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AIA Singapore posts rise in operating profit after tax but lower VONB and ANP

Friday, February 24, 2017 - 10:39

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Insurer AIA Singapore has reported a 6 per cent year-on-year rise in operating profit after tax to US$453 million for the full year as at end-November 2016, on a constant exchange rate basis.

INSURER AIA Singapore has reported a 6 per cent year-on-year rise in operating profit after tax to US$453 million for the full year as at end-November 2016, on a constant exchange rate basis.

For FY16, value of new business (VONB) generated, a measure of expected profits from new premiums, fell 7 per cent to US$316 million, even as VONB from regular premium business grew 16 per cent year on year.

The insurer said that growth in its new regular premium business was offset by lower single premium sales through the broker channel - a reflection of its approach to managing product mix through proactive pricing actions and lower overall market sales to deliver growth over the long term.

VONB margin went up 1.4 percentage points to 74.1 per cent in FY16.

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Annualised new premiums (ANP), used to measure new business sales, was 9 per cent lower at US$427 million.

Total weighted premium income (TWPI), a gauge of the insurer's longer-term business volumes, remained flat in 2016 to US$2.28 billion.

"We delivered double-digit growth in agency VONB from increased active agent numbers and higher productivity in terms of ANP per active agent. Our efforts were supported by the high adoption rate of iPoS (interactive point of sales) and the enhanced capabilities of iMO (intreative mobile office), including providing customers with on-the-spot underwriting decisions. Approximately 80 per cent of new business applications in Singapore were submitted through iPoS in 2016," AIA Singapore said.

At the group level, the Hong Kong-listed insurer declared a final dividend of 63.75 Hong Kong cents, up 25 per cent, bringing the total dividend for the year to 85.65 Hong Kong cents per share, up 23 per cent.

Full year net profit jumped 55 per cent to S$4.16 billion. Lifted by its Hong Kong operations, VONB rose 28 per cent to US$2.75 billion, but VONB margin came in at 52.8 per cent, down by 1.3 percentage points. ANP rose 31 per cent year on year to US$5.12 billion.

Mark Tucker, the group chief executive and president, said that the group has achieved record new business profits, significant earnings growth, strong free surplus generation and a step up in shareholder dividends.

"Asian macroeconomic fundamentals remain resilient, and continue to deliver strong growth supported by domestic drivers of demand," he said, adding that emerging Asia "remains one of the most well-positioned regions in the global economy, and has demonstrated proven abilities over the past eight years to withstand continued volatility arising from political uncertainty in the United States and Europe".

Mr Tucker added that Asia's powerful structural economic, social and demographic changes taking place across the region present an unparalleled opportunity for the Asian life insurance industry.

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