AIA Group first-quarter new business value rises 36% y-o-y

[HONG KONG] AIA Group Ltd, the third-largest Asia-based insurer, said new business value jumped 36 per cent in the first quarter, beating analysts' estimates.

The measure of projected future profitability of new policies rose to US$578 million in the three months to Feb 29, from US$425 million a year earlier, the Hong Kong-based company said in a statement to the city's stock exchange Friday. That compared with the 18 per cent consensus growth estimate of analysts, according to an April 18 report by China International Capital Corp analyst Tang Bolun.

The life insurer that operates in 18 Asian markets kept the gauge growing at a time when China tightened rules to curb capital flight through insurance purchases in Hong Kong.

Money outflows from the country hit US$1 trillion last year, according to Bloomberg Intelligence, as its economy slowed, currency weakened and domestic stock markets wobbled.

Chinese visitors spent US$10 billion on insurance in Hong Kong in 2015, one per cent of the country's total capital outflows, Goldman Sachs Group Inc analysts led by Mancy Sun estimated in a March 14 report.

The Chinese government has since last year tightened scrutiny of its citizens' insurance purchases in Hong Kong, first by stricter enforcement of a US$5,000 per transaction ceiling for payments made through UnionPay cards and then by limiting purchases settled by electronic transfers.

AIA's first-quarter new business value may have been bolstered by previously hesitant Chinese visitors rushing to buy policies in Hong Kong as new restrictions loomed, driving sales, CICC's Mr Tang wrote.

About 80 per cent of the regular-premium policies that AIA's Hong Kong unit sold to Chinese visitors were below US$5,000 a year, the Goldman Sachs analysts wrote.

The insurer's annualized new premium increased 23 per cent to US$1.1 billion in the three months, according to the statement.

AIA's new business value would have jumped 44 per cent and its annualized new premium 31 per cent, should the currencies in which it collects premium income remained the same. Currencies in its markets depreciated by as much as 14 percent in the year to the end of February.

New business margin widened by 4.8 percentage points to 51.6 per cent.

The shares closed 2.9 per cent higher at HK$45.95 in Hong Kong on Thursday. The stock has fallen 10 per cent in the past year, compared with a 23 per cent decline in the benchmark Hang Seng Index.

BLOOMBERG