Maintaining a Strong, Resilient Balance Sheet
Definitions and Notes (Cont.)
AIA
■ In 2021, the Hong Kong Insurance Authority (HKIA) implemented the new group-wide supervision (GWS) framework. On 14 May 2021, AIA Group Limited became a designated insurance
holding company and is therefore subject to the GWS framework in Hong Kong including the Insurance (Group Capital) Rules. The Group LCSM surplus is the difference between the group
available capital and the group minimum capital requirement, and the Group LCSM cover ratio is the ratio of group available capital to group minimum capital requirement based on the Local
Capital Summation Method (LCSM). The comparative figure as at 31 December 2020, as previously disclosed in our Annual Report 2020, was based on our understanding of the likely
application of the GWS framework to the Group at the time. The 2020 figure excluded $5,822m of senior notes which was not approved at the time as contributing to Group available capital.
Investment return and composition of investments exclude unit-linked contracts and consolidated investment funds.
Investment return is defined as investment income with the addition of realised and unrealised gains and losses as a percentage of average investments excluding property held for own use.
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.
PVNBP margin refers to margin on a present value of new business premium basis.
Operating ROE stands for operating return on shareholders' allocated equity and is as operating profit after tax attributable to shareholders of the Company, expressed as a percentage of the
simple average of opening and closing shareholders' allocated equity.
Operating ROEV stands for operating return on EV and is calculated as EV operating profit, expressed as a percentage of the opening embedded value.
Shareholders' allocated equity is total equity attributable to shareholders of the Company less fair value reserve.
Tata AIA Life refers to Tata AIA Life Insurance Company Limited.
TWPI consists of 100% of renewal premiums, 100% of first year premiums and 10% of single premiums, before reinsurance ceded.
Underlying free surplus generation (UFSG) represents free surplus generated from the in-force business, adjusted for certain non-recurring items, and before free surplus used to fund new
business, unallocated Group Office expenses, finance costs, investment return variances and other non-operating items. The underlying free surplus generation is also calculated after reflecting
consolidated reserving and capital requirements.
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. VIF by market is stated before adjustments to reflect consolidated reserving and capital requirements and unallocated Group Office expenses, and presented on a local statutory
basis.
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 and VONB margin by distribution channel are based on local statutory reserving and capital requirements, before the deduction of unallocated Group Office expenses and non-controlling
interests and exclude pension business.
VONB and VONB margin by product mix and geographical market are based on local statutory reserving and capital requirements, before the deduction of unallocated Group Office expenses
and non-controlling interests.
■ VONB includes pension business. ANP and VONB margin exclude pension business and are before the deduction of non-controlling interests.
VONB margin is calculated as VONB divided by ANP. VONB for the margin calculations excludes pension business and is before the deduction of non-controlling interests to be consistent with
the definition of ANP.
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