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AIA Group, Asia's largest insurer, reported its best first-half profit in five years, as mainland Chinese customers continue buying policies in Hong Kong with an eye on better investment returns and as a hedge against a weakening yuan.
Net profit rose 53 per cent in the six months to June to US$3.31 billion, or 29.53 US cents per share, according to a filing to the Hong Kong stock exchange on Thursday. This exceeded analysts' estimates of a 45 per cent increase in net profit to US$3.27. It was also the best first-half result since US$3.86 billion in the same period in 2019.
Operating profit after tax, excluding one-off items and valuation gains in the company's investment portfolio, increased 7 per cent to US$3.39 billion.
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AIA's value of new business (VONB), an important measure of sales and future growth, surged 25 per cent to US$2.46 billion.
"We have achieved record new-business profit, significant earnings growth, strong free surplus generation and returned substantial capital to shareholders," Lee Yuan Siong, CEO and president, said in the statement.
"AIA is exceptionally well-positioned to leverage the long-term structural growth opportunities in Asia, the most attractive region in the world for life and health insurance."
He will meet the media to discuss the results at noon.
AIA's shares rose 3.6 per cent to HK$53.25 on Thursday morning after the earnings announcement.
The Hong Kong-based insurer declared an interim dividend of HK$0.445 per share, an increase of 5.2 per cent from a year earlier. The company in April announced an additional US$2 billion worth of share buy-back, bringing the total to US$12 billion since March 2022.
Lee said the high dividend payment and buy-back reflects "AIA's very strong financial position and confidence in our future operational and financial delivery".
Mainland travellers buying policies in Hong Kong boosted AIA's bottom line. Photo: Jelly Tse alt=Mainland travellers buying policies in Hong Kong boosted AIA's bottom line. Photo: Jelly Tse>
Hong Kong and China, which represent 62 per cent of AIA's new business, both reported strong sales growth in the first half.
VONB in Hong Kong rose 26 per cent to US$858 million as mainlanders continued to buy products in the city for better returns and better health protection.