AIA looks past biggest profit slump in a decade, banking on Hong Kong’s reopened borders to lift insurance sales
- AIA’s 2022 net profit tumbled 96 per cent to US$282 million, or 2.36 US cents per share, missing analysts estimates
- Sales jumped in the first two months, as a million mainland Chinese travellers poured across the border into Hong Kong
AIA is looking to strong sales in 2023 to put one of its worst years behind it, as Asia’s largest insurer wagered that the rush of mainland Chinese customers across Hong Kong’s reopened borders would help arrest a slump in earnings.
Net profit plunged 96 per cent in 2022 to US$282 million, or 2.36 US cents per share, missing the US$2.79 billion expected in a Bloomberg poll, due mainly to US$5.39 billion in unrealised valuation losses of its stocks and bonds portfolio. The company’s operating profit after tax rose 5 per cent to of US$6.37 billion.
AIA’s value of new business (VONB), an important measure of sales and future growth in insurance, fell 5 per cent in 2022 to US$3.09 billion, as Hong Kong’s closed borders prevented customers from signing for their coverage in person, a requirement under the city’s rules. Still, VONB picked up by 6 per cent in the second half, as Hong Kong gradually relaxed its border and inbound travelling restrictions.
“Following the reopening of mainland China, we have seen our new business momentum recover swiftly and return to positive value of new business growth in the first two months of 2023”, said Lee Yuan Siong, AIA’s group chief executive and president, in his first in-person media briefing since he took the job in June 2020. Before that, he was co-CEO of Ping An.
