HONG KONG-BASED insurer AIA Group reported a 5-percent drop in its third-quarter value (Q3) of new business on Friday, as growth moderated from an “exceptionally high” level a year earlier.
Mainland China, AIA’s second-largest market in terms of new business sales, reported a 33-percent fall in the value of new business (VONB) in the three months ended Sept. 30, reflecting a high base of prior-year comparison when customers brought forward purchases ahead of industry-wide repricing in September last year.
VONB from mainland China was also hurt by a double-digit decline in the new business value of its bancassurance segment.
AIA Hong Kong saw a 3-percent decline in new business value, impacted by strong sales in July last year.
Some Chinese mainland visitor customers adopted a wait-and-see approach amid extensive news coverage of offshore investments, the company said.
Earlier this year, the Chinese authorities started imposing a 20-percent tax on returns from Hong Kong insurance policies held by mainland residents.
As a result, the insurer’s VONB, which gauges expected profits from new premiums and is a key barometer for future growth, fell to $1.42 billion on a constant exchange rate basis in the quarter, compared with $1.48 billion a year ago.
“The run-up to these results featured an intense discussion of the pressures created by last year’s +40-percent growth in Hong Kong, so this contraction was near-universally expected,” said Jefferies.
