By Adwitiya Srivastava and Aaditya GovindRao

(Reuters) - Hong-Kong based insurer AIA on Friday posted an 18% rise in annual value of new business (VONB) but missed estimates, while announcing a $1.6 billion share buyback that analysts said fell short of market expectations.

The company's shares fell as much as 4.2% by 0615 GMT, hitting their lowest level since March 5. The stock was also the top loser on the Hang Seng Finance Index, which was up 1.6%.

AIA approved a new $1.6 billion buyback plan, citing its strong financial position. Analysts at Jefferies, however, said the buyback fell short of expectations.

The company had last approved a share buyback program in April 2024, extending it by about $2 billion.

It also declared a final dividend of 130.98 Hong Kong cents per share, up from 119.07 Hong Kong cents declared last year.

"In aggregate, AIA's dividends and buybacks thus offer investors a total yield that is surprisingly competitive with lower growth global insurance peers," Jefferies said.

AIA's VONB, which gauges expected profit from new premiums and is a key measure of future growth, rose to $4.71 billion on a constant currency basis for the year ended December 31, from $4.03 billion a year earlier.

It, however, missed a Visible Alpha consensus estimate of $4.78 billion, according to Jefferies.

Its key onshore China business logged a 20% rise in VONB for the year, while the Hong Kong division jumped 23%.

The firm's VONB margin grew by 1.9 percentage points, owing to a favourable product mix shift and repricing efforts in Hong Kong and China, its main markets.

(This story has been refiled to add the dollar symbol in the headline)