Great Eastern Underwrites Higher Profits

great eastern logo Great Eastern Holdings Limited (SGX: G07), which is 87.2% owned by Oversea-Chinese Banking Corporation Limited (SGX: O39), posted an improvement in gross premiums for third quarter of 2013 (3Q 2013), increasing 32% to $2,222.6 million over 3Q 2012. The operating profit from insurance business was S$138.6 million, a 26% improvement year-on-year. The growth was due to better underwriting performance and higher net investment income across all insurance funds.

The non-operating profit from insurance business went up by 27% for the quarter to S$91.1 million. This was mainly due to “unrealised mark-to-market gains brought about by the partial recovery in financial markets following the US Federal Reserve’s decision in September 2013 to maintain its quantitative easing programme”.

The profit attributable to shareholders came to S$282.8 million, which was 54% lower year-on-year, due to the one-off post-tax gain of S$421.6 million from the sale of shareholdings in Asia Pacific Breweries Limited and Fraser and Neave, Limited (SGX: F99)  in 3Q 2012. Excluding this one-off gain, the profit attributable to shareholders for the quarter would have been 43% higher year-on-year.

The total weighted new sales went up by 38% in 3Q 2013 to S$274.7 million, led by the continued growth in Singapore and Malaysia operations. The new business embedded value (NBEV) increased 18% year-on-year to S$100.8 million, due to stronger sales as mentioned above. NBEV is a measure of long-term economic profitability for insurance companies.

Great Eastern’s Chief Executive Officer, Chris Wei, said, “I am delighted to see the healthy growth trend in key operating metrics such as operating profit, total weighted new sales and NBEV… We are constantly exploring new ways to better engage our customers and enrich their experience with Great Eastern. Some of these initiatives have begun to bear fruit, as we recently clinched five accolades at Marketing Magazine’s Loyalty & Engagement Awards, including the coveted Brand of the Year Award. This is a further testament to our proactive customer engagement efforts, built upon our flagship Live Great Programme.”

The shares last traded at S$17.70 on Tuesday. The historical PE ratio is at 7 and the dividend yield is at 2.1%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.