Hong Kong – AIA Group has reported an 18% increase in the value of new business for 2024, driven by robust growth in its core markets in Hong Kong and mainland China. The insurer expressed confidence that its operations and investments are resilient enough to navigate the current global geopolitical and economic uncertainties.
The company’s new business value, a key indicator of future profits from new premiums, reached a record $4.71 billion on a constant currency basis, up from $4.03 billion the previous year. This significant increase was fueled by strong demand in Hong Kong and mainland China, where new business value grew by 23% and 20%, respectively.
Growth Driven by Chinese Investors and Market Demand
AIA’s Chief Executive Officer, Lee Yuan Siong, attributed the company’s performance to rising demand among Chinese investors seeking to diversify their assets amid a slowing economy. He emphasized the company’s ability to maintain resilience across various economic conditions, stating, “We are very positive about the prospects for future performance in the market.”
Despite the positive results, AIA’s Hong Kong-listed shares were down about 2% in afternoon trading on Friday. However, they have risen by approximately 11% since the start of the year, underperforming the 22% rise of the Hang Seng Index.
Navigating Market Challenges and Geopolitical Tensions
The life insurance sector has faced challenges due to lower interest rates and a slowing Chinese economy. Additionally, the gap between sovereign bond yields in China and the U.S. has widened, reflecting a rally in Chinese government bonds and a decline in U.S. notes. However, U.S. bond yields have bounced back recently due to softer inflation reports.
AIA, which invests around 80% of its portfolio in fixed-income products, has gradually increased its exposure to global equities over the past few years. Despite heightened global market volatility, Chief Investment Officer Mark Konyn remains optimistic about risk assets. “We are positive on risk assets despite the volatility,” he said during a news conference.
Geopolitical Tensions Have Limited Impact on Operations
AIA executives also downplayed the potential impact of U.S. President Donald Trump’s changing tariff policies on their business. CEO Lee emphasized that “geopolitical competition between the U.S. and China does not impact the demand for our products and services in the very local markets we operate in.”
Mainland China and Hong Kong Markets Show Resilience
Since the easing of pandemic-related restrictions, Hong Kong’s life insurance market has seen a recovery, with AIA noting a surge in demand from mainland Chinese visitors. The group recorded a new high for the value of new business from mainland Chinese visitors to Hong Kong in the fourth quarter of 2024, following the resumption of cross-border travel in early 2023.
In mainland China, AIA targets wealthier clients, allowing the company to remain resilient through economic cycles. The number of new customers in the region rose by 9% in 2024, contributing significantly to the company’s overall performance.
Expansion in Mainland China and Southeast Asia
According to Fitch Ratings’ senior director Terrence Wong, mainland China is likely to become the largest contributor to AIA’s new business in the long term, surpassing Hong Kong. In 2024, mainland China accounted for 24% of the group’s new business, up from 13% in 2014.
Southeast Asia also saw impressive growth, with new business value rising by more than 15% to $1.7 billion, driven by double-digit growth in Thailand, Singapore, and Malaysia.
AIA Announces $1.6 Billion Share Buyback and Dividend Increase
AIA has also announced a $1.6 billion share buyback plan, which is expected to be completed by the end of this year. This move is part of the company’s efforts to meet its payout ratio target. Additionally, AIA declared a final dividend of 130.98 Hong Kong cents per share, reflecting a 10% increase from the previous year.
Chief Financial Officer Jones said the increased dividend and share buyback plan demonstrate the company’s confidence in its future prospects.
Annualized New Premiums Rise by 14%
In line with the growth in new business value, AIA reported a 14% increase in annualized new premiums, reaching $8.6 billion in 2024. This growth was driven by a favorable product mix shift and repricing efforts in both Hong Kong and mainland China.
AIA’s Chief Investment Officer, Mark Konyn, noted that the recent rally in technology stocks has made the China and Hong Kong equity markets relatively attractive compared to global markets. However, he cautioned that it remains uncertain whether the enthusiasm will extend beyond the tech sector.
“On a relative basis, we would be constructive on the markets in this part of the world,” Konyn concluded.
With strong business performance and strategic investments in equities, AIA remains optimistic about its prospects, even amidst global market challenges and geopolitical uncertainties.
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