Mark Tucker, CEO of
Hong Kong-headquartered insurer AIA Group, has a clear cut view on
the future of Asia’s insurance market.
“Asia is the most attractive
place in the world in which to operate as a life insurer,” Tucker
stressed in his review of AIA’s third-quarter 2011
results.
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Tucker, the former CEO of UK
insurer Prudential and AIA’s CEO since July 2010, has good reason
to feel positive. AIA, Asia’s third-largest insurer, romped home in
the three months to September to deliver an exceptional set of
results.
A highlight of the results
was the value of new business (VONB) which came in 53% up on the
third quarter of 2010 at $245m, a new record for AIA.
This brought the VONB in the
first nine months of 2011 to $644m, an increase of 39% compared
with the same period in 2010.
Annualised new premium income
in the third quarter was up 52% at $766m while during the first
nine months it reflected an improvement of 34% to
$1.86bn.
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By GlobalData“AIA’s 53% growth in VONB
builds on the strong momentum reported at the half-year,” Tucker
added. “The figures reflect the group’s early successes in
launching new product initiatives targeted at meeting the life
insurance protection and savings needs of the Asian
consumer.”
According to AIA all the
major markets in which it operates generated strong performance
with most reflecting double-digit increases in premium income which
boosted the insurer’s total weighted premium income by 13.5% in the
third quarter of 2001 at $3.752bn.
Weighted premium income in
the first nine months of the year was up 12.8% at
$10.517bn.
AIA has operations in Hong
Kong, Thailand, Singapore, China, Malaysia, Korea, the Philippines,
Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau, Brunei
and India.
AIA’s new business margin
also reflected a positive trend, rising from 32.9% in the first
three quarters of 2010 to 36% in the first three quarters of
2011.
Tucker attributed this
improvement and the strong growth in VONB to a number of recently
launched strategies, including its Premier Agency initiative -aimed
at increasing the size and efficiency of its agency
force.
While no data was provided on
the initiative’s impact in the third quarter, AIA disclosed in its
2011 half year results that it had delivered a $103m (42%) increase
in the VONB generated by its agency force compared with a year
earlier.
The size of the agency force
had been increased by a far lower 9%.
Tucker also highlighted other
AIA volume and profitability drivers, including new product
launches targeting the under-penetrated protection market, ongoing
repricing actions of existing products and shifts in product mix
towards regular premium products with higher life insurance
content.
AIA is also actively seeking
to expand its bancassurance partnerships.
So far this year new
partnerships with US bank Citi and Australian bank Australia and
New Zealand Bank (ANZ) and have been concluded. Citi brings
additional exposure for AIA in 16 major Asia Pacific countries and
ANZ additional exposure in 15.
AIA was floated off by
American International Group (AIG) and listed on the Hong Kong
Stock Exchange in October 2010 following a $17.8bn initial public
offer in October 2010 at HK$19.68 ($2.50) per share, and went on to
perform strongly, its share price reaching a high of just on HK$29
in July 2011. AIG retains a 33% stake in AIA.
However, despite AIA’s solid results and prospects, its
share price has not been immune to equity market turmoil and is
currently trading 17% below its peak at around HK$24.
