profit | 4,092 (H1) | 3,878 (H1) | 1% | | EV Operating Return | 12.9% (annualised) | 12.9% (annualised) | (0.3) pps | - EV operating profit included a positive operating variance of $363 million, reflecting the Group's overall experience continuing to be more favourable than embedded value assumptions[19][25] - The growth in embedded value was achieved after the payment of the 2020 final dividend of $1,558 million[19][28] Embedded Value and Value of New Business Sensitivity This analysis shows that embedded value is sensitive to equity price changes, while the value of new business is positively impacted by rising interest rates Embedded Value Sensitivity (June 30, 2021) | Scenario Change | EV Change (USD million) | Percentage Change | | :--- | :--- | :--- | | 10% increase in equity prices | 1,312 | 1.9% | | 10% decrease in equity prices | (1,307) | (1.9)% | | 50 bps increase in interest rates | 90 | 0.1% | | 50 bps decrease in interest rates | (533) | (0.8)% | Value of New Business Sensitivity (June 30, 2021) | Scenario Change | VONB Change (USD million) | Percentage Change | | :--- | :--- | :--- | | 50 bps increase in interest rates | 50 | 2.8% | | 50 bps decrease in interest rates | (66) | (3.6)% | IFRS Profit Operating profit after tax grew 5% to $3,182 million in H1 2021, while IFRS net profit increased significantly by 47% due to positive investment fluctuations 2021 H1 Operating Profit After Tax (by segment) | Segment | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Mainland China | 722 | 640 | 4% | | Hong Kong | 1,055 | 1,005 | 5% | | Thailand | 485 | 478 | (1)% | | Singapore | 339 | 303 | 8% | | Malaysia | 194 | 148 | 25% | | Other Markets | 391 | 333 | 12% | | Total | 3,182 | 2,933 | 5% | 2021 H1 IFRS Net Profit | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Operating Profit After Tax | 3,182 | 2,933 | 5% | | Net Profit | 3,245 | 2,197 | 47% | - Excluding the impact of withholding tax on our China business and the normalisation of claims, operating profit after tax grew by 8%[20][34] 2021 H1 Earnings Per Share | Indicator | 2021 H1 (US cents) | 2020 H1 (US cents) | | :--- | :--- | :--- | | Basic Operating Earnings Per Share | 26.37 | 24.33 | | Basic Net Profit Per Share | 26.90 | 18.22 | IFRS Balance Sheet Total assets grew to $329,891 million as of June 30, 2021, with a stable and high-quality financial investment portfolio dominated by fixed-income assets Consolidated Statement of Financial Position Summary (June 30, 2021) | Indicator | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | Change (Actual Exchange Rate) | | :--- | :--- | :--- | :--- | | Total Assets | 329,891 | 326,121 | 1% | | Financial Investments | 272,619 | 271,467 | – | | Cash and Cash Equivalents | 7,149 | 5,619 | 27% | | Total Liabilities | 270,474 | 262,453 | 3% | | Total Equity | 59,417 | 63,668 | (7)% | - The fixed income portfolio (excluding government bonds) maintained an average credit rating of A-, with below investment grade or unrated bonds accounting for only 2%[51] - The carrying value of equity securities increased by $4,542 million, primarily driven by new purchases and positive market value movements[51] Liabilities Total liabilities increased to $270,474 million as of June 30, 2021, reflecting in-force portfolio growth and an increase in borrowings Liabilities Overview (June 30, 2021) | Indicator | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | | :--- | :--- | :--- | | Total Liabilities | 270,474 | 262,453 | | Insurance and Investment Contract Liabilities | 241,135 | 235,952 | | Borrowings | 9,182 | 8,559 | | Gearing Ratio | 13.4% | 11.9% | - The increase in borrowings was mainly due to net proceeds of $1,121 million from the issuance of medium term notes and securities, partially offset by redemptions of $502 million[53] Equity Total equity attributable to shareholders decreased by 7% to $58,944 million as of June 30, 2021, primarily due to fair value reserve reductions from rising bond yields Total Equity Attributable to Shareholders (June 30, 2021) | Indicator | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | | :--- | :--- | :--- | | Total equity attributable to shareholders of AIA Group Limited | 58,944 | 63,200 | | Change (Actual Exchange Rate) | (7)% | | - The reduction in the fair value reserve reflects unrealised gains on available-for-sale debt securities and is excluded from shareholders' allocated equity for a clearer representation[54] Capital AIA maintained a strong capital position in H1 2021 with a Group LCSM coverage ratio of 412% and growing free surplus to support future growth Regulatory Capital Requirements AIA fully complied with all regulatory capital requirements and was designated as an insurance holding company under Hong Kong's new group-wide supervision framework - AIA Group Limited became a designated insurance holding company on May 14, 2021, subject to the Hong Kong group-wide supervision framework[20][55] - Hong Kong's new risk-based capital regime is expected to take effect on January 1, 2024, under which the company anticipates maintaining a very strong regulatory capital position[15][19][55] Free Surplus The Group's free surplus grew to $17,907 million as of June 30, 2021, driven by strong underlying free surplus generation and positive investment return variances Free Surplus Movement Overview | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Opening Free Surplus | 13,473 | 14,917 | | Underlying Free Surplus Generation | 3,374 | 3,049 | | Free Surplus Used to Fund New Business | (921) | (703) | | Investment Return Variances and Other Items | 3,919 | (3,899) | | Dividends | (1,558) | (1,452) | | Closing Free Surplus | 17,907 | 11,771 | - Underlying free surplus generation grew by 6%, primarily driven by the continued growth and active management of the in-force portfolio[4][20][56] Group Local Capital Summation Method (LCSM) Solvency Position The Group LCSM coverage ratio was very strong at 412% as of June 30, 2021, with a surplus of $51,231 million, benefiting from the new group-wide supervision framework Group LCSM Solvency Position | Indicator | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | | :--- | :--- | :--- | | Group Available Capital | 67,675 | 59,830 | | Group Minimum Capital Requirement | 16,444 | 16,013 | | Group LCSM Surplus | 51,231 | 43,817 | | Group LCSM Coverage Ratio | 412% | 374% | - Group available capital includes $2,858 million of subordinated securities and $5,810 million of approved senior notes[58] Group LCSM Coverage Ratio Sensitivity (June 30, 2021) | Scenario Change | Coverage Ratio Change (pps) | | :--- | :--- | | 10% increase in equity prices | 2 | | 10% decrease in equity prices | (2) | | 50 bps increase in interest rates | 12 | | 50 bps decrease in interest rates | (22) | Reconciliation between Group LCSM Surplus and Free Surplus This section reconciles the Group LCSM surplus of $51,231 million to the free surplus of $17,907 million, which better represents the Group's capital position from a shareholder perspective Reconciliation of Group LCSM Surplus to Free Surplus | Indicator | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | | :--- | :--- | :--- | | Group LCSM Surplus | 51,231 | 43,817 | | Free Surplus on a consolidated basis | 17,907 | 13,473 | - Key adjustments include eligible debt capital, differences in capital requirements for AIA's China business, and reflecting a shareholder's view of capital[65] Local Solvency Requirements All of AIA's branches and subsidiaries complied with their respective local regulatory capital requirements as of June 30, 2021 - All regional market operating units complied with local regulatory capital requirements[66] Holding Company Financial Resources Holding company financial resources increased to $12,919 million as of June 30, 2021, supported by net fund inflows from subsidiaries and net proceeds from debt issuance Holding Company Financial Resources Movement | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Opening Holding Company Financial Resources | 12,388 | 8,630 | | Net Flow of Funds to Holding Company | 1,908 | 24 | | Net Increase in Borrowings | 619 | 1,055 | | Dividends Paid | (1,558) | (1,452) | | Closing Holding Company Financial Resources | 12,919 | 8,814 | Global Medium Term Note and Securities Programme AIA increased its Global Medium Term Note and Securities Programme to $12 billion and issued a total of $1.25 billion in subordinated perpetual resettable securities in H1 2021 - The Global Medium Term Note and Securities Programme was increased to $12 billion[70] - Two tranches of subordinated perpetual resettable securities were issued in H1 2021, totaling $750 million and S$500 million[70] Credit Ratings AIA and its principal operating company, AIA Co., maintained strong credit ratings from Moody's, Fitch, and S&P, with upgrades from Moody's and S&P for the Company - AIA Co. holds financial strength ratings of Aa2 from Moody's, AA from Fitch, and AA- from S&P[71] - The Company's issuer credit ratings were upgraded to A1 by Moody's and A+ by S&P, with stable outlooks[71] Dividend The Board declared an 8.6% increase in the interim dividend to 38.00 HK cents per share, reflecting a prudent, sustainable, and progressive dividend policy - The interim dividend was increased by 8.6% to 38.00 HK cents per share[4][15][72] - The dividend policy is prudent, sustainable, and progressive, supporting future growth and financial flexibility[4][15][72] Regulatory and International Developments As an Internationally Active Insurance Group, AIA is actively involved in the development of the IAIS Common Framework, including the Insurance Capital Standard (ICS) - AIA has been designated as an Internationally Active Insurance Group (IAIG) and participates in the development of the IAIS Insurance Capital Standard (ICS)[73] - Hong Kong's risk-based capital regime is expected to take effect from January 1, 2024[74] - The OECD's BEPS 2.0 Pillar One is expected to exclude financial services, while Pillar Two will introduce a global minimum tax rate of 15%[74] Business Review AIA delivered strong and broad-based business growth in H1 2021 with a 22% increase in VONB, driven by digital distribution and regional market expansion Overview and Key Business Summary AIA reported strong and broad-based business performance in H1 2021 with a 22% increase in VONB, as all reported segments recorded double-digit growth on a like-for-like basis - Value of new business (VONB) grew by 22% in H1 2021[75] - All reported segments recorded double-digit growth on a like-for-like basis[75] - Remote sales capabilities and strategic initiatives enhanced business resilience[75] Distribution The agency channel's VONB grew by 25% in H1 2021, supported by the continued enhancement of the digitalised agency value chain, while partnership distribution also showed strong growth - Agency channel VONB increased by 25%[76] - Partnership distribution channel VONB grew by 8% on a like-for-like basis[76] - AIA ranked number one globally in the Million Dollar Round Table (MDRT) for the seventh consecutive year[76] Regional Markets AIA China's VONB grew 20% on a like-for-like basis, while Hong Kong's local customer segment grew 16%, and Thailand, Singapore, and Malaysia delivered excellent growth of 52%, 32%, and 89% respectively - Mainland China's VONB grew by 20% on a like-for-like basis[77] - Hong Kong's local customer segment VONB increased by 16%[77] - VONB in Thailand, Singapore, and Malaysia grew by 52%, 32%, and 89% respectively[77] Distribution Platforms AIA achieved significant VONB growth through its Premier Agency network and strategic partnership distribution channels, supported by investments in digital tools and platforms Agency Force Agency channel VONB grew 25% to $1,574 million, with ANP up 16% and VONB margin increasing to 76.0%, driven by digital tools and remote sales capabilities Agency Channel New Business Performance | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 1,574 | 1,194 | 25% | | Annualised New Premiums (ANP) | 2,069 | 1,708 | 16% | | VONB Margin | 76.0% | 69.9% | 5.6 pps | - Remote sales capabilities facilitated over one-third of agency channel policy sales in H1 2021[79] - Social media integration helped agents identify over 1 million new sales leads, generating over $100 million in ANP[79] Partnership Distribution Partnership distribution VONB grew 8% on a like-for-like basis, with ANP up 8%, though the VONB margin decreased due to a higher contribution from Australian group insurance business Partnership Distribution New Business Performance | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 352 | 335 | (1)% | | Annualised New Premiums (ANP) | 991 | 871 | 8% | | VONB Margin | 35.5% | 38.4% | (3.2) pps | - Excluding the one-off contribution from Commonwealth Bank of Australia, partnership distribution VONB grew by 8% on a like-for-like basis[81] Bancassurance The bancassurance channel recorded double-digit VONB growth, with excellent performance from strategic bank partnerships in Thailand and Malaysia - Strong double-digit growth in productivity was recorded from Bangkok Bank in Thailand, Public Bank in Malaysia, and BCA in Indonesia[82] - New product propositions and efficient online sales processes were launched with Citibank in Hong Kong and Singapore[82] - Following Citibank's announced exit from retail banking outside Hong Kong and Singapore, the company is discussing future arrangements for the bancassurance partnership[82] Digital Platforms AIA leverages digital platforms through strategic partnerships with technology and leading consumer companies to offer online product purchases and identify customer needs through data analytics - Strategic partnerships have been established with technology and leading consumer companies with large active user bases[83] - New partnerships include TNG Digital in Malaysia and Tiki Corporation in Vietnam[83] Regional Markets Summary AIA demonstrated strong performance across its key Asian markets, with significant VONB growth in Mainland China, Hong Kong's local customer segment, Thailand, Singapore, and Malaysia Mainland China AIA China's VONB grew 20% on a like-for-like basis to $738 million, exceeding pre-pandemic levels, driven by enhanced agent productivity and geographical expansion Mainland China Business Performance | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 738 | 594 | 15% | | Annualised New Premiums (ANP) | 899 | 726 | 14% | | Operating Profit After Tax (OPAT) | 722 | 640 | 4% | - On a like-for-like basis, VONB grew by 20%, exceeding pre-pandemic levels in 2019[5][77][84] - The Sichuan branch opened, and approval was received to prepare for a Hubei branch, continuing the geographical expansion strategy[5][14][24][77][85] Hong Kong AIA Hong Kong's local customer segment VONB grew 16%, but overall VONB increased by only 2% to $313 million, offset by the decline in sales to Mainland Chinese visitors Hong Kong Business Performance | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 313 | 306 | 2% | | Local Customer Segment VONB | - | - | 16% | | Operating Profit After Tax (OPAT) | 1,055 | 1,005 | 5% | - Sales to Mainland Chinese visitors at the Macau branch gradually increased, accounting for over one-third of total ANP[5][24][77][86] - A 15-year bancassurance partnership with The Bank of East Asia was launched in early July 2021[16][21][87] Thailand AIA Thailand's VONB grew by an excellent 52% to $312 million, significantly above pre-pandemic levels, with a substantial increase in VONB margin to 93.5% Thailand Business Performance | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 312 | 199 | 52% | | VONB Margin | 93.5% | 63.9% | 29.6 pps | | Operating Profit After Tax (OPAT) | 485 | 478 | (1)% | - A successful shift in product mix towards protection and unit-linked products drove a significant increase in the VONB margin[5][24][77][88] - Strategic bancassurance partner Bangkok Bank recorded double-digit VONB growth[89] Singapore AIA Singapore's VONB grew 32% to $176 million, with double-digit growth from both agency and partnership distribution channels Singapore Business Performance | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 176 | 127 | 32% | | VONB Margin | 63.2% | 59.3% | 3.9 pps | | Operating Profit After Tax (OPAT) | 339 | 303 | 8% | - The Premier Agency strategy and digital recruitment platforms significantly boosted agent productivity, with over 60% of new recruits sourced digitally[5][24][77][91] Malaysia AIA Malaysia delivered excellent VONB growth of 89% to $157 million, representing a 20% increase over H1 2019, with a significant rise in VONB margin Malaysia Business Performance | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 157 | 81 | 89% | | VONB Margin | 61.7% | 50.5% | 11.3 pps | | Operating Profit After Tax (OPAT) | 194 | 148 | 25% | - Excellent VONB performance from the agency channel was complemented by strong growth in the partnership distribution channel with Public Bank[5][24][77][93] Other Markets The Other Markets segment reported VONB of $253 million, a 10% increase after excluding a one-off contribution from Commonwealth Bank of Australia, with strong growth in Indonesia, South Korea, and Vietnam Other Markets Business Performance | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | Y-o-Y Change (Constant Exchange Rate) | | :--- | :--- | :--- | :--- | | Value of New Business (VONB) | 253 | 240 | (1)% | | Operating Profit After Tax (OPAT) | 391 | 333 | 12% | - Excluding the one-off contribution from Commonwealth Bank of Australia, VONB grew by 10%[24][77][95] - Indonesia, South Korea, and Vietnam recorded double-digit increases in VONB[5][24][77][95] - A 10-year exclusive life and health insurance partnership agreement was reached with Tiki Corporation in Vietnam[97] Corporate Governance Compliance with the Corporate Governance Code For the six months ended June 30, 2021, AIA complied with all applicable code provisions of the Corporate Governance Code, with the exception of the reporting mechanism for the Company Secretary - The Company complied with all applicable provisions of the Corporate Governance Code during the reporting period, except for the reporting mechanism of the Company Secretary[99] - The Group Company Secretary reports to the Group General Counsel, who in turn reports directly to the Group Chief Executive[99] Compliance with the Model Code The Company has adopted a policy for securities transactions by directors and chief executives on terms no less exacting than the Model Code, with all directors confirming compliance - The Company has adopted a Policy for Transactions by Directors and Chief Executives on terms no less exacting than the Model Code[100] - All Directors, including the Group Chief Executive, have confirmed compliance with the Model Code and the transaction policy[100] Changes in Directors' Information This section discloses changes in directors' information during the six months ended June 30, 2021, including awards and changes in appointments for several directors - Mr. CHOW Chung Kong was awarded the Grand Bauhinia Medal by the Hong Kong Government on July 1, 2021[101] - Mr. George YONG-BOON YEO resigned as a director of New Yangon Development Company Limited and retired as a Senior Adviser to Kerry Logistics Network Limited[101] - Mr. Cesar Velasquez PURISIMA was appointed as an Independent Director of Bank of the Philippine Islands (BPI) and BPI Capital Corporation[101] Directors' and Chief Executive's Interests and Short Positions in Shares and Underlying Shares As of June 30, 2021, the Company's directors and chief executive held interests in the shares and underlying shares of the Company, including ordinary shares, RSUs, and share options Directors' and Chief Executive's Interests in Shares and Underlying Shares of the Company (June 30, 2021) | Director Name | Number of Shares or Underlying Shares (Long Position) | Class | Percentage of Total Issued Shares | | :--- | :--- | :--- | :--- | | Mr. LEE Yuan Siong | 633,095 (Ordinary Shares) | Ordinary Shares | < 0.01 | | | 2,318,686 (RSUs) | Ordinary Shares | 0.02 | | | 1,661,659 (Share Options) | Ordinary Shares | 0.01 | | Mr. Edmund S.W. TSE | 3,330,400 (Ordinary Shares) | Ordinary Shares | 0.02 | | Mr. Jack SO Chak Kwong | 130,000 (Ordinary Shares) | Ordinary Shares | < 0.01 | - Mr. LEE Yuan Siong's RSUs include compensation for unvested long-term incentive awards and deferred payments forfeited upon leaving his former employment[104] Interests and Short Positions of Persons Other than Directors or Chief Executive in Shares and Underlying Shares As of June 30, 2021, substantial shareholders including JPMorgan Chase & Co., The Bank of New York Mellon Corporation, The Capital Group Companies, Inc., and BlackRock, Inc. held interests and short positions in the Company's shares Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares of the Company (June 30, 2021) | Shareholder Name | Long Position (L) (Shares) | Short Position (S) (Shares) | Percentage of Total Issued Shares (L) | | :--- | :--- | :--- | :--- | | JPMorgan Chase & Co. | 1,110,600,642 | 22,351,209 | 9.18 | | The Bank of New York Mellon Corporation | 1,096,258,164 | 301,796,828 | 9.06 | | The Capital Group Companies, Inc. | 1,087,914,261 | - | 8.99 | | BlackRock, Inc. | 629,705,868 | 2,007,714 | 5.20 | - JPMorgan Chase & Co.'s interests include roles as an approved lending agent, investment manager, controlled corporation, and trustee[109] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the six months ended June 30, 2021, except for purchases by trustees for employee share schemes - Neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities[111] - Under the ESPS and RSU schemes, trustees purchased 738,388 and 6,719,800 shares respectively, for a total consideration of approximately $96 million[111] Share-based Remuneration AIA continued to implement various share-based remuneration schemes in H1 2021, including RSU, share option, employee share purchase, and agency share purchase schemes to align employee and agent interests with long-term company goals Long-term Incentive Schemes The Company adopted new RSU and share option schemes in 2020, both with a 10-year term, to replace the previous schemes that terminated in 2020 - The 2020 RSU Scheme and 2020 Share Option Scheme were adopted in 2020, each with a 10-year term[112] - In H1 2021, the Company granted RSUs and share options to employees, directors, and executives under the new schemes[112] Restricted Share Unit (RSU) Scheme A total of 9,373,814 RSUs were granted under the 2020 RSU Scheme during the six months ended June 30, 2021, with previously granted units under the terminated 2010 scheme remaining in effect - In H1 2021, a total of 9,373,814 RSUs were granted under the 2020 RSU Scheme[113] - As of June 30, 2021, the cumulative vested RSUs represented 0.049% of the issued shares on the RSU base date[113] - Group Chief Executive and President, Mr. LEE Yuan Siong, holds 1,468,714 unvested RSUs as compensation for forfeited long-term incentive awards from his former employment[114] Share Option Scheme A total of 1,849,222 share options were granted under the 2020 Share Option Scheme during the six months ended June 30, 2021, with the total number of shares available for issue under the schemes representing approximately 2.46% of issued shares - In H1 2021, 1,849,222 share options were granted under the 2020 Share Option Scheme[118] - As of the date of this report, the total number of shares available for issue under the share option schemes is 297,419,376, representing approximately 2.46% of issued shares[118] - Group Chief Executive and President, Mr. LEE Yuan Siong, holds 1,197,133 outstanding share options with an exercise price of HK$68.10[119] Employee Share Purchase Scheme (ESPS) The Company adopted a new ESPS in August 2020, allowing eligible employees to purchase Company shares and receive matching restricted share purchase units, with 738,389 matching units granted in H1 2021 - The 2020 ESPS was adopted on August 1, 2020, with a term of ten years[124] - In H1 2021, a total of 738,389 matching restricted share purchase units were granted[124] - The total number of new shares issuable under the ESPS shall not exceed 2.5% of the issued shares as of May 29, 2020[124] Agency Share Purchase Scheme (ASPS) The Company adopted a new ASPS in February 2021, allowing eligible agents to purchase Company shares and receive matching restricted share subscription units, with 146,711 matching units granted in H1 2021 - The 2021 ASPS was adopted on February 1, 2021, with a term of ten years[125] - In H1 2021, a total of 146,711 matching restricted share subscription units were granted[126] - 1,192,355 new shares were issued due to the vesting of awards under the 2012 ASPS[126] Employees As of June 30, 2021, there were no material changes in the Group's number of employees, remuneration policies, share incentive schemes, or training programmes from those disclosed in the 2020 Annual Report - Information on the number of employees, remuneration policies, share incentive schemes, and training courses remained materially unchanged from the 2020 Annual Report[127] Financial Statements Report on Review of Interim Condensed Consolidated Financial Statements PricewaterhouseCoopers has reviewed the interim condensed consolidated financial statements for the six months ended June 30, 2021, and concluded that nothing has come to their attention that causes them to believe the statements are not prepared in accordance with HKAS 34 and IAS 34 - PricewaterhouseCoopers has reviewed the interim condensed consolidated financial statements[129] - The review concluded that nothing indicated the financial statements were not prepared in accordance with HKAS 34 and IAS 34[131] Interim Consolidated Income Statement AIA's total revenue for H1 2021 increased to $24,194 million, with net profit attributable to shareholders reaching $3,245 million 2021 H1 Interim Consolidated Income Statement Summary | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Total Revenue | 24,194 | 19,664 | | Net Premiums and Fee Income | 17,248 | 16,133 | | Investment Return | 6,780 | 3,381 | | Total Expenses | 20,482 | 17,092 | | Profit Before Tax | 3,714 | 2,574 | | Net Profit | 3,269 | 2,183 | | Net profit attributable to shareholders of AIA Group Limited | 3,245 | 2,197 | 2021 H1 Earnings Per Share | Indicator | 2021 H1 (USD) | 2020 H1 (USD) | | :--- | :--- | :--- | | Basic Earnings Per Share | 0.27 | 0.18 | | Diluted Earnings Per Share | 0.27 | 0.18 | Interim Consolidated Statement of Comprehensive Income AIA recorded a total comprehensive expense of $2,638 million for H1 2021, primarily due to fair value losses on available-for-sale financial assets and negative foreign currency translation adjustments 2021 H1 Interim Consolidated Statement of Comprehensive Income Summary | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Net Profit | 3,269 | 2,183 | | Fair value (losses)/gains on available-for-sale financial assets | (4,092) | 2,742 | | Foreign currency translation adjustments | (813) | (679) | | Total other comprehensive (expense)/income | (5,907) | 1,082 | | Total comprehensive (expense)/income | (2,638) | 3,265 | | Total comprehensive (expense)/income attributable to shareholders of AIA Group Limited | (2,646) | 3,262 | - Fair value losses on available-for-sale financial assets were the main reason for the negative total comprehensive income[137] Interim Consolidated Statement of Financial Position As of June 30, 2021, AIA's total assets grew to $329,891 million and total liabilities increased to $270,474 million, with total equity standing at $59,417 million 2021 H1 Interim Consolidated Statement of Financial Position Summary | Indicator | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | | :--- | :--- | :--- | | Total Assets | 329,891 | 326,121 | | Financial Investments | 272,619 | 271,467 | | Deferred acquisition and origination costs | 28,374 | 27,915 | | Cash and Cash Equivalents | 7,149 | 5,619 | | Total Liabilities | 270,474 | 262,453 | | Insurance Contract Liabilities | 228,276 | 223,071 | | Borrowings | 9,182 | 8,559 | | Total Equity | 59,417 | 63,668 | | Total equity attributable to shareholders of AIA Group Limited | 58,944 | 63,200 | - Within financial investments, available-for-sale debt securities represent the largest portion, followed by equity securities[139] Interim Consolidated Statement of Changes in Equity Total equity attributable to shareholders decreased by $4,256 million to $58,944 million in H1 2021, mainly due to fair value losses on available-for-sale financial assets and dividend payments 2021 H1 Interim Consolidated Statement of Changes in Equity Summary | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Opening Shareholders' Equity | 63,200 | 54,947 | | Net Profit | 3,245 | 2,197 | | Fair value (losses)/gains on assets | (5,097) | 1,826 | | Dividends | (1,558) | (1,452) | | Foreign currency translation adjustments | (819) | (710) | | Closing Shareholders' Equity | 58,944 | 56,804 | - Fair value losses and foreign currency translation adjustments were the main factors contributing to the decrease in shareholders' equity[142] Interim Consolidated Statement of Cash Flows For H1 2021, AIA generated net cash from operating activities of $3,094 million, resulting in a net increase in cash and cash equivalents of $1,630 million 2021 H1 Interim Consolidated Statement of Cash Flows Summary | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Net cash provided by operating activities | 3,094 | 3,266 | | Net cash used in investing activities | (197) | (668) | | Net cash used in financing activities | (1,267) | (530) | | Net increase in cash and cash equivalents | 1,630 | 2,068 | | Cash and cash equivalents at end of financial period | 6,929 | 5,762 | - Cash inflows from operating activities were mainly from adjustments to profit before tax, while cash outflows from investing activities were primarily for intangible asset payments and increased interests in joint ventures[146] - Cash outflows from financing activities were mainly affected by dividend payments and interest payments on medium term notes and securities[146] Notes to the Unaudited Interim Condensed Consolidated Financial Statements This section provides detailed notes to the H1 2021 financial statements, covering accounting policies, segment information, financial instruments, capital structure, risk management, and other key disclosures 1. Corporate Information AIA Group Limited, incorporated in Hong Kong on August 24, 2009, is the largest pan-Asian independent publicly listed life insurance group, operating in 18 markets - AIA Group Limited was incorporated in Hong Kong on August 24, 2009[148] - The Group is the largest pan-Asian independent publicly listed life insurance group, with a presence in 18 markets[6][148] - Its principal business is life insurance, accident and health insurance, and savings plans, as well as related investment and other financial services products[6][148] 2. Basis of Preparation and Statement of Compliance The interim condensed consolidated financial statements are prepared in accordance with HKAS 34 and IAS 34 and should be read in conjunction with the 2020 annual financial statements - The interim condensed consolidated financial statements are prepared in accordance with HKAS 34 and IAS 34[149] - New standard amendments, such as "Interest Rate Benchmark Reform – Phase 2", had no material impact on the Group[150] - The financial statements are unaudited but have been reviewed by PricewaterhouseCoopers[150] 3. Exchange Rates This section presents the average and period-end exchange rates used to translate the local currencies of AIA's principal overseas operations into US dollars Average Exchange Rates for Principal Overseas Operations (local currency units per US$1) | Business Unit | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :--- | :--- | :--- | | Mainland China | 6.47 | 7.03 | | Hong Kong | 7.76 | 7.76 | | Thailand | 30.82 | 31.60 | | Singapore | 1.33 | 1.40 | | Malaysia | 4.10 | 4.25 | Period-end Exchange Rates for Principal Overseas Operations (local currency units per US$1) | Business Unit | June 30, 2021 | June 30, 2020 | | :--- | :--- | :--- | | Mainland China | 6.46 | 7.07 | | Hong Kong | 7.77 | 7.75 | | Thailand | 32.03 | 30.88 | | Singapore | 1.34 | 1.40 | | Malaysia | 4.15 | 4.28 | 4. Operating Profit After Tax AIA's operating profit after tax for H1 2021 was $3,206 million, with $3,182 million attributable to shareholders, reconciled from the net profit of $3,269 million 2021 H1 Reconciliation of Operating Profit After Tax to Net Profit | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Operating profit after tax | 3,206 | 2,958 | | Net non-operating items | 63 | (775) | | Net profit | 3,269 | 2,183 | | Operating profit after tax attributable to shareholders of AIA Group Limited | 3,182 | 2,933 | - Operating profit excludes short-term fluctuations between the expected long-term investment return and the actual investment return on equity and real estate investments[155] 5. Total Weighted Premium Income and Annualised New Premiums AIA's total weighted premium income increased to $18,511 million in H1 2021, and annualised new premiums grew to $3,060 million 2021 H1 Total Weighted Premium Income and Annualised New Premiums | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Total Weighted Premium Income (TWPI) | 18,511 | 16,926 | | Annualised New Premiums (ANP) | 3,060 | 2,579 | | First Year Premiums | 2,412 | 2,162 | | Single Premiums | 3,046 | 2,249 | | Renewal Premiums | 15,794 | 14,539 | - TWPI is a performance measure of turnover for the period, while ANP is a performance measure of new business[156] 6. Segment Information AIA's operating segments are defined by geographical markets, with Hong Kong and Mainland China being the largest contributors to operating profit after tax in H1 2021 2021 H1 Operating Profit After Tax by Segment | Segment | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Mainland China | 722 | 640 | | Hong Kong | 1,055 | 1,005 | | Thailand | 485 | 478 | | Singapore | 339 | 303 | | Malaysia | 194 | 148 | | Other Markets | 391 | 333 | | Group Corporate Centre | (4) | 26 | | Total | 3,182 | 2,933 | 2021 H1 Key Operating Ratios by Segment | Segment | Cost-to-income Ratio | Operating Margin | Operating Return on Shareholders' Allocated Equity | | :--- | :--- | :--- | :--- | | Mainland China | 5.9% | 18.2% | 31.4% | | Hong Kong | 3.6% | 18.4% | 16.3% | | Thailand | 6.1% | 23.2% | 14.5% | | Singapore | 6.4% | 19.6% | 16.0% | | Malaysia | 9.1% | 16.6% | 17.9% | | Other Markets | 13.5% | 10.7% | 8.6% | | Total | 7.8% | 17.3% | 12.8% | - Following the conversion of AIA's China business to a wholly-owned subsidiary, future dividends will be subject to a withholding tax at the applicable rate in Mainland China (currently 5%)[160] 7. Investment Return AIA's investment return increased significantly to $6,780 million in H1 2021, driven by interest income, dividend income, and net gains on financial instruments 2021 H1 Investment Return Breakdown | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Interest income | 3,681 | 3,443 | | Dividend income | 539 | 459 | | Total investment income | 4,304 | 3,989 | | Net realised gains on available-for-sale debt securities | 1,103 | 926 | | Net gains/(losses) on financial instruments at fair value through profit or loss | 1,027 | (1,603) | | Investment return | 6,780 | 3,381 | - The significant increase in investment return was primarily driven by positive net gains on equity securities and realised gains on available-for-sale debt securities[171] 8. Expenses AIA's total expenses increased to $20,482 million in H1 2021, with net insurance and investment contract benefits being the largest component 2021 H1 Expense Breakdown | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Total expenses | 20,482 | 17,092 | | Net insurance and investment contract benefits | 16,070 | 13,031 | | Commission and other underwriting expenses | 2,267 | 2,157 | | Operating expenses | 1,439 | 1,242 | | Finance costs | 176 | 143 | 2021 H1 Employee Benefit Expenses | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Wages and salaries | 751 | 664 | | Share-based remuneration | 39 | 48 | | Pension costs | 67 | 53 | | Other employee benefit expenses | 75 | 52 | | Total | 932 | 817 | - Finance costs primarily arise from medium term notes and securities, repurchase agreements, and lease liabilities[174] 9. Income Tax AIA's income tax expense for H1 2021 was $445 million, with corporate income tax rate changes enacted in the Philippines and Sri Lanka 2021 H1 Income Tax Expense | Indicator | 2021 H1 (USD million) | 2020 H1 (USD million) | | :--- | :--- | :--- | | Current income tax – Hong Kong profits tax | 86 | 77 | | Current income tax – Overseas | 595 | 213 | | Deferred income tax on temporary differences | (236) | 101 | | Total | 445 | 391 | - The corporate income tax rate in the Philippines was adjusted from 30% to 25%, effective July 1, 2020[177] - The corporate income tax rate in Sri Lanka was adjusted from 28% to 24%, effective January 1, 2020[177] 10. Earnings Per Share AIA's basic earnings per share for H1 2021 was 26.90 US cents, and basic operating profit after tax per share was 26.37 US cents 2021 H1 Earnings Per Share | Indicator | 2021 H1 (US cents/share) | 2020 H1 (US cents/share) | | :--- | :--- | :--- | | Basic earnings per share | 26.90 | 18.22 | | Diluted earnings per share | 26.85 | 18.20 | | Basic operating profit after tax per share | 26.37 | 24.33 | | Diluted operating profit after tax per share | 26.33 | 24.29 | - The calculation of diluted earnings per share considers the potential dilutive effects of share options, restricted share units, and other items[180][182] 11. Dividends The Board declared an interim dividend of 38.00 HK cents per share for the six months ended June 30, 2021, totaling approximately $590 million 2021 H1 Dividend Declaration and Payment | Dividend Type | Amount per Share (HK cents) | Total Amount (USD million) | | :--- | :--- | :--- | | Interim Dividend (Declared) | 38.00 | 590 | | Final Dividend (Paid) | 100.30 | 1,558 | - The interim dividend was declared after the reporting date and has not been recognised as a liability[184] 12. Intangible Assets As of June 30, 2021, AIA's intangible assets had a net carrying amount of $2,569 million, primarily comprising goodwill, computer software, and distribution and other rights Net Carrying Amount of Intangible Assets (June 30, 2021) | Asset Class | Net Carrying Amount (USD million) | | :--- | :--- | | Goodwill | 1,607 | | Computer software | 317 | | Distribution and other rights | 645 | | Total | 2,569 | - A significant portion of distribution and other rights relates to the bancassurance partnership with Citibank[187] - Following Citibank's announced exit from retail banking outside Hong Kong and Singapore, the company is discussing future arrangements for the bancassurance partnership[187] 13. Financial Investments AIA's financial investment portfolio, totaling $271,604 million as of June 30, 2021, consists of debt securities, equity securities, and loans and deposits Financial Investment Portfolio (June 30, 2021) | Asset Class | Total (USD million) | | :--- | :--- | | Debt securities | 197,029 | | Equity securities | 65,106 | | Loans and deposits | 9,569 | - The fixed income portfolio (excluding government bonds) maintained an average credit rating of A-[51] Carrying Amount of Financial Instruments Subject to IBOR Reform (June 30, 2021) | Benchmark | Non-derivative financial assets (USD million) | Non-derivative financial liabilities (USD million) | Net derivative financial assets/(liabilities) (USD million) | | :--- | :--- | :--- | :--- | | USD LIBOR | 1,518 | - | (73) | | SOR | 904 | (371) | 23 | | THBFIX | - | - | 45 | 14. Derivative Financial Instruments AIA uses derivative financial instruments to manage financial risks such as foreign exchange and interest rate risk, with a total notional amount of $39,874 million as of June 30, 2021 Derivative Financial Instruments Overview (June 30, 2021) | Category | Notional Amount (USD million) | Fair Value Assets (USD million) | Fair Value Liabilities (USD million) | | :--- | :--- | :--- | :--- | | Foreign exchange contracts | 12,148 | 173 | (332) | | Interest rate contracts | 8,879 | 415 | (249) | | Others | 18,938 | 327 | (1,255) | | Total | 39,874 | 915 | (1,836) | - The majority of derivative instruments are transacted over-the-counter and are used to provide economic hedges[196] - The Group has recorded cash collateral of $170 million and debt securities collateral of $1,489 million for liabilities on derivative transactions[201] 15. Fair Value Measurement of Financial Instruments AIA classifies its financial instruments by fair value hierarchy, with the majority of its financial assets measured at fair value falling into Level 2 Fair Value of Financial Assets (June 30, 2021) | Classification | Total Carrying Amount (USD million) | Total Fair Value (USD million) | | :--- | :--- | :--- | | At fair value through profit or loss | 103,752 | 103,752 | | Available-for-sale | 159,298 | 159,298 | | At cost/amortised cost | 22,795 | 22,791 | | Total | 285,845 | 285,841 | Fair Value of Financial Liabilities (June 30, 2021) | Classification | Total Carrying Amount (USD million) | Total Fair Value (USD million) | | :--- | :--- | :--- | | At fair value through profit or loss | 14,856 | 14,856 | | At cost/amortised cost | 20,549 | 21,387 | | Total | 35,405 | 36,243 | Fair Value Hierarchy of Financial Assets Measured at Fair Value on a Recurring Basis (June 30, 2021) | Level | Amount (USD million) | Percentage | | :--- | :--- | :--- | | Level 1 | 58,058 | 22.1% | | Level 2 | 197,923 | 75.2% | | Level 3 | 7,069 | 2.7% | | Total | 263,050 | 100.0% | 16. Cash and Cash Equivalents As of June 30, 2021, AIA's cash and cash equivalents totaled $7,149 million, an increase of 27% from year-end 2020, primarily held for recently announced transactions Cash and Cash Equivalents (June 30, 2021) | Category | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | | :--- | :--- | :--- | | Cash | 4,260 | 2,877 | | Cash equivalents | 2,889 | 2,742 | | Total | 7,149 | 5,619 | - The increase in cash and cash equivalents mainly reflects funds held for the purchase consideration of recently announced transactions[52][214] 17. Insurance and Investment Contract Liabilities As of June 30, 2021, AIA's insurance contract liabilities totaled $228,276 million, and investment contract liabilities were $12,859 million Insurance Contract Liabilities (June 30, 2021) | Category | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | | :--- | :--- | :--- | | Deferred profit | 27,166 | 24,972 | | Deferred income | 2,039 | 1,751 | | Policyholders' share of surplus in participating business | 30,259 | 31,151 | | Future policyholder benefits | 168,812 | 165,197 | | Total | 228,276 | 223,071 | - The increase in insurance and investment contract liabilities reflects the growth of the in-force portfolio and positive market value movements of equity investments backing unit-linked and participating policies[53] 18. Borrowings As of June 30, 2021, AIA's total borrowings were $9,182 million, a 7% increase from year-end 2020, primarily comprising senior notes and subordinated securities Borrowings Overview (June 30, 2021) | Category | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | | :--- | :--- | :--- | | Senior notes | 6,321 | 6,824 | | Subordinated securities | 2,850 | 1,735 | | Other loans | 11 | - | | Total | 9,182 | 8,559 | - In H1 2021, the company issued $750 million and S$500 million of subordinated perpetual resettable securities[70][218] - The company holds $2,290 million in undrawn unsecured committed credit facilities, with no outstanding borrowings at the reporting date[219] 19. Liabilities under Repurchase Agreements As of June 30, 2021, AIA's liabilities under repurchase agreements were $3,447 million, a significant increase from year-end 2020 Amount of Financial Investments Involved in Repurchase Agreements (June 30, 2021) | Category | June 30, 2021 (USD million) | Dec 31, 2020 (USD million) | | :--- | :--- | :--- | | Debt securities – AFS | 3,200 | 1,444 | | Debt securities – FVTPL | 248 | 232 | | Total | 3,448 | 1,676 | - Liabilities under repurchase agreements amounted to $3,447 million[222] - The Group has pledged $16 million of debt securities and holds $26 million of cash collateral[222] 20. Share Capital and Reserves As of June 30, 2021, AIA had 12,097 million ordinary shares in issue with a share capital of $14,159 million Share Capital Overview (June 30, 2021) | Indicator | June 30, 2021 (million shares) | June 30, 2021 (USD million) | | :--- | :--- | :--- | | Issued ordinary shares | 12,097 | 14,159 | - During the period, 505,584 shares were issued under the Share Option Scheme and 1,192,355 shares were issued under the Agency Share Purchase Scheme[224] - The Employee Share Trust holds 30,635,796 shares of the Company[224] - The fair value reserve includes the net cumulative change in the fair value of available-for-sale securities[225] 21. Group Capital Structure AIA's capital management objective is to maintain a strong capital base to support business development and meet regulatory requirements, with a Group LCSM coverage ratio of 412% as of June 30, 2021 - The capital management objective is to maintain a strong capital base to support business development and meet regulatory capital requirements[227] Group LCSM Solvency Position (June 30, 2021) | Indicator | June 30, 2021 (USD million) | | :--- | :--- | | Group Available Capital | 67,675 | | Group Minimum Capital Requirement | 16,444 | | Group LCSM Surplus | 51,231 | | Group LCSM Coverage Ratio | 412% | - Group available capital includes $2,858 million of subordinated securities and $5,810 million of approved senior notes[228] 22. Risk Management AIA faces credit, interest rate, equity price, currency, and liquidity risks, which are managed through rigorous underwriting, economic-based management, limits, and a liquidity framework - The Group is exposed to credit risk, interest rate risk, equity price risk, currency risk, and liquidity risk[233] - Credit risk is managed through internal ratings and underwriting procedures, while interest rate risk is managed through asset-liability duration management[233][234] Sensitivity Analysis (June 30, 2021) | Scenario | Impact on profit before tax (USD million) | Impact on total equity (before tax effect) (USD million) | | :--- | :--- | :--- | | 1