Latest Earnings from Great Eastern Holding Limited: A Surge in Profit Seen

Great Eastern Holding Limited (SGX: G07) reported its 2016 third-quarter earnings results yesterday.

As a quick background, Great Eastern is an insurance outfit that provides mainly life assurance products and general insurance products across a number of countries in Asia.

With that, let’s see how the insurer fared.

Financial highlights

  1. Gross premiums for the reporting quarter declined by 8% to S$2.34 billion compared to the same period last year.
  2. Despite the drop in gross premiums, total weighted new sales remained largely unchanged year-on-year, coming in at S$266.9 million. Meanwhile, new business embedded value was up 29% to S$135.3 million.
  3. Great Eastern saw its profit from the insurance business rise 151% year-on-year to S$171.1 million. Similarly, profit from investments increased 66% to S$64.2 million. These evetually led to a 185% increase to S$195 million in net profit attributable to shareholders.
  4. Moving to Great Eastern’s balance sheet, total assets stood at S$71 billion as of 30 September 2016, which is 12% higher from the S$63.2 billion seen a year ago. Total equity ticked up as well from S$6.02 billion to S$6.55 billion. This meant that the insurer’s assets to equity ratio – a gauge of the financial risk it is taking on – had decreased from 9.5% to 9.2%.
  5. Great Eastern’s net asset value per share had climbed 8.7% from S$12.59 a year ago to S$13.69.

Business highlights

The increase in profit from the insurance business was mainly due to a higher contribution from an Investment-Linked Fund in Great Eastern’s Malaysia business.

Meanwhile, profit from investments had increased mainly because of higher net investment income and realised gains from the sale of investments. This was partly offset by lower foreign exchange gains from US dollar-denominated investments.

A future outlook

Great Eastern’s chief executive, Khor Hock Seng had commented on the company’s performance and future plans:

“We have delivered strong operating results amid a challenging environment. Our disciplined execution of our strategies has enabled us to build, grow and maintain the sales momentum in the first three quarters. Together with the active management of the product mix, we have achieved a strong NBEV growth of 29%.

Our priority remains on delivering meaningful solutions to meet the needs of our customers, leveraging our comprehensive suite of products and our strong distribution capabilities.

Given the current macroeconomic environment, we expect markets to remain volatile. Our strong capital position and fundamentals, coupled with the resilience of our business model, will enable us to seize opportunities for further growth as we continue to create sustainable long term value for our shareholders. We are confident of the Group’s growth prospects in the markets that we operate in.”

For more investing analyses and to keep up to date on the latest financial and stock market news, sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.

Also, like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Esjay does not owns shares in any companies mentioned.