Target Information

AIA Group Limited ("AIA"; or "the Company"; stock code: 1299) has announced a strategic 15-year exclusive bancassurance partnership agreement with Bank of East Asia Limited ("BEA") that spans Hong Kong and mainland China. Under this agreement, BEA will exclusively distribute AIA's life insurance and long-term savings products to its retail banking clients. This partnership leverages AIA's attractive product offerings and exceptional track record in bancassurance, alongside BEA's extensive network of over 140 branches and wealthy customer base in both Hong Kong and mainland China.

This collaboration is based on AIA's excellent performance in previous bancassurance ventures, further expanding its partnerships with leading regional banks across eight markets. AIA also has a significant regional partnership, enhancing its market reach.

Industry Overview in Hong Kong and Mainland China

In Hong Kong, BEA is a leading bank with over 1.2 million local customers, providing substantial potential for increased penetration of life and medical insurance products. In mainland China, BEA ranks among the top three foreign banks based on the number of personal banking branches, operating across 22 provinces and cities, with a rapidly growing affluent customer base. This broad operational footprint offers BEA a strategic advantage in accessing a diverse demographic.

The Greater Bay Area ("GBA"), which includes Hong Kong, Macao, and nine mainland cities, boasts a combined population of 72 million and a GDP of USD 1.7 trillion. As insurance needs continue to grow in this region, demand for life and health insurance presents immense development opportunities for AIA. The GBA is a core part of China's national development plan, aimed at fostering economic reform, innovation, and enhancing connectivity among cities to accelerate growth.

As a result, urban populations within the GBA are projected to increase rapidly, with GDP expected to surpass USD 4 trillion by 2030. AIA has established itself as one of the top three life insurance companies in the GBA in terms of new business sales and owns its operations in this region outright, positioning itself uniquely to capture growth opportunities offered by this dynamic market.

The company's integration strategy and execution abilities allow AIA to deliver products and superior services efficiently through a broad multichannel distribution network while capitalizing on emerging opportunities resulting from regulatory changes.

Rationale Behind the Deal

AIA will pay HKD 5.07 billion (approximately USD 650 million) for BEA’s 100% ownership of AIA Life Insurance Company Limited, along with acquiring the life policies previously insured by Blue Cross (Asia) Insurance Company Limited. This deal underscores AIA's commitment to enhancing its distribution capabilities within the GBA and strategically aligns with the increasing demand for insurance solutions in the region.

AIA's Regional Chief Executive Officer, Mr. Ng Keng Hooi, stated, "This transaction harnesses the strengths of both trusted financial institutions with long-standing operational histories in Hong Kong and mainland China, aimed at sustainable growth through digitalization and technology transformation. It enables us to introduce our range of high-quality protection and long-term savings products to BEA’s loyal customer base, unlocking substantial growth potential for both companies."

Information About the Investor

AIA is one of the largest life insurers in Asia, well-known for its breadth of coverage and innovative product offerings. The company covers various markets across the Asia Pacific region and has a robust strategy aimed at sustainable growth through partnerships and technological advancements. AIA’s focus on expanding its footprint in rapidly growing markets positions it favorably for long-term success in the insurance sector.

With a solid financial foundation and an extensive multi-channel distribution approach, AIA continues to optimize its operations, ensuring resilience and adaptability amid evolving market dynamics. The partnership with BEA is a pivotal step in further establishing AIA’s presence and market leadership in the GBA.

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The collaboration between AIA and BEA represents a strategic alignment that could prove to be a lucrative investment. AIA's strong reputation in bancassurance and its record of high-performance in insurance sales position it uniquely to benefit from BEA’s extensive distribution network.

Moreover, the significant growth potential of the insurance market in the GBA, coupled with the increasing insurance penetration rate, sets the groundwork for potentially impressive returns. The integration of technology and digital transformation in the financial landscape further enhances the appeal of this partnership, creating synergistic value for both parties.

However, it will be crucial for AIA to effectively manage this partnership and ensure that they align product offerings with the evolving needs of BEA’s customer base. With AIA’s expertise in developing innovative insurance products and BEA’s established infrastructure, there is a promising outlook for achieving substantial growth.

In conclusion, this deal could not only facilitate AIA's expansion into larger markets but also affirm its capability in capturing significant market share in the burgeoning insurance sector in Hong Kong and mainland China. Therefore, this investment appears to be well-aligned with AIA's strategic goals and the market’s growth trajectory.

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