AIA's new business growth boosts shares
Updated 09:30 PM Feb 24, 2012
HONG KONG - AIA Group, Asia's third-largest insurer, reported a 40 per cent rise in the value of new business for its fiscal full year and growth in Thailand despite last year's devastating floods, surprising analysts.
Value of new business (VONB), a key metric for insurance companies that measures the present value of future business, rose to US$932 million (S$1.17 billion) for the year ended November, while VONB margin climbed 4.6 percentage points to 37.2 per cent, AIA said.
Those numbers overshadowed a 41 per cent drop in net profit that AIA, one-third owned by bailed-out insurer American International Group, suffered due to stock investment losses.
"The value of new business came in way above consensus. We were looking for US$883 million and we were at the high end of street estimates," said Mr Stanley Tsai, an analyst at Keefe, Bruyette & Woods in Hong Kong.
"Volumes were in line or slightly below expectations, but margins were very high. That was driven mainly by Hong Kong and Thailand," Mr Tsai said.
Embedded value, another measure that analysts watch closely, rose 10 per cent to US$27 billion for AIA in 2011.
The margin on new business growth in Hong Kong last year was 56.1 per cent, in Thailand 48.8 per cent, and in Singapore 62.3 per cent.
Thailand's growth and margin on that growth came as a surprise to many analysts who had revised their models to reflect slower growth after last year's floods.
Net profit for the fiscal year fell to US$1.6 billion from US$2.7 billion a year earlier.
The slide in net profit came mainly from US$207 million worth of mark-to-market losses in AIA's equity portfolio. In 2010, that same portfolio provided an US$853 million boost.
AIA CEO Mark Tucker said that AIA's net profit figure does not include US$500 million worth of gains on bond investments and that as of Friday morning, AIA estimates its negative mark-to-market movement in equities would have been fully reversed. REUTERS
