AIA Rises After Quarterly New Business Value Beats Estimates

  • New business value surged 18%, beating 15% median estimate
  • Recent share pullback is buying opportunity, analyst says

AIA Group Ltd., 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 3.8 percent to HK$46.40 at 11:54 a.m., to the highest in two months. New business value, its key management performance measure, surged 18 percent in the three months to August, beating the 15 percent median estimate of 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 that 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 U.S. dollars.

Currencies in AIA’s major markets including Malaysia and South Korea depreciated as much as 13 percent in the three months, among the biggest decliners of emerging-market currencies tracked by Bloomberg.

AIA’s new business value would have grown 25 percent 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 percent, Credit Suisse Group AG analyst Arjan van Veen wrote in a note Friday.

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

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

AIA’s Hong Kong-traded shares slumped 21 percent in the three months to September, the worst quarter since March 2011, as concerns about slowing China growth spilled over to international stock markets. The stock gained nearly 94 percent from the first day of trading on Oct. 29, 2010, through Thursday, while the city’s benchmark Hang Seng Index was little changed.

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