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Great Eastern Q4 profit falls 68% to S$137m on market volatility

GREAT Eastern reported on Wednesday a 68 per cent fall in net profit for the fourth quarter, roiled by volatile market conditions. 

Net profit for the three months ended Dec 31, 2018 stood at S$136.9 million, down from S$426.8 million for the same period a year ago. The quarter registered "unfavourable financial market conditions" in particular, and in contrast, the year-ago fourth quarter registered exceptionally high gains from higher valuation and sale of investments, the insurer said in a media statement.

Operating profit from the insurance business alone for the fourth quarter was up 5 per cent from a year ago to S$171.6 million. But with the market volatility, Great Eastern registered a loss in shareholders’ fund’s investments of S$45.4 million, swinging from a gain of S$182.7 million in the same period a year ago.

The group's total weighted new sales fell 30 per cent from a year ago, in the absence of a "product campaign" for the year-ago period. Correspondingly, the new business embedded value for the insurer dropped 7 per cent for the fourth quarter, compared with the year-ago period. 

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The results translate to earnings per share of 28 Singapore cents, down from 90 Singapore cents for the same period a year ago. 

The board has proposed a final one-tier tax exempt dividend of 50 Singapore cents per ordinary share.

For the full year, net profit fell 29 per cent to S$740.7 million.

In a press statement, group CEO Khor Hock Seng said 2018 was a "challenging year", with interest rate hikes, coupled with trade and geopolitical tensions, resulting in volatile capital and financial markets that hit the net profit. But he noted that the operating profit from the insurance business remained "resilient".

"Deepening our footprint in the region, we have recently acquired a general insurance company in Indonesia. The acquisition is part of our broader strategy to build our general insurance operations and complement our existing life insurance presence in the market," he said.

"While concerns over market volatility and slowing global economic growth are present, we remain positive on the long term growth potential of the markets we operate in.”

Shares of Great Eastern closed on Tuesday at S$26.66, down 17 Singapore cents.