UPDATE: AIA Last Fiscal Year Net Up 54%; Sees Growth Momentum Continuing

Asian insurance giant AIA Group Ltd. (1299.HK) said Friday its net profit rose 54% in its last fiscal year, as a weaker U.S. dollar boosted its investment gains and new business surged.

AIA, which was spun off by American International Group Inc. (AIG) in a Hong Kong listing in October, said it expects to maintain strong momentum in net profit growth during the current fiscal year and that AIG's long-standing intention to divest itself of its 33% stake in the company remains unchanged.

"Recovery (in the region) is under way, and we expect much more to come" in 2011, AIA Chief Executive Mark Tucker told reporters in a conference call.

He reiterated that he sees immense growth opportunities in China, the insurer's fourth-biggest market by premium income, and added the company will focus primarily on organic growth in the current fiscal year.

AIA reported that its net profit for the 12 months ended Nov. 30 surged to US$2.7 billion from US$1.76 billion a year earlier, surpassing the average US$2.1 billion net profit forecast of 10 analysts polled earlier by Thomson Reuters. The result was also above the US$1.4 billion-US$2.3 billion the company had forecast before its listing.

The insurer said its net premiums and fee income rose 10% during the period to US$11.08 billion from US$10.10 billion, while the value of new business, a key indicator of future profitability, rose 22% to US$667 million from US$545 million, driven by growth in markets such as China and Thailand.

AIA, which has life-insurance operations in 15 Asian markets, raised more than US$20 billion in its IPO, a record for Hong Kong, backed by strong investor interest in the company's pan-Asian exposure and strong brand recognition. The share sale also contributed to the single-largest repayment of U.S. taxpayer funds used in AIG's rescue, which amounted to more than US$120 billion.

Tucker said the company recorded strong growth in profitability in the fourth quarter, and added AIA's results were boosted by gains in several Asian currencies, especially the Chinese yuan, against the U.S. dollar.

However, he said the insurer won't speculate on currency movements.

The U.S. dollar weakened against major currencies last year amid worries about the U.S. economic recovery. The U.S. currency dropped 9% against the Japanese yen and 3.7% against the British pound, while the Chinese yuan gained 2% against the U.S. dollar.

AIA's total weighted premium income rose 12% to US$13.01 billion in its last fiscal year from US$11.63 billion a year earlier, though the growth rate would be just 5% if foreign exchange effects were excluded. Investment income for the period rose 14% to US$3.48 billion from US$3.06 billion, boosted by gains in equity markets and debt securities. Excluding the effect of forex gains, investment income would have risen just 8%, the company said.

Tucker said that while AIA has a strong capital position, it will nonetheless focus mainly on organic opportunities to drive its growth this fiscal year, and the company will only consider acquisitions that would make business sense for the company.

AIA didn't propose a dividend for fiscal 2010, as stated earlier in its listing prospectus. The company said it will consider paying a semiannual dividend from the first half "if conditions remain as at present."

-By Fiona Law, Dow Jones Newswires; 852-2802-7002; [e-mail]