AIA Group Limited

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement and the listing document referred to herein have been published for information purposes only as required by the Listing Rules (as defined below) and do not constitute an offer to sell nor a solicitation of an offer to buy any securities. Neither this announcement nor anything referred to herein (including the listing document) forms the basis for any contract or commitment whatsoever. For the avoidance of doubt, the publication of this announcement and the listing document referred to herein shall not be deemed to be an offer of securities made pursuant to a prospectus issued by or on behalf of the issuer for the purposes of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong nor shall it constitute an advertisement, invitation or document containing an invitation to the public to enter into or offer to enter into an agreement to acquire, dispose of, subscribe for or underwrite securities for the purposes of the Securities and Futures Ordinance (Cap. 571) of Hong Kong.

This announcement is for information purposes only, and does not constitute an invitation or solicitation of an offer to acquire, purchase or subscribe for securities or an invitation to enter into an agreement to do any such things, nor is it calculated to invite any offer to acquire, purchase or subscribe for any securities.

This announcement does not constitute an offer to sell or the solicitation of an offer to buy any securities in the United States or any other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The securities referred to herein will not be registered under the United States Securities Act of 1933, as amended (the “ Securities Act ”), and may not be offered or sold in the United States except pursuant to an exemption from or in a transaction not subject to, the registration requirements of the Securities Act. Any public offering of securities to be made in the United States will be made by means of a prospectus. Such prospectus will contain detailed information about the company making the offer, its management and financial statements. The Issuer (as defined below) does not intend to make any public offering of securities in the United States.

Notice to Hong Kong investors : The Issuer confirms that the Instruments are intended for purchase by Professional Investors (as defined in Chapter 37 of the Listing Rules) only and will be listed on the Hong Kong Stock Exchange on that basis. Accordingly, the Issuer confirms that the Instruments are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

PUBLICATION OF SUPPLEMENTAL OFFERING CIRCULAR ON THE STOCK EXCHANGE OF HONG KONG LIMITED

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(the " Issuer ")

US$12,000,000,000 Global Medium Term Note and Securities Programme

This announcement is issued pursuant to Rule 37.39A of the Rules Governing the Listing of Securities (the " Listing Rules ") on The Stock Exchange of Hong Kong Limited (the " Hong Kong Stock Exchange ").

Please refer to the supplemental offering circular dated 18 August 2021 (the " Supplemental Offering Circular ") appended hereto in relation to the US$12,000,000,000 Global Medium Term Note and Securities Programme (the " Programme "), which is supplemental to the offering circular dated 16 March 2021 (the " Original Offering Circular ", and together with the Supplemental Offering Circular, the " Offering Circular "). A copy of the Original Offering Circular is available at https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0317/2021031700222.pdf. As disclosed in the Offering Circular, the instruments (the " Instruments ") to be issued under the Programme will be intended for purchase by professional investors (as defined in Chapter 37 of the Listing Rules) only and will be listed on the Hong Kong Stock Exchange on that basis.

The Offering Circular does not constitute a prospectus, notice, circular, brochure or advertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation to the public to make offers to subscribe for or purchase any securities, nor is it circulated to invite offers by the public to subscribe for or purchase any securities.

Hong Kong, 19 August 2021

As at the date of this announcement, the Independent Non-executive Chairman and Independent Non-executive Director of the Issuer is Mr. Edmund Sze-Wing TSE, the Executive Director, Group Chief Executive and President of the Issuer is Mr. LEE Yuan Siong and the Independent Non-executive Directors of the Issuer are Mr. Jack Chak-Kwong SO, Mr. Chung-Kong CHOW, Mr. John Barrie HARRISON, Mr. George Yong-Boon YEO, Professor Lawrence Juen-Yee LAU, Ms. Swee-Lian TEO, Dr. Narongchai AKRASANEE, Mr. Cesar Velasquez PURISIMA and Ms. SUN Jie (Jane).

SUPPLEMENTAL OFFERING CIRCULAR

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(incorporated in Hong Kong with limited liability)

(Stock Code: 1299)

US$12,000,000,000 Global Medium Term Note and Securities Programme

This Supplemental Offering Circular (the “ Supplemental Offering Circular ”) is supplemental to, and should be read in conjunction with, the Offering Circular dated 16 March 2021 (the “ Original Offering Circular ”, and together with this Supplemental Offering Circular, the “ Offering Circular ”) and all other documents that are deemed to be incorporated by reference therein in relation to the Global Medium Term Note and Securities Programme (the “ Programme ”) established by AIA Group Limited (the “ Issuer ”). Save to the extent defined in this Supplemental Offering Circular, terms defined or otherwise attributed meanings in the Original Offering Circular have the same meaning when used in this Supplemental Offering Circular. References in the Original Offering Circular and this Supplemental Offering Circular to “this Offering Circular” or “the Offering Circular” mean the Original Offering Circular as supplemented by this Supplemental Offering Circular. To the extent that the Original Offering Circular is inconsistent with this Supplemental Offering Circular, the terms of this Supplemental Offering Circular shall prevail.

The Programme is listed on The Stock Exchange of Hong Kong Limited (the “ Hong Kong Stock Exchange ” or “ HKSE ”).This Supplemental Offering Circular is for distribution to professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) (the “ Professional Investors ”) only.

Notice to Hong Kong investors : the Issuer confirms that each Tranche of Instruments issued under the Programme is intended for purchase by Professional Investors only and, with respect to Instruments to be listed on the Hong Kong Stock Exchange, will be listed on the Hong Kong Stock Exchange on that basis. Accordingly, the Issuer confirms that the Instruments are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.

The HKSE has not reviewed the contents of this Supplemental Offering Circular, other than to ensure that the prescribed form disclaimer and responsibility statements, and a statement limiting distribution of this document to Professional Investors only have been reproduced in this Supplemental Offering Circular. Listing of the Programme and the Instruments on the HKSE is not to be taken as an indication of the commercial merits or credit quality of the Programme, the Instruments or the Issuer or quality of disclosure in the Offering Circular. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this Supplemental Offering Circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Supplemental Offering Circular.

Arranger Citigroup Dealers

ANZ BNP PARIBAS Citigroup Crédit Agricole CIB Deutsche Bank Goldman Sachs HSBC Morgan Stanley MUFG Standard Chartered Bank Wells Fargo Securities

The date of this Supplemental Offering Circular is 18 August 2021.

DISCLAIMERS

The Offering Circular includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer. The Issuer accepts full responsibility for the accuracy of the information contained in this document and confirms, having made all reasonable enquiries, that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

SIGNIFICANT / MATERIAL CHANGE

Since 30 June 2021, there has been no material adverse change in the financial position or prospects nor any significant change in the financial or trading position of the Issuer and the Group.

PAGE

RECENT DEVELOPMENTS .................................................................................................................. 4 TOTAL CAPITALISATION .................................................................................................................... 5 SELECTED INTERIM CONSOLIDATED FINANCIAL AND OTHER DATA ......................................... 6 INTERIM RESULTS ............................................................................................................................. 10 REGULATORY AND INTERNATIONAL DEVELOPMENTS .............................................................. 31 INDEX TO THE INTERIM FINANCIAL STATEMENTS AND SUPPLEMENTARY EMBEDDED VALUE INFORMATION ...................................................................................................................... F-1

RECENT DEVELOPMENTS

PARTNERSHIP WITH THE BANK OF EAST ASIA AND ACQUISITION OF BEA LIFE LIMITED

On 24 March 2021, we announced that we had entered into an exclusive 15 year strategic bancassurance partnership with The Bank of East Asia (“ BEA ”) covering Hong Kong and Mainland China. We will pay a total consideration of approximately US$650 million for the distribution partnership with BEA and for the acquisition of 100% of BEA Life Limited, a wholly-owned subsidiary of BEA. We will also acquire a closed portfolio of life insurance policies underwritten by Blue Cross (Asia-Pacific) Insurance Limited. As at 17 August 2021, the necessary regulatory approval for the acquisition of the shares of BEA Life Limited has been obtained and the completion of that acquisition is expected to take place shortly.

RATINGS CHANGES

On 29 March 2021, S&P Global Ratings revised our long-term issuer credit ratings to A+ with a “stable” outlook from A with a “positive” outlook.

On 14 May 2021, Moody’s Investors Service revised our long-term issuer credit rating to A1 with a “stable” outlook from A2 with a “Ratings under Review” outlook.

MANAGEMENT UPDATE

On 31 May 2021, we announced the appointment of Ms. Jie Sun (Jane) as an Independent Non-executive Director of the Issuer with effect from 1 June 2021.

Ms. Sun, aged 52, is the chief executive officer and a member of the board of directors of Trip.com (listed on the Hong Kong Stock Exchange and the Nasdaq Global Select Market), one of the leading global travel services companies that operates the sub-brands Trip.com, Ctrip, Skyscanner and Qunar. Ms. Sun is a director of Tripadvisor, Inc. and MakeMyTrip, both listed on the Nasdaq Global Select Market. She is also an independent director of iQIYI, Inc. (listed on the Nasdaq Global Select Market) and TAL Education Group (listed on the New York Stock Exchange). Ms. Sun has extensive experience in operating and managing online travel businesses, mergers and acquisitions, and financial reporting and operations.

Ms. Sun received her Bachelor's degree from the business school of the University of Florida with high honors. She also obtained a LLM degree from Peking University Law School. She is a member of the American Institute of Certified Public Accountants.

INVESTMENT IN CHINA POST LIFE

On 29 June 2021, we announced that we had reached an agreement to invest RMB12,033 million (approximately US$1,860 million) through AIA Company Limited (“ AIA Co. ”) for a 24.99% equity stake (post investment) in China Post Life Insurance Co., Ltd. The completion of the transaction remains subject to securing all necessary regulatory approvals.

ESTABLISHMENT OF NEW BRANCH IN HUBEI

In June 2021, AIA China received approval from the China Banking and Insurance Regulatory Commission (“ CBIRC ”) to begin preparations to establish a new branch in Hubei province. Hubei has a fast-growing economy and ranks eighth by GDP by province in Mainland China. The approval is a further step in our geographical expansion strategy in Mainland China.

TOTAL CAPITALISATION

The following table sets out the consolidated Total Capitalisation (as defined below) of the Group as derived from the 2021 interim condensed consolidated financial statements. The table should be read in conjunction with the 2021 interim condensed consolidated financial statements and the notes thereto included elsewhere in this Supplemental Offering Circular.

Other loans ................................................................................................................. Medium term notes and securities(1)........................................................................... Total Borrowings ...................................................................................................... Equity Share capital........................................................................................................... Employee share-based trusts ................................................................................. Other reserves ........................................................................................................ Retained earnings .................................................................................................. Fair value reserve ................................................................................................... Foreign currency translation reserve ...................................................................... Property revaluation reserve………………………………………………………… Others ..................................................................................................................... Non-controlling interests ......................................................................................... Total Equity .............................................................................................................. Total Capitalisation(2) ..............................................................................................	As of 30 June 2021 (Unaudited)
	(in US$ millions)
	11 9,171
	9,182
	14,159 (225) (11,877) 46,391 10,073 (586) 1,048 (39) 473
	59,417
	68,599

(1) Represents our outstanding medium term notes and securities placed to the market as of 30 June 2021. (2) Total Capitalisation is the sum of Total Borrowings plus Total Equity.

There has been no material change in our Total Capitalisation since 30 June 2021.

SELECTED INTERIM CONSOLIDATED FINANCIAL AND OTHER DATA

The tables set forth below show certain selected historical consolidated financial information and other data of the Group. The financial information as at and for the six months ended 30 June 2021 and 2020 set forth below has been derived from our unaudited interim condensed consolidated financial statements (the “2021 interim condensed consolidated financial statements”) included elsewhere in this Supplemental Offering Circular. The information on VONB for the six months ended 30 June 2021 and 2020 and the information on EV Equity as at 30 June 2021 and 31 December 2020 set forth below has been derived from the “ Supplementary Embedded Value Information ” included elsewhere in this Supplemental Offering Circular. The selected historical consolidated financial and other data should be read in conjunction with “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” set forth in the Original Offering Circular and the 2021 interim condensed consolidated financial statements and the information in the “ Supplementary Embedded Value Information ” included elsewhere in this Supplemental Offering Circular.

The interim consolidated income statement and interim consolidated statement of financial position include amounts attributable to unit-linked contracts. Such amounts are excluded in calculating OPAT, which is set forth in “– Other Data ” below.

CONSOLIDATED INCOME STATEMENT

	Six months ended 30 June (Unaudited)	Six months ended 30 June (Unaudited)
(inUS$millions)	2021	2020
Revenue
Premiums and fee income .........................................................	18,609	17,268
Premiums ceded to reinsurers ....................................................	(1,361)	(1,135)
Net premiums and fee income ...................................................	17,248	16,133
Investment return ........................................................................	6,780	3,381
Other operating revenue ............................................................	166	150
Total revenue ................................................................................	24,194	19,664

Expenses
Insurance and investment contract benefits ...............................	17,272	13,930
Insurance andinvestment contract benefits ceded.....................	(1,202)	(899)
Net insurance and investment contract benefits .........................	16,070	13,031
Commission and other acquisition expenses .............................	2,267	2,157
Operating expenses ..................................................................	1,439	1,242
Finance costs ............................................................................	176	143
Other expenses ..........................................................................	530	519
Total expenses .............................................................................	20,482	17,092

Profit before share of profit from associates and joint ventures ……………………………………………………………..	3,712	2,572
Share of profit from associates and joint ventures ........................	2	2
Profit before tax……………………………………………………….	3,714	2,574
Income tax credit/(expense) attributable to policyholders’ returns	72	(23)
Profit before tax attributable to shareholders’ profits…………	3,786	2,551
Tax expense ...................................................................................	(445)	(391)
Tax attributable to policyholders’ returns .......................................	(72)	23
Tax expense attributable to shareholders’ profits ..........................	(517)	(368)
Net profit ......................................................................................	3,269	2,183

Less: amounts attributable to non-controlling interests ..............	24	(14)
Net profit attributable to shareholders of the Issuer ................	3,245	2,197

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(in US$ millions) Assets Intangible assets ........................................................................................... Investments in associates and joint ventures ......................................... Property, plant and equipment ...................................................................... Investment property ...................................................................................... Reinsurance assets ...................................................................................... Deferred acquisition and origination costs .................................................... Financial investments: Loans and deposits ...................................................................................... Available for sale Debt securities .............................................................................................. At fair value through profit or loss Debt securities .............................................................................................. Equity securities ........................................................................................... Derivative financial instruments .................................................................... Total financial investments ............................................................................... Deferred tax assets ...................................................................................... Current tax recoverable ................................................................................ Other assets ................................................................................................. Cash and cash equivalents ........................................................................... Total assets .................................................................................................... Liabilities Insurance contract liabilities .......................................................................... Investment contract liabilities ........................................................................ Borrowings .................................................................................................... Obligations under repurchase agreements ................................................... Derivative financial instruments .................................................................... Provisions ..................................................................................................... Deferred tax liabilities ................................................................................... Current tax liabilities ..................................................................................... Other liabilities .............................................................................................. Total liabilities ............................................................................................. Equity Share capital ................................................................................................. Employee share-based trusts ....................................................................... Other reserves .............................................................................................. Retained earnings ........................................................................................ Fair value reserve ......................................................................................... Foreign currency translation reserve ............................................................. Property revaluation reserve................................................................... Others ........................................................................................................... Amounts reflected in other comprehensive income ...................................................................................................... Total equity attributable to shareholders of the Issuer ............................................................................................................ Non-controlling interests ................................................................................ Total equity ..................................................................................................... Total liabilities and equity .............................................................................	As at 30 June 2021 (Unaudited) 2,569 676 2,703 4,579 4,830 28,374 9,569 159,298 37,731 65,106 915 272,619 32 89 6,271 7,149 329,891 228,276 12,859 9,182 3,447 1,836 225 5,835 446 8,368 270,474 14,159 (225) (11,877) 46,391 10,073 (586) 1,048 (39) 10,496 58,944 473 59,417 329,891	As at 31 December
		2020 (Unaudited)
		2,634 606 2,722 4,639 4,560 27,915 9,335 165,106 36,775 59,182 1,069
		271,467 23 103 5,833 5,619
		326,121 223,071 12,881 8,559 1,664 1,003 230 6,902 346 7,797
		262,453 14,155 (155) (11,891) 44,704 15,170 233 1,027 (43)
		16,387 63,200 468
		63,668
		326,121

OTHER DATA

We measure the scale and profitability of our business using various key performance indicators, including VONB, ANP, TWPI, OPAT and EV Equity. For a discussion of these metrics, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Key Performance Indicators” in the Original Offering Circular.

. . . .	For the six months ended 30 June	For the six months ended 30 June
	2021 1,814 3,060 18,511 3,182 As at 30 June 2021 70,102 412% 13.4%	2020
		1,410 2,579 16,926 2,933 As at 31 December 2020
. . .		67,185 374% 11.9%

(1) Definitions of VONB, ANP, TWPI, OPAT and EV Equity and Group LCSM Cover Ratio are provided in the Glossary beginning on page A-1 of the Original Offering Circular.

(2) For a reconciliation of OPAT to net profit, see note 4 to our 2021 interim condensed consolidated financial statements included elsewhere in this Supplemental Offering Circular. OPAT is calculated before non-operating investment returns and other items, net of tax.
(3) This ratio as at 31 December 2020 was based on the Group’s understanding of the likely application of the GWS framework to the Group at the time and included US$1,735 million of subordinated securities but excluded US$5,810 million of senior notes that had not yet been approved to contribute to Group available capital. The calculation basis as at 31 December 2020 is largely consistent with that applied to the Group LCSM Cover Ratio as at 30 June 2021 with the key difference being the treatment of senior notes. For more information see “Interim Results – Group LCSM Solvency Position” and “Regulatory and International Developments”.
(4) The leverage ratio is calculated by dividing Total Borrowings by Total Capitalisation, each as set out or defined in “ Total Capitalisation ” in the Original Offering Circular.

INTERIM RESULTS

INTERIM FINANCIAL REVIEW FOR THE SIX MONTHS ENDED 30 JUNE 2021

The management discussion and analysis below covers the financial results for the six months period from 1 January 2021 to 30 June 2021 for the current period and for the six months period from 1 January 2020 to 30 June 2020 for the prior period. All figures included in this Supplemental Offering Circular are presented in actual reporting currency (U.S. dollar) and based on actual exchange rates unless otherwise stated.

New Business Performance

VONB, ANP AND VONB MARGIN BY SEGMENT

US$ millions, unless otherwise stated	Six months ended 30 June 2021 VONB VONB Margin ANP	Six months ended 30 June 2020 VONB VONB Margin ANP	VONB Change %
Mainland China Hong Kong Thailand Singapore Malaysia Other Markets	738 82.1% 899 313 57.5% 505 312 93.5% 333 176 63.2% 279 157 61.7% 253 253 32.1% 791	594 81.8% 726 306 51.0% 565 199 63.9% 312 127 59.3% 214 81 50.5% 159 240 39.7% 603	24% 2% 57% 39% 94% 5%
Subtotal Adjustment to reflect consolidated reserving and capital requirements After-tax value of unallocated Group Office expenses	1,949 62.9% 3,060 (31) n/m n/m (88) n/m n/m	1,547 59.3% 2,579 (50) n/m n/m (77) n/m n/m	26% n/m n/m
Total before non-controlling interests Non-controlling interests	1,830 59.0% 3,060 (16) n/m n/m	1,420 54.4% 2,579 (10) n/m n/m	29% n/m
Total	1,814 59.0% 3,060	1,410 54.4% 2,579	29%

VONB increased by 29% to US$1,814 million for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, reflecting our geographical diversification across Asia, our market-leading positions and the strength of our multi-channel distribution. Growth in VONB was broad-based with 11 markets reporting a strong increase and all of our reportable segments (except Hong Kong) exceeding the pre-pandemic levels in the six months ended 30 June 2019.

VONB from our agency channel increased by 32% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020 and accounted for 82% of the Group’s total VONB. While travel restrictions continue to limit sales to Mainland Chinese visitors which resulted in a reduction in VONB from the retail IFA channel in Hong Kong, VONB from our partnership distribution channel remained broadly stable for the six months ended 30 June 2021 compared to the six months ended 30 June 2020.

ANP increased by 19% to US$3,060 million for the six months ended 30 June 2021 compared to the six months ended 30 June 2020 primarily due to growth in Malaysia, Singapore and Mainland China. VONB margin increased by 4.6 percentage points to 59.0% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, driven by a shift in product mix towards protection and unit-linked business, higher government bond yields and a reduction in acquisition expense overruns reflecting the strong recovery in new business volumes.

VONB from AIA China increased 24% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020. Our agency force remained a key competitive advantage as a high adoption level for our comprehensive suite of digital tools supported a strong improvement in productivity in the six months ended 30 June 2021 compared to the six months ended 30 June 2020. The VONB in the six months ended 30 June 2021 was presented after deducting withholding tax of US$38 million. The VONB in the six months ended 30 June 2020, which was generated from the Shanghai branch of AIA Co. before the incorporation of the subsidiary in Mainland China, was presented before deducting any withholding tax. Excluding the impact of

the 5% withholding tax applied from July 2020, VONB from AIA China increased 31% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020.

VONB from AIA Hong Kong grew by 2% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020. VONB from our domestic customer segment increased by 16% in the six months ended 30 June 2021 compared to the six months ended 30 June 2020. These results were partly offset by reduced sales to the Mainland Chinese visitor customer segment. Our Premier Agency remained the market leader in agency distribution, which was supported by an increase in new recruits. Sales to Mainland Chinese visitors in our Macau branch has significantly increased and contributed over one-third of AIA Macau’s total ANP in the six months ended 30 June 2021.

VONB from AIA Thailand increased by 57% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, which was higher than the pre-pandemic level in the six months ended 30 June 2019. These results were supported by a shift in product mix towards traditional protection and regular premium unit-linked products, which increased VONB margin from 63.9% for the six months ended 30 June 2020 to 93.5% for the six months ended 30 June 2021.

VONB from AIA Singapore increased by 39% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, driven by strong improvement in agency productivity, as we continued to support our Premier Agency by enhancing our digital tools and platforms.

VONB from AIA Malaysia increased by 94% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, which was 21% higher than the pre-pandemic level in the six months ended 30 June 2019, driven by a strong increase in VONB from our agency and bancassurance channels.

VONB from Other Markets increased by 5% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020. VONB for the six months ended 30 June 2020 included the one-off contribution from the purchase of mortality cover by the Commonwealth Bank of Australia (“ CBA ”) in the six months ended 30 June 2020. Excluding this one-off contribution, Other Markets reported 17% VONB growth. VONB growth was driven by Indonesia, South Korea and Vietnam.

EV Equity

EV Equity was US$70,102 million as at 30 June 2021 compared to US$67,185 million as at 31 December 2020, driven by EV operating profit of US$4,092 million and positive investment return variances of US$1,019 million, which reflected a rise in government bond yields and a strong equity market performance. Long-term economic assumptions remained unchanged from those reported as at 31 December 2020.

EV EQUITY

US$ millions, unless otherwise stated	As at 30 June 2021 As at 31 December 2020
EV Goodwilland other intangible assets(1)	68,179 65,247 1,923 1,938
EV Equity	70,102 67,185

Note:

(1) Consistent with the 2021 interim condensed consolidated financial statements included elsewhere in this Supplemental Offering Circular. Net of tax, amounts attributable to participating funds and non-controlling interests.

EV OPERATING PROFIT

EV operating profit increased by US$214 million to US$4,092 million for the six months ended 31 June 2021 compared to the six months ended 30 June 2020. EV operating profit for the six months ended 30 June 2021 included US$363 million from positive operating variances as our overall experience has continued to be positive compared with our EV assumptions.

EV MOVEMENT

EV increased by US$2,932 million to US$68,179 million as at 30 June 2021 compared to US$65,247 million as at 31 December 2020. The growth in EV is reported after the payment of the final shareholder dividend for the year ended 31 December 2020 of US$1,558 million. The increase was mainly driven by EV operating profit of US$4,092 million and positive investment return variances of US$1,019 million, which reflected a rise in government bond yields and a strong equity market performance. Long-term economic assumptions remained unchanged from those reported at the twelve months ended 31 December 2020. The effect of foreign exchange translation movements was negative at US$612 million for the six months ended 30 June 2021.

An analysis of the movement in EV is shown as follows:

US$ millions, unless otherwise stated	Six months ended 30 June 2021 ANW VIF EV
Opening EV Value of new business Expected return on EV Operating experience variances Operating assumption changes Finance costs	28,503 36,744 65,247 (400) 2,214 1,814 2,456 (391) 2,065 471 (85) 386 42 (65) (23) (150) - (150)
EV operating profit Investment return variances Other non-operatingvariances	2,419 1,673 4,092 1,482 (463) 1,019 833 (794) 39
Total EV profit Dividends Other capital movements Effect of changes in exchange rates	4,734 416 5,150 (1,558) - (1,558) (48) - (48) (86) (526) (612)
Closing EV	31,545 36,634 68,179

US$ millions, unless otherwise stated	Six months ended 30 June 2020 ANW VIF EV
Opening EV Value of new business Expected return on EV Operating experience variances Operating assumption changes Finance costs	28,241 33,744 61,985 (363) 1,773 1,410 2,844 (654) 2,190 494 (69) 425 (152) 116 (36) (111) - (111)
EV operating profit Investment return variances Effect of changes in economic assumptions Other non-operatingvariances	2,712 1,166 3,878 (3,076) (302) (3,378) 33 (968) (935) 426 (91) 335
Total EV profit Dividends Other capital movements Effect of changes in exchange rates	95 (195) (100) (1,452) - (1,452) 61 - 61 (323) (597) (920)
Closing EV	26,622 32,952 59,574

IFRS Profit

OPAT(1) BY SEGMENT

US$ millions, unless otherwise stated	Six months ended Six months ended 30 June 2021 30 June 2020 %
Mainland China Hong Kong Thailand Singapore Malaysia Other Markets GroupCorporate Centre	722 640 13% 1,055 1,005 5% 485 478 1% 339 303 12% 194 148 31% 391 333 17% (4) 26 n/m
Total	3,182 2,933 8%

Note:

(1) Attributable to shareholders of the Issuer only and excludes non-controlling interests.

OPAT increased by 8% to US$3,182 million for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, which was driven by our high-quality, recurring sources of earnings and proactive management of our growing in-force portfolio. These results included the effect of 5% withholding tax for AIA China post subsidiarisation and a normalisation of claims compared with the low levels reported in the six months ended 30 June 2020. Excluding these items, underlying OPAT growth was 12% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020. Renewal premiums received increased by 14% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, and total recurring premiums accounted for over 90% of premiums received for the six months ended 30 June 2021. Operating margin was 17.3% for the six months ended 30 June 2021 as compared to 17.5% for the six months ended 30 June 2020.

OPAT from Mainland China increased 13% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, primarily driven by higher earnings from our growing in-force portfolio. This result included the introduction of the withholding tax following the subsidiarisation. Excluding this item, OPAT growth was 19% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020 due to higher earnings from our growing in-force portfolio, which was partly offset by the normalisation of medical claims relative to the six months ended 30 June 2020.

Hong Kong reported OPAT growth of 5% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, supported by underlying business growth and higher investment returns. Medical claims experience for the six months ended 30 June 2021 was not as positive as the experience in the six months ended 30 June 2020.

OPAT from Thailand remained broadly stable with a 1% increase for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, as earnings from new business for the six months ended 30 June 2021 was offset by adverse lapse experience and lower investment returns.

OPAT from Singapore increased by 12% for the six month ended 30 June 2021 compared with the six months ended 30 June 2020 as a result of growth in our in-force portfolio and increased investment returns.

OPAT from Malaysia increased by 31% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. OPAT for the six months ended 30 June 2020 was negatively impacted by a one-off provision due to an industry-wide initiative to identify and pay accumulated unreported death claims. Excluding this provision, OPAT from Malaysia increased by 12% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020 due to underlying business growth.

OPAT from Other Markets increased by 17% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, mainly driven by underlying business growth and positive claims experience from disability insurance policies in Australia.

TWPI BY SEGMENT

US$ millions, unless otherwise stated	Six months Six months ended ended 30 June 2021 30 June 2020 %
Mainland China Hong Kong Thailand Singapore Malaysia Other Markets	3,961 3,001 32% 5,773 6,136 (6)% 2,089 1,981 5% 1,730 1,502 15% 1,200 1,049 14% 3,758 3,257 15%
Total	18,511 16,926 9%

TWPI increased by 9% to US$18,511 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. In Hong Kong, TWPI decreased by 6% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020 as a cohort of long-term participating policies issued in 2016 has reached the end of the premium payment term. These policies remain in force and generated OPAT for the six months ended 30 June 2021. Renewal premiums received increased by 14% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, and total recurring premiums accounted for over 90% of premiums received in the six months ended 30 June 2021.

IFRS OPERATING PROFIT INVESTMENT RETURN

US$ millions, unless otherwise stated	Six months Six months ended ended 30 June 2021 30 June 2020 %
Interest income Expected long-term investment return for equities and real estate	3,754 3,420 10% 1,427 1,129 26%
Total	5,181 4,549 14%

IFRS operating profit investment return increased by 14% to US$5,181 million for the six months ended 30 June 2021 compared to the six months ended 30 June 2020. The growth was primarily driven by the increase in the size of our investment portfolio.

OPERATING EXPENSES

US$ millions, unless otherwise stated	Six months Six months ended ended 30 June 2021 30 June 2020 %
Operatingexpenses	1,439 1,242 16%

The expense ratio was 7.8% for the six months ended 30 June 2021 compared with 7.3% for the six months ended 30 June 2020 as a result of a geographical mix shift in TWPI away from Hong Kong, which was the reportable segment with the lowest expense ratio in the Group.

NET PROFIT[(1)]

NET PROFIT(1)
US$ millions, unless otherwise stated	Six months Six months ended ended 30 June 2021 30 June 2020 %
OPAT Short-term fluctuations in investment return related to equities and real estate, net of tax(2) Reclassification of revaluation (gains)/losses for property held for own use, net of tax(2) Corporate transaction related costs, net of tax Implementation costs of new accounting standards, net of tax Other non-operating investment return and other items,net oftax	3,182 2,933 8% 199 (1,290) n/m (37) 61 n/m (19) (37) n/m (28) (22) n/m (52) 552 n/m
Total	3,245 2,197 48%

Notes:

(1) Attributable to shareholders of the Issuer only, excluding non-controlling interests.

(2) Short-term fluctuations in investment return include the revaluation gains and losses for property held for own use. This amount is then reclassified out of net profit to conform to IFRS measurement and presentation.

IFRS NON-OPERATING MOVEMENT

IFRS net profit increased by 48% to US$3,245 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. Our net profit definition includes mark-to-market movements from equity and investment property portfolios. The result for the six months ended 30 June 2021 included positive shortterm fluctuations from long-term assumptions for equities and real estate of US$199 million, compared with negative movements of US$1,290 million for the six months ended 30 June 2020. Other non-operating investment return and other items of US$552 million in the six months ended 30 June 2020 largely consisted of realised gains from our available for sale debt securities.

Segmental Information

Our reporting segments are categorised as follows: (i) each Key Segment, consisting of Mainland China, Hong Kong (which includes Macau), Thailand, Singapore (which includes Brunei) and Malaysia; (ii) combined results for our Other Markets, consisting of the combined results of Australia, Cambodia, India, Indonesia, Myanmar, New Zealand, the Philippines, South Korea, Sri Lanka, Taiwan (China) and Vietnam; and (iii) our Group Corporate Centre reporting segment.

The following summarises the results of operations of each of our geographical market segments.

Mainland China

	Six months ended 30 June	Six months ended 30 June
	2021	2020
	(inUS$ millions, except VONB margin)
VONB(1)(3).............................................................	738	594
VONB margin(2)....................................................	82.1%	81.8%
ANP......................................................................	899	726
TWPI ....................................................................	3,961	3,001
OPAT ...................................................................	722	640

(1) VONB figures shown in the table are based on local statutory reserving and capital requirements and include pension business.

(2) VONB margin excludes pension business which is consistent with the definition of ANP used within the calculation.

(3) Following the subsidiarisation of AIA China, VONB for the six months ended 30 June 2021 is presented after deducting withholding tax at the applicable rate in Mainland China (which is currently set at 5%). VONB for the six months ended 30 June 2020 was generated from the Shanghai branch of AIA Co. and was presented before deducting any withholding tax.

Six Months Ended 30 June 2021 Compared with Six Months Ended 30 June 2020

VONB increased by 24% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. VONB for the six months ended 30 June 2021 included the impact of the 5% withholding tax applied since July 2020. Excluding the effect of the withholding tax, VONB increased by 31% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, primarily driven by ANP growth while VONB margin remained broadly stable during the six months ended 30 June 2021.

ANP increased by 24% to US$899 million and TWPI increased by 32% to US$3,961 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, reflecting our growth in the underlying business.

VONB margin of 82.1% for the six months ended 30 June 2021 remained broadly stable compared to the six months ended 30 June 2020 as the enhanced profitability in our long-term savings products was offset by the impact of the withholding tax.

OPAT from Mainland China increased by 13% to US$722 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, primarily driven by higher earnings from our growing inforce portfolio, which was partly offset by the impact of the withholding tax and the normalisation of medical claims relative to the six months ended 30 June 2020. Excluding the withholding tax impact, OPAT increased by 19% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020.

Our high-quality, professional agency force is a key competitive advantage for AIA China and we continue to strengthen its capabilities with enhanced digital tools. In July 2021, we launched a powerful needs-basedselling application that analyses a customer’s existing insurance coverage in real time, generates a personal needs analysis and enables our agents to provide tailored product recommendations. High adoption levels of our comprehensive suite of advanced digital tools in their daily activities has supported an increase in agency productivity.

Our new innovative modular critical illness proposition, You Ru Yi , provides bespoke coverage and includes an upgraded personal case management service and a nutrition programme. Since it was launched, You Ru Yi has become our primary protection proposition in Mainland China.

We also recently expanded our long-term savings offerings with the launch of a suite of new products that are designed to help us to meet evolving customer needs and deepen our share of wallet in our expanding customer base. We have formed new partnerships with hospitals to provide value-added services to our customers, including online direct billing and prescription services.

In March 2021, we launched our first new operation in Sichuan province. For the six months ended 30 June 2021, we had more than 400 full-time high-quality new agents, 70% of whom are university graduates. Leveraging on our model of geographical expansion, in June 2021, AIA China received approval from the China Banking and Insurance Regulatory Commission to begin preparations to establish a new branch in Hubei province. Hubei has a fast-growing economy and ranks eighth by GDP by province in Mainland China. The Hubei branch approval was received shortly after the launch of our operations in Sichuan province and is a further step in our geographical expansion strategy in Mainland China.

Hong Kong

	Six months ended 30 June	Six months ended 30 June
	2021	2020
	(inUS$ millions, except VONB margin)
VONB(1)................................................................	313	306
VONB margin(2)....................................................	57.5%	51.0%
ANP......................................................................	505	565
TWPI ....................................................................	5,773	6,136
OPAT ...................................................................	1,055	1,005

(1) VONB figures shown in the table are based on local statutory reserving and capital requirements and include pension business.

(2) VONB margin excludes pension business which is consistent with the definition of ANP used within the calculation.

Six Months Ended 30 June 2021 Compared with Six Months Ended 30 June 2020

VONB increased by 2% to US$313 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. VONB in our domestic customer segment increased by 16% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020. These results were partly offset by reduced sales to the Mainland Chinese visitor customer segment. While the Individual Visit Scheme with Mainland China remained suspended for Hong Kong, quarantine requirements for cross-border visitors have been lifted for Macau.

VONB margin increased by 6.5 percentage points to 57.5% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, as the product mix shifted towards protection products.

ANP decreased by 11% to US$505 million and TWPI decreased by 6% to US$5,773 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, primarily driven by the reduced sales to the Mainland Chinese visitor customer segment. In the six months ended 30 June 2021, sales to Mainland Chinese visitors in our Macau branch significantly increased compared to the six months ended 30 June 2020 and contributed over one-third of AIA Macau’s total ANP for the six months ended 30 June 2021.

OPAT grew by 5% to US$1,055 million for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, supported by underlying business growth and higher investment returns. Medical claims experience for the six months ended 30 June 2021 was not as positive as the experience in the six months ended 30 June 2020.

Our Premier Agency remained the market leader in agency distribution in Hong Kong and our continued focus on quality recruitment reported an increase in new recruits in the six months ended 30 June 2021. We also launched a series of new customer-centric and innovative propositions, including enhanced Voluntary Health Insurance Scheme products which offer top-tier medical protection, and AIA One Absolute, our innovative severity-based health protection proposition.

In March 2021, we announced a 15-year bancassurance partnership with BEA. The partnership was launched in early July 2021, providing us with exclusive access to BEA’s customer base and further expanding our distribution capabilities.

Thailand

	Six months ended 30 June	Six months ended 30 June
	2021	2020
	(inUS$ millions, except VONB margin)
VONB(1)................................................................	312	199
VONB margin(2)....................................................	93.5%	63.9%
ANP......................................................................	333	312
TWPI ....................................................................	2,089	1,981
OPAT ...................................................................	485	478

(1) VONB figures shown in the table are based on local statutory reserving and capital requirements and include pension business. (2) VONB margin excludes pension business, which is consistent with the definition of ANP used within the calculation.

Six Months Ended 30 June 2021 Compared with Six Months Ended 30 June 2020

VONB increased by 57% to US$312 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, which was a significant increase from the pre-pandemic level in the six months ended 30 June 2019. The VONB growth was primarily driven by VONB margin improvement.

VONB margin increased significantly from 63.9% for the six months ended 30 June 2020 to 93.5% for the six months ended 30 June 2021, primarily due to a product mix shift towards regular premium traditional protection and unit-linked products. This change in product mix was supported by greater consumer awareness of individual protection needs.

ANP increased by 7% to US$333 million and TWPI increased by 5% to US$2,089 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, primarily driven by underlying business growth.

AIA Thailand’s OPAT remain broadly stable with a 1% increase to US$485 million for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, as earnings from new business was offset by negative lapse experience and lower investment returns for the six months ended 30 June 2021.

Our market-leading agency business continued to focus on quality recruitment and achieved growth in the number of new recruits for the six months ended 30 June 2021. We further developed the functionality of our agency digital tools and launched AIA iSign, an enhanced remote sales tool that improves customer experience with a smoother sales process, enabling our agents to remotely complete sales of unit-linked products. VONB growth from our strategic bancassurance partner Bangkok Bank increased in the six months ended 30 June 2021 compared to the six months ended 30 June 2020, primarily driven by strategic initiatives to increase the productivity of insurance specialists.

Singapore

	Six months ended 30 June	Six months ended 30 June
	2021	2020
	(inUS$ millions, except VONB margin)
VONB(1)................................................................	176	127
VONB margin(2)....................................................	63.2%	59.3%
ANP......................................................................	279	214
TWPI ....................................................................	1,730	1,502
OPAT ...................................................................	339	303

(1) VONB figures shown in the table are based on local statutory reserving and capital requirements and include pension business.

(2) VONB margin excludes pension business which is consistent with the definition of ANP used within the calculation.

Six Months Ended 30 June 2021 Compared with Six Months Ended 30 June 2020

VONB increased by 39% to US$176 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, driven by a strong improvement in agency productivity, as we continued to support our Premier Agency by enhancing our digital tools and platforms.

VONB margin increased by 3.9 percentage points to 63.2% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, supported by reduced acquisition expense overruns that reflected ANP growth.

ANP increased by 30% to US$279 million and TWPI increased by 15% to US$1,730 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, primarily driven by underlying business growth.

OPAT from Singapore increased by 12% to US$339 million for the six month ended 30 June 2021 compared with the six months ended 30 June 2020 as a result of growth in our in-force portfolio and higher investment returns.

Our differentiated Premier Agency strategy achieved improvements in agent productivity in the six months ended 30 June 2021. In the six months ended 30 June 2021, we launched a new mobile-enabled recruitment platform that has been widely adopted with over 60% of new recruits recruited digitally since the platform’s launch. We also enhanced iSmart, our mobile application enabling our agents to leverage their individual social media presence for leads generation.

Malaysia

	Six months ended 30 June	Six months ended 30 June
	2021	2020
	(inUS$ millions, except VONB margin)
VONB(1)................................................................	157	81
VONB margin(2)....................................................	61.7%	50.5%
ANP......................................................................	253	159
TWPI ....................................................................	1,200	1,049
OPAT ...................................................................	194	148

(1) VONB figures shown in the table are based on local statutory reserving and capital requirements and include pension business. (2) VONB margin excludes pension business which is consistent with the definition of ANP used within the calculation.

Six Months Ended 30 June 2021 Compared with Six Months Ended 30 June 2020

VONB increased by 94% to US$157 million for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, which was 21% higher than the pre-pandemic level in the six months ended 30 June 2019. The growth in VONB was driven by our agency and bancassurance channels. Our focus on quality recruitment and agency management helped to achieve strong growth in new recruits and a strong increase in active agents. Our partnerships channel achieved strong growth in VONB for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, primarily through Public Bank Berhad where we have worked to drive higher adoption of remote sales tools and execute cross-selling strategies.

VONB margin increased by 11.2 percentage points to 61.7% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, reflecting a favourable product mix shift and reduced acquisition expense overruns from higher sales volumes.

ANP increased by 59% to US$253 million and TWPI increased by 14% to US$1,200 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. These results were supported from both the agency and partnership distribution channels.

OPAT increased by 31% to US$194 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. In the six months ended 30 June 2020, OPAT was reduced by a one-off provision due to an industry-wide initiative to identify and pay accumulated unreported death claims. Excluding this provision, OPAT increased by 12% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020 due to underlying business growth.

Other Markets

VONB(1)(4)............................................................. VONB margin(2).................................................... ANP(4)................................................................... TWPI(3)................................................................. OPAT(4)................................................................	Six months ended 30 June	Six months ended 30 June
	2021 2020 (inUS$ millions, except VONB margin)	2020
	253 240 32.1% 39.7% 791 603 3,758 3,257 391 333

(1) VONB figures shown in the table are based on local statutory reserving and capital requirements and include pension business.

(2) VONB margin excludes pension business, which is consistent with the definition of ANP used within the calculation. (3) TWPI excludes the contribution from Tata AIA Life.

(4) ANP, VONB and OPAT include the contribution from Tata AIA Life.

Six Months Ended 30 June 2021 Compared with Six Months Ended 30 June 2020

Our Other Markets segment reported a 5% increase in VONB to US$253 million for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, above the pre-pandemic level in the six months ended 30 June 2019. Excluding the one-off contribution from the purchase of mortality cover by CBA in the six months ended 30 June 2020, the segment reported strong VONB growth for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, and 7 of the 11 markets within this segment reported VONB growth in the six months ended 30 June 2021. VONB growth was driven by Indonesia, South Korea and Vietnam.

VONB margin decreased by 7.6 percentage points to 32.1% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020.

ANP increased by 31% to US$791 million and TWPI increased by 15% to US$3,758 million for the six months ended 30 June 2021 compared with 30 June 2020.

OPAT increased by 17% to US$391 million for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, driven by the growth in underlying business within this segment and positive claims experience from disability insurance policies in Australia in the six months ended 30 June 2021.

Geographical Market Highlights

Excluding the one-off contribution from CBA in the six months ended 30 June 2020, AIA Australia reported strong VONB growth for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. Group insurance business reported strong VONB growth for the six months ended 30 June 2021 compared to the six months ended 30 June 2020 as we benefitted from the renewal of several large group insurance schemes.

The New Zealand business reported strong VONB growth for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, supported by a reduction in acquisition expense overruns. Our IFA channel achieved strong performance as we focused on providing strong support to advisers.

AIA Cambodia continued to execute its multi-channel strategy and reported strong ANP growth in the six months ended 30 June 2021 compared with the six months ended 30 June 2020. This was driven by a strong performance in partnership distribution, despite disruptions from COVID-19 containment measures imposed in the six months ended 30 June 2021.

Tata AIA Life Insurance Company Limited (“ Tata AIA Life ”) reported positive VONB growth for the six months ended 30 June 2021 compared to the six months ended 30 June 2020 and maintained its leading position in the pure retail protection market. Our high-quality and differentiated Premier Agency continued to drive productivity improvements and achieved strong ANP growth for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, even as COVID-19 infection rates within the country increased. Our bancassurance channel also reported strong growth in VONB for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, as we worked closely with our partners to improve productivity through our enhanced online purchase journeys. Our comprehensive suite of digital and

remote selling tools has enabled business continuity and growth throughout the six months ended 30 June 2021, including agent recruitment processed through iRecruit and online training for our distribution partners and employees.

AIA Indonesia achieved strong VONB growth for the six months ended 30 June 2021 compared to the six months ended 30 June 2020 in both our agency and partnership distribution channels, driven by a significant increase in the number of active agents and an improvement in insurance specialist productivity for our strategic bancassurance partnerships.

During the six months ended 30 June 2021, the Myanmar business has been focused on ensuring the safety of our employees and agents and continuing to meet the needs of our customers.

Our operations in the Philippines reported a reduction in VONB for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, as the growth in the three months ended 30 June 2021 was more than offset by the decline in the three months ended 31 March 2021. We have continued to focus on increased adoption of remote selling tools among our agency and bank insurance specialists, as our business was affected by containment measures that have largely remained in place since March 2020.

AIA Korea reported strong VONB growth for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, driven by a strong performance in our direct marketing business and a higher VONB margin resulting from the repricing of several key products in 2020. We continued to enhance our omni-channel distribution model with SK Telecom, SK Inc. C&C and Samsung Card.

AIA Sri Lanka reported VONB growth for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, driven by an increase in the number of active agents and improved productivity in our strategic bancassurance partnerships. We achieved strong growth in new recruits for the six months ended 30 June 2021 compared to the six months ended 30 June 2020 and continued to support our agency force by enhancing digital support tools including the launch of a digital customer portal and enhanced remote sales capability.

AIA Taiwan recorded a decline in VONB for the six months ended 30 June 2021 compared to the six months ended 30 June 2020. In May 2021, stringent containment measures were implemented for the first time since the start of the pandemic.

AIA Vietnam reported strong growth in VONB for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, driven by strong performance from our agency channel. We achieved an increase in the number of active agents and improved agent productivity for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. Our strategic bancassurance partnership with VPBank reported strong VONB growth, partly due to a positive shift in product mix. In July 2021, we announced a new 10-year exclusive life and health insurance partnership with Tiki Corporation, a leading allin-one e-commerce platform.

Holding Company Financial Resources

At 30 June 2021, holding company financial resources were US$12,919 million compared with US$12,388 million at 31 December 2020. The increase of US$531 million resulted primarily from net capital flows to the holding company from subsidiaries of US$1,908 million, net proceeds from the issuances and redemption of medium-term notes and securities of US$619 million, and the payment of the final shareholder dividend for the year ended 31 December 2020 of US$1,558 million. Issuances of medium-term notes and securities totalled US$1,121 million while US$502 million were redeemed upon maturity.

The movements in holding company financial resources are summarised as follows:

US$ millions, unless otherwise stated	Six months ended Six months ended 30 June 2021 30 June 2020
Opening holding company financial resources Net capital flows to holding company Increase in borrowings(1) Interest payments on borrowings(1) Investment income, mark-to-market movements in debt securities and others	12,388 8,630 1,908 24 619 1,055 (157) (115) (281) 672
Closing holding company financial resources before dividends	14,477 10,266
Dividends paid	(1,558) (1,452)
Closing holding company financial resources	12,919 8,814
Assets recoverable and liabilities repayable within 12 months are as follows:
US$ millions, unless otherwise stated	As at As at 30 June 2021 30 June 2020
Loans to/amounts due from subsidiaries(2) Medium-term notes and securities(3) Net other assets and other liabilities	85 92 (500) (503) (65) (30)

Notes:

(1) Borrowings principally include medium-term notes and securities, other intercompany loans, and amounts outstanding, if any, from the Issuer’s US$2,290 million unsecured committed credit facilities.

(2) As at 30 June 2021, loans to/amounts due from subsidiaries was US$1,899 million (31 December 2020: US$1,904 million). US$85 million was recoverable within the 12 months after the period ended 30 June 2021 (30 June 2020: US$92 million).

(3) As at 30 June 2021, medium-term notes and securities placed to the market was US$9,171 million (31 December 2020: US$8,559 million). US$500 million was repayable within the 12 months after the period ended 30 June 2021 (30 June 2020: US$503 million). Details of the medium-term notes and securities placed to the market are included in note 18 to our 2021 interim condensed consolidated financial statements included elsewhere in this Supplemental Offering Circular.

IFRS Balance Sheet

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

US$ millions, unless otherwise stated	US$ millions, unless otherwise stated	As at 30 June 2021 As at 31 December 2020 Change %
Assets Financial investments Investment property Cash and cash equivalents Deferred acquisition and origination costs Other assets		272,619 271,467 - 4,579 4,639 (1)% 7,149 5,619 27% 28,374 27,915 2% 17,170 16,481 4%
Total assets Liabilities Insurance and investment contract liabilities Borrowings Other liabilities		329,891 326,121 1% 241,135 235,952 2% 9,182 8,559 7% 20,157 17,942 12%
Less total liabilities Equity Total equity Less non-controlling interests		270,474 262,453 3% 59,417 63,668 (7)% 473 468 1%
Total equity attributable to shareholders of AIA Group Limited		58,944 63,200 (7)%
MOVEMENT IN SHAREHOLDERS’ EQUITY
US$ millions, unless otherwise stated	Six months ended 30 June 2021 Year ended 31 December 2020 Six months ended 30 June 2020
Opening shareholders’ equity Net profit Fair value (losses)/gains on assets Purchase of shares held by employee share- based trusts Dividends Revaluation gains/(losses) on property held for own use Foreign currency translation adjustments Other capital movements	63,200 54,947 54,947 3,245 5,779 2,197 (5,097) 3,501 1,826 (97) (16) (6) (1,558) (1,997) (1,452) 22 (46) (65) (819) 931 (710) 48 101 67
Total movement in shareholders’ equity	(4,256) 8,253 1,857
Closing shareholders’ equity	58,944 63,200 56,804

TOTAL INVESTMENTS

US$ millions, unless otherwise stated	As at 30 June 2021 Percentage of total As at 31 December 2020 Percentage of total
Total policyholder and shareholder Total unit-linked contracts and consolidated investmentfunds	248,386 87% 247,408 87% 37,990 13% 36,302 13%
Total investments	286,376 100% 283,710 100%

The investment mix remained stable during the six months ended 30 June 2021 as set out below:

UNIT-LINKED CONTRACTS AND CONSOLIDATED INVESTMENT FUNDS

US$ millions, unless otherwise stated	As at 30 June 2021 Percentage of total As at 31 December 2020 Percentage of total
Unit-linked contracts and consolidated investment funds Debt securities Loans and deposits Equities Cash and cash equivalents Derivatives	6,779 18% 6,403 18% 580 2% 395 1% 29,614 78% 28,232 78% 973 2% 1,219 3% 44 - 53 -
Total unit-linked contracts and consolidated investment funds	37,990 100% 36,302 100%

POLICYHOLDER AND SHAREHOLDER INVESTMENTS

US$ millions, unless otherwise stated	As at 30 June 2021 Percentage of total As at 31 December 2020 Percentage of total
Participating funds and Other participating business with distinct portfolios(1) Government bonds Other government and government agency bonds Corporate bonds and structured securities Loans and deposits	10,330 4% 9,324 4% 10,870 5% 11,701 5% 53,960 22% 54,947 22% 2,650 1% 2,519 1%
Subtotal – Fixed income investments Equities Investment property and property held for own use Cash and cash equivalents Derivatives	77,810 32% 78,491 32% 28,520 12% 23,892 10% 1,069 - 1,054 - 759 - 565 - 522 - 335 -
Subtotal Participating funds and Other participating business with distinct portfolios Other policyholder and shareholder Government bonds Other government and government agency bonds Corporate bonds and structured securities Loans and deposits	108,680 44% 104,337 42% 45,107 18% 46,939 19% 17,887 7% 18,918 7% 52,096 21% 53,649 22% 6,339 3% 6,421 3%
Subtotal – Fixed income investments Equities Investment property and property held for own use Cash and cash equivalents Derivatives	121,429 49% 125,927 51% 6,972 3% 7,058 3% 5,539 2% 5,570 2% 5,417 2% 3,835 2% 349 - 681 -
Subtotal other policyholder and shareholder	139,706 56% 143,071 58%
Totalpolicyholder and shareholder	248,386 100% 247,408 100%

Note:

(1) Participating business is written in a segregated statutory fund, with regulations governing the division of surplus between policyholders and shareholders. “Other participating business with distinct portfolios”, which represents the Hong Kong participating business, is supported by segregated investment assets and explicit provisions for future surplus distribution, although the division of surplus between policyholders and shareholders is not defined in the regulations.

ASSETS

Total assets increased by US$3,770 million to US$329,891 million at 30 June 2021 compared with US$326,121 million at 31 December 2020 due to net cash inflows and mark-to-market gains on equities for the six months ended 30 June 2021, partly offset by negative fair value movements from our debt securities.

Total investments including financial investments, investment property, property held for own use, and cash and cash equivalents increased by US$2,666 million to US$286,376 million at 30 June 2021, compared with US$283,710 million at 31 December 2020.

Of the total US$286,376 million investments at 30 June 2021, US$248,386 million were held in respect of policyholders and shareholders and the remaining US$37,990 million were backing unit-linked contracts and consolidated investment funds.

Fixed income investments, including debt securities, loans and term deposits held in respect of policyholders and shareholders, totalled US$199,239 million at 30 June 2021 compared with US$204,418 million at 31 December 2020.

Government bonds and other government and government agency bonds represented 42% of fixed income investments at 30 June 2021, compared with 43% at 31 December 2020. Corporate bonds and structured securities accounted for 53% of fixed income investments at 30 June 2021 and 31 December 2020. The average credit rating of our fixed income portfolio excluding government bonds remained stable at A- compared to the position at 31 December 2020. Our corporate bond portfolio is well diversified with over 1,700 issuers with an average holding size of US$59 million. At 30 June 2021, we held US$4.0 billion of bonds rated below investment grade or not rated, representing 2% of our total bond portfolio. Approximately US$30 million of our bonds, representing less than 0.1% of our total bond portfolio, were downgraded to below investment grade and we did not experience any impairments in the six months ended 30 June 2021, reflecting the overall quality of our investment portfolio.

Equity securities held in respect of policyholders and shareholders totalled US$35,492 million at 30 June 2021 compared with US$30,950 million at 31 December 2020. The US$4,542 million increase in carrying value was mainly attributable to new purchases driven by underlying business growth and positive mark-to-market movements. Of the US$35,492 million of equity securities, US$28,520 million of equity securities were held in participating funds and other participating business with distinct portfolios.

Cash and cash equivalents increased by US$1,530 million to US$7,149 million at 30 June 2021 compared with US$5,619 million at 31 December 2020. The increase largely reflected funds being held for purchase consideration of recently announced transactions.

Investment property and property held for own use in respect of policyholders and shareholders totalled US$6,608 million at 30 June 2021 compared with US$6,624 million at 31 December 2020.

Deferred acquisition and origination costs increased by US$459 million to US$28,374 million at 30 June 2021 compared with US$27,915 million at 31 December 2020.

Other assets increased to US$17,170 million at 30 June 2021 compared with US$16,481 million at 31 December 2020, reflecting an increase in investment-related receivables and reinsurance recoveries.

LIABILITIES

Total liabilities increased to US$270,474 million at 30 June 2021 from US$262,453 million at 31 December 2020.

Insurance and investment contract liabilities increased to US$241,135 million at 30 June 2021 compared with US$235,952 million at 31 December 2020, reflecting the underlying growth of the in-force portfolio and positive mark-to-market movements on equities backing unit-linked and participating policies, which were partially offset by the impact of negative foreign exchange translation.

Borrowings increased to US$9,182 million at 30 June 2021, due to the net proceeds from the issuances of medium-term notes and securities totalling US$1,121 million less the redemption of medium-term notes of US$502 million upon maturity. The leverage ratio, which is defined as borrowings expressed as a percentage of total borrowings and equity, was at 13.4% at 30 June 2021 compared with 11.9% at 31 December 2020.

Other liabilities were US$20,157 million at 30 June 2021, compared with US$17,942 million at 31 December 2020, reflecting an increase in repurchase agreements, investment-related payables and derivative financial liabilities, which were partly offset by a decrease in deferred tax liabilities.

Details of commitments and contingencies are included in note 25 to our 2021 interim condensed consolidated financial statements included elsewhere in this Supplemental Offering Circular.

EQUITY

Total equity attributable to shareholders was US$58,944 million at 30 June 2021 compared with US$63,200 million at 31 December 2020 due to the decrease in fair value reserve driven by the increase in government bond yields in the six months ended 30 June 2021, partially offset by earnings for the six months ended 30 June 2021.

Capital

REGULATORY CAPITAL REQUIREMENTS

We are subject to both Group and local level regulatory capital requirements and we have fully met these requirements as at 30 June 2021.

On 14 May 2021, the Group became subject to the new GWS framework implemented by the Hong Kong Insurance Authority (the “ HKIA ”), under which the HKIA has direct regulatory powers over Hong Kong incorporated holding companies of designated insurance groups. The framework includes the Local Capital Summation Method (“ LCSM ”) assessment of the regulatory capital of the Group based on the sum of local level capital requirements.

The Group’s various regulated branches and subsidiaries are also subject to local supervision, including relevant capital requirements, in the jurisdictions in which they and their parent entity operate. The vast majority of the jurisdictions in which the Group operates have enacted regulatory capital regimes for insurers that are risk-based and intended to better reflect the underlying economics than the earlier “Solvency 1” regulatory regimes that they replaced.

We continue to be closely engaged with the HKIA and the industry on the multi-year consultation process toward a risk-based capital regime in Hong Kong applicable to Hong Kong licensed insurance companies (which is distinct from the GWS framework applicable at the group level). This risk-based capital regime will replace the current Solvency 1 regime in Hong Kong. We expect that the regulatory capital rules of the new Hong Kong risk-based capital regime will be finalised during 2021.

Based on the most recently available information, our expectation is that the risk-based capital regime will become effective from 1 January 2024, however we understand that the HKIA is currently developing plans to allow early adoption.

We anticipate that our regulatory capital position will remain very strong following implementation of the new Hong Kong risk-based capital regime.

GROUP LCSM SOLVENCY POSITION

Our Group supervisor is the HKIA. The Group is in compliance with the group capital adequacy requirements as applied by the HKIA. On 29 March 2021, the HKIA implemented the new GWS framework, under which the HKIA has direct regulatory powers over Hong Kong incorporated holding companies of designated insurance groups. On 14 May 2021, AIA Group Limited became a designated insurance holding company and became subject to the GWS framework in Hong Kong including the Group Capital Rules. The Group Capital Rules set out the capital requirements of the Group under the GWS framework that define the Group’s overall solvency position. These requirements are based on a “summation approach” and are referred to as the LCSM.

Under the LCSM, our published group-level total available capital and minimum capital requirement are calculated as the sum of the available and applicable required capital according to the respective regulatory requirements for each entity within the Group, subject to any variation the HKIA considers necessary. The Group LCSM surplus is the difference between the Group available capital and the Group minimum capital requirement. The Group LCSM Cover Ratio is the ratio of the Group available capital to the Group minimum

capital requirement.

At 30 June 2021, the Group LCSM surplus was US$51,231 million, with a Group LCSM Cover Ratio of 412%. Group available capital includes:

(i) US$2,858 million of subordinated securities. Subordinated securities with a fixed maturity receive full capital credit up to the date that is 5 years prior to the date of maturity, with the capital credit then reducing at the rate of 20% per annum until maturity. Perpetual subordinated securities receive full capital credit unless they are redeemed; and
(ii) US$5,810 million of senior notes issued before the Issuer became a designated insurance holding company that have been approved by the HKIA. Prior to maturity, the approved senior notes will receive full capital credit until 14 May 2031, after which the capital credit will reduce at the rate of 20% per annum until 14 May 2036.

The amounts above represent the net cash proceeds from the issuances of medium-term notes and securities that contribute to Group available capital. These are counted as Tier 2 group capital under the Group Capital Rules.

The comparative figures as at 31 December 2020 were based on the Group’s understanding of the likely application of the GWS framework to the Group at the time and included US$1,735 million of subordinated securities, while excluding the US$5,810 million of senior notes that had not yet been approved by the HKIA to contribute to Group available capital. The basis of calculation is largely consistent with that applied to the Group LCSM solvency position as at 30 June 2021 with the key difference being the treatment of senior notes.

A summary of the Group LCSM solvency position is as follows:

US$ millions, unless otherwise stated	As at 30 June 2021 As at 31 December 2020
Group available capital Group minimum capital requirement Group LCSM surplus GroupLCSM Cover Ratio	67,675 59,830 16,444 16,013 51,231 43,817 412% 374%
Senior notes approved as contributingto Groupavailable capital(1)	5,810 -

Note:

(1) The amounts represent the net cash proceeds from the issuances of medium-term notes and securities that contribute to Group available capital. These are counted as Tier 2 group capital under the Group Capital Rules.

The following table summarises the movement in Group LCSM surplus:

US$ millions, unless otherwise stated	Six months ended 30 June 2021
Opening Group LCSM surplus Senior notes approved as contributing to Group available capital(1) Group LCSM surplus generation Group LCSM surplus used to fund new business Unallocated Group Office expenses Finance costs and othercapital movements	43,817 5,810 3,021 (89) (182) (198)
Group LCSM surplus before net increase in borrowings, investment return variances and dividends New issuances of borrowings(1) Redemptionandmaturity ofborrowings	52,179 1,121 -
Group LCSM surplus before investment return variances and dividends Investmentreturn variances and other items	53,300 (511)
Group LCSM surplus before dividends Dividends	52,789 (1,558)
Closing Group LCSM surplus	51,231

Note:

LOCAL SOLVENCY REQUIREMENTS

The Group’s individual branches and subsidiaries are also subject to supervision, including relevant capital requirements, in the jurisdictions in which they and their parent entity operate. The local operating units were in compliance with the capital requirements of their respective entity and local regulators in each of our geographical markets at 30 June 2021.

Global Medium-term Note and Securities Programme Issuances

Under the Programme, the Issuer has issued two fixed rate resettable subordinated perpetual securities. On 7 April 2021, the Issuer issued US$750 million of resettable subordinated perpetual securities at an annual rate of 2.7%. On 11 June 2021, the Issuer issued Singapore dollar (SGD) 500 million of resettable subordinated perpetual securities at an annual rate of 2.9%. The U.S. dollar equivalent is approximately US$378 million. Both securities are listed on The Stock Exchange of Hong Kong Limited.

At 30 June 2021, the aggregate carrying amount of the debt issued to the market under the Programme was US$9,171 million.

Credit Ratings

At 30 June 2021, AIA Co. had financial strength ratings of Aa2 (Very Low Credit Risk) with a stable outlook from Moody ’ s; AA (Very Strong) with a stable outlook from Fitch; and AA- (Very Strong) with a stable outlook from S&P Global Ratings.

Moody ’ s upgraded its issuer credit rating on the Issuer from A2 (Low Credit Risk) to A1 (Low Credit Risk) on 14 May 2021. S&P Global Ratings upgraded its issuer credit rating on the Issuer from A (Strong) to A+ (Strong), and revised the outlook on the Issuer from positive to stable on 29 April 2021.

At 30 June 2021, the Issuer had issuer credit ratings of A1 (Low Credit Risk) with a stable outlook from Moody’s; AA- (Very High Credit Quality) with a stable outlook from Fitch; and A+ (Strong) with a stable outlook from S&P Global Ratings.

INTERIM BUSINESS REVIEW FOR THE SIX MONTHS ENDED 30 JUNE 2021

The information below covers the financial results for the six month period from 1 January 2021 to 30 June 2021 for the current period and for the six month period from 1 January 2020 to 30 June 2020 for the prior period.

Distribution

AGENCY

VONB .................................................................... VONB margin ........................................................ ANP.......................................................................	Six months ended 30 June	Six months ended 30 June
	2021 2020 (inUS$ millions, except VONB margin)	2020
	1,574 1,194 76.0% 69.9% 2,070 1,708

Our proprietary agency network is our primary distribution channel and sits at the heart of our relationships with our customers. Our Premier Agents are equipped to provide personalised advice and value-added services that help our customers as they help them to meet their evolving protection and long-term savings needs.

VONB from our agency channel grew by 32% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020. ANP grew by 21% to US$2,070 million for the six months ended 30 June 2021 compared with the six months ended 30 June 2020 and VONB margin increased from 69.9% for the six months ended 30 June 2020 to 76.0% for the six months ended 30 June 2021, driven by product mix shift and lower acquisition expense overruns. Our ongoing efforts to digitalise activities across the value chain has helped to build greater resilience in our agency force. These initiatives supported an increase in the number of active new agents and productivity in the six months ended 30 June 2021 compared with the six months ended 30 June 2020, despite periodic disruptions from the resurgence of COVID-19 in our markets.

In the six months ended 30 June 2021, we continued to enhance our digital platforms and embedded new features that industrialise our use of social media presence for leads generation and campaign marketing. These features are now live in six markets: Mainland China, Hong Kong, Singapore, Malaysia, India and the Philippines.

Our next-generation agency leaders are critical in achieving sustainable growth of our Premier Agency. We increased the number of agency leaders for the six months ended 30 June 2021 compared to the six months ended 30 June 2020. We have further enhanced our digital recruitment platforms and improved our leader development programmes.

In July 2021, we were named the number one Million Dollar Round Table (“ MDRT ”) company in the world, our seventh consecutive year of achieving the largest number of registered members. Our total of more than 16,000 MDRT members registered in 2021 is an increase of 25% from 2020.

PARTNERSHIPS

VONB .................................................................... VONB margin ........................................................ ANP.......................................................................	Six months ended 30 June	Six months ended 30 June
	2021 2020 (inUS$ millions, except VONB margin)	2020
	352 335 35.5% 38.4% 990 871

Our long-term distribution partnerships with market-leading financial institutions and other corporate partners provide us with the opportunity to engage with and meet the protection and long-term savings needs of hundreds of millions of potential customers in Asia-Pacific. Our focus is to deliver new, digitally-led and personalised propositions to customers of our partners.

VONB for partnerships grew by 13% for the six months ended 30 June 2021 compared to the six months ended 30 June 2020, after excluding the impact of the one-off purchase by CBA in the six months ended 30 June 2020. ANP increased by 14% and VONB margin decreased from 38.4% to 35.5% for the six months ended 30 June 2021 compared with the six months ended 30 June 2020, driven by a higher contribution from group insurance business in Australia.

Bancassurance

Excluding the one-off contribution from CBA in the six months ended 30 June 2020, our bancassurance channel reported strong VONB growth in the six months ended 30 June 2021 compared to the six months ended 30 June 2020. We achieved strong VONB growth through our long-term strategic bancassurance partnerships in Thailand and Malaysia.

In the six months ended 30 June 2021, we continued to work with our partners to strengthen activity management of insurance specialists and improve customer segmentation, resulting in an improvement in new business momentum. In particular, we have seen strong growth in productivity in Bangkok Bank Public Company Limited (Bangkok Bank) in Thailand, Public Bank Berhad in Malaysia and Bank Central Asia (BCA) in Indonesia. Our evolving digital capabilities enable us to engage, connect and serve the customers of our partners with seamless end-to-end experiences. For example, in the six months ended 30 June 2021, we launched a new product proposition with Citibank in Hong Kong and Singapore that provides customers with an online sales process linked to their mobile banking application. We are also driving integration with our partners’ data and digital platforms to enable us to deliver the right propositions for different customer segments through an omnichannel experience. Our bancassurance partnerships are increasingly using social media, customer analytics and digital marketing to generate leads that can be closed through different channels from fully online through to face-to-face sales in-branch.

In April 2021, Citibank announced that it will pursue an exit from its consumer banking business in the markets covered by our bancassurance partnership except for Hong Kong and Singapore. We are in discussions with Citibank on the future arrangement of the bancassurance partnership.

Digital Platforms

Our strategy is to form strategic partnerships with technology companies that have significant active user bases and leading consumer companies that have widely-used digital platforms. Through these next generation partnerships, we attract and engage customers with online purchases of simple products, while applying new analytical models to identify customers with unmet needs for more comprehensive advice-driven life insurance propositions. In addition to existing partnerships with Practo PTE Ltd in India, Gojek in Indonesia and SK Telecom in South Korea, we have launched several new partnerships in 2021, including with TNG Digital Sdn. Bhd., Malaysia’s largest e-wallet company, and Tiki Corporation, Vietnam’s leading e- commerce retailer.

REGULATORY AND INTERNATIONAL DEVELOPMENTS

HONG KONG INSURANCE REGULATORY REGIME DEVELOPMENTS

A number of developments relating to the Hong Kong insurance regulatory regime have recently become effective or have been proposed and are in various stages of study, consultation or legislative enactment, as summarised below.

GWS Framework: On 29 March 2021, the Group-Wide Supervision framework in Hong Kong (the “ GWS framework ”) became effective and the Insurance (Group Capital) Rules (the “ Group Capital Rules ”) came into operation. On 14 May 2021, the Issuer became a “designated insurance holding company” by the HKIA. As a designated insurance holding company, we are subject to the GWS framework and the Group Capital Rules . The HKIA has confirmed that the undertaking previously given by the Issuer to the HKIA has ceased to apply as of 14 May 2021. For further information on the prior undertaking to the HKIA, see “Regulation – Power of Intervention” in the Original Offering Circular and Note 37 to our 2020 audited consolidated financial statements included in the Original Offering Circular.
Proposed RBC standard: We continue to be closely engaged with the HKIA on the multi-year consultation process toward a risk-based capital regime (“ HKRBC ”) in Hong Kong applicable to Hong Kong licensed insurance companies (which is distinct from the GWS framework applicable at the group level). We expect that the new HKRBC rules will be finalised in 2021. We understand that the HKIA is currently developing plans to allow early adoption.

INTERNATIONAL DEVELOPMENTS

ComFrame

The International Association of Insurance Supervisors (the “ IAIS ”), a standard-setting body for insurers, adopted ComFrame, the Common Framework for the Supervision of Internationally Active Insurance Groups (“ IAIGs ”) at its annual general meeting on 14 November 2019. Many of the regulators of the Group’s business units, including the HKIA, are members of the IAIS. IAIGs are identified under ComFrame as insurance groups which meet certain minimum requirements with regards to the size and geographical footprint of their business. The Group has been designated as an IAIG in accordance with these criteria.

In addition, as part of ComFrame, in 2020 the IAIS began the first of two phases in the development and implementation of the Insurance Capital Standard (the “ ICS ”). Under the first phase, a “Reference ICS” is being assessed during a five-year monitoring period for reporting privately to group-wide supervisors. It is proposed that the second phase, beginning in 2025, will include implementation of the ICS as part of prescribed group capital requirements. The IAIS is also collecting data on the “aggregation method” (“ AM ”), an alternative proposed by US regulators, that would define group solvency by referencing the local regimes to which a group is subject. The IAIS will make a determination by the end of the monitoring period whether the AM can be considered to produce “comparable outcomes” to the Reference ICS and therefore be used in its place.

BEPS 2.0

We continue to closely monitor developments in respect of the Organisation for Economic Co-operation and Development’s (the “ OECD ”) recent work on tax policy, commonly referred to as “Base erosion and profit shifting 2.0” (“ BEPS 2.0 ”), and constructively engages with governments and the OECD. The first pillar of BEPS 2.0 focuses on changes to the international tax system to allocate more taxing rights to sales and market jurisdictions and to ensure a taxable presence in jurisdictions where enterprises have no physical presence but still have a significant economic presence. The second pillar focuses on the development of rules that seek to apply a global minimum tax rate to multinational enterprises and their cross-border transactions. 133 of the 139 members of the OECD/G20 Inclusive Framework that have signed up to the BEPS 2.0 initiative (including Hong Kong) issued a statement which sets out, at a high level, certain agreed elements of the initiative.

Pillar One (which is now limited to changes to the international tax system that target the "largest and most profitable" multinational groups) includes an exclusion for regulated financial services businesses. The details of the exclusion are still to be determined but are expected to apply to the Group. Pillar Two will introduce a minimum tax rate of "at least 15 per cent” on a jurisdiction-by-jurisdiction basis. Specific details on the

operation of these rules, such as how the effective tax rate (the “ ETR ”) will be calculated for the purposes of comparing the ETR in a particular jurisdiction with the 15% minimum rate, are still unclear. However, based on publicly available information, the rules that the OECD is proposing are likely to impact our effective tax rate. A commitment has been made by the G20 Inclusive Framework to continue discussions in order to reach a "final decision" on the "design elements" of both pillars by October 2021 and that jurisdictions should bring the rules on Pillar Two into law in 2022, to be effective from 2023.

INDEX TO THE INTERIM FINANCIAL STATEMENTS AND SUPPLEMENTARY EMBEDDED VALUE INFORMATION

(1) INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF THE ISSUER FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2021

Independent Review Report [(1)] ............................................................................................................. F-2 Interim Consolidated Income Statement ............................................................................................. F-3 Interim Consolidated Statement of Comprehensive Income ............................................................... F-4 Interim Consolidated Statement of Financial Position ......................................................................... F-5 Interim Consolidated Statement of Changes in Equity ........................................................................ F-7 Interim Consolidated Statement of Cash Flows .................................................................................. F-9 Notes to the Interim Consolidated Financial Statements .................................................................. F-11

(2) INTERIM SUPPLEMENTARY EMBEDDED VALUE INFORMATION AS AT AND FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2021 Independent Review Report on the Supplementary Embedded Value Information [(1)] ....................... F-58 Supplementary Embedded Value Information ................................................................................... F-59

(1) References to page numbers in the independent review report on the interim consolidated financial statements and the independent review report on the interim supplementary embedded value information refer to the original page numbers in the 2021 interim results announcement of the Issuer which may be found at http://www.aia.com, and cross-references to page numbers included in the independent review reports are to such original page numbering. Neither the 2021 interim results announcement nor any other information on the Issuer’s website has been incorporated by reference into the Offering Circular.

F-1

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF AIA GROUP LIMITED

(incorporated in Hong Kong with limited liability)

==> picture [77 x 56] intentionally omitted <==

Introduction

We have reviewed the interim condensed consolidated financial statements set out on pages 51 to 105, which comprise the interim consolidated statement of financial position of AIA Group Limited (the “Company”) and its subsidiaries (together, the “Group”) as at 30 June 2021 and the interim consolidated income statement, interim consolidated statement of comprehensive income, interim consolidated statement of changes in equity and interim consolidated statement of cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 “Interim Financial Reporting” (“HKAS 34”) issued by the Hong Kong Institute of Certified Public Accountants and International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) issued by the International Accounting Standards Board. The directors of the Company are responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with HKAS 34 and IAS 34. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements of the Group are not prepared, in all material respects, in accordance with HKAS 34 and IAS 34.

PricewaterhouseCoopers Certified Public Accountants

Hong Kong 17 August 2021

50 F-2

INTERIM CONSOLIDATED INCOME STATEMENT

INTERIM CONSOLIDATED INCOME STATEMENT
US$m Notes Revenue Premiums and fee income Premiums ceded to reinsurers Net premiums and fee income Investment return 7 Other operating revenue Total revenue Expenses Insurance and investment contract benefits Insurance and investment contract benefits ceded Net insurance and investment contract benefits Commission and other acquisition expenses Operating expenses Finance costs Other expenses Total expenses 8 Profit before share of profit from associates and joint ventures Share of profit from associates and joint ventures Profit before tax	Six months ended 30 June 2021 (Unaudited) 18,609 (1,361) 17,248 6,780 166 24,194 17,272 (1,202) 16,070 2,267 1,439 176 530 20,482 3,712 2 3,714	Six months ended 30 June 2020 (Unaudited) 17,268 (1,135) 16,133 3,381 150 19,664 13,930 (899) 13,031 2,157 1,242 143 519 17,092 2,572 2 2,574
Income tax credit/(expense) attributable to policyholders’ returns Profit before tax attributable to shareholders’ profits	72 3,786	(23) 2,551
Tax expense 9	(445)	(391)
Tax attributable to policyholders’ returns Tax expense attributable to shareholders’ profits	(72) (517)	23 (368)
Net profit Net profit attributable to: Shareholders of AIA Group Limited Non-controlling interests Earnings per share (US$) Basic 10 Diluted 10	3,269 3,245 24 0.27 0.27	2,183 2,197 (14) 0.18 0.18

51 F-3

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

US$m Net profit Other comprehensive income Items that may be reclassified subsequently to profit or loss: Fair value (losses)/gains on available for sale financial assets (net of tax of: six months ended 30 June 2021: US$739m; six months ended 30 June 2020: US$(84)m)(2) Fair value gains on available for sale financial assets transferred to income on disposal (net of tax of: six months ended 30 June 2021: US$42m; six months ended 30 June 2020: US$61m)(2) Foreign currency translation adjustments Cash flow hedges Share of other comprehensive income/(expense) from associates and joint ventures Subtotal Items that will not be reclassified subsequently to profit or loss: Revaluation gains/(losses) on property held for own use (net of tax of: six months ended 30 June 2021: nil; six months ended 30 June 2020: US$5m) Effect of remeasurement of net liability of defined benefit schemes (net of tax of: six months ended 30 June 2021: nil; six months ended 30 June 2020: US$(1)m) Subtotal Total other comprehensive (expense)/income Total comprehensive (expense)/income Total comprehensive (expense)/income attributable to: Shareholders of AIA Group Limited Non-controlling interests	Six months ended 30 June 2021 (Unaudited) 3,269 (4,092) (1,061) (813) – 33 (5,933) 22 4 26 (5,907) (2,638) (2,646) 8	Six months ended 30 June 2020 (Unaudited) 2,183 2,742 (865) (679) 12 (65) 1,145 (65) 2 (63) 1,082 3,265 3,262 3

Notes:

(1) Where applicable, amounts are presented net of tax, policyholders’ participation and other shadow accounting related movements.

(2) Gross of tax, policyholders’ participation and other shadow accounting related movements, US$(7,246)m relates to the fair value losses (six months ended 30 June 2020: US$4,709m relates to the fair value gains) on available for sale financial assets and US$1,103m (six months ended 30 June 2020: US$926m) relates to the fair value gains on available for sale financial assets transferred to income on disposal during the period.

52 F-4

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION

US$m Notes Assets Intangible assets 12 Investments in associates and joint ventures Property, plant and equipment Investment property Reinsurance assets Deferred acquisition and origination costs Financial investments: 13, 15 Loans and deposits Available for sale Debt securities At fair value through profit or loss Debt securities Equity securities Derivative financial instruments 14 Deferred tax assets Current tax recoverable Other assets Cash and cash equivalents 16 Total assets Liabilities Insurance contract liabilities 17 Investment contract liabilities 17 Borrowings 18 Obligations under repurchase agreements 19 Derivative financial instruments 14 Provisions Deferred tax liabilities Current tax liabilities Other liabilities Total liabilities	As at 30 June 2021 (Unaudited) 2,569 676 2,703 4,579 4,830 28,374 9,569 159,298 37,731 65,106 915 272,619 32 89 6,271 7,149 329,891 228,276 12,859 9,182 3,447 1,836 225 5,835 446 8,368 270,474	As at 31 December 2020 2,634 606 2,722 4,639 4,560 27,915 9,335 165,106 36,775 59,182 1,069 271,467 23 103 5,833 5,619 326,121 223,071 12,881 8,559 1,664 1,003 230 6,902 346 7,797 262,453

53 F-5

INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

US$m Notes Equity Share capital 20 Employee share-based trusts 20 Other reserves 20 Retained earnings Fair value reserve 20 Foreign currency translation reserve 20 Property revaluation reserve 20 Others Amounts reflected in other comprehensive income Total equity attributable to: Shareholders of AIA Group Limited Non-controlling interests Total equity Total liabilities and equity	As at 30 June 2021 (Unaudited) 14,159 (225) (11,877) 46,391 10,073 (586) 1,048 (39) 10,496 58,944 473 59,417 329,891	As at 31 December 2020 14,155 (155) (11,891) 44,704 15,170 233 1,027 (43) 16,387 63,200 468 63,668 326,121

Approved and authorised for issue by the Board of Directors on 17 August 2021.

54 F-6

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

US$m Note Balance at 1 January 2021 Net profit Fair value losses on available for sale financial assets(2) Fair value gains on available for sale financial assets transferred to income on disposal(2) Foreign currency translation adjustments Share of other comprehensive income/(expense) from associates and joint ventures Revaluation gains on property held for own use Effect of remeasurement of net liability of defined benefit schemes Total comprehensive income/ (expense) for the period Dividends 11 Shares issued under share option scheme and agency share purchase plan Capital contributions from non-controlling interests Share-based compensation Purchase of shares held by employee share-based trusts Transfer of vested shares from employee share-based trusts Balance at 30 June 2021 – Unaudited	Share capital 14,155 – – – – – – – – – 4 – – – – 14,159	Employee share- based trusts (155) – – – – – – – – – – – – (97) 27 (225)	Other reserves (11,891) – – – – – – – – – – – 41 – (27) (11,877)	Retained earnings 44,704 3,245 – – – – – – 3,245 (1,558) – – – – – 46,391	Other comprehensive income Fair value reserve Foreign currency translation reserve Property revaluation reserve Others Non- controlling interests 15,170 233 1,027 (43) 468 – – – – 24 (4,081) – – – (11) (1,061) – – – – – (808) – – (5) 45 (11) (1) – – – – 22 – – – – – 4 – (5,097) (819) 21 4 8 – – – – (14) – – – – – – – – – 11 – – – – – – – – – – – – – – – 10,073 (586) 1,048 (39) 473	Total equity 63,668 3,269 (4,092) (1,061) (813) 33 22 4
						(2,638)
						(1,572) 4 11 41 (97) –
						59,417

Notes:

(1) Where applicable, amounts are presented net of tax, policyholders’ participation and other shadow accounting related movements.

(2) Gross of tax, policyholders’ participation and other shadow accounting related movements, US$(7,246)m relates to the fair value losses on available for sale financial assets and US$1,103m relates to the fair value gains on available for sale financial assets transferred to income on disposal during the six months ended 30 June 2021.

55 F-7

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)

US$m Note Balance at 1 January 2020 Net profit Fair value gains on available for sale financial assets(2) Fair value gains on available for sale financial assets transferred to income on disposal(2) Foreign currency translation adjustments Cash flow hedges Share of other comprehensive expense from associates and joint ventures Revaluation losses on property held for own use Effect of remeasurement of net liability of defined benefit schemes Total comprehensive income/ (expense) for the period Dividends 11 Shares issued under share option scheme and agency share purchase plan Share-based compensation Purchase of shares held by employee share-based trusts Transfer of vested shares from employee share-based trusts Balance at 30 June 2020 – Unaudited	Share capital 14,129 – – – – – – – – – – 6 – – – 14,135	Employee share- based trusts (220) – – – – – – – – – – – – (6) 71 (155)	Other reserves (11,887) – – – – – – – – – – – 47 – (71) (11,911)	Retained earnings 40,922 2,197 – – – – – – – 2,197 (1,452) – – – – 41,667	Other comprehensive income Fair value reserve Foreign currency translation reserve Property revaluation reserve Others 11,669 (698) 1,073 (41) – – – – 2,727 – – – (865) – – – – (681) – – – – – 12 (36) (29) – – – – (65) – – – – 2 1,826 (710) (65) 14 – – – – – – – – – – – – – – – – – – – – 13,495 (1,408) 1,008 (27)	Non- controlling interests 448 (14) 15 – 2 – – – – 3 – – – – – 451	Total equity 55,395 2,183 2,742 (865) (679) 12 (65) (65) 2
							3,265
							(1,452) 6 47 (6) –
							57,255

Notes:

(1) Where applicable, amounts are presented net of tax, policyholders’ participation and other shadow accounting related movements.

(2) Gross of tax, policyholders’ participation and other shadow accounting related movements, US$4,709m relates to the fair value gains on available for sale financial assets and US$926m relates to the fair value gains on available for sale financial assets transferred to income on disposal during the six months ended 30 June 2020.

56 F-8

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS

US$m Cash flows from operating activities Profit before tax Adjustments for: Financial investments Insurance and investment contract liabilities, and deferred acquisition and origination costs Obligations under repurchase agreements Other non-cash operating items, including investment income and the effect of exchange rate changes on certain operating items Operating cash items: Interest received Dividends received Interest paid Tax paid Net cash provided by operating activities Cash flows from investing activities Payments for intangible assets Distribution or dividend from an associate Payments for increase in interest of joint ventures Proceeds from sales of investment property and property, plant and equipment Payments for investment property and property, plant and equipment Acquisition of subsidiaries Net cash used in investing activities Cash flows from financing activities Issuances of medium-term notes and securities Redemption of medium-term notes Proceeds from other borrowings Repayment of other borrowings Capital contributions from non-controlling interests Payments for lease liabilities(1) Interest paid on medium-term notes and securities Dividends paid during the period Purchase of shares held by employee share-based trusts Shares issued under share option scheme and agency share purchase plan Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the financial period Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of the financial period	Six months ended 30 June 2021 (Unaudited) 3,714 (12,101) 10,139 1,774 (4,193) 3,712 519 (24) (446) 3,094 (120) – (27) 1 (51) – (197) 1,121 (502) 94 (83) 11 (95) (148) (1,572) (97) 4 (1,267) 1,630 5,393 (94) 6,929	Six months ended 30 June 2020 (Unaudited) 2,574 (7,459) 9,053 (314) (4,024) 3,377 460 (24) (377) 3,266 (81) 2 (2) – (51) (536) (668) 1,055 – 911 (841) – (96) (107) (1,452) (6) 6 (530) 2,068 3,753 (59) 5,762

Note:

(1) The total cash outflow for leases for the six months ended 30 June 2021 was US$98m (six months ended 30 June 2020: US$100m).

57 F-9

INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

Cash and cash equivalents in the above interim consolidated statement of cash flows can be further analysed as follows:

Note Cash and cash equivalents in the interim consolidated statement of financial position 16 Bank overdrafts Cash and cash equivalents in the interim consolidated statement of cash flows	As at 30 June 2021 (Unaudited) 7,149 (220) 6,929	As at 30 June 2020 (Unaudited) 5,950 (188) 5,762

58 F-10

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Corporate information

AIA Group Limited (the “Company”) was established as a company with limited liability incorporated in Hong Kong on 24 August 2009. The address of its registered office is 35/F, AIA Central, No. 1 Connaught Road Central, Hong Kong.

AIA Group Limited is listed on the Main Board of The Stock Exchange of Hong Kong Limited under the stock code “1299” with American Depositary Receipts (Level 1) being traded on the over-the-counter market (ticker symbol: “AAGIY”).

AIA Group Limited and its subsidiaries (collectively “AIA” or the “Group”) is a life insurance based financial services provider operating in 18 markets. The Group’s principal activity is the writing of life insurance business, providing life insurance, accident and health insurance and savings plans throughout Asia, and distributing related investment and other financial services products to its customers.

2. Basis of preparation and statement of compliance

The interim condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard (HKAS) 34, Interim Financial Reporting and International Accounting Standard (IAS) 34, Interim Financial Reporting. International Financial Reporting Standards (IFRS) is substantially consistent with Hong Kong Financial Reporting Standards (HKFRS) and the accounting policy selections that the Group has made in preparing these interim condensed consolidated financial statements are such that the Group is able to comply with both HKFRS and IFRS. References to IFRS, IAS and Interpretations developed by the IFRS Interpretations Committee (IFRS IC) in these interim condensed consolidated financial statements should be read as referring to the equivalent HKFRS, HKAS and Hong Kong (IFRIC) Interpretations (HK(IFRIC) – Int) as the case may be. Accordingly, there are not any differences of accounting practice between HKFRS and IFRS affecting these interim condensed consolidated financial statements. The interim condensed consolidated financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2020.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss. The accounting policies adopted are consistent with those of the previous financial year, except as described as follows.

59 F-11

2. Basis of preparation and statement of compliance (continued)

(a) The following relevant new amendments to standards have been adopted for the first time for the financial year ending 31 December 2021 and have no material impact to the Group:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform Phase 2; and
Amendment to IFRS 16, COVID-19-Related Rent Concessions.
(b) The following relevant new amendments to standards have been issued since the release of the Group’s 2020 consolidated financial statements, but are not effective for the financial year ending 31 December 2021 and have not been early adopted (the financial years for which the adoption is required for the Group is stated in parentheses). The Group has assessed the impact of the new amendment on its financial position and results of operations and it is not expected to have a material impact on the financial position or results of operations of the Group:
Amendments to IAS 12, Deferred Tax related to Assets and Liabilities arising from a Single Transaction (2023).

The preparation of an interim financial report in conformity with IAS 34 requires management to make judgement on estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and income and expenses. Actual results may differ from these estimates. The interim condensed consolidated financial statements contain condensed consolidated financial statements and selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the 2020 annual financial statements. The interim condensed consolidated financial statements and notes thereon do not include all of the information required for a full set of financial statements prepared in accordance with HKFRS and IFRS.

The interim condensed consolidated financial statements are unaudited, but have been reviewed by PricewaterhouseCoopers in accordance with the Hong Kong Standard on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity, issued by the Hong Kong Institute of Certified Public Accountants. PricewaterhouseCoopers’ independent review report to the Board of Directors is included on page 50. The interim condensed consolidated financial statements have also been reviewed by the Company’s Audit Committee.

The financial statements relating to the financial year ended 31 December 2020 that are included in the interim condensed consolidated financial statements as comparative information does not constitute the Group’s statutory financial statements for that financial period but is derived from those financial statements. The Group has delivered the financial statements for the year ended 31 December 2020 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance. The auditors have expressed an unqualified opinion on those financial statements in their report dated 12 March 2021. Their report did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.

Items included in the interim condensed consolidated financial statements of each of the Group’s entities are measured in the currency of the primary economic environment in which that entity operates (the functional currency). The interim condensed consolidated financial statements are presented in millions of US dollars (US$m) unless otherwise stated, which is the Company’s functional currency, and the presentation currency of the Company and the Group.

60 F-12

3. Exchange rates

The Group’s principal overseas operations during the reporting period were located within Asia. The results and cash flows of these operations have been translated into US dollars at the following average rates:

following average rates:
	US dollar exchange rates
	Six months	Year	Six months
	ended	ended	ended
	30 June	31 December	30 June
	2021	2020	2020
	(Unaudited)		(Unaudited)
Mainland China	6.47	6.90	7.03
Hong Kong	7.76	7.76	7.76
Thailand	30.82	31.27	31.60
Singapore	1.33	1.38	1.40
Malaysia	4.10	4.20	4.25

Assets and liabilities have been translated at the following period-end rates:

	US	dollar exchange rates
	As at	As at	As at
	30 June	31 December	30 June
	2021	2020	2020
	(Unaudited)		(Unaudited)
Mainland China	6.46	6.53	7.07
Hong Kong	7.77	7.75	7.75
Thailand	32.03	29.95	30.88
Singapore	1.34	1.32	1.40
Malaysia	4.15	4.02	4.28

Exchange rates are expressed in units of local currency per US$1.

61 F-13

4. Operating profit after tax

Operating profit after tax may be reconciled to net profit as follows:

US$m Note Operating profit after tax 6 Non-operating items, net of related changes in insurance and investment contract liabilities and taxes: Short-term fluctuations in investment return related to equities and real estate(1) Reclassification of revaluation (gains)/losses for property held for own use(1) Corporate transaction related costs Implementation costs for new accounting standards Other non-operating investment return and other items Subtotal(2) Net profit Operating profit after tax attributable to: Shareholders of AIA Group Limited Non-controlling interests Net profit attributable to: Shareholders of AIA Group Limited Non-controlling interests	Six months ended 30 June 2021 (Unaudited) 3,206 196 (37) (19) (28) (49) 63 3,269 3,182 24 3,245 24	Six months ended 30 June 2020 (Unaudited) 2,958 (1,309) 61 (37) (22) 532 (775) 2,183 2,933 25 2,197 (14)

Notes:

(1) Short-term fluctuations in investment return include the revaluation gains and losses for property held for own use. This amount is then reclassified out of net profit to conform to IFRS measurement and presentation.

(2) The amount is net of tax credit of US$13m (six months ended 30 June 2020: US$91m). The gross amount before tax is US$50m (six months ended 30 June 2020: US$(866)m).

Operating profit is determined using, among others, expected long-term investment return for equities and real estate. Short-term fluctuations between expected long-term investment return and actual investment return for these asset classes are excluded from operating profit. The assumptions used to determine expected long-term investment return are the same, in all material respects, as those used by the Group in determining its embedded value and are disclosed in the Supplementary Embedded Value Information.

62 F-14

5. Total weighted premium income and annualised new premiums

For management decision-making and internal performance management purposes, the Group measures business volumes during the period using a performance measure referred to as total weighted premium income (TWPI). The Group measures new business activity using a performance measure referred to as annualised new premiums (ANP). The presentation of this note is consistent with our reportable segment presentation in note 6.

TWPI consists of 100 per cent of renewal premiums, 100 per cent of first year premiums and 10 per cent of single premiums, before reinsurance ceded, and includes deposits and contributions for contracts that are accounted for as deposits in accordance with the Group’s accounting policies.

Management considers that TWPI provides an indicative volume measure of transactions undertaken in the reporting period that have the potential to generate profits for shareholders. The amounts shown are not intended to be indicative of premiums and fee income recorded in the interim consolidated income statement.

ANP is a key internal measure of new business activities, which consists of 100 per cent of annualised first year premiums and 10 per cent of single premiums, before reinsurance ceded. ANP excludes new business of pension business, personal lines and motor insurance.

TWPI US$m TWPI by geography Mainland China Hong Kong Thailand Singapore Malaysia Other Markets Total First year premiums by geography Mainland China Hong Kong Thailand Singapore Malaysia Other Markets Total Single premiums by geography Mainland China Hong Kong Thailand Singapore Malaysia Other Markets Total	Six months ended 30 June 2021 (Unaudited) 3,961 5,773 2,089 1,730 1,200 3,758 18,511 872 357 291 188 186 518 2,412 92 1,376 256 711 163 448 3,046	Six months ended 30 June 2020 (Unaudited) 3,001 6,136 1,981 1,502 1,049 3,257 16,926 693 462 282 145 141 439 2,162 234 876 91 521 87 440 2,249

63 F-15

5. Total weighted premium income and annualised new premiums (continued)

TWPI (continued) US$m Renewal premiums by geography Mainland China Hong Kong Thailand Singapore Malaysia Other Markets Total ANP US$m ANP by geography Mainland China Hong Kong Thailand Singapore Malaysia Other Markets Total	Six months ended 30 June 2021 (Unaudited) 3,080 5,278 1,772 1,471 998 3,195 15,794 Six months ended 30 June 2021 (Unaudited) 899 505 333 279 253 791 3,060	Six months ended 30 June 2020 (Unaudited) 2,285 5,586 1,690 1,305 899 2,774 14,539 Six months ended 30 June 2020 (Unaudited) 726 565 312 214 159 603 2,579

64 F-16

6. Segment information

The Group’s operating segments, based on the reports received by the ExCo, are each of the geographical markets in which the Group operates. Each of the reportable segments, other than the “Group Corporate Centre” segment, writes life insurance business, providing life insurance, accident and health insurance and savings plans to customers in its local market, and distributes related investment and other financial services products. The reportable segments are Mainland China, Hong Kong (including Macau), Thailand, Singapore (including Brunei), Malaysia, Other Markets and Group Corporate Centre. Other Markets includes the Group’s operations in Australia, Cambodia, Indonesia, Myanmar, New Zealand, the Philippines, South Korea, Sri Lanka, Taiwan (China), Vietnam and India. The activities of the Group Corporate Centre segment consist of the Group’s corporate functions, shared services and eliminations of intragroup transactions.

As each reportable segment other than the Group Corporate Centre segment focuses on serving the life insurance needs of its local market, there are limited transactions between reportable segments. The key performance indicators reported in respect of each segment are:

ANP;
TWPI;
investment return;
operating expenses;
operating profit after tax attributable to shareholders of AIA Group Limited;
expense ratio, measured as operating expenses divided by TWPI;
operating margin, measured as operating profit after tax expressed as a percentage of TWPI; and
operating return on shareholders’ allocated equity measured on an annualised basis as operating profit after tax attributable to shareholders of AIA Group Limited expressed as a percentage of the simple average of opening and closing shareholders’ allocated segment equity (being the segment assets less segment liabilities in respect of each reportable segment less non-controlling interests and fair value reserve).

Business volumes in respect of the Group’s five largest customers are less than 30 per cent of premiums and fee income.

The Group provides deferred tax liabilities in respect of unremitted earnings in jurisdictions where withholding tax charge would be incurred upon dividend distribution. On 1 October 2020, AIA Company Limited (AIA Co.) converted its Mainland China business to a wholly-owned subsidiary, AIA Life Insurance Company Limited, which was incorporated in Shanghai on 9 July 2020. Upon the conversion of the Mainland China business to AIA Life Insurance Company Limited, any future dividends to the Group from this subsidiary are subject to withholding tax at the applicable tax rate in Mainland China (currently at 5 per cent). Consequently, deferred tax liability in respect of unremitted earnings of this subsidiary was provided for in the period ended 30 June 2021 and year ended 31 December 2020.

65 F-17

6. Segment information (continued)

US$m Six months ended 30 June 2021 – Unaudited ANP TWPI Net premiums, fee income and other operating revenue (net of reinsurance ceded) Investment return Total revenue Net insurance and investment contract benefits Commission and other acquisition expenses Operating expenses Finance costs and other expenses Total expenses Share of (losses)/profit from associates and joint ventures Operating profit before tax Tax on operating profit before tax Operating profit/(losses) after tax Operating profit/(losses) after tax attributable to: Shareholders of AIA Group Limited Non-controlling interests Key operating ratios:	Mainland China Hong Kong 899 505 3,961 5,773 3,776 6,192 658 1,993 4,434 8,185 2,978 5,985 303 747 232 209 29 92 3,542 7,033 – (1) 892 1,151 (170) (89) 722 1,062 722 1,055 – 7	Mainland China Hong Kong 899 505 3,961 5,773 3,776 6,192 658 1,993 4,434 8,185 2,978 5,985 303 747 232 209 29 92 3,542 7,033 – (1) 892 1,151 (170) (89) 722 1,062 722 1,055 – 7	Thailand 333 2,089 1,968 614 2,582 1,415 421 128 28 1,992 – 590 (105) 485 485 –	Singapore 279 1,730 1,877 709 2,586 1,918 185 111 22 2,236 – 350 (11) 339 339 –	Malaysia 253 1,200 999 298 1,297 807 123 109 8 1,047 – 250 (51) 199 194 5	Other Markets 791 3,758 2,535 610 3,145 1,627 480 509 45 2,661 3 487 (84) 403 391 12	Group Corporate Centre – – 63 299 362 57 8 141 140 346 – 16 (20) (4) (4) –	Total 3,060 18,511 17,410 5,181 22,591 14,787 2,267 1,439 364 18,857 2 3,736 (530) 3,206 3,182 24
Expense ratio Operating margin Operating return on shareholders’ allocated equity	5.9% 18.2% 31.4%	3.6% 18.4% 16.3%	6.1% 23.2% 14.5%	6.4% 19.6% 16.0%	9.1% 16.6% 17.9%	13.5% 10.7% 8.6%	– – –	7.8% 17.3% 12.8%
Operating profit before tax includes:
Finance costs Depreciation and amortisation	18 49	15 46	– 11	1 14	1 12	4 50	133 16	172 198
US$m 30 June 2021 – Unaudited Total assets Total liabilities Total equity Shareholders’ allocated equity Total assets include:	Mainland China Hong Kong 38,567 118,329 33,847 100,647 4,720 17,682 4,066 12,828		Thailand 35,116 26,746 8,370 6,492	Singapore 46,851 41,640 5,211 4,222	Malaysia 17,265 15,069 2,196 2,082	Other Markets 53,636 43,230 10,406 8,840	Group Corporate Centre 20,127 9,295 10,832 10,341	Total 329,891 270,474 59,417 48,871
Investments in associates and joint ventures	–	3	–	–	2	671	–	676

66 F-18

6. Segment information (continued)

Segment information may be reconciled to the interim consolidated income statement as shown below:

below:
US$m Six months ended 30 June 2021 – Unaudited	Segment information	Short-term fluctuations in investment return related to equities and real estate	Other non-operating items(1) Interim consolidated income statement
Net premiums, fee income and other operating revenue Investment return	17,410 5,181	– 741	4 858	17,414 Net premiums, fee income and other operating revenue 6,780 Investment return
Total revenue	22,591	741	862	24,194 Total revenue
Net insurance and investment contract benefits Other expenses	14,787 4,070	503 –	780 342	16,070 Net insurance and investment contract benefits 4,412 Other expenses
Total expenses Share of profit from associates and joint ventures Operating profit before tax	18,857 2 3,736	503 – 238	1,122 – (260)	20,482 Total expenses 2 Share of profit from associates and joint ventures 3,714 Profit before tax

Note:

(1) Include unit-linked contracts.

67 F-19

6. Segment information (continued)

US$m Six months ended 30 June 2020 – Unaudited ANP TWPI Net premiums, fee income and other operating revenue (net of reinsurance ceded) Investment return Total revenue Net insurance and investment contract benefits Commission and other acquisition expenses Operating expenses Finance costs and other expenses Total expenses Share of profit from associates and joint ventures Operating profit before tax Tax on operating profit before tax Operating profit after tax Operating profit after tax attributable to: Shareholders of AIA Group Limited Non-controlling interests Key operating ratios:	Mainland China Hong Kong 726 565 3,001 6,136 3,039 6,631 509 1,695 3,548 8,326 2,388 6,155 222 770 185 220 22 88 2,817 7,233 – – 731 1,093 (91) (80) 640 1,013 640 1,005 – 8	Mainland China Hong Kong 726 565 3,001 6,136 3,039 6,631 509 1,695 3,548 8,326 2,388 6,155 222 770 185 220 22 88 2,817 7,233 – – 731 1,093 (91) (80) 640 1,013 640 1,005 – 8	Thailand Singapore 312 214 1,981 1,502 1,909 1,596 631 616 2,540 2,212 1,415 1,619 397 170 113 96 26 28 1,951 1,913 – – 589 299 (111) 4 478 303 478 303 – –	Thailand Singapore 312 214 1,981 1,502 1,909 1,596 631 616 2,540 2,212 1,415 1,619 397 170 113 96 26 28 1,951 1,913 – – 589 299 (111) 4 478 303 478 303 – –	Malaysia 159 1,049 901 279 1,180 770 127 90 7 994 – 186 (36) 150 148 2	Other Markets 603 3,257 2,151 573 2,724 1,304 463 445 39 2,251 2 475 (127) 348 333 15	Group Corporate Centre – – 57 246 303 47 8 93 111 259 – 44 (18) 26 26 –	Total 2,579 16,926 16,284 4,549 20,833 13,698 2,157 1,242 321 17,418 2 3,417 (459) 2,958 2,933 25
Expense ratio Operating margin Operating return on shareholders’ allocated equity	6.2% 21.3% 28.7%	3.6% 16.5% 18.8%	5.7% 24.1% 14.4%	6.4% 20.2% 16.9%	8.6% 14.3% 15.8%	13.7% 10.7% 7.8%	– – –	7.3% 17.5% 13.2%
Operating profit before tax includes:
Finance costs Depreciation and amortisation	16 43	16 51	– 11	1 15	1 10	5 57	102 18	141 205
US$m 31 December 2020 Total assets Total liabilities Total equity Shareholders’ allocated equity Total assets include:	Mainland China Hong Kong 34,919 113,933 29,989 95,598 4,930 18,335 4,407 11,999		Thailand Singapore 38,640 45,994 28,730 40,640 9,910 5,354 6,421 3,916		Malaysia 17,715 15,445 2,270 2,060	Other Markets 55,644 44,369 11,275 8,936	Group Corporate Centre 19,276 7,682 11,594 10,291	Total 326,121 262,453 63,668 48,030
Investments in associates and joint ventures	–	3	–	–	2	601	–	606

68 F-20

6. Segment information (continued)

Segment information may be reconciled to the interim consolidated income statement as shown below:

below:
US$m Six months ended 30 June 2020 – Unaudited	Segment information	Short-term fluctuations in investment return related to equities and real estate	Other non-operating items(1)	Interim consolidated income statement
Net premiums, fee income and other operating revenue Investment return	16,284 4,549	– (2,886)	(1) 1,718	16,283 Net premiums, fee income and other operating revenue 3,381 Investment return
Total revenue	20,833	(2,886)	1,717	19,664 Total revenue
Net insurance and investment contract benefits Other expenses	13,698 3,720	(1,384) –	717 341	13,031 Net insurance and investment contract benefits 4,061 Other expenses
Total expenses Share of profit from associates and joint ventures Operating profit before tax	17,418 2 3,417	(1,384) – (1,502)	1,058 – 659	17,092 Total expenses 2 Share of profit from associates and joint ventures 2,574 Profit before tax

Note:

(1) Include unit-linked contracts.

69 F-21

7. Investment return

US$m Interest income Dividend income Rental income Investment income Available for sale Net realised gains from debt securities Net gains of available for sale financial assets reflected in the interim consolidated income statement At fair value through profit or loss Net (losses)/gains of debt securities Net gains/(losses) of equity securities Net fair value movement on derivatives Net gains/(losses) in respect of financial instruments at fair value through profit or loss Net fair value movement of investment property Net foreign exchange gains Other net realised losses Investment experience Investment return	Six months ended 30 June 2021 (Unaudited) 3,681 539 84 4,304 1,103 1,103 (907) 2,798 (864) 1,027 (2) 395 (47) 2,476 6,780	Six months ended 30 June 2020 (Unaudited) 3,443 459 87 3,989 926 926 719 (3,165) 843 (1,603) (276) 363 (18) (608) 3,381

Foreign currency movements resulted in the following gains recognised in the interim consolidated income statement (other than gains and losses arising on items measured at fair value through profit or loss):

value through profit or loss):
	Six months	Six months
	ended	ended
	30 June 2021	30 June 2020
US$m	(Unaudited)	(Unaudited)
Foreign exchange gains	261	111

70 F-22

8. Expenses

US$m Insurance contract benefits Change in insurance contract liabilities Investment contract benefits Insurance and investment contract benefits Insurance and investment contract benefits ceded Insurance and investment contract benefits, net of reinsurance ceded Commission and other acquisition expenses incurred Deferral and amortisation of acquisition costs Commission and other acquisition expenses Employee benefit expenses Depreciation Amortisation Other operating expenses Operating expenses Investment management expenses and others Depreciation on property held for own use Restructuring and other non-operating costs(1) Change in third-party interests in consolidated investment funds Other expenses Finance costs Total	Six months ended 30 June 2021 (Unaudited) 7,596 9,004 672 17,272 (1,202) 16,070 2,857 (590) 2,267 932 135 43 329 1,439 297 16 207 10 530 176 20,482	Six months ended 30 June 2020 (Unaudited) 6,878 7,207 (155) 13,930 (899) 13,031 2,725 (568) 2,157 817 132 49 244 1,242 283 16 190 30 519 143 17,092

Note:

(1) Restructuring costs represent costs related to restructuring programmes and are primarily comprised of redundancy and contract termination costs. Other non-operating costs primarily consist of corporate transaction related costs, implementation costs for new accounting standards and other items that are not expected to be recurring in nature.

71 F-23

8. Expenses (continued)

Finance costs may be analysed as:

US$m Repurchase agreements Medium-term notes and securities Lease liabilities Other loans Total Employee benefit expenses consist of: US$m Wages and salaries Share-based compensation Pension costs – defined contribution plans Pension costs – defined benefit plans Other employee benefit expenses Total	Six months ended 30 June 2021 (Unaudited) 19 147 7 3 176 Six months ended 30 June 2021 (Unaudited) 751 39 60 7 75 932	Six months ended 30 June 2020 (Unaudited) 15 111 8 9 143 Six months ended 30 June 2020 (Unaudited) 664 48 46 7 52 817

72 F-24

9. Income tax

US$m Tax charged in the interim consolidated income statement Current income tax – Hong Kong Profits Tax Current income tax – overseas Deferred income tax on temporary differences Total	Six months ended 30 June 2021 (Unaudited) 86 595 (236) 445	Six months ended 30 June 2020 (Unaudited) 77 213 101 391

Income tax expense is recognised based on the management’s best estimate of the weighted average annual income tax rate expected for the full financial year.

The tax benefit or expense attributable to life insurance policyholder returns in Singapore, Brunei, Malaysia, Australia, Indonesia, New Zealand, the Philippines and Sri Lanka is included in the tax charge or credit and is analysed separately in the interim consolidated income statement in order to permit comparison of the underlying effective rate of tax attributable to shareholders from period to period. The tax credit attributable to policyholders’ returns included above is US$72m (six months ended 30 June 2020: tax expense of US$23m).

During the period ended 30 June 2021, changes in the corporate income tax rates have been enacted in the Philippines and Sri Lanka. For the Philippines, the corporate income tax rate changed from 30 per cent to 25 per cent effective from 1 July 2020. For Sri Lanka, the corporate income tax rate changed from 28 per cent to 24 per cent effective from 1 January 2020.

In 2020, a change in the corporate income tax rate was enacted in Indonesia from 25 per cent to 22 per cent for fiscal years 2020 and 2021 and to 20 per cent from fiscal year 2022 onwards.

10. Earnings per share

BASIC

Basic earnings per share is calculated by dividing the net profit attributable to shareholders of AIA Group Limited by the weighted average number of ordinary shares in issue during the period. The shares held by employee share-based trusts are not considered to be outstanding from the date of the purchase for the purpose of computing basic and diluted earnings per share.

share.
	Six months	Six months
	ended	ended
	30 June 2021	30 June 2020
	(Unaudited)	(Unaudited)
Net profit attributable to shareholders of AIA Group Limited
(US$m)	3,245	2,197
Weighted average number of ordinary shares in issue
(million)	12,065	12,055
Basic earnings per share (US cents per share)	26.90	18.22

73 F-25

10. Earnings per share (continued)

DILUTED

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. As of 30 June 2021 and 2020, the Group has potentially dilutive instruments which are the share options, restricted share units, restricted stock purchase units and restricted stock subscription units granted to eligible directors, officers, employees and agents under various share-based compensation plans as described in note 23.

Net profit attributable to shareholders of AIA Group Limited (US$m) Weighted average number of ordinary shares in issue (million) Adjustment for share options, restricted share units, restricted stock purchase units and restricted stock subscription units granted under share-based compensation plans (million) Weighted average number of ordinary shares for diluted earnings per share (million) Diluted earnings per share (US cents per share)	Six months ended 30 June 2021 (Unaudited) 3,245 12,065 22 12,087 26.85	Six months ended 30 June 2020 (Unaudited) 2,197 12,055 19 12,074 18.20

At 30 June 2021, 1,849,222 share options (30 June 2020: 9,824,311) were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.

OPERATING PROFIT AFTER TAX PER SHARE

Operating profit after tax (see note 4) per share is calculated by dividing the operating profit after tax attributable to shareholders of AIA Group Limited by the weighted average number of ordinary shares in issue during the period. As of 30 June 2021 and 2020, the Group has potentially dilutive instruments which are the share options, restricted share units, restricted stock purchase units and restricted stock subscription units granted to eligible directors, officers, employees and agents under various share-based compensation plans as described in note 23.

	Six months	Six months
	ended	ended
	30 June 2021	30 June 2020
	(Unaudited)	(Unaudited)
Basic (US cents per share)	26.37	24.33
Diluted (US cents per share)	26.33	24.29

74 F-26

11. Dividends

Dividends to shareholders of the Company attributable to the interim period:

	Six months	Six months
	ended	ended
	30 June 2021	30 June 2020
US$m	(Unaudited)	(Unaudited)
Interim dividend declared after the reporting date of 38.00 Hong
Kong cents per share (six months ended 30 June 2020: 35.00
Hong Kong cents per share)(1)	590	545

Note:

(1) Based upon shares outstanding at 30 June 2021 and 2020 that are entitled to a dividend, other than those held by employee share-based trusts.

The above interim dividend was declared after the reporting date and has not been recognised as a liability at the reporting date.

Dividends to shareholders of the Company attributable to the previous financial period, approved and paid during the interim period:

approved and paid during the interim period:
	Six months	Six months
	ended	ended
	30 June 2021	30 June 2020
US$m	(Unaudited)	(Unaudited)
Final dividend in respect of the previous financial period,
approved and paid during the interim period of 100.30 Hong
Kong cents per share (six months ended 30 June 2020: 93.30
Hong Kong cents per share)	1,558	1,452

75 F-27

12. Intangible assets

US$m Cost At 1 January 2021 Additions Disposals Foreign exchange movements At 30 June 2021 – Unaudited Accumulated amortisation At 1 January 2021 Amortisation charge for the period Disposals Foreign exchange movements At 30 June 2021 – Unaudited Net book value At 31 December 2020 At 30 June 2021 – Unaudited	Goodwill 1,659 – – (48) 1,611 (4) – – – (4) 1,655 1,607	Computer software 823 54 (18) (13) 846 (512) (43) 18 8 (529) 311 317	Distribution and other rights 911 – – (8) 903 (243) (20) – 5 (258) 668 645	Total 3,393 54 (18) (69) 3,360 (759) (63) 18 13 (791) 2,634 2,569

The Group holds intangible assets for its long-term use and the annual amortisation charge of US$126m (31 December 2020: US$142m) approximates the amount that is expected to be recovered through consumption within 12 months after the end of the reporting period.

The carrying amount of distribution and other rights is US$645m (31 December 2020: US$668m), a significant proportion of which is related to the bancassurance partnership with Citibank, N.A. (Citibank).

In April 2021, Citibank announced publicly that it will pursue an exit from its consumer banking business in the markets covered by the bancassurance partnership except for Hong Kong and Singapore. The Group is in discussions with Citibank on the future arrangement of the bancassurance partnership.

The Group determined that there was no impairment of the Group’s intangible assets as at 30 June 2021.

76 F-28

13. Financial investments

DEBT SECURITIES

Debt securities by type comprise the following:

Policyholder and shareholder

	Policyholder and	shareholder
US$m 30 June 2021 – Unaudited Government bonds(1) Other government and government agency bonds(2) Corporate bonds Structured securities(3) Total(4) 31 December 2020 Government bonds(1) Other government and government agency bonds(2) Corporate bonds Structured securities(3) Total(4)	Participating funds and other participating business with distinct portfolios FVTPL AFS 10,330 – 6,615 4,255 10,926 42,699 335 – 28,206 46,954 9,324 – 6,767 4,934 11,922 42,668 357 – 28,370 47,602	Other policyholder and shareholder FVTPL AFS 1,185 43,922 70 17,817 1,058 49,663 433 942 2,746 112,344 1,189 45,750 75 18,843 264 51,975 474 936 2,002 117,504	Unit-linked Consolidated investment funds(5) Subtotal FVTPL FVTPL 55,437 1,669 – 28,757 548 678 104,346 1,361 2,301 1,710 222 – 190,250 3,800 2,979 56,263 1,846 – 30,619 508 332 106,829 1,459 2,063 1,767 195 – 195,478 4,008 2,395	Total 57,106 29,983 108,008 1,932
	FVTPL 10,330 6,615 10,926 335 28,206 9,324 6,767 11,922 357 28,370	FVTPL 1,185 70 1,058 433 2,746 1,189 75 264 474 2,002
				197,029

				58,109 31,459 110,351 1,962
				201,881

Notes:

(1) Government bonds include bonds issued in local or foreign currencies by the government of the country where respective business unit operates.

(2) Other government and government agency bonds comprise other bonds issued by government and governmentsponsored institutions such as national, provincial and municipal authorities, government-related entities, multilateral development banks and supranational organisations.

(3) Structured securities include collateralised debt obligations, mortgage-backed securities and other asset-backed securities.

(4) Debt securities of US$8,490m (31 December 2020: US$9,188m) are restricted due to local regulatory requirements.

(5) Consolidated investment funds reflect 100 per cent of assets and liabilities held by such funds.

77 F-29

13. Financial investments (continued)

EQUITY SECURITIES

Equity securities by type comprise the following:

US$m 30 June 2021 – Unaudited Equity shares Interests in investment funds Total US$m 31 December 2020 Equity shares Interests in investment funds Total	Policyholder and shareholder Participating funds and other participating business with distinct portfolios Other policyholder and shareholder FVTPL FVTPL 17,083 5,044 11,437 1,928 28,520 6,972 Policyholder and shareholder Participating funds and other participating business with distinct portfolios Other policyholder and shareholder FVTPL FVTPL 15,596 6,302 8,296 756 23,892 7,058	Subtotal 22,127 13,365 35,492 Subtotal 21,898 9,052 30,950	Unit-linked Consolidated investment funds (1) FVTPL FVTPL 7,193 1,806 20,603 12 27,796 1,818 Unit-linked Consolidated investment funds (1) FVTPL FVTPL 7,185 1,073 19,974 – 27,159 1,073	Total 31,126 33,980
				65,106

				Total 30,156 29,026 59,182
	Participating funds and other participating business with distinct portfolios FVTPL 15,596 8,296 23,892

Note:

(1) Consolidated investment funds reflect 100 per cent of assets and liabilities held by such funds.

DEBT AND EQUITY SECURITIES

US$m Debt securities Listed Unlisted Total Equity securities Listed Unlisted(1) Total	As at 30 June 2021 (Unaudited) 154,261 42,768 197,029 33,166 31,940 65,106	As at 31 December 2020 160,062 41,819 201,881 31,050 28,132 59,182

Note:

(1) Including US$27,002m (31 December 2020: US$25,806m) of investment funds which can be redeemed daily.

78 F-30

13. Financial investments (continued)

LOANS AND DEPOSITS

US$m Policy loans Mortgage loans on residential real estate Mortgage loans on commercial real estate Other loans Allowance for loan losses Loans Term deposits Promissory notes(1) Total	As at 30 June 2021 (Unaudited) 3,559 549 46 597 (15) 4,736 3,225 1,608 9,569	As at 31 December 2020 3,547 590 49 760 (14)
		4,932 2,683 1,720
		9,335

Note: (1) The promissory notes are issued by a government.

Certain term deposits with financial institutions and promissory notes are restricted due to local regulatory requirements or other pledge restrictions. The restricted balance held within term deposits and promissory notes is US$1,953m (31 December 2020: US$2,057m).

Other loans include receivables from reverse repurchase agreements under which the Group does not take physical possession of securities purchased under the agreements. Sales or transfers of securities are not permitted by the respective clearing house on which they are registered while the loan is outstanding. In the event of default by the counterparty to repay the loan, the Group has the right to the underlying securities held by the clearing house. At 30 June 2021, the carrying value of such receivables is US$294m (31 December 2020: US$271m).

Effect of Inter-bank offered rate (IBOR) reform

The International Accounting Standards Board (IASB) published Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform Phase 2 to address the implications on financial reporting when an existing interest rate benchmark is replaced with an alternative benchmark interest rate. These amendments have been adopted for the first time for the year ending 31 December 2021 and have no material impact to the Group.

The Group currently holds a number of financial instrument contracts which reference USD London Interbank Offered Rate (LIBOR), Singapore Swap Offer Rate (SOR) and Thai Baht Interest Rate Fixing (THBFIX), that extend beyond 2021 (collectively “Original Benchmark Interest Rates”) and have not yet transitioned to replacement benchmark interest rates.

The Group monitors the exposure to instruments subject to such reform and is in the process of implementing changes to systems, processes, risk management procedures and valuation models that may arise as a consequence of the reform. Such reform has no impact on the Group’s risk management strategy. Risks arising from instruments that are subject to such transition are not considered significant.

While the impact of IBOR reform on profit or loss and other comprehensive income is not considered significant to the Group, the following table contains the carrying value of relevant financial instruments that the Group holds at 30 June 2021.

US$m Non-derivative financial assets Non-derivative financial liabilities Net derivative financial assets/(liabilities)	Carrying value at 30 June 2021 and have yet to transition to a replacement benchmark interest rate
	USD LIBOR SOR THBFIX 1,518 904 – – (371) – (73) 23 45

79 F-31

14. Derivative financial instruments

The Group’s derivative exposure is as follows:

US$m 30 June 2021 – Unaudited Foreign exchange contracts Cross-currency swaps Forwards Foreign exchange futures Total foreign exchange contracts Interest rate contracts Interest rate swaps Other Warrants and options Forward contracts Swaps Netting Total 31 December 2020 Foreign exchange contracts Cross-currency swaps Forwards Foreign exchange futures Total foreign exchange contracts Interest rate contracts Interest rate swaps Other Warrants and options Forward contracts Swaps Netting Total	Notional amount 8,086 3,971 91 12,148 8,879 147 17,004 1,787 (91) 39,874 8,172 2,694 100 10,966 8,510 1,342 10,658 1,267 (100) 32,643	Fair value Assets Liabilities 101 (310) 72 (22) – – 173 (332) 415 (249) 9 – 310 (1,252) 8 (3) – – 915 (1,836) 313 (158) 121 (17) – – 434 (175) 561 (308) 51 (45) 18 (469) 5 (6) – – 1,069 (1,003)
		Assets 101 72 – 173 415 9 310 8 – 915 313 121 – 434 561 51 18 5 – 1,069

The column “notional amount” in the above table represents the pay leg of derivative transactions other than equity-index option. For certain equity-index call and put options with the same notional amount that are purchased to hedge the downside risk of the underlying equities by means of a collar strategy, the notional amount represents the exposure of the hedged equities.

Of the total derivatives, US$25m (31 December 2020: US$25m) are listed in exchange or dealer markets and the rest are over-the-counter (OTC) derivatives. OTC derivative contracts are individually negotiated between contracting parties and not cleared through an exchange. OTC derivatives include forwards, swaps and options. Derivatives are subject to various risks including market, liquidity and credit risks, similar to those related to the underlying financial instruments.

Derivative assets and derivative liabilities are recognised in the interim consolidated statement of financial position as financial assets at fair value through profit or loss and derivative financial liabilities respectively. The Group’s derivative contracts are established to provide an economic hedge to financial exposures. The Group adopts hedge accounting in limited circumstances. The notional or contractual amounts associated with derivative financial instruments are not recorded as assets or liabilities in the interim consolidated statement of financial position as they do not represent the fair value of these transactions. The notional amounts in the previous table reflect the aggregate of individual derivative positions on a gross basis and so give an indication of the overall scale of derivative transactions.

80 F-32

14. Derivative financial instruments (continued)

FOREIGN EXCHANGE CONTRACTS

Foreign exchange forward and futures contracts represent agreements to exchange the currency of one country for the currency of another country at an agreed price and settlement date. Currency options are agreements that give the buyer the right to exchange the currency of one country for the currency of another country at agreed prices and settlement dates. Currency swaps are contractual agreements that involve the exchange of both periodic and final amounts in two different currencies. Exposure to gains and losses on the foreign exchange contracts will increase or decrease over their respective lives as a function of maturity dates, interest and foreign exchange rates, implied volatilities of the underlying indices and the timing of payments.

INTEREST RATE SWAPS

Interest rate swaps are contractual agreements between two parties to exchange periodic payments in the same currency, each of which is computed on a different interest rate basis, on a specified notional amount. Most interest rate swaps involve the net exchange of payments calculated as the difference between the fixed and floating rate interest payments.

OTHER DERIVATIVES

Warrants and options are option agreements that give the owner the right to buy or sell securities at an agreed price and settlement date. Forward contracts are contractual obligations to buy or sell a financial instrument on a predetermined future date at a specified price. Swaps are OTC contractual agreements between the Group and a third party to exchange a series of cash flows based upon an index, rates or other variables applied to a notional amount.

NETTING ADJUSTMENT

The netting adjustment is related to futures contracts executed through clearing house where the settlement arrangement satisfied the netting criteria under IFRS.

COLLATERAL UNDER DERIVATIVE TRANSACTIONS

At 30 June 2021, the Group had posted cash collateral of US$170m (31 December 2020: US$86m) and pledged debt securities with carrying value of US$1,489m (31 December 2020: US$696m) for liabilities and held cash collateral of US$288m (31 December 2020: US$500m), debt securities collateral with carrying value of US$20m (31 December 2020: US$17m) for assets in respect of derivative transactions. The Group did not sell or repledge the collateral received. These transactions are conducted under terms that are usual and customary to collateralised transactions including, where relevant, standard repurchase agreements.

81 F-33

15. Fair value measurement of financial instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Group classifies all financial assets as either at fair value through profit or loss, or as available for sale, which are carried at fair value, or as loans and receivables, which are carried at amortised cost. Financial liabilities are classified as either at fair value through profit or loss or at amortised cost, except for investment contracts with discretionary participation features (DPF) which are accounted for under IFRS 4.

The following tables present the fair values of the Group’s financial assets and financial liabilities:

US$m Notes 30 June 2021- Unaudited Financial investments 13 Loans and deposits Debt securities Equity securities Derivative financial instruments 14 Reinsurance receivables Other receivables Accrued investment income Cash and cash equivalents 16 Financial assets Notes Financial liabilities Investment contract liabilities 17 Borrowings 18 Obligations under repurchase agreements 19 Derivative financial instruments 14 Other liabilities Financial liabilities	Fair value Fair value through profit or loss Available for sale Cost/ amortised cost Total carrying value – – 9,569 9,569 37,731 159,298 – 197,029 65,106 – – 65,106 915 – – 915 – – 816 816 – – 3,423 3,423 – – 1,838 1,838 – – 7,149 7,149 103,752 159,298 22,795 285,845 Fair value through profit or loss Cost/ amortised cost Total carrying value 12,016 556 12,572 – 9,182 9,182 – 3,447 3,447 1,836 – 1,836 1,004 7,364 8,368 14,856 20,549 35,405	Fair value Fair value through profit or loss Available for sale Cost/ amortised cost Total carrying value – – 9,569 9,569 37,731 159,298 – 197,029 65,106 – – 65,106 915 – – 915 – – 816 816 – – 3,423 3,423 – – 1,838 1,838 – – 7,149 7,149 103,752 159,298 22,795 285,845 Fair value through profit or loss Cost/ amortised cost Total carrying value 12,016 556 12,572 – 9,182 9,182 – 3,447 3,447 1,836 – 1,836 1,004 7,364 8,368 14,856 20,549 35,405	Total fair value 9,565 197,029 65,106 915 816 3,423 1,838 7,149 285,841 Total fair value 12,572 10,020 3,447 1,836 8,368 36,243

82 F-34

15. Fair value measurement of financial instruments (continued)

FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

US$m Notes 31 December 2020 Financial investments 13 Loans and deposits Debt securities Equity securities Derivative financial instruments 14 Reinsurance receivables Other receivables Accrued investment income Cash and cash equivalents 16 Financial assets	Fair value Fair value through profit or loss Available for sale – – 36,775 165,106 59,182 – 1,069 – – – – – – – – – 97,026 165,106	Cost/ amortised cost 9,335 – – – 671 3,053 1,822 5,619 20,500	Total carrying value 9,335 201,881 59,182 1,069 671 3,053 1,822 5,619 282,632	Total fair value 9,333 201,881 59,182 1,069 671 3,053 1,822 5,619 282,630
	Fair value through profit or loss – 36,775 59,182 1,069 – – – – 97,026

Notes Financial liabilities Investment contract liabilities 17 Borrowings 18 Obligations under repurchase agreements 19 Derivative financial instruments 14 Other liabilities Financial liabilities	Fair value through profit or loss 12,026 – – 1,003 1,025 14,054	Cost/ amortised cost 543 8,559 1,664 – 6,772 17,538	Total carrying value 12,569 8,559 1,664 1,003 7,797 31,592	Total fair value 12,569 9,555 1,664 1,003 7,797 32,588

The Group does not have assets or liabilities measured at fair value on a non-recurring basis during the six months ended 30 June 2021.

When the Group holds a group of derivative assets and derivative liabilities entered into with a particular counterparty, the Group takes into account the arrangements that mitigate credit risk exposure in the event of default (e.g. International Swap and Derivatives Association (ISDA) Master Agreements and Credit Support Annex (CSA) that require the exchange of collateral on the basis of each party’s net credit risk exposure). The Group measures the fair value of the group of financial assets and financial liabilities on the basis of its net exposure to the credit risk of that counterparty or the counterparty’s net exposure to our credit risk that reflects market participants’ expectations about the likelihood that such an arrangement would be legally enforceable in the event of default.

83 F-35

15. Fair value measurement of financial instruments (continued)

FAIR VALUE HIERARCHY FOR FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS ON A RECURRING BASIS

A summary of financial assets and liabilities carried at fair value according to fair value hierarchy is given below:

Fair value hierarchy Level 1 Level 2 Level 3 – 46,946 8 – 111,151 1,193 – 27,368 838 22 6,757 – 1 2,434 311 23,742 999 3,779 28,991 302 321 5,290 1,063 619 – 173 – – 415 – 12 315 – 58,058 197,923 7,069 *22.1* *75.2* *2.7* – 11,704 312 – 332 – – 249 – 9 1,246 – – 1,004 – 9 14,535 312 *0.1* *97.8* *2.1*	Fair value hierarchy Level 1 Level 2 Level 3 – 46,946 8 – 111,151 1,193 – 27,368 838 22 6,757 – 1 2,434 311 23,742 999 3,779 28,991 302 321 5,290 1,063 619 – 173 – – 415 – 12 315 – 58,058 197,923 7,069 *22.1* *75.2* *2.7* – 11,704 312 – 332 – – 249 – 9 1,246 – – 1,004 – 9 14,535 312 *0.1* *97.8* *2.1*	Total 46,954 112,344 28,206 6,779 2,746 28,520 29,614 6,972 173 415 327
Level 1 – – – 22 1 23,742 28,991 5,290 – – 12 58,058 *22.1* – – – 9 – 9 *0.1*	Level 2 46,946 111,151 27,368 6,757 2,434 999 302 1,063 173 415 315 197,923 *75.2* 11,704 332 249 1,246 1,004 14,535 *97.8*
		263,050 *100.0* 12,016 332 249 1,255 1,004
		14,856 *100.0*

84 F-36

15. Fair value measurement of financial instruments (continued)

FAIR VALUE HIERARCHY FOR FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS ON A RECURRING BASIS (continued)

Fair value hierarchy Level 1 Level 2 Level 3 – 47,594 8 69 116,178 1,257 14 27,426 930 14 6,386 3 1 1,697 304 20,272 877 2,743 27,640 285 307 5,481 1,077 500 – 434 – – 561 – 13 61 – 53,504 202,576 6,052 20.4 77.3 2.3 – – 12,026 – 175 – – 308 – 12 508 – – 1,025 – 12 2,016 12,026 0.1 14.3 85.6	Fair value hierarchy Level 1 Level 2 Level 3 – 47,594 8 69 116,178 1,257 14 27,426 930 14 6,386 3 1 1,697 304 20,272 877 2,743 27,640 285 307 5,481 1,077 500 – 434 – – 561 – 13 61 – 53,504 202,576 6,052 20.4 77.3 2.3 – – 12,026 – 175 – – 308 – 12 508 – – 1,025 – 12 2,016 12,026 0.1 14.3 85.6	Total 47,602 117,504 28,370 6,403 2,002 23,892 28,232 7,058 434 561 74
Level 1 – 69 14 14 1 20,272 27,640 5,481 – – 13 53,504 20.4 – – – 12 – 12 0.1	Level 2 47,594 116,178 27,426 6,386 1,697 877 285 1,077 434 561 61 202,576 77.3 – 175 308 508 1,025 2,016 14.3
		262,132 100.0 12,026 175 308 520 1,025
		14,054 100.0

The Group’s policy is to recognise transfers of assets and liabilities between Level 1 and Level 2 at their fair values as at the end of each reporting period, consistent with the date of the determination of fair value. Assets are transferred out of Level 1 when they are no longer transacted with sufficient frequency and volume in an active market. During the six months ended 30 June 2021, the Group transferred US$312m (year ended 31 December 2020: US$127m) of assets measured at fair value from Level 1 to Level 2. Conversely, assets are transferred from Level 2 to Level 1 when transaction volume and frequency are indicative of an active market. The Group transferred US$202m (year ended 31 December 2020: US$9m) of assets from Level 2 to Level 1 during the six months ended 30 June 2021.

The Group’s Level 2 financial instruments include debt securities, equity securities, derivative instruments and other liabilities. The fair values of Level 2 financial instruments are estimated using values obtained from private pricing services and brokers corroborated with internal review as necessary. When the quotes from private pricing services and brokers are not available, internal valuation techniques and inputs will be used to derive the fair value for the financial instruments.

85 F-37

15. Fair value measurement of financial instruments (continued)

FAIR VALUE HIERARCHY FOR FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS ON A RECURRING BASIS (continued)

The table below sets out a summary of changes in the Group’s Level 3 financial assets and liabilities measured at fair value on a recurring basis for the six months ended 30 June 2021. The table reflects gains and losses, including gains and losses on financial assets and liabilities categorised as Level 3 as at 30 June 2021.

Level 3 financial assets and liabilities

US$m At 1 January 2021 Net movement on investment contract liabilities Total gains/(losses) Reported under investment return in the interim consolidated income statement Reported under fair value reserve and foreign currency translation reserve in the interim consolidated statement of comprehensive income Purchases Sales Settlements Transfer out of Level 3 At 30 June 2021 – Unaudited Change in unrealised gains or losses included in the interim consolidated income statement for assets and liabilities held at the end of the reporting period, under investment return	Debt securities 2,502 – (2) 12 172 (14) (320) – 2,350 (36)	Equity securities 3,550 – 346 (35) 895 (37) – – 4,719 332	Derivative financial assets/ (liabilities) – – – – – – – – – –	Investment contracts (12,026) (5) – – – – – 11,719 (312) –

Movements in investment contract liabilities at fair value are offset by movements in the underlying portfolio of matching assets. In 2021, the Group has revisited the fair value hierarchy disclosure of its investment contract liabilities. Of the total investment contract liabilities reported, US$11,719m have been valued based on quoted prices of the underlying investments hence they are classified as Level 2.

There are not any differences between the fair values on initial recognition and the amounts determined using valuation techniques since the models adopted are calibrated using initial transaction prices.

86 F-38

15. Fair value measurement of financial instruments (continued)

SIGNIFICANT UNOBSERVABLE INPUTS FOR LEVEL 3 FAIR VALUE MEASUREMENTS

As at 30 June 2021, the valuation techniques and applicable unobservable inputs used to measure the Group’s Level 3 financial instruments are summarised as follows:

	Fair value at
	30 June 2021
	(Unaudited)
Description	(US$m)	Valuation techniques	Unobservable inputs	Range
Debt securities	907	Discounted cash flows	Risk adjusted discount rate	3.71% – 10.79%

VALUATION PROCESSES

The Group has the valuation policies, procedures and analyses in place to govern the valuation of financial assets required for financial reporting purposes, including Level 3 fair values. In determining the fair values of financial assets, the Group in general uses private pricing providers and, only in rare cases when third-party prices do not exist, will use prices derived from internal models. The Chief Investment Officers of each of the business units are required to review the reasonableness of the prices used and report price exceptions, if any. The Group Investment team analyses reported price exceptions and reviews price challenge responses from private pricing providers and provides the final recommendation on the appropriate price to be used. Any changes in valuation policies are reviewed and approved by the Group Valuations Advisory Committee which is part of the Group’s wider financial risk governance processes. Changes in Level 2 and 3 fair values are analysed at each reporting date.

The main Level 3 input used by the Group pertains to the discount rate for the debt securities and investment contracts. The unobservable inputs for determining the fair value of these instruments include the obligor’s credit spread and/or the liquidity spread. A significant increase/ (decrease) in any of the unobservable input may result in a significantly lower/(higher) fair value measurement. The Group has subscriptions to private pricing services for gathering such information. If the information from private pricing services is not available, the Group uses the proxy pricing method based on internally-developed valuation inputs.

87 F-39

16. Cash and cash equivalents

US$m Cash Cash equivalents Total(1)	As at 30 June 2021 (Unaudited) 4,260 2,889 7,149	As at 31 December 2020 2,877 2,742 5,619

Note:

(1) US$931m (31 December 2020: US$1,111m) are held to back unit-linked contracts and US$42m (31 December 2020: US$108m) are held by consolidated investment funds.

Cash comprises cash at bank and cash in hand. Cash equivalents comprise bank deposits and highly liquid short-term investments with maturities at acquisition of three months or less and money market funds that are convertible into known amounts of cash and subject to insignificant risk of changes in value. Accordingly, all such amounts are expected to be realised within 12 months after the end of the reporting period.

17. Insurance and investment contract liabilities

INSURANCE CONTRACT LIABILITIES

Insurance contract liabilities (including liabilities in respect of investment contracts with DPF) can be analysed as follows:

US$m Deferred profit Unearned revenue Policyholders’ share of participating surplus Liabilities for future policyholder benefits Total	As at 30 June 2021 (Unaudited) 27,166 2,039 30,259 168,812 228,276	As at 31 December 2020 24,972 1,751 31,151 165,197 223,071

INVESTMENT CONTRACT LIABILITIES

Investment contract liabilities include deferred fee income of US$287m (31 December 2020: US$312m).

18. Borrowings

US$m Other loans Medium-term notes and securities Senior notes Subordinated securities Total	As at 30 June 2021 (Unaudited) 11 6,321 2,850 9,182	As at 31 December 2020 – 6,824 1,735 8,559

88 F-40

18. Borrowings (continued)

The following table summarises the Company’s outstanding medium-term notes and securities placed to the market at 30 June 2021:

SENIOR NOTES

SENIOR NOTES
Issue date	Nominal amount	Interest rate	Tenor at issue	Maturity
13 March 2013(1)	US$500m	3.125%	10 years	13 March 2023
11 March 2014(1)	US$500m	4.875%	30 years	11 March 2044
11 March 2015(1)	US$750m	3.200%	10 years	11 March 2025
16 March 2016(1)	US$750m	4.500%	30 years	16 March 2046
23 May 2017(2)	US$500m	4.470%	30 years	23 May 2047
6 April 2018(1)	US$500m	3.900%	10 years	6 April 2028
20 September 2018(1)	US$500m	3M LIBOR + 0.52%	3 years	20 September 2021
16 January 2019	HK$1,300m	2.950%	3.5 years	16 July 2022
16 January 2019	HK$1,100m	3.680%	12 years	16 January 2031
9 April 2019(1)	US$1,000m	3.600%	10 years	9 April 2029
7 April 2020(1)	US$1,000m	3.375%	10 years	7 April 2030
24 June 2020	A$90m	2.950%	10 years	24 June 2030
SUBORDINATED SECURITIES
Issue date	Nominal amount	Interest rate	Tenor at issue	Maturity
16 September 2020(1)(3)	US$1,750m	3.200%	20 years	16 September 2040
7 April 2021(1)(3)(4)	US$750m	2.700%	Perpetual	n/a
11 June 2021(1)(3)(4)	SG$500m	2.900%	Perpetual	n/a

Notes:

(1) These medium-term notes and securities are listed on The Stock Exchange of Hong Kong Limited.

(2) These medium-term notes are listed on The Taipei Exchange, Taiwan. The Company has the right to redeem these notes at par on 23 May of each year beginning on 23 May 2022.

(3) The Company has the right to redeem these securities, in whole, at par on predetermined dates as set out within the terms and conditions of the securities.
(4) The coupon rate of these securities is fixed for a predetermined period as set out within the terms and conditions of the securities, and then resets to the initial spread plus a then prevailing benchmark rate if the securities have not been redeemed.

The net proceeds from issuance during the six months ended 30 June 2021 are used for general corporate purposes.

The Group has access to an aggregate of US$2,290m unsecured committed credit facilities, which includes a US$100m revolving three-year credit facility expiring in 2024 and a US$2,190m five-year credit facility expiring in 2026, following extension of both facilities by one year effective 28 July 2021. The credit facilities will be used for general corporate purposes. There were no outstanding borrowings under these credit facilities as of 30 June 2021 and 31 December 2020.

89 F-41

19. Obligations under repurchase agreements

The Group has entered into repurchase agreements whereby securities are sold to third parties with a concurrent agreement to repurchase the securities at a specified date.

The securities related to these agreements are not derecognised from the Group’s interim consolidated statement of financial position, but are retained within the appropriate financial asset classification. During the term of the repurchase agreements, the Group is restricted from selling or pledging the transferred debt securities. The following table specifies the amounts included within financial investments subject to repurchase agreements which do not qualify for derecognition at each period end:

US$m Debt securities – AFS Repurchase agreements Debt securities – FVTPL Repurchase agreements Total	As at 30 June 2021 (Unaudited) 3,200 248 3,448	As at 31 December 2020 1,444 232 1,676

COLLATERAL

At 30 June 2021, the Group had pledged debt securities of US$16m (31 December 2020: US$1m). Cash collateral of US$26m (31 December 2020: nil) was held based on the market value of the securities transferred. In the absence of default, the Group did not sell or repledge the collateral received.

At 30 June 2021, the obligations under repurchase agreements were US$3,447m (31 December 2020: US$1,664m).

90 F-42

20. Share capital and reserves

SHARE CAPITAL

SHARE CAPITAL
As at 30 June 2021 Million shares US$m (Unaudited) (Unaudited) Ordinary shares(1), issued and fully paid At beginning of the financial period 12,095 14,155 Shares issued under share option scheme and agency share purchase plan 2 4 At end of the financial period 12,097 14,159	As at 31 December 2020
	Million shares 12,089 6 12,095	US$m 14,129 26 14,155

Note: (1) Ordinary shares have no nominal value.

The Company issued 505,584 shares under share option scheme (year ended 31 December 2020: 4,876,916 shares) and 1,192,355 shares under agency share purchase plan (year ended 31 December 2020: 1,185,442 shares) during the six months ended 30 June 2021.

The Company and its subsidiaries have not purchased, sold or redeemed any of the Company’s shares during the six months ended 30 June 2021 with the exception of 7,458,188 shares (year ended 31 December 2020: 1,552,886 shares) of the Company purchased by and nil share (year ended 31 December 2020: nil share) of the Company sold by the employee share-based trusts. These purchases were made by the relevant scheme trustees on the Hong Kong Stock Exchange. These shares are held on trust for participants of the relevant schemes and therefore were not cancelled.

During the six months ended 30 June 2021, 5,570,654 shares (six months ended 30 June 2020: 11,233,639 shares) were transferred to eligible directors, officers and employees of the Group from the employee share-based trusts under share-based compensation plans as a result of vesting. As at 30 June 2021, 30,635,796 shares (31 December 2020: 28,748,261 shares) of the Company were held by the employee share-based trusts.

91 F-43

20. Share capital and reserves (continued)

RESERVES

Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available for sale securities held at the end of the reporting period.

Foreign currency translation reserve

The foreign currency translation reserve comprises all foreign currency exchange differences arising from the translation of the financial statements of foreign operations.

Employee share-based trusts

Trusts have been established to acquire shares of the Company for distribution to participants in future periods through the share-based compensation plans. Those shares acquired by the trusts, to the extent not transferred to the participants upon vesting, are reported as “Employee share-based trusts”.

Property revaluation reserve

Property revaluation reserve comprises the cumulative net change in the revalued amount of property held for own use at the end of the reporting period. Property revaluation surplus is not considered to be a realised profit available for distribution to shareholders.

Other reserves

Other reserves mainly include the impact of merger accounting for business combinations under common control and share-based compensation.

92 F-44

21. Group capital structure

Capital Management Approach

The Group’s capital management objectives focus on maintaining a strong capital base to support the development of its business, maintaining the ability to move capital freely among Group members and satisfying regulatory capital requirements at all times.

The Group’s capital management function oversees all capital-related activities of the Group and assists senior management in making capital decisions. The capital management function participates in decisions concerning asset-liability management, strategic asset allocation and ongoing solvency management. This includes ensuring capital considerations are paramount in the strategy and business planning processes and when determining AIA’s capacity to pay dividends to shareholders.

Group-wide Supervision Framework and the Local Capital Summation Method

The group supervisor of the Group is the Hong Kong Insurance Authority (HKIA). The Group is in compliance with the group capital adequacy requirements as applied to it.

In 2021, the HKIA implemented the new Group-wide Supervision (GWS) framework, under which the HKIA has direct regulatory powers over Hong Kong incorporated holding companies of insurance groups that are designated. On 14 May 2021, the Company became a designated insurance holding company and is now subject to the GWS framework including the Insurance (Group Capital) Rules (GWS Capital Rules). Under the GWS Capital Rules, the Group available capital and the Group minimum capital requirement are based on a “summation approach”, and are referred to as the Local Capital Summation Method (LCSM).

Under the LCSM, the Group available capital and the Group minimum capital requirement are calculated based on summing up of the available capital and applicable required capital according to the respective regulatory requirements for each entity within the Group, subject to any variation the HKIA considers necessary. The Group LCSM surplus is the difference between the Group available capital and the Group minimum capital requirement. The Group LCSM cover ratio is the ratio of the Group available capital to the Group minimum capital requirement.

At 30 June 2021, the Group available capital includes:

(i) US$2,858m[(1)] of subordinated securities. Subordinated securities with a fixed maturity receive full capital credit up to the date that is 5 years prior to the date of maturity, with the capital credit then reducing at the rate of 20 per cent per annum until maturity. Perpetual subordinated securities receive full capital credit unless they are redeemed; and
(ii) US$5,810m[(1)] of senior notes issued before designation that have been approved by the HKIA. Prior to maturity, the approved senior notes receive full capital credit until 14 May 2031, after which the capital credit reduces at the rate of 20 per cent per annum until 14 May 2036.

The comparative figures as at 31 December 2020 were based on the Group’s understanding of the likely application of the GWS framework to the Group at the time and included US$1,735m of subordinated securities, while excluding US$5,810m of senior notes not then approved as contributing to Group available capital. This is largely consistent with the basis of calculation of the Group LCSM solvency position as at 30 June 2021 with the key difference being the treatment of senior notes.

Note:

(1) The amounts represent the net cash proceeds from the issuances of medium-term notes and securities contributing to Group available capital. These are counted as tier 2 group capital under the GWS Capital Rules.

93 F-45

21. Group capital structure (continued)

Group-wide Supervision Framework and the Local Capital Summation Method (continued)

A summary of the Group LCSM solvency position is as follows:

	As at	As at
	30 June	31 December
	2021	2020
US$m	(Unaudited)	(Unaudited)
Group available capital	67,675	59,830
Group minimum capital requirement	16,444	16,013
Group LCSM surplus	51,231	43,817
Group LCSM cover ratio	412%	374%

Local Regulatory Solvency

The Group’s individual branches and subsidiaries are also subject to the supervision of government regulators in the jurisdictions in which those branches and subsidiaries and their parent entity operate and, in relation to subsidiaries, in which they are incorporated. The various regulators overseeing the Group actively monitor our local solvency positions.

The Group’s principal operating companies AIA Co. and AIA International Limited (AIA International), as authorised insurers in Hong Kong, are required by the HKIA to meet the solvency margin requirements of the Hong Kong Insurance Ordinance. During the six months ended 30 June 2021 and the year ended 31 December 2020, these two principal operating companies were in compliance with these solvency requirements.

Dividends, remittances and other payments from individual branches and subsidiaries

The ability of the Company to pay dividends to shareholders and to meet other obligations depends ultimately on dividends, remittances and other payments being received from its operating branches and subsidiaries, which are subject to contractual, regulatory and other limitations. The various regulators overseeing the individual branches and subsidiaries of the Group have the discretion to impose additional restrictions on the ability of those regulated branches and subsidiaries to make payment of dividends, remittances and other payments to AIA Co., including increasing the required margin of solvency that an operating unit must maintain. For example, capital may not be remitted without the consent from regulators for certain individual branches or subsidiaries of the Group.

Capital and Regulatory Orders Specific to the Group

On 14 May 2021, AIA Group Limited became a designated insurance holding company and is now subject to the GWS framework. The HKIA has confirmed that the undertaking as previously disclosed in note 37 to the Group’s consolidated financial statements as at and for the year ended 31 December 2020 has ceased to apply as of 14 May 2021.

94 F-46

22. Risk management

The risks that the Group is exposed to include, but are not limited to, credit risk, interest rate risk, equity price risk, foreign exchange rate risk and liquidity risk.

CREDIT RISK

Credit risk is the risk that third parties fail to meet their obligations to the Group when they fall due. Although the primary source of credit risk is the Group’s investment portfolio, such risk can also arise through reinsurance, procurement, and treasury activities.

The Group’s credit risk management oversight process is governed centrally, but provides for decentralised management and accountability by our lines of defence. A key to AIA’s credit risk management is adherence to a well-controlled underwriting process. The Group’s credit risk management starts with the assignment of an internal rating to all counterparties. A detailed analysis of each counterparty is performed and a rating determined by the investment teams. The Group’s Risk Management function manages the Group’s internal ratings framework and conducts periodic rating reviews. Measuring and monitoring of credit risk is an ongoing process and is designed to enable early identification of emerging risk.

INTEREST RATE RISK

The Group’s exposure to interest rate risk predominantly arises from any differences between the duration of the Group’s liabilities and assets. Since most markets do not have assets of sufficient tenor to match life insurance liabilities, an uncertainty arises around the reinvestment of maturing assets to match the Group’s insurance liabilities.

AIA manages interest rate risk primarily on an economic basis to determine the durations of both assets and liabilities. Interest rate risk on local solvency basis is also taken into consideration for business units where local solvency regimes deviate from economic basis. Furthermore, for products with discretionary benefits, additional modelling of interest rate risk is performed to guide determination of appropriate management actions. Management also takes into consideration the asymmetrical impact of interest rate movements when evaluating products with options and guarantees.

95 F-47

22. Risk management (continued)

EQUITY PRICE RISK

Equity price risk arises from changes in the market value of equity securities. Investments in equity securities on a long-term basis are expected to align policyholders expectations, provide diversification benefits and enhance returns. The extent of exposure to equities at any time is subject to the terms of the Group’s strategic asset allocations.

Equity price risk is managed in the first instance through the individual investment mandates which define benchmarks and any tracking error targets. Equity limits are also applied to contain individual exposures. Equity exposures are included in the aggregate exposure reports on each individual counterparty to ensure concentrations are avoided.

SENSITIVITY ANALYSIS

Sensitivity analysis to the key variables affecting financial assets and liabilities is set out in the table below. The carrying values of other financial assets are not subject to changes in response to movements in interest rates or equity prices. In calculating the sensitivity of debt and equity instruments to changes in interest rates and equity prices, the Group has made assumptions about the corresponding impact of asset valuations on liabilities to policyholders. Assets held to support unit-linked contracts have been excluded on the basis that changes in fair value are wholly borne by policyholders. Sensitivity analysis for assets held in participating funds has been calculated after allocation of returns to policyholders using the applicable minimum policyholder participation ratios.

Information is presented to illustrate the estimated impact on profits and total equity arising from a change in a single variable before taking into account the effects of taxation.

The impact of any impairments of financial assets has been ignored for the purpose of illustrating the sensitivity of profit before tax and total equity before the effects of taxation to changes in interest rates and equity prices on the grounds that default events reflect the characteristics of individual issuers. As the Group’s accounting policies lock in interest rate assumptions on policy inception and the Group’s assumptions incorporate a provision for adverse deviations, the level of movement illustrated in this sensitivity analysis does not result in loss recognition and so there is not any corresponding effect on liabilities.

		30 June 2021	30 June 2021	31	December 2020	December 2020
		(Unaudited)
		Impact	Impact on			Impact on
		on total	allocated		Impact on	allocated
		equity	equity		total equity	equity
	Impact	(before the	(before the	Impact	(before the	(before the
	on profit	effects of	effects of	on profit	effects of	effects of
US$m	before tax	taxation)	taxation)	before tax	taxation)	taxation)
Equity price risk
10 per cent increase
in equity prices	1,158	1,158	1,158	1,091	1,091	1,091
10 per cent decrease
in equity prices	(1,158)	(1,158)	(1,158)	(1,091)	(1,091)	(1,091)
Interest rate risk
+ 50 basis points shift
in yield curves	(690)	(8,000)	(690)	(550)	(8,403)	(550)
- 50 basis points shift
in yield curves	728	8,910	728	584	9,356	584

96 F-48

22. Risk management (continued)

FOREIGN EXCHANGE RATE RISK

The Group’s foreign exchange rate risk arises mainly from the Group’s operations in multiple geographical markets in Asia and the translation of multiple currencies to US dollar for financial reporting purposes. The balance sheet values of our operating units and subsidiaries are not hedged to the Group’s presentation currency, the US dollar.

However, assets, liabilities and local regulatory and stress capital in each business unit are generally currency matched with the exception of holdings of equities denominated in currencies other than the functional currency, or any expected capital movements due within one year which may be hedged. Bonds denominated in currencies other than the functional currency are commonly hedged with cross-currency swaps or foreign exchange forward contracts.

FOREIGN EXCHANGE RATE NET EXPOSURE

US$m 30 June 2021 – Unaudited Equity analysed by original currency Net positions of currency derivatives Currency exposure 5% strengthening of original currency Impact on profit before tax Impact on other comprehensive income Impact on total equity 5% strengthening of the US dollar Impact on profit before tax Impact on other comprehensive income Impact on total equity US$m 31 December 2020 Equity analysed by original currency Net positions of currency derivatives Currency exposure 5% strengthening of original currency Impact on profit before tax Impact on other comprehensive income Impact on total equity 5% strengthening of the US dollar Impact on profit before tax Impact on other comprehensive income Impact on total equity	United States Dollar 30,501 (8,908) 21,593 356 (381) (25) 356 (381) (25) United States Dollar 35,400 (9,942) 25,458 260 (286) (26) 260 (286) (26)	China Renminbi Hong Kong Dollar 6,891 5,735 (13) 332 6,878 6,067 98 113 246 140 344 253 (95) (71) (249) (182) (344) (253) China Renminbi Hong Kong Dollar 5,862 4,617 – 650 5,862 5,267 41 71 252 141 293 212 (34) (5) (259) (207) (293) (212)	Thai Baht Singapore Dollar 5,137 (5,526) 3,033 3,711 8,170 (1,815) 4 11 404 (101) 408 (90) (2) 6 (406) 84 (408) 90 Thai Baht Singapore Dollar 6,445 (4,644) 3,457 4,239 9,902 (405) 9 25 485 (45) 494 (20) (6) (9) (488) 29 (494) 20	Malaysian Ringgit 2,384 (38) 2,346 (1) 118 117 1 (118) (117) Malaysian Ringgit 2,516 135 2,651 5 128 133 (4) (129) (133)

97 F-49

22. Risk management (continued)

LIQUIDITY RISK

The liquidity principle adopted by the Group Board is “ We will maintain sufficient liquidity to meet our expected financial commitments as they fall due ” and as such AIA has defined liquidity risk as the risk of failure to meet current and future financial commitments as they fall due. This incorporates the risks arising from the timing mismatch of cash inflows and outflows in day-to-day operations, including collateral requirements, as well as the market liquidity of assets required for policyholder liabilities.

AIA manages liquidity risk in accordance with the Group’s liquidity framework. This framework contains the standards, procedures, and tools used by the Group to monitor and manage liquidity risk in base and stressed conditions across multiple time horizons from daily to twelve months. AIA further supports its liquidity by maintaining access to committed credit facilities, use of bond repurchase markets and debt markets via the Group’s Global Medium-term Note and Securities Programme.

US$m 30 June 2021 – Unaudited Financial assets (Policyholder and shareholder investments) Loans and deposits Other receivables Debt securities Equity securities Reinsurance receivables Accrued investment income Cash and cash equivalents Derivative financial instruments Subtotal Financial assets (Unit-linked contracts and consolidated investment funds) Total Financial and insurance contract liabilities (Policyholder and shareholder investments) Insurance and investment contract liabilities (net of deferred acquisition and origination costs, and reinsurance) Borrowings Obligations under repurchase agreements Other liabilities excluding lease liabilities Lease liabilities Derivative financial instruments Subtotal Financial and insurance contract liabilities (Unit-linked contracts and consolidated investment funds) Total	Total 8,989 2,661 190,250 35,492 816 1,768 6,176 872 247,024 38,481 285,505 172,777 9,182 3,447 7,816 497 1,808 195,527 35,798 231,325	Due in one year or less 2,117 2,544 4,783 – 816 1,759 6,176 55 18,250 – 18,250 4,280 511 3,447 6,107 168 396 14,909 – 14,909	Due after one year through five years 1,108 66 20,719 – – 2 – 395 22,290 – 22,290 15,530 1,413(1) – 262 299 1,079 18,583 – 18,583	Due after five years through ten years 516 14 28,916 – – – – 125 29,571 – 29,571 17,510 2,689 – 168 29 126 20,522 – 20,522	Due after ten years 1,679 – 135,832 – – – – 297 137,808 – 137,808 135,457 3,454 – 188 1 207 139,307 – 139,307	No fixed maturity(2) 3,569 37 – 35,492 – 7 – – 39,105 38,481(3) 77,586 – 1,115 – 1,091 – – 2,206 35,798 38,004

Note:

(1) Including US$747m which fall due after 2 years through 5 years.

98 F-50

22. Risk management (continued)

LIQUIDITY RISK (continued)

US$m 31 December 2020 Financial assets (Policyholder and shareholder investments) Loans and deposits Other receivables Debt securities Equity securities Reinsurance receivables Accrued investment income Cash and cash equivalents Derivative financial instruments Subtotal Financial assets (Unit-linked contracts and consolidated investment funds) Total Financial and insurance contract liabilities (Policyholder and shareholder investments) Insurance and investment contract liabilities (net of deferred acquisition and origination costs, and reinsurance) Borrowings Obligations under repurchase agreements Other liabilities excluding lease liabilities Lease liabilities Derivative financial instruments Subtotal Financial and insurance contract liabilities (Unit-linked contracts and consolidated investment funds) Total	Total 8,940 2,574 195,478 30,950 671 1,757 4,400 1,016 245,786 36,499 282,285 169,477 8,559 1,664 4,025 539 991 185,255 35,125 220,380	Due in one year or less 1,997 2,477 3,973 – 671 1,756 4,400 189 15,463 – 15,463 4,316 1,002 1,664 2,305 177 135 9,599 – 9,599	Due after one year through five years 1,013 50 21,353 – – 1 – 189 22,606 – 22,606 15,559 1,414(4) – 240 325 534 18,072 – 18,072	Due after five years through ten years 580 13 31,072 – – – – 249 31,914 – 31,914 17,309 2,548 – 150 35 109 20,151 – 20,151	Due after ten years 1,793 – 139,080 – – – – 389 141,262 – 141,262 132,293 3,595 – 171 2 213 136,274 – 136,274	No fixed maturity(2) 3,557 34 – 30,950 – – – – 34,541 36,499(3) 71,040 – – – 1,159 – – 1,159 35,125 36,284

Notes:

(2) Financial assets with no fixed maturity are equities or receivables on demand which the Group has the choice to call. Borrowings with no fixed maturity are resettable subordinated perpetual securities issued by the Company. Other financial liabilities with no fixed maturity are payables on demand as the counterparty has a choice of when the amount is paid.

(3) The total value of amounts within financial assets (Unit-linked contracts and consolidated investment funds) is included within the no fixed maturity category to facilitate comparison with the corresponding total value of amounts within financial and insurance contract liabilities (Unit-linked contracts and consolidated investment funds). Included within financial assets (Unit-linked contracts and consolidated investment funds) are debt securities of US$553m (31 December 2020: US$433m) due in one year or less, US$2,961m (31 December 2020: US$2,622m) due after 1 year through 5 years, US$2,001m (31 December 2020: US$1,934m) due after 5 years through 10 years and US$1,264m (31 December 2020: US$1,414m) due after 10 years, in accordance with the contractual terms of the financial investments.
(4) Including US$1,246m which fall due after 2 years through 5 years.

99 F-51

23. Share-based compensation

SHARE-BASED COMPENSATION PLANS

During the six months ended 30 June 2021, the Group made further grants of share options (SOs), restricted share units (RSUs) and restricted stock purchase units (RSPUs) to certain directors, officers and employees of the Group under the Share Option Scheme (2020 SO Scheme) and the Restricted Share Unit Scheme (2020 RSU Scheme) and the Employee Share Purchase Plan (2020 ESPP). In addition, the Group made further grants of restricted stock subscription units (RSSUs) to eligible agents under the Agency Share Purchase Plan (2021 ASPP and 2012 ASPP).

Due to the expiry of the 2010 SO Scheme in 2020, the Company obtained the approval from its shareholders at the annual general meeting of the Company held on 29 May 2020 (2020 AGM) for the termination of the 2010 SO Scheme and the adoption of a new share option scheme (2020 SO Scheme), each as of 29 May 2020. The 2020 SO Scheme is also effective for a period of 10 years from the date of adoption. Following the termination of the 2010 SO Scheme and adoption of the 2020 SO Scheme, no further SOs can be granted thereunder. However, the 2010 SO Scheme shall remain in full force and effect for all SOs granted prior to its termination, and the exercise of such SOs shall be subject to and in accordance with the terms on which they were granted under the provisions of the 2010 SO Scheme and the Listing Rules.

VALUATION METHODOLOGY

The Group utilises a binomial lattice model to calculate the fair value of the SO grants, a Monte-Carlo simulation model and/or discounted cash flow technique to calculate the fair value of the RSU, RSPU and RSSU grants, taking into account the terms and conditions upon which the grants were made. The price volatility is estimated on the basis of implied volatility of the Company’s shares which is based on an analysis of historical data since they are traded in the Hong Kong Stock Exchange. The expected life of the SOs is derived from the output of the valuation model and is calculated based on an analysis of expected exercise behaviour of the Company’s employees. The estimate of market condition for performance-based RSUs is based on one-year historical data preceding the grant date. An allowance for forfeiture prior to vesting is not included in the valuation of the grants.

The fair value calculated for SOs is inherently subjective due to the assumptions made and the limitations of the model utilised.

limitations of the model utilised.
	Share	options
	Six months	Year
	ended	ended
	30 June	31 December
	2021	2020
	(Unaudited)
Assumptions
Risk-free interest rate	1.24%	0.85%
Volatility	26%	24%
Dividend yield	1.60%	1.60%
Exercise price (HK$)	97.33	68.10
Share option life (in years)	10	10
Expected life (in years)	7.82	7.84
Weighted average fair value per option/unit at measurement
date (HK$)	22.26	15.51

The weighted average share price for SO valuation for grants made during the six months ended 30 June 2021 is HK$92.75 (year ended 31 December 2020: HK$68.10). The total fair value of SO granted during the six months ended 30 June 2021 is US$5m (six months ended 30 June 2020: US$12m).

100 F-52

23. Share-based compensation (continued)

RECOGNISED COMPENSATION COST

The total recognised compensation cost (net of expected forfeitures) related to various share-based compensation grants made by the Group for the six months ended 30 June 2021 is US$44m (six months ended 30 June 2020: US$52m).

24. Remuneration of key management personnel

Key management personnel have been identified as the members of the Group’s Executive Committee.

US$ Key management compensation and other expenses Salaries and other short-term employee benefits Post-employment benefits Termination benefits Share-based payments(1) Total	Six months ended 30 June 2021 (Unaudited) 12,829,872 343,746 – 7,182,450 20,356,068	Six months ended 30 June 2020 (Unaudited) 14,490,699 802,167 1,708,678 16,371,764 33,373,308

Note:

(1) Includes amortised expenses for unvested SOs, RSUs and matching shares under ESPP to the key management personnel based on the fair value at the respective grant dates.

The emoluments of the key management personnel are within the following bands:

	Six months	Six months
	ended	ended
	30 June 2021	30 June 2020
US$	(Unaudited)	(Unaudited)
Below 1,000,000	3	4
1,000,001 to 2,000,000	8	7
2,000,001 to 3,000,000	–	1
6,000,001 to 7,000,000	–	1
7,000,001 and above	1	1

101 F-53

25. Commitments and contingencies

INVESTMENT AND CAPITAL COMMITMENTS

The Group announced in March 2021 that it had reached an agreement to enter into a new exclusive 15-year strategic bancassurance partnership with The Bank of East Asia, Limited (BEA) covering Hong Kong and Mainland China. As part of the agreement, the Group also agreed to acquire 100 per cent of BEA Life Limited, a wholly-owned subsidiary of BEA, and a closed portfolio of life insurance policies underwritten by Blue Cross (Asia-Pacific) Insurance Limited. The total gross consideration with respect to these transactions is HK$5,070m (approximately US$650m). As at 17 August 2021, the necessary regulatory approval for the acquisition of the shares of BEA Life Limited has been obtained and the completion of that acquisition is expected to take place shortly.

The Group announced in June 2021 that it had reached an agreement to invest RMB12,033m (approximately US$1,860m) through AIA Co. for a 24.99 per cent equity stake (post investment) in China Post Life Insurance Co., Ltd. The completion of this transaction remains subject to securing all necessary regulatory approvals.

Other investment and capital commitments, consisting of commitments to invest in private equity partnerships and other assets, were as follows:

US$m Not later than one year Later than one and not later than five years Later than five years Total	As at 30 June 2021 (Unaudited) 3,956 218 9 4,183	As at 31 December 2020 2,504 174 16 2,694

102 F-54

25. Commitments and contingencies (continued)

CONTINGENCIES

The Group is subject to regulation in each of the geographical markets in which it operates from insurance, securities, capital markets, pension, data privacy and other regulators and is exposed to the risk of regulatory actions in response to perceived or actual non-compliance with regulations relating to suitability, sales or underwriting practices, claims payments and procedures, product design, disclosure, administration, denial or delay of benefits and breaches of fiduciary or other duties. The Group believes that these matters have been adequately provided for in these financial statements.

The Group is exposed to legal proceedings, complaints and other actions from its activities including those arising from commercial activities, sales practices, suitability of products, policies, claims and taxes. The Group believes that these matters are adequately provided for in these financial statements.

The Group operates in many jurisdictions across Asia and in certain of those jurisdictions, the Group’s interpretation of the relevant law or regulation may differ from that of the tax authorities, which can result in disputes arising. The Group has made provisions to cover the potential tax implications, based on management’s judgement and best estimate in relation to the probability or likelihood of the potential outcomes, which is subject to periodic re-assessment. Due to the uncertainty associated with these items, there remains a possibility that the final outcomes may differ on conclusion of the relevant tax matters at a future date.

The Group is the reinsurer in a residential mortgage credit reinsurance agreement covering residential mortgages in Australia. The Group is exposed to the risk of losses in the event of the failure of the retrocessionaire, a subsidiary of American International Group, Inc., to honour its outstanding obligations which is mitigated by a trust agreement. The principal balance outstanding of mortgage loans to which the reinsurance agreement relates were approximately US$456m at 30 June 2021 (31 December 2020: US$479m). The liabilities and related reinsurance assets, which totalled US$3m (31 December 2020: US$3m), respectively, arising from these agreements are reflected and presented on a gross basis in these financial statements in accordance with the Group’s accounting policies. The Group expects to fully recover amounts outstanding at the reporting date under the terms of this agreement from the retrocessionaire.

26. Events after the reporting period

On 17 August 2021, a Committee appointed by the Board of Directors declared an interim dividend of 38.00 Hong Kong cents per share (six months ended 30 June 2020: 35.00 Hong Kong cents per share).

103 F-55

27. Interim statement of financial position of the Company

US$m Assets Investment in subsidiaries at cost(4) Financial investments: At fair value through other comprehensive income Debt securities(2) At fair value through profit or loss Debt securities Equity securities(4) Derivative financial instruments Loans to/amounts due from subsidiaries Other assets Promissory notes from subsidiaries(3) Cash and cash equivalents Total assets Liabilities Borrowings Obligations under repurchase agreements Derivative financial instruments Other liabilities Total liabilities Equity Share capital Employee share-based trusts Other reserves Retained earnings Amounts reflected in other comprehensive income Total equity Total liabilities and equity	As at 30 June 2021 (Unaudited) 17,202 8,817 34 1,174 5 10,030 1,899 85 3,166 728 33,110 9,764 1,000 9 150 10,923 14,159 (225) 273 7,727 253 22,187 33,110	As at 31 December 2020 17,341 9,871 37 227 – 10,135 1,904 78 1,844 409 31,711 9,152 – 12 92 9,256 14,155 (155) 259 7,360 836 22,455 31,711

Notes:

(1) The financial information of the Company should be read in conjunction with the interim condensed consolidated financial statements of the Group.

(2) Includes United States Treasury securities of US$3,248m as at 30 June 2021 (31 December 2020: US$3,372m).

(3) The promissory notes from subsidiaries are repayable on demand.

(4) The Company’s interests in investment funds such as mutual funds and unit trusts, including funds controlled by the Group, are measured at fair value through profit or loss. Interests in other entities controlled by the Group are measured at cost, unless impaired, and presented as investment in subsidiaries at cost.

Approved and authorised for issue by the Board of Directors on 17 August 2021.

104 F-56

28. Interim statement of changes in equity of the Company

US$m Balance at 1 January 2021 Net profit Fair value losses on debt securities at fair value through other comprehensive income Fair value gains on debt securities at fair value through other comprehensive income transferred to profit or loss on disposal Dividends Shares issued under share option scheme and agency share purchase plan Share-based compensation Purchase of shares held by employee share-based trusts Transfer of vested shares from employee share-based trusts Balance at 30 June 2021 – Unaudited US$m Balance at 1 January 2020 Net profit Fair value gains on debt securities at fair value through other comprehensive income Fair value gains on debt securities at fair value through other comprehensive income transferred to profit or loss on disposal Dividends Shares issued under share option scheme and agency share purchase plan Share-based compensation Purchase of shares held by employee share-based trusts Transfer of vested shares from employee share-based trusts Balance at 30 June 2020 – Unaudited	Share capital 14,155 – – – – 4 – – – 14,159 Share capital 14,129 – – – – 6 – – – 14,135	Employee share-based trusts (155) – – – – – – (97) 27 (225) Employee share-based trusts (220) – – – – – – (6) 71 (155)	Other reserves 259 – – – – – 41 – (27) 273 Other reserves 260 – – – – – 47 – (71) 236	Retained earnings 7,360 1,925 – – (1,558) – – – – 7,727 Retained earnings 7,079 86 – – (1,452) – – – – 5,713	Amounts reflected in other comprehensive income 836 – (404) (179) – – – – – 253 Amounts reflected in other comprehensive income 395 – 492 (47) – – – – – 840	Total equity 22,455 1,925 (404) (179) (1,558) 4 41 (97) –
						22,187

						Total equity 21,643 86 492 (47) (1,452) 6 47 (6) –
						20,769

105 F-57

REPORT ON REVIEW OF SUPPLEMENTARY EMBEDDED VALUE INFORMATION AS AT AND FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2021 TO THE BOARD OF DIRECTORS OF AIA GROUP LIMITED

(incorporated in Hong Kong with limited liability)

==> picture [77 x 56] intentionally omitted <==

Introduction

We have reviewed the Supplementary Embedded Value Information (“the EV Information”) set out on pages 107 to 130, which comprises the EV consolidated results of AIA Group Limited (the “Company”) and its subsidiaries (together, the “Group”) as at and for the six-month period ended 30 June 2021, sensitivity analysis and a summary of significant methodology and assumptions and other explanatory notes. The directors of the Company are responsible for the preparation and presentation of the EV Information in accordance with the EV basis of preparation set out in Sections 4 and 5 of the EV Information. Our responsibility is to express a conclusion on this EV Information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Scope of Review

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants. A review of the EV Information, including the summary of significant methodology and assumptions, consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the EV Information of the Group is not prepared, in all material respects, in accordance with the EV basis of preparation set out in Sections 4 and 5 of the EV Information.

Basis of Preparation

Without modifying our conclusion, we draw attention to Sections 4 and 5 of the EV Information, which describes the EV basis of preparation. As a result, the EV Information may not be suitable for another purpose. This report does not extend to any financial statements of the Company.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 17 August 2021

106 F-58

SUPPLEMENTARY EMBEDDED VALUE INFORMATION

Cautionary Statements Concerning Supplementary Embedded Value Information

This report includes non-IFRS financial measures and should not be viewed as a substitute for IFRS financial measures.

The results shown in this report are not intended to represent an opinion of market value and should not be interpreted in that manner. This report does not purport to encompass all of the many factors that may bear upon a market value.

The results shown in this report are based on a series of assumptions as to the future. It should be recognised that actual future results may differ from those shown, on account of the changes in the operating and economic environments and natural variations in experience. The results shown are presented at the valuation dates stated in this report and no warranty is given by the Group that future experience after these valuation dates will be in line with the assumptions made.

The Supplementary Embedded Value Information is unaudited, but has been reviewed by PricewaterhouseCoopers in accordance with Hong Kong Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants. PricewaterhouseCoopers’ independent review report to the Board of Directors is included on page 106.

107 F-59

1. HIGHLIGHTS

The Embedded Value (EV) is a measure of the value of shareholders’ interests in the earnings distributable from assets allocated to the in-force business after allowance for the aggregate risks in that business. AIA Group Limited (the “Company”), together with its subsidiaries (collectively the “Group”) use a traditional deterministic discounted cash flow methodology for determining its EV and value of new business (VONB) for all entities other than Tata AIA Life Insurance Company Limited (Tata AIA Life). This methodology makes an implicit overall level of allowance for risk including the cost of investment return guarantees and policyholder options, asset-liability mismatch risk, credit risk, the risk that actual experience in future years differs from that assumed, and the economic cost of capital, through the use of a risk discount rate. For Tata AIA Life, the Group uses the Indian Embedded Value (IEV) methodology as defined in Actuarial Practice Standard 10 issued by the Institute of Actuaries of India, consistent with local practice in India.

The equity attributable to shareholders of the Company on the embedded value basis (EV Equity) is the total of EV, goodwill and other intangible assets attributable to shareholders of the Company, after allowing for taxes. More details on the EV results, methodology and assumptions are covered in later sections of this report.

The Supplementary Embedded Value Information in this report should be read in conjunction with the Supplementary Embedded Value Information of the Group in the Company’s Annual Report 2020.

Unless otherwise stated, the growth rates provided in the commentaries are shown on a constant exchange rate (CER) basis.

108 F-60

1. HIGHLIGHTS (continued)

Summary of Key Metrics[(1)] (US$ millions)

	As at	As at
	30 June	31 December	Change	Change
	2021	2020	CER	AER
	(Unaudited)
EV Equity	70,102	67,185	5%	4%
EV	68,179	65,247	5%	4%
Adjusted net worth (ANW)	31,545	28,503	10%	11%
Value of in-force business (VIF)	36,634	36,744	2%	–
	Six months	Six months
	ended	ended
	30 June	30 June	YoY	YoY
	2021	2020	CER	AER
	(Unaudited)	(Unaudited)
VONB	1,814	1,410	22%	29%
Annualised new premiums (ANP)	3,060	2,579	13%	19%
VONB margin	59.0%	54.4%	4.2 pps	4.6 pps
EV operating profit	4,092	3,878	1%	6%
Operating return on EV
(Operating ROEV)(2)	12.9%	12.9%	(0.3) pps	–
Underlying free surplus generation
(UFSG)	3,374	3,049	6%	11%

Notes:

(1) The results are after adjustment to reflect the consolidated reserving and capital requirements and the present value of future after-tax unallocated Group Office expenses.

(2) On an annualised basis.

109 F-61

2. EMBEDDED VALUE RESULTS

2.1 Embedded Value by Business Unit

The EV as at 30 June 2021 is presented consistently with the segment information in the IFRS interim condensed consolidated financial statements.

Summary of EV by Business Unit (US$ millions)

Business Unit		As at 30 June 2021 (Unaudited) ANW(1) VIF before CoC CoC VIF after CoC EV 3,221 8,996 2 8,994 12,215 8,589 17,195 1,673 15,522 24,111 3,841 4,357 929 3,428 7,269 3,172 4,581 827 3,754 6,926 1,272 2,166 241 1,925 3,197 5,334 5,175 1,422 3,753 9,087 10,724 – – – 10,724 36,153 42,470 5,094 37,376 73,529 (4,247) 1,703 1,039 664 (3,583) – (1,217) – (1,217) (1,217) 31,906 42,956 6,133 36,823 68,729 (361) (199) (10) (189) (550) 31,545 42,757 6,123 36,634 68,179
AIA China AIA Hong Kong AIA Thailand AIA Singapore AIA Malaysia Other Markets Group Corporate Centre Subtotal Adjustment to reflect consolidated reserving and capital requirements(2) After-tax value of unallocated Group Office expenses Total (before non-controlling interests) Non-controlling interests Total

110 F-62

2. EMBEDDED VALUE RESULTS (continued)

2.1 Embedded Value by Business Unit (continued)

Business Unit		As at 31 December 2020 ANW(1) VIF before CoC CoC VIF after CoC EV 3,439 8,409 4 8,405 11,844 7,735 17,319 2,159 15,160 22,895 3,008 5,145 1,096 4,049 7,057 2,984 4,416 814 3,602 6,586 1,293 2,084 233 1,851 3,144 5,983 5,018 1,561 3,457 9,440 11,472 – – – 11,472 35,914 42,391 5,867 36,524 72,438 (7,064) 3,115 1,596 1,519 (5,545) – (1,138) – (1,138) (1,138) 28,850 44,368 7,463 36,905 65,755 (347) (173) (12) (161) (508) 28,503 44,195 7,451 36,744 65,247
AIA China AIA Hong Kong AIA Thailand AIA Singapore AIA Malaysia Other Markets Group Corporate Centre Subtotal Adjustment to reflect consolidated reserving and capital requirements(2) After-tax value of unallocated Group Office expenses Total (before non-controlling interests) Non-controlling interests Total

Notes:

(1) ANW by Business Unit is after net capital flows between Business Units and Group Corporate Centre.

(2) Adjustment to reflect consolidated reserving and capital requirements as described in Section 4.4 of the Supplementary Embedded Value Information in the Company’s Annual Report 2020 and Section 4.1 of this report.

111 F-63

2. EMBEDDED VALUE RESULTS (continued)

2.2 Reconciliation of ANW from IFRS Equity

Derivation of the Consolidated ANW from IFRS Equity (US$ millions)

	As at	As at
	30 June	31 December
	2021	2020
	(Unaudited)
IFRS equity attributable to shareholders of the Company	58,944	63,200
Elimination of IFRS deferred acquisition and origination costs
assets	(28,374)	(27,915)
Difference between IFRS policy liabilities and local statutory
policy liabilities	4,203	(937)
Difference between net IFRS policy liabilities and local
statutory policy liabilities	(24,171)	(28,852)
Mark-to-market adjustment for property and mortgage loan
investments, net of amounts attributable to participating
funds	(1)	(3)
Elimination of intangible assets	(2,569)	(2,634)
Recognition of deferred tax impacts of the above adjustments	3,476	3,735
Recognition of non-controlling interests impacts of the above
adjustments	113	121
ANW (Business Unit)	35,792	35,567
Adjustment to reflect consolidated reserving requirements,
net of tax	(4,247)	(7,064)
ANW (Consolidated)	31,545	28,503

112 F-64

2. EMBEDDED VALUE RESULTS (continued)

2.3 Breakdown of ANW

The breakdown of ANW for the Group between the required capital, as defined in Section 4.1 of this report, and the free surplus, which is the ANW in excess of the required capital, is set out below:

Free Surplus and Required Capital for the Group (US$ millions)

	As at 30 June 2021 (Unaudited) Business Unit Consolidated	As at 31 December 2020
		Business Unit Consolidated
Free surplus Required capital ANW	24,591 17,907 11,201 13,638 35,792 31,545	24,093 13,473 11,474 15,030
		35,567 28,503

The Company’s subsidiaries, AIA Company Limited (AIA Co.) and AIA International Limited (AIA International), are both subject to the Hong Kong reserving and capital requirements. In addition, AIA International, which is incorporated in Bermuda, is subject to the Bermuda Monetary Authority (BMA) reserving and capital requirements. These regulatory reserving and capital requirements, and other consolidated reserving and capital requirements as determined by the Group, apply in addition to the relevant local requirements applicable to our Business Units.

113 F-65

2. EMBEDDED VALUE RESULTS (continued)

2.4 Earnings Profile

The tables below show how the after-tax distributable earnings from the assets backing the statutory reserves and required capital of the in-force business of the Group are projected to emerge over future years. The projected values reflect the consolidated reserving and capital requirements.

Profile of Projected After-Tax Distributable Earnings for the Group ’ s In-force Business (US$ millions)

(US$ millions)
Expected period of emergence		As at 30 June 2021 (Unaudited)
		Undiscounted Discounted
1 – 5 years 6 – 10 years 11 – 15 years 16 – 20 years 21 years and thereafter Total Expected period of emergence		20,409 16,990 19,201 10,807 21,235 8,169 19,558 5,224 146,764 9,082
		227,167 50,272

		As at 31 December 2020
		Undiscounted Discounted
1 – 5 years 6 – 10 years 11 – 15 years 16 – 20 years 21 years and thereafter Total		21,452 17,845 19,489 10,980 22,452 8,615 20,070 5,356 143,817 8,978
		227,280 51,774

The profile of distributable earnings is shown on an undiscounted and discounted basis. The discounted value of after-tax distributable earnings of US$50,272 million (31 December 2020: US$51,774 million) plus the free surplus of US$17,907 million (31 December 2020: US$13,473 million) shown in Section 2.3 of this report is equal to the EV of US$68,179 million (31 December 2020: US$65,247 million) shown in Section 2.1 of this report.

114 F-66

2. EMBEDDED VALUE RESULTS (continued)

2.5 Value of New Business

The VONB for the Group for the six months ended 30 June 2021 is summarised in the table below. The VONB is defined as the present value, at the point of sale, of the projected after-tax statutory profits less the cost of required capital. Results are presented consistently with the segment information in the IFRS interim condensed consolidated financial statements.

The Group VONB for the six months ended 30 June 2021 was US$1,814 million, an increase of US$404 million, or 22 per cent, from US$1,410 million for the six months ended 30 June 2020.

Summary of VONB by Business Unit (US$ millions)

Business Unit		Six months ended 30 June 2021 (Unaudited) VONB before CoC CoC VONB after CoC	Six months ended 30 June 2020 (Unaudited) VONB before CoC CoC VONB after CoC 629 35 594 359 53 306 222 23 199 134 7 127 88 7 81 295 55 240 1,727 180 1,547 (20) 30 (50) 1,707 210 1,497 (77) – (77) 1,630 210 1,420 (11) (1) (10) 1,619 209 1,410
AIA China(1) AIA Hong Kong AIA Thailand AIA Singapore AIA Malaysia Other Markets Total before unallocated Group Office expenses and non-controlling interests (Business Unit) Adjustment to reflect consolidated reserving and capital requirements Total before unallocated Group Office expenses and non-controlling interests (Consolidated) After-tax value of unallocated Group Office expenses Total before non-controlling interests (Consolidated) Non-controlling interests Total		782 44 738 346 33 313 329 17 312 185 9 176 168 11 157 302 49 253 2,112 163 1,949 (29) 2 (31) 2,083 165 1,918 (88) – (88) 1,995 165 1,830 (16) – (16) 1,979 165 1,814

Note:

(1) Following the subsidiarisation of AIA China in July 2020 as described in section 4.1 of the Supplementary Embedded Value Information in the Company’s Annual Report 2020, the VONB for AIA China in the six months ended 30 June 2021 is presented after deducting withholding tax at the applicable rate in Mainland China (currently set at 5 per cent). The VONB for AIA China in the six months ended 30 June 2020 is presented before deducting withholding tax.

115 F-67

2. EMBEDDED VALUE RESULTS (continued)

2.5 Value of New Business (continued)

The table below shows the breakdown of the VONB, ANP, VONB margin, and present value of new business premium (PVNBP) margin for the Group, by quarter, for business written in the six months ended 30 June 2021.

The VONB margin and PVNBP margin are defined as VONB, gross of non-controlling interests and excluding pension business, expressed as a percentage of ANP and PVNBP, respectively. The VONB used in the margin calculation is gross of non-controlling interests and excludes pension business to be consistent with the definition of ANP and PVNBP.

The Group VONB margin for the six months ended 30 June 2021 was 59.0 per cent compared with 54.4 per cent for the six months ended 30 June 2020. The Group PVNBP margin for the six months ended 30 June 2021 was 10 per cent compared with 9 per cent for the six months ended 30 June 2020.

Breakdown of VONB, ANP, VONB Margin and PVNBP Margin (US$ millions)

	VONB		VONB	PVNBP
	after CoC	ANP	Margin	Margin
Half Year
Values for 2021
Six months ended 30 June 2021 (Unaudited)	1,814	3,060	59.0%	10%
Values for 2020
Six months ended 30 June 2020 (Unaudited)	1,410	2,579	54.4%	9%
Quarter
Values for 2021
Three months ended 31 March 2021 (Unaudited)	1,052	1,703	61.6%	10%
Three months ended 30 June 2021 (Unaudited)	762	1,357	55.7%	9%
Values for 2020
Three months ended 31 March 2020 (Unaudited)	841	1,483	56.6%	10%
Three months ended 30 June 2020 (Unaudited)	569	1,096	51.4%	9%

116 F-68

2. EMBEDDED VALUE RESULTS (continued)

2.5 Value of New Business (continued)

The table below shows the VONB (excluding pension business), ANP and VONB margin by Business Unit.

Summary of VONB Excluding Pension, ANP and VONB Margin by Business Unit (US$ millions)

millions)
Business Unit	Six months ended 30 June 2021 (Unaudited) VONB excluding pension ANP VONB margin	Six months ended 30 June 2020 (Unaudited) VONB excluding pension ANP VONB margin 594 726 81.8% 289 565 51.0% 199 312 63.9% 127 214 59.3% 80 159 50.5% 240 603 39.7% 1,529 2,579 59.3% (50) – 1,479 2,579 57.3% (77) – 1,402 2,579 54.4%
AIA China(1) AIA Hong Kong AIA Thailand AIA Singapore AIA Malaysia Other Markets Total before unallocated Group Office expenses (Business Unit) Adjustment to reflect consolidated reserving and capital requirements Total before unallocated Group Office expenses (Consolidated) After-tax value of unallocated Group Office expenses Total	738 899 82.1% 290 505 57.5% 312 333 93.5% 176 279 63.2% 156 253 61.7% 254 791 32.1% 1,926 3,060 62.9% (32) – 1,894 3,060 61.9% (88) – 1,806 3,060 59.0%

Note:

117 F-69

2. EMBEDDED VALUE RESULTS (continued)

2.6 Analysis of EV Movement

Analysis of Movement in EV (US$ millions)

	Six months ended 30 June 2021 (Unaudited) ANW VIF EV	Six months ended 30 June 2020 (Unaudited) ANW VIF EV	YoY AER EV 5% 29% (6)% n/m(1) n/m 35% 6% n/m n/m n/m n/m 7% (179)% n/m 14%
Opening EV VONB Expected return on EV Operating experience variances Operating assumption changes Finance costs EV operating profit Investment return variances Effect of changes in economic assumptions Other non-operating variances Total EV profit Dividends Other capital movements Effect of changes in exchange rates Closing EV	28,503 36,744 65,247 (400) 2,214 1,814 2,456 (391) 2,065 471 (85) 386 42 (65) (23) (150) – (150) 2,419 1,673 4,092 1,482 (463) 1,019 – – – 833 (794) 39 4,734 416 5,150 (1,558) – (1,558) (48) – (48) (86) (526) (612) 31,545 36,634 68,179	28,241 33,744 61,985 (363) 1,773 1,410 2,844 (654) 2,190 494 (69) 425 (152) 116 (36) (111) – (111) 2,712 1,166 3,878 (3,076) (302) (3,378) 33 (968) (935) 426 (91) 335 95 (195) (100) (1,452) – (1,452) 61 – 61 (323) (597) (920) 26,622 32,952 59,574

Note:

(1) Not meaningful (n/m).

118 F-70

2. EMBEDDED VALUE RESULTS (continued)

2.6 Analysis of EV Movement (continued)

EV operating profit was US$4,092 million (2020: US$3,878 million), reflecting VONB of US$1,814 million (2020: US$1,410 million), an expected return on EV of US$2,065 million (2020: US$2,190 million), operating experience variances and operating assumption changes which were again positive and amounted to US$363 million (2020: US$389 million), net of finance costs of US$150 million (2020: US$111 million).

The VONB is calculated at the point of sale for business written during the period. The expected return on EV is the expected change in the EV over the period plus the expected return on the VONB up to 30 June 2021. Operating experience variances reflect the impact on the ANW and VIF from differences between the actual experience over the period and that expected based on the operating assumptions.

The operating experience variances, net of tax, increased EV by US$386 million (2020: US$425 million), driven by:

Expense variances of US$115 million (2020: US$68 million), partly offset by development costs of US$4 million (2020: US$3 million);
Mortality and morbidity claims variances of US$195 million (2020: US$273 million); and
Persistency and other variances of US$80 million (2020: US$87 million) which included persistency variances of US$(109) million (2020: US$(82) million) and other variances arising from management actions of US$189 million (2020: US$169 million).

The effect of changes in operating assumptions during the period was a decrease in EV of US$23 million (2020: decrease in EV of US$36 million).

The EV profit of US$5,150 million (2020: US$(100) million) is the total of EV operating profit, investment return variances, the effect of changes in economic assumptions and other non-operating variances.

The investment return variances, reflecting short-term fluctuations in investment returns, arise from the impact of differences between the actual investment returns in the period and the expected investment returns. This amounted to an increase in EV of US$1,019 million (2020: decrease in EV of US$3,378 million) driven by the effect of short-term fluctuations in interest rates and equity markets, and other capital market movements, on the Group’s investment portfolio and the reserves and capital requirements compared with the expected returns.

The effect of changes in economic assumptions was nil (2020: decrease in EV of US$935 million).

Other non-operating variances increased EV by US$39 million (2020: increased EV by US$335 million) which comprised positive impacts from adjustments to capital requirements on consolidation, partly offset by negative impacts from certain non-operating expenses and modelling-related enhancements.

The final shareholder dividend for 2020 paid in the first half of 2021 totalled US$1,558 million (2020: US$1,452 million). Other capital movements decreased EV by US$48 million (2020: increased EV by US$61 million).

Foreign exchange movements decreased EV by US$612 million (2020: decreased EV by US$920 million).

119 F-71

2. EMBEDDED VALUE RESULTS (continued)

2.6 Analysis of EV Movement (continued)

Operating ROEV (US$ millions)

Operating return on EV (operating ROEV) is calculated as EV operating profit expressed as a percentage of the opening EV and was 12.9 per cent (2020: 12.9 per cent) for the six months ended 30 June 2021.

30 June 2021.
	Six months ended 30 June 2021 Six months ended 30 June 2020 YoY CER YoY AER (Unaudited) (Unaudited)
EV operating profit Opening EV Operating ROEV(1)	4,092 3,878 1% 6% 65,247 61,985 3% 5%
	12.9% 12.9% (0.3) pps –

Note:

(1) On an annualised basis.

2.7 EV Equity

The EV Equity increased to US$70,102 million at 30 June 2021, an increase of 5 per cent from US$67,185 million as at 31 December 2020.

Derivation of EV Equity from EV (US$ millions)

	As at 30 June 2021 As at 31 December 2020 Change CER Change AER (Unaudited)
EV Goodwill and other intangible assets(1) EV Equity	68,179 65,247 5% 4% 1,923 1,938 1% (1)%
	70,102 67,185 5% 4%

Note:

(1) Consistent with the IFRS interim condensed consolidated financial statements. Net of tax, amounts attributable to participating funds and non-controlling interests.

120 F-72

2. EMBEDDED VALUE RESULTS (continued)

2.8 Free Surplus Generation

Free Surplus Generation (US$ millions)

	Six months ended 30 June 2021 Six months ended 30 June 2020 YoY CER YoY AER (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Opening free surplus UFSG Free surplus used to fund new business Investment return variances and other items Unallocated Group Office expenses Dividends Finance costs and other capital movements Closing free surplus	13,473 14,917 (11)% (10)% 3,374 3,049 6% 11% (921) (703) 25% 31% 3,919 (3,899) n/m(1) n/m (182) (91) 100% 100% (1,558) (1,452) 7% 7% (198) (50) n/m n/m
	17,907 11,771 46% 52%

Free surplus increased by US$4,434 million to US$17,907 million (31 December 2020: US$13,473 million) as at 30 June 2021.

UFSG, as defined in Section 4.8 of the Supplementary Embedded Value Information in the Company’s Annual Report 2020, increased by 6 per cent to US$3,374 million (2020: US$3,049 million). Investment in writing new business reduced free surplus by US$921 million (2020: US$703 million).

Investment return variances and other items amounted to US$3,919 million (2020: US$(3,899) million), reflecting the effect of short-term fluctuations in interest rates and equity markets, and other capital market movements, on the Group’s investment portfolio and the reserves and capital requirements compared with the expected returns, and other items, including the free surplus impacts arising from other non-operating variances as described in Section 2.6.

Unallocated Group Office expenses amounted to US$182 million (2020: US$91 million).

Note: (1) Not meaningful (n/m).

121 F-73

3. SENSITIVITY ANALYSIS

The EV as at 30 June 2021 and the VONB for the six months ended 30 June 2021 have been recalculated to illustrate the sensitivity of the results to changes in certain central assumptions discussed in Section 5 of this report.

The sensitivities analysed were:

Risk discount rates 200 basis points per annum higher than the central assumptions;
Risk discount rates 200 basis points per annum lower than the central assumptions;
Interest rates 50 basis points per annum higher than the central assumptions;
Interest rates 50 basis points per annum lower than the central assumptions;
The presentation currency (as explained below) appreciated by 5 per cent;
The presentation currency depreciated by 5 per cent;
Lapse and premium discontinuance rates increased proportionally by 10 per cent (i.e. 110 per cent of the central assumptions);
Lapse and premium discontinuance rates decreased proportionally by 10 per cent (i.e. 90 per cent of the central assumptions);
Mortality/morbidity rates increased proportionally by 10 per cent (i.e. 110 per cent of the central assumptions);
Mortality/morbidity rates decreased proportionally by 10 per cent (i.e. 90 per cent of the central assumptions);
Maintenance expenses 10 per cent lower (i.e. 90 per cent of the central assumptions); and
Expense inflation set to 0 per cent.

The EV as at 30 June 2021 has been further analysed for the following sensitivities:

Equity prices increased proportionally by 10 per cent (i.e. 110 per cent of the prices at 30 June 2021); and
Equity prices decreased proportionally by 10 per cent (i.e. 90 per cent of the prices at 30 June 2021).

For the interest rate sensitivities, the investment return assumptions and the risk discount rates were changed by 50 basis points per annum; the projected bonus rates on participating business, the statutory reserving bases at 30 June 2021 and the values of debt instruments and derivatives held at 30 June 2021 were changed to be consistent with the interest rate assumptions in the sensitivity analysis, while all the other assumptions were unchanged.

As the Group operates in multiple geographical markets, the EV results for the Group are translated from multiple currencies to US dollar which is the Group’s presentation currency. In order to provide sensitivity results for EV and VONB of the impact of foreign currency movements, a change of 5 per cent to the US dollar is included.

For the equity price sensitivities, the projected bonus rates on participating business and the values of equity securities and equity funds held at 30 June 2021 were changed to be consistent with the equity price assumptions in the sensitivity analysis, while all the other assumptions were unchanged.

122 F-74

3. SENSITIVITY ANALYSIS (continued)

For each of the remaining sensitivity analyses, the statutory reserving bases as at 30 June 2021 and the projected bonus rates on participating business were changed to be consistent with the sensitivity analysis assumptions, while all the other assumptions remain unchanged.

The sensitivities chosen do not represent the boundaries of possible outcomes, but instead illustrate how certain alternative assumptions would affect the results.

Sensitivity of EV (US$ millions)

Scenario	As at 30 June 2021 (Unaudited) EV % Change	As at 31 December 2020
		EV % Change
Central value Impact of: 200 bps increase in risk discount rates 200 bps decrease in risk discount rates 10% increase in equity prices 10% decrease in equity prices 50 bps increase in interest rates 50 bps decrease in interest rates 5% appreciation in the presentation currency 5% depreciation in the presentation currency 10% increase in lapse/discontinuance rates 10% decrease in lapse/discontinuance rates 10% increase in mortality/morbidity rates 10% decrease in mortality/morbidity rates 10% decrease in maintenance expenses Expense inflation set to 0%	68,179 (9,176) (13.5)% 14,403 21.1% 1,312 1.9% (1,307) (1.9)% 90 0.1% (533) (0.8)% (1,963) (2.9)% 1,963 2.9% (1,007) (1.5)% 1,126 1.7% (4,851) (7.1)% 4,766 7.0% 841 1.2% 1,034 1.5%	65,247 (9,098) (13.9)% 14,409 22.1% 1,099 1.7% (1,095) (1.7)% 652 1.0% (1,294) (2.0)% (1,906) (2.9)% 1,906 2.9% (891) (1.4)% 1,049 1.6% (4,556) (7.0)% 4,665 7.1% 882 1.4% 1,063 1.6%

Sensitivity of VONB (US$ millions)

Scenario	Six months ended 30 June 2021 (Unaudited) VONB % Change	Six months ended 30 June 2020 (Unaudited)
		VONB % Change
Central value Impact of: 200 bps increase in risk discount rates 200 bps decrease in risk discount rates 50 bps increase in interest rates 50 bps decrease in interest rates 5% appreciation in the presentation currency 5% depreciation in the presentation currency 10% increase in lapse/discontinuance rates 10% decrease in lapse/discontinuance rates 10% increase in mortality/morbidity rates 10% decrease in mortality/morbidity rates 10% decrease in maintenance expenses Expense inflation set to 0%	1,814 (393) (21.7)% 590 32.5% 50 2.8% (66) (3.6)% (79) (4.4)% 79 4.4% (110) (6.1)% 123 6.8% (214) (11.8)% 214 11.8% 54 3.0% 47 2.6%	1,410 (324) (23.0)% 492 34.9% 102 7.2% (159) (11.3)% (53) (3.8)% 53 3.8% (81) (5.7)% 85 6.0% (159) (11.3)% 153 10.9% 41 2.9% 23 1.6%

123 F-75

4. METHODOLOGY

The methodology used by the Group for determining the EV results for the period is consistent with that described in Section 4 of the Supplementary Embedded Value Information in the Company’s Annual Report 2020 taking into account the capital requirements as set out in Section 4.1.

4.1 Capital Requirements

Each of the Business Units has a regulatory requirement to hold shareholder capital in addition to the assets backing the insurance liabilities. The table below sets out the Group’s assumed level of capital requirement for each Business Unit:

Business Unit	Capital requirements
AIA Australia(1)	100% of regulatory capital adequacy requirement
AIA China	100% of required capital as specified under the CAA EV assessment
	guidance
AIA Hong Kong	150% of required minimum solvency margin
AIA Indonesia	120% of regulatory Risk-Based Capital requirement
AIA Korea	150% of regulatory Risk-Based Capital requirement
AIA Malaysia	170% of regulatory Risk-Based Capital requirement
AIA New Zealand(2)	100% of regulatory capital adequacy requirement
AIA Philippines	100% of regulatory Risk-Based Capital requirement
AIA Singapore	Higher of 135% of capital adequacy requirement and 80% of Tier 1
	capital requirement under the regulatory Risk-Based Capital framework
AIA Sri Lanka	120% of regulatory Risk-Based Capital requirement
AIA Taiwan	250% of regulatory Risk-Based Capital requirement
AIA Thailand	140% of regulatory Risk-Based Capital requirement(3)
AIA Vietnam	100% of required minimum solvency margin
Tata AIA Life	175% of required minimum solvency margin

Notes:

(1) AIA Australia refers to AIA Australia Limited, a subsidiary of AIA Co., and the business acquired by the Group from Commonwealth Bank of Australia (CBA) upon the completion of the portfolio transfer of CBA’s life insurance business conducted through The Colonial Mutual Life Assurance Society Limited (CMLA) under Part 9 of the Life Insurance Act 1995 (Cth) of Australia.
(2) AIA New Zealand refers to AIA Sovereign Limited, a wholly-owned subsidiary of AIA International and the holding company of AIA New Zealand Limited to which the above capital requirement applies.
(3) The Capital Requirement ratio assumed in the EV calculation is 120% up to year-end of 2021, and 140% thereafter, in line with the regulatory requirement under Thailand RBC 2.

Capital Requirements on Consolidation

The non-Hong Kong branches of AIA Co. and AIA International hold required capital of no less than 100% of the Hong Kong statutory minimum solvency margin requirement.

AIA International and its subsidiaries hold required capital of no less than 120% of the BMA regulatory capital requirement.

In addition to the above, the reserving and capital requirements for the purpose of consolidation allow for the local regulatory requirements outlined above and other reserving and capital requirements as determined by the Group.

124 F-76

5. ASSUMPTIONS

5.1 Introduction

This section summarises the assumptions used by the Group to determine the EV as at 30 June 2021 and the VONB for the period ended 30 June 2021.

Long-term investment return assumptions used in the EV basis for the interim results remain unchanged from those shown in Section 5.2 of the Supplementary Embedded Value Information in the Company’s Annual Report 2020, while risk discount rates were updated to reflect the risks associated with new business written during the reporting period as disclosed in Section 5.2 of the Supplementary Embedded Value Information in the Company’s Annual Report 2020.

The non-economic assumptions used are based on those at 31 December 2020, updated to reflect the Group’s latest view of expected future experience. A more detailed description of the assumptions can be found in Section 5 of the Supplementary Embedded Value Information in the Company’s Annual Report 2020.

5.2 Economic Assumptions

Investment Returns

The Group has set the assumed long-term future returns for fixed income assets to reflect its view of expected returns having regard to estimates of long-term forward rates from yields available on government bonds and current bond yields. In determining returns on fixed income assets the Group allows for the risk of default, and this allowance varies by the credit rating of the underlying asset.

Where long-term views of investment return assumptions differ from current market yields on existing fixed income assets such that there would be a significant impact on value, an adjustment was made to make allowance for the current market yields. In these cases, in calculating the VIF, adjustments have been made to the investment return assumptions such that the investment returns on existing fixed income assets were set consistently with the current market yield on these assets for their full remaining term, to be consistent with the valuation of the assets backing the policy liabilities.

The Group has set the equity return and property return assumptions by reference to the return on 10-year government bonds, allowing for an internal assessment of risk premia that vary by asset class and by territory.

For each Business Unit, the non-linked portfolio is divided into a number of distinct product groups, and the returns for each of these product groups have been derived by considering current and future targeted asset allocations and associated investment returns for major asset classes.

For unit-linked business, fund growth assumptions have been determined based on actual asset mix within the funds at the valuation date and expected long-term returns for major asset classes.

For Tata AIA Life, the Group uses the IEV methodology as defined in Actuarial Practice Standard 10 issued by the Institute of Actuaries of India for determining its EV and VONB. This methodology uses investment returns and risk discount rates that reflect the market-derived government bond yield curve. Therefore, the risk discount rate and long-term investment returns are not provided for Tata AIA Life.

125 F-77

5. ASSUMPTIONS (continued)

5.2 Economic Assumptions (continued)

Risk Discount Rates

The risk discount rates can be considered as the sum of the appropriate risk-free interest rate, to reflect the time value of money, and a risk margin to make an implicit allowance for risk.

The table below summarises the current market 10-year government bond yields referenced in EV calculations.

Business Unit

Current market 10-year government bond
yields referenced in EV calculations (%)
As at
30 June
2021
(Unaudited)
As at
31 December
2020
As at
30 June
2020
(Unaudited)
1.53
0.97
0.87
3.09
3.15
2.85
1.47
0.91
0.66
6.59
5.89
7.21
2.10
1.72
1.39
3.29
2.65
2.87
1.77
0.99
0.93
3.92
3.00
2.80
1.58
0.84
0.90
8.20
7.55
7.20
0.42
0.32
0.45
1.78
1.28
1.28
2.21
2.60
2.99

AIA Australia
AIA China
AIA Hong Kong(1)
AIA Indonesia
AIA Korea
AIA Malaysia
AIA New Zealand
AIA Philippines
AIA Singapore
AIA Sri Lanka
AIA Taiwan
AIA Thailand
AIA Vietnam

Note:

(1) The majority of AIA Hong Kong’s assets and liabilities are denominated in US dollars. The 10-year government bond yields shown above are those of US dollar-denominated bonds.

126 F-78

5. ASSUMPTIONS (continued)

5.2 Economic Assumptions (continued)

Risk Discount Rates (continued)

The table below summarises the risk discount rates and long-term investment returns assumed in EV calculations. The risk discount rates as at 30 June 2021 reflect the weighted average of the risk margins of the in-force business at the start of 2021, and those of the new business written during the first half of 2021 which, as disclosed in the Company’s Annual Report 2020, are determined at a product level starting from 2021 to better reflect the market and non-market risks associated with the mix of products sold during the reporting period. In addition, the VONB results are calculated based on start-of-quarter long-term investment return assumptions consistent with the measurement at the point of sale. The present value of unallocated Group Office expenses was calculated using the AIA Hong Kong risk discount rate. The investment returns on existing fixed income assets were set consistently with the market yields on these assets. The investment returns shown are gross of tax and investment expenses.

Business Unit	Risk discount rates assumed in EV calculations (%) As at 30 Jun 2021 (Unaudited) As at 31 Dec 2020 As at 30 Jun 2020 (Unaudited)	Long-term investment returns assumed in EV calculations (%) 10-year government bonds Local equities As at 30 Jun 2021 (Unaudited) As at 31 Dec 2020 As at 30 Jun 2020 (Unaudited) As at 30 Jun 2021 (Unaudited) As at 31 Dec 2020 As at 30 Jun 2020 (Unaudited) 2.30 2.30 2.30 6.60 6.60 6.60 3.70 3.70 3.70 9.30 9.30 9.30 2.20 2.20 2.20 7.00 7.00 7.00 7.50 7.50 7.50 12.00 12.00 12.00 2.20 2.20 2.20 6.50 6.50 6.50 4.00 4.00 4.00 8.60 8.60 8.60 2.30 2.30 2.60 6.80 6.80 7.10 5.30 5.30 5.30 10.50 10.50 10.50 2.20 2.20 2.20 6.70 6.70 6.70 10.00 10.00 10.00 12.00 12.00 12.00 1.00 1.00 1.30 5.60 5.60 5.90 2.70 2.70 2.70 7.70 7.70 7.70 4.00 4.00 4.00 9.30 9.30 9.30
		10-year government bonds As at 30 Jun 2021 (Unaudited) As at 31 Dec 2020 As at 30 Jun 2020 (Unaudited)
AIA Australia AIA China AIA Hong Kong(1) AIA Indonesia AIA Korea AIA Malaysia AIA New Zealand AIA Philippines AIA Singapore AIA Sri Lanka AIA Taiwan AIA Thailand AIA Vietnam	6.43 6.45 6.45 9.73 9.75 9.75 7.00 7.00 7.00 12.99 13.00 13.00 8.10 8.10 8.10 8.55 8.55 8.55 6.53 6.55 6.85 11.80 11.80 11.80 6.60 6.60 6.60 15.70 15.70 15.70 7.25 7.25 7.55 7.75 7.80 7.90 9.71 9.80 9.80	2.30 2.30 2.30 3.70 3.70 3.70 2.20 2.20 2.20 7.50 7.50 7.50 2.20 2.20 2.20 4.00 4.00 4.00 2.30 2.30 2.60 5.30 5.30 5.30 2.20 2.20 2.20 10.00 10.00 10.00 1.00 1.00 1.30 2.70 2.70 2.70 4.00 4.00 4.00

Note:

(1) The majority of AIA Hong Kong’s assets and liabilities are denominated in US dollars. The 10-year government bond assumptions shown above are those of US dollar-denominated bonds.

127 F-79

5. ASSUMPTIONS (continued)

5.3 Expense Inflation

The expected long-term expense inflation rates used by each Business Unit are set out below:

Expense Inflation Assumptions by Business Unit (%)

	As at	As at
	30 June	31 December
	2021	2020
Business Unit	(Unaudited)
AIA Australia	2.05	2.05
AIA China	2.00	2.00
AIA Hong Kong	2.00	2.00
AIA Indonesia	3.50	3.50
AIA Korea	3.50	3.50
AIA Malaysia	3.00	3.00
AIA New Zealand	2.00	2.00
AIA Philippines	3.50	3.50
AIA Singapore	2.00	2.00
AIA Sri Lanka	6.50	6.50
AIA Taiwan	1.20	1.20
AIA Thailand	2.00	2.00
AIA Vietnam	4.00	4.00
Tata AIA Life(1)	5.60	5.60

Note:

(1) For Tata AIA Life, in accordance with the IEV methodology as defined in Actuarial Practice Standard 10 issued by the Institute of Actuaries of India, the inflation assumption is derived by applying a spread to the reference interest rate.

Unallocated Group Office expenses are assumed to inflate by the weighted average of the Business Unit expense inflation rates.

128 F-80

5. ASSUMPTIONS (continued)

5.4 Taxation

The EV and VONB presented in this report are net of tax based on current taxation legislation. The projected corporate income tax payable in any year allows for the benefits arising from any tax loss carried forward where relevant. Where applicable, tax payable on investment income has been reflected in the projected investment returns. Any withholding tax payable on future remittances from local business units are also reflected under the appropriate operating segment.

The local corporate income tax rates used by each Business Unit are set out below:

Local Corporate Income Tax Rates by Business Unit (%)

	As at	As at
	30 June	31 December
	2021	2020
Business Unit	(Unaudited)
AIA Australia	30.0	30.0
AIA China	25.0	25.0
AIA Hong Kong	16.5	16.5
AIA Indonesia(1)	22.0	22.0
AIA Korea(2)	27.5	27.5
AIA Malaysia	24.0	24.0
AIA New Zealand	28.0	28.0
AIA Philippines(3)	25.0	30.0
AIA Singapore	17.0	17.0
AIA Sri Lanka(4)	24.0	28.0
AIA Taiwan	20.0	20.0
AIA Thailand	20.0	20.0
AIA Vietnam	20.0	20.0
Tata AIA Life	14.6	14.6

Notes:

(1) During 2020, a change in corporate income tax rate was enacted in Indonesia from 25% to 22% for fiscal years 2020 and 2021 and to 20% from fiscal year 2022 onwards.
(2) AIA Korea is subject to an assumed corporate income tax of 27.5% up to fiscal year 2022, which includes an Accumulated Earnings Tax following the subsidiarisation of the branch in AIA Korea. Based on current regulations, the corporate income tax rate will revert to 24.2% from fiscal year 2023.
(3) During the reporting period, a change in corporate income tax rate has been enacted in the Philippines from 30% to 25%, and this was effective from 1 July 2020 onwards.
(4) During the reporting period, a change in corporate income tax rate has been enacted in Sri Lanka from 28% to 24%, and this was effective from 1 January 2020 onwards.

129 F-81

6. COMMITMENTS AND EVENTS AFTER THE REPORTING PERIOD

The Group announced in March 2021 that it had reached an agreement to enter into a new exclusive 15-year strategic bancassurance partnership with The Bank of East Asia, Limited (BEA) covering Hong Kong and Mainland China. As part of the agreement, the Group also agreed to acquire 100 per cent of BEA Life Limited, a wholly-owned subsidiary of BEA, and a closed portfolio of life insurance policies underwritten by Blue Cross (Asia-Pacific) Insurance Limited. The total gross consideration with respect to these transactions is HK$5,070 million (approximately US$650 million). As at 17 August 2021, the necessary regulatory approval for the acquisition of the shares of BEA Life Limited has been obtained and the completion of that acquisition is expected to take place shortly.

The Group announced in June 2021 that it had reached an agreement to invest RMB12,033 million (approximately US$1,860 million) through AIA Co. for a 24.99 per cent equity stake (post investment) in China Post Life Insurance Co., Ltd. The completion of this transaction remains subject to securing all necessary regulatory approvals.

Refer to note 25 to the IFRS interim condensed consolidated financial statements for details of investment and capital commitments.

On 17 August 2021, a Committee appointed by the Board of Directors declared an interim dividend of 38.00 Hong Kong cents per share (six months ended 30 June 2020: 35.00 Hong Kong cents per share).

130 F-82

AI assistant

AIA Group Limited — Capital/Financing Update 2021

49833_rns_2021-08-19_440cf197-5a27-4298-b81f-c1ec7cae980b.pdf

PUBLICATION OF SUPPLEMENTAL OFFERING CIRCULAR ON THE STOCK EXCHANGE OF HONG KONG LIMITED

US$12,000,000,000 Global Medium Term Note and Securities Programme

Hong Kong, 19 August 2021

SUPPLEMENTAL OFFERING CIRCULAR