AIA’s Third-Quarter VONB Growth Pressured by COVID-19 Rebound and High Base in Third-Quarter 2020

AIA Group’s third-quarter financial highlights reported year-on-year VONB growth of 15% on a constant currency basis and 20% on an actual currency basis for the first nine months, which came in line with our full-year VNOB growth forecast of around 20%. As expected, growth in third-quarter VONB slowed significantly to 4% on an actual currency basis from the 29% growth in the first half. The slowdown was attributable to a high base in the third quarter of 2020, which benefited from a rebound in policy sales right after the unlock of COVID-19 containment measures, and the COVID-19 rebound in certain provinces in China and some ASEAN markets in the past quarter. Despite the decelerating growth, AIA was able to expand its premium agent force and agent productivity in major markets, including China, Hong Kong, Thailand, Singapore, and Malaysia. Given that results were largely in line, we maintain our HKD 107 per share fair value estimate.