Great Eastern's Q1 net profits drop 56%

Insurer Great Eastern reported uninspiring results for the first quarter, on the back of volatility in the global financial markets affecting asset valuations.

Net profit dived 56 per cent to $96.9 million in the three months to March 31, from a year earlier.

Group chief executive Khor Hock Seng said in a statement yesterday: "The volatility in the global financial markets during the quarter impacted the valuation of our assets, resulting in a lower profit attributable to shareholders."

New business embedded value - a measure of long-term profitability - remained flat at $84.7 million, compared with $84.4 million a year ago.

Operating profit from the insurance business slumped 20 per cent to $120.4 million.

"In Singapore, operating profit was lower mainly due to higher claims in the non-participating fund. The profit contribution from Malaysia in Singapore dollar terms was also lower, primarily due to a weaker Malaysian ringgit," said the insurer.


  • NET PROFIT: $96.9 million (-56%)

    GROSS PREMIUMS: $2.26 billion (-11%)

Extra returns over promised payouts from the non-participating fund are retained as profits by Great Eastern.

Quarterly gross premiums dropped 11 per cent to $2.26 billion.

Total weighted new sales were the bright spot in the quarter, up 9 per cent to $222.9 million, driven by higher sales in Singapore and Malaysia.

This was excluding sales contribution from the group's investment in China, which stopped being accounted for as an associate from last December.

Investments in the shareholders' fund for the year dropped 37 per cent to $28.9 million.

Although it had higher realised gain from sale of investments and changes in fair value in the quarter, this was more than offset by unrealised foreign exchange loss from United States dollar-denominated investments.

Quarterly earnings per share was 20 cents, down from 47 cents a year earlier, while net asset value per share was $13.24 as at March 31, marginally up from $13.16 previously.

Mr Khor added that the investment portfolio remains sound and its capital position also remains strong.

The results were announced before markets opened. Great Eastern shares closed down 5 cents at $22.19 yesterday.

Rachael Boon

A version of this article appeared in the print edition of The Straits Times on April 27, 2016, with the headline 'Great Eastern's Q1 net profits drop 56%'. Print Edition | Subscribe