Great Eastern Holdings’ Impressive Quarter

Great Eastern Holdings (SGX: G07) can be considered one of the oldest life insurance companies in Singapore and Malaysia. It is also majority-owned by banking giant Oversea-Chinese Banking Corporation (SGX: O39). As a publicly-listed insurer, Great Eastern Holdings is not alone and it counts Prudential PLC (SGX: K6S), United Overseas Insurance (SGX: U13) and Singapore Reinsurance Corp (SGX: S49) amongst its peers.

Great Eastern had announced its first quarter results only yesterday, so let’s see how it had fared.

Operating results

Great Eastern collected gross premiums of S$1.85 billion in the first quarter of 2014. This was a 14% improvement over last year’s result. However, as the profitability of its underwriting was slightly lower this quarter, it only managed to record a 4% increase in profit to S$192.1million in its insurance business.

If non-recurring gains – the company sold a 25% stake in an associate in China during the quarter and logged a S$31.9 million gain – and other investment income were included, Great Eastern ended the quarter with a net profit of S$231.6 million for its shareholders, a 12% increase from a year ago.

Weighted new sales from the company also grew 12% from S$ 201.9million in the first quarter last year to S$ 225.9million in the first quarter this year. Most of the new businesses streaming in are from the company’s Singapore operations which saw sales grow by 18% year-on-year to S$157 million; sales in Malaysia had only grown by 5% to S$61 million.

The company increased its net asset value per share to S$11.18, marking a 4% improvement from the last quarter. Its leverage ratio stayed relatively stable at roughly 11.57 times, dropping from 11.88 times from end of 2013.

Going forward

Great Eastern has long been considered as one of the market leaders in the Singapore and Malaysia market. As the insurance market evolved throughout the years, Great Eastern has proven to be able to withstand the changing forces quite effectively. In the future, competition in the industry might be heating up with Great Eastern hoping to counter by focusing on more value-added services that it can provide for its clients.

Foolish Summary

The company ended Tuesday at S$18.73 per share. At that price, It is trading at a P/E ratio of 13 and has a price-to-book ratio of 1.7.

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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 Stanley Lim doesn’t own shares in any companies mentioned.