AIA Group, Asia’s largest insurer, reported its best half-year profit in five years as mainland Chinese customers continued to buy policies in Hong Kong with the prospect of better investment returns and as a hedge against a weakening yuan.
Net profit rose 53 percent to $3.31 billion, or 29.53 cents per share, in the six months to June, according to a filing to the Hong Kong stock exchange on Thursday. That beat analysts’ estimates of a 45 percent rise in net profit to $3.27 billion. It was also the best half-year result since $3.86 billion in the same period in 2019.
After-tax operating profit, excluding one-off items and valuation gains in the company’s investment portfolio, increased 7 percent to $3.39 billion.
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AIA’s (VONB) new business value, a key indicator of revenue and future growth, rose 25 percent to $2.46 billion.
“We achieved record profit from new business, delivered significant profit growth, generated strong free profit and returned significant capital to shareholders,” Lee Yuan Siong, CEO and president, said in the statement.
“AIA is exceptionally well positioned to capitalize on long-term structural growth opportunities in Asia, the most attractive region in the world for life and health insurance.”
He will meet with the media to discuss the results at noon.
AIA shares rose 3.6 percent to HK$53.25 on Thursday morning after the results were announced.
The Hong Kong-based insurer announced an interim dividend of HK$0.445 per share, up 5.2 percent year-on-year. The company announced an additional $2 billion share buyback in April, bringing the total since March 2022 to $12 billion.
Lee said the high dividend payout and share buyback reflect “AIA’s very strong financial position and confidence in our future operational and financial performance.”
Mainland travelers buying policies in Hong Kong boosted AIA’s profits. Photo: Jelly Tse alt=Mainland travelers buying policies in Hong Kong boosted AIA’s profits. Photo: Jelly Tse>
Hong Kong and China, which account for 62 percent of AIA’s new business, both reported strong revenue growth in the first half of the year.
In Hong Kong, the VONB market grew 26 percent to $858 million as mainland residents continued to buy products in the city for better returns and better health protection.
Mainland customers like to buy insurance policies in Hong Kong because the products are sold in US dollars or Hong Kong dollars. This helps to hedge against the risk of a falling yuan, which has weakened 13 percent against the US dollar over the past two years.
In the first half of the year, 21 million travelers visited Hong Kong, an increase of 64 percent from the previous year, according to data from the Hong Kong Tourism Board. Two-thirds of them came from the mainland.
The insurer, whose roots date back to Shanghai in 1919, continued to expand in mainland China, where its VONB rose 36 percent to $782 million.
AIA’s three largest markets in Southeast Asia all reported VONB growth in the first half of the year. Singapore saw the largest growth at 27 percent, followed by Thailand and Malaysia at 16 and 14 percent respectively. The other markets in Asia grew by 9 percent.
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