Great Eastern sees 56% fall in Q1 profit on unrealised fair value losses

Operating profit from the insurance business fell 20.1 per cent to S$120.4 million from S$150.7 million for the same quarter last year.
Operating profit from the insurance business fell 20.1 per cent to S$120.4 million from S$150.7 million for the same quarter last year. PHOTO: GREAT EASTERN HOLDINGS

SINGAPORE - Great Eastern Holdings reported a 56 per cent fall in net profit to S$96.9 million for the the first quarter ended March 31 from S$220.5 million in the year-ago period.

The insurer said this was largely due to unrealised fair value losses from the valuation of assets and liabilities in the insurance business amid unfavourable financial market conditions.

Operating profit from the insurance business fell 20.1 per cent to S$120.4 million from S$150.7 million for the same quarter last year. In Singapore, operating profit was lower mainly due to higher claims in the non-participating fund. The profit contribution from Malaysia in Singapore dollar terms was also lower, primarily due to a weaker Malaysian ringgit.

There was a non-operating loss of S$42.6 million for the quarter as "financial markets experienced widening of credit spreads and decline in equity markets," said Great Eastern. In contrast, it recorded a non-operating profit of S$41.1 million for the same quarter last year, mainly from unrealised gains from equity investments.

Total weighted new sales (TWNS) for the first quarter grew 9 per cent from the same quarter last year to S$222.9 million, underpinned by higher sales in both Singapore and Malaysia. Excluding sales contribution from the group's investment in China, which ceased to be accounted for as an associate from December 2015, the group's TWNS was 11 per cent higher than the same quarter last year.

New business embedded value (NBEV), a measure of long-term economic profitability, for the first quarter was S$84.7 million, comparable with the same quarter last year.

NBEV margin for the quarter was 38 per cent, lower than the 41.3 per cent for the year-ago quarter as a result of channel and product mix shifts, said the insurer.

Profit from shareholders' fund's Investments was lower at S$28.9 million compared with S$45.6 million for the same quarter last year, weighed down by unrealised foreign exchange loss from US dollar-denominated investments.