Great Eastern’s key policy is to provide certainty despite uncertainty 

IT may be more than a century old, but Great Eastern Holdings is still fighting fit — despite a raft of challenges unleashed by Covid-19, and the emergence of technology startups that compete in the insurance space.

Speaking to The Business Times, Khor Hock Seng, group chief executive officer of the oldest provider of life and general insurance in Singapore and Malaysia, said the 114-year-old group has been “very resilient”. This is in part due to a digital transformation journey that began in 2018 — 2 years before the pandemic. Great Eastern, which is 88 per cent-owned by OCBC , has so far invested more than S$100 million in its digitalisation.

“(Being a traditional company) doesn’t mean we can’t compete. It is all about investing in the digital space, which we do,” he said. “We have invested quite a bit in our digital affinity partners…So, we are also in the insurtech space.”

Tailored insurance solutions are offered on the platforms of these digital affinity partners. In Singapore, Great Eastern has worked with Singtel to launch home, motor and travel solutions, as well as personal accident and disability insurance plans, for Singtel Dash customers. It has also worked with Axiata Digital Capital and Malindo in Malaysia, and Traveloka and Tiket.com in Indonesia, to reach out to new customer segments and increase its market share in travel insurance.

Khor believes the company’s digitalisation efforts have helped it get through the pandemic in good shape.

Great Eastern’s net profit for the fiscal year ended Dec 31, 2021 rose 16 per cent to S$1.1 billion, from S$960.6 million in FY2020. New business embedded value — a measure of long-term economic profitability — rose by 20 per cent to S$803.6 million.

Net profit for Q1 FY2022 halved to S$220 million, down from an exceptional 1Q21 as well a lower valuation of its investments.. Its underlying business metrics were, nevertheless, robust. Operating profit from the insurance business rose 6 per cent to S$191.4 million, and total weighted new sales were up 32 per cent to S$505.3 million.

Net profit for Q2 this year rose 22 per cent to S$282.9 million, driven by higher profit from insurance business.

Regional presence

With more than S$110 billion in total assets and 13 million policyholders, Great Eastern aims to deliver more protection products — such as critical illness, medical and death coverage — as well as savings products to cater to customers’ evolving needs and concerns that have emerged due to Covid-19.

The group intends to continue to strengthen its sales distribution network of financial representatives, bancassurance partners and brokers, as well as digital affinity partners. By the end of this year, the number of financial agents in Singapore is targeted to grow to 6,000 — from about 5,500 last year. In Malaysia, it has about 32,000 agents.

Khor sees continued growth momentum in Singapore, where operations comprise Great Eastern Life Assurance and Great Eastern General Insurance. It also serves some 2 million policyholders under the Central Provident Fund Board’s enhanced Dependants’ Protection Scheme.

Due to its small market, Brunei operates as a branch of Singapore. 

Malaysian operations comprising — Great Eastern Life Assurance (Malaysia), Great Eastern Takaful and Great Eastern General Insurance (Malaysia) — remain resilient. The second quarter saw higher sales boost new business embedded value by 5 per cent to S$201.9 million.

Khor said: “In Malaysia, we are still a very strong market leader, with a very good market share. That will continue to grow.

“Takaful, our Islamic insurance business, has done well too. The company is about 10 years old and is now No 4 in the industry. Our ambition is to be No 1.”

The real growth engine will come from Indonesia, a country with a population of more than 260 million. Great Eastern’s life insurance business there has grown faster than the industry’s, albeit from a low base. 

Khor said: “We are reviewing our strategy currently to see how we can make Indonesia a significant contributor in the next 5 years. We hope it will contribute as much as 10 per cent of the group’s new business value creation, from about 1 per cent now.”  

The group is open to exploring mergers and acquisitions in Indonesia to propel the growth, but is “cautious”. Potential candidates must “add value” as well as fit the overall group strategy, Khor said. Vietnam and Thailand were also cited as possibilities.

But Khor stressed: “There are no particular countries. It depends on opportunities that will arise. We are not going out desperately to look.”

New challenges

The challenge for 2022 is navigating the growing uncertainties and challenges — from geopolitical tensions, inflationary pressures, energy and food shortages to supply chain disruptions.

“Interest rates have risen; but at the same time, it has flattened the yield curve,” Khor said, adding it is harder for insurance companies to structure long-term savings products that will be seen as attractive by customers.

The group is leveraging data analytics to stay on top of changing needs and trends. Its Centre for Design, Insights and Innovation team is tasked to generate insights, which drive sharper product propositions and customer experiences through the company’s Actionable Consumer Insights Lab.

“The ability to adapt our range of products to go with the context of the moment is very important. If you are not able to adapt fast enough, you will become the servant of that situation, rather than the master

“All that we have done will put us in a very good position to continue our growth journey,” he said.

Based on its close on Friday (Aug 5) at S$19.38, Great Eastern is trading at roughly half its 2021 embedded value of S$18.3 billion — or S$38.57 a share. The counter has fallen 3.8 per cent this year, and has a market capitalisation of S$9.2 billion.