#1HEALTHIER, LONGER, AIR BETTER LIVES ור IFRS 17 UPDATE 15 June 2023#2Disclaimer AIA This document ("document") has been prepared by AIA Group Limited (the "Company", and together with its subsidiaries, "AIA" or the "Group" or "AIA Group") solely for use at the presentation held in connection with the voluntary announcement of the Group's consolidated special purpose financial information (the “Consolidated Financial Information") for the six months ended 30 June 2022 and the year ended 31 December 2022, which have been restated under IFRS 9 and IFRS 17 (the "Presentation"). References to "document" in this disclaimer shall be construed to include any oral commentary, statements, questions, answers and responses at the Presentation. Throughout the entire presentation, IFRS 9 impacts are included when referring to IFRS 17 figures, and IAS 39 impacts are included when referring to IFRS 4 figures. No representation or warranty expressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. The information and opinions contained herein are subject to change without notice. The accuracy of the information and opinions contained in this document is not guaranteed. None of the Company nor any of its affiliates or any of their directors, officers, employees, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any information contained or presented in this document or otherwise arising in connection with this document. This document contains certain forward-looking statements relating to the Company that are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management. These forward-looking statements are, by their nature, subject to significant risks and uncertainties. When used in this document, the words "anticipate”, “believe”, “could”, “estimate”, “expect”, “going forward”, “intend”, “may”, “ought” and similar expressions, as they relate to the Company or the Company's management, are intended to identify forward-looking statements. These forward-looking statements reflect the Company's views as of the date of the Presentation with respect to future events and are not a guarantee of future performance or developments. You are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. Actual results and events may differ materially from information contained in the forward-looking statements. The Company assumes no obligation to update or otherwise revise these forward-looking statements for new information, events or circumstances that occur subsequent to the date of the Presentation. This document does not constitute or form part of, and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. No securities of the Company may be sold in the United States or to U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933, as amended. In Hong Kong, no shares of the Company may be offered by the Company to the public unless a prospectus in connection with the offering for sale or subscription of such shares has been authorised by The Stock Exchange of Hong Kong Limited for registration by the Registrar of Companies under the provisions of the Companies Ordinance and has been so registered. The information herein is given to you solely for your own use and information, and no part of this document may be copied or reproduced, or redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organisation/firm) in any manner or published, in whole or in part, for any purpose. The distribution of this document may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Throughout this document, in the context of our reportable segments, Hong Kong refers to operations in the Hong Kong Special Administrative Region and the Macau Special Administrative Region; Singapore refers to operations in Singapore and Brunei; and Other Markets refers to operations in Australia, Cambodia, India, Indonesia, Myanmar, 2 New Zealand, the Philippines, South Korea, Sri Lanka, Taiwan (China) and Vietnam.#3Agenda Today's Presentation Overview of IFRS 17 adoption ■ Key IFRS metrics for FY 2022 ■ Understanding new disclosures ■ Conclusion Virtual Q&A Session ◉ Scheduled at 5:00 to 6:00 p.m. on 15 June 2023 (Hong Kong Time) 2023 Interim Results 1H 2023 results will be reported under IFRS 9 and IFRS 17, with 1H 2022 comparative financial statements Note: Throughout the entire presentation, IFRS 9 impacts are included when referring to IFRS 17 figures, and IAS 39 impacts are included when referring to IFRS 4 figures אור 3#4AIA's Successful Growth Strategy is Unchanged Post IFRS 17 AIA Continued focus on delivering Growth, Earnings and Cash - Growth: Significant opportunity for profitable new business growth at attractive returns, active in-force management Earnings: Sustained growth in OPAT and shareholders' allocated equity driven by EV and VONB growth Cash: Prudent, sustainable and progressive dividend; returning excess capital to shareholders All key IFRS metrics improved, volatility reduced post IFRS 17 adoption - - - No impact on underlying economics of the business Key metrics of OPAT and shareholders' allocated equity for 2022 higher than under IFRS 4 High-quality sources of earnings driven by insurance contract services Net profit and shareholders' equity for 2022 significantly higher and less volatile going forward VONB, EV and free surplus remain key measures of shareholder value creation Large-Scale Profitable New Business Driving Growth, Earnings and Cash 4#5All Key IFRS Metrics Improved in 2022 Under IFRS 17 OPAT FY22 Net Profit FY22 IFRS 4 $6.4b $0.3b Shareholders' Allocated Equity As at 31 Dec 2022 $44.8b Shareholders' Equity As at 31 Dec 2022 $38.1b AIA Leverage Ratio As at 31 Dec 2022 22.5% IFRS 17 $6.4b $3.3b $47.2b $44.7b 11.4% Impact 1% $3.0b 5% 17% 11.1 pps Prior Guidance (Mar 2023) Note: (1) within 5% at least $2.0b higher expected to be higher expected to be higher Under IFRS 4, leverage ratio defined as total borrowings / (total borrowings + total equity); Under IFRS 17, leverage ratio defined as total borrowings / (total borrowings + total equity + CSM net of reinsurance and taxes) at least 5 pps lower 5#6OPAT Higher Under IFRS 17 vs IFRS 4 in 2022 1,900 OPAT ($m) CAGR +11% OPAT Sources of Earnings 6,370 6,421 Return on Net Worth (1) 15% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2022 IFRS 4 IFRS 17 AIA Spread 11% IFRS 17 FY22 OPBT 58% Non-par and Fee- based 74% Insurance Contract Services 16% Par ☐ OPAT better reflects underlying earnings vs net profit ■ IFRS 17 provides a clearer understanding of the drivers of OPAT ☐ High-quality earnings driven by insurance contract services Note: (1) Net of finance costs, non-attributable expenses under IFRS 17 and non-insurance expenses excluding the investment contract related expenses 60#7CSM Release is the Core Driver of $6.4b OPAT FY22 OPAT Composition ($b) 2 $3.3b Net Investment Result 1 $5.5b Insurance Service Result + 0.3 5.1 + 0.1 CSM Release Operating Variances (1) Risk Adjustment Release & Other Notes: Due to rounding, numbers presented in the chart may not add up precisely ea Includes claims, expenses and others but excludes persistency Net of investment management expenses of $0.3b (1) (2) (3) Net of non-insurance expenses of $0.3b + 3.3 Net Investment Result(2) OPAT 8.8 + 0.0 (1.0) (0.4) (1.1) 6.4 3 $(1.0)b Other Revenue and Expenses OPAT Before Other Revenue and Expenses, Finance Costs and Tax Net Other Fees and Revenue (3) Non-attributable Expenses Under IFRS 17 Finance Costs Tax OPAT AIA 7#81. Insurance Service Result AIA's Growth Strategy Has Delivered a Large Stock of Future Profits AIA Insurance Contract Liabilities Net of Reinsurance ($b) As at 1 Jan 2022 (Transition Date) 206.0 Insurance Liabilities Net of DAC and Reinsurance 208.4 CSM 52.9 RA 2.9 BEL 152.5 Contractual Service Margin (CSM) of $52.9b represents a large stock of expected future profits from in-force business Key driver of OPAT and shareholders' allocated equity growth Profitable new business to drive sustained OPAT growth Best Estimate Liabilities (BEL) is the present value of best estimate policy net cash flows from in-force business Risk Adjustment (RA) is an explicit allowance for non-financial risk over and above the best estimate assumptions Discount rates are based on current risk-free rates plus an illiquidity premium, consistent with observable market prices IFRS 4 IFRS 17 Notes: Due to rounding, numbers presented in the chart may not add up precisely IFRS 17 insurance contract liabilities are presented net of insurance contract assets and assets for insurance acquisition cash flows to be consistent with IFRS 4 insurance contract liabilities net of DAC, value of business acquired and upfront reinsurance premium rebate 8#91. Insurance Service Result New Business Drives Increasing CSM and Future OPAT Growth AIA 52.9 + 6.0 +15.9% FY22 CSM Movement, Net of Reinsurance ($b) + 2.4 61.3 (3.9) 9.3% CSM Release Rate (1) (2.1) 55.3 (5.1) 50.2 Opening CSM New Business CSM Expected Return on In-force CSM Variances Before Variances, Exchange Rates and Release Exchange Rates Closing CSM Before Release CSM Release Closing CSM Note: (1) Calculated after variances and exchange rates 6#102. Net Investment Result $3.3b Net Investment Result from Non-Par and Surplus Assets 5.3 Expected Return for Equities and 1.2 Real Estate FY22 Net Investment Result ($b) From Non-Par and Surplus Assets (1.8) Non-Par and Surplus Assets By Asset Type Cash & Others Real Estate 5% 3% Equities (0.3) 10% 3.3 AIA Interest Revenue 4.2 Investment Return Insurance Finance Expenses (3) Investment Management Expenses Net Investment Result $115.2b As of 31 Dec 2022 82% Fixed Income Fixed Income Yield (1) 4.2% As of 31 Dec 2022 ($b) Unwind of discount rate on non-par insurance contract liabilities Uses a level discount rate locked-in at contract issue Non-par and surplus assets 115.2 53% Total Investment 4.5% Return(2) Average insurance contract liabilities (4) balance of $63.0b in 2022 Rate changes gradually over time with new business Par business 103.1 47% Invested Assets 218.3 100% (1) Notes: Excludes participating funds and other participating business with distinct portfolios, unit-linked contracts and consolidated investment funds. Due to rounding, numbers presented in the chart may not add up precisely Interest revenue from fixed income investments, as a percentage of average amortised cost of fixed income investments over the period (2) (3) Interest revenue from fixed income investments and expected long-term returns of equities and real estate, as a percentage of fixed income investments, equities and real estate over the period Represents interest accreted on non-par business liabilities net of investment return relating to unit-linked business with significant protection (4) Net of reinsurance, insurance contract asset and insurance finance reserve 10#11High-Quality Sources of Earnings 5.5 FY22 Operating Profit Before Tax Composition ($b) Non-Attributable Expenses Under IFRS 17 + 3.3 + 0.0 (0.6) 3. Other Revenue and Expenses AIA (0.3) Sources of Earnings (0.4) 7.5 $(1.0)b Other Revenue and Expenses Return on 15% Net Worth (3) 11% Spread 16% Par 58% 74% Non- Insurance par Contract & Services Fee- based Insurance Service Result Net Investment Result(1) Net Other Fees Busines Unit and Revenue (2) Overheads and Others Unallocated Group Office Expenses Finance Costs Operating Profit Before Tax Operating Profit Before Tax Notes: Due to rounding, numbers presented in the chart may not add up precisely (1) Net of investment management expenses of $0.3b (2) Net of non-insurance expenses of $0.3b (3) Net of finance costs, non-attributable expenses under IFRS 17 and non-insurance expenses excluding the investment contract related expenses 11#12Balanced Earnings Across Markets FY22 OPAT ($b) 6.4 6.4 Hong Kong 35% 34% Mainland China 22% 24% Hong Kong $2.2b (1)% FY22 OPAT by Market Segment (IFRS 17 vs IFRS 4 % Change) Mainland China $1.6b +9% Singapore Thailand 12% 15% $0.7b Malaysia $0.4b Singapore 12% 10% Malaysia 6% 6% (12)% (8)% Other Markets 13% 11% IFRS 4 IFRS 17 Note: Group OPAT includes Group Corporate Centre OPAT Thailand $1.0b +25% Other Markets $0.7b (12)% AIA 12#13Net Profit Higher and Less Volatile $b OPAT FY22 Reconciliation of OPAT to Net Profit IFRS 4 IFRS 17 6.4 6.4 Short-term fluctuations in equities/real estate and discount rates (2.3) (1.1) Non-operating movements on derivative financial instruments for par business (2.0) Other non-operating items Net Profit (1.8) (2.0) 0.3 3.3 Net Profit AIA Mark-to-market on equities and real estate in par business absorbed within the CSM ■ Hedging derivatives within par business offset by change in insurance contract liabilities Includes other non-operating expenses, realised capital gains/losses on FVOCI bonds, mark-to-market movement on FVTPL bonds, and changes in provision for Expected Credit Losses (ECL) 13#14Shareholders' Allocated Equity $53.0b Shareholders' Allocated Equity Before Shareholder Returns AIA + 3.3 51.3 IFRS 17 Shareholders' Allocated Equity Movement ($b) (1.6) 53.0 (2.3) (3.6) 47.2 Allocated Equity Net Profit 1 Jan 2022 Exchange Rates and Others Allocated Equity Before Dividend Paid Share Buy-back Allocated Equity 31 Dec 2022 Returns to Shareholders 31 Dec 2022 IFRS 17 Note: Due to rounding, numbers presented in the chart may not add up precisely +5% 44.8 Allocated Equity 31 Dec 2022 IFRS 4 14#15Shareholders' Equity Higher and Less Volatile Shareholders' Equity AIA Reconciliation of IFRS Shareholders' Equity from IFRS 4 to IFRS 17 ($b) +6.6 + 4.2 (0.7) 44.7 + 3.0 38.1 IFRS 4 (6.7) IFRS 17 (2.5) Change +4.2 FY22 Net Profit OCI(1) Shareholders' Equity Transitional Impact (1) and Others FY22 Shareholders' Equity IFRS 17 IFRS 4 Notes: Due to rounding, numbers presented in the chart may not add up precisely Excluding unit-linked with significant protection (1) (2) OCI represents fair value reserve and insurance finance reserve; transitional impact excludes impacts from OCI for presentation Other Comprehensive Income (OCI) is smaller and less volatile going forward Continues to include mark-to-market on fixed income assets through the fair value reserve Under IFRS 17 Relates only to non-par business (1) and surplus assets Par business captured within insurance contract liabilities Partially offset by the effect of discount rate changes on insurance contract liabilities that are now included in insurance finance reserve within OCI(2) 15#16Comprehensive Equity of $86.4b; Leverage Ratio of 11.4% Leverage Ratio Leverage Ratio (1) as at 31 Dec 2022 Note: (1) Comprehensive Equity ($b) As at 31 Dec 2022 38.1 86.4 41.7 Net CSM 44.7 Shareholders' Equity IFRS 4 IFRS 17 22.5% 11.4% Comprehensive equity of $86.4b as at 31 Dec 2022 Comprehensive equity defined as shareholders' equity plus net CSM Net CSM is after allowing for reinsurance, taxes and non-controlling interests Inclusion by rating agencies for leverage ratio calculation Leverage ratio of 11.4% as at 31 Dec 2022 Supports AIA's very strong credit and financial ratings Further enhances AIA's financial flexibility Under IFRS 4, leverage ratio defined as total borrowings / (total borrowings + total equity); Under IFRS 17, leverage ratio defined as total borrowings / (total borrowings + total equity + CSM net of reinsurance and taxes) AIA 16#17IFRS 17 Reinforces Prudence in AIA's Embedded Value AIA IFRS 17 Comprehensive Equity to EV Equity ($b) As at 31 Dec 2022 IFRS 17 New Business CSM to VONB ($b) FY 2022 86.4 71.2 Net CSM 41.7 Shareholders' Equity 44.7 6.0 2.0x 3.1 VONB VONB, EV and free surplus more representative of shareholder value ■ Value of future distributable cash flows to shareholders Captures all expenses including unallocated Group Office expenses Reflective of regulatory and Group capital requirements Risk premium allowance (1) in the range of 4% to 6% Free surplus represents shareholders' view of capital IFRS 17 Comprehensive Equity EV Equity IFRS 17 New Business CSM (Net of Reinsurance) Note: (1) For Hong Kong, Mainland China, Thailand, Singapore and Malaysia 17#18Profitable Growth Strategy Driving Shareholder Value Note: Focus on strong profitable new business growth at attractive returns OPAT and shareholders' allocated equity remain key metrics under IFRS 17 - Strong OPAT and high-quality sources of earnings - Net profit and shareholders' equity higher for 2022, less volatile going forward Robust cash generation with growing free surplus (1) Prudent, sustainable and progressive dividend; returning $10.0b to shareholders (1) Ongoing share buy-back programme AIA 18#19Definitions and Notes AIA " " Throughout the entire presentation, IFRS 9 impacts are included when referring to IFRS 17 figures, and IAS 39 impacts are included when referring to IFRS 4 figures. In the context of our reportable segments, Hong Kong refers to operations in the Hong Kong Special Administrative Region (SAR) and the Macau SAR; Singapore refers to operations in Singapore and Brunei; and Other Markets refers to operations in Australia, Cambodia, India, Indonesia, Myanmar, New Zealand, the Philippines, South Korea, Sri Lanka, Taiwan (China) and Vietnam. VONB includes the results from our 49 per cent shareholding in Tata AIA Life Insurance Company Limited (Tata AIA Life). VONB does not include any contribution from our 24.99 per cent shareholding in China Post Life Insurance Co., Ltd. (China Post Life). The IFRS results of Tata AIA Life and China Post Life are accounted for using the equity method in Other Markets and Group Corporate Centre, respectively. For clarity, TWPI does not include any contribution from Tata AIA Life and China Post Life. Both the results of Tata AIA Life and China Post Life are reported on a one-quarter-lag basis. The results of Tata AIA Life are accounted for the six-month period ended 31 March 2022 and the twelve-month period ended 30 September 2022 in AIA's consolidated results for the six-month period ended 30 June 2022 and the twelve-month period ended 31 December 2022 respectively. The results of China Post Life are accounted for using the period from the completion of the investment on 11 January 2022 to 31 March 2022 in AIA's consolidated results for the six months ended 30 June 2022, and from 11 January 2022 to 30 September 2022 in AIA's consolidated results for the year ended 31 December 2022. The financial information from 2019 onwards is presented after the change in AIA's IFRS accounting treatment for the recognition and measurement of insurance contract liabilities of other participating business with distinct portfolios. The financial information from 2018 and before is presented before the above-mentioned changes. The Group enhanced the presentation to further split and allocate the underlying assets held by consolidated investment funds to the respective fund segments of the asset-backing liabilities, except for the consolidated investment funds comprising third-party unit holders' interests in the consolidated investment funds. All figures are presented in actual reporting currency (US dollar) unless otherwise stated. AIA has a presence in 18 markets - wholly-owned branches and subsidiaries in Mainland China, Hong Kong SAR, Thailand, Singapore, Malaysia, Australia, Cambodia, Indonesia, Myanmar, New Zealand, the Philippines, South Korea, Sri Lanka, Taiwan (China), Vietnam, Brunei, Macau SAR and a 49% joint venture in India. In addition, AIA has a 24.99% shareholding in China Post Life. Amortised cost is a type of recognition and measurement of financial assets under IFRS 9, primarily including debt securities, loans and deposits, receivables and cash and cash equivalents. These financial assets are initially recognised at fair value plus transaction costs. Subsequently, they are carried at amortised cost using the effective interest method less any impairment losses. Interest revenue from debt securities measured at amortised cost is recognised in investment return in the consolidated income statement using the effective interest method. Best estimate liabilities (BEL) represent the present value of best estimate future cash flows discounted at the IFRS 17 discount rates. Comprehensive equity is defined as shareholders' equity plus net CSM. Contractual service margin (CSM) is a component of the carrying amount of the asset or liability under IFRS 17 for a group of insurance contracts representing the unearned profit the Group will recognise as it provides insurance contract services under the insurance contracts in the group. The balance is on discounted basis, presented after allowing for reinsurance unless otherwise stated. Please refer to note 2.3.6 to the FY22 consolidated financial information for details. Deferred acquisition costs (DAC) are expenses of an insurer under IFRS 4 which are incurred in connection with the acquisition of new insurance contracts or the renewal of existing insurance contracts. They include commissions and other variable sales inducements and the direct costs of issuing the policy, such as underwriting and other policy issue expenses. These costs are deferred and expensed to the consolidated income statement on a systematic basis over the life of the policy. EV Equity is the total of embedded value, goodwill and other intangible assets attributable to shareholders of the Company, after allowing for taxes. Expected credit losses is a forward-looking model under IFRS 9, replacing the incurred loss model in IAS 39. The new impairment model applies to financial assets measured at amortised cost, debt securities at fair value through other comprehensive income, trade receivables and lease receivables. It represents the weighted average of credit losses with the respective risks of a default occurring as the weights. Please refer to note 11 to the FY22 consolidated financial information for details. Fair value through other comprehensive income (FVOCI) represents a type of recognition and measurement of financial assets and liabilities under IFRS 9 where changes in fair value are recognised in other comprehensive income. Please refer to note 2.5.1 to the FY22 consolidated financial information for details. Fair value through profit or loss (FVTPL) represents a type of recognition and measurement of financial assets under IFRS 9 where changes in fair value are recognised in profit or loss as part of net investment result. Please refer to note 2.5.1 to the FY22 consolidated financial information for details. Free surplus is the excess of the market value of AIA's assets over the sum of the statutory liabilities, required capital and adjustment for certain assets not eligible for regulatory capital purposes. 19#20• Definitions and Notes (Cont.) AIA General measurement model (GMM) defines the recognition and measurement of insurance contracts under IFRS 17. Please refer to the content of this information pack and note 2.3.1 to the FY22 consolidated financial information for details. IFRS operating profit includes the expected long-term investment return for equities and real estate. Insurance contract services are the services that the Group provides to a policyholder of an insurance contract: (a) coverage for an insured event (insurance coverage); (b) for insurance contracts without direct participation features, the generation of an investment return for the policyholder, if applicable (investment-return service); and (c) for insurance contracts with direct participation features, the management of underlying items on behalf of the policyholder (investment-related service). Insurance finance reserve comprises the cumulative insurance finance income or expenses recognised in other comprehensive income under IFRS 17. Insurance service result is a new consolidated income statement line item under IFRS 17, comprising insurance revenue, insurance service expenses and net expenses from reinsurance contracts held. Investment return and composition of investments exclude unit-linked contracts and consolidated investment funds, unless otherwise stated. Investments include financial investments, investment property, property held for own use, and cash and cash equivalents. Investment property and property held for own use are at fair value. Leverage ratio under IAS 39 and IFRS 4 is total borrowings expressed as a percentage of the sum of total borrowings and total equity. Leverage ratio under IFRS 9 and IFRS 17 is total borrowings expressed as a percentage of the sum of total borrowings, total equity and CSM net of reinsurance and taxes. Net contractual service margin (net CSM) is the contractual service margin net of reinsurance, taxes and non-controlling interests. Net finance income or expenses from insurance contracts is a new consolidated income statement line item under IFRS 17. Please refer to note 7A to the FY22 consolidated financial information for details. Net investment result is a new consolidated income statement line item under IFRS 17, comprising investment return, net finance income or expenses from insurance contracts and reinsurance contracts held, movement in investment contract liabilities and movement in third-party interests in consolidated investment funds. New business contractual service margin (NB CSM) represents the contractual service margin initially recognised in the period. Non-participating (non-par) business includes all insurance liabilities under the GMM model, covering traditional protection, unit-linked with significant protection benefits, universal life and other participating business without distinct portfolios. Participating (par) business referring to participating funds and other participating business with distinct portfolios, with investment experience reflected within insurance contract liabilities. Premium allocation approach (PAA) simplifies the recognition and measurement of insurance contracts under IFRS 17. Please refer to the content of this information pack and note 2.3.7 to the FY22 consolidated financial information for details. Risk adjustment or RA represents the compensation the Group requires for bearing the uncertainty about the amount and timing of the cash flows that arises from non-financial risk as the Group fulfils insurance contracts under IFRS 17. It is determined separately from estimates from the present value of future cash flows, using the confidence level technique. Applying a confidence level technique, AIA estimates the probability distribution of the expected present value of the future cash flows from insurance contracts at each reporting date and calculates the risk adjustment for non-financial risk as the excess of the value at risk at the 75th percentile (the target confidence level) over the expected present value of the future cash flows. Shareholders' allocated equity under IAS 39 and IFRS 4 is the total equity attributable to shareholders of the Company less fair value reserve. Shareholders' allocated equity under IFRS 9 and IFRS 17 is the total equity attributable to shareholders of the Company less fair value reserve and insurance finance reserve. Transition date is 1 January 2022, representing the start of the comparative financial period when AIA adopted the new accounting standards of IFRS 9 and IFRS 17 from 1 January 2023. TWPI consists of 100% of renewal premiums, 100% of first year premiums and 10% of single premiums, before reinsurance ceded. Variable fee approach (VFA) modifies the general measurement model for the recognition and measurement of insurance contracts under IFRS 17. Please refer to the content of this information pack and note 2.3.1 to the FY22 consolidated financial information for details. VIF is the present value of projected after-tax statutory profits by business units emerging in the future from the current in-force business less the cost arising from holding the required capital (CoC) to support the in-force business. VIF for AIA is stated after adjustments to reflect consolidated reserving and capital requirements and the after-tax value of unallocated Group Office expenses. VONB for the Group is after unallocated Group Office expenses and the adjustment to reflect consolidated reserving and capital requirements. The total reported VONB for the Group excludes VONB attributable to non-controlling interests. VONB includes pension business. 20#21HEALTHIER, LONGER, AIR BETTER LIVES APPENDIX#22Overview of IFRS 9 and IFRS 17 Accounting Standards Invested Assets Assets Liabilities and Equity AIA IFRS 9 Financial Instruments ■ Measurement mostly at fair value Impairment model: Expected Credit Losses ■ Classification of assets into FVTPL, FVOCI and amortised cost Insurance Contract and Other Liabilities IFRS 17 Insurance Contracts (1) ■ Best Estimate Liabilities (BEL) ■ Risk Adjustment for non-financial risks (RA) ■ Contractual Service Margin (CSM) OCI OCI (2) Balances Deferred acquisition costs no longer exist Other Assets Total Equity ■ Mark-to-market on FVOCI fixed income assets Reinsurance included under IFRS 17 liabilities Allocated Equity ▪ Effect of changes in discount rates on insurance contract liabilities for non-par business (3) Notes: (1) IFRS 17 insurance contract liabilities are presented net of insurance contract assets and assets for insurance acquisition cash flows (2) OCI comprises fair value reserve and insurance finance reserve (3) Excluding unit-linked with significant protection 22 22#23Invested Assets Better Aligned to Insurance Contract Liabilities AIA Total Assets ($b) As at 1 Jan 2022 DAC 28.5 Invested Assets (1) By Line of Business Invested Assets Classification Fixed Income Equities & Real Estate (2) 71.0 Equity 71.1 Non-par IFRS 17 FVOCI FVTPL and Surplus Assets 47% IFRS 4 FVOCI FVTPL Invested Assets (1) Fixed $290.0b 205.8 Income 205.7 Par IFRS 17 FVTPL FVTPL and Unit- linked 53% IFRS 4 FVTPL / FVOCI (3) FVTPL Reinsurance Other 5.0 13.2 16.4 Other 13.2 6.4 14.8 IFRS 4 IFRS 17 IFRS 17 ■ Deferred acquisition costs (DAC) eliminated Goodwill and intangibles unchanged Invested asset values largely unchanged, >95% continue on mark-to-market basis ■ Classification of invested assets aligned to insurance contract liability measurement model Non-participating and surplus assets ■ FVOCI for fixed income (4) ■ FVTPL for equities and real estate Participating and unit-linked assets (5) are mostly fair value through P&L (FVTPL) Includes policyholder and shareholder fund, unit-linked contracts and consolidated investment funds. Excludes policy loans as these are included in insurance contract liabilities under IFRS 17 The classification of real estate under IFRS 17 in the table represents investment properties and certain properties held for own use for participating contracts. Classification of properties held for own use generally follows IAS 16. The classification of real estate under IFRS 4 in the table represents investment properties only FVTPL for participating funds, FVOCI for Hong Kong participating business Notes: (1) (2) (3) (4) Includes $4.6b of fixed income assets that are classified under amortised cost and FVTPL (5) Includes consolidated investment funds 23 23#24CSM by Class of Business and Geography Measurement Model Class of Business General Measurement Model (GMM) Non-par protection and savings Universal life Unit-linked (protection) Other par without distinct portfolios Variable Fee Approach (VFA) Participating funds Unit-linked (savings) Other par with distinct portfolios Premium Allocation Approach (PAA) Annual renewable group insurance contracts, classified as short-term (< 1 year) Note: As of 31 Dec 2022 Included in CSM CSM VFA 41% By J Measurement Model GMM 59% Malaysia 5% Other Markets 6% Singapore 9% Hong Thailand 12% CSM By Market Segment Kong 35% Mainland China 33% AIA 24 24#25Net Profit and Shareholders' Equity Less Volatile Going Forward Illustrative Net Profit and Shareholders' Equity Under IFRS 17 OPAT Short-term market fluctuations (1) Other non-operating items Net Profit Shareholders' Allocated Equity 1 1 2 2 Non-par business (3) and surplus assets only Mark-to-market on equities and real estate - Discount rate changes on insurance contract liabilities (unit-linked with significant protection benefits) ■ Par business mark-to-market allowed for within CSM ■ Realised capital gains/losses on FVOCI bonds ■ Mark-to-market movement on FVTPL bonds ■ Provision for Expected Credit Losses (ECL) ■ Other non-operating expenses AIA 3 Other Comprehensive Income (OCI) (2) 3 Non-par business (3) and surplus assets only Mark-to-market movement on FVOCI bonds under fair value reserve Shareholders' Equity - Discount rate changes on insurance contract liabilities (other than unit-linked with significant protection benefits) under insurance finance reserve Notes: (1) (2) (3) Short-term investment and discount rate variances OCI represents fair value reserve and insurance finance reserve Non-participating (non-par) business includes all insurance liabilities under the GMM model, covering traditional protection, unit-linked with significant protection benefits, universal life and other participating business without distinct portfolios 25 45#26Participating Business (VFA) Accounting Treatment Participating Business (VFA) Accounting Treatment of Insurance Contract Liabilities and Invested Asset Movements Insurance Contract Liabilities Assumption Changes Invested Assets Mark-to-Market Movement Operating Discount Rates Fixed Income Equities & Real Estate (1) Implications IFRS 17 vs IFRS 4 Reduced net profit volatility AIA IFRS 17 CSM CSM CSM CSM ◉ IFRS 4 Locked-in Locked-in Net Profit / OCI(2) ◉ Net Profit Discount rate changes and asset mark-to-market absorbed within CSM and gradually released into OPAT Interest rate hedges in participating business also absorbed within the CSM Notes: Excludes unit-linked and short-term contracts under PAA approach for simplicity (1) The classification of real estate under IFRS 17 in the table represents investment properties and certain properties held for own use for participating contracts. Classification of properties held for own use generally follows IAS 16. The classification of real estate under IFRS 4 in the table represents investment properties only (2) Net profit for participating funds, OCI for Hong Kong participating business 26 26#27Non-Participating Business (GMM) Accounting Treatment AIA Non-Participating Business (GMM) Accounting Treatment of Insurance Contract Liabilities and Invested Asset Movements Insurance Contract Liabilities Assumption Changes Operating Invested Assets Mark-to-Market Movement Discount Rates Fixed Income Equities & Real Estate (2) IFRS 17 CSM OCI(1) OCI(1) Net Profit Implications IFRS 17 vs IFRS 4 OCI is smaller and shareholders' equity more stable ■ Discount rate changes on insurance contract liabilities and mark-to-market on fixed income both flow through OCI IFRS 4 Locked-in Locked-in OCI Net Profit Net profit treatment similar vs IFRS 4 ■ >95% of invested assets continue on mark-to-market basis Notes: Excludes unit-linked and short-term contracts under PAA approach for simplicity (1) (2) Except for unit-linked with significant protection benefits which is recognised through net profit The classification of real estate under IFRS 17 in the table represents investment properties. Classification of properties held for own use generally follows IAS 16. The classification of real estate under IFRS 4 in the table represents investment properties only 27 27#28Empty#29IFRS 17 OPAT Stable vs IFRS 4 FY 2022 OPAT ($b) Group FY 2022 OPAT ($b) Mainland China Hong Kong Thailand 2.2 2.2 1.0 1.6 1.4 (1)% +9% 0.8 +25% 6.4 6.4 +1% IFRS 4 IFRS 17 IFRS 4 Singapore IFRS 17 Faster emergence for profit of non-par business under IFRS 17 Malaysia AIA IFRS 4 IFRS 17 ◉ Lower opening shareholders' allocated equity translates to higher future earnings Other Markets 0.7 0.7 0.4 0.8 0.4 0.7 (12)% (8)% (12)% IFRS 4 IFRS 17 IFRS 4 Note: Group OPAT includes Group Corporate Centre IFRS 17 IFRS 4 IFRS 17 IFRS 4 IFRS 17 More gradual emergence of earnings for unit-linked business under IFRS 17 More gradual emergence of earnings for unit-linked business under IFRS 17 Mismatch in accounting treatment and contract boundary in Australia 29 29#301H 2022 OPAT Under IFRS 17 1H22 OPAT Composition ($b) 2 $1.6b Net Investment Result 1 $2.9b Insurance Service Result + 0.1 + 0.2 2.6 CSM Release Operating Variances (1) Risk Adjustment Release & Other Notes: Due to rounding, numbers presented in the chart may not add up precisely ea Includes claims, expenses and others but excludes persistency (1) (2) Net of investment management expenses of $0.1b (3) Net of non-insurance expenses of $0.1b +1.6 4.5 (0.1) (0.4) (0.2) (0.5) 3.4 3 $(0.5)b Other Revenue and Expenses Net Investment Result (2) OPAT Before Other Revenue and Expenses, Finance Costs and Tax Net Other Fees and Revenue (3) Non-attributable Expenses Under IFRS 17 AIA Finance Costs Tax OPAT 30 50#312H 2022 OPAT Under IFRS 17 2H22 OPAT Composition ($b) 2 $1.7b Net Investment Result 1 $2.6b Insurance Service Result 2.5 (0.1) + 0.1 CSM Release Operating Variances (1) Risk Adjustment Release & Other Notes: Due to rounding, numbers presented in the chart may not add up precisely ea (1) (2) (3) Includes claims, expenses and others but excludes persistency Net of investment management expenses of $0.2b Net of non-insurance expenses of $0.2b +1.7 4.3 + 0.1 (0.5) (0.2) (0.6) 3.1 3 $(0.5)b Other Revenue and Expenses Net Investment Result (2) OPAT Before Other Revenue and Expenses, Finance Costs and Tax Net Other Fees and Revenue (3) Non-attributable Expenses Under IFRS 17 Finance Costs Tax OPAT AIA 31#32Expected Credit Losses Stage 3 Stage 2 Stage 1 Description Expected Credit Losses (ECL) Under IFRS 17 AIA $m Stage 1 Stage 2 Stage 3 Total Loss allowance as at 1 Jan 2022 152 29 26 207 Financial assets that have low credit risk at reporting date or have not had a significant increase in credit risk since initial recognition ECL net charge to net profit Derecognition Financial assets that have had a significant increase in credit risk since initial recognition but that do not have any evidence of impairment at the reporting date Other movements 97 64 64 72 233 (48) (25) (73) (13) (2) 6 (9) Loss allowance as at 31 Dec 2022 188 66 104 358 Financial assets that are determined to be credit-impaired at the reporting date Amortised cost of financial assets before loss allowance as at 31 Dec 2022 97,579 579 141 98,299 % of total 99% 1% 100% Note: Shown at amortised cost and does not include accrued investment income and cash and cash equivalents as the exposure to credit risk of these assets are considered insignificant 32 32#33IFRS 17 Reinforces Prudence in AIA's Embedded Value IFRS 17 Comprehensive Equity to EV Equity ($b) Net CSM Shareholders' Equity + 2.8 86.4 (4.3) (13.6) 71.2 IFRS 17 Comprehensive Equity 31 Dec 2022 Risk Adjustment (1) Cost of Capital in EV Valuation Differences EV Equity 31 Dec 2022 Notes: Due to rounding, numbers presented in the chart may not add up precisely (1) Risk adjustment is net of reinsurance IFRS 17 New Business CSM to VONB ($b) 6.0 (1.2) + 0.4 (0.3) (1.8) FY22 IFRS 17 New Business CSM (Net of Reinsurance) AIA 3.1 Tax Risk Adjustment (1) Cost of Capital Valuation Differences FY22 VONB in VONB 33 33#34Estimated Sensitivity Analysis Under IFRS 17 Estimated Sensitivity of CSM ($b) As at 31 Dec 2022 50.2 10% decrease in equity prices 50 basis points increase in interest rates (0.6) (0.7) Note: Sensitivities are based on latest AIA's estimation CSM (Net of Reinsurance) 50 basis points decrease in interest rates 10% increase in equity prices 0.9 0.6 Estimated Sensitivity of Profit before Tax ($b) For the year ended 31 Dec 2022 10% decrease in equity prices 50 basis points increase in interest rates 4.1 50 basis points decrease in interest rates 10% increase in equity prices (1.2) (0.1) Profit Before Tax 0.1 1.2 AIA 34#35IFRS 17 Discount Rates and Illiquidity Premium Spot Rates as at 31 Dec 2022 1 year 5 years 10 years 15 years 20 years Risk free With illiquidity premium Risk free With illiquidity premium Risk free With illiquidity premium Risk free With illiquidity premium Risk free With illiquidity premium % USD 4.62 4.96 3.88 4.92 3.75 5.20 3.84 5.42 4.10 5.69 HKD 4.85 5.19 3.96 4.99 3.78 5.22 3.82 5.40 4.08 5.66 CNY 2.09 2.63 2.66 3.29 2.88 3.47 3.04 3.72 3.16 3.88 SGD 3.88 5.15 2.84 4.56 3.07 4.97 2.92 4.80 2.59 4.39 MYR 3.25 3.86 3.88 4.36 4.09 4.67 4.36 5.02 4.46 5.18 THB 1.38 1.83 1.98 2.62 2.74 3.59 3.34 4.33 3.75 4.79 AIA 35 95