* H2 net profit $1.6 bln vs $1.04 bln consensus
* 2010 new biz value up 22 pct, slowing from 35 pct in H1
* 2010 investment income up 14 pct amid stock market rebound
* 2010 embedded value up 18 pct to $24.7 bln
* Shares up 5.2 pct vs broader market's 1.2 pct gain
(Adds CEO quotes, share movement)
By Kelvin Soh and Lee Chyen Yee
HONG KONG, Feb 25 (Reuters) - AIA , Asia's No. 3 insurer, beat forecasts with a 54 percent jump in 2010 net profit as a recovery in stock markets boosted investment income , pushing its shares up 5 percent.
The results mark a strong turnaround from the days of the global financial crisis, when terrified customers turned up in droves at the company's offices to surrender their policies fearing that AIA's parent AIG may go under. AIG spun off AIA last year, but still holds a 33 percent stake in the company.
"It was a very good set of results, especially looking at AIA's investment income for the period," said Kenneth Yue, an analyst at CCB International in Hong Kong who has an "outperform" rating on the stock.
"However, looking at the stock market's performance these two months, it might be challenging for the company to maintain that kind of performance on investments."
AIA is facing stiff competition from rivals such as Prudential and China's Ping An looking to expand in Asia's fast-growing insurance market and the company sees 2011 as "demanding operationally."
The insurer, which reported its results before the market open on Friday, did so for the first time as a listed company. AIA listed last October in the world's third biggest IPO.
Chief Executive Mark Tucker said the macro economy and political uncertainty remain the company's biggest challenges for 2011.
"I think that shouldn't take away from the fact that over the medium- and long-term opportunities in Asia are immense," Tucker said in a post-earnings call.
Asia is shaping up to be the new battleground for many insurance companies facing saturated and aging economies in their home markets, with companies such as Dutch financial group ING and Sun Life also pushing into the region.
AIA's net profit was $1.6 billion in the second half, up from the previously stated $788 million last year and better than the consensus estimate of $1.04 billion according to a poll of 14 analysts by Thomson Reuters I/B/E/S.
The company said 2010 operating profit before tax clocked in at $2.1 billion, up from $1.8 billion in 2009.
Weighing on the performance was a fall in operating margin to 13.8 percent in the second half from 18.8 percent in the first half of 2010, hit by a rise in the sale of more investment-linked products in Hong Kong that typically command lower margins.
"I think our aim is to look across all our products and ensure there's a greater protection margin there which will help move margins up," CEO Tucker said.
Investment income rose 14 percent in 2010 to $3.5 billion, helped by rebounding equities markets and appreciating Asian currencies. AIA reports in U.S. dollars, but receives much of its premiums in Asian currencies, which broadly appreciated last year.
Value of new business (VONB), a key indicator that measures the profitability of new business, rose 22 percent to $667 million in 2010, but slowed from the 35 percent in the first half.
AIA's finance chief Marc de Cure said during the call that the company's VONB growth in the second half fell on a sequential basis because of a smaller base in 2009, which exaggerated the growth seen in the first half of 2010.
Solvency ratio, which measures an insurer's ability to meet its payment obligations, rose to 337 percent from 312 percent in the fiscal first half. Solvency requirements differ depending on the market it operates in, but regulators typically require insurers to maintain an excess of assets over liabilities. (Editing by Charlie Zhu and Vinu Pilakkot)