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Hong Kong-listed AIA Group is preparing expansion efforts into mainland China’s more remote provinces as Beijing liberalises its foreign ownership rules for financial firms.
“We are ready to move into the new provinces if they open to us,” Ng Keng Hooi, AIA group’s CEO and president, said at a press conference.
In 2017, Beijing announced that it will allow foreign entities to own up to 51% of insurance companies within three years, followed by a total removal of the cap in five years. This is expected to intensify competition among global insurers that want a piece of the growing mainland Chinese insurance market.
Currently, foreign insurers can only operate in China with a local joint venture partner. However, AIA has special privileges to operate without a local partner in certain regions, owing to its roots in Shanghai.
AIA’s current mainland markets – the cities of Beijing, Guangzhou, Shanghai and Shenzhen as well as Guangdong and Jiangsu provinces – are among the mainland’s more affluent areas and will be the first areas other foreign insurers will be likely to set up shop in once regulations are liberalised. In the face of potential stiff competition, AIA is on the hunt for new markets, Nikkei reported.
Ng believes that AIA’s ability to work without the need for a local partner will give it an edge over its competitors.
“Unlike some of our competitors who [have] to deal with their joint venture partners, we are fortunate we are not in that situation,” said Ng. “We are excited. Because of our success [so far], when the market eventually opens up to us, we are ready to move to the new provinces.”
AIA reported on Tuesday a US$6.12 billion profit for the year ended in November, a 48% year-on-year increase. It attributed the growth to its strong results in mainland China and Hong Kong.
New business value, which insurers use to measure their future profitability, grew 28%, reaching a record high of US$3.51 billion. Mainland China recorded the largest growth in this metric, with a 60% leap to US$828 million. Meanwhile, in Hong Kong, new business value went up by 34%, dispelling fears that Beijing’s crackdown on mainland residents buying Hong Kong insurance policies would dent the company’s ability to attract new business.
