Great Eastern’s profits slid 8% in Q2

New sales fell by 16%.

It has been a lacklustre quarter for Singapore’s oldest life insurance group. Great Eastern Holdings today unveiled its Q2 results, showing an 8% decrease in operating profit along with a 16% decrease in total weighted new sales.

Operating profit from insurance business of S$142.9 million in Q2-14 was 8% lower than the same quarter last year, as profit in Q2-13 was boosted by a larger release of tax provisions following greater clarity over the treatment of specific items by the tax authorities.

Meanwhile, total weighted new sales for Q2-14 and 6M-14 decreased 16% and 4% compared with the same period last year to S$219.9 million and S$446.0 million respectively, as agency sales in Singapore in 2013 benefited from the recapture of a high volume of maturing Participating policies.

According to Group Chairman Norman Ip, “The Group has made good progress in improving its product mix, which has led to an improvement in margins. Sales-wise, the Group’s performance in 2013 was boosted by
the successful recapture of a high volume of policies which matured during that year. While the rate of recapture was maintained in 2014, sales volume was not replicated as there were fewer policies maturing this year. Looking ahead, Great Eastern will be launching new products, along with fresh sales initiatives to bolster sales in the second half of the year.”

Here’s more from Great Eastern:

Excluding the impact of tax provisions released, operating profit in Q2-14 was higher than the same quarter last year. The increase was driven by the Group’s growing in-force business, a better product sales mix during the period and lower claims.

On a half year basis, operating profit grew marginally to S$286.2 million, driven by higher contributions from the Investment-linked and General Insurance Funds.

Total weighted new sales for Q2-14 and 6M-14 decreased 16% and 4% compared with the same period last year to S$219.9 million and S$446.0 million respectively, as agency sales in Singapore in 2013 benefited from the recapture of a high volume of maturing Participating policies.

During the quarter, sales through the Singapore bancassurance channel were also lower. This was partially offset by sustained demand for regular premium Investment-linked products in the Malaysian conventional business.

Q2-14 new business embedded value (“NBEV”), a measure of long-term economic profitability, registered a decline of 7% to S$99.1 million compared with the same period last year. However, there was an improvement in the Group’s NBEV margin to 45.1% in Q2-14 from 40.6% in Q2-13 due to a positive shift in product and channel mix in Singapore.

On a half year basis, NBEV increased 1% to S$188.5 million despite a 4% decline in sales, also owing to an improvement in product mix in both Singapore and Malaysia.