Acquisitions help AIA Group to post record 1H results
Asia’s second largest insurer based on market value, AIA Group Limited, increased its first half net profit by a record 34 percent to US $ 1.93 billion supported by acquisitions and paper gains from equity investments, a statement from the company showed.
The Value Of New Businesses (VONB), AIA’s key performance measure increased 26 percent to a six months record US $ 645 million.
Continuing its expansion drive, particularly into smaller Asian markets, AIA completed the US $ 1.7 billion purchase of ING Group NV’s Malaysia business in December becoming the market leader in the life insurance segment in Malaysia.
In the same month, the company successfully forayed into Sri Lanka acquiring the second largest life insurer, AVIVA NDB Insurance in a deal worth US $ 109 million, adding the16th market to the portfolio.
Addressing the media, CEO of AIA Insurance Lanka PLC (AIA), Shah Rouf said that his company made progress in terms of financial performance during the first half compared to the corresponding period in 2012. However he did not disclose numbers as the company was yet to release the financial results to the Colombo Stock Exchange.
“Our life insurance market share grew 26 percent Year-onYear during first six months, but the General insurance business remained flat,” he said.
However during the first quarter under the Hong Kong-based insurance giant, the net profits almost halved to Rs. 32 million due to exponential increase in income tax and the brand migration expenses of Rs.80.6 million.
However, according to Bloomberg, Malaysia contributed 10 percent of AIA’s annualized new premium in the six months, up from 6 percent a year earlier. Its share of the company’s new business value rose almost two percentage points to 7.6 percent.
Meanwhile the visiting AIA Group Chief Financial Officer, Garth Jones said that compared to peers, insurance penetration remained low in Sri Lanka, a fact which was pointed out by many industry professionals.
“If you take Indonesia, insurance constitutes to 1 percent of GDP. If you look at the expected progress in the economy, I do not see any reason why the industry cannot grow at a rapid pace here in Sri Lanka, particularly considering the growth in the per capital income,” Jones said.
Sri Lanka’s insurance penetration currently remains at extremely low levels. Life insurance penetration is 0.5 percent while the General insurance penetration is 0.7 percent.