Value of new AIA businesses excluding Hong Kong up 14% in 3Q

The AIA Group has reported new business results for the third quarter of 2019, with value up 1% overall to $ 980 million and 14% higher excluding its Hong Kong operations. 

It said annualised new premiums (ANP) were lower by 8% at $ 1,444 million and the VONB margin was up 6.0 pps to 67.0% while total weighted premium income (TWPI) was up 8% to $ 8,168 million.

AIA’s Group Chief Executive and President Ng Keng Hooi said: “AIA has delivered growth in VONB to $ 980 million in a challenging operating environment, particularly in relation to current events in Hong Kong. Excluding Hong Kong, the Group’s VONB grew by 14% compared to the third quarter of 2018 with Mainland China continuing as our fastest growing market segment.

“I am optimistic about the long-term outlook for AIA given the structural drivers of growth for our business and our deep experience of successfully managing our business through different market cycles. Despite some headwinds, AIA’s markets across the region will benefit over the long term from increasing demand for our products driven by rapid growth in the middle-class population.

“We remain committed to delivering our brand promise and making a real and positive impact on people’s lives. We will do this by executing our clear strategic priorities and leveraging the quality and scale of our multi-channel distribution. AIA’s financial strength and market-leading brand provide reassurance for our customers as we help safeguard their future health and financial security. Our teams will continue to focus on delivering high-quality growth and generating long-term returns for our shareholders.”

VONB grew to $ 980 million, up by 1% compared to the third quarter of 2018. Growth from the proprietary agency and bancassurance channels was offset by a substantial decline in VONB through the retail IFA channel in Hong Kong. The Group’s VONB grew by 14% in the third quarter of 2019 excluding Hong Kong.

Its Hong Kong business reported double-digit reduction in VONB in the third quarter. Double-digit VONB growth from domestic customers was offset by a decline in VONB from Mainland Chinese visitors which broadly tracked the reduction in overall visitor arrivals to Hong Kong reported in July and August.

AIA’s wholly-owned operation in Mainland China continued to deliver very strong VONB growth and was its fastest-growing reportable market segment in the third quarter. AIA’s differentiated Premier Agency recruitment and training programs have supported a further increase in both new recruits and numbers of active agents. Early results from newly-opened sales and service centres in Tianjin and Shijiazhuang, Hebei have been encouraging and preparations are continuing in anticipation of potential further geographical expansion in due course.

AIA’s Thailand operation delivered growth from both its agency and partnership channels to generate solid overall VONB growth. Our ongoing agency transformation provided a further increase in active agent productivity and our partnership with Bangkok Bank Public Company Ltd. continued to make strong progress.

AIA’s business in Singapore reported unchanged VONB compared to the third quarter of 2018 as lower single premium business offset regular premium growth. In Malaysia, AIA delivered solid VONB growth, driven by growth from both its agency and partnership channels.

VONB growth from Other Markets was led by strong performances from businesses in the emerging ASEAN countries of Indonesia, the Philippines and Vietnam. AIA Australia reported lower VONB due to the timing of large group schemes, as previously reported. Excluding the impact of these large group schemes, Other Markets delivered double-digit growth in VONB compared to the third quarter of 2018.

Overall, ANP decreased by 8% compared with the third quarter of 2018 to $ 1,444 million. The VONB margin improved to 67.0%, up 6.0 pps, mainly driven by a positive shift in both product and geographical mix, operating assumption changes and the positive effect of a tax rule change that increased the tax deductibility of commissions in Mainland China. 

The margin reported on a present value of new business premium (PVNBP) basis increased to 12% from 10% in the third quarter of 2018. Long-term economic assumptions remain unchanged from those shown in AIA’s Annual Report 2018, following the same approach that it applied consistently for new quarterly business highlights. TWPI increased by 8% to $ 8,168 million, compared with the third quarter of 2018.

The Asian region continues to deliver solid economic growth, driven by economic diversity and supported by proactive macro policy actions. While global economic growth rates are expected to slow, the strong domestic drivers of demand and major demographic trends in Asia provide positive structural support for the long-term prospects of AIA’s business. Some of its markets are experiencing headwinds from the lower interest rate environment, falling consumer confidence and rising political and trade tensions. In particular, the reduced numbers of Mainland Chinese visitors to Hong Kong continue to affect sales. Despite this uncertain backdrop, the need for AIA’s insurance products will continue to grow over the long term, given low levels of private insurance penetration and social welfare coverage. AIA is uniquely positioned through its powerful distribution and product innovation to capture the enormous long-term opportunities in Asian life and health insurance.