AIA's stock rises in HK after spike in new business value

An AIA advertisement in Beijing. The insurer, which operates in 18 Asian markets, would have earned more if it were not hit by depreciating currencies in its major markets.
An AIA advertisement in Beijing. The insurer, which operates in 18 Asian markets, would have earned more if it were not hit by depreciating currencies in its major markets.PHOTO: BLOOMBERG

HONG KONG • AIA Group, the third most valuable Asia-based insurer, rose in Hong Kong trading after its quarterly new business value beat analyst estimates.

Shares of the Hong Kong-based company jumped HK$1.50 or 3.4 per cent to HK$46.20 - the highest in two months.

New business value, its key management performance measure, surged 18 per cent in the three months to August, beating the 15 per cent median estimate by five analysts surveyed by Bloomberg News.

Chief executive officer Mark Tucker has more than trebled the estimated future profitability of new policies sold in AIA's five years as a public company.

Wider margin in the three months helped offset slower premium growth as weaker and more volatile stock markets hit sales of savings products.

The insurer, which operates in 18 Asian markets, was also hit by depreciating currencies as it sells most of its policies in local currencies and reports financial figures in US dollars. Currencies in AIA's major markets, including Malaysia and South Korea, depreciated by as much as 13 per cent in the three months, among the biggest decliners of emerging-market currencies tracked by Bloomberg.

AIA's new business value would have grown 25 per cent in the quarter without the currency effect, it said in a statement to the city's stock exchange. That beat the consensus analyst estimate of 20 per cent, Credit Suisse Group analyst Arjan van Veen wrote in a note yesterday.

Annualised new premiums, combining first-year premiums and 10 per cent of single premiums, increased 7 per cent in the quarter on a constant exchange-rate basis, declining 1 per cent if weaker Asian currencies were taken into account. The more moderate growth may be due to stock market swings which dampened demand for savings products, Mr van Veen wrote.

New business margin, or new business value as a percentage of annualised new premiums, widened by 8.9 percentage points to 57.6 per cent in actual exchange rates.

AIA's Hong Kong-traded shares slumped 21 per cent in the three months to September, the worst quarter since March 2011, as concerns about China's slowing growth spilled over to global stock markets.

"We see the recent pullback as a good entry opportunity into AIA," Mr van Veen said.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on October 17, 2015, with the headline 'AIA's stock rises in HK after spike in new business value'. Print Edition | Subscribe