AIA boosts dividend 17 per cent as first-half profit beats estimates; CEO upbeat on China’s middle class

AIA Group expects to see robust growth from China and Hong Kong markets in coming years, fuelled by rising affluence among China’s middle class, AIA’s chief executive said, after Asia’s third-largest insurer by market value posted better-than-expected profit in the first half and hiked its dividend by 17 per cent.

AIA reported Thursday that its net profit dropped 6 per cent year on year to US$2.065 billion in the six months ended May 31 on an actual exchange rate basis. On a constant exchange rate basis, net profit dropped 2 per cent from the same period a year earlier. The figures are well above the range of market expectations of US$1.49 billion to US$1.88 billion, representing a year-on-year fall of 14 per cent to 31 per cent, as strong growth in new business in Hong Kong and China helped offset losses on equity investments.

AIA said it would increase its interim dividend to 21.9 Hong Kong cents per share, compared with the 18.72 Hong Kong cents per share a year ago.

“Hong Kong and China are two big growth drivers in the value of new business,” said Mark Tucker, chief executive of AIA, in an interview with the Post.

“In Hong Kong, it’s a mix of local Hong Kong Chinese and mainland customers [driving sales]. In China, the economic headline growth is still strong and there is a big protection gap between what people need and what people have in insurance, thus there is a great potential for us to grow our business,” he said.

Tucker said the insurance coverage gap could be more than US$50 trillion.