AIA Singapore's H1 2016 operating net profit up 8% on growth in new business

AIA Singapore reported on Thursday that its operating net profit for the six months ended May 31, 2016 rose by 8 per cent to US$211 million from US$201 million from a year ago.

The value of new business (VONB) generated grew 10 per cent to US$152 million from US$142 million due to strong performances from its agency and bancassurance distribution channels. However, these were partly offset by slower single premium sales through the broker channel.

VONB margin increased by 8 percentage points (pps) to 71.1 per cent, with annualised new premiums (ANP) lower by 2 per cent following a shift towards regular premium business within the overall product mix.

Agency channel delivered more than 20 per cent VONB growth in the first half of 2016, while its strategic relationship with Citibank and increased engagement with bank partners in Singapore boosted its bancassurance business.

Its insurance business delivered "solid" VONB growth from individual protection sales to existing group scheme members and the higher VONB generated by its agency distribution compared to a year ago.

Overall, AIA Group - the world's second-largest life insurer by market value - reported a 37 percent rise in new business for the first half of the year, driven by strong sales in its key markets, Hong Kong and China.

The group's VONB surged 37 per cent to US$1.26 billion in the first half of 2016, up from US$959 million a year ago.

Operating net profit grew 14 percent US$1.96 billion, up from US$1.80 billion a year ago. However, its net profit - defined to include mark-to-market movements from equity and investment property portfolios - fell by 2 per cent to US$2.07 billion. This reflects the US$27 million in negative mark-to-market movements in equities and properties, compared with gains of US$409 million a year ago.

Looking ahead, AIA said while the global economic outlook remains increasingly unpredictable, domestic demand combined with proactive fiscal and monetary policy has continued to provide support to Asian economies amidst capital market volatility.

"We remain confident in the prospects for the group and our ability to generate further sustainable value..,'' AIA said.

The board has declared an interim dividend of 21.90 Hong Kong cents a share, up 17 per cent from a year ago.