National Mutual Asia, the Hong Kong-listed subsidiary of the French-controlled Australian insurance group National Mutual, said net profits fell 40 per cent to $352 million for the six months to March 31, reflecting the economic turmoil and poor operating conditions in Asia. Chief executive Terry Smith said National Mutual Asia's equity portfolio declined in value over the six months by more than 19 per cent while its property portfolio - principally its 53 per cent stake in the National Mutual Centre in Wan Chai - registered a 28 per cent drop in value. Overall, the value of its total investment portfolio fell by 6.9 per cent. Mr Smith said the firm had re-evaluated its investment strategy in the past few months and had subsequently disposed of its equity investments in Southeast Asia and South Korea and lowered most of its exposure to Japan. National Mutual Asia said net premiums rose 13 per cent to $2.81 billion during the period under review, while assets under management increased 18 per cent to $20.89 billion. Over the past six months, total assets under management rose by about $200 million to $18.5 billion. 'While the investment environment was the most challenging we had encountered in many years, our key individual life insurance business continued to grow strongly,' Mr Smith said. The company said it would pay shareholders an interim dividend of 5.9 cents per share.