- New business rose to US$2.27 billion in the first half, lifted by sales in its main markets of mainland China and Hong Kong
- New business conducted in Hong Kong rose 19 per cent, while sales of new policies jumped 34 per cent in mainland China
AIA Group, the world's second-largest insurer by value, posted a 20 per cent rise in new business for the first half of the year, bolstered by sales of insurance policies to mainland Chinese customers.
New business rose to US$2.27 billion in the first six months, from US$1.95 billion in the same period last year, lifted by sales in its main markets of mainland China and Hong Kong, according to a filing to the Hong Kong stock exchange. Net profit more than doubled to US$3.86 billion, beating a Bloomberg estimate, while operating profit rose 11 per cent to US$4.5 billion during the period.
As much as 40 per cent of the insurer's business comes from Hong Kong, while 15 per cent comes from China, according to Bloomberg data. New business conducted in Hong Kong rose 19 per cent, while sales of new policies jumped 34 per cent in mainland China.
"China was our fastest growing market segment with excellent growth," AIA Group's chief executive and president Ng Keng Hooi said, highlighting the opening of new sales centres in the northern Chinese cities of Tianjin, Shijiazhuang, and in Hebei province. "While we are not immune to market volatility, our diversified, robust and high-quality business model continues to place AIA in an advantaged position in the Asian life insurance markets where growth fundamentals remain resilient."
The gains in new business were in line with expectations by Bloomberg Intelligence analyst Steven Lam, who predicted new business value to increase by between 15 and 20 per cent, led by strong momentum in Hong Kong and mainland China.
AIA's results cap a strong first half for Hong Kong's insurance industry, where sales of life and medical insurance policies to mainland Chinese policyholders rose 8 per cent in the first three months to HK$12.77 billion (US$1.63 billion).
The second half of the year may be a different matter, as street rallies against an unpopular extradition bill turned increasingly violent, disrupting transport links and deterring visitors from mainland China. Chinese insurance buyers prefer the broader policy choices available offshore, and often use Hong Kong dollar-denominated policies as currency hedges against a deteriorating yuan.
"The recent uncertainties in Hong Kong has raised investor concerns over new business sales, particularly the MCV (mainland Chinese visitor) business," wrote Credit Suisse's head of China insurance and fintech research Charles Zhou. "Our discussions with local agents suggests July sales may be affects, as many (mainland Chinese visitors) postpone (or) cancel Hong Kong trips".
Still, AIA's long term demand by mainland Chinese visitors would be "resilient, as long as Hong Kong maintains its special status and insurance ordinance," Zhou said.
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