AIA's H1 operating profit grows but new business sinks

Limited face-to-face sales pushed VONB down.

AIA posted a 5% growth in operating profit to $2.9b for the half-year, but the value of new business (VONB) sank 37% to $1.4b, according to an announcement.

VONB margin slipped 11.1pps to 54.4% whilst annualised new premiums dropped 24% to $2.6b. Embedded value operating profit also dropped 13% to $3.9b.

New business values were mostly hit by pandemic-induced containment measures which limited face-to-face sales. Despite the overall downturn, AIA’s operations in mainland China contributed significantly to the group’s VONB as new business sales picked up as movement restrictions were progressively eased.

In June, the insurer obtained regulatory approval to incorporate its first wholly foreign-owned life subsidiary in the country.

AIA Hong Kong recorded a 68% slump in VONB triggered by mandatory quarantine requirements for all arrivals from the mainland since early February. Outside Hong Kong and Mainland China, businesses generated double-digit growth in the Q1 but containment measures significantly impacted new business sales come Q2.

AIA has declared an interim dividend of 35 Hong Kong cents per share. 

Photo courtesy of Wikimedia Commons.