AIA's recently released 2025 annual report serves as a prism reflecting the gap between its global strategy and the realities of the Chinese market. This report, the first led by Mark Tucker since his return as independent chairman in October of the previous year, portrays the group's "strong" performance while inadvertently revealing a more complex picture of diverging growth rates, high costs, and signs of fatigue in key markets.

At the group level, the 2025 performance figures show notable highlights: new business value increased by 15% year-on-year to $5.516 billion, after-tax operating profit reached $7.136 billion, earnings per share grew by 12%, and insurance service performance rose by 18% to $6.772 billion. These macro-level figures support management's characterization of "strong performance." However, when focusing on its second-largest market—Mainland China—and the sky-high compensation of top executives, a clearer image emerges of slowing growth and structural questions about scale versus quality.

**Mismatch Between High Compensation and Growth Contribution** Compensation structure offers a window into corporate governance and strategic direction. The annual report shows that Executive Director, CEO, and President Yuanxiang Li received total 2025 compensation of $14.7711 million, approximately RMB 106 million, maintaining the high level seen in the previous year. Independent Chairman Mark Tucker received compensation of $584,800. Total remuneration for key management personnel increased from $55.1369 million in 2024 to $61.6628 million, a rise of over 11.8%.

The issue is not high compensation itself, but rather its relationship to the quality of business growth driven, particularly in core markets. Li Yuanxiang has repeatedly emphasized in public that "Mainland China remains the most important market," noting that it ranks "first" in terms of future growth potential and contribution to the group. Yet, this very market, positioned as "number one," achieved only a 2% growth rate in new business value for 2025, significantly lower than the group's overall 15% growth and far behind the 28% growth rate in Hong Kong.

In terms of contribution share, Mainland China's new business value was $1.240 billion, accounting for 22.5% of the group total, lagging behind Hong Kong's $2.256 billion, which represents 40.9% of the total. A market labeled "first" and directly steered by a CEO with an annual salary exceeding RMB 100 million is seeing growth momentum advance at only a single-digit pace, while compensation costs rigidly increase by tens of millions of dollars. This trend of diminishing marginal returns on investment deserves scrutiny from shareholders and the market.

**Structural Reasons for Slowing Growth in the Mainland Market** AIA Life Insurance, AIA's wholly-owned subsidiary in China, has been operating for nearly six years since its establishment in 2020. In 2025, it achieved insurance revenue of RMB 82.415 billion, a year-on-year increase of 14.72%, and net profit of RMB 12.131 billion, up 44.35% year-on-year. While the absolute figures are still substantial, the trend of slowing growth is evident. Compared to the 18.23% growth in insurance revenue and 96.95% growth in net profit in 2024, these two indicators narrowed by 3.5 percentage points and over 52 percentage points respectively in 2025, indicating a sharp slowdown in profit growth.

More notably, alongside scale expansion, financial health indicators showed volatility. As of the end of 2025, AIA Life's total assets were RMB 490.93 billion, up 19.12% year-on-year, but net assets decreased by 8.30% compared to the end of the previous year to RMB 42.837 billion. Regarding solvency, the core solvency adequacy ratio and comprehensive solvency adequacy ratio were 226% and 335% respectively, down 16 and 23 percentage points from the end of the previous quarter. This "dual decline" trend during a business expansion phase warrants close attention, reflecting challenges in balancing capital consumption with business growth.

**Agent Model Strength Persists, but Value Rate Declines** AIA has long relied on its "best-in-class agent" strategy in the Mainland China market. In 2025, this channel still contributed 85% of new business value, with new agent recruits increasing by 14% and the total number of active agents rising by 8%, demonstrating its strong organizational capabilities in recruitment and retention. The high-quality operation of the agent model is a core differentiator for AIA compared to many domestic Chinese insurers, a point particularly salient against the backdrop of an overall contraction in the industry's agent force.

However, the decline in the new business value rate should not be overlooked. In 2025, the new business value rate for Mainland China was 57.6%, not only lower than Hong Kong's 68.5% but also indicating pressure on product mix, channel costs, or pricing strategies from market conditions. In a macro-environment characterized by intensified competition in the bancassurance channel, a downward trend in interest rates, and increasing client preference for savings-oriented products, maintaining a high value rate has become more challenging. If the value rate remains under pressure, even if new premium income continues to grow, the actual embedded value created could be diluted.

**New Regional Expansion: Gap Between High Targets and Reality** In 2025, the combined new business value from AIA's nine new regions (Tianjin, Hebei, Sichuan, Hubei, Henan, Anhui, Shandong, Chongqing, and Zhejiang) was $118 million, representing growth of 45%. While the growth rate appears impressive, in terms of scale, this figure accounts for only 9.5% of the total new business value in Mainland China. In August 2025, AIA set a target to achieve a 40% compound annual growth rate (CAGR) for new business value in these new regions from 2025 to 2030.

Starting from a base of $118 million, achieving 40% CAGR implies that new business value from these regions would need to reach approximately $630 million by 2030. Whether this target is attainable depends on multiple factors, including the pace of branch network expansion, the productivity release of new branches, and competitive capabilities against local market players. Currently, AIA Life remains in an investment phase in the nine newly operational regions, with limited scale contribution. Achieving a more than fivefold increase in five years requires sustained capital investment, channel development, and brand penetration, posing a test for the parent company's resource allocation and operational capabilities.

**Governance Transition and Strategic Continuity** In March 2025, Xiaoyu Zhang was promoted from General Manager of AIA Life to Chairman. A veteran who joined AIA in 2000 and gained experience in actuarial, administration, business development, and China CEO roles, his first-year report card under his leadership exhibits characteristics of steadiness over aggressiveness. The narrowing business growth, decline in net assets, and drop in solvency ratios may reflect a cautious approach by the management team during the transition period in balancing market timing, capital management, and business expansion.

For foreign insurers, the particularity of the Chinese market lies in the need to maintain globally consistent operating standards and risk appetites while simultaneously adapting to the competitive pace and regulatory environment of the local market. As a local manager deeply entrenched in the Chinese market, Zhang Xiaoyu's strategic choices are likely inclined towards stability. However, the cost of this stability might be falling behind some aggressively expanding domestic competitors in terms of scale and market share in the short term.

**Comprehensive View: Underlying Concerns Beneath the Glow** From an overall perspective, AIA faces three structural challenges in the Mainland China market.

First, a transition in growth drivers. The shift from early reliance on blue-ocean opportunities in single cities and high-net-worth segments to nationwide expansion, channel diversification, and targeting broader customer segments in a competitive red ocean is eroding the previous advantages of high value rates and low competitive intensity. The slide in new business value growth from higher levels in 2024 to just 2% in 2025 is not a short-term fluctuation but the result of combined effects from market competition, interest rate environment, and changing customer demographics.

Second, rigidity in the cost structure. Executive compensation remains at the top of the industry, with total management remuneration growing over 11% year-on-year, while new business value growth in Mainland China was only 2%, and net profit growth halved from 96.95% to 44.35%. The widening gap between human capital costs and value creation will erode shareholder returns over the long term.

Third, marginal deterioration in financial health indicators. The decline in net assets and the consecutive quarterly drops in solvency adequacy ratios reflect that an optimal balance has not yet been achieved among asset-liability matching, capital planning, and the pace of business expansion. During a period of declining interest rates, insurers already face interest spread loss risks. If solvency continues to be under pressure, it could impact future business expansion potential and the stability of regulatory ratings.

In summary, AIA's 2025 annual report reveals the tension for a leading foreign insurer between scale, compensation, and growth. The stark contrast between Yuanxiang Li's RMB 100 million-plus salary, the continued rise in total management remuneration, and the mere 2% increase in Mainland China's new business value—coupled with a new business value rate lower than Hong Kong's, a decrease in net assets, and a dual decline in solvency—is pronounced. Although new regional expansion has high growth targets, the current scale is insufficient to effectively support overall performance.

While the "best-in-class agent" strategy remains solid, the questions AIA needs to answer are becoming more pointed: When growth in the core market can no longer match the increase in executive pay, when the new business value rate remains under pressure, and when financial indicators begin to show signs of marginal weakening, has the time come for this century-old insurer, known for its stability, to recalibrate the logic of its growth story in China?