AIA Group Limited - FY 2025 Earnings Analysis

Performance Highlights

AIA Group posted record full-year 2025 results, with value of new business rising 15% to US$5,516 million and operating profit after tax climbing 12% per share to US$7,136 million, exceeding the high end of management's implied trajectory toward its 9–11% OPAT per share CAGR target through 2026. Underlying free surplus generation rose 11% per share to US$6,765 million, while net free surplus generation grew 14% per share to US$4,451 million, reflecting both earnings momentum and a deliberate shift toward less capital-intensive products.

Hong Kong was the standout market, with VONB surging 28% to US$2,256 million on strong domestic demand and 35% growth from Mainland Chinese visitor customers, while Mainland China delivered 2% full-year VONB growth of US$1,240 million, with momentum accelerating to 14% in the second half and more than 20% in the first two months of 2026. Agency distribution remained the primary growth engine, contributing 73% of Group VONB at US$4,273 million, with VONB margin expanding 3.4 percentage points to 71.5%, and partnership distribution VONB rose 22% to US$1,593 million with margin expanding 3.5 percentage points to 45.4%.

Management Outlook and Forward Catalysts

Management expressed full confidence in meeting or exceeding the 9–11% OPAT per share CAGR target from 2023 to 2026, supported by a contractual service margin of US$64,945 million that grew 15% and provides a structural runway for future earnings release. The approval of a US$1.743 billion share buy-back programme alongside a 10% dividend increase signals that capital generation has reached a level where management can simultaneously fund growth and accelerate shareholder returns.

The central investor debate heading into 2026 centres on whether Hong Kong's Mainland Chinese visitor-driven VONB growth is durable amid geopolitical uncertainty, and whether Mainland China's second-half acceleration can offset a softer first quarter in Thailand following new co-payment rules. Bulls will focus on the CSM compounding engine and expanding operating ROE of 15.5%, while bears will monitor medical inflation trends, macro headwinds across Southeast Asia, and the pace of new geographic expansion in China, where nine new regions contributed only US$118 million of VONB despite a 45% year-on-year increase.