AIA Group, Asia’s largest insurer, reported its best first-half profit in five years, as mainland Chinese customers continue buying policies in Hong Kong with an eye on better investment returns and as a hedge against a weakening yuan.
Net profit rose 53 per cent in the six months to June to US$3.31 billion, or 29.53 US cents per share, according to a filing to the Hong Kong stock exchange on Thursday. This exceeded analysts’ estimates of a 45 per cent increase in net profit to US$3.27. It was also the best first-half result since US$3.86 billion in the same period in 2019.
Operating profit after tax, excluding one-off items and valuation gains in the company’s investment portfolio, increased 7 per cent to US$3.39 billion.
AIA’s value of new business (VONB), an important measure of sales and future growth, surged 25 per cent to US$2.46 billion.
“We have achieved record new-business profit, significant earnings growth, strong free surplus generation and returned substantial capital to shareholders,” Lee Yuan Siong, CEO and president, said in the statement.
“AIA is exceptionally well-positioned to leverage the long-term structural growth opportunities in Asia, the most attractive region in the world for life and health insurance.”
He will meet the media to discuss the results at noon.
AIA’s shares rose 3.6 per cent to HK$53.25 on Thursday morning after the earnings announcement.
The Hong Kong-based insurer declared an interim dividend of HK$0.445 per share, an increase of 5.2 per cent from a year earlier. The company in April announced an additional US$2 billion worth of share buy-back, bringing the total to US$12 billion since March 2022.
Lee said the high dividend payment and buy-back reflects “AIA’s very strong financial position and confidence in our future operational and financial delivery”.
Hong Kong and China, which represent 62 per cent of AIA’s new business, both reported strong sales growth in the first half.
VONB in Hong Kong rose 26 per cent to US$858 million as mainlanders continued to buy products in the city for better returns and better health protection.
Mainland customers like to buy insurance policies in Hong Kong as the products are sold in US dollars or Hong Kong dollars. This helps hedge the risks against a falling yuan, which has weakened 13 per cent against the US dollar over the past two years.
In the first half, 21 million travellers visited Hong Kong, an increase of 64 per cent from a year earlier, according to data published by the Hong Kong Tourism Board. Two-thirds were from the mainland.
The insurer, which traces its roots to 1919 in Shanghai, continued expanding in mainland China, where its VONB increased by 36 per cent to US$782 million.
AIA’s three biggest markets in Southeast Asia all reported VONB growth in the first half. Singapore saw the biggest growth at 27 per cent, followed by Thailand and Malaysia at 16 per cent and 14 per cent, respectively. Its other markets in Asia grew by 9 per cent.
