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INSURERS' PERFORMANCE

AIA's new business value rises 26% in Q1, beating estimate

Hong Kong

AIA Group Ltd, the second-largest Asia-Pacific insurer by market value, said its value of new business rose 26 per cent in the first quarter, as growth in China offset slowing Hong Kong sales.

The measure of estimated future profitability of new policies climbed to US$1.02 billion in the three months ended March 31, from US$811 million a year earlier, Hong Kong-based AIA said in a stock exchange filing on Friday.

That compares with an 18 per cent estimate by Morgan Stanley and Goldman Sachs Group Inc analysts.

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In other key figures: new-business margin widened 10.5 percentage points to 59.7 per cent as it sold more protection-type policies that are more profitable Annualised new premiums grew 4 per cent.

AIA is increasingly reliant on China to drive growth. In Hong Kong, AIA's biggest market, sales to mainland visitors have slowed since China introduced curbs to slow capital outflows, and a stronger domestic currency reduced incentives for residents to move assets offshore.

China was again its fastest-growing market in the quarter, AIA said in the statement, without giving numbers. China new business profitability, measured by new business value, has surged 12-fold from 2010 to 2017, lifting it to AIA's second-biggest market from fourth place.

The mainland is set to overtake Hong Kong as AIA's biggest market by new business value in three to five years, Goldman Sachs analysts wrote in an April 19 note.

That doesn't factor in any benefit from China's pledge to increase the cap on foreign ownership of insurers, they added. BLOOMBERG