SINGAPORE - Insurer AIA Singapore clocked a 7 per cent increase in full-year operating profit after tax to US$558 million from a year ago, against what it cited as pressure on profitability from double-digit medical inflation in the market, it said on Friday (March 15).
The results reflect an 18 per cent increase for the full year in its value of new business (VONB) to US$357 million, with firmer sales driven mainly by the agency channel and its strategic partnership with Citibank. Its VONB margin decreased to 65.4 per cent from 69.7 per cent, due primarily to lower profitability from its HealthShield business, and higher volumes of single premium unit-linked business ahead of a regulatory change in October 2018.
VONB is the present value, measured at the point of sale, of projected after-tax profits emerging in the future from new business sold in the period, after deducting the cost of holding the required capital in excess of regulatory reserves to support this business. Metrics that look at the value of new businesses are commonly used by insurers to reflect the value behind policies sold currently, including those for long-term protection.
AIA Singapore said it has kept its "market leadership position" in agency distribution, boosting growth in VONB through this core distribution channel.
The insurer also grew its annualised new premium in Singapore by 26 per cent to US$547 million, driven by regular premium protection products in all channels.