Great Eastern Holdings' gains from insurance surge 144%

It's a good year for the group.

Great Eastern Holdings Limited today reported profit attributable to shareholders of S$619.6 million for the quarter ended 30 September 2012 (Q3-12), compared with S$40.4 million a year ago.

The increase included a S$421.6 million post-tax gain arising from the sale of the Group’s shareholdings in Asia Pacific Breweries Limited (“APB”) and Fraser and Neave, Limited (“F&N”) during the quarter.

Excluding this gain, the Group delivered strong performance for the quarter with profit attributable to shareholders of S$198.0 million, underpinned by continued
growth in underwriting profit and mark-to-market gains on investments.

For the first nine months of 2012 (9M-12), profit attributable to shareholders increased to S$963.5 million from S$316.8 million the year before.

Total weighted new sales for the Group in Q3-12 was stable at S$202.5 million. 9M-12 total weighted new sales was S$574.7 million, comparable to S$569.5 million a year ago.

The steady sales performance reflected the overall higher demand for regular premium products, which was offset by the lower sales of single premium products resulting from a limited availability of appropriate underlying investments.

In Singapore, the sales of regular premium policies increased across all channels, particularly those distributed through bancassurance. In Malaysia, there was
healthy growth in the take-up of regular premium investment-linked and single premium creditrelated products.

The total sales performance in Malaysia was however dampened by aggressive pricing competition in traditional endowment products. In Q3-12, the Group recorded S$88.3 million in new business embedded value (NBEV), a measure of its long-term economic profitability.

Year-to-date, NBEV rose 6% to S$258.5 million. This positive outcome was the result of sustained improvements in product mix across all channels towards regular premium and protection-based products.

Q3-12 profit from insurance operations rose 144% to S$198.9 million from S$81.4 million the year before. The Group’s underwriting profit from insurance operations continued to exhibit growth in the quarter.

Profit from insurance operations was further boosted by strong investment performance due to improvements in market conditions. The Group recorded mark-to-market net gains in asset and liability valuations, as a result of narrowing credit and swap spreads as well as favourable interest rate movements. This compares against mark-to-market net losses in the same quarter last year.

9M-12 profit from insurance operations rose by 43% year-on-year to S$501.2 million, brought about by consistent growth in underwriting profit and a strong investment performance.

Q3-12 profit from investments in Shareholders’ Fund rose to S$540.0 million, against a net investment loss of S$13.1 million in the same quarter last year amid the adverse investment climate then.

For the first nine months of the year, profit from investments in Shareholders’ Fund was S$643.4 million, compared with S$49.1 million last year. The significant increase in the Shareholders’ Fund this year was largely contributed by the gain from the sale of APB and F&N shares.