Value of new business up 26 per cent
Peter Crewe
Life insurance specialist AIA Australia continues its path of solid performance, as AIA Group Limited yesterday announced a record value of new business (VONB) for the third quarter ending 31 August 2013.
The Hong Kong listed entity reported a 26 per cent increase in the value of new business (VONB) to US$379 million, as well as a 21 per cent increase in annualised new premium to US$839 million and a VONB margin of 44.7 per cent.
Recently awarded ANZIIF’s 2013 Life Insurance Company of the Year, AIA Australia continues to perform strongly in the local group insurance market, with 24.3 per cent of in-force business. Its retail in-force business has grown by more than double the market over the last 12 months – 23 per cent for AIA Australia compared to broader retail market growth of 10 per cent[2].
Commenting on the results AIA Australia chief executive, Peter Crewe, said:“AIA Group has delivered another outstanding set of results, and the team at AIA Australia is playing a big part in this. We have consistently had double-digit growth over the last four years, and that all stems from our ability to provide exceptional value to our customers and partners.”
Highlights of AIA Group’s performance in the 3rd quarter include:
- 26 per cent increase in value of new business (VONB) to US$379 million
- 21 per cent growth in annualised new premium (ANP) to US$839 million
- 44.7 per cent VONB margin, an increase of 2.1 percentage points (pps)
- Total weighted premium income (TWPI) growth of 14 per cent to US$4,409 million.
“As an industry, it is important for us to keep focused on helping people get access to cover and having a more secure financial future. This is what drives us every day at AIA Australia. These results show that we are making good progress in achieving this objective”, Mr Crewe concluded.
Summary of the third quarter
VONB increased by 26 per cent to US$379 million compared with the third quarter of 2012, as AIA continued to optimise both new business volume and margin to deliver sustainable growth.
Each of the geographic market segments delivered double-digit growth in VONB over the quarter, building on the very strong performance in the first half of the year. Highlights of the quarter include the ongoing positive momentum achieved by AIA in Hong Kong and China, the excellent growth from the Philippine and Indonesian businesses, and sustained improvements in the Korean operation.
AIA delivered a strong increase of 21 per cent in ANP to US$839 million in the third quarter. VONB margin improved by 2.1 percentage points to 44.7 per cent compared with 42.6 per cent in the third quarter of 2012. Margin expansion was achieved mainly through a positive improvement in product mix.
AIA’s proprietary agency channel accounted for 71 per cent of VONB in the third quarter and was a key driver of the overall VONB growth. The successful delivery of the Premier Agency strategy continued with growth in both the number of active agents and agent productivity in the third quarter. AIA continued to review its agency compensation structure in Thailand, as previously highlighted in the interim results announcement. Partnership distribution also reported solid growth, benefiting from strong banc assurance and group insurance results and the ongoing restructuring of the direct marketing channel in Korea.
TWPI increased by 14 per cent to US$4,409 million, compared with the third quarter of 2012.
Outlook
Macroeconomic fundamentals in Asia remain robust. Debate over the timing of supportive US monetary policy caused capital market volatility in the third quarter and tested those countries running current account deficits. Asian central banks responded appropriately, as they have the ability and resolve to continue to respond proactively to global liquidity challenges. The larger Asian economies continue to benefit from rebalancing toward domestic sources of growth, while more trade-dependent economies should benefit from a pick-up in global trade emanating from a more positive economic outlook in China and Japan.
Demographic drivers remain strong and AIA is confident in the immense growth potential for life insurance in Asia. The substantial upside from low insurance penetration, rapid urbanisation, increasing household incomes and the opportunity to reduce the substantial savings and protection gaps across the region will continue to provide AIA with significant growth opportunities. AIA’s strong performance since the IPO in 2010 demonstrates the success of its strategy and its advantaged position in the region. It is exceptionally well-positioned to benefit from the expanding demand for its products and services to create sustainable value for shareholders.
