(Bloomberg) -- AIA Group Ltd. unveiled its first-ever share buyback as a public company after new business value beat estimates, signaling a recovery even as the pandemic lingers in key markets including Hong Kong.

The estimate of future profitability of new policies sold rose 22% last year to $3.4 billion, the Hong Kong-based insurer said in a statement to the city’s stock exchange on Friday. That beat the 17.3% median estimate of nine analysts.

The result marks a rebound from the 33% tumble a year earlier when the pandemic hampered the ability to sell new policies face-to-face. Insurers like AIA and Prudential Plc have since boosted capability to interact with clients virtually, as well as shifted toward more profitable policies.

AIA said it plans to buy back as much as $10 billion of shares over the next three years, returning some of the surplus capital accumulated to investors.

“This capital return program enhances shareholder returns while retaining the financial strength that allows AIA to continue investing in the significant growth opportunities available to us with confidence,” Chief Executive Lee Yuan Siong said in the statement.  

Shares of AIA rose 2.9% as of 2:25 p.m. local time, the best performer on the benchmark Hang Seng Index, which dropped 1.6%.

Read Bloomberg Intelligence’s reaction to buyback

Hong Kong, its second-largest market by new business, saw the fastest growth at 37%, helped by a more profitable product mix and higher government bond yields.

Challenges remain as Hong Kong deals with its worst Covid-19 outbreak by tightening social-distancing measures and travel restrictions. Analysts at Goldman Sachs Group Inc. and Nomura Holdings Inc. have warned of a delayed reopening of borders with mainland China, where visitors to Hong Kong were once a key driver of new sales. 

An eventual border reopening will add further to business growth, Chief Financial Officer Garth Jones said in an interview with Bloomberg Television. “We’re very optimistic for the future of Hong Kong and the business in Hong Kong.” 

There were encouraging signs. Part of the Hong Kong unit, its Macau branch saw triple-digit growth in the mainland Chinese visitors business in 2021, Jacky Chan, a regional chief executive, told reporters at a news conference.

The insurer agreed to buy Blue Cross (Asia-Pacific) Insurance Ltd. from Bank of East Asia Ltd. this month. It comes with a 15-year agreement to sell policies, including heath insurance, to BEA customers in Hong Kong.

In Thailand, new business value surged 30% last year, as it shifted to more profitable products. Malaysia grew 27%. Its mainland China unit saw a 14% increase, retaining its spot as the largest contributor.  

Hired Agents

AIA boosted its agency force with former private tutors in a year when China’s after-school education industry was crushed by a regulatory crackdown, Daiwa Capital Markets analysts led by Leon Qi wrote in a Jan. 20 note. It also hired agents from struggling competitors to help jump-start a new Hubei branch, they added. 

The insurer completed the $1.9 billion purchase of a minority stake in China Post Life Insurance Co. in January, giving it access to about 40,000 outlets and more than 600 million retail customers across China. 

AIA’s operating profit rose 8% to $6.4 billion. It declared a HK$1.08 final dividend, boosting the full-year payout by 8% from a year earlier.

The increased dividend and share buyback could be equivalent to at least 4.7% of AIA’s market value as of Thursday, making it more appealing to investors on a total return basis than peers including Prudential, Bloomberg Intelligence analyst Steven Lam wrote on Friday.

The insurer saw some increases in claims in India, Indonesia and the Philippines, countries worst hit by Covid-19 in the region, Jones said. Overall claim experience remains “very good,” he added.

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