AIA Profit Hit by Market Swings

By Dow Jones Business News, 
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By Enda Curran

HONG KONG--AIA Group Ltd.'s full-year net profit slipped 7% as the pan-Asian insurer's earnings were hit by volatile equity markets in the second half of 2013.

Stocks and currencies across Asia were jolted last year after the U.S. Federal Reserve signaled it would start to rein in its policy of ultraloose money supply, a source of cheap credit that has helped to fuel economic growth across the emerging world.

The resulting market swings meant AIA's net profit in the year ended Nov. 30 fell to US$2.8 billion from US$3.01 billion after net gains from equities fell by US$363 million.

Chief Executive Mark Tucker said the market volatility across the region has now eased and that exchange rates and economic data have stabilized.

"Asia continues to provide one of the most attractive and resilient life insurance markets in the world," Mr. Tucker said.

The world's fourth-largest insurer by market capitalization said its new-business value, a measure of insurers' profitability, rose to a record US$1.5 billion, a 25% jump from a year earlier and just ahead of analyst expectations.

The value of new-business margins grew by 0.5 percentage point to 44.1% while annualized new premium sales--a measure of new business activity--rose 24% to US$3.3 billion.

AIA operates in 17 markets across the Asia-Pacific region. The life insurer has been steadily adding assets across the region.

Among the insurer's biggest markets, Malaysia recorded a 74% surge in new-business-value growth. China and South Korea each grew 34%, while Hong Kong grew 28% and remained the single biggest market, adding US$468 million in new business value last year. Other markets, including Indonesia, Vietnam and the Philippines, grew a combined 32%.

AIA is the only wholly foreign-owned insurer in China, where it reported US$205 million of after-tax profit last year, up 36% from a year earlier.

The insurer has continued to beat estimates in recent years and its share price has soared since its initial public offering in Hong Kong in October 2010, when former parent American International Group Inc. sold around two-thirds of its stake in the company to repay the U.S. government, which had bailed it out during the 2008 financial crisis.

Late last year AIA agreed a deal to sell its insurance products through Citibank's Asian-Pacific retail branch network, known as a bancassurance arrangement.

Write to Enda Curran at

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This article appears in: News Headlines

Referenced Stocks: AIG

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