© Reuters. FILE PHOTO: The logo of AIA is displayed at its office in Hong Kong, China February 24, 2017. REUTERS/Bobby Yip

HONG KONG (Reuters) -AIA Group Ltd has agreed to buy a 24.99% stake in China Post Life Insurance Co., Ltd. for 12 billion yuan ($1.86 billion), it said on Tuesday, increasing the insurer’s presence in China which provided a third of its new business in 2020.

AIA said in a stock exchange filing that its wholly-owned Chinese life insurance business would remain independent of this investment.

China Post Life is a subsidiary of China’s postal service operator, China Post Group Co. Ltd. and targets Chinese mass market and emerging mass-affluent consumers selling its products via Postal Savings Bank of China, also a China Post subsidiary.

Its value of new business (VONB), which measures expected profits from new premiums and is an important gauge of future growth, was 1.866 billion yuan ($289.11 million) for 2020.

AIA’s China operations, which target middle-class and affluent customers had a VNOB of $968 million for 2020, and accounted for 32% of AIA Group (OTC:)’s total.

“The Chinese insurance market is already the second-largest in the world with immense long-term growth opportunities,” AIA’s Group Chief Executive and President Lee Yuan Siong said in a statement, adding the investment would enable AIA to benefit from additional distribution channels and customer segments.

The deal remains subject to approval from the China Banking and Insurance Regulatory Commission.

($1 = 6.4544 renminbi)

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