Great Eastern posts 11% fall in Q4 profit as insurance earnings drop

Great Eastern Holdings (GE) reported on Monday (Feb 13) an 11 per cent fall in net profit to $195.2 million for the fourth quarter.
Great Eastern Holdings (GE) reported on Monday (Feb 13) an 11 per cent fall in net profit to $195.2 million for the fourth quarter.PHOTO: ST FILE

SINGAPORE - Great Eastern Holdings (GE) reported on Monday (Feb 13) an 11 per cent fall in net profit to S$195.2 million for the fourth quarter ended Dec 31, 2016, from S$218.8 million a year ago.

This came as operating profit from its insurance business dropped by one-third or 33 per cent for the quarter, and 13 per cent for the full year.

GE, a unit of OCBC Bank, said the fall was due to "new business strain from higher sales growth" and medical claims in the Singapore operations.

For the full year, net profit fell by 25 per cent, largely due to lower non-operating profit, lower profit from shareholders' fund's investments and a loss on disposal of the group's Vietnam business of S$18.7 million, said GE.

Earnings also suffered in comparsion to FY15, when there was a S$119.9 million gain on disposal of its investment in New China Life Insurance Company Ltd.

The group's total weighted new sales for the year rose 11 per cent, with sales surpassing the S$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 a strong 22 per cent growth over the year to S$466.2 million, it added.

GE group CEO Khor Hock Seng said GE will continue to strengthen its business model, prudently manage costs and improve operational efficiencies.

He added: "We will continue to look at innovative ways to enhance our service level and enrich customer experience through digitalisation and analytics. The fundamentals underpinning our business remain strong and we are confident of the group's growth prospects in the region."

The board has recommended a final dividend of 40 cents per share, payable upon approval on May 8. This will bring total dividends for FY2016 to 50 cents per share, down from 55 cents for FY2015.