Acquisition

AIA beats market forecast with 54pc jump in earnings

PUBLISHED : Saturday, 26 February, 2011, 12:00am
UPDATED : Saturday, 26 February, 2011, 12:00am

AIA Group, Asia's biggest insurer in terms of premium income, has reported a better-than-expected 54 per cent increase in its first full-year profit after its listing.

The insurer reported a net profit of US$2.7 billion for the 12 months to November, reflecting increased sales of new policies and better investment returns. Analysts had expected profit growth of about 30 per cent.

Despite the strong result, which was in line with its undertaking during its initial public offering in Hong Kong last October, the company did not declare a dividend.

'We will review our dividend policy in the interim result in July this year,' said Mark Tucker, AIA's chief executive.

AIA raised HK$159.1 billion in what was Hong Kong's largest initial public offering, breaking the US$16.1 billion record set by Industrial and Commercial Bank of China for the H-share portion of its float in 2006.

AIA, established in Asia 90 years ago, was a former subsidiary of troubled US insurer American International Group (AIG,) which needed to sell its Asian arm to repay the US government after being bailed out in 2008 during the financial crisis.

The firm's listing last year, however, did not go smoothly. An IPO initially planned for the first quarter of 2010 was upset by a takeover bid from British rival Prudential. The mega US$35.5 billion deal collapsed in June.

Tucker, a former Prudential head who built up its Asia business, joined AIA in July last year to reshuffle the management team and to put the IPO back on track.

'We are now in a new chapter. The problems of AIG no longer affect us,' Tucker said. 'The focus this year will be to achieve sustainable profit growth and to create value for our shareholders. We will enhance quality of our agency and increase banking sales partners.'

In the fourth quarter of last year, premium income from new policy sales increased by 15 per cent from the year earlier period.

AIA, which announced its results before the market opened, closed up 5.69 per cent at HK$22.30.

Louis Wong Wai-kit, director of Phillip Capital Management, said AIA's strong performance last year reflected the market's rebound after the financial crisis. 'Its outlook is positive. But it may not be able to repeat the same strong 54 per cent growth this year,' Wong said.

Tucker said the company would not rule out good acquisition opportunities but would focus on organic growth in its 15 Asia-Pacific markets.

The group last year gained approval to open eight new sales offices in Jiangsu and Guangdong provinces. It has also signed a deal with ICBC to sell policies for it.

In Hong Kong, new business sales in the fourth quarter of last year were up 56 per cent from the third quarter.

Tucker said he was not aiming to enlarge the group's team of 260,000 agents in Asia. 'I would not chase quantity, but I would focus on the quality and productivity of our agencies,' Tucker said.