FWD Group Holdings: 1H26 Preview: Turnaround delivery could reset the valuation debate

Research evidence excerpt

FWD Group Holdings: 1H26 Preview: Turnaround delivery could reset the valuation debate

he sustainability of the HK business, with HK contributing 50% of FY25 NBV Key Changes (FYE Dec)

and MCV accounting for 27% of that. Broker-channel reliance, at 37% of FY25 Prev Cur Δ

Adj. EPS - 26E ($) 0.22 0.25 9.2%

total APE in 2025, has added to concerns amid recent HK MCV uncertainty Adj. EPS - 27E ($) 0.30 0.29 -5.1%

(link). Second, Thailand has become a debate, given weak financial markets,

rising medical claims and less stable industry trends after co-payment Style Exposure

introduction in Mar-25. Third, the absence of a dividend proposal and thin daily

trading liquidity of around US$1.3m (3-month average) remain clear

negatives.

• Strong 1H26 print ahead. We forecast 1H26E NBV of US$572m, up 13%

oya, supported by both volume growth and margin expansion. In HK, we

expect continued life sales strength from FWD’s multi-channel strategy across

domestic and MCV customers, helped by its sizeable agency force and top 5

MDRT insurer in Hong Kong (26th worldwide) (link). We also expect strong

business momentum in Japan and EM ASEAN. As such, we expect

management to sound confident on business delivery and the outlook during

the 1H results briefing. We also expect strong in-force cash generation to more

than offset new business strain and financing costs, with net underlying free

surplus generation of US$307m, down 26% oya. This reflects a one-off US

$100m adjustment related to Japan’s solvency capital framework change, but

excludes the opening adjustment from the reinsurance transaction. On a

comparable basis, 1H25 net UFSG before the reinsurance transaction was US

$315m. We forecast OPAT of US$287m, up 14% oya, CSM balance of US