The Zhitong Finance App learned that UBS released a research report stating that the target price of AIA Insurance (01299) was lowered from HK$104 to HK$102 to reflect the impact of macroeconomic conditions in the second half of the year (such as the Shanghai and Shenzhen 300 Index falling 7.8%) on connotative value and maintaining a “buy” rating.
Summarizing the highlights of AIA's first half year results briefing, investors paid close attention to mainland visitors to Hong Kong, as news of market regulation (such as Order No. 837, taxation) continued since the end of May 2026. AIA said that the regulatory framework has always been in place, yet demand from mainland visitors to Hong Kong is still strong. June was the strongest month in the first half of the year for the value of new business growth for mainland visitors to Hong Kong. The company emphasizes structural drivers of demand from mainland visitors to Hong Kong, including diversification of global investment opportunities, high-quality advice and flexible product design. AIA acknowledged increased competition in the Hong Kong market, but continued to focus on high-quality growth to turn into profit and cash. Financial discipline was reflected in the year-on-year increase of 6.2 percentage points to 72% in Hong Kong's new business value margin in the first half of the year. In contrast, some peers adopt aggressive pricing and prefer products with a short or less than 5-year payment period to reduce profit margins. Starting September 1, the Federation of Insurers will launch the Unified Critical Illness Definition Program. According to AIA, participation is voluntary, and most of its products are already broadly in line with the plan.
In terms of Chinese business, AIA China is still confident about the growth prospects in 2026, despite implementing Document No. 65 (Strengthening the Consistency Requirements for Bank and Insurance Channel Filing and Enforcement) on July 1. The industry is in transition, including product re-filing, but banking and insurance channels will only account for less than 15% of the value of AIA China's new business in 2025. AIA expects Document No. 65 to accelerate the industry's shift from a commission-driven model to broader competency competition.
In terms of operating profit, operating profit after tax increased 15% year-on-year in the first half of the year (actual exchange rate). The marginal release of contract services increased 11% year over year, benefiting from the accumulation of profitable business layers underwritten in previous years. Operating differences improved 22% year over year, reflecting strict expense and claims management. The generation of value-based free surpluses increased 10% year over year, benefiting from an 18% year-on-year increase in expected distributable profits from insured businesses, mainly from the Hong Kong market.