AIA Declares 50% Increase In Dividend

AIA Group Ltd., the third-largest Asia-based insurer by market value, posted a 22 per cent decline in full- year profit as weaker regional currencies and stock-market gyrations detracted from business growth.

The insurance company announced an unexpected 50 per cent increase in its final dividend even as net income fell to US$2.69 billion (RM11.35 billion), or 22.41 cents a share, in the year to November 30, from US$3.45 billion, or 28.73 cents a share, a year earlier.

AIA has come under pressure after currencies in five of its six-largest markets depreciated by as much as 21 per cent during the year, according to data compiled by Bloomberg, and the MSCI Asia-Pacific ex-Japan Index dropped 14 per cent. Compounding that, China has tightened capital controls to stem money outflows.

New business value would have expanded 26 per cent without the currency effect. AIA, which has presence in 18 Asia-Pacific markets, sells policies mostly in local currencies and reports financial figures in dollars. It tries to match the currencies of its investments with those of its insurance sales.

China restrictions China recently vowed to tighten enforcement of a cap on the purchases of insurance products using UnionPay debt and credit cards at US$5,000 per transaction. The country’s foreign-exchange regulator is tightening restrictions to help stem money outflows that topped US$1 trillion last year as economic growth slowed and the currency weakened. Mainland Chinese have been flocking to buy insurance policies in Hong Kong for better service and also to skirt curbs on moving money out of the country.

Hong Kong and China accounted for almost 50 per cent of AIA’s new business value in 2015, up from 44 per cent a year earlier, its two-fastest growing markets. Chinese visitors contribute about 30 per cent of sales in Hong Kong.

 Hong Kong new business value surged 32 per cent to US$820 million, according to the AIA statement. AIA’s annualised new premium grew 8 per cent to US$3.99 billion last year, or 14 per cent without currency translation losses.