UPDATE: AIA's New Business Value Climbs 40% In Fiscal 2011; Beat Estimates

HONG KONG (Dow Jones)--Asian insurance company AIA Group Ltd. (1299.HK) Friday beat estimates to report its highest ever value from new policies in fiscal 2011, thanks to robust premium-income growth in its major markets of Hong Kong, Singapore, Malaysia and China.

AIA's new business value, a key measure of profitability for life insurance companies, surged 40% to US$932 million in the 12 months ended Nov. 30, up from US$667 million a year earlier. This was higher than the average new-business value forecast of $870.5 million in a Dow Jones Newswires poll of eight analysts.

The insurance company, whose largest shareholder is American International Group Inc. (AIG) with a 32.89% stake, managed the performance despite weaker fourth-quarter sales in Thailand amid flooding in the country.

The company also said it expects to maintain the pace of growth in the current fiscal year.

"I am confident that we will continue the underlying momentum established over the last 18 months as we take full advantage of the outstanding opportunities presented by the Asian markets," Chief Executive Mark Tucker told reporters in a teleconference.

Hong Kong, AIA's biggest market, registered 45% growth in new-business value, due to improved agency sales and higher margins combined with a better product mix, the company said. New-business value for Singapore surged 58%, while in China and Malaysia it jumped 50% and 49%, respectively.

During the period, the insurer's value-of-new-business margin increased by 4.6 percentage points to 37.2%, and annualized-new-premium sales were up 22% at $2.47 billion.

However, AIA's net profit in the last fiscal year dropped 41% to US$1.60 billion from US$2.70 billion a year earlier.

Tucker attributed the fall to weak investment returns, which dropped 73%, amid mark-to-market equity declines over the year. The Hong Kong benchmark Hang Seng Index was down 22% during the life insurer's reporting period.

Though, "as of today, the negative market movements have been full reversed," Tucker said, adding that equity markets in the region have recouped much of the losses so far in this fiscal year.

Tucker also said that given the insurer's strong capital position, it would consider acquisition opportunities if it added shareholder value. But he refused to comment on whether AIA would join the bidding race for ING Groep NV's Asian business and on the possibility of AIG selling part of its stake in the company.

The company has decided to pay a final dividend of HK$22 cents a share for 2011, making the full year total dividend payout HK$33 cents per share.

Investors cheered AIA's results, pushing up its Hong Kong-listed shares 2.9% higher to HK$28.20 at the midday break.

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