Fitch upgrades AIA Group rating
Fitch Ratings has upgraded life insurer AIA Group Limited's Long-Term Issuer Default Rating (IDR) to 'AA-' from 'A+' and affirmed the Insurer Financial Strength Ratings of AIA Company Limited and AIA International Limited at 'AA'.
The issuer ratings reflect AIA's very strong market franchise and financial performance, conservative investment mix and very strong capitalisation.
AIA and its subsidiaries comprise one of the largest life insurance groups in Asia-Pacific, with a presence in 18 markets.
Pre-tax operating return on assets remained very strong at 3.7 percent (annualised) for the six months ended May 2017 and 2.8 percent in the financial year ended November 2016 (FY16), versus the median of 1.4 percent for Fitch's 'AAA' rating category. This was attributable to robust insurance underwriting and fee-based profits due to prudent underwriting and successful customer outreach, according to the agency.
AIA's quality investment portfolio with moderate equity exposure and a high level of currency matching between assets and liabilities underpins the persistently low earnings volatility. Annualised new premiums (ANP) increased by 37 percent (yoy, on a constant-exchange-rate basis) to $3.2 billion in the first half of 2017, with regular premiums accounting for more than 90 percent of total ANP. This supported the strong 42 percent (yoy, on a constant-exchange-rate basis) expansion in value of new business to $1.8 billion, Fitch noted.
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