AIA's China Post Life investment, Hubei licence add to medium-term China growth

It should complement AIA's operations and expansion strategy in China.

AIA Group’s proposal to invest $1.86 billion for a 24.99% stake in China Post Life will expand its mass market reach, and along with the recent addition of a Hubei branch licence, is a plus for its medium-term growth in China, according to an OCBC Investment research report.

Whilst rather unexpected, the planned investment is a positive development as a bank partner with a large customer base of mid to high-end customers should complement AIA’s operations and expansion strategy in China.

Read more: AIA to buy 25% of China Post Life

The two firms do not compete directly given their different distribution model and customer segments, the report said; and additional business opportunities with China Post Group could be explored, with possibilities such as bancassurance distribution agreements.

AIA has also received approval from the China Banking and Insurance Regulatory Commission to establish a new branch in Hubei, marking progress in its China expansion plan and meeting expectations to build one to two new branches yearly.

AIA’s China expansion plan is shaping up further, the report noted, with efforts to drive growth from its regional hubs in Beijing, Shanghai, and Sichuan. OCBC predicts that one to two new licences will be added yearly as the insurer goes ahead on its target of 12 new regions by 2030, it said.