AIA new business hit by 'significant disruption'

AIA Group (1299) warned of a "significant disruption" in its first-quarter new business sales amid the Covid-19 pandemic, after its biggest market, Hong Kong, saw a 5 percent drop in new business value last year.

Shares of the Hong Kong-based insurer fell 4.44 percent to HK$68.8 yesterday, with a market turnover of HK$3.17 billion, although its 2019 net profit soared 1.5 times to US$6.65 billion (HK$51.87 billion) last year.

New business value growth slowed to 6 percent last year, lower than expected, affected by social unrest in the second half.

The total new business value rose to US$4.15 billion in 2019. Hong Kong market, which attributed around 40 percent of total new business value, declined 5 percent year-on-year to US$1.62 billion, due to sales drop from mainland visitors in the second half amid protests.

The new business value from the mainland rose by 27 percent to US$1.17 billion last year, contributing around 28 percent of the total new business value.

AIA expects the virus to cause a "temporary but significant disruption" on its new business sales and "the speed of recovery and the extent of any long-term impact remain uncertain."

Chief executive and president Ng Keng-hooi said the company has been selling most of its products face-to-face, and although it has launched digital platforms, it could not completely replicate the traditional model.

AIA has moved sales, meeting and recruitment activities online, Ng said, with online sales contributing around 60 percent of new business in the past one to two weeks. All branches in mainland China have reopened, he added, expressing confidence that the insurance industry would overcome the current headwinds.

Ng said AIA has submitted its application for converting its Shanghai Branch into a wholly-owned subsidiary to the China Banking and Insurance Regulatory Commission, the virus will not affect application progress.

Regional chief executive Jacky Chan Wing-shing said AIA Hong Kong launched an online selling platform two years ago, with 10 products available as they don't require financial needs analysis, the insurer and peers in the industry are continuing to discuss with the Insurance Authority to further open up remote insurance sales.

Chan said the insurer has not yet seen a significant increase in claims related to the virus so far.