AIA Group’s Lee on Earnings, China Business, Expansion Plan

by birtanpublished on August 25, 2020

Let's talk about the first half obviously it was a tough period here at the time second quarter obviously you're dealing with more restrictions all around the region tell us a bit more about what you're seeing in terms of the new

Business value growth uh you saw 68 lower in hong kong 13 lower in china are you seeing signs of perhaps a bottoming out now yes uh as you know it's been a very challenging uh

First half of the year with the whole world pretty much locked down and i think we we deliver a very resilient set of our results uh in the context of this environment uh vonb

Was down but uh we are seeing strong recovery in the months of may and june and going to july as well as as the markets come out of lockdown the the momentum in uh in china

In vietnam uh in even in markets like thailand india where india has been still in quite a serious situation but uh the the momentum that we see because of

The digitalization efforts that we've taken has been quite encouraging yeah china perhaps doing a little bit better than the rest of your markets here tell us a bit more are you seeing signs there given the first in first out kind of

Situation we're seeing there that there's a bit of a turning point there too yeah i think as you know china came out of the the pandemic earlier than most other markets and so in fact we've seen

Uh in the months of uh july um year on year month of month growth versus last year as well so it's pretty much recovered to pre-covert levels of production

Tell us a bit more about the dislocations that you're seeing you mentioned about the remote training that you've had to do and just given the challenges of this pandemic

How have you had to adjust in terms of how you hire people and put people moving around now yeah well we've taken the six months uh during these six months the opportunity to

Digitalize digitalize most of our processes so uh and the adoption rate amongst the agency force and our sales force is uh very high um for example in singapore uh even

After coming out of the circuit breaker um the the proportion of new business coming through digital or remote selling is still remains at a very high level of around 80 percent

So the adoption rate and is uh very high in india it's practically all the business is coming through remote selling um and 99 of the business uh comes through remote selling

Um 40 of your policies issued in the second quarter were done remotely well i guess overall overall so do you see that as a sense of a permanent change in the industry well yes you know insurance people still

Like to see you know it is a complicated planning process planning for the future so uh as markets come out of a locked down and as a agent

Are able to see their customers face-to-face um we've seen like in china uh reversion back to face-to-face selling yeah coming from ping on

You obviously had the china experience you also have this enthusiasm for innovation and technology how do you see the technological side of of development here for aia do you want to be a leader yeah i think

Pinan is they are very different companies pingan is a great company uh done a lot in the 30 years of its history and uh but and similarly aiaia is very focused on the use of technology

To power its business so we will be transforming our technology architecture to move to a much more cloud-based uh using modern architecture to allow us to

High levels of automation to uh achieve a 90 up to 90 straight processing and if you can achieve a 90 straight through processing the whole customer experience will be transformed there's been a lot of talk

About obviously stock connect's been very well established there's wealth connect now there's also insurance connect that's become a buzzword in your industry what shape or form do you see this

Initiative taking place now and what do you need to see in particular for for markets to be ready to open the door for that money flow i think it's still early days uh uh but uh initially what we will see is uh the

Setup of uh service centers in the greater bay area as you know there are a lot of mainland customers who like to come to hong kong to buy hong kong companies insurance products and

With the restrictions on the border it's sometimes difficult for them to assess some of the services that they need so the setup of our service centers in the greater bay area greater bay area

Would uh help these customers uh get access to good uh services um yeah what are what regulations see though in order for this to really you know for them to really open the

Doors and how does it affect aia for example your dynamics versus what you're seeing the mainland between your onshore and offshore clients well as you know aia has a unique opportunity in

China we just subsidize our operations our branch operations in shanghai after which we can expand to new provinces within china and we are very unique in the sense that we are 100

Ownership so we don't have to share any of the economics of a local partner so whether our customer buys in uh hong kong or whether it buys in across the border in the mainland we get

A hundred percent of the economics of it so yeah what sort of factors do you look at when you decide to expand for example in china do you look more at geography do you look a little more a distribution

Platform what sort of determining factors are yeah as you know we we now have seven uh major uh provinces or municipalities uh in beijing qianjin shanghai

Shenzhen guangdong chiang zhu and herbe these are the geographies that we are operating now with the new subsidiarization we can go to more provinces you know and as you know

Each province in china is like a mid-sized country in the rest of asia so we are actually going to all these big markets we will focus on 10 to 12 new provinces

In the near future and each province we are talking about hundreds of millions of new new untapped customers for us i want to focus a little bit on on hong kong as well

Uh we've seen new business value there continue to be very sluggish down some 68 as i mentioned uh you know obviously with this national security legislation that's come into effect for

For two months now what considerations do you make here at aia for companies like aia i mean what what are you looking at now to stay resilient well as you know we are headquartered in

Hong kong and we have uh we remain very optimistic about hong kong we are a asian focused company we operate in 18 markets and really i think if you look at uh if

You look at hong kong it has the best business and operating environment compared with many of the markets that we operate in or many of the developed markets in the

World i think the business environment still remains very very very good for businesses do you think with even if they do relax restrictions i mean obviously you took a

Lot of your business before from from mainland visitors here in hong kong do you see those mainland visitors coming back in the same way like they did before or

Given just the political unrest we've seen here that perhaps some of these offshore customers are going to stay away now yeah as you know i've worked the last 20 years in the mainland

China and the last 16 years i was in shenzhen so and as and i believe that as long as hong kong companies products are remain price competitive compared to products in china the million chinese

Customers will come back yes but when when were the it's difficult to project when the the border will open but as long as the the the dynamics remain mainland chinese customers will come

Back i used to have so many of my ex-colleagues i know that they come over in the weekend to hong kong to buy a product from a hong kong company last question m a do

You see more opportunities post covent or is it gonna be different yeah we are very strong financially so we are always looking out for opportunities but we

Will be very financially disciplined uh looking for uh in investments that make financial and uh strategic sense to us

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