AIA Group Ltd., a leading Asia insurer, has reported a significant 27% increase in new business value in the first quarter of the year. This growth was primarily driven by strong performance in Hong Kong and mainland China. The company also announced an additional share buyback program, adding $2 billion to the existing $10 billion buyback program.
The measure of future profitability of new policies sold surged to $1.3 billion, up from $1.05 billion in the previous year, with annualized new premiums jumping 23% to $2.4 billion. Stripping out the effect of exchange rate fluctuations, new business value saw a 31% surge, while annualized new premiums rose by 26%.
AIA’s success in Hong Kong and mainland China can be attributed to the recovery of mainland Chinese visitor arrivals in Hong Kong, reaching 71% of the 2018 level. In mainland China, insurance is gaining popularity as a wealth management tool, with the company’s tax-deferred pension savings products seeing continued success.
Despite the positive performance, AIA’s Hong Kong-listed shares have experienced a 38% decline since 2022. This decline is partly due to investor bearishness on Hong Kong and mainland Chinese companies, as well as concerns about a growth slowdown in new business value.
Investors may have also been spooked by a recent regulatory crackdown on unlicensed insurance sales in Hong Kong, with the Insurance Authority raiding the offices of a licensed insurance broker and a referral company suspected of using unlicensed referrers to advise and sell insurance.
Overall, AIA’s strong financial position and operational performance have instilled confidence in investors, with the company’s strategic decisions and future outlook addressing many investor concerns.