American International Assurance Group Limited
Autor: ruoyuchen2 • February 17, 2017 • Coursework • 2,153 Words (9 Pages) • 979 Views
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Background
American International Assurance Group Limited (AIA) (1299.HK) was founded in 1919 in Shanghai and extended to Hong Kong in 1931. It was listed on HKEx in 2010 and included in HSI the next year.
AIA owns branches and subsidiaries in 18 markets including Hong Kong. In terms of life insurance premiums, the group is a leader in Asia-Pacific region. According to its annual report, AIA is the world 's second largest listed insurance company (in market value). Up to May 31, 2016, the Group's total assets amounted to 1,810 billion US dollars.
Historical Financial Analysis
AIA has delivered excellent growth across all of its financial metrics with recorded new business profitability, significant growth in earnings and strong underlying free surplus generation.
As for the investment income, underlying growth in the business and higher investment income were partially offset by surrender claims, but still grows at a steady pace from
2014 – 2015 (Table1), which could bring more profit to investors.
In the meantime, AIA also has a significant growth in the value of new business. By May 31, 2016, its new business value had reached 1.26 billion dollars, while the profit rate of new business value had increased by 2.4% during six months. Total weighted premium income was 10.332 billion dollars.
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(Table 1)
In conclusion, AIA’s has the ability to deliver a strong and resilient performance through out market cycles. It is ideally placed to continue to deliver profitable new business growth and increasing returns to its shareholders.
Competitive advantages
- Strong Financial Background
AIA has a strong financial background in Hong Kong stock market. It has strength in cash flow and capital. According to the 2016 interim report of AIA, at constant exchange rates, the basic free earnings generated during the period increased by 12% to $ 2,073 million. The implied value equity is $ 41.7 billion. The solvency ratio of AIA calculated on the basis of the Hong Kong Insurers Ordinance is 381% which is much higher than the required ratio (150%) and its opponents’, e.g. Prudential (193%). All of these indicate that AIA has a strong financial background.
- Innovative Product
AIA aims to make a positive impact on their customers’ lives by supporting them through the uncertainties of life and helping them plan for the future. Therefore, it developed new products to satisfy their customers’ needs. For instance, it developed protection products that meet changing personal needs, and a heightened emphasis across the region on the healthcare in 2015. And these products as the new business mentioned above have brought strong increase in market performance. Besides, AIA Vitality (a mobile APP) was launched in Hong Kong aiming to help their customers to keep healthy lifestyle, which also differentiates AIA in the insurance market.
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