Good morning, and a warm welcome to AIA's annual results presentation. I am delighted to report that AIA has delivered an excellent financial performance in 2024. We achieved double-digit growth across our key metrics for new business, earnings, and cash generation, demonstrating the benefits of our growth strategy. Let me now take you through the highlights. Value of new business was up by 18% to a record high of $4.7 billion, building on the strong momentum we have generated in previous years. EV equity increased to $71.6 billion, up by 9% per share, after returning $6.5 billion to shareholders. Operating profit after tax also reached a record high, up by 12% per share. Underlying free surplus generation, our key operating measure of cash generation, grew by 10% per share.
Following our capital management policy, the board has recommended an increase of 10% in the final dividend per share and announced a new share buyback of $1.6 billion. As you can see, we are delivering profitable new business growth, which is driving both strong earnings and cash flow generation. In this way, we create a virtuous circle, funding further capital investment in organic new business, growing our large stock of future earnings, and delivering cash returns to shareholders. Premier Agency is the main driver of profitable growth for the group, contributing 74% of our VONB. We have the world's leading agency, which has ranked number one globally by MDRT members for the last 10 years, and we hold the top position in nine markets. In 2024, Agency delivered 16% VONB growth, driven by higher activity and productivity, combined with an increase in VONB margin.
Recruitment was also up by 18%, with positive growth across the vast majority of our markets. These strong results are the direct outcome of AIA's Premier Agency strategy, designed to enhance both customer satisfaction and agent performance. We attract high-quality and motivated individuals, equipping them with extensive training and leading digital tools to support their long-term career growth with AIA. A highly professional agency enables AIA to advise sophisticated and affluent customers on their more complex needs, improving customer experience and increasing demand for our services. In turn, this attracts more high-caliber agents to join AIA, creating a self-reinforcing cycle, contributing to our industry leadership and delivering high-quality new business growth at attractive returns for shareholders. This is what sets AIA apart. Our fast-growing, profitable partnerships also present a valuable growth opportunity for AIA and our partners.
In 2024, VONB was up by 28% to $1.3 billion, driven by an excellent performance in bank assurance, which grew by 39%. We have a proven model of partnering with leading banks for the long term, reflecting the aligned growth ambitions of both partners. Integrating AIA's leading technology enables us to run advanced analytics models that better target customers, making our professional insurance specialists even more productive. In this way, we drive long-term regular premium business with attractive margins and returns. As a result, over the last three years, VONB through our bank assurance channel has more than doubled, with an increase in margin to more than 40%. AIA's extensive network of high-quality strategic partners significantly extends our reach, creating opportunities to engage with more than 100 million target customers across Asia, providing a growing source of profitable new business.
Our twin distribution engines drive growth across the group, and I will now take you through the highlights of our performance by market segment. AIA Hong Kong was again the largest contributor to the group's VONB in 2024, delivering a record $1.8 billion, up 23%. Demand was very strong across both domestic and mainland Chinese visitor customer segments, with broadly equal VONB contributions from each, reflecting our diversified and growing customer base. AIA's Premier Agency is the leader in Hong Kong and Macau, and our main source of new business in this market. The 23% increase in VONB from Agency was supported by both growth in active agents and higher productivity. New recruits were up by 16% as we add greater capacity to meet the growing demand for AIA's products and services.
Our agency also achieved strong sales from mainland Chinese visitors, with the fourth quarter recording the highest VONB since cross-border travel resumed in early 2023. VONB from our partnerships grew by 25%, following double-digit growth in our bancassurance as well as IFA and broker channels. Overall, the combination of our leading distribution platform and attractive products keeps us well-positioned for future growth in this important market. AIA China achieved 20% growth in VONB to over $1.2 billion, driven by higher volumes and profitability. Our ability to achieve substantial growth in a challenging local environment marked by low interest rates demonstrates the resilience of our strategy and the quality of our business model. AIA China's Premier Agency is the world leader in MDRT members and at the heart of our growth strategy.
Our agents are highly professional, with incomes double the industry average, enabling us to attract and retain the best candidates. As a result, new recruits grew by 18%, and active agent numbers increased by 9%, demonstrating the health of our business. AIA is uniquely focused on meeting the needs of middle-class and affluent customers in mainland China, with professional advice and high-quality personalized products. Long-term customer relationships help sustain full-time careers for our agents and, in turn, help more customers to achieve their protection, long-term savings, and retirement goals. This is demonstrated by our middle-class customers holding over six policies on average and a 9% increase in the number of new customers in 2024, providing additional future growth opportunities for our agency. Highly selective bancassurance partnerships accelerate AIA China's growth, and we delivered a significant uplift in new business and VONB margin in 2024.
This was achieved through our focus on meeting the needs of the most affluent customers with average case sizes above $20,000. Taken in combination with our world-leading Premier Agency, we have the right model to capture future value in this market. The high-quality new business that we are able to generate through our Premier Agency differentiates AIA in mainland China. We have a well-balanced product mix, with traditional protection delivering close to half of our agency VONB. Nearly all our agents sold a protection policy in 2024, and demand remains strong, with a 26% year-on-year VONB increase. Protection is an essential part of financial planning and provides an important source of diversified earnings. AIA also leads the market in tax-incentivized products targeted at affluent customers, and we broaden our range of products further during the year.
By repricing our long-term savings products, withdrawing certain products early, and shifting our focus towards participating products, we are proactively navigating the low-interest rate environment. In the first two months of the year, our agency has already successfully shifted the vast majority of our new business savings portfolio to PAR products, as shown here. These offer policyholders a higher expected return from a broader range of assets and are more resilient to interest rate movements. Our comprehensive suite of products, supported by a powerful ecosystem of value-added services and leveraging our distribution strength, enables us to deepen customer engagement, expand our potential customer base, and drive long-term growth. There is significant headroom for AIA to grow in mainland China.
We continue to deepen our reach within our established geographies of Beijing, Shanghai, Jiangsu, Guangdong, and Shenzhen, where just 3% of our target base of 140 million are existing AIA customers. Since 2019, we have established branches in five additional regions, bringing a further 100 million accessible customers within our reach. We are rapidly growing these operations, and in 2024, we launched three new major cities in Sichuan and Hubei provinces. As we replicate our Premier Agency model in these recently established geographies, growth remains strong, with VONB up by 27%. In the fourth quarter of 2024, we received approvals for four new branches in Anhui, Shandong, Chongqing, and Zhejiang. These add another 100 million to our addressable market, and all four regions have now received approval to commence operations.
As you can see, our geographical expansion has more than doubled our target customers to over 340 million across 14 geographies in mainland China. We are still in the early stages of replicating our platform, and I'm confident the AIA scalable model ensures that we will capitalize on growth opportunities while maintaining our business resilience through changing economic conditions. Turning now to ASEAN, where AIA is the leading life and health insurer. This region is an important growth engine and generated more than 1/3 of the group's VONB. In aggregate, ASEAN delivered over $1.7 billion of VONB in 2024, up 15%. Our performance was broad-based, with double-digit growth from Thailand, Singapore, and Malaysia, and the other ASEAN operations grew by 30%. Across ASEAN, AIA's powerful multi-channel distribution is exceptionally well-placed to meet the growing customer needs across the region.
We have the world's leading agency, and our long-term strategic partnerships are a key asset, helping AIA bridge the huge protection gap for a growing population of more than 600 million people. Finally, onto our joint venture in India, Tata AIA Life. As you will recall, new business in the first quarter of 2023 was distorted by strong sales ahead of personal tax changes. VONB was up by over 20% excluding the first quarter of 2024, and reported VONB growth was still positive with this tax effect. Our leading agency contributes more than half of our VONB, and we are the most productive in the market. We were again the number one MDRT company, and our focus on agency quality has delivered consistent outperformance compared with the industry. Our agency is complemented by high-quality bank and broker partners, extending our customer reach.
Through its multi-distribution platform, Tata AIA Life has cemented its position as the market leader in retail protection. We also rank number one for persistency, and we are the third-largest private life insurer in the industry. Our protection-focused strategy, quality distribution, and proven execution ensure that Tata AIA Life is well on its way to capturing India's vast potential. Today's excellent results are the outcome of executing a clear growth strategy that plays to our core strengths. We are uniquely positioned in Asia, the world's most dynamic insurance market and the fastest-growing region globally. Our focus is clear: capturing the immense opportunities from rising populations, increasing wealth, and an aging demographic with limited social welfare coverage. Despite strong economic expansion, private insurance remains low, driving an urgent and growing demand for quality life and health insurance.
AIA is at the forefront of meeting these evolving needs, backed by the right products, services, and distribution capabilities. In 2024, we welcomed over 2 million new customers to AIA, and repeat sales within our existing customer base grew by 15% as we continue to nurture long-term relationships through professional advice and best-in-class service. Our integrated product ecosystems are a key differentiator, empowering consumers to achieve their financial security, health, and wellness goals in ways that are more relevant, personalized, and impactful than ever before. At the core of our success is AIA's highly productive and growing distribution platform, bringing unrivaled expertise and a scalable way to address individual customer needs with compelling propositions. These strengths enable us to generate high-quality new business, deliver sustainable earnings growth, and generate strong surplus cash flows, creating long-term value for shareholders.
The execution of our strategy is powered by market-leading technology, digital capabilities, and advanced analytics that enhance efficiency, scalability, and customer engagement. Modern infrastructure, applications, and high automation accelerate the adoption of digital tools and emerging technologies, boosting productivity while strengthening risk management. Rich and structured data provides the foundation for deploying advanced analytics and AI, enabling better decision-making and deeper insights. Our investment in TDA has already achieved recurring expense and claims efficiencies of more than $180 million. Digital tools power our unrivaled distribution, expanding our reach and bringing high-quality advice and services across Asia. More than 21 million customers actively engage with AIA through digital channels, including AIA+, our flagship customer app, contributing to higher Net Promoter Scores. Amplify Health achieved major milestones in 2024, including the launch of AI-powered solutions, transforming health claims management, payment integrity, and provider management, reinforcing our integrated healthcare strategy.
AIA has invested heavily in foundational technology upgrades, process optimization, and data integrity, ensuring that as we integrate AI, it delivers maximum impact and seamless functionality across the business. I firmly believe that GenAI will reshape the future of insurance, achieving better outcomes for customers, agents, and our business. To date, we have already deployed over 50 use cases, and we are realizing significant gains in key parts of our operations. In distribution, our AI-driven training tool simulates real customer interactions, sharpening our agents' engagement skills and boosting productivity. In our contact centers, AI-powered copilots summarize customer inquiries, reducing response times by over 50% and streamlining service. GenAI document processing cuts review times in half, enhancing both customer satisfaction and operational efficiency. More than 3,000 software developers benefit from our proprietary software engineering AI platform, reducing development time by 55% and accelerating speed to market.
Our investment in GenAI is not just about operational efficiency; it's about delivering substantial benefits across the business, building on the significant claim savings and productivity uplifts already achieved through our TDA program. I'm confident that our continued expansion of GenAI will strengthen our market leadership and accelerate AIA's growth strategy in the years ahead. In closing, today's financial performance reiterates our confidence in AIA's strategy and business model. With our clear priorities and strong competitive advantages, we are well-placed to fully capture the immense opportunities ahead. Our excellent VONB growth builds on the momentum generated in prior years, with successive layers of profitable new business, growing our large stock of future earnings and delivering future cash to shareholders. AIA's enhanced capital management policy and OPAT per-share growth target introduced in 2024 reflect both our ambition and our proven ability to execute.
Importantly, our financial flexibility provides the resilience to navigate market challenges and support long-term value creation. I'm certain that AIA is exceptionally well-positioned to achieve our objectives in 2025 and beyond. Thank you.
Good morning, everyone. I'll now take you through the highlights of our financial performance. As you've heard, AIA has delivered an excellent set of results across growth, earnings, and capital and cash. VONB was up 18% to a record $4.7 billion. We drove EV operating profits of more than $10 billion and operating ROEV up to 14.9%. EV equity increased by 9% per share and ended the year at $71.6 billion after we returned $6.5 billion to shareholders. OPAT grew by 12% per share, supporting an increasing operating ROE of 130 basis points, and comprehensive equity of $87.6 billion was up 10% per share. UFSG, our key operating measure of cash generation, increased by 10% per share.
Given these excellent results, the board has recommended a 10% increase in the final dividend per share. The board has also announced a new share buyback of $1.6 billion following our capital management policy. This increased dividend and new share buyback reflects our confidence in the future prospects of the group. Let me now take you through more details, beginning with growth. Our excellent VONB performance, with 18% growth overall, was driven by double-digit increases across all of our reportable segments. Hong Kong delivered 23% VONB growth to a record $1.8 billion. AIA China was up 20% from growth in active agents, a step up in bank assurance VONB, and a 4.9 percentage point increase in VONB margin. I would remind you that in the first quarter of 2024, AIA China saw 38% growth, which is a very high comparative for the first quarter of this year.
As Yuan Siong mentioned, our agency has successfully shifted the vast majority of our new business savings portfolio to PAR products. While the reported VONB margin for PAR products is lower, they are more resilient to lower interest rates, and we expect AIA China's VONB margin to remain over 50% in the first quarter. Thailand grew VONB by 15% to $816 million, driven by both our market-leading agency and our strategic partnership with Bangkok Bank. AIA Singapore was also up by 15%, with strong performances across both our agency and partnership channels, while Malaysia was 10% higher. Other markets grew by 18% to $467 million, with all markets delivering positive growth and Tata AIA Life contributing more than a quarter of the total. Our new business generates attractive returns with an IRR on capital invested consistently above 20% and short payback periods.
We delivered improvements in new business capital efficiency and higher margins overall, supported by a more favorable product mix and repricing actions. Overall, PVNBP margin increased to 11%, and VONB margin grew to 54.5%. Our ability to write large-scale, high-quality, and profitable new business with a very attractive financial profile is a key differentiator for AIA and a major factor in our confidence in the group's future growth. EV operating profit per share grew by 19%. The increase in operating profit included $700 million of VONB above the 2023 level. Operating variances improved by $171 million, supported by disciplined expense control, improved persistency variances, and proactive medical business management. Since IPO, we have achieved positive operating variances every single year, and in total, these have added $4.1 billion to EV equity, demonstrating the ongoing prudence in our assumptions.
Together with a higher expected return that reflects higher U.S. interest rates, EV operating profit exceeded $10 billion for the first time. EV operating profit is a key driver of the increase in EV equity over the year and resulted in a 200 basis points increase in operating return on EV to 14.9%. Investment return variances were small, as favorable equity market movements broadly offset lower Chinese and Thai interest rates. Currency translation into a stronger US dollar for reporting purposes and other non-operating items reduced EV equity by $2 billion. After returns to shareholders through dividends and share buyback, EV equity finished the year at $71.6 billion, up 9% per share. A direct result of AIA's financial discipline is our resilience to market movements. As you can see on the left-hand side, embedded value sensitivities to equity and interest rate movements remained small for the group.
For AIA China, a further 50 basis point reduction in Chinese government bond yields is just a 0.8% reduction to the group EV. I'll now explain the prudence within our EV methodology, as it is important to understand some crucial differences when comparing with peers. First, we use actual yields to maturity on existing fixed income assets. This is in line with how we invest in practice, using an ALM-driven investment strategy and holding long-dated fixed income assets to match our insurance liabilities. The second difference is the treatment of new investments. Here, the assumed yield varies according to when the investment is made. We start at current spot market rates in year one and grade over many years to our ultimate long-term assumption. This approach is applied across each of our businesses. For example, new investments into 10-year Chinese government bonds started earning 1.68%, the current market spot yield.
Only by year 30 do we invest at our long-term assumption of 2.7%, and we've reduced this assumption by 80 basis points at the end of 2024. An important point to note is that after reflecting current market conditions and assumption changes and post-remittances to the group, AIA China's EV continued to grow in 2024. We believe this prudent and realistic approach sets AIA apart from the industry and provides confidence in the robustness of our VONB and embedded value. Now moving to IFRS earnings. Operating profit after tax was up 12% per share. The main driver of this was the 12% increase in the insurance service result. The CSM release was up by 7% to $5.6 billion, reflecting the compounding of large-scale, profitable new business each year. Operating variances improved by $172 million, benefiting from management actions on our medical business.
Adjusting for the impact of the share buyback, the net investment result increased by 6% on an underlying basis. Other revenue and expenses, including finance costs, remain broadly stable compared with 2023. Overall, operating margin remained strong at 16%. The contractual service margin represents our stock of expected future IFRS earnings. This growth in CSM came from $7.7 billion added by new business and $2.8 billion from expected return on in-force. The CSM release rate was stable at 9.4%, with the resulting CSM release up by 7%, providing a $5.6 billion contribution to OPAT. Variance in and others were mainly driven by the effect of higher U.S. interest rates on our Hong Kong participating business and some modeling refinements. Exchange rates reflect the strengthening of our US dollar reporting currency relative to Asian currencies. Ending CSM was $56.2 billion, with a strong underlying growth rate of 9.1%.
Shareholders allocated equity remained broadly flat over the year, as $6.5 billion in returns to shareholders balanced out our strong net profit. Higher OPAT helped drive a 130 basis points increase in operating ROE to 14.8%. Net profit was slightly higher than OPAT at $6.8 billion, with a small impact from non-operating items. Comprehensive equity, which provides a more economic view of equity by including net CSM, increased to $87.6 billion, up by 10% per share. I have great confidence that we are on track to achieve our earnings target. As I said earlier, the strong new business performance in 2024 builds on the momentum from prior years and adds another substantial layer of recurring earnings to our enforce business and the CSM. Underlying CSM growth after the release into earnings was 9.1%.
Combined with our effective management of the in-force portfolio, this supported strong growth in the insurance service result and OPAT per share, both up 12%. We've made an excellent start towards our three-year OPAT per share growth target. Our confidence in delivering this target is underpinned by our strong business fundamentals, consistent execution, and financial discipline. Finally, turning to capital and cash. UFSG is our key operating measure of cash generation after tax and is shown before reinvestment in new business and central costs. There are four components that make up UFSG. First, $4.3 billion of expected distributable earnings from our large in-force book that delivers recurring releases year-on-year. Next is the expected return on assets backing free surplus and medium-term notes, which added $1.4 billion. Third, the addition of new business further diversifies our in-force portfolio, leading to a reduction in reserves and required capital.
This item recurs each year and increased broadly in line with VONB growth. Other operating variances improved by more than $350 million compared to 2023 levels due to effective management of our in-force business. Overall, UFSG grew to $6.3 billion, up 10% per share in 2024. Over the next 10 years, our large in-force portfolio is expected to generate close to $47 billion of distributable earnings before allowing for any future new business. During 2024, the profitable new business we added supported an increase in the 10-year total of $3.7 billion. Since these projections are consistent with EV, they already reflect current market spot yields in mainland China. The key driver of future UFSG growth is successive cohorts of profitable new business adding to our large in-force book.
You can see this on the right of the slide, as layers of profitable new business compound over time to drive UFSG growth. This is why VONB growth is such an important focus for AIA. The group's financial position remained very strong, with free surplus increasing by 19% over the year to $19 billion before returns to shareholders. We reinvested $1.5 billion of UFSG into profitable new business, up by 17%. After deducting central costs, net free surplus generation was $4 billion. Investment return variances and other non-operating items include interest rate and foreign exchange movements, as well as changes to regulatory capital requirements in South Korea. After returning $6.5 billion of capital to shareholders, closing free surplus was $12.6 billion. This is the first year that we have applied our enhanced capital management policy.
The annual payout target based on net free surplus generation amounts to $3 billion for 2024. Based on our excellent financial performance, the board has declared a 10% increase in the final dividend per share, which results in total dividends of $2.4 billion for the year. This leaves a balance of $600 million in the form of share buyback. Following a review of our capital position, the board has announced an additional $1 billion share buyback. In aggregate, this will result in $4 billion return to shareholders in respect of 2024's financial results. Our enhanced capital management policy introduced a shareholder view of the group's capital. Shareholder total capital resources comprises free surplus plus eligible debt and required capital, as stated in our EV report. Required capital includes the prescribed capital levels for our various businesses as set out by our regulators.
Allowing for the new share buyback announced today, the pro forma free surplus was $10.3 billion, and shareholder capital ratio was 223% at the 31st of December, comfortably above 200%. AIA's financial discipline and commitment to shareholder value creation set us apart. Our prudent, sustainable, and progressive dividend policy has seen total dividend per share increase progressively over time to more than 5x the 2011 level. Through proactive capital management, we have returned $12 billion in the form of share buyback since March 2022, reducing the share count by 11.7%. Over 2022 to 2024, through our capital management actions and dividends, we've returned a total of $18.2 billion. In summary, the group delivered an excellent financial performance in 2024, with double-digit growth in our key financial metrics.
EV equity of $71.6 billion was up by 9% per share after returning $6.5 billion to shareholders, powered by VONB growth of 18%. Our performance in 2024 and AIA's unparalleled competitive advantages provide us with confidence in meeting our OPAT per share growth target. Operating returns increased, with ROEV up to 14.9% and ROE up to 14.8%. Our capital management policy delivers a total yield of 6%, with a 10% increase in the final dividend per share and a new $1.6 billion share buyback. There are substantial opportunities for AIA to continue to deliver attractive returns for shareholders well into the future, and I have every confidence that we will do so. Thank you.
Good morning from AIA Central in Hong Kong, and welcome to our 2024 Annual Results Analyst Briefing. I'm Lance Burbidge, Chief Investor Relations Officer.
Together with me on stage, we have Lee Yuan Siong, our Group Chief Executive and President, Garth Jones, our Chief Financial Officer, and our Regional Chief Executives, Jacky Chan, Fisher Zhang, Hak Leh Tan, and Leo Grepin. Last but not least, our Group Technology Officer, Bisw a Misra. We also have the other members of our Group Executive Committee with us in the room. With that, we will now begin our Q&A session. If you want to ask a question, please make sure that you are logged into the Zoom call. Operator, over to you.
Ladies and gentlemen, if you wish to ask a question, 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, and our first question comes from Charles Zhou of UBS Securities.
Morning, Charles.
Charles, please press the unmute button shown on your screen and ask your questions.
Okay, thanks. This is Charles Zhou from UBS. Hi, good morning, everyone. Congratulations. I think it's a very good result, as expected, and OPAT is also well on track. I have three questions. First is about China. The reported value of new business growth was 20% last year. On a like-for-like basis, what's the growth rate? Is this significantly higher? Also, with the strong growth in the past two years, what would be the sustainability? I also noticed that you obtained four new licenses last year versus your target of about one to two licenses per year. What is the pace going forward? The second question, I want to talk about the technology.
I think Yuan Siong just mentioned about that one during the presentation. What is your technology, especially AI, CapEx, over the past three to five years, and how much will be your investment for the next three to five years? I think Yuan Siong mentioned about the AI use case. Is that 50? Can you maybe elaborate this a little bit? Can you maybe also quantify the financial outcome and the ROI for the tech investment? Lastly, the question is for, I have a question for Garth. I know your shareholder capital ratio is 236% at the end of last year. I remember you showed a shareholder capital ratio of 242% pro forma in the first half results after the $3.1 billion buyback. I think the actual buyback in the second half of last year was smaller than $3.1 billion.
Also, the equity market was doing well in China and Thailand. What is causing this lower-than-expected ratio? I also noticed the required capital increased very rapidly, I think 12% half-on-half. What's the reason? What caused this reduced free surplus? Thank you.
Thank you, Charles, for your three very probing questions. First, on China. China is a huge growth opportunity for AIA, and we are uniquely positioned to capture this opportunity. Our headroom for growth in our original five geographies, the new provincial operations, and future new provinces is tremendous. Our differentiated model ensures that we are best placed to service the needs of affluent families in major cities, and the demand for our products and services remains robust. I will hand over to Fisher, who's here with us today, to elaborate.
Thank you, Yuan Siong.
I think, Charles, regarding the like-for-like basis, I think, as you expected, it will be significantly higher than the current reporting basis, 20%. That is the answer for the first question. You're talking about the growth potential. I think Yuan Siong has pointed out we are quite confident in the long-term growth. Let me elaborate a little bit about the HR channel. For agency, as you can see from the result, our growth momentum, recruitment momentum is very good. The number of recruits increased by 18%, and the number of activity agents increased by 9%. I think it's quite sustainable. Normally, the recruitment is driven by three key things. If we do not talk about the supply, actually, the supply of the very good quality talent in mainland China is not an issue.
The demand side, I think, is mainly driven by three key factors: the willingness of the leader, the capability of the leader, and the confidence of the leader. For the willingness of a leader, I think we have a very young, energetic leader group. Our average age of the leader is only early 40. That is a very demanding group. Secondly, for the capability of the leader, I think we are quite capable, leveraging our leading digital platform. As for the confidence of the leader, we give a very special focus on the new agent development. We have additional resources, additional capability building up for the new agent group. The new agent development, the quality has gradually backed to the pre-COVID level. In summary, we think our Premier Agency is well positioned in this market and has lots of the growth potential for AIA China.
As for the bank insurance, I think our model is a highly selective model. We cooperate with a selected partner, focusing on the affluent and high net worth segment, leveraging our digital capability and also the customer relationship management capability. I think so far, we have built a lot of new innovation in this channel. We have seen early success, but it's still at an early stage. I'm sure it has a very high growth potential. That is about the two channels. I am very confident we can deliver long-term sustainable growth. For the expansion, we are very pleased to have four new licenses in this year. I think there are a couple of factors. Number one, this is a good demonstration of the government's high-quality opening up. Number two, this is also the demonstration of the government's high recognition of AIA China.
I also want to point out, in 2023, there is a suspension in the approval of the new provincial license and also the sub-branch in a certain period. I think that's also one of the reasons we can have four new licenses in 2024. Our expectation of the expansion remains unchanged: one to two new provincial licenses per year.
Yeah, thank you, Fisher. On your second question about technology and digital analytics, I recall that in my first term, we invested close to $1 billion in TDA, over and above normal technology spend. We delivered a cloud-based, modernized, scalable, highly digital, and data-rich technology platform. The investment has paid dividends and delivered material benefits, as we have reported previously. It is also essential for our next phase, which is to leverage AI and other new emerging technologies to transform our business.
I'm excited about the potential benefits we can unlock through the use of this technology. I'll hand over to Biswa to elaborate.
Yeah, thank you. Good morning, Charles, and thank you for the question. Firstly, I'm happy and excited about how our significant TDA investments over the last four years have helped transform our business. Our cloud adoption today is at 90%. Straight-through processing, over 85%. Same-day turnaround of transactions, over 85%. The data richness and data availability has grown tenfold over the last four years. We have delivered more than 330 analytics use cases over this period. All of this has also powered digital adoption of our platforms. Today, we have 21 million members who are using our digital platforms. As a result of all this, we have provided excellent experience to our consumers, customers, and distribution.
Our number one NPS ranking in multiple markets, our average in-app rating for agents who use our platforms, which is 4.7 on 5, are a testament to the deliberate focus that we have put on providing the world-class experience using our powerful technology. On efficiency, we are realizing annual benefits to the tune of $180 million on claims and operational efficiencies. As a result of this, our unit costs over a period of last four years have significantly reduced to the tune of 43%. This robust cloud infrastructure, high level of automation, performing platforms, and huge quality data set that we have sets us up to use the immense potential that generative AI presents. We moved seamlessly to the use of generative AI last year. Today, I'm going to be delivering more than 50 use cases.
I'm just going to walk you through four select use cases, which will give you an idea of the breadth of usage of generative AI within AIA and the different facets of our business that we are looking to address using this potential power. The first one, we have used the Alibaba LLM to launch a personalized training tool for agents, which simulates customer interaction scenarios, enhancing the agent's customer engagement skills, and initial results show an uplift of 10 points on assessment scores for the agents who are using this tool. We have implemented customer servicing Copilot using OpenAI LLM, which helps our customer services representatives answer queries seamlessly and summarize interactions, and we have seen a decrease in 50% in wrap-up times. We have also the third example.
We have implemented an extraction solution for medical documents using, again, OpenAI LLM, saving up to 55% time for claims assessors and underwriters while analyzing the documents that come through. Last but not least, which is quite fascinating and useful, I mean, this is the DeepSeek revolution that we all are on the cusp of. Actually, we have been using this since March of 2024, the earlier versions of DeepSeek. We have developed a proprietary software engineering platform using the earlier versions of DeepSeek and now migrated to R3, which significantly reduces our coding time, code review time, by up to 55%. You can imagine, Yuan Siong touched upon our massive investments on TDA.
A lot of this, the workhorse of a lot of these systems and platforms that we have placed in over the years, is a result of these significant benefits that we are seeing from these platforms. As you can see through this sprinkling of examples, our approach to implementing generative AI spans across new business, underwriting, claims, and software development, and many other areas. Over the next three years, a significant part of our technology investment will be focused on embedding generative AI across all aspects of our business and help us scale our business further. Thank you.
Thank you, Biswa, on capital. Previously, we have clearly communicated our capital management framework. We have acted in accordance with this framework. Since 2022, we have returned over $18 billion to shareholders and bought back more than 11% of outstanding shares. We will continue to implement this framework. On your detailed questions, I'll hand over to Garth.
Yeah, thanks, Yuan Siong. Yeah, thank you, Charles. Good morning. Clearly, the biggest change in the shareholder capital ratio was the buyback program that reduced the ratio by 38 points. That was the most significant. The rest of it was largely due to the required capital increase, as you noted. More than half of that is due to the increased new business, and the increase there was proportionate. That is part of it. Obviously, on that new business, we are getting returns of over 20%. It remains a very attractive investment. There is some, in the second half compared with the first half, there are some forex and interest rate differences that come through. That is probably where your numbers are a little different.
Okay, thanks, Garth. Does that answer your questions, hopefully, Charles?
The next question comes from MW Kim of JP Morgan. MW, please press the unmute button shown on your screen and ask your question.
Good morning, everyone. This is MW Kim at JP Morgan. Congratulations on the good result. Thank you for taking my question. I have three questions. Firstly, under the company's enhanced capital management policy, I guess net free surplus generation has become a more important metric to wider stakeholders. Do you have any plans to adjust the weighting of short-term management KPIs to place a greater emphasis on the net free surplus generation? Secondly, the Hong Kong business continues to perform strongly. Could you elaborate on the potential implications of new guidance related to the other powers in Hong Kong, including GL34, both for the industry and the company? Lastly, it appears that the India business is doing very well.
However, we still lack separate disclosure for this segment. When can you expect to see the separate disclosure for the India operation, even without the composite license progress, please?
Okay, thank you, MW On the question of net free surplus generation, net free surplus generation is UFSG-less new business investment. Clearly, in terms of new business investment, because of the attractive returns that we can generate from new business, clearly, I think our shareholders would appreciate if we invest more and more, even more in new business. The metric that we reflect in our incentive schemes is the UFSG for each year. The UFSG metric is actually in the STI, which is the short-term incentive program, and also incorporated in the LTI of the management. That shows the emphasis that we place on UFSG, and that is very aligned with the interests of shareholders.
Garth, do you want to add anything?
No, I think you covered it well, Yuan Siong.
Okay, now on Hong Kong, I think in Hong Kong, we are the most respected insurance brand in Hong Kong. Our loyal customer base stays with us through their lifetimes because of the trust they have in our professional agents and the advice they get from our professional agency force. Our primary agents in Hong Kong, we are the most professional. We have been MDRT for 22 years already. In 2024, we delivered very strong growth, both in the domestic and MCV segments. I will hand over to Jacky to elaborate.
Yeah, I am very pleased to report that AIA Hong Kong and Macau delivered a set of excellent results in the year 2024.
We're on VONB growth by 23%, and it is a broad-based growth across both the agency channel and the partnership distribution channel, and also broad-based growth across both domestic customer segment and the mainland Chinese visitor customer segment. As you know, AIA Hong Kong has been very innovative in rolling out leading innovative long-term protection and long-term saving products for our customers. Most of the products sold in the Hong Kong market, they are participating products. You mentioned two recent guidance notes from the Insurance Authority. In fact, AIA Hong Kong, we are very supportive of those guidance notes. On the first one, it is about PAR product illustration guidelines, and it puts a cap on HKD PAR product on the IRR to the customer at 6%. Non-HKD product, the cap is 6.5%.
We are supportive, and we believe a healthy competition in the market actually is beneficial to the customer. This power guideline product will be well implemented, effective July 1st. We believe it has no major impact to the business. In fact, as Hong Kong is selling majority US dollar product, we invest globally. Our product in Hong Kong remains very attractive with very flexible features and benefits to both domestic and MCV customers. As to the second guidance note, which you mentioned, is GL34. In fact, AIA Hong Kong has been employing a very robust power product management policy well before this issuance of the guideline GL34. We have clearly identified and also segregated asset investment for power product. We have been doing this for years, and we have a robust ALM on the power product.
We have also a very robust dividend and bonus declaration policy over the years. We put policyholder reasonable expectation in a very important principle in our policy. We always keep our customers a very fair treatment of our customers. Over the years, our participating product dividend bonus performance ratio has been on average between 90%-110%. We are well positioned to implement this GL34.
On your third question, I think I just remind you we have a diversified pan-Asian platform, and our key growth markets are the best markets for life and health insurance, offering ample growth headroom at attractive new business returns. Our portfolio of businesses is well balanced with Hong Kong, which is US dollar-based, as Jacky mentioned, contributing 1/3, mainland China, one-quarter, Southeast Asia, 35%, and India is growing rapidly. I'll hand over to Leo to talk about India.
Yes, good morning, MW As you've mentioned, we're very pleased with the performance of Tata AIA. As you know, we've got a tremendous partnership with Tata Sons, and that partnership has delivered very strong performance. Last year, we delivered growth in both ANP and VONB. If you look at the last two-year CAGR growth, Tata AIA delivered over 20% over that period in both ANP and VONB. That now places us as the third largest private insurer in India. That's on the back of a strong strategy with multi-distribution channel distribution. In particular, we've got a strong focus on our agency distribution, which is now the number one MDRT agency in the country. That's also complemented with very strong partnership distribution, where we are associated with the highest quality banks and brokers in the country.
We're very pleased with that performance in terms of growth, but we've also got a very strong focus on quality. We've been focused on protection in particular, and we now rank number one in the country in terms of retail sum assured across both public and private insurance companies. That's also resulted in very high persistency, where we have the leading persistency in the country across four of five persistency cohorts. As you can see, and as you've highlighted, very strong performance for Tata AIA, and we've got great confidence in the performance of that business going forward.
Okay, thanks. Next question, please.
The next question comes from Thomas Wang of Goldman Sachs. Thomas, please press the unmute button shown on your screen and ask your question.
Hi, morning. This is Thomas here. Thank you for taking my questions. A couple of questions.
I think firstly, if I can just follow up on that free surplus generation, there's a $1.3 billion negative investment return variance on other items. I think there's a few drivers that mentioned Hong Kong MPF with Korea and China rates. Is it possible to give a little bit more color in terms of what the size of each of those factors that are contributing to this $1.3 billion negative variance item? The second question, if I'm looking forward to 2025 VONB growth, just thinking about how you calculate your VONB, this is mainly for mainland China. My understanding is that the bond yield at December 31st will be used in the 2025, at least part of the 2025 VONB. Just how should we think about that? Is that going to be a headwind to VONB growth just because of the way it's calculated? Thank you.
Okay, Garth, you want to take the first question?
Yeah, thanks, Thomas. Yeah, on the free surplus, there's a reduction because of the Chinese and Thai interest rates. That's about $1.5 billion. The equities performance was strong, actually. The strong equity performance was about $500 million the other way. There were the regulatory changes in Korea. They updated the ICS factors. That's about $200 million. There are some FX effects, which is the balance.
Okay, on your question about the China VONB growth, before I hand over to Fisher, I just again reiterate that China presents a huge opportunity for AIA. I've elaborated just now. I think any short-term headwinds should be looked at in the context of the huge opportunity for growth in the long term that we have in China.
Yeah, thanks, Yuan Siong.
Good morning, Thomas. I think as Yuan Siong pointed out, we are very confident in the long-term sustainable growth. I think our Premier Agency force, our target segment at the middle class and affluent, our leading digital technology, and also the geography expansion opportunity, I think AIA China is well placed to capture the growth opportunity in mainland China. Considering the low interest rate, we have revised the assumption for the 2025 VONB. We also proactively repriced our product and shifted our long-term saving to the participating product. I think with all of this, although there are some margin pressure, we are still very confident in our growth driver, growth potential, our unique agency, and also the complementary bancassurance growth potential. Thank you.
Thanks, Thomas. Any follow-ups on those? No? Okay, next question, please.
The next question comes from Richard Xu of Morgan Stanley.
Richard, please press the unmute button shown on your screen and ask your question.
Hi, I think it's come through to me.
Oh, it's Kailesh.
Hi, Richard. Can you hear me okay?
Yes, we can hear you.
Yeah, hi, Richard Xu from Morgan Stanley. A couple of questions. First of all, on China, it seems like the VONB growth has slowed a little bit based on our calculation. Obviously, there's probably a number of impacts in fourth quarter. Just wondering whether there's any breakdown or details on some of the basically fourth quarter trends in China. Going forward, obviously, there are a lot of opportunities, but just want to see if any of the headwinds are still going to be persistent in first quarter. When do we expect some improvement from that on China? Secondly, maybe on Hong Kong a little bit.
There's any guidance on the competitive landscape at the moment? Obviously, AIA has continued to be doing well in Hong Kong, but competition continues to increase. What are some of the outlooks on maybe pricing as well as competitive landscape for Hong Kong in 2025? Thank you.
Okay, Fisher?
Okay. Thanks, Yuan Siong. Talking about the last year, the fourth quarter, the second half, I think from the reporting basis, you may notice it's a bit lower. I think a couple of factors. Firstly, it's because in 2023, there was a surge of business because of the first round of the PII card. But in 2024, we early withdrew the product, trying to avoid those unhealthy five sales. Okay.
Secondly, it's also because last year, the bancassurance contributed a lot to the growth, but mainly it comes in the first half, which is in line with the market practice. Thirdly, I think very importantly, in the second half, especially the fourth quarter, we shifted our focus to the customer acquisition, to the recruitment, and very importantly, to train the agent, sell more participating products, shift more to the power development. I think that's a key reason. Another reason is also we use a reported basis. If like a for-like basis, it would be more positive, and it will look much better. That is about the fourth quarter in the last year. As for this year, the first quarter, as usual, we launched the Jump Start in last November. Also, we began to receive the premium in January.
I think for agency, the momentum is quite good. We maintain the good momentum in both sales and recruitment. I think we maintain our well-balanced product strategy. We try to, our strategy actually is to fulfill the customer needs at a different life stage. We sell protection, we sell the tax incentive, the product, and also the long-term saving. In the Jump Start stage, our top priority is still trying to shift more to participant product in the long-term saving. So far, the momentum is quite good. For bancassurance, we saw the increased competition in the market because of relaxation of the one, two, three, and also the increased emphasis from the competitors in the bancassurance. Please note, we always said we are not managing the business quarter by quarter. We manage the business in the long-term view.
As we said, we have full confidence in the long-term potential of the China market, and we think AIA China is well positioned to capture the great opportunity in mainland China. We have full confidence in delivering the long-term sustainable growth. Thank you.
Okay, thank you, Fisher.
Richard, on your question on Hong Kong competition, this is a really competitive market, but I have to say AIA always welcomes competition if it really works out beneficial to the customer. Therefore, at the same time, AIA always employs some financial discipline. Let me address this conversation through the channel lens. Because in AIA, we always are very proud of our Premier Agency. AIA Hong Kong and Macau is a good example. We are MDRT number one in the last 22 years out of 24 years. We have very high-quality agents.
You see our MCV business growth since the border reopened. It grows quarter by quarter. Our premier well-trained professional agency force is a key differentiation for AIA Hong Kong to address the competition issue. Our partnership channel also grows 25% in year 2024. We have very good exclusive bank partners, Citibank and BEA , both of them actually achieved very excellent growth in the last year. The IFA/ broker channel might be the channel that is more open to competition because it is not proprietary. You see, we also deliver double-digit growth in our IFA/ broker channel in last year, while it is very competitive in the broker channel. AIA, as I said, we really want to write quality sustainable business. Therefore, we partner with selected brokers who really align with our way of quality business.
We launched a more stringent compliance requirement in writing MCV business from the broker channel. Those IFA/ brokers partner with us, they employ, implement the same to ensure a quality business going forward. We continue to employ our financial discipline in driving sustainable quality business, while, yes, there is competition. We continue to innovate our product and services, etc.
Thanks, Jacky. You got any follow-ups there, Richard? No? I'm kind of guessing the next question is probably Kailesh.
Yes, the next question comes from Kailesh Mistry of HSBC. Kailesh, please unmute yourself and ask your questions.
Hi, good morning, everyone. Thanks for taking my questions. Second time lucky, I guess. First one is on slide 31. Within the UFSG roll forward, there's a negative variance of $127 million. I think there was a positive $310 million in the first half. Just wanted to understand what's happened there.
Second question is on required capital. Just to follow up from Charles's question. In your model, is it fair to say that you assume a required capital growth rate of around 5%-6% given 13% growth this year, half of which was new business, half was market movements, basically? If you could confirm that. Third question is on the medical provision. How much of the $400 million is remaining at the end of this year? The last one, just coming back to Hong Kong, if I may, some of my sort of colleagues internally and also some of the clients are very excited about the Hong Kong offshore market, in particular the wealth management flows, etc.
Could you just talk about the type of business you're willing to not do and the business that you are razor-focused on, I guess, to sort of cover that point? Thank you.
Okay, thank you. Garth, can you take the first three questions and thank you.
Yeah, I believe the $1.3 billion, Kailesh, is mainly due to the interest rate movements in equities, as I described earlier. They impact the free surplus more than the embedded value because you have the dollar for dollar and the free surplus, and then that money comes back, the required capital comes back. It is the time value of money that you see in the embedded value. The second question was?
On UFSG.
Oh, the 5%-6%. I think that depends on the reserves, but typically, they would be around that level.
Some of that is the business that is participating and so on. It's not just the guaranteed parts of the reserves and so on. You have the diversification benefit as well coming in, of course. I think you can sort of project that out based on the past history. That will give you a good idea about how that will move.
On the fourth, I would look at these things on an annual basis rather than on a first half or second half split. There's some seasonality in the way things emerge, particularly in UFSG.
Yeah. That diversification benefit, really, you can see that's roughly proportionate to the new business. No surprise. The $400 million. The question is about the required capital or required capital growth.
Oh, the required capital growth, again, was due to the we said it was due to the new business increase that you saw. The majority was due to the new business increase. Some of it was due to Forex and interest rate movements, but the majority was due to the increase in the new business. Yeah.
The third question is on medical provision.
Yeah. The medical provisions, we've used a substantial amount of the medical provisions. So you saw that the experience, the variance has improved over the year. It was broadly in line with what we expected. We did keep some back for Thailand, where we saw an extended flu season, and a little bit for Malaysia, given the regulatory movements there. The majority of it has been used as we expected and is broadly in line with our expectations when we set the provision up.
Jacky?
Yeah.
Hong Kong office here is an international financial hub. Of course, the wealth management business in Hong Kong is flourishing. Many high-net-worth customers come to Hong Kong. In fact, AIA pioneered to launch our club elder, and we established a high-net-worth wealth center and also a wellness center for our customers. It is both a health and a wellness. Right now, we really are doing a lot of high-net-worth business, but we are only using onshore policies, meaning those policies are usually by AIA in Hong Kong. We continue to have our options open to reveal the development of this high-net-worth market. Also, let me remind you, in fact, Singapore is also one of the major financial hubs in Asia. In Singapore, we are also writing a lot of high-end policies.
Kailesh, did Garth address your three questions on UFSG, required capital, and the medical provision? If not, you want to follow up?
Yeah, just one outstanding on slide 31. I think it's the fourth column along the - $0.1 billion. That was the one that was +$0.3 billion at the first half, just trying to understand what moved in the second half there.
Yeah, I think that was my point that I was trying to say. Maybe I wasn't clear enough that you should look at this more on an annual basis rather than a because there's things like expenses that are quite seasonal between the first and the second half. We tend to have a positive expense variance in the first half that turned negative in the second half. Quite a lot of that is actually that happening.
If you look at it more over the year, that gives you a better impression as to what has been happening. The + 355 year-on-year is more about the improvement in managing the claims.
Okay, thank you.
Next question, please.
The next question comes from Michelle Ma from Citi. Michelle, please press the unmute button shown on your screen and ask your question.
Good morning, Michelle.
Hey, can you hear me?
Yeah. Hi, Michelle.
Hi, hi, hi. This is Michelle from Citi. I have three questions. The first on China, China again. It's nice to have another four new licenses last year. I wonder, this is kind of a non-COVID period, new license. Just wonder how will we handle those new regions differently to build up the team.
Because we noticed AIA China actually started to hire some top managers, top agents from some competitors. Just wondering, this time, anything different to build up a new branch? This is the first question. The second question is on the way of thinking shareholders' view of capital, because in the presentation, we basically have a static view. We deduct the newly announced share buyback from last year's capital position. Just wondering whether this is too conservative because the new buyback will actually be conducted in 2025, and there will be new free surplus generation in 2025. If we just use the end of the 2024 position to think about the capital position, it will be very low, like 223. If we also consider the new generation during 2025, it should be much higher.
Should we think about the shareholders' capital from a more dynamic way? That's my second question to discuss with the management team. The third question is on the total shareholders' return. I think we already offer a very generous shareholders' return, $ 600 million already completed in buyback year to date, $ 1.6 billion newly added, and another $ 2.4 billion in terms of the dividend. My question is, given currently the valuation, the trading valuation is already above 1x PEV, should we consider actually more dividend from here and less buyback, given some domestic funds, especially Southbound funds, most of them, they value the dividend yield as a critical threshold for stock picking. If we all do it in the form of the dividend, that will bring our dividend yield like 5.5%, which is really attractive.
Yeah, I just want to discuss the format of shareholders' return to hear about management thought. Thank you.
Okay, thank you, Michelle, for your question. China and why it might not surprise. Now, I want to just start off by saying that myself and actually the whole group board of directors are very pleased with the fact that we received approvals for four new provinces in October last year. And also for the fact that we received the approval to launch all four provinces within the first quarter of 2025. I think that is really in record time. We are very pleased with the local team led by Fisher in delivering this excellent result for us. Just a reminder that since 2019, we have expanded our geography in China from five geographies, Beijing, Shanghai, Jiangsu, Guangdong, and Shenzhen, now to 14 geographies.
We are definitely very excited about opportunities there in China. I will hand over to Fisher to talk about how we are progressing when it comes to new operations.
Okay, thanks, Ms. Shanghai. Morning, Michelle. As Ms. Shanghai said, we are very pleased to get the four new licenses. As you said, there was some disruption in the COVID period, but after the COVID period, we saw very good progress in the new five regions. Normally, for the expansion, we think there are three key success factors. The first one is a proven business model, which is our Premier Agency. I think we have quite a lot of success stories and accumulated very good experience in the past years. Actually, we can leverage our current very high-quality agency force.
Just to give you some color, like in Zhejiang, quite a lot of our agency leaders in Jiangsu and Shanghai are willing to refer their friends in Zhejiang. And some of them are actually from Zhejiang. They can consider to relocate back to Zhejiang. I think we are quite confident in this business model. We can definitely replicate the success in the new regions. The second success factor is a scalable operating model. Since subsidization in 2020, we have established two shared service offices in Guangdong and in Jiangsu. They are working very well to support the nationwide operation. In AIA China, we have leading digital technology. I think that is very helpful. The third one is a key, actually, is the talents. We need to have enough talent to fit our culture, understand our model, following our operating principle.
I think that's a key for the success. Since 2019, we have already built a solid pipeline of the talents. I think combine all these three key success factors, and also we have accumulated very good experience in the past years for the five established new branches. We are very confident we can ensure the long-term success of the new builds. By the way, we are also very strategic and disciplined in the pace of the development. We need to ensure the initial step, the first batch of the leaders and agents are very solid. I think they are key for the future success. That's a quick introduction of our expansion.
Yeah. On your two questions around capital and shareholder return, we have communicated our capital management framework. We are implementing it. We've returned significant amounts of capital to shareholders over the past three years.
We've improved our metrics significantly. Our return on equity has increased significantly now, close to 15%. We have also increased our final dividend per share to 10%. I'll hand over to Garth.
Yeah, thanks, Michelle. I think when you look at our, we set out the capital management policy, Michelle, as you know, and we target to return 75% of net free surplus generation. I think the other element of this really is the prudent, sustainable, progressive dividend policy that we have. You saw, again, a substantial increase in the final dividend, 10% increase. I think it's also important to remember that we've increased the dividend during COVID. You can see that progressively over the years, we've increased the dividend. It's not just about the level, it's the prospects for future growth in that dividend that I think are also very important.
In terms of the yield, quite rightly you say 6%, and we think that's a very compelling proposition for shareholders. In terms of the shareholder capital ratio, as we set out in the capital management policy, we expect that that will reduce progressively over time due to the 75% of net free surplus generation, plus anything addition that we add above that. You saw the additional $1 billion of buyback that we announced today, making $1.6 billion in total. We see tremendous growth opportunities for the business. Fisher has outlined the growth opportunities in China, but we have growth opportunities right across the portfolio. We saw that in the results in ASEAN, for example, very strong growth, and in India. We think that the prospects are very good, and we don't want the business to ever be constrained in terms of its organic growth in particular.
There is a slide in the appendix.
I do not know if you will go to that. Yeah, I was going to say, I think this also goes back to one of Charles's questions on the movement in the shareholder capital ratio. We understand that it is hard to see, perhaps, from some of the disclosures. Slide 57 gives you the numerator and the denominator movement. This hopefully confirms what we said earlier in terms of it is actually the new business growth, the $1.3 billion you can see in terms of the required capital at the bottom, and that you would expect to continue. Do not forget that we hold currently 236% of it. It gets multiplied in terms of how it impacts on the shareholder capital ratio. The generation of in-force capital is more than sufficient to cover that growth, as you can see.
That may be helpful in terms of understanding. You can see that investment variance in other, which includes the interest rate movement and the FX across the year. Hopefully that will answer more of your questions in terms of the movement, but come back to me in investor relations if you want any more on it. Hopefully that gets all of your questions, Michelle.
Okay. Also on the format of the buyback versus the dividend.
I think importantly, Michelle, is that we've targeted 75% of net free surplus generation. You've seen the dividend increase by 10%. As I said, we increased the dividend during COVID at a faster rate than OPAT growth. I think it's not only about the level of dividend, it's also the prospects for future growth in the dividend that are important.
Then we also have the additional buyback to top up. In some ways, looking at 75% of net free surplus generation may be a more appropriate way to look at it.
Okay, next question, please.
The next question comes from Michael Chang of CGSI Securities. Michael, please press the unmute button shown on your screen and ask your question.
Hi, thanks for giving me the opportunity to ask questions. I've got a few questions on my side. Firstly, appreciate the buyback program, $1.6 billion. Taking a look at some of your peers, maybe investors are a bit greedy here. Some of your peers have announced reinsurance or potential spinoffs to return more capital to shareholders. Capital management is clearly the flavor of the month.
I was actually wondering on a slightly different topic for leverage ratios, because subdebt actually is a component, or tier two debt is a component of your capital. What are your target leverage ratios? In terms of your credit rating, how much are you willing to expand that? Whether, say, if you were to do more on that front, whether more capital could be returned to shareholders. Second question is, while I appreciate that you do have a very strong confidence on the long-term outlook for mainland China, I think it's fair to say that a lot of the global investors, of which AIA does have a fairly high mix of shareholders, some of them are probably a bit more uncertain about the outlook.
As AIA did in the first quarter and the second quarter last year, which investors highly appreciated based on the share price reaction, would management feel confident about, say, giving more clarity into the future, into the future by giving outlook statements or at least targets, say, like new business CSM growth rates or VONB growth rates, like some of your peers do, because that will actually help reduce the uncertainty. The third one is possibly on the new business CSM, because that grew by 11% year-on-year on a CER basis. VONB was up 18% year-on-year. Now, we do appreciate that, obviously, these are different metrics. One is accounting, one is actual, different things that go into it, tax, critical illness, and so on.
Trying to actually understand why has it been consistently slower over the last one to two years compared to the VONB growth? How should we think about it, say, if interest rates move or given where your product mix is shifting, say, in the case of mainland China, more towards PAR? Does that mean we should, under such a situation, given those assumptions, therefore expect slower new business CSM versus VONB? Maybe just lastly, I think it was asked by Thomas indirectly just now, but insofar that Garth did say that 1 Q, very strong growth in mainland China last year, so take that into account when considering the near-term prospects for mainland China. Hong Kong also showed high growth, but it was only seemingly only mainland China that was singled out as having a high base.
One thing that's different about mainland China is the assumption changes. I know that AIA will not disclose like for like, but in terms of setting expectations, how should we think about the assumption changes and how it by itself just impacts FY 2025 growth numbers for VONB? Thanks a lot.
Okay, I think if I can summarize your first three questions, I think your first question is about target leverage ratio. Your second question is about whether we should be giving new business growth targets. Your third question is about the trajectory of NB CSM growth. I'll just hand over to Garth to talk about it.
Yeah, thanks. Thanks, Michael. On leverage, clearly, we look at ways that we can optimize returns for shareholders on a long-term basis. We do look at our capital management.
We look at the structure of the balance sheet and so on, and we look to continue to optimize our balance sheet. We do have capacity and financial flexibility from the debt capacity we have. Clearly, if you look at our leverage ratios within our ratings, we could increase our leverage. That also gives us great flexibility, and we're very comfortable with the ratings where they are. We continue to look at that on an ongoing basis. In terms of the new business CSM and so on, I think you should remember that the group business has a different CSM from the individual business because it's one-year business and so on. That goes in the PAA profits. We would broadly expect that they move in line with each other over time.
I think if you look at our target of 9%-11% growth that we expect to meet or beat, particularly given the excellent performance in 2024, there is a level of new business CSM growth that you might expect within that. In terms of China, the margin in China, we highlighted the strong new business growth in China in Q1 last year. In Q1 last year, China was around 40% of the value of new business. As was said earlier, we will be using our revised economic assumptions for China going into Q1, and that will have an impact on margin. We do expect our margins to be above 50% overall for Q1. Hopefully that gives you enough guidance.
Yeah, and again, I'd like to reiterate my point at the beginning that while any short-term headwinds, we should really look at it in the context of the tremendous growth opportunity that we see for AIA in mainland China over the medium and long term.
Does that get all of those questions, Michael?
Thanks a lot.
Great, thank you. Next question. I think maybe the last question.
Yes, the last question comes from Michael Li of BofA Securities. Michael, please press the unmute button shown on your screen and ask your questions.
Thank you. This is Michael Li from Bank of America Securities. Thank you for giving me this chance to ask for the last questions. Three questions from me. The first question is about ASEAN markets. We saw strong margin in Thailand. We saw strong volume growth in Singapore.
Could you talk about your strategy on some other markets in ASEAN countries, whether you could follow the example of Thailand or the example of Singapore to boost the VONB growth in 2025 or 2026? Second question is about India. We saw the news about Tata AIA Life is not keen to get listed in India. Any rationale you could explain to investors why you make this decision? The third question is about the long-term outlook of the company growth. Some investors say that AIA now is a 10% company, so everything is about 10% growth, OPAT, EV before, buyback, EPS. Any kind of game changers or drivers that could make AIA a 15% growth in the next five years? Thank you.
Thank you for your question on ASEAN. I'll hand over to Hak Leh to talk about the opportunities in ASEAN.
Thank you, Yuan Siong. Thanks, Michael, for the question. AIA Thailand continues to achieve excellent growth. In 2024, we achieved 15% VONB growth, supported by both our agency and bancassurance channel. As you're probably aware, we are the clear market leader in Thailand. We are number one in most major product lines, number one unit-linked, critical illness, health, corporate solution, and overall protection business. Because our focus is on protection business, we are able to sustain the high margin while delivering valuable solutions to our customers. Our agency force is our single biggest distribution channel. Agency force grew by 17% last year, both in productivity gains as well as headcount. The growth of agency force in Thailand was supported by the excellent contribution from our financial advisor program, where the number of new recruits of FA increased by 21%.
We have been able to obtain number one MDRT position in Thailand every year since IPO. In addition, we also saw very strong growth from our strategic partner, Bangkok Bank, largely from the success of our more segmented approach in serving the large and diverse market segment of Bangkok Bank. With our strong track record of execution in Thailand, as well as our market-leading distribution channel proposition and digital platform, we believe AIA Thailand is well placed to continue to grow into the future. Singapore, in 2024, achieved 15% growth, supported by both agency and partnership channel. Our strategic focus in the wealth opportunity in Singapore contributed to very strong growth in long-term savings products in Singapore. However, our overall product mix remained diverse. Traditional product is our largest and growing product segment, accounting for about 41% of our VONB.
The sales momentum in Singapore continued throughout the year, which more than offset the lower overall portfolio margin. In Singapore, we continue to grow our agency force very strongly. The number of new active recruits grew by 15%. We are number one MDRT in Singapore for 10 years. Our focus on the affluent and high-level segment through our partnership distribution has yielded very strong growth in 2024. We also retain our clear market-leading position in the corporate solution business. As you can see, in each market, we always strive to deliver the best solution to the respective segment. In Singapore, we are seeing a lot more growth from the wealth segment, which has generated a huge increase in ANP. While the margin has gone down in 2024, the VONB continues to grow very strongly.
Whereas in Thailand, the opportunity for protection, especially critical illness, life protection, and health protection remains extremely strong. That continues to support the significantly higher VONB margin that we have in Thailand.
In short, I think it really reflects our very customer-focused approach to our propositions development in our markets. Leo, Tata AIA?
Good morning, Michael. On your question on India, what I would say simply is, obviously, we will not comment on market rumors. As you know, we have got an outstanding partnership with Tata Sons that has delivered very strong performance for our joint venture, Tata AIA. The partners are consistently reviewing all of our options to maximize shareholder value. We will continue to do so in the future.
Yeah, on your final question regarding the growth prospects of AIA, I will take this question.
As I said, we are in the best region for life and health insurance globally. I think there's no better region to be in for life and health insurance than in the markets that we currently operate in. We are also the best positioned with our quality sales force, our very differentiated model to capture the growth opportunities in this region. I really don't see that we are a 10% growth company.
Thank you.
Thanks, Yuan Siong.
Thank you.
Thanks, Michael. Thanks for everybody who participated on the call and for your questions. If you have any follow-ups, obviously, come through to investor relations during the day. I think we'll see some of you later on today. Thank you very much.
Ladies and gentlemen, this concludes AIA's 2024 annual result Q&A section. Thank you for your participation.