The tougher economic environment in the second quarter dented insurer Great Eastern's results, save for a major one-off gain that boosted earnings.
Net profit grew 14 per cent to $277.7 million, mainly because of a gain of $119.9 million - a post-tax figure - from the sale of part of the group's investment in Chinese firm New China Life.
Net profit for the six months to June 30 increased 5 per cent from a year ago to $498.2 million.
Acting chief executive Norman Ip told a briefing yesterday: "The Singapore (result) is a bit down but we are putting in a lot of effort. We think we can make up for some lost ground here."
He added that Great Eastern is spending a lot of resources on information technology to boost productivity and remain competitive.
AT A GLANCEBackground Story
NET PROFIT: $277.7 million (+14%)
GROSS PREMIUMS: $1.82 billion (-8%)
INTERIM DIVIDEND PER SHARE: 10 cents (unchanged)
Operating profit from the insurance business slipped 7 per cent to $132.2 million for the three months to June 30, compared with a year ago when the quarter was boosted by tax provisions from its investment-linked fund in Singapore.
Excluding this, operating profit for the quarter was higher than a year ago, owing to lower claims from the non-participating fund.
Gross premiums for the quarter dipped 8 per cent to $1.82 billion. Total weighted new sales fell 4 per cent to $203.9 million in the second quarter, owing to lower sales of single-premium participating products. Said Great Eastern: "On a half-year basis, lower sales from the Singapore bancassurance channel in the first quarter also contributed to the overall decline."
Chief financial officer Tony Cheong noted that the single-premium sales were down by 46 per cent, compared with the same quarter last year. He explained: "We are still in a prolonged low interest rate environment, which has made it difficult for us to sell, manufacture and create single-premium products."
Singapore chief executive Khoo Kah Siang added that a single-premium product was withdrawn because the yield was low and it could not "support the product based on the prevailing investment market".
There are plans to launch more products in this half of the year. Last week, OCBC Bank and Great Eastern launched a five-year single-premium plan that offers a guaranteed payout of 2 per cent every year. The insurer added that in Malaysia, sales for the quarter and half-year were stable compared with the same periods last year.
Mr Ip said: "It will be challenging. We need to have more products and we are strengthening our agency force. We hope we can develop our IT faster and be able to compete faster."
Mr Cheong noted that almost $100 million worth of IT projects have been approved over the last two years.
Earnings per share for the second quarter was 58 cents, up from 52 cents a year ago, while net asset value per share was $13 at June 30, up from $12.41 at Dec 31.
The insurer declared an interim dividend of 10 cents per share, to be paid out on Sept 2.
The results were announced before markets opened yesterday.