Higher activity from agents, greater sales of investment-linked plans and growth in the Singapore group insurance business all helped boost insurer AIA Singapore in the first half.
Its value of new business for the six months to May 31 was up 19 per cent to US$142 million (S$194 million) compared with the same period a year earlier, the company said yesterday.
Annualised new premiums, a measure of business activity, rose 13 per cent to US$225 million from a year ago.
New business margin, or the value of new business as a percentage of annualised new premiums, grew to 62.9 per cent.
Operating profit after tax rose 10 per cent to US$210 million, compared with a year earlier.
IMPACT OF MEDICAL INFLATION
The percentage of claims covered under the private insurance component will go down, but that reduction would, to a large extent, be offset by the impact of medical inflation over the last three years.
AIA SINGAPORE CHIEF EXECUTIVE TAN HAK LEH
The firm said that due to the 6 per cent depreciation of the Singapore dollar against its United States dollar reporting currency, growth rates for the Singapore business are on constant exchange rates, unless otherwise stated.
It said that this provides "a clearer picture of the underlying performance of the business in the first half of 2015".
Hong Kong-listed AIA Group saw its value of new business rise 25 per cent to US$959 million, on constant exchange rates, while annualised new premiums were up 15 per cent to US$1.88 billion. The group announced a 17 per cent increase in interim dividend to 18.72 Hong Kong cents per share.
AIA Group chief executive Mark Tucker told a briefing that this was up 70 per cent since it began paying dividends in 2011.
He noted: "We can produce scale in profit growth and have also seen dividend growth. Very few companies can do both, AIA has the ability (to)... which is what makes it unique."
In a separate phone call, AIA Singapore chief executive Tan Hak Leh said the firm was pleased with the strong results in a very flat industry environment, especially in the first quarter.
Mr Tan noted that the agency's force of more than 4,200 agents is the most important distribution channel in Singapore.
The insurer noted that "two-thirds of new business applications" were submitted through the interactive point of sales system that agents use as their primary sales tool.
AIA Singapore recorded a 20 per cent increase in unit-linked value of new business in the first half, due to promoting regular premium investment-linked policies designed mostly for protection purposes, said Mr Tan.
He noted that the industry is facing several and rapid changes, including the implementation of MediShield Life at the end of this year.
With the increase in coverage from MediShield Life, the claims payout from the top-up portion of Integrated Shield Plans (IPs) is expected to fall. Insurers are expected to pay less in claims.
The five insurers that offer IP plans said they will not raise their portion of the premium for 12 months. The Straits Times had said that some of these savings should be passed on to policy holders.
But Mr Tan said there are other factors to consider in doing so. "Yes, the percentage of claims covered under the private insurance component will go down, but that reduction would, to a large extent, be offset by the impact of medical inflation over the last three years."
Instead, the aim is to manage the portfolio actively so "that the premiums will remain affordable", and the insurer will engage the industry and other stakeholders in that process, he said.
Mr Tan said: "Just like any other forms of health insurance policies in Singapore or any part of the world, it is a block of business that requires active management."
"Health insurance products are subject to the impact of claims inflation and the increase in claims utilisation," he added.