AIA Malaysia Confirmed Its Confidence in Continued Growth

American International Assurance Bhd confirmed said it registered a 23% growth rate in new business for September, and it is confident of continued growth, despite the troubles of U.S. parent American International Group Inc.

The Malaysian subsidiary said its AIG parent is refocusing and maintaining a majority interest in AIA companies in Asia.

AIA’s chief executive officer, Khor Hock Seng, said AIG has made known it will retain a continuing ownership interest in AIA companies in Asia. “We do not anticipate any major changes to our operational style,” he said.

He added AIA’s business philosophy will continue to be the first-choice provider of insurance with innovative and relevant products that anticipate its customers’ priorities with an aim to exceed their expectations.

Despite the events in the U.S. financial market in recent weeks, “AIA's 23% growth rate in new business for September reflects the public’s confidence in AIA as a long-term and active participant in the local insurance and financial planning market,” said Khor in a statement.

“We are pleased to reiterate that AIA Malaysia continues to be a high-performing and profitable business that has enjoyed steady revenue growth,” added Khor.

He added the insurer is a “locally incorporated insurer, with more than 96% of our total assets invested in Malaysia.”

Insurance policies underwritten by AIA are direct obligations of its regulated business, which is subject to stringent local regulatory and capital requirements as prescribed by the Insurance Act and Regulations under close supervision by Bank Negara Malaysia, said Khor.

He also commented that the Malaysian insurance branch is “well capitalized” and it also “maintains separate reserves in Malaysia” in line with the regulations, to meet obligations to policyholders.

Khor emphasized that AIA’s Malaysian branch has been established in the country for 60 years, which has helped the insurer built a strong business foundation over time and look forward to continue servicing its customers needs now and in the future. Looking forward, “AIA Malaysia is and will now be better positioned for further growth,” he said.

AIA began operations in Malaysia in 1948 in Kuala Lumpur. It currently has a network of 23 branches nationwide and more than 1,000 employees and 8,000 agents.

The insurer’s wholly-owned subsidiary, AIA Takaful International Bhd, was granted permission by the domestic regulator, Bank Negara Malaysia, to provide composite (family and general) takaful and retakaful business in international currencies in September.

For the financial year ended Nov. 30, 2007, AIA recorded net profit of 143 million Malaysian ringgit, down 34.1%, from 217 million riggit in 2006. Total net premium for general insurance was 256 million ringgit in 2007, slightly up from 250 million ringgit in 2006. Net premium for life insurance was 2.28 billion ringgit in 2007, up from 2.2 billion ringgit in 2006.

In Asia, AIA provides a range of life insurance products through a multi-channel distribution system with an extensive agency force.

The insurer together with American International Assurance Company (Bermuda) Ltd., American International Assurance Company (Australia) Ltd. and AIA Pension and Trustee Co. Ltd. represent collectively one of the largest groups of life insurance organizations in Asia, with branch offices, subsidiaries and affiliates located in jurisdictions including China, Hong Kong, Macau, Taiwan, Australia, Brunei, Guam, India, Indonesia, Japan, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand and Vietnam.

AIA is a wholly owned subsidiary of U.S.-based AIG, which has recorded financial problems since September this year, that the Federal Reserve Bank of New York is providing a two-year $85 billion secured revolving credit facility to it to ensure that the company can meet its immediate liquidity needs.

Although the U.S. parent has been suffered from the credit crunch, its India subsidiary, Tata AIG Life Insurance Company Ltd., said it will unlikely be affected by the crisis and further expanded its business by introducing its first unit-linked health product, Tata AIG Life InvestAssure Health, recently.

In September, Tata AIG Life said the recent developments in the global financial markets have been "truly extraordinary" and the U.S. financial crisis will go through some challenging times, but it is “well capitalized” and is subject to stringent local regulatory and capital requirements. The U.S. financial crisis, therefore, “does not have any immediate material impact on its business” in India.

The Indian life insurance subsidiary also said in a statement that “its local solvency margin as at the end of August 2008 stood at over 300%” compared to the Indian Insurance Regulatory and Development Authority’s minimum of 150%.

It reassured that it continues to operate in the normal course to meet its obligations to its clients and policyholders.

Established in 2001, Tata AIG Life is a 74%-26% joint venture between Indian conglomerate, Tata Group, and AIG, providing insurance solutions to both individuals and corporate customers.

With the robust business growth in India, Tata AIG Life’s branch distribution network expanded from 80 offices to nearly 400 offices during the past 18 months. It aims at further expand its total offices to 500 in the coming 12 months.

(By Rebecca Ng, Hong Kong news editor: [email protected])