Formerly part of the American International Group (AIG), which required a US government bailout at the height of the global financial crisis in 2008, Hong Kong-based American International Assurance (AIA) separated from the group in 2009. A plan for UK-based Prudential to buy AIA for US$35.5 billion fell through, and AIA held an initial public offering in Hong Kong in 2010, raising US$20.5 billion.
AIA profit rises 89pc to beat market target
Surge in new business amid weakness in the US dollar helps insurer post US$3 billion gain
AIA Group, the third-largest Asian-based insurer by market value, reported a higher-than-expected 89 per cent growth in net income last year, helped by investments, stronger Asian currencies and product improvements.
Net income rose to US$3 billion, or 25.1 US cents a share, in the year to November from US$1.6 billion, or 13.3 US cents a share, a year earlier, the company said in a statement to the stock exchange yesterday. The figure beat the US$2.7 billion average estimate of 12 analysts.
Value of new business rose 27 per cent to US$1.19 billion, the first time it topped US$1 billion in at least four years. Chief executive Mark Tucker has been focusing on the indicator of projected future profitability of new policies after AIA was hurt by financial trouble at former parent American International Group, and Prudential's attempted takeover in 2010.
"We have built the momentum," Tucker said. "There is a lot more to come."
AIA's share price has risen 60 per cent since it became a public company in October 2010, beating the 8.8 per cent slide in the Hang Seng finance sub-index, as Tucker rejuvenated new policy sales and expanded in Southeast Asian markets. The stock has trailed the gauge since the middle of November last year, ahead of AIG's December sale of its remaining stake.
"Beating the consensus should provide solid upside momentum," ICBC International said in a report this month, which gave a "buy" rating for the stock and raised its price target by HK$5 to HK$37. "The equity market indices performance of AIA's markets was better than expected in the second half."
The stock yesterday closed 4.1 per cent higher at HK$32.85.
Stocks in AIA's six-largest markets advanced a weighted average of 12 per cent in the second half, adding to the 5.5 per cent gain in the previous six months, according to a report by Credit Suisse last week.
Currencies in the six markets - Hong Kong, mainland China, Thailand, Singapore, Malaysia and South Korea - strengthened 3.1 per cent against the US dollar in the second half, the report said, bolstering results of AIA, which sells policies in local currencies while reporting earnings in US dollars.
Volatility in stock markets amid fallout from the financial and debt crises has weighed on the earnings of AIA, which has delivered consecutive quarters of new business growth. Market-value loss of stock investments led to a 41 per cent net income decline in 2011 for the insurer that books fair-value changes of equity holdings through profit and loss accounts.
AIA declared a final dividend of 24.67 HK cents a share.