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UOI's earnings fall 42% for Q2 amid lower business activities during pandemic

MAINBOARD-LISTED United Overseas Insurance (UOI), the general insurance arm of United Overseas Bank, saw its net profit shrink by 42 per cent to S$4.9 million for the second quarter ended June 30, 2020, from S$8.4 million for the corresponding period last year.

The insurer’s gross premium declined by 6.7 per cent on the year to S$28.5 million for the three months, from SS$30.6 million.

Underwriting profit grew 57.3 per cent to S$4.7 million, thanks to a 40.7 per cent drop in net claims incurred.

Gross dividends from investments plunged 89.8 per cent to S$547,000, from S$5.4 million for the year-ago quarter. Interest income from those investments rose 12.3 per cent year on year to S$2.2 million.

Annualised earnings per share stood at 31.74 Singapore cents for Q2, down from 54.7 cents for the year-ago period.

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For the first half of this year, net profit dropped 56.7 per cent to S$8.6 million while gross premium ticked down by 3.2 per cent to S$56.6 million, mainly due to lower business activities caused by the novel coronavirus pandemic.

Underwriting profit increased by 7.8 per cent to S$9.5 million for the first six months.

Management expenses decreased by 4.4 per cent to S$6.5 million, given the financial support for employers under the government’s Jobs Support Scheme and lower call-centre expenses during Singapore’s “circuit-breaker” period.

Non-underwriting income amounted to just S$605,000 for H1 2020, down from S$14.7 million a year ago, dragged by “adverse market conditions” arising from the coronavirus pandemic and the global recession, UOI said. In addition, in the comparative period last year, there were realised and unrealised gains of S$8.4 million from unit trusts and a one-time special dividend of S$3.6 million received from an equity investment, which were not repeated this year.

Overall, UOI sank into a total comprehensive loss of nearly S$3 million for H1 2020, versus a total comprehensive income of S$36.2 million a year ago, due mainly to “unfavourable” investment market conditions.

The insurer on Thursday said it foresees further reductions in gross premium written for the next reporting period, as the Covid-19 pandemic lingers.

“Claims experience may worsen given the prevailing adverse business conditions and severe weather conditions brought about by climate change,” UOI said.

As a result, while underwriting profit is still achievable, it is expected to come in at “much lower” levels than the previous year.

An interim dividend of 8.5 Singapore cents per share was declared, unchanged from the previous year. It will be paid on Aug 17, after books closure on Aug 5.

Shares of UOI gained S$0.05 or 0.7 per cent to close at S$6.77 on Thursday, before the results were released.

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