AIA Group shares fall 2.8 percent on CEO Tucker's departure

Michelle Price and Sumeet Chatterjee

* Tucker to retire from AIA in Sept., joining HSBC as

chairman

* The 59-year old Brit to be replaced by regional CEO Ng

Keng Hooi

* Tucker's retirement comes amid growing challenges for AIA

* Analysts say group still well-positioned, transition

manageable

HONG KONG, March 13 (Reuters) - Insurer AIA Group Ltd

shares fell 2.8 percent on Monday morning in Hong Kong

as investors digested the news that chief executive Mark Tucker

will be retiring in September after what was regarded as a

stellar seven-year stint at the helm.

A one-time professional footballer who has held several

leadership jobs including running Britain's Prudential,

Tucker is leaving the world's third-largest life insurer as it

faces new headwinds amid a regulatory crackdown in China and

sluggish growth in some other key regional markets.

He will be succeeded on Sept. 1 by Ng Keng Hooi, who has

served as AIA regional chief executive for the past six and a

half years. Ng joined AIA in 2010, before which he was group

CEO of Singapore-based Great Eastern Holdings and served a

20-year stint at Prudential.

Tucker, 59, will be a tough act to follow. Since taking the

company public shortly after his appointment in 2010, the

British-born executive has presided over a doubling in AIA

share's price - driven for the most part by a pivot in focus

towards Asia.

Over the past seven years, the company has expanded rapidly

into key growth markets including India and China, leading to a

quadrupling in the value of new business at AIA to $2.8 billion

between 2010 and November 2016, according to the company.

"Under his leadership, AIA has achieved impressive growth

via steady topline expansion, ongoing product mix improvement,

expansion in distribution channels, accretive acquisitions, as

well as expansion into new markets," analysts at Citi wrote on

Monday, noting the company was still well-positioned with an

experienced senior management team.

The group put in another strong performance in 2016 buoyed

by steady demand for policies in Hong Kong, with mainland

Chinese seeking overseas investment opportunities to cushion the

impact of a weakening yuan. China and Hong Kong together

accounted for about half of new business growth globally at AIA.

But last year's surge in mainland Chinese seeking policies

in Hong Kong has led Beijing to crack down on such purchases,

and worries about further regulatory tightening are weighing on

investor sentiment, according to analysts and industry insiders.

AIA shares dropped 15 percent in the December quarter, and

were down 6 percent for 2016 - their first annual decline since

the insurer's market IPO. Citi said on Monday the group's

historical growth had set a high base and that much of the

easiest expansion had already been realised under Tucker's

tenure.

"We also continue to believe lingering capital controls in

China may further dampen growth from here," it said.

The group's other major markets include Thailand, Singapore,

and Malaysia - the Southeast Asian countries that have become a

battleground for foreign insurers attracted by the region's

lower insurance penetration levels. Industry insiders said these

markets had also seen a tough start to the year.

“It has been a difficult start to the year for the insurance

industry. The very profitable mainland (Chinese) business is

showing signs of slowing down because of the crackdown on

capital outflow channels," said a senior executive at a rival

group in Hong Kong.

"Secondly, some other regional markets like Thailand, which

have been strong growth areas, have showed a decline recently.

So the Asian insurance industry is braced for a few tough

years."

Analysts at Morgan Stanley said Ng's strong industry

experience should make for a "manageable" transition.

(Reporting by Michelle Price and Sumeet Chatterjee; additional

reporting by Saikat Chatterjee in Hong Kong; Editing by Stephen

Coates)