Q4 profit at Great Eastern down 11%

Insurer says earnings drop due partly to spike in medical claims in Singapore

Insurer Great Eastern Holdings yesterday posted weaker fourth- quarter and full-year earnings.

The firm said net profit fell 11 per cent to $195.2 million for the quarter ended Dec 31, although gross premiums rose 6 per cent to $2.68 billion.

Full-year net profit fell 25 per cent to $589.3 million even as gross premiums jumped 9 per cent to $9.56 billion. The fall in earnings was due to business strain caused by higher sales growth, as well as a spike in medical claims in Singapore in the first half of 2016.

Mr Ronnie Tan, GE group chief financial officer, said the rise in the value of medical claims was a "two-digit million" figure.

GE group chief executive Khor Hock Seng said it was hard to pinpoint the causes of the spike, but the firm was monitoring the medical claims segment very closely.

  • AT A GLANCE

  • Q4 NET PROFIT: $195.2 million (-11%)

    Q4 GROSS PREMIUMS:

    $2.68 billion (+6%)

    FULL-YEAR TOTAL DIVIDEND PER SHARE: 50 cents (-9.1%)

"It seems to have stabilised from the second half of 2016," he said, adding the insurer expected an increase in medical claims, but not a spike of similar magnitude.

The full-year profit for 2015 had also been boosted by a $119.9 million gain on disposal of the firm's investment in New China Life Insurance Company, while the profit for 2016 was also affected by an $18.7 million loss on disposal of its Vietnam subsidiary.

The drop in net profit would have been 8.6 per cent instead of 25 per cent without these two events, explained Mr Tan.

The group's total weighted new sales for the year rose 11 per cent, with sales surpassing the $1 billion mark, driven by strong contributions from both agency and bancassurance channels, said GE.

New business embedded value, a measure of long-term economic profitability, saw strong 22 per cent growth over the year to $466.2 million, it added.

Mr Khor said GE sees Indonesia as a growth market. "We will continue to look at innovative ways to enhance our service level and enrich customer experience through digitalisation and analytics."

The board recommended a final dividend of 40 cents a share, unchanged from a year earlier.

A version of this article appeared in the print edition of The Straits Times on February 14, 2017, with the headline 'Q4 profit at Great Eastern down 11%'. Print Edition | Subscribe