Great Eastern's Q2 net profit up 14% on gain from partial sale of interest in New China Life

Great Eastern Holdings reported on Tuesday a 14 per cent rise in net profit to $277.7 million.
Great Eastern Holdings reported on Tuesday a 14 per cent rise in net profit to $277.7 million. PHOTO: ST FILE

SINGAPORE - Mainboard-listed insurer Great Eastern Holdings reported on Tuesday a 14 per cent rise in net profit to $277.7 million for the second quarter ended June 30, 2015, from S244.6 million in the year-ago period.

Net profit for the first half-year increased 5 per cent to $498.2 million.

The improvement was mainly thanks to a gain of $119.9 million (post-tax) from the sale of part of the group's investment in New China Life.

Operating profit of $132.2 million for the quarter declined 7 per cent from same period last year when profit was boosted by a release of tax provisions from the investment-linked fund in Singapore. Excluding this, operating profit was higher compared to a year ago, on the back of lower claims from the non-participating fund in Singapore.

On a half year basis, operating profit of $282.9 million dipped 1 per cent from the S286.2 million for the same period last year.

Great Eastern achieved $203.9 million and $410.5 million in total weighted new sales for the second quarter and first half-year, respectively. These were 4 per cent and 5 per cent lower compared to a year ago. The decline for the quarter was mainly caused by lower sales of single premium participating products through the agency channel in Singapore. On a half year basis, lower sales from the Singapore bancassurance channel also contributed to the overall decline. In Malaysia, sales for the quarter and half year were stable compared to the same periods last year.

New business embedded value (NBEV), a measure of long-term economic profitability, was 13 per cent lower at $82.1 million for the second quarter compared to $94.1 million in the year-ago quarter, due to lower sales and margins. In Singapore, a shift in channel mix led to a lower margin, while in Malaysia, a downward adjustment was made to factor in the impact of changes in tax regulations, said the company.

On a half year basis, NBEV of $166.0 million was 7 per cent down from the $178.4 million in the year-ago period.

An interim tax exempt (one-tier) dividend of 10 cents per ordinary share for the financial year ending December 31, 2015, was declared. This will be paid on September 2, 2015.