AIA Group First-Quarter New Business Value Rises 36% on Yearby
The measure rose to $578 million compared with $425 million
Chinese may have rushed to buy new policies in Hong Kong
AIA Group Ltd., the third-largest Asia-based insurer, said new business value jumped 36 percent in the first quarter, beating analysts’ estimates.
The measure of projected future profitability of new policies rose to $578 million in the three months to Feb. 29, from $425 million a year earlier, the Hong Kong-based company said in a statement to the city’s stock exchange Friday. That compared with the 18 percent consensus growth estimate of analysts, according to an April 18 report by China International Capital Corp. analyst Tang Bolun.
The life insurer that operates in 18 Asian markets kept the gauge growing at a time when China tightened rules to curb capital flight through insurance purchases in Hong Kong. Money outflows from the country hit $1 trillion last year, according to Bloomberg Intelligence, as its economy slowed, currency weakened and domestic stock markets wobbled.
Chinese visitors spent $10 billion on insurance in Hong Kong in 2015, 1 percent of the country’s total capital outflows, Goldman Sachs Group Inc. analysts led by Mancy Sun estimated in a March 14 report. The Chinese government has since last year tightened scrutiny of its citizens’ insurance purchases in Hong Kong, first by stricter enforcement of a $5,000 per transaction ceiling for payments made through UnionPay cards and then by limiting purchases settled by electronic transfers.
AIA’s first-quarter new business value may have been bolstered by previously hesitant Chinese visitors rushing to buy policies in Hong Kong as new restrictions loomed, driving sales, CICC’s Tang wrote. About 80 percent of the regular-premium policies that AIA’s Hong Kong unit sold to Chinese visitors were below $5,000 a year, the Goldman Sachs analysts wrote.
The insurer’s annualized new premium increased 23 percent to $1.1 billion in the three months, according to the statement.
AIA’s new business value would have jumped 44 percent and its annualized new premium 31 percent, should the currencies in which it collects premium income remained the same. Currencies in its markets depreciated by as much as 14 percent in the year to the end of February.
New business margin widened by 4.8 percentage points to 51.6 percent.
The shares closed 2.9 percent higher at HK$45.95 in Hong Kong on Thursday. The stock has fallen 10 percent in the past year, compared with a 23 percent decline in the benchmark Hang Seng Index.