AIA Reports 18% Growth in Value of New Business but Misses Estimates

AIA Reports 18% Growth in Value of New Business but Misses Estimates

Annual Performance Overview

AIA reported an 18% rise in the value of new business (VONB) for the year ended December 31. The VONB, a key measure of expected profit from new premiums, increased to $4.71 billion on a constant currency basis, compared to $4.03 billion the previous year. However, this figure fell short of the Visible Alpha consensus estimate of $4.78 billion.

Stock Market Reaction

Following the earnings report, AIA’s shares dropped by as much as 4.2% in early trading, reaching their lowest level since March 5. The stock was the biggest decliner on the Hang Seng Finance Index, which was up by 1.6%.

Share Buyback and Dividend Announcement

AIA announced a $1.6 billion share buyback plan, citing its strong financial position. However, analysts from Jefferies noted that the buyback amount was lower than market expectations. The company had previously approved a share buyback program in April 2024, which was extended by about $2 billion.

Additionally, AIA declared a final dividend of 130.98 Hong Kong cents per share, up from 119.07 Hong Kong cents declared the previous year. Analysts highlighted that AIA’s combined dividend and buyback offer a total yield competitive with lower-growth global insurance peers.

Regional Performance

AIA’s key onshore China business recorded a 20% increase in VONB, while its Hong Kong division experienced a 23% rise. The company’s overall VONB margin expanded by 1.9 percentage points, attributed to a favorable shift in product mix and repricing efforts in its primary markets.

Conclusion

Despite strong growth in China and Hong Kong, AIA’s performance did not fully meet analyst expectations. The market’s reaction indicates concerns over the lower-than-anticipated buyback size and the missed VONB estimate, though the company’s financial fundamentals remain strong.

“AIA Reports 18% Growth in Value of New Business but Misses Estimates” “AIA Reports 18% Growth in Value of New Business but Misses Estimates”