Great Eastern's Q4 earnings rise 19% mainly on one-off tax impact

Great Eastern Holdings yesterday reported a 19 per cent increase in net profit to $341.3 million for the fourth quarter ended Dec 31 last year, from $287 million a year ago.

The increase was mainly due to a one-off positive tax impact arising from the finalisation of prior years' tax assessments, said the insurance arm of OCBC in its results filing.

Operating profit for the fourth quarter fell 56 per cent year on year to $76.5 million from $173.2 million, due to provisions for higher expected future insurance claims.

Non-operating profit slipped 25 per cent to $47.6 million from $63.7 million in the corresponding year despite partial recovery from mark-to-market losses from unfavourable market conditions in the first quarter of last year.

Profit from shareholders' fund however quadrupled to $228.1 million from just $54.6 million for FY2019's fourth quarter, due to the abovementioned one-off positive tax impact.

Total weighted new sales for the quarter rose 34 per cent to $527.6 million from $394.5 million a year ago, which Great Eastern attributes to strong momentum from its Singapore and Malaysia business.

Amid the growth in sales, new business embedded value grew 42 per cent to $274.8 million from $193.4 million in the previous year.

Directors of the group have recommended a final dividend of 50 cents per ordinary share, unchanged from a year ago.

The final dividend will be payable on May 5 upon approval by shareholders at an annual general meeting to be convened. Including an interim dividend of 10 cents per ordinary share paid last August, this would bring the total dividend for the full year to 60 cents per ordinary share.

The latest set of quarterly results brings its net profit for the full year to $960.6 million, down 4 per cent from $1 billion for FY2019.

Great Eastern attributes this decline mainly to the lower valuation of the group's investments which resulted from less-favourable financial market conditions for the year, particularly in the first quarter of last year which saw a 90 per cent drop in net profit due to non-operating losses.

"The group's solid distribution capabilities and innovative product strategy, supported by the focused execution of our digital and technology infrastructure initiatives, have put us in a position of growth this year," commented group chief executive officer Khor Hock Seng. "Our timely implementation of such initiatives has helped us overcome the business challenges brought by the Covid-19 pandemic, changed the way we operate for the better and built greater resilience."

Shares of Great Eastern closed up 1.6 per cent at $20.83 yesterday.

THE BUSINESS TIMES

A version of this article appeared in the print edition of The Straits Times on February 24, 2021, with the headline 'Great Eastern's Q4 earnings rise 19% mainly on one-off tax impact'. Subscribe