Great Eastern sees 63% fall in Q2 earnings

The Great Eastern Life insurance building at 1 Pickering Street.
The Great Eastern Life insurance building at 1 Pickering Street. PHOTO: ST FILE

SINGAPORE - Great Eastern Holdings posted on Wednesday (July 27) a 63 per cent fall in net profit to S$102.2 million for the second quarter ended June 30, from S$277.7 million in the year ago period.

For the first half-year, earnings dropped 60 per cent to S$199.1 million from S$498.2 million a year ago.

The lower profit was attributed to the S$18.7 million loss on disposal of the group's Vietnam subsidiary, unfavourable financial markets and low interest rate environment. There was also the absence of a post-tax gain of S$119.9 million from the sale of part of the group's investment in New China Life Insurance Company Ltd.

As a result, profit from shareholders' fund's investments for Q2 tumbled 89 per cent to S$19.2 million from S$180.3 million a year ago.

Gross premiums for Q2 rose 25 per cent to S$2.28 billion from S$1.82 billion a year ago.

But profit from its insurance business fell 16 per cent to S$116.2 million in Q2 compared to S$139.1 million a year ago, mainly because of unrealised losses from the widening of credit spreads and sharp decline of the long term interest rates.

Profit from general insurance rose 22 per cent to S$8.4 million in Q2 from S$6.9 million a year ago due to a release of reserves in Malaysia.

Said Great Eastern chief executive officer Khor Hock Seng: "Our positive Q2-16 performance is a direct result of building upon, and even surpassing, our Q1-16's sales momentum for our major markets, Singapore and Malaysia. While we maintain our focus to grow our core markets, we will increase efforts to build our business in Indonesia.

"I am confident that the group will be able to ride through the global macroeconomic uncertainty with our strong fundamentals and robust financial position."

The board has declared an interim dividend of 10 cents per share, unchanged from a year ago, to be paid on Sept 2.