AIA’s net income slipped to $2.82 billion, or 23.5 cents a share, in the 12 months through November, from $3.02 billion, or 25.1 cents a share, a year earlier, the Hong Kong-based company said in a statement to the stock exchange today. The profit compared with the $2.83 billion mean estimate of 10 analysts, according to data compiled by Bloomberg.

The company’s value of new business rose 25 percent to $1.5 billion, surpassing the 23.4 percent growth estimated by eight analysts surveyed by Bloomberg.

The results show continued underlying business growth for the insurer, whose share price fell as much as 14 percent since an October peak as worries about the global economy fueled stock market corrections. Analysts at Credit Suisse Group AG and Deutsche Bank AG have highlighted challenges including weaker Asian currencies and stock markets as well as political turmoil in Thailand, one of AIA’s largest markets.

“The group has achieved record results for each of our key performance metrics driven by strong operating performances against a backdrop of weaker Asian equity markets,” Chief Executive Officer Mark Tucker said in the statement.

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AIA booked $424 million of net gains from stock investments in its income statement, 46 percent less than 2012. Stock losses led to a 41 percent drop in AIA’s profit for 2011, the only previous year when its earnings missed analyst estimates compiled by Bloomberg.

Operating Profit

AIA’s profits beat analyst estimates in two of the previous three years since the former unit of American International Group Inc. went public in October 2010. The stock has gained 90 percent over the initial public offering price, outperforming the 9.5 percent retreat of the Bloomberg Asia-Pacific Insurance Index which tracks 24 insurers in the region.

AIA’s after-tax operating profit grew 16 percent to a record $2.5 billion last year, bringing the cumulative increase since public listing to about half, according to its statement.

“This is a key positive for us as a return to equity generation is still one of the few weaknesses of the group from a valuation perspective,” Credit Suisse analyst Arjan van Veen said in a research note today.

Tucker has focused on the value of new business, a gauge of projected future profitability of new policies, as the management team’s key performance measure, shrugging off short-term share price and profit fluctuations.

New Business

AIA said new business is on track to triple since 2009 as it increases the number of agents, improves their productivity and shifts toward more profitable products.

Annualized new premium, which tracks new policy sales, grew 24 percent to $3.3 billion. New business margin, or new business value as a percentage of annualized new premium, widened by 0.5 percentage point to 44.1 percent over the 12 months.

AIA announced in December that it signed an exclusive 15-year bancassurance agreement with Citibank to sell policies in 11 Asia-Pacific markets.

The insurer operates in 17 markets, selling policies in local currencies and reporting financial figures in dollars.

Currencies in Thailand and Malaysia, its second and fifth markets by new business value, have depreciated more than 7 percent against the greenback since the end of May 2013 as the anticipated scale-back of monetary stimulus in the U.S. reduced demand for emerging market currencies.

AIA’s embedded value increased 8 percent to $33.8 billion last year. The measure is used to assess the economic worth of life insurers.

The company declared a final dividend of 28.62 Hong Kong cents a share, bringing full-year payout to 42.55 Hong Kong cents, 15 percent more than last year.

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

http://www.bloomberg.com/news/2014-02-20/aia-profit-falls-7-on-weaker-stocks-new-business-value-rises.html

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