HONG KONG: AIA Group Ltd has reported year-on-year growth for the profitability of new policies in the first quarter, propelled by strong sales to Hong Kong and mainland China visitors.
AIA’s new business value grew 13% to US$1.5bil after factoring exchange rate fluctuations, according to a statement yesterday.
Rival Prudential Plc reported new business profit of US$608mil in the same period, as it transitioned to using a different reporting system.
The two insurer giants continue to tap growth in the key Hong Kong market as mainland travellers seek to diversify their wealth offshore.
That comes despite caution navigating the Chinese mainland market as regulatory changes and investment returns combine with a challenging economic outlook.
Both firms are also seeking to diversify growth in Asia in countries such as India and Singapore.
AIA’s annualised new premium, a measure of sales, rose 7% to US$2.6bil. Prudential reported US$1.7bil in annual premium equivalent, a similar measure.
In Hong Kong, AIA saw 16% growth of value of new business, driven by both sales to locals and the mainland China travellers.
Prudential said higher sales volumes and margin expansion from product repricing actions helped sales to clients in the city.
In the mainland market, however, AIA’s value of new business declined 7% after factoring in an 80 basis point reduction in its long-term investment returns assumption in the onshore market, and the China government bond spot yields as of the end of 2024.
China’s 10-year sovereign yield hit a record low in December.
Chinese clients continued to seek investments in offshore assets despite threats of turmoil in global markets.
Last month, AIA announced a US$1.6bil share buyback plan, while Prudential said it aimed to finish a US$2bil stock purchase programme by the end of 2025.
“The current tariff uncertainty does not directly impact our business but has resulted in global economic and market volatility,” said Anil Wadhwani, chief executive at Prudential.
Michael Chang, head of Asian Financials at CGSI Securities Ltd, said he prefers Prudential over AIA, citing the former’s goal of more than doubling its new business profits by 2027 from US$2.2bil in 2022.
“These targets are positive as they give Prudential investors a level of certainty amidst the current environment of high uncertainty,” Chang said. — Bloomberg
