27 February 2017 11:03 am Views - 1145
REUTERS: AIA Group Ltd, the world’s third-largest life insurer by market value, said on Friday new business rose 28 percent in 2016, buoyed by strong customer demand in its main markets in China and Hong Kong.
Value of new business rose to US $ 2.75 billion for the year ended November 30, from US $ 2.20 billion the previous year, the company said in a statement. The category measures expected profit from new premiums and is a key indicator of growth.
Annualised new premiums rose 32 percent to US $ 5.12 billion in 2016.
The insurer’s value of new business in Hong Kong grew by 42 percent in 2016, driven by higher demand from its local clients as well as increased purchases from mainland Chinese customers, it said.
The Hong Kong life insurance market has seen very strong demand from customers in mainland China in the last one year, with many looking for better products and overseas investment opportunities to cushion the impact of a weakening yuan.
In the first nine months of 2016, mainland Chinese visitors contributed to 37 percent of total regular first-year premiums sold in Hong Kong, compared with 22 percent in the same period a year ago, according to brokerage Daiwa Capital Markets.
This resulted in Chinese authorities tightening norms for such purchases to curb capital outflows. In the latest move, use of China’s hugely popular UnionPay cards to pay for saving-type insurance products was prohibited in October.
While insurance analysts have said there were other ways for mainland Chinese buyers to pay for insurance purchases in Hong Kong, worries about more regulatory tightening measures to curb such purchases have weighed on investor sentiment.
Shares in AIA dropped 15 percent in the December quarter and were down 6 percent for 2016. It was their first annual decline since the insurer’s market debut in Hong Kong in 2010.
China and Hong Kong together accounted for about half of new business growth globally at AIA, which was originally founded in Shanghai nearly 100 years ago and was the first foreign insurer to obtain a licence in China.
AIA’s other major markets include Thailand, Singapore, and Malaysia - the Southeast Asian countries that have become a battleground for foreign insurers attracted by the region’s lower insurance penetration levels.
The company said it would pay dividends of 63.75 Hong Kong cents per share to shareholders, an increase of 25 percent.
Operating profit after tax rose 15 percent to US $ 3.98 billion.
AIA also announced the setting up of an internal asset management company based in Singapore, which will provide services to investment teams across the region.