AIA First Quarter New Business Value Rises 26%, Beating Estimate

(Bloomberg) -- AIA Group Ltd., the second-largest Asia-Pacific insurer by market value, said its value of new business rose 26 percent in the first quarter, as growth in China offset slowing Hong Kong sales.

The measure of estimated future profitability of new policies climbed to $1.02 billion in the three months ended March 31, from $811 million a year earlier, Hong Kong-based AIA said in a stock exchange filing Friday. That compares with an 18 percent estimate by Morgan Stanley and Goldman Sachs Group Inc. analysts.

In other key figures:

• New-business margin widened 10.5 percentage points to 59.7 percent as it sold more protection-type policies that are more profitable
• Annualized new premiums grew 4 percent

AIA is increasingly reliant on China to drive growth. In Hong Kong, AIA's biggest market, sales to mainland visitors have slowed since China introduced curbs to slow capital outflows, and a stronger domestic currency reduced incentives for residents to move assets offshore.

China was again its fastest growing market in the quarter, AIA said in the statement, without giving numbers. China new business profitability, measured by new business value, has surged 12-fold from 2010 to 2017, lifting it to AIA's second-biggest market from fourth place.

The mainland is set to overtake Hong Kong as AIA's biggest market by new business value in 3-to-5 years, Goldman Sachs Group Inc. analysts led by Thomas Wang wrote in an April 19 note. That doesn't factor in any benefit from China's pledge to increase the cap on foreign ownership of insurers, they said.

AIA, the only foreign company permitted to wholly own its China life insurance unit, may be allowed to expand its geographical reach beyond the regions it's currently limited to, the Goldman Sachs analysts wrote.

It was the first time AIA has released quarterly trading figures since moving its fiscal-year end to December from November.

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net.

To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Peter Vercoe

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