FWD finds value in new business amid slowing policy sales

The insurer’s new policy sales rose just 1% in the first nine months of 2026, but its new business value jumped 18%, underpinned by an improved product mix

Key Takeaways:

• FWD’s new business value grew to $878 million in the first nine months of this year, driven primarily by improving profit margins
• The regional insurer plans to buy back 25% of Bolttech Insurance it previously sold to complement its product offerings and distribution partnerships

By Lee Shih Ta

He’s spent much of his life trying to match the success of his father, Hong Kong billionaire Li Ka-shing, one of Asia’s richest men. Now Richard Li’s Asian insurance empire that he spent over a decade building is facing the test of boosting its returns. New policy sales for his company, FWD Group Holdings Ltd. (1828.HK), largely stagnated in the first nine months of 2026, even as the value of its new business (VNB) surged nearly 20%. Meanwhile, the company also plans to buy back a portion of a business it sold in 2020, in a new effort to supplement its group medical and general insurance offerings.

Last week, FWD said its new business sales, measured by annualized premium equivalent (APE), rose a scant 1% to $1.95 billion ($293 million) in the first nine months of the year, while its VNB grew by a much faster 18% to $878 million. Its new business profit margin increased by roughly 6 percentage points to 44.9%. VNB measures the present value of expected future profits from new policies rather than profits only in the current period. Despite practically flat sales, an improved product mix lifted the company’s expected returns on new business.

The sales slowdown stems partly from a high base in FWD’s Hong Kong and Macao markets last year. During the first nine months of 2025, new business sales in those markets surged 85%, buoyed by high-net-worth business and the expansion of distribution channels. In the third quarter of that year, sales of mid-term savings policies accelerated, accounting for nearly 30% of sales for those markets during the quarter. A decline for those policies this year dragged down the APE in Hong Kong and Macao during the third quarter year-over-year. Stripping out mid-term savings policy sales in both periods, the remaining products grew 2%.

Selling more policies does not necessarily generate proportionately more profits. Since claims, commissions, operational and capital costs vary across different products, tweaking the sales mix can elevate expected returns even when sales growth is muted.

Asian footprint buffer

Its shifting product mix also reflects trade-offs across the various Asian markets where FWD operates. While Hong Kong and Macao reduced sales of savings insurance to bolster profitability, Japan ramped up annuity products to capture demand for retirement savings. That kind of tailored strategy is built on the Asian footprint that Richard Li gradually assembled following his 2013 acquisition of ING’s insurance operations in Hong Kong, Macao, and Thailand. That geographic diversification allows the company to hunt for growth across divergent interest rate and demand environments.

The adjustments in Hong Kong and Macao have already borne fruit. VNB in those markets sustained its upward trajectory in the first nine months, rising 21% year-over-year. Local customers accounted for 58% of the growth, while Mainland Chinese visitors contributed roughly 23%, showing that growth does not rely solely on cross-border policies.

In Japan, FWD capitalized on retirement savings demand in a higher interest rate environment via Japanese yen single premium annuity (JSPA) products, driving a 59% surge in VNB over the first nine months. Still, the company anticipates that as the proportion of the savings business climbs, local profit margin growth will gradually slow, underscoring the fact that expanding sales and preserving margins do not always go hand-in-hand.

The company’s businesses in Thailand and Cambodia, meanwhile, were bogged down by interest rates. FWD estimates that improvements in its product and channel mix yielded a positive impact of 5.9 percentage points on the new business profit margin for those markets in the first nine months. However, those gains were completely wiped out by low interest rates, which dealt a 6.6 percentage point blow, leaving the segment’s VNB down 1% year-on-year.

FWD’s new business growth stands out compared with its peers. AIA (1299.HK) reported a 5% increase in VNB for the first nine months, with a 5% drop in the third quarter. Meanwhile, Prudential (2378.HK) posted a 6% rise in new business profit during the same nine-month period, though the third-quarter increase was just 1%. Both lagged FWD’s 18% growth for the first nine months and 16% third-quarter surge. That said, both rivals have life insurance operations in Mainland China, where FWD doesn’t do business, making their market profiles distinctly different.

Business buyback

Beyond upgrading its existing operations, FWD also agreed last month to acquire 25% of Bolttech Insurance (Hong Kong) Co. Ltd. from Bolttech Discovery Holdings Ltd., an entity indirectly held by Richard Li, for a base consideration of $20.72 million. FWD originally sold the asset it’s now buying in 2020, and intends to leverage its new minority stake to deepen its presence in group medical and personal general insurance. Because the sale constitutes a connected transaction, Richard Li abstained from voting on the deal.

Bolttech Insurance recorded a loss of roughly HK$31 million last year, but rebounded with a HK$21 million profit in the first half of this year. The transaction price implies a price-to-book (P/B) ratio of about 1.9 times, representing a premium above the reference level of comparable listed companies selected by the valuer, though the final consideration could be adjusted.

With the value of this investment yet to be proven, FWD must still lean on its established operations for earnings improvement. The company’s net profit stood at $172 million in the first half of the year, roughly quadruple the figure from a year earlier. While the latest nine-month update did not provide new profit figures, the company cautioned that new business profit margins could retreat in the fourth quarter, particularly in Hong Kong and Macao. Japan could also face margin pressure owing to a heavier tilt toward the savings business.

FWD’s stock, meanwhile, has hardly been a sure bet. The shares closed up roughly 3% at HK$33.62 after the announcement, only to pull back 2% the following day to HK$32.96. That price represents a roughly 13% discount to its HK$38 IPO price last year and is squarely in the middle of its 52-week range of HK$40.80 and HK$26.80.

Based on embedded value (EV) metrics disclosed in their interim reports, FWD trades at a price-to-EV (P/EV) multiple of roughly 0.78 times. That trails AIA’s 1.22 times but is in line with Prudential’s 0.82 times. While FWD has already demonstrated prowess in elevating expected returns on its new business, its next hurdle will be reigniting overall sales growth without sacrificing margins. Ultimately, it must convert the value of new policies into tangible earnings and cash flow to justify a valuation re-rating.

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