HONG KONG:
AIA Group Limited announced that it has agreed to invest RMB12,033 million (US$1,860 million)1 through its wholly-owned subsidiary, AIA Company Limited, for a 24.99 per cent equity stake, post investment, in China Post Life Insurance. The investment will be financed on an all-cash basis from internal resources and subject to securing all necessary regulatory approvals. .
The total value of the proposed investment represents a valuation of 1.34x China Post Life book value on a pre-money basis3 as of 31 December 2020. Value of new business (“VONB”) for China Post Life was RMB1,866 million (US$269 million) for the full year 2020.
China is one of the largest life insurance markets globally and capturing the significant growth potential it offers is a core component of AIA’s strategy.
AIA’s investment in China Post Life increases the Group’s exposure to the growth opportunities in the Chinese life insurance market and enables AIA to capture the significant value available from distribution channels and customer segments that are complementary to our existing strategy in China. The Group’s operations of AIA China will remain entirely independent of this investment.
China Post Life is a subsidiary of China Post Group Co., Ltd. (“China Post”) and is the leading bank-affiliated life insurer focused on bringing financial protection to the mass and emerging mass-affluent market in China. Through its distribution partnership with Postal Savings Bank of China Co., Ltd. (“PSBC”), it has access to the largest retail financial distribution network of around 40,000 financial outlets nationwide and more than 600 million retail customers. China Post Life currently distributes in 21 provinces, covering 80 per cent of the PSBC network.
China Post Life also has a unique operating structure and platform for distribution and customer servicing using China Post’s infrastructure and resources. This distinctive model is an important competitive advantage and enables profitable growth at scale with market-leading efficiency.
AIA and China Post have also entered into a Business Cooperation Framework Agreement to explore additional business opportunities.
Lee Yuan Siong, AIA’s Group Chief Executive and President, said: “The Chinese insurance market is already the second-largest in the world with immense long-term growth opportunities given the protection gap of more than US$40 trillion6. This unique investment in China Post Life enables AIA to capture additional areas of growth and benefit from the substantial potential for value creation.
AIA's wholly-owned business, AIA China, has a highly successful and exceptional platform focused on providing high-quality protection and long-term savings products to the rapidly-growing middle-class and affluent customer segments through its highly-differentiated Premier Agency model. AIA China’s proven expansion strategy captures the tremendous growth opportunities both within its existing footprint and by increasing its geographical reach.