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Great Eastern's Q1 net profit falls 56% on unfavourable market conditions

Great Eastern Holdings (GEH), the oldest and most established life insurance group in Singapore and Malaysia, reported on Tuesday a net profit of S$96.9 million for the first quarter ended March 31, 2016, down 56 per cent from the net profit of S$220.5 million achieved a year ago.

The weaker performance was due mainly to unrealised fair value losses from the valuation of assets and liabilities in the insurance business amid unfavourable financial market conditions, the insurance arm of OCBC Group said.

GEH's chief executive, Khor Hock Seng, said "the volatility in the global financial markets during the quarter impacted the valuation of our assets, resulting in a lower profit attributable to shareholders".

"Notwithstanding this, our investment portfolio remains sound and our capital position also remains strong," Mr Khor added.

Gross premiums increased 21 per cent from a year ago to S$2.3 billion.

Profit from insurance business was S$89.1 million, compared to S$205.6 million a year ago, down 57 per cent mainly because of unrealised losses from the widening of credit spreads and decline in equity markets. Profit was also affected by higher claims in the Singapore non-participating fund. GEH said the profit contribution from Malaysia in Singapore Dollar terms was lower, primarily due to a weaker Malaysian Ringgit.

Profit from general insurance of S$5.6 million was lower than the S$6.7 million achieved a year ago due to higher claims.

Cash and cash equivalents increased by 20 per cent to S$4.2 billion on March 31, 2016, mainly due to net cash flows from operating activities.