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AIA Group SWOT & PESTLE Analysis

ID : 52548753| May 2019| 15 pages

COMPANY PROFILE -AIA Group

Business Sector :Insurance and Financial Services

Operating Geography :Asia Pacific countries except Japan

About AIA Group :

American Insurance Association (AIA), headquartered in Hong Kong, is the largest pan-Asian life insurance group operating in 18 countries of Asia Pacific excluding Japan. These countries are China, Hong Kong, Singapore, Thailand, Philippines, Malaysia, Brunei, Australia, New Zealand, Macau, Indonesia, Korea, Taiwan, Vietnam, India, Sri Lanka, Myanmar (representative office) and Cambodia. They provide insurance services for both individual and businesses. For individuals, they offer Life insurance, Medical insurance, Accident protection, Critical illness protection, Disability protection and savings. For businesses, they provide, pension services and employee benefits to corporate clients to cover their employees', protection, health and retirement needs.
AIA is 100% focused on Asia-Pacific, being the largest insurer in the world insuring people with total sum assured of over US $1 trillion. They made 13 million benefits payment to beneficiaries in 2018 to help customers and their families cope with challenges. In 2010, it successfully featured on the Hong Kong stock exchange, the third-largest IPO ever globally at the time. Other than insurance services, they promote AIA Vitality, a science based health wellness program for a positive change. They creatively promote health wellness by knowledge and tools for achieving health goals. They give opportunity to complete fitness assessments and full health and earn points for completing those activities which can be used as discount for shopping, travel, entertainment and other purchases. These are sold on initial purchase of eligible life insurance policy.
AIA works with the Vision of becoming the world’s largest life insurance provider to customers and shareholders. AIA’s Mission statement reads “to service societies and people by playing leadership role in economic and social development across the region.” AIA’s USP or unique selling proposition lies in being the second-largest life insurance company in the world, ranked by market capitalization.

AIA Group Revenue :


$ 36,297 million – FY ended 31st December 2018 (Net profit of $ 3,226 million)
$ 38,330 million – FY ended 31st December 2017

Competitive Analysis of AIA Group

SWOT
PESTLE
The SWOT analysis for AIA Group is presented below:
Strengths
Weaknesses
1. Increase in VONB
2. Strong Cash Flow Position
3. Diversified Portfolio Mix
4. Strong Credit Worthiness
1. Non-adaptive to Niche Markets
Opportunities
Threats
1. Change in Customer Preferences
2. Low Penetration
3. Efficiency Increment through Digitalization
4. Growth Opportunities in Existing Countries
5. Promising outlook for the Asian life insurance sector
1. High Dependence on Hong-Kong
2. Competition Pressure
3. Increasing Terrorist Activities
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of AIA Group

 

Strength

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Weakness

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Opportunity

1. Change in Customer Preferences: Increase in healthcare awareness among people has provided the opportunity for AIA to expand and diversify its protection oriented portfolio and develop new revenue streams. Ageing population, increasing need for retirement savings, awareness of life style related diseases, rapid urbanization and significant wealth creation are the factors contributing in change in customer preferences. Like in India, there is a significant gap of protection insurances of which AIA can avail this opportunity through partnerships and joint ventures. With reference to the Annual Report 2018, middle-class population in Asia (excluding Japan) is expected to get doubled in year 2025, crossing Europe and North America and middle class expansion by more than seven times in the continent by 2020 which provides large customer base in future for the company. In addition to this, there is increase in prevalence of lifestyle related disease as 49% of all the non-communicable diseases deaths globally are covered by Asia (excluding Japan).

2. Low market penetration: Low awareness of protection insurances, untouched markets and targeting new customers are the causes of low penetration. Life insurance premiums penetration in Asia ex-Japan markets stands at an abysmal 2.4% of GDP. This is remarkably lower than the developed countries such as US (3.5%), Italy (6%), UK (8%) and Japan (8%). As per theory, the penetration rate should justly figure above the ratio of the developed economies, given the relatively low amount of social spending and high savings rate. AIA partnership with its 7 largest partner banks having access to more than 60 million existing customers provide only 2% of penetration of AIA products and provide significant potential new customers for future profitable growth. This can be developed through deepening engagement with strategic partners, through non-traditional partners expand distribution reach, engage customers in healthy living, increase customer engagements and develop the market capabilities using data analytics according to each country market.

3. Efficiency Increment through Digitalization: Technology, Innovation and Digitization – three pillars for a company to adapt to environmental changes. Technology and innovation are those pillars which AIA has built upon and catering to people need but digitization is where its opportunity lies. Digitization of operational process, systems and supporting distribution helps in simplifying customer experience, reducing costs and increase customer base. They can increase digitization through building Insurance Chatbots that provide instant service to customers using Natural Language Processing or by Private Cloud and Big Data in smaller countries market by consolidating multiple data centers into it and reducing carbon footprint. They can increase customer interaction by developing a mobile application where customer can resolve their queries, get latest updates of products and its related terms and conditions and get timely notification for its payment of premium, thus overall helping in improving customer experience.

4. Growth Opportunities in Existing Countries: With the aim of expansion and after opening its first office in the country, AIA expects future growth opportunity despite low penetration in the Cambodia as compared to its neighbors. Having market reached maturity; positive signs of growth resemble future growth driven by dynamic and young labor force. Cambodian life insurance market has shown potential growth as premiums of life insurance grew 30% from US$ 151.6 million in 2017 to US$ 196.4 million in 2018 and general insurance sector grew by 50.6% to US$ 75.4 million in 2017.
Australia also has potential growth opportunity for expanding its distribution channel through a $3.8 billion purchase of Commonwealth Bank of Australia (CBA). CBA’s Sovereign Assurance and CommInsure Life would keep selling AIA’s product which would result in AIA capturing a leading market position in Australia and increasing its revenue. This partnership could bridge the gap of insurance industry and align it with what exactly the customer needs.

Threat

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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in AIA Group Analysis Report

1. About AIA - http://www.aia.com/en/about-aia.html

2. AIA Annual Report 2018 - http://www.aia.com/content/dam/group/en/docs/agm-pdf/2019/e%20-%20Annual%20Report%202018.pdf

3. AIA Annual Report 2017 - http://www.aia.com/content/dam/group/en/docs/annual-report/aia-annual-report-2017-eng.pdf

4. AIA 2017 annual Results Presentation - http://www.aia.com/content/dam/group/en/docs/download-library/2018/FY2017%20Analyst%20Presentation%20(Final).pdf

5. AIA Statement on Climate Changehttp://www.aia.com/en/about-aia/esg/statement-on-climate-change.html

Copyrights and Disclaimer

AIA Group SWOT and PESTLE analysis has been conducted by Shreya Tayal and reviewed by senior analysts from Barakaat Consulting.

Copyright of AIA Group SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

AIA Group SWOT & PESTLE Analysis
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