AIA sa­vors the sweet spot of in­sur­ance in Asia

China Daily (Hong Kong) - - BUSINESS - By HU YUANYUAN in Hong Kong huyuanyuan@ chi­nadaily.com.cn

AIA Group Ltd, the world’s sec­ond-largest life in­surer by mar­ket value, will con­tinue to fo­cus on pro­tec­tion poli­cies and the qual­ity of its busi­ness in China to en­sure sus­tain­able growth, ac­cord­ing to top man­age­ment.

“We’ve been very spe­cific and very clear about our China strat­egy: we fo­cus on qual­ity, not quan­tity; we fo­cus on pro­duc­tiv­ity and pro­tec­tion poli­cies,” said Mark Tucker, CEO and pres­i­dent of AIA Group.

The clear fo­cus, Tucker said, is also the se­cret of AIA’s suc­cess in the world’s sec­ond­largest in­sur­ance mar­ket.

AIA’s new busi­ness value, a mea­sure of ex­pected profit from new poli­cies, rose 37 per­cent to $1.26 bil­lion in the first half of this year. The new busi­ness value in Hong Kong soared by 60 per­cent to $537 mil­lion while new busi­ness value in the Chi­nese main­land in­creased by 56 per­cent to $278 mil­lion, ac­cord­ing to the in­surer’s fi­nan­cial re­port.

Over­all, its op­er­at­ing profit rose by 14 per­cent in the first half while net profit, which in­cludes on-pa­per losses from eq­uity in­vest­ments, de­clined by 2 per­cent due to volatil­ity in the stock and cur­rency mar­kets.

AIA’s fast growth is also in line with the rapid de­vel­op­ment of China’s in­sur­ance mar­ket. The coun­try’s to­tal in­come from in­sur­ance pre­mi­ums reached 1.9 tril­lion yuan ($287.9 bil­lion) in the first six months of 2016, up 37.3 per­cent year-on-year. The growth rate is much higher than the 17.5 per­cent in the first half of 2014 and 20 per­cent in the first half of 2015. The value of in­sur­ance pre­mi­ums in China will reach 5 tril­lion yuan by 2020, statis­tics from the China In­sur­ance Reg­u­la­tory Com­mis­sion showed.

Look­ing for­ward, Tucker is very pos­i­tive about the mar­ket in 2017 as he be­lieved that the op­por­tu­ni­ties AIA has across the 18 coun­tries it op­er­ates in are the best in the world.

“The im­por­tant point for us is the struc­tural fac­tors, such as de­mo­graph­ics, ur­ban­iza­tion and ris­ing in­come. These trends will con­tinue and Asia will con­tinue to grow in the fore­see­able fu­ture,” said Tucker. “We are in the sweet spot of the in­dus­try and the sweet spot of macro­eco­nomics across Asia. It’s the best place to be, go­ing into 2017.”

For Tucker, AIA will have an eye on any pos­si­ble merger and ac­qui­si­tion op­por­tu­ni­ties, but says 99 per­cent of en­ergy will be fo­cused on or­ganic growth.

The fluc­tu­a­tion of the yuan, ac­cord­ing to Mark Konyn, chief in­vest­ment of­fi­cer of AIA Group, will not change its Chi- na in­vest­ment port­fo­lio as it is all about li­a­bil­ity match­ing.

“The book of busi­ness in China, one of our fastest grow­ing mar­kets, is 100 per­cent de­nom­i­nated in RMB. So all our li­a­bil­i­ties and poli­cies are writ­ten in ren­minbi. Fol­low­ing this method­ol­ogy, the ma­jor­ity, in fact, all of our as­sets are on­shore ren­minbi,’’ said Konyn. So any yuan fluc­tu­a­tions will not un­duly im­pact the port­fo­lio.

Agents will con­tinue to play a key role, said Joe Cheng, Head of AIA Group’s Agency Dis­tri­bu­tion.

“Our fo­cus is still on get­ting pre­mier agents through qual­ity re­cruit­ment, through train­ing and tech­nol­ogy. This is the only way that we can serve our clients bet­ter, be­cause our sur­veys show that there is a high de­mand for face-to-face in­ter­ac­tion,” said Cheng.

Prod­ucts deal­ing with life and health need to be ex­plained. In Asia, more so­phis­ti­cated prod­ucts are de­manded by the up­com­ing mid­dle class and AIA’s sur­veys show that the first point of con­tact with cus­tomers is the agency, Cheng ex­plained.

BLOOMBERG

A man stretches next to an ad­ver­tise­ment for AIA Group fea­tur­ing the English Pre­mier League foot­ball team Tot­ten­ham Hot­spur Foot­ball Club (Spurs) at a tram stop in Hong Kong.

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