AIA posts strong growth for 2017, value of new business up 28 percent

Boosted by sustained growth of new business in Hong Kong and the Chinese mainland, AIA Group Ltd on Tuesday announced that the company has delivered strong results for 2017, with double-digit growth across main financial metrics.

As the largest pan-Asian life insurer, AIA saw its operating profit after tax and embedded-value operating profit up by 16 percent and 19 percent, respectively, to reach US$4.64 billion and US$6.99 billion.

With a presence in 18 markets in Asia-Pacific, the insurance giant delivered diversified operating profit after tax growth across the region. The Chinese mainland recorded the fastest growth of 39 percent while Hong Kong was the largest contributor in terms of market segment.

Embedded value is a common valuation measure in the life insurance sector and it is the value of the company’s future profits plus its adjusted net asset value.

Value of new business, a key gauge of insurance company’s future profitability, increased by 28 percent to reach a new high of US$3.51 billion for the year ending on November 30, 2017, according to AIA’s filing to the Hong Kong Stock Exchange.

The Chinese mainland witnessed sustained quality outperformance in the past year, with a 60 percent growth in the value of new business from 2016 to 2017. The great success in the market came from the differentiated premier agency strategy, profitable partnerships, new products and rapidly growing customer base, AIA said.

During the same period, its annualized new premiums increased by 19 percent to US$6.09 billion, the company said.

The insurance giant also recorded robust cash flow and resilient capital position in the reported period, with a US$51.8-billion of embedded value equity and a US$4.52-billion of underlying free surplus generation.

Solvency ratio for the group stood at 443 percent in 2017, up from 404 percent in 2016, according to a presentation posted on its website. AIA said the resilience is underpinned by strong growth in retained earnings and positive mark-to-market movements on assets and reserves.

Thanks to its prudent investment portfolio and stable yield, the life insurer delivered US$7.09 billion in operating-profit investment return for 2017.

“With our deep roots and long history in Asia, we have aligned our growth strategy with the opportunities created by the unprecedented structural, economic, demographic and social changes taking place across our markets,” said Ng Keng Hooi, chief executive and president of the group.

He added that AIA’s extensive distribution reach, product innovation, trusted brand and outstanding people capabilities place the group in a unique position to help safeguard the financial security of consumers across the Asia-Pacific region.