Formerly part of the American International Group (AIG), which required a US government bailout at the height of the global financial crisis in 2008, Hong Kong-based American International Assurance (AIA) separated from the group in 2009. A plan for UK-based Prudential to buy AIA for US$35.5 billion fell through, and AIA held an initial public offering in Hong Kong in 2010, raising US$20.5 billion.
AIA beats forecasts with 34pc gain
Acquisitions help boost first-half profit but chief says organic growth is the focus for insurer
AIA, one of the largest providers of life insurance and pension funds in Asia, reported a higher-than-expected 34 per cent rise in net profit to US$1.93 billion in the six months to May 31. The gains were driven by sales growth and acquisitions.
Chief executive and president Mark Tucker and analysts believe the Hong Kong-listed insurer can keep up this momentum, after it beat forecasts five times in the last six reporting periods.
"We are operating in the right markets at the right time with the right people," Tucker said.
"AIA has a dominant position in Asia, which has a rising middle class and low insurance penetration rate.
"The savings rate is high, while the population is ageing in the region. Under such circumstances, there are huge growth opportunities in Asia for our life protection and retirement planning."
Profit growth was partly due to the acquisition of ING Malaysia and Sri Lankan insurer Aviva NDB.
Tucker said the company would focus on organic growth but he would not rule out buying more firms when good opportunities arise.
Another growth engine was the increase of sales of new business across 17 markets in which AIA operates. New business value rose 26 per cent year on year to US$645 million.
Malaysia, a low-margin market, had the strongest growth, at 69 per cent. In contrast, the established and high-margin markets grew more slowly.
New business in Hong Kong, the firm's largest market, grew 20 per cent to US$168 million in the first half, followed by 11 per cent in Thailand to US$146 million and 13 per cent in Singapore to US$110 million.
Tucker said the low-margin areas were less developed markets, which represented stronger growth potential.
He said the Hong Kong Monetary Authority's tightening of rules on banks' sales of investment-linked policies would not hurt its business because AIA sells mainly through agents.
"Overall, we are of the view that future growth will be more driven by premium growth and, as such, see it as a positive that premium momentum is improving," said Arjan van Veen, an analyst at Credit Suisse.
Hannah Li Wai-han, a senior securities analyst at Sun Hung Kai Financial, said AIA had a strong balance sheet and could afford more acquisitions.