What Investors May Want To Know About These 4 Companies

Great Eastern Holding Limited (SGX: G07), Oversea-Chinese Banking Corp. Limited (SGX: O39), Public Bank Berhad (KLSE: PBBANK), LPI Capital Berhad (KLSE: LPI) are four companies operating in the financial service industry.

The first two are from Singapore, while the other two are listed in Malaysia.

Sharp-minded reader might ask, “So what? Aren’t they just four separate companies listed in 2 different exchanges?”

If that is your question, then you are not wrong. But perhaps, you could delve a little deeper in understanding the nature of the relationship between the four companies.

“Two of them are insurance companies, whereas the other two are banks!” – Bingo! But there’s more to it than that.

Great Eastern and OCBC Bank

These 2 companies are related because of the former, an insurance company, is an 87.6% subsidiary of OCBC bank. In other words, OCBC Bank has control over the strategy and direction of the Great Eastern.

Public Bank and LPI Capital

Public Bank and LPI capital are connected due to the ownership of a common major shareholder, namely, Tan Sri Dato’ Sri Dr. Teh Hong Piow. The former is a bank whereas the latter is an insurance provider.

Though Public Bank is not a parent of LPI Capital, yet by sharing a common major shareholder could drive the policy of both companies in the same direction.

Despite both companies, which seem to be operating under a bank and insurance model, there are some obvious differences between the two pairs.

For one, Great Eastern is a life insurer with operation mainly in Singapore, with some overseas income mainly from Malaysia. As a life insurer, its main products are those that are related to life insurance.

LPI Capital is a general insurer with the bulk of its income coming from Malaysia, with the remaining coming from Cambodia and Singapore. As a general insurer, its main products are fire insurance, marine insurance, motor insurance and others.

Similarly, OCBC Bank generates the majority of its income from Singapore, whereas Public Bank earns its income predominantly from Malaysia.

Key Takeaway:

By understanding the bank-insurer relationship, investors can better understand the strategic and operational direction of the pairs, especially the insurance companies.

This is true given that the insurance companies may depend on the banking group to “cross-sell” their products.

Yet, this ability to “cross-sell” is the reason why these two insurance companies may be of interest to the shareholders!

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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.