Hong Kong-based insurer AIA Group Ltd on Thursday reported a 37% fall in new business for the first half of the year, as the COVID-19 pandemic dented sales of its insurance products in its main markets of Hong Kong and China.
Insurers across the world have been hit by pandemic-related claims including for travel, business interruption and event cancellation, while economic slowdown and job losses have led to reduced demand for life insurance.
In Asia, insurance firms mainly rely on their army of agents for product sales, which have been dented by lockdown and social distancing measures put in place in various countries to contain the pandemic.
AIA’s new business value, which measures expected profits from new premiums and is a key gauge for future growth, dropped to $1.41 billion in the six months ended June 30 from $2.28 billion a year earlier.
China and Hong Kong together account for about half of the new business growth globally at AIA.
“In the first half of 2020, measures to contain the spread of COVID-19 across our markets have limited face-to-face sales meetings,” said Chief Executive Officer Lee Yuan Siong, adding new business sales took the biggest hit from the containment measures.
The value of new business from Hong Kong plunged 68% due to mandatory quarantine requirements for all arrivals from mainland China since early February, AIA said, while new business from China fell 13%.
The company has long benefited from demand for insurance products in its two biggest markets of Hong Kong and China, but has faced a sharp slowdown in growth in recent quarters due to anti-government protests and an economic downturn in Hong Kong.