Virus-infected new business decline in 2020 for insurance giant
The pandemic has taken a toll on pan-Asian life insurance giant AIA Group, resulting in a sharp decline in new business last year, according to the company's financial reports.
Affected by COVID-19 containment measures, the insurer saw the value of new business (VONB), a key financial metric that predicts future profitability of new policies, decline to US$2.76 billion, down 33 percent from 2019.
AIA's annualized new premiums, a gauge of new business sales, dropped by 20 percent to US$5.21 billion during the reporting period.
In 2020, the VONB for agency businesses, which accounted for more than two-thirds of the company's total new business value, declined 28 percent as movement controls restricted in-person meetings, an AIA official said.
Meanwhile, insurance products sold by banks also declined by double digits in terms of VONB.
After-tax operating profits for the year, however, increased 5 percent to US$5.94 billion.
AIA China became the largest contributor to the company's VONB in 2020, although the Chinese market registered a 17 percent decrease in new business value from a year earlier.
The slump on the Chinese mainland market was primarily due to limited new sales during the initial outbreak of COVID-19 in the first quarter of 2020.
As movement controls eased, new business momentum swiftly improved, an AIA official said, adding the China market has delivered a successful start to 2021, with very strong VONB growth in the first two months.
Last year, AIA China obtained regulatory approval and completed the conversion of its Shanghai branch to become the first entirely foreign-owned life insurance subsidiary on the Chinese mainland.
It has also received regulatory approval to open its newest branch in Sichuan Province.
“AIA has a unique opportunity on the Chinese mainland with enormous growth potential in both our existing footprint and new locations,” said Lee Yuan Siong, AIA’s group chief executive and president.