AIA released its financial report for 2019, reporting a total 6% growth in value of new business (VONB) to $4.15bn across all markets. This represents a strong performance for the life insurer, only slowed down by the political unrest in Hong Kong during the second half of the year. Excluding Hong Kong, the company recorded a 16% growth in VONB.
AIA operates in 18 markets across Asia and is the largest publicly listed pan-Asian life insurance group. The breakdown of its performance in each market is as follows:
The Hong Kong business reported a 5% decline in VONB to $1.62bn with strong growth in the first half offset by a substantial decline in the mainland Chinese visitor customer segment in the second half of the year.
Mainland China saw VONB grow by 27% to $1.17bn, with the VONB margin remaining strong at 93.5%. AIA also expanded into mainland China for the first time 17 years, with the opening of their new sales and service centres in Tianjin and Shijiazhuang in July 2019.
Thailand grew VONB by 6% to $494m, supported by sales momentum in its financial adviser (FA) programme and its strategic long-term partnership with Bangkok Bank. Overall VONB margin remained strong at 67.7% but reflected a higher proportion of bancassurance business compared with the prior year.
Singapore saw a VONB of $352m, a stable year-on-year performance, with growth in regular premium sales offset by lower single premiums through our partnership distribution channels.
Malaysia reported VONB growth of 7%, with AIA’s agency channel delivering double-digit VONB growth, supported by the launch of a new quality recruitment platform. While the insurer’s strategic partnership with Public Bank generated strong VONB growth from in-branch distribution, this was offset by lower VONB in the direct marketing channel and corporate solutions business.
Other markets reported very strong VONB growth of 27% to $535m, led by Australia, the Philippines and Vietnam. AIA also included a first-time contribution from its Indian joint venture, Tata AIA Life, in line with its 49% shareholding.
Premier agency model paying off
AIA’s premier agency model continued to perform, delivering agency VONB growth of 11% to $3.24bn. According to the company’s report, its proprietary training, bespoke innovative digital tools and clear career development paths are fundamental to attracting and retaining the best people.
Significant disruption in new business sales in 2020
The first quarter of 2020 sees a number of AIA’s markets affected by significant headwinds, namely the low interest rate environment and COVID-19.
“The expectation is for a temporary but significant disruption in the near term. The speed of recovery and the extent of any long-term impact remain uncertain but will depend on the duration and severity of the outbreak and associated containment measures. Policymakers are taking actions to help reduce the financial impact on personal incomes by supporting businesses with targeted measures including tax reductions and by providing further fiscal support,” said the report.
The report added that there have been no unusual patterns of claims from mainland China, and that the company’s agency recruitment pipeline is operating as strongly as ever. “However, we have seen a significant disruption in the group’s new business sales in the first quarter given travel restrictions and a general reluctance for people to engage in face-to-face meetings.”
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