AIA Group reported strong revenue growth and policy sales in the first half, thanks to mainland Chinese customers crossing into Hong Kong after the border reopening in search of better investment returns and protection against the yuan depreciation.
Net profit rose 50% in the six months to June to US$2.25 billion (HK$17.6 billion), or 19.39 US cents per share, according to an exchange filing on Thursday. Operating profit after tax increased 0.2% to US$3.27 billion. The insurer adopted the new IFR17 accounting standards for insurance business this year, and adjusted the comparison figure a year earlier.
AIA’s value of new business (VONB), an important measure of sales and future growth, surged 37% to US$2 billion, beating the 29% estimate by Nomura. Income from investments rose 9% to US$1.72 billion, aided by a more stable capital market.
“With the pandemic disruption behind us, the strength of AIA’s unrivalled distribution platform across Asia has powered a return to very strong new business momentum,” CEO and president Lee Yuan Siong said in results media briefing. “All of our reportable segments and distribution channels delivered higher VONB.”
AIA’s improved showing marked an ongoing recovery for many businesses that were affected by the border closure from 2020 to earlier this year. The strong VONB growth came on the back of a 6% increase in the second half, after Hong Kong relaxed its inbound travel restrictions.
In the first half, 13 million travellers visited Hong Kong, including more than 10 million mainland Chinese, according to data published by the Hong Kong government.
AIA grew its business through some acquisitions, spending HK$2.2 billion (US$280 million) on health insurer Blue Cross (Asia-Pacific) a year ago, and HK$5.07 billion on BEA Life in March 2021. It also spent CNY12 billion (US$1.86 billion) to buy a 25% stake in China Post Life Insurance in mid-2021.
“We are happy with the performance of [the new business from] the three acquisitions and partnership with Bank of East Asia both in Hong Kong and in mainland China. They have actually performed better than our expectations,” Mr Lee said.
Mr Lee said AIA has a US$16.3 billion surplus which could support future expansion.