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3 Things that Investors Should Know About United Overseas Insurance Limited Now

Credit: Lali Masriera

United Overseas Insurance Limited (SGX: U13) is an insurance company that focuses on general insurance and reinsurance businesses. General insurance covers a broad spectrum, among which are fire, marine, motor, engineering, general accident, and more.

Here are three things about the company that investors should know:

1. Its insurance business has been growing over the last decade

United Overseas Insurance has grown its gross insurance premiums from S$67.43 million in 2006 to S$104.88 million in 2015. This translates to an annual compounded growth rate of 5%.

Over the same period, the insurer’s pre-tax insurance underwriting profit has climbed from S$11.79 million to S$20.10 million, which translates into an even faster compound annual growth rate of 6.1%.

Moreover, the company has generated a pre-tax insurance underwriting profit in each year from 2006 to 2015. Some of you may have noticed that the 2006-2015 period includes the great financial crisis.

2. It has a history of consistently paying a dividend

The insurer has also consistently paid a dividend in its last 10 fiscal years. What’s more, the company has kept its ordinary dividend per share from 2006 to 2015 within a tight range of S$0.15 and S$0.20. The only exception was 2009 when the dividend dropped to just S$0.06 per share.

At its current share price of $4.72, United Overseas Insurance has a dividend yield of 3.2% based on its ordinary dividend of S$0.15 per share in 2015.

3. It has a low return on equity

The median return on equity for the 30 companies that make up the Straits Times Index (SGX: ^STI) is 8.7%, according to data from S&P Global Market Intelligence.

For United Overseas Insurance, its return on equity of 7.3% in 2015 is below the market’s median value.

While the insurer has had stable business results and dividends over the last decade, it has not been very adept at sweating its shareholders’ equity to produce profits.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.