Company Reports

AIA's first-half value of new business growth decelerated to 13% on an actual exchange rate basis from 17% in the first quarter.

AIA's shares fell 6% on Aug. 6 after media reports claimed that China's tax bureaus had begun enforcing a 20% personal income tax, or PIT, on gains from offshore insurance policies, including dividends and interest earned on prepaid premiums, with retrospective application to 2019.

AIA's shares fell 13% month to date, partly on market concerns that China's tightening of cross-border investment will negatively affect the Hong Kong-based insurer.

AIA's first-quarter value of new business, or VONB, increased 13% year on year. VONB margin declined 1.8 percentage points to 56%.

AIA Group delivered 17% growth in the value of new business and 12% growth in operating profit after tax in 2025. Embedded value equity per share strongly rebounded to 14% growth from a low-single-digit pace since 2022.

AIA's shares rose 47% in 2025 and 6% year-to-date, in line with peers. Its shares outperformed the broad market on strong growth momentum in the China and Hong Kong markets. AIA will announce 2025 results on March 19.

As a leading life insurer in the Asia-Pacific region, AIA enjoys an entrenched position in most markets in which it operates. While we expect regional growth to be sluggish over the next 12 months, we believe AIA's established and broad distribution networks, strong product offerings, and diversified geographic mix should enable the company to maintain decent sales growth and support a valuation premium over peers.

AIA's cumulative nine-month value of new business accelerated to 19% year on year from 14% in the first half. VONB margin further expanded 4.6 percentage points to 57.9%.

AIA's interim value of new business accelerated to 14% year on year from 13% in the first quarter. VONB margin expanded 3.8 percentage points to 57.7%.

As a leading life insurer in the Asia-Pacific region, AIA enjoys an entrenched position in most markets in which it operates. While we expect regional growth to be sluggish over the next 12 months, we believe AIA's established and broad distribution networks, strong product offerings, and diversified geographic mix should enable the company to maintain decent sales growth and support a valuation premium over peers.

AIA's first-quarter value of new business increased 13% year on year, and VONB margin expanded 3 percentage points to 57.5%.

We retain our fair value estimate of HKD 96 per share for no-moat AIA. The stock is undervalued trading at 1.1 times 2025 EV equity per share. AIA is our top pick and we like its steady growth outlook and progressive dividends. The stock offers a 6% total shareholder return via USD 2.4 billion dividend payment and USD 2.3 billion buyback. Given its near-term goal to reduce its capital ratio and achieve strong OPAT growth, we see upsides in both metrics.

We retain our fair value estimates for Chinese insurers after a recent regulatory announcement that establishes a dynamic adjustment mechanism for the pricing rate on life insurance products. The current pricing rate remains unchanged, as the latest published reference rate did not trigger the adjustment mechanism. While market concerns over insurers’ spread loss risks are likely to persist, the pricing adjustment mechanism, coupled with recent central bank warnings about risks in China’s overheated bond market—where long-term yields have reached record lows—should help support long-term rates and enhance insurers’ liability cost management.

We maintain our fair value estimate of HKD 96 for AIA. The company’s first three-quarter growth in the value of new business was 20% on an actual currency basis, aligning with our full-year forecast of 20% year-on-year growth. The stock remains undervalued, trading at 1.2 times the projected 2024 embedded value and a 2.6% dividend yield. AIA shares have risen 13% since September, supported by optimistic management guidance for 11% annual growth in operating profit after tax from 2023 to 2026 and a stimulus package in China. Despite this, AIA underperformed peers that saw 25% to 45% increases during the same period. This discrepancy likely stems from investor concerns about macroeconomic headwinds, including depreciating local currencies, stock market volatility, and deflationary pressures in China, which may affect EV and VNB growth. However, we believe some of these headwinds are starting to reverse, such as the emergence of lower US interest rates and a stock market rally in China—factors that should boost AIA’s investment returns and net assets. Consequently, we see potential upside to our full-year growth assumptions for net profit and EV of 48% and 5%, respectively, which could drive a gradual rerating.

We retain our fair value estimate of HKD 96 following AIA’s respective interim 21% and 47% year-on-year growth in value of new business, or VNB, on an actual currency basis, and net profit. The results are on track to deliver our full-year growth projections at 19% and 48% in VNB and net profit, respectively. Positively, management lifts operating profit after tax, or OPAT, per share growth target to 11% from 9% from 2023 to 2026. Though the stronger-than-expected guidance lifted AIA shares by 5.6% on Aug. 22, the stock is still trading at a historical low 1.1 times 2024 embedded value equity per share. Shares have declined 23% year to date as investors remain worried about macroeconomic headwinds including depreciating local currencies, stock market volatility, and falling interest rates in China that hamper growth in embedded value and VNB in 2024.

As a leading life insurer in the Asia-Pacific region, AIA enjoys an entrenched position in most markets in which it operates. While we expect regional growth to be sluggish over the next 12 months, we believe AIA's established and broad distribution networks, strong product offerings, and diversified geographic mix should enable the company to maintain decent sales growth and support a valuation premium over peers.

As a leading life insurer in the Asia-Pacific region, AIA enjoys an entrenched position in most markets in which it operates. While we expect regional growth to be sluggish over the next 12 months, we believe AIA's established and broad distribution networks, strong product offerings, and diversified geographic mix should enable the company to maintain decent sales growth and support a valuation premium over peers.

AIA Group experienced a strong first-quarter 2024 performance led by robust growth in the value of new business. This, coupled with news of an enlarged share buyback, lifted AIA shares by 6.1%. Despite the share price runup, AIA is trading at a historical low of 1.1 times 2024 embedded value equity per share, and we believe the stock is undervalued. While we lift our VNB forecast, we retain our fair value estimate of HKD 96 per share as our full-year net profit growth and embedded value growth projections are largely unchanged at 34% and 5.5% year on year, after accounting for higher-than-expected medical claim expenses.

AIA Group’s 2023 growth in value of new business on an actual exchange-rate basis was in line with our expectation at 30% year on year. The results again reflect AIA’s resilient and strong new business growth across Asia, with mainland China, Hong Kong, the Association of Southeast Asian Nations excluding Vietnam, and India all delivering double-digit value of new business growth in 2023. However, despite the strong growth and management’s firm commitment to steadily increase the dividend, AIA’s share price dropped 4% on the first day following the results announcement. We believe the market is ignoring the recovery of mainland Chinese visitor, or MCV, business and overconcerned about the asset risk and slowing macro conditions in China. We retain our HKD 96 fair value estimate. AIA is trading at a historical trough of 1.2 times 2024 embedded value equity per share, and we think the shares are undervalued.

AIA Group’s financial highlights showed third-quarter value of new business, or VNB, on an actual exchange-rate basis grew strongly at 34% year on year from 15% in the second quarter. Cumulative nine-month VNB growth climbed to 33% from 32% in the first half. We increase our 2023 projections for annualized new premium, and VNB growth by 3 and 5 percentage points, respectively, to 45% and 30%, following the higher-than-expected third-quarter growth. We keep our HKD 96 fair value estimate and we think AIA remains on track to deliver our 2023 growth forecasts for embedded value, or EV, and operating profit at 12% and 2%, respectively, year on year. AIA is trading at 1.4 times 2024 EV equity per share and we believe the stock is undervalued. The results confirm our view that concerns about AIA China’s slowing VNB growth and potential margin dilution from increased sales of saving products were overblown. We continue to expect AIA’s premier agency force and ongoing mainland China expansion plan to support a better-than-peer long-term growth.