Key Highlights Summary
AIA Insurance’s new business value in the first half of 2026 increased by 10% (lower than the 14% recorded in the same period last year), with outstanding performance in the mainland market (where new business value grew by 20%). The company’s shareholder return indicators reached a record high, with dividends increasing by 10%. The shift towards dividend-paying savings products led to a slight decline in profit margins, while the agency channel performed well despite weaker performance in the bank channel. The expansion of new branches was particularly successful, with growth rates exceeding 40%. Although overall performance fell short of expectations, the core market (especially the mainland) and shareholder returns were still impressive.
I. Overall Performance: Growth Slows Down, with Hong Kong Dragging Down Results
AIA’s new business value for the first half of the year (which represents the present value of future profits from new policies) increased by 10% to $3.2 billion, and annualized new premiums (converted from half-year premiums to annual figures) rose by 12% to $5.65 billion. However, the growth rate was 4 percentage points lower than the 14% seen in the same period last year. Goldman Sachs noted that performance was slightly below expectations, mainly due to the weak performance of the Hong Kong market in the second quarter. As a traditional core market for AIA, Hong Kong may have seen fewer new policy purchases in the second quarter due to economic or consumer confidence issues, which impacted overall results. Nevertheless, the company’s after-tax operating profit (OPAT) increased by 18% (at actual exchange rates), significantly exceeding the target range of 9-11% for 2023-2026, indicating strong profitability.
II. The Main Driver: The Mainland Market
AIA’s mainland subsidiary, AIA Life, saw its new business value increase by 20% to $937 million, the fastest growth among all regions. There are two main reasons for this:
1. Strong Agency Channel: The number of active agents increased by 14%, and the number of new agents grew by 25%, leading to a 24% increase in new business value through the agency channel. In other words, more agents were selling insurance more actively, resulting in higher sales.
2. Contribution from New Branches: The nine new branches added since 2019 (bringing the total to 14 regions) contributed 11% of the new business value, with a growth rate exceeding 40%, on track to meet the company’s target of compound annual growth of 40% for 2025-2030. These new regions have successfully replicated AIA’s “excellent agent” model, maintaining the same high quality of development as older areas.
III. Record High Shareholder Returns: Strong Profitability and Increased Dividends
AIA’s shareholder return indicators reached a historic high, with an annualized equity distribution return of 17.5% and an intrinsic value return of 18%. These metrics indicate the proportion of profits generated for shareholders relative to their investment. The board also announced a 10% increase in interim dividends, offering shareholders an additional 10% in returns, demonstrating the company’s generosity.
IV. Product Channel Adjustments: Shift towards Savings Products and Challenges for the Bank Channel
1. Product Mix Change: In the first half of the year, dividend-paying savings products accounted for 57% of sales through the agency channel, while protection products (such as critical illness and life insurance) accounted for 35%. Although protection product sales also increased by 15%, the higher proportion of savings products led to a 4.5 percentage point decrease in new business value profit margins to 54.1%. CEO Li Yuanxiang explained that this is due to changes in interest rates, making savings products more in line with market demand.
2. Channel Divergence: While the agency channel performed well, the new business value through the bank insurance channel decreased by 6% due to increasing competition in the banking sector, where AIA currently lacks a competitive advantage.
V. Successful Expansion of New Branches: Outperforming Expectations
Since 2019, AIA has opened nine new branches on the mainland, covering 14 regions. These new branches contributed 11% of the new business value and grew at a rate exceeding 40%, maintaining the same high quality of development as older areas. Regional CEO Zhang Xiaoyu noted that they have “disciplinarily replicated the successful agent strategies” used in established regions like Shanghai and Guangzhou, such as training professional insurance agents and providing customized services to customers, which contributed to the positive expansion results.
In summary, although AIA’s growth rate slowed down in the first half of the year, the mainland market and shareholder returns were strong highlights. The company’s product and channel adjustments have helped it adapt to market changes, and the expansion of new branches has laid the foundation for future growth. For investors, the increase in dividends and the potential of the mainland market are noteworthy. For consumers, the increased availability of savings products offers more “principal-guaranteed with dividend” options, while protection products are also growing—consumers can choose based on their needs.