Good morning from Hong Kong, and welcome to our 2022 interim results presentation. AIA has delivered a resilient performance, and I would like to thank our employees, agents, and partners for their outstanding dedication and professionalism during these extraordinary times. In the first half of 2022, unprecedented outbreaks of the Omicron variant caused temporary disruptions, while global capital markets have been extremely volatile in response to the evolving macroeconomic conditions. Throughout our long history, we have successfully navigated periods of uncertainty and change, and our unwavering commitment to our customers, our balance sheet strength, and financial discipline are important differentiators. Today's results demonstrate the power of AIA's substantial competitive advantages, continued focus on executing our growth strategy, and the benefits of our scale and diversity in the world's most attractive region for life and health insurance. Let me now take you through some highlights.
VONB exceeded $1.5 billion in the first half, despite the reaction to the initial Omicron wave affecting sales activity and consumer demand. As containment measures eased, we saw strong momentum in the second quarter, and the group delivered positive VONB growth in June. Our large and growing in-force portfolio supported increased operating profit after tax and underlying free surplus generation. The group's capital position remained very strong, despite significant capital market stress. Free surplus was substantially higher at $20.6 billion, an increase of $3.6 billion in the first half, and this is after we paid $3 billion to shareholders through dividends and the share buyback. Shareholders' allocated equity was broadly stable, and EV equity of $72 billion was up 3% before payments to shareholders.
The board has declared an increase of 6% in the interim dividend, reflecting the confidence in the group's future prospects while retaining the financial flexibility to invest capital in the significant growth opportunities available to us. AIA's unrivaled distribution has remained robust throughout the disruptions in the first half. From the beginning of the second quarter, we saw strong momentum across most of our markets, with a return to positive VONB growth in June for the group. As you know, the Omicron outbreak occurred later in mainland China, with stringent movement restrictions well into the second quarter. The impact was more than offset by positive growth from the rest of the group, including from Hong Kong, Thailand, Singapore, Malaysia, Indonesia, and the Philippines. This broad-based performance demonstrates the benefits of our diversification across Asia.
As movement restrictions eased across mainland China in the second quarter, we have seen strong positive momentum and a return to VONB growth in July. Most of our operations were subject to brief and targeted controls, followed by a rapid recovery in sales activity. Suzhou and Shanghai were affected by prolonged measures lasting more than two months, followed by a gradual reopening. When needed, our digital remote capabilities enabled our professional agents to generate substantial VONB, and as restrictions reduced, in-person sales rebounded. In the first half, AIA China significantly outperformed the market and was again the largest contributor to the group's VONB. Our premier agency model continues to differentiate AIA in mainland China. While the market has seen a huge reduction in agent numbers since the start of the pandemic, our headcount is stable, with consistently high recruitment standards.
Our focus on long-term professional careers attracts the best talent, and we grew new recruits by 8% in the first half. Continued enhancements to our digital platforms and training programs supported improved agent productivity and incomes. MDRT members have grown nearly 60% to more than 4,200 since the beginning of the pandemic. In July, AIA China became the largest MDRT company in the world. Our geographical expansion continues to advance at pace, generating excellent performances as we replicate our efficient and scalable model in new provinces and deepen our presence within existing regions. In the first half, we successfully launched our Hubei operation and received approval to establish a new branch in Zhengzhou, Henan, which brings access to the third most populous province in mainland China with close to 100 million people.
I am confident that AIA's unique growth opportunity in mainland China remains firmly intact. AIA's capabilities to meet the growing needs for life and health insurance in Hong Kong and the Greater Bay Area are unparalleled. In the first half, VONB for AIA Hong Kong grew by 3%, outperforming other listed life insurers. We delivered growth in all our channels and in both our domestic and mainland Chinese visitor businesses. AIA's premier agency is the clear leader in both Hong Kong and Macau. Our undivided focus on reinforcing our strengths saw a significant increase in the number of agency leaders and agent productivity. In Macau, the border with mainland China has been open since the end of 2020, and our VONB from mainland Chinese visitors almost doubled in the first half, underscoring the continued demand for our products.
We also achieved more than 30% growth in our partnership channel. Notably, our recently established relationship with the Bank of East Asia is already a material contributor to VONB. Our ASEAN markets returned to VONB growth in the second quarter and accounted for around 40% of total VONB in the first half. We have significant scale in each of our markets, powered by a multi-channel distribution platform. MDRT members for our premier agency increased by 15%, demonstrating the quality of our leading force. In the first half, we grew the number of next gen agency leaders, building capacity for growth, and we significantly increased new recruits in the second quarter. Our partnerships with leading domestic banks are another key asset for AIA and delivered strong growth in the second quarter. Digital platform partnerships provide a valuable source of leads for our unrivaled distribution.
In Malaysia, we acquired more than half a million customers through TNG Digital, with the vast majority new to AIA. Through the second quarter, momentum improved with broad-based VONB growth in June from Thailand, Singapore, Malaysia, Indonesia, and the Philippines. Across Asia, AIA is in prime position to build on our strengths and deliver superior profitable growth. India is an exceptional long-term opportunity for AIA, and our joint venture with Tata benefits from a highly digitalized and successful multi-channel distribution strategy. Tata AIA continued its strong track record of broad-based growth with VONB up close to 40% in the first half. We are making excellent progress in scaling and enhancing our premier agency and delivered a strong increase in both new recruits and the number of active agents. Our partnership business includes leading banks, brokers, and digital platforms.
Leveraging TDA, we provide seamless connectivity and a best-in-class customer experience, deepening our relationships and driving our growing success across our diverse partnerships. We are the leader in retail protection, and our strong growth has moved us up to number four in the industry by total new business. Our high quality multi-channel distribution strategy ensures Tata AIA is well-positioned to capture India's massive long-term potential. In January, we completed our investment in China Post Life, the leading bank-affiliated life insurer focused on bringing financial protection to the under-penetrated mass market in mainland China. This business is highly complementary to AIA China's strategy and further increases the group's exposure to the enormous growth opportunities for life insurance in mainland China. A separate and dedicated team of experts from AIA Group office provides support as China Post Life advances its strategic priorities.
When we announced our investment in June 2021, we outlined that value upside will be driven by VONB growth delivered by increased customer engagement and enhanced profitability. VONB in the first half of 2022 was 2.8x the whole of 2020. Working together with China Post Life, we have helped enhance its product mix, drive significant volume and margin growth while reducing new business strain. This has supported an EV increase of more than 30%, and China Post Life's solvency is robust with a solvency ratio over 180%. AIA has the ambition, scale, and financial strength to capture the enormous growth opportunities across all our markets. The improved momentum and VONB growth in June demonstrate the power of our businesses.
In mainland China, we continue to replicate our differentiated premier agency in new geographies as we expand our accessible target market by 5x , and we return to VONB growth in July. AIA Hong Kong delivered VONB growth in the first half across all channels and in both its domestic and mainland Chinese visitor businesses. Our ASEAN markets rapidly regained momentum and grew in the second quarter. Our high-quality Indian business has achieved another excellent result with close to 40% VONB growth in the first half. AIA's resilient performance demonstrates the benefits of our diversified platform across Asia, our substantial competitive advantages, and focused execution of our profitable growth strategy. Garth Jones will now take you through our financial results in more detail.
Thanks Lee Yuan Siong and good morning everyone. As you've just heard, our businesses progressively regained momentum through the second quarter and the group's VONB returned to positive growth in June. Our financial discipline and consistent focus on high-quality business supported continued growth in OPAT and UFSG. Our financial position remained very strong, providing us with the flexibility to capture the immense growth opportunities available to us across Asia, while delivering progressive returns to shareholders. These resilient results reflect the diversified nature and quality of AIA's business, our prudent financial management, and our focus on long-term sustainable growth. Let me now take you through the financials in more detail. AIA benefits from our diversified regional presence and our long-established market-leading positions. Taken together with the quality of our multi-channel distribution and our comprehensive product range, this strong platform gives us great confidence in our future growth.
Our product mix is high quality, with an emphasis on long-term savings and traditional protection, and with recurring premiums. The mix in Mainland China was more balanced compared with last year, when a regulatory change accelerated demand for traditional protection. The rest of the group maintained a stable product mix, with the majority of VONB from traditional protection. Despite the disruption caused by Omicron, our resilient performance and return to VONB growth in June reflect the strength of our business and its diversification. EV equity was $75 billion before dividends and capital returns to shareholders. This represents a 3% increase over the first half on a constant currency basis, a very strong result given the market headwinds.
An uplift of $3.3 billion from early adoption of the Hong Kong RBC and release of resilience margins was in line with my indication at the full year results. Together with the operating profit of $4 billion, EV equity increased to more than $82 billion before short-term macroeconomic impacts. Closing EV equity is shown after the deduction of $2.5 billion for additional capital and reserves and the present value of future unallocated group office expenses. EV equity closed the period at $72.3 billion after the $3 billion returned to shareholders. Our EV methodology uses long-term assumptions, which aim to smooth out short-term volatility in markets. In line with AIA's usual practice, these remain unchanged from the end of 2021.
However, if we had moved our long-term investment return assumptions to spot rates as of the 30th of June 2022, with a consistent adjustment to risk discount rates, the impact on EV would have been immaterial. We include a substantial allowance for risk in our discount rates with a risk premium of more than 500 basis points for the group, consistent with the levels used since IPO. EV and VONB sensitivities to interest rates remain small. While EV declines slightly as interest rates rise, as discounting at higher rates offsets increased earnings and cash flows, you can see that VONB increases overall. AIA's strong track record of positive operating experience demonstrates the prudence in our embedded value assumptions and the quality of our in-force business.
Positive claims experience was similar to last year as medical claims continued at more normalized levels overall compared with the exceptional experience early in the pandemic. Expense, persistency, and other variances were also positive. Overall, consistently positive operating variances have added more than $4 billion to EV since our IPO. Now moving to IFRS earnings. The group's operating profit after tax increased by 4% to $3.2 billion. OPAT grew in all of our reportable segments except Thailand, where, in contrast to our other markets, many customers were treated for COVID in private hospitals during the initial Omicron wave. As the number of infections in Thailand dropped in the second quarter and with lower cost per claim due to shorter average hospital stays, COVID-related claims reduced compared to the first quarter. Excluding Thailand the group's OPAT grew by 8%.
Growth in our in-force portfolio continued to drive increased OPAT as successive cohorts of new business translates into higher earnings over time. As with VONB, our OPAT is well diversified geographically, with markets outside Hong Kong and Mainland China delivering over 40% of the group total. Our sources of earnings are high quality, with insurance and fee-based profits accounting for close to 60% of the total, and the group's operating margin increased to 17.5%. Shareholders allocated equity provides a clear reflection of the underlying drivers of the change in equity before the IFRS accounting treatment of bonds. Before dividends and the impact of the share buyback, allocated equity was close to $50 billion. Operating profit of $3.2 billion was offset by short-term mark-to-market movements on equities and real estate, as well as the effects of foreign exchange translation.
Under IFRS, we do not apply hedge accounting, resulting in a + $1.6 billion mark-to-market on derivatives as interest rates increase sharply. While this is included within other non-operating items under IFRS 4, this non-economic accounting mismatch will disappear when we adopt IFRS 17. After dividends and the impact of the share buyback, shareholders' allocated equity was $46.8 billion at the 30th of June 2022. Our high-quality investment portfolio is constructed to match our insurance liabilities as closely as possible. As a result, 78% of total invested assets are fixed income, the vast majority of which are government bonds and investment-grade corporate bonds, and 63% of equities and real estate are held in participating funds. We take a conservative approach, and our holdings of structured securities are very small.
The corporate bond portfolio is well-diversified, with over 2,000 issuers and an average credit rating of A-. We have a low level of exposure to real estate, banks, and local government financing vehicles in Mainland China. In the first half, just 0.19% of our corporate bonds were downgraded to below investment grade, and there were no material impairments. This demonstrates the strength of our investment process and the quality of our portfolio. As you're aware, we will adopt IFRS 17 in our group financial statements with effect from January 1, 2023. The change in accounting standard does not affect the underlying economics of our business, and consequently, we expect no material change to our embedded value, cash flow, or solvency metrics.
While IFRS 17 will resolve some of the non-economic accounting issues from IFRS 4, we will continue to report OPAT and shareholders' allocated equity as non-GAAP measures to better reflect the economics of our business. We expect to provide restated financial statements for 2022 on IFRS 9 and IFRS 17 in the second quarter of 2023. Finally, capital and dividends. Following anticipated changes to disclosure requirements, we now report the LCSM position on a prescribed capital requirement basis. This replaces the previously disclosed minimum capital requirement basis. The new PCR basis is more consistent with the capital requirements used within EV. However, we believe that free surplus is more representative of our capital position for shareholders.
At the end of 2021, the change to 291% from 399% previously reported mainly reflects a higher denominator of $28.7 billion on a prescribed capital basis than $16.9 billion under a minimum capital basis. The LCSM cover ratio on the new PCR basis as at 30th of June remains very strong at 277%. The sensitivity of our LCSM cover ratio to both equity and interest rate movements is small, reflecting the resilience of our balance sheet and our strong risk management. The group's financial position remains very strong, with free surplus increasing by $3.6 billion over the first half. Underlying free surplus generation increased by 5% on a comparable basis to $3.2 billion.
Non-operating items mainly reflect the mark-to-market impact of higher bond yields and lower equity markets. This was more than offset by the increase from the adoption of the Hong Kong RBC and the release of resilience margins. After the payments of shareholder dividends and share buyback, free surplus increased to $20.6 billion. The board follows AIA's established prudent, sustainable, and progressive dividend policy, allowing for future growth opportunities and the financial flexibility of the group. The board has declared a 6% increase in the interim dividend to HKD 0.4028 per share. Further, we commenced the buyback in March, and by the end of June have returned an additional $1.3 billion, supporting enhanced returns to shareholders. In conclusion, the group has delivered resilient results. We achieved strong momentum and VONB growth in June as movement restrictions eased.
EV equity increased by 3% over the half before payments to shareholders, a very strong result given market headwinds. Our financial position remains very strong, with free surplus up $3.6 billion to $20.6 billion, and we have a high-quality, conservative investment portfolio. The board has declared a 6% increase in interim dividend, and we returned $1.3 billion of capital to shareholders through our share buyback program. These results reflect the quality and strength of our business, our execution capabilities, and our disciplined financial management. In summary, our continuing ability to deliver sustainable growth for our shareholders. I'll now hand back to you, Siong.
Thank you, Garth. Once again, we have demonstrated that our differentiated and diversified platform ensures there's significant potential for profitable growth in each of our markets. Today, I will introduce you to AIA's new integrated health strategy. This brings together the unique strengths of the group to build on our substantial competitive advantages, significantly enhance our core business, and capture new opportunities for additional growth. Asia is the most attractive region for life and health insurance. Robust and unmatched economic expansion is creating unprecedented levels of wealth for a growing and aging population. However, while Asia is becoming rapidly wealthier, it is not getting healthier. In 2030, healthcare expenditure is expected to exceed $4 trillion. With high out-of-pocket spend, much of these costs will fall to individuals, driving the tremendous need for AIA's insurance products and services.
At the same time, healthcare delivery in Asia can be inaccessible, unaffordable, and ineffective. Millions are missing out on necessary medical treatment due to limited access to healthcare resources. Where care is available, costs can be prohibitive, and expenditure is rising almost twice as fast as GDP. Healthcare journeys are often difficult to navigate, with significant variability in the quality of care across markets and socioeconomic groups. The unparalleled combination of rising consumer expectations, significant unmet service demand, and expanding protection gaps create immense potential for our business. This is the right time for AIA to play a leading role in making health insurance and care more accessible, more affordable, and more effective for our communities. AIA is the leading health insurer in the region with the scale, reach, and unique capabilities to make a difference.
Health and wellness services are fully embedded into our protection products across our markets, enhancing customer journeys and achieving better outcomes. Our differentiated health propositions create significant synergies with our core life business and are central to the success of our unrivaled distribution. In the first half, over 40% of total VONB came from products that include health benefits such as medical and critical illness. Amplify Health, our health insurtech business, will bring significant competitive advantages to AIA, helping grow new business value and delivering financial benefits such as improved claims experience. Since we launched in February, we have 200 full-time employees, and our experienced teams are collaborating with our local businesses to transform how people experience and manage health insurance and healthcare. As I said, AIA is uniquely positioned to make a difference.
Our integrated health strategy is a bold new vision that goes beyond fragmented partnerships and ecosystems to deliver simpler customer journeys, including how people buy health insurance and navigate the healthcare system. We have three strategic pillars. First, more personalized health insurance with advice and innovative solutions that provide enhanced coverage for customers and greater value. Second, integration with high-quality outpatient clinics to direct better healthcare journeys, lower costs, and improve health outcomes. Third, by shaping the nature of healthcare administration and management, we make the end-to-end healthcare experience simpler and more effective for our customers and are with them on every step of their journey. Amplify Health is at the heart of our strategy. It is the crucial enabler of our fully integrated approach. Our new strategy delivers increased growth and profitability for shareholders and makes healthcare more accessible, more affordable, and more effective.
Let me now show you how it will generate increased value across the group. AIA's personalized health insurance replaces standardized benefits with targeted coverages that are tailored to each customer's needs. For wealthier customers, our high-end propositions provide comprehensive global medical benefits and lifestyle-oriented services that meet increasing demands for holistic care. Our innovative solutions cater to an individual's requirements based on life stages or specific diseases. For the mass market, digital health models are key to providing simple and affordable protection products for younger or less affluent customers. Amplify Health is critical to delivering these personalized propositions through its broad range of data-driven health insurtech services. Our shared value, personalized health insurance, drives significant benefits for all, enabling AIA to assess new customer segments, increase our share of wallet, and drive sustainable margins. A critical point on the customer journey is the healthcare gateway.
Traditionally, this gateway is through physical clinics or specialists. Convenience and availability are increasingly driving customers to use online solutions as the first port of call. Integration with high-quality physical and virtual outpatient clinics enables AIA to fully support customers and help them better navigate the increasingly complex healthcare system. Digital tools, engagement platforms, and preventative care programs from Amplify Health empower providers to deliver effective care that is convenient and proactive while reducing medical cost inflation. Our strategic partnerships mean that we can offer differentiated propositions with unique access to the best healthcare providers and lower the cost of insurance. At every step of the journey, AIA's healthcare administration and management ensures that customers have the support of high-quality and value-based healthcare providers. Customers want a seamless end-to-end experience that delivers the best health outcomes at the right price.
Our high quality networks help to diagnose, focus on the right treatment, prevent disease progression, reduce complications, and ensure that customers benefit from more effective and affordable healthcare. Amplify Health enables providers to deliver a streamlined experience by supplying the tools and data-driven insights that support optimal clinical decisions and reduce the administrative burden for providers. Our customers receive better outcomes from more personalized case management and specific treatment programs. Achieving greater clinical alignment between AIA and care providers delivers a sustainable pricing advantage and further differentiation to our propositions while reducing loss ratios and medical cost inflation. As you have seen, Amplify Health is the engine that powers our health strategy. Our new company, in partnership with Discovery, offers a broad suite of services through a fully integrated health technology stack, along with the associated IP data sets and expertise developed over the last three decades.
These services have been successfully applied across the entire health insurance value chain globally, resulting in more efficient insurance pricing, best-in-class claims and risk management, and advanced value-based care capabilities. Amplify Health materially accelerates our capacity build in health and creates a new and sustainable competitive advantage. This means that AIA is uniquely positioned to deliver truly personalized health insurance with fully integrated and end-to-end care for our customers. There's never been a better time for us to transform health insurance and healthcare delivery across Asia. AIA's integrated health strategy significantly enhances our core business and creates greater value for our customers, distributors, and shareholders. Health insurance and healthcare delivery becomes more accessible, more affordable, and more effective for consumers. This, in turn, leads to increased lifetime customer value for AIA as satisfied policyholders stay with us for longer.
Our premier agents and partners have a broader product suite, access to new customer segments, and increased interactions resulting in higher sales and productivity. For AIA, this means more engaged customers, more productive distribution, more protection sales, and more VONB earnings and cash. I have great confidence that through the focused execution of our strategic priorities, AIA will build on a strong track record of performance and continue to deliver long-term sustainable value for all our stakeholders. To summarize, today, we have reported a resilient performance in the first half of 2022. We saw strong momentum in the second quarter with VONB growth in June for the group. AIA China returned to VONB growth in July. Our financial position remains very strong with a substantial increase in free surplus to $20.6 billion.
The board has declared a 6% increase in the interim dividend, and we paid $3 billion to shareholders through dividends and the share buyback. AIA operates in the most attractive markets in the world for life and health insurance. Our substantial competitive advantages built over decades keep us uniquely positioned to capture the large and fast-growing opportunities in life and health. Our clear and ambitious strategy aligns our scale, position, and influence with the powerful drivers of growth prevalent in the region to deliver profitable new business growth. AIA has the strength and financial flexibility to shape a more sustainable future for our communities while delivering superior and sustainable shareholder value with confidence. Thank you for listening.
Good afternoon from Hong Kong and welcome to our 2022 interim results Q&A. I'm Lance Burbidge, Chief Investor Relations Officer of AIA Group. Together with me in Hong Kong are Lee Yuan Siong, our Group CEO and President, and Garth Jones, our Group CFO. We also have our regional chief executives and other members of our group executive committee with us in the room or on the Zoom webinar. I hope you have had a chance to watch the video presentation which we posted to the website earlier today. In particular, Yuan Siong introduced our new integrated health strategy. Before we start our Q&A, Yuan Siong will make some opening remarks.
Thank you, Lance. Good afternoon, everyone. AIA has delivered a resilient performance despite the Omicron wave affecting sales activity and consumer demand and extreme volatility in global capital markets.
VONB exceeded $1.5 billion in the first half, and we saw strong momentum in the second quarter. VONB grew for the group in June, and AIA China returned to growth in July. Our large and growing in-force portfolio supported increased operating profit after tax and underlying free surplus generation. The group's capital position remained very strong despite significant capital market stress. Free surplus was substantially higher at $20 billion, an increase of $3.6 billion in the first half, and this is after we paid $3 billion to shareholders through dividends and the share buyback. Shareholders allocated equity was broadly stable, and EV equity of $72 billion was up 3% before payments to shareholders.
The board has declared an increase of 6% in the interim dividend, reflecting their confidence in the group's future prospects while retaining the financial flexibility to invest capital in the significant growth opportunities available to us in Asia. In summary, today's results demonstrate the power of AIA's substantial competitive advantages, continued focus on executing our growth strategy, and the benefits of our scale and diversity in the world's most attractive region for life and health insurance. Now over to you, for your questions.
Thank you Yuan Siong. We now begin our Q&A session. If you wish to ask a question, you need to make sure that you're logged in to the Zoom webinar. Please click the hand-raising button and wait for your name to be announced. After I call your name, please press the Unmute button shown on your screen and ask your question. If at any time you need to cancel your request, please unclick the hand-raising button. Let's proceed. Our first question comes from Jenny Jiang of Morgan Stanley. Jenny, please press the Unmute button shown on your screen and ask your question.
Hi can you hear me? Hello.
Yes.
Okay. Hi management. Hi Yuan Siong. Thanks a lot for your time. I have two questions today, but it's more like long term. I think first one is about China. We know that there's a lot of regulatory changes lately, but one, a key one will be on the retirement space. You know, given China's aging population, this is a very, very long-term theme. We just wanna get a little bit more update on your latest thinking about, you know, our strategy in this area. How we're gonna position in the asset management segment and also retirement insurance product segment. We learned that AIA is also piloting some new model in China, combining some of the retirement services with our annuity products.
We also want to know a little bit, you know, how we did in this segment in the first half and how big this opportunity gonna be over long run. The second question is about the health strategy. Thank you so much for putting a lot of information about the health strategy in the presentation today. We know that you had a new JV with Discovery, the Amplify Health. We just wonder that whether we have launched it, and how can you give us a little bit more color on this new initiative. How this, you know, venture gonna develop. Are they gonna be a new revenue pillar for us in the long run. Thanks a lot. That's all for me.
Okay. Thanks. Maybe I hand over to Jacky Chan who's our RCE for China. Jacky.
Thank you Yuan Siong. Yeah, Jenny Jiang, you know the retirement, which is a long-term thing for mainland China, and we are really excited with this opportunity. AIA China has a differentiated agency force, which is a high quality agency force, and we are able to capture this long-term strategy. In fact, first of all, I have to say that protection is still contributing a major VONB contributor for AIA China. In mainland China, there is still a big demand on protection and long-term saving. While on this coming retirement theme, in fact we also know that mainland China also has a big aging population, and AIA China offer differentiated proposition to tackle this retirement theme. Our product and proposition and ecosystem facilitate the customer to retire at his own home.
This is a differentiated proposition. Besides an annuity product, we also develop ecosystem and services, including nursing care, et cetera, to facilitate the insured to retire at home, with the support of AIA China. I have to say that we're happy that, in the first half of this year, we are able to really diversify our product suite to cover both long-term protection and long-term saving including the retirement saving proposition.
Yeah. Thank you Jacky. Jenny, on your question about the healthcare strategy, yes, we are very excited about the prospects and opportunities in the healthcare space in Asia. We believe that our strategy will significantly enhance our core business and will create greater value for our customers, distributors, and shareholders. We have the capabilities and very unique assets that can help us to capture this vast opportunity. Obviously, the capabilities and access that we have that we'll be building up with Amplify Health is a crucial enabler to help us implement, empower our integrated healthcare strategy. I'll hand over to Stuart to talk a bit about Amplify Health.
Jenny thank you for the question, and thank you for the lead in Yuan Siong. You know, Jenny, we really do believe that now is the time to address what we see as increasing consumer demands for better access, better integration, better affordability, better experience, and better health outcomes within the health systems, while delivering more solutions to meet customer needs, producing greater growth and, of course, profitability for AIA. We're very confident in our, in our new integrated health strategy, which we believe really does meet customer demands, delivering personalized health insurance, better integration with provision, and of course, more advanced healthcare administration and management. This is where Amplify Health comes in. We see Amplify Health as absolutely the key enabler of our integrated health strategy and a key competitive advantage, bringing over 30 years of proven IP to the table.
We see Amplify Health as incredibly complementary to AIA's health insurance business, playing both a transformational as well as an integrating role through the provision of state-of-the-art health tech solutions and services. Think of it this way. Think of our taking the leading pan-Asian health insurer and adding on and creating the leading pan-Asian integrated health tech solutions and services capability at the same time. We believe this is a very powerful combination. At its core, Amplify Health is super rich, deep and scalable as a health tech platform that supports what we believe all the essential value generating processes in today's private health insurance business, with key capabilities across the health insurance value chain.
Essentially, bringing tremendous integration to a space full of fragmentation, be it digital health platforms and solutions, could be medical cost optimization, benefits and policy management, data analytics and intelligence. Core platforms that really deal with health tech solutions in today's marketplace. I have to tell you, I'm really pleased with progress since announcing the venture in February, we are really building momentum, gaining operationalization. We have more than 200 FTEs on board. I've got a super leadership team, a tremendous leadership team that's up and running, collaborating. Principally right now is our core focus, supporting priority initiatives with our own AIA businesses, driving deployments that will emerge over the next few months. Building our capabilities and solutions relevant to AIA businesses across Asia for now.
We will expand and diversify to focus on serving other payers, whether they're private or governmental. We're very excited about bringing this sophisticated capability to Asia. Thank you.
Thanks. The next question comes from Charles Zhou of Credit Suisse. Charles, please press the unmute button shown on your screen and ask your question.
Okay. Can you hear me? Hello?
Yes. Hi Charles.
Okay. Hi hello. I have three questions and probably, you know, more difficult than Jenny's question. The first question is that we see the net loss for the first time, I think, since your IPO. Clearly, I think the loss is not sustainable for any company, so we'll put some pressures on capital and shareholder equity. On page 12 of your interim report, I look at the IFRS non-operating movement. I see two items. The first one is other non-operating investment return and other items, + $1.9 billion. So what's this? Can you maybe elaborate about this one? The other one is the + $1.8 billion short-term fluctuation in investment. So, are you concerned about this one?
In the second half today, I think that the macro environment is still quite challenging. What measures will you take to improve your investment capability and sales through this difficulty? This is my first question. Second and third question is related to China. My second question is that I think you said agent head count is largely flat, pre-pandemic level, and value of new business down 24%. Mathematically, this probably will translate into lower agency productivity. I'm wondering about the agency income right now. My question is, how can we retain the agents, or do we see some pressure of retaining agent and ensure the premium agency, you know, strategy if their income is going down? And what about your, you know, agency retention rate in China, you know, at the moment?
My last question is also related to China. We're very glad to see that you deliver positive value of new business growth in July. I think, you know, you have a low base in the second half of this year and possibly no more disruption lockdown as we see in Shanghai as well. Can we say that the worst is over in China and also probably anticipate gradual recovery in China with maybe mid to high single digit growth or value of new business in the second half and even to double digit next year and beyond? Thank you.
Thanks Charles maybe I hand over to Gav on your-
Yeah.
Questions on the financial statements.
Thanks Charles I think the key thing to understand is our IFRS accounting basis. You know, as I said, this is a resilient set of results. The net profit you see there is a result of our accounting treatment, our IFRS 4 accounting treatment, whereby the liabilities are fixed, and then we have a mark-to-market movement on the asset side. It's clearly non-economic. That will be dealt with when we move to IFRS 17. We'll move to a much more economic basis from the first of January.
As you quite rightly say, we focus on capital and you've seen an increase of $3.6 billion in the free surplus to $20.6 billion over the half. Clearly a strong increase in the capital position there in the free surplus position. In terms of the two numbers you mentioned, the first one, the 1.9 is really down to the equity movements and the fair value movement of the equities. That's predominantly in the participating funds and that represents our share of that as it goes through. Clearly, those equities will be held for the long term, and we'll see over the longer period, they'll go through bonuses and so on.
That's a short-term fluctuation. Similarly, the other number you mentioned is really to do with the interest rate derivatives. We've got a mark-to-market loss on interest rate derivatives as interest rates rise. Those interest rate rises then you know that's in there to again in the participating fund to protect our participating policyholders. We've seen a mark to market on that. You know, we'll let those derivatives run their course. They're there for a purpose. They're there for our risk management. It's a non-economic loss effectively through the IFRS accounts. That's what you're seeing.
One thing that has happened on the investment side is that with the Hong Kong RBC coming in, we've seen that that has also helped us with our investment side of the business. It's given us greater freedom and flexibility, in particular to invest a bit more in the private equity space than we have historically as well.
Okay. Jacky, on the two China questions.
Yeah. Thank you Charles on AIA China, I have to say that it is a very challenging situation in mainland China in the first half. In the first quarter of this year, we compare to a first quarter last year, which was a very high base due to the big sales of the critical illness product. In the second quarter of this year, the COVID surge in mainland China results in a certain pause or silent mode situation in some of the major cities, which is obviously challenging to the insurance company in China. AIA China, I have to say that we perform. I would say a lot better than many of our peers in mainland China.
Now, as to your calculation, I also want to mention that in first half this year, as I just talked about the retirement savings product, the AIA China product suite actually diversified to include long-term saving and retirement saving, and therefore the margin will be a bit lower than the prior ones. As a result, the VONB dropped. But in terms of the agents' productivity, I have to tell you that, in fact, our agents' productivity in the first half of this year has a single digit increase over first half last year. We are very mindful about our premium agency force in mainland China.
In fact, I would say that the premier agency for mainland China is really a differentiation for AIA in this challenging environment. As you see that in our presentation, you can see that as the movement restriction is being eased in some of those cities which we have shown our AIA China business momentum actually has a strong rebound. As a result, overall speaking, in July we have an overall AIA China growth in VONB in the month of July. Going forward, you know, we don't provide forecast or estimate, but I will draw your attention to the fact that AIA China really has a strong agency force and they can really rebound strongly once those COVID movement restrictions are being eased.
Notwithstanding the fact that, yes, it is still remaining a challenging environment in mainland China, but our agency force with the skill set and our differentiated proposition, I'm sure that we are able to capture the opportunity, especially the long-term opportunity in mainland China.
I'll just add that our agents continue to earn very good incomes compared with what somebody would earn doing a full-time job in any industry in the cities that they operate in. As you know, the employment environment in mainland China is not very easy, a big challenge now. We've been seeing very good recruitment activity as well because of the fact that our agents are able to demonstrate that they can earn a very good income being an agent of AIA. Yeah. Any second?
The next question comes from Thomas Wang of Goldman Sachs. Thomas, please press the unmute button shown on your screen and ask your question.
Thank you management. Congrats on good numbers, especially out of mainland China. A couple questions from me. I think the first one, just want to get a bit color. When we look at the product mix disclosure, that other segment is now 22% of first half 2022 VONB. Can you just give me a little bit color what that is and how we think about margin, also growth on that segment or on that type of business? What is more sensitive to interest rate or protection? Which country it is? Just a little bit more color on that segment, please.
The second question, related to China Post Life. It's good to see the VNB growth, very strong in that business. The core solvency ratio for that company is 110% under 120%. Just wanted to get your thought. Do you think the product strategy or product mix shift in that business have sort of how far are we progressing that we already move away from the capital consumption, high capital consumption products? Do we see risk that, you know, in a volatile market environment, there may be more capital needs for that business? Thank you.
Okay. I'll let Garth take the question on product mix, and Jackie, you talk about how we are helping China Post Life in terms of improving the capital efficiency and the product design and distribution. Thanks.
Thanks Thomas. The other mix that you mentioned is the non-participating business. It's predominantly in China. That is business that we match it well with suitable government bonds and so on. As you've seen, the business remains true to predominantly traditional protection business.
Yeah. I mean, I think I'll just add that our definition of traditional protection is very strict, so some products that sort of are between those two categories do sit in other.
Hi Thomas. As to your question on the China Post Life, I'm very happy that the investment in China Post Life was completed in January this year. In fact, we immediately have a team of technical expert on the ground supporting providing advice to the China Post Life, especially in terms of strengthening the financial management, the asset liability matching, and also strengthening product shift towards long-term protection and long-term saving. As a result, you already see that the VNB of China Post Life in the first half of this year is 2.8x of the whole year of 2020, which they disclosed that in year 2020.
In terms of the comprehensive solvency ratio, which was shown as 182% as of first half of this year. Actually, this is excluding the investment portion of AIA. It shows that they are on the track, on the right track of really strengthening the financial performance and result. I have to say that there is still a lot of work to be done, but China Post Life is really eager to deliver quality growth in accordance with the 14th five-year plan of Mainland China.
Yeah. Just to correct, Jackie, that the 182% was after the investment.
Oh, okay.
The next question comes from Kailesh Mistry of HSBC. Kailesh, please press the mute button shown on your screen and ask your question.
Hi there. Good afternoon. I've got a few questions here. First one is on the LCSM position. Could you just help us understand if there's an internal target range for the LCSM ratio? And also, you haven't provided credit spread sensitivity. I wonder if you could provide some insights on, you know, what that looks like. Secondly, I guess, you know, you've provided some nice charts on improving volumes as COVID restrictions have eased. You've also made comments around Mainland China that the product mix is broadening out. In the other markets, so Hong Kong and ASEAN, as face-to-face interaction is improving, are you seeing new business sort of product mix reverting back to, you know, the pre-COVID type mix?
Also, are you capturing new customers, you know, when that face-to-face does resume? Then the last question, for now is just on Amplify Health, and the health strategy. Thank you, obviously, for the update on the strategy and what your objectives are here. Could you just talk a little bit about two things. Firstly, what are the main gaps in your product and service propositions? Are there sufficient partners out there to plug those gaps, or would you have to do it organically? How are you approaching Greater China? Because obviously you don't have the Amplify Health relationship, for that region. Thank you.
Garth.
Yeah. Yeah thanks Kailesh. In terms of targets, our focus really is on the free surplus, 'cause that better represents the shareholder perspective. The LCSM ratio that we've shown there is really about regulatory solvency. It includes the participating firms as well as the shareholder firms. When we look at it from a shareholder perspective, we will tend to look at the free surplus. Again, you saw the free surplus up by $3.6 billion- $20.6 billion. Clearly, our regulatory solvency is very strong, but it's not something that we target particularly beyond being demonstratively very strong. We do run our own internal credit spreads and I can confirm that we'll remain resilient through credit cycles.
I think I'm gonna take the product mix question. You're right, Kailesh, that obviously the China business, the shift in product mix is the main driver of the overall group product mix changing. If you take out China, the product mix is actually the same in terms of protection content this year as it was last year. You'll remember that actually it went up quite significantly post-pandemic in our markets, so hopefully that gives you the answer.
Okay. Stuart, can you take the question on healthcare?
Sure, Kailesh. Let me make sure I understand your first question. You're asking what gaps do we believe Amplify Health will fill within our existing product suite? Is that correct?
No, no. It was more, obviously, you know, through acquisitions or partnerships such as Medix, Blue Cross and all those, you've built additional propositions. What are the gaps in the service and product proposition you want to have, that are there currently, I guess?
We believe that Amplify Health actually does provide a significant gap closure across its four integrated platforms and augments and supplements our existing ecosystem of services that are principally focused on improving customer journeys, experience and outcomes, as well as a greater concentration on prevention. We believe in particular the capabilities on medical cost optimization will give us tremendous amount of technical excellence on the back end to drive expanded margins and ultimately a more absolute VONB. We see Amplify Health as complementary, but also really the greatest integrating factor of the overall ecosystem.
We've also incorporated AIA Vitality into the framework of Amplify Health so that we are really gonna be able to scale up digital health platform and solutions with Vitality as really the core driver of wellness and behavioral change across the group. Now, vis-à-vis China, bear in mind that Amplify Health has two entities, one that's based in Singapore serving markets other than Greater China and Hong Kong and Macau. We have an Amplify Health ChinaCo situated in Hong Kong that will be providing the same IP, the same leading IP in the Chinese market under Amplify Health ChinaCo. We believe we see tremendous opportunities for the delivery of integrated health solutions in the Chinese market.
We recognize that it is a very distinct market, rapidly evolving and does require very, very specific solutions. We continue to evaluate our options and how best to strategically deploy those solutions in the China market over the next months and years. Thank you.
I'll just add, I think, as we explained in the strategy, we see a lot of opportunity for in healthcare in Asia. We are talking about in excess of $4 trillion of healthcare spend by 2030. A lot of it will be out of pocket. The different markets, the situation in different markets will be different, and we'll be focusing on a few key markets. Obviously China will be one of them because the healthcare spend is huge and the out-of-pocket spend is actually also tremendous. We set out in our strategy, our three pillar strategy, which and with Amplify Health being a key enabler.
It's just like if you recall, two years ago, when we talked about Ascend 200 strategy, we have our Ascend 200 strategy and the TDA is the cornerstone of our Ascend 200 strategy. In our healthcare strategy, Amplify Health is really a cornerstone, you know, a key enabler, you know, the driver of innovation supporting the three pillars. I think we are going through market by market, assessing, you know, in terms of the three pillars, where we are, what the gaps are, how do we fill it. For example, in terms of personalized health insurance in Singapore and Malaysia, in Thailand, Vietnam, et cetera. We're going through market by market, looking at it and to see.
Look at where the gaps are, and how we can better fill it. The second pillar in terms of how we our network of outpatient physical clinics and virtual clinics, how do we build up such a network that can integrate into our the healthcare journey for our customers. The professional case management and health management and services that you know that we can partner with or build organically in each market. Obviously, everything will be powered and you know driven and supported by Amplify Health.
On Greater China, we will be bringing the IP and Amplify Health will be building, and it will be deployed in Hong Kong and the Greater China as well. Yeah.
The next question comes from MW Kim of JP Morgan. MW, please press the mute button shown on your screen and ask your question.
Thank you for this opportunity. I want to ask three questions. Number one is about India. Compared to five years ago, the India life insurance market stood at significantly bigger scale in terms of new business value. The Tata AIA Life showed 38% of new business value growth in first half. I was pretty surprised to see the scale and growth delta on the MDRT number at Tata AIA. I would ask the company's medium and long-term, the capital allocation and then also the business strategy in India, including the distribution channel. Second question is about the follow question about the capital side. Under the new solvency measure, the higher interest rate does not have a positive solvency sensitivity. I would ask that the solvency management and target solvency ratio on the macro stress scenario.
Also, the group leverage ratio moved up to 20% in first half. Any management guidance on the target leverage ratio should be appreciated. The last about the again the follow-up on the health strategy. It perhaps too early to make a comment relate to the business synergy under Amplify Health. I would love more about the business impact and the progress in detail relate to the customer acquisition, underwriting, and claim experience so far on the integrated health strategy and also the timeline to see those positive impact into the number disclosure, please.
Okay. Thanks. I think, Garth, India and also the capital.
Yeah yeah thanks I mean, we have a fantastic business in India. In fact, I was just there a few weeks ago, and I was really impressed by the way the economy is picking up. There's a lot of activity. I think out of the current environment, I think India is extremely well-placed, and looks set to grow strongly in terms of GDP. I'm very positive about India. I'm also very positive about our business there. We have a fantastic business, great management team. We've seen the business go from strength to strength. The last three years, it's been growing at sort of close to 40%, each of the last three years.
It's moved up now to a number four position, a solid number four position, and is pushing for number three in the market. We have a great joint venture with Tata. We work extremely well with them. It's a business that's built on a digital platform. You know, the margins in India are tight. And as such, we use technology to full advantage. We have a very strong agency force. We're number one in the protection business. We have a strong bank insurance distribution through various large banks, and partnerships with people like IndusInd Bank. We do a lot of business through HDFC and so on.
We sell a lot of business through the brokerage and the direct channel, through the PolicyBazaar, people like that. It's a very well-balanced, well-diversified business. It's a business that we'll continue to invest capital in, and we'll continue to look to grow strongly going forward. In terms of the LCSM ratio, I think the sensitivities, I should say, first of all, are very small from a very strong position. The negative you're seeing in terms of interest rates up is really in respect of the free surplus. You know, that $20.6 billion of free surplus is predominantly invested in bonds. You see the negative impact of that, but it's only a small variance anyway.
In terms of the leverage, I think that goes back to the earlier question, really from Charles. It's due to our accounting. The increase you see in the leverage ratio over the first six months is almost entirely due to the movement in the balance sheet, which is non-economic. If you looked at it on a more economic basis, you'd probably see a better picture that would be rectified to a large extent through IFRS 17 again. You know, our ratings are strong. We're very happy with our ratings, and they're important to us.
Okay. I will ask Leo to take the question on healthcare. Before that, I just reiterate that the way we see our integrated healthcare strategy, you know, significantly enhancing our core business. Secondly, that we are already the leading health insurer with significant presence in Asia in the health insurance space already. Leo.
Yeah thank you MW for your question. I think the core of the health strategy that we've presented and of Amplify Health is about this aspect of integration and the synergies between the components. If you think about Amplify Health, it is really about generating better outcome in the three pillars of our healthcare strategy through the levers that you've described, better customer acquisition, better underwriting outcomes, better claims outcomes. As we deploy the capabilities of Amplify Health through our business, we expect those gains to come through.
As we do this, we expect the synergies between the three pillars of our strategy to come through with the integration of not just health insurance, but integration with provision, with better closer partnerships with outpatient clinics in particular, and then the integration of those with better health management and health administration, which give us the ability to streamline pathways and journeys for our customers. The synergies will come through in that regard. Finally, as Lee Yuan Siong mentioned, the healthcare business allows us to engage with customers at times earlier in their lifetime because of the deep need for health insurance across Asia. We see customer acquisition as a very powerful lever of this healthcare strategy for our broader life insurance strategy.
Overall, this is how we'd expect the value to come through in this healthcare strategy. More accessible, affordable healthcare for our customers, which then enables us to better support our distribution partners, which then drives better sales, higher customer lifetime value, and higher VNB earnings and cash.
Okay thanks. Next question, please.
The next question comes from Michelle Ma of Citi. Michelle, please press the unmute button shown on your screen and ask your question.
Thank you. Thank you, management team, for giving me the opportunity. I also have three questions here. First, again, to follow up questions, primarily on the investment. In the P&L, we noticed there is $14 billion losses in terms of investment. If we zoom in and we look into the details in the disclosure, the Item 7. There is a $3 billion losses from debt securities. I'm wondering whether, you know, this loss is purely from high interest rate environment or we notice this is because of higher credit spreads resulting in the lower valuation of the debt securities.
For derivatives, $7 billion losses, I think previously it is explained that there is a mechanism, there's a protection mechanism here. Can you give us more, you know, color on this derivative losses, $7 billion? The second question is on other markets. In the financial report, there are some explanation about the situation in Australia and also New Zealand and also Vietnam. Looks like the IFA channel for Australia and New Zealand experienced some difficulties. It also sounded like, in the second quarter, Vietnam we have a very early signs of recovery of better recruitments.
How about, you know, the MBV momentum and the recovery situation in Vietnam as well? The last question is about Hong Kong. I think I noticed currently there is a very active promotion for Hong Kong market for a variety of products. I also purchased several of them myself. I noticed there's a very high margin for Hong Kong market in second half last year. How should we think about the margin trend in the Hong Kong market for the second half this year? Thank you very much.
Okay. I think Garth can take the investment question and maybe Leo, if you can give some color on Australia and New Zealand, Hardi on what's going on in Vietnam. In terms of Hong Kong, I hope that the policies that you bought are from AIA Now, as
Yes yes.
Jackie thank you very much. Ask Jackie to take that question. Yeah.
Yeah. On the balance sheet and so on, the question you raised about the debt securities, Michelle, that's mark to market through the fair value securities, and that's all to do with the movement in the market value through interest rates and credit spreads and so on changing. It doesn't reflect actual credit losses. Those were minimal in the whole thing. The key was that they're mark to market, really. On the derivatives, they're in the participating fund in Hong Kong, predominantly. Those derivatives are really there as part of our risk management for the participating fund.
With those derivatives in place, we can then have a greater investment freedom and produce greater returns for our shareholders with actually lower risk. What you see there is the proportion of the derivatives that flows through into the net profit through our current accounting basis. It's the shareholders' share of those losses. What you'll see is that we don't hedge accounting. When we go to IFRS 17, this will disappear. It's non-economic.
Good afternoon Michelle. It's Leo here. On your question regarding Australia, as you noted, VONB declined in the first half of the year. As you mentioned, it was primarily driven by our IFA channel, where, as a result of the pandemic and market trends over the past few years, we've seen a decline in the protection market. Our sales followed that decline in the market. We've also remained very disciplined with our pricing through that environment. That's also contributed to the decline in sales, which then resulted in an expense overrun. You know, at the same time, if we look at our position in New Zealand and in Australia, we're building a business for the long term in those markets.
We're very well-positioned with number one position in the market in new business sales in New Zealand as well as in Australia, with a very strong position in group in particular, with our Vitality capability differentiating us in the market. With investments in new capabilities, such as our MiWay Life digital product and AIA Financial Wellness, which allows us to target the underserved middle market in Australia. We're quite optimistic about the future of these businesses as we continue to deliver on the protection needs of currently 3.7 million Australians and more to come in the coming years.
Tan Hak Leh about on Vietnam.
Yes. Tan Hak Leh. Michelle Ma thanks for question. As you noted, Vietnam, the experience of decline VONB first half of this year compared to first half of last year, which was a very strong first half in 2021. Obviously, first half of last year, the performance wasn't affected by the very strict COVID restriction which came in only in August last year. Looking at the breakdown of the business, our partnership with VP Bank, the first half this year achieved a very strong VONB growth as well as ANP growth, supported by the significant improvement in productivity of the bank assurance specialist throughout the entire first half.
For the agency business, which is an important channel for us in Vietnam, the quarter one was somewhat affected by the restriction that kicked in August last year, but we are seeing a very strong quarter-on-quarter growth in second quarter this year. The strong momentum in recruitment and we also see, as the Omicron wave subsides in the first half this year, the overall recovery in activities across both channels. Overall, we believe that with the strong bancassurance partnership and strong recovery in agency momentum, we are optimistic about the future of Vietnam.
Yeah I was also recently in Vietnam in June. I can say that what I saw in Hanoi and Ho Chi Minh, the economic activity recovering very strongly. There's a lot of optimism and confidence in Vietnam. Yeah.
Thank you Michelle for being a customer of AIA Hong Kong. Firstly, I really want to say about the AIA Hong Kong's really resilient performance in the first half of this year. This first half is a challenging environment in Hong Kong. The Omicron outbreak, et cetera, and then the social distancing requirement restriction. AIA Hong Kong deliver growth in a VONB in this challenging environment and outperform many of our peers, listed insurance company with operation in Hong Kong and Macau. You looked at, you know, result announcement, we mentioned that the margin of AIA Hong Kong improve especially due to the participating product margin.
In fact, in Hong Kong, we always review our product, ensure that we have the competitive product meeting the customer need and also deliver a reasonable return to the shareholder and also ride on the existing or latest situation or economic situation, including AIA Hong Kong work very hard towards the early adoption of a risk-based capital. This help us to uplift the product competitiveness, et cetera. We're very happy that you know all this.
In fact, as we see that the COVID restriction situation in Hong Kong has relieved, AIA Hong Kong rolled out a very comprehensive product promotion for the customer in Hong Kong, and therefore also revitalize or motivate a lot of our agency force in Hong Kong. As you asked about what is our outlook in the second half, margin, et cetera, I have to repeatedly say that, yeah, we don't provide the forecast. As I said before, AIA Hong Kong continues to review product suite and ensure that we have the most relevant product proposition to meet today's customers needs and also deliver a reasonable return to shareholder.
The next question comes from Edwin Liu of CLSA. Edwin, please press the unmute button shown on your screen and ask your question.
Thanks for taking my question. Rest assured I won't ask any financial questions, being an accountant myself, but I do have three questions to follow up with questions asked by other analysts. Firstly, on the integrated health strategy, I think apart from Amplify Health, it seems to me that the partnership with outpatient clinics is also very important to this strategy. Could you please help me compare on this front how you will be able to outperform other Pan-Asian peers in terms of partnership with outpatient clinics? And also, in particular in Mainland China, how this strategy would work, because predominantly Mainland China is a public healthcare system. Second question is in terms of management responsibility. I understand there has been some redistribution of responsibilities among regional CEOs.
Could you share more color on this and your thinking behind this redistribution? Just finally on China Post Life, thanks for the additional details, but to me, I'm actually more interested in terms of your bancassurance with PSBC. I understand the partnership already started, so could you share more color in terms of the progress in terms of the bancassurance business with PSBC? If you can, how much percentage the contribution is in terms of your MP. Thank you.
I'd like to invite Stuart to explain about how we are collaborating with the provider networks across our markets. Yep.
Thanks Edwin and thank you Yuan Siong we believe that being able to exert greater influence and greater control at point of care is gonna be significant and instrumental in driving better customer journeys and outcomes. Today, we have networks of providers spanning Asia that are best in class. We believe that with the application of Amplify Health tools we can provide greater efficiencies, greater cost efficiencies, but also better patient outcomes that then serve as a virtuous circle to drive better pricing and better price optimization going forward. We recognize that clinics constitute a key gateway into the healthcare system. We need to exert greater influence.
We've said that we will selectively and discriminatingly assess opportunities to broaden our clinic networks and acquire as appropriate. We believe, as I've said, that this is fundamental to being able to have greater impact on customer journeys, which we believe need to be improved across the industry today. We think that Amplify Health data, analytics, steering capabilities will provide us with a sophisticated edge in the market that our peers don't possess. Regarding China, we would see the same opportunities and challenges given the marketplace there and the entrenched BMI system. We believe that medical cost optimization and the harmony of high quality care is by no means incompatible.
We think we can and we will align interests and incentives to have a very sustainable impact, at point of care going forward. Thank you.
On your second question, I think we obviously very saddened by what happened to Bill. We will always remember him. He was responsible for group distribution and a few markets and, you know, since then, we have made some adjustments. Briefly, I think how we have organized it, we've put life operations and technology together under our Chief Technology Officer, Biswa, so that our technology can better you know support our efforts in terms of improving customer experience and the buy, learn, service, claim journeys and all our digitalization efforts as well. In terms of the group distribution function, we have put the function under Jackie.
Jacky used to run group agency and corporate solutions as well. He's very experienced, and he's very knowledgeable and will provide strong leadership to the group distribution functions, as well as his responsibilities for AIA China, Hong Kong, Korea and Taiwan. We've put Australia and New Zealand and Indonesia and Philippines under the leadership of Leon, who's also in charge of group strategy. Finally, fourthly, I think we've grouped a few markets, the more established markets of Singapore, Malaysia and Thailand and also Vietnam, and the smaller markets of Cambodia, Myanmar and Sri Lanka under Tan Hak Leh's leadership. Tan Hak Leh has many years of experience.
As a Malaysian, he ran the Singapore business before. He ran the Thailand business before. Definitely well able to guide these business units. Tata AIA, I put it under Garth Jones's. Garth has, in addition to his, you know, his vast experience as a CFO, he used to be the CEO of CITIC-Prudential in China many years ago, and has a good experience in a fast-developing, emerging market environment, and is able to. I'm sure will be able to give guidance to our management team in Tata AIA, which is a joint venture with Tata Group then as well. So far, since we made all these changes, I think it has worked very well.
We support each other as a team, and so, I think, we've been driving, you know, all of our priority, strategic priorities, you know, and there's no delay or, you know, slowdown in any of these initiatives. Yeah. On CPL on the bancassurance with AIA and Postal Savings Bank of China. Yeah.
Yeah. Thank you for the question on bank insurance with PSBC. With the investment in CPL, we are very happy that we developed and continue to foster a good relationship with various levels with CPG and those at PSBC. Right now, as of now, we have already signed and executed bank insurance agreement with PSBC on certain branches in Shenzhen, Shanghai and Guangdong Province. We are hopeful that Jiangsu Province will soon be in. This is still early days in the bank insurance, and we are happy that we will continue to foster the relationship with various levels of CPG and PSBC. Hopefully, we will continue to gain more momentum and traction into this bank insurance opportunity with PSBC.
Thanks Jacky. I think we have one time for one final quick question. Let's
The last question comes from Leon Qi of Daiwa. Leon, please press the unmute button shown on your screen and ask your question.
Hi. Thanks management. This is Leon Qi from Daiwa. Thank you very much for giving me the opportunity to ask the last questions. I have three relatively quick questions. Firstly, on China. Well, overall, across the industry, the bank insurance is doing better than agency channel in mainland China. Understood our distribution channel is relatively agency-focused. In addition to China Post Life and Bank of East Asia, both of which obviously has been running in excellent way, do we have any plans to strengthen our bank insurance distribution under this such current industry backdrop? Secondly, I just wanna ask a detailed number on your claim experiences.
Understand that Thailand saw rising medical claims because of the private hospital treatment of COVID earlier in the year. I do notice that on page 19 of your presentation, at a group level, mortality and morbidity claim experiences actually was a quite positive number. First half of this year, it actually increased a little bit compared with last year. Wondering whether I'm right in reading these two numbers together. If that is the case, where are the other markets that we are actually seeing better claim experiences, given Thailand has obviously been deteriorating in that regard? Lastly, still coming back to your Amplify Health strategy.
I think overall, we've seen in many Western markets that the interaction between health management and health insurances has been very successful. There has been overwhelming success in the telemedicine area, in particular after COVID. In Asia, that kind of collaboration seems to be much less exciting, at least so far. In management view, what do you think is missing in Asia? In other words, what Amplify Health plans to narrow this gap, plans to avoid any pitfalls that currently exists in Asia? What is it or what is Amplify Health addressing the problem? Thank you very much.
Thanks Leon. When we're answering the questions can be quick, 'cause we're already running over time.
Yeah. Your first question on China bank insurance. Obviously, you know that AIA aims at delivering quality growth, and we really want to deliver value to both customer and also our shareholder. You know that right now, majority of the mainland China bank insurance is still deposit replacement product, short-term saving. In our AIA China strategy in bank insurance, we really want to do long-term protection and long-term saving. This is why, this is where we work, we really work hard with our bank partner. At the same time, besides BA and PSBC, as you mentioned, we also work with the private bank of the mainland China Bank, and they are very well received AIA China's value proposition of legacy planning and the long-term protection.
This is where we really want to play in the bank insurance market in China.
Yeah. On the claims side, very briefly, we saw, as you say, overall claims experience positive more than $200 million in the embedded value. In fact, we saw a positive claims experience overall in Thailand from all sorts of claims. When we look across the board, you'll see that other than Thailand, then, we've seen good experience right across all the other segments.
Very quickly on the third question. We see a lot of opportunity to integrate the three pillars of healthcare, empowered by, you know, digital data analytics and technology. Yeah.
Great. Thanks Lee Yuan Siong. Thanks, Leon Qi for the question. Thank you everybody for listening. Obviously, if you have any follow-ups, please do come through to us, Investor Relations, and we're always happy to help. Thank you very much.
Ladies and gentlemen, this concludes AIA's analyst briefing. Thank you for your participation.