(Adds CEO quote, detail on results, share price)
HONG KONG, July 25 (Reuters) - AIA Group Ltd, Asia’s second-largest insurer by market capitalisation, on Friday reported a 23 percent rise in the value of its new business in the first half of the year, led by strong growth in Hong Kong and China.
That beat expectations of 20 percent growth, according to the average estimate of analysts polled by Thomson Reuters.
Value of new business (VONB), a key metric for insurance companies that measures the present value of future business, rose to a record $792 million from $645 million a year earlier, the Hong Kong-based company said.
The first-half new business value was more than the company recorded for the whole of 2010, Chief Executive Mark Tucker said, as China contributed 58 percent growth.
“Growth in China was driven by very successful new product launches, particularly a campaign in the first quarter aimed at young families,” Tucker said in a conference call with media after the results were announced.
Still, net profit fell 20 percent in the half to $1.55 billion, on a decline in equity investments and the appreciation of the U.S. dollar against the Asian currencies in which AIA earns much of its income.
AIA saw an impact on its capital reserves from a one-off payment of $800 million to Citigroup, for a deal signed last December that will see the U.S. bank sell only AIA’s insurance products across 11 markets in the Asia-Pacific region.
The insurer beat rivals in an auction to land the bancassurance deal, seen in the industry as a key channel to market products in Asia.
The insurer’s South Korean business took a hit from an industry-wide regulatory ban on outbound calls by telesales agents, the result of a customer information leak from a credit agency. While AIA’s new business growth in the country slowed by 20 percent, Tucker said the insurer still grew sales in South Korea in the first half while the industry as a whole saw a 50 percent decline in sales.
AIA’s shares have risen 5.6 percent in Hong Kong this year, against a 3.6 rise in the city’s Hang Seng Index. On Friday morning the shares rose 1.5 percent.
The outlook for the rest of the year looks positive, Tucker said, suggesting fears over macroeconomic disruption in Asia from U.S. policy changes may have been overstated.
“We don’t expect great interest rate movement from the Fed over the next 6 months or year, it may be some time well into next year, and overall economies in the region, in Southeast Asia are robust,” Tucker said.
Reporting by Lawrence White, additional reporting by Tripti Kalro in BANGALORE; Editing by Stephen Coates, Lisa Shumaker and Kenneth Maxwell