By Prudence Ho
HONG KONG-- AIA Group Ltd.'s full-year profit rose 22%, lifted
by surprisingly strong growth in China.
AIA is the only wholly foreign-owned insurer in China, where it
reported the highest growth among its operating other markets,
posting 55% surge in new-business value last year, a measure of
insurers' profitability.
"The biggest positive surprises came from China," said in a
Goldman Sachs report after the result announcement.
The insurer cited strong growth in its number of agents, better
productivity and product changes for its China results.
Thailand, Singapore and Malaysia each saw double digital growth
in new-business value. That measure rose 32% in Hong Kong, which
remained the insurer's single biggest market, where it added $619
million in new business value last year.
"Urbanization, rising disposable incomes, relatively low levels
of social welfare and a rapidly-growing middle class continue to
provide enormous structural growth opportunities across our
markets," said Chief Executive Mark Tucker.
AIA, once part of U.S. insurer American International Group
Inc., operates in 17 markets across the Asia-Pacific region and has
become the region's largest life insurance network.
Equity gains also help lift the earnings of the life insurer
which recorded a net profit of $3.45 billion in the year ended of
November, up from $2.8 billion a year earlier. The result beat the
$3.2 billion estimate from analysts polled by Capital IQ.
AIA said its new-business value rose to a record $1.8 billion, a
24% jump from a year earlier. Annualized new premium sales--a
measure of new business activity--rose 11% to $3.7 billion.
Last year, the insurer started selling its products through
Citibank's Asia-Pacific retail branch network, known as a
bancassurance arrangement, a move that reduced its reliance on
sales agents. That boosted business growth in the insurer's main
markets such as Hong Kong and Singapore.
But AIA still mainly relies on sales agents to sell its
insurance products. Over the financial year of 2014, agency
business accounted for 72% of the insurer's total new business
value, while other partnership distribution channels, such as
bancassurance and direct marketing, accounted for the rest.
Analysts expect the benefits of the Citibank bancassurance
arrangement to start paying off in 2015.
AIA, which will increase its final dividend to 34 Hong Kong
cents per share, has continued to top estimates in recent years.
Its share price has soared since its initial public offering in
Hong Kong in October 2010, when former parent AIG sold around
two-thirds of its stake in the company to repay the U.S. government
bailout from the 2008 financial crisis. AIG sold all of its
remaining stake in AIA in 2012.
Write to Prudence Ho at prudence.ho@wsj.com
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