AIA 2023 profit jumps 15%, buoyed by Hong Kong’s increasing sales of insurance policies to mainland Chinese visitors
- Hong Kong-based insurer’s annual net profit came in at US$3.76 billion, or 32.68 US cents per share
- The value of new business, an important measure of sales and future growth, rose 33 per cent to US$4.03 billion
AIA Group’s policy sales in Hong Kong and mainland China continued to grow in the first two months of the year, indicating strong momentum from last year is carrying over in the insurer’s two major markets, according to its top boss.
The company on Thursday reported a 15 per cent profit jump last year, benefiting from demand for insurance products from the return of mainland Chinese visitors to Hong Kong in search of better returns and as a hedge against a weakening yuan.
“We are seeing good momentum in Hong Kong driven by mainland Chinese visitors’ sales in the first two months of this year with double-digit growth,” said Lee Yuan Siong, AIA’s group chief executive and president, in a result media briefing.
He said mainland China saw the same trend of double-digit growth of new policy sales in the past two months, as a rising middle class and an aging population in mainland China led many customers to buy insurance products for protection and as a wealth-management tool, Lee said.
Hong Kong-based AIA, Asia’s largest insurer, reported a net profit of US$3.76 billion, or 32.68 US cents per share, according to an exchange filing on Thursday. Operating profit after tax, which excludes any valuation gain or loss in its investment portfolio, fell 1 per cent to US$6.21 billion.
The insurer adopted the new IFR17 accounting standards in 2023 and adjusted the comparable figure a year earlier.
AIA’s value of new business (VONB), an important measure of sales and future growth in insurance, rose 33 per cent to US$4.03 billion in 2023. The big jump came after Hong Kong relaxed its inbound travel restrictions from January 2023 after three years of closed borders during the Covid-19 pandemic.
Hong Kong, AIA’s largest market, saw its VONB jump 82 per cent because of strong growth in policy sales to mainland visitors.
AIA’s new business in China grew 20 per cent last year, 21 per cent in Thailand, 10 per cent in Singapore and 7 per cent in Malaysia.
Analysts at Jefferies said that the breadth of growth was notable. “We believe that it’s more important that growth is broad based, with 10 markets growing at a double-digit rate.”
Mainland Chinese tourists spent HK$59 billion (US$7.6 billion) on insurance policies in Hong Kong last year, representing about 32.6 per cent of all sales, according to data from the Insurance Authority.
AIA’s shares fell 4 per cent to close at HK$62.25 on Thursday after the earnings announcement, amid a falling market as the Hang Seng Index fell 0.7 per cent.
The insurer will pay a second dividend of 119.07 HK cents, bringing the full-year payout to 161.36 HK cents per share, versus 153.68 HK cents in 2022.
The insurer has kept a conservative portfolio, with a majority of its investments in fixed income, through it also invests in certain riskier assets to achieve higher returns, such as warehouses and data centres, said Mark Konyn, AIA’s chief investment officer.
“We can take advantage as we see opportunities. We have a risk budget to invest in asset classes which can deliver long-term benefits for our policyholders. These include private credit, private equity and real estate globally.”
Mainland customers spent US$7.6 billion on Hong Kong insurance policies in 2023
AIA has about 1 per cent of its investment portfolio in Chinese property.
“We are very happy with the results,” he said. “We will not avoid the China property market altogether, as there are still some good projects. The current problem is mainly related to certain developers who are overleveraged, and we will avoid these.”
