Great Eastern Holdings (GEH), a member of the OCBC group, has reported earnings of $282.9 million for the 2QFY2022 ended June, 22% higher than the earnings of $232.3 million in the same period the year before.
The higher earnings were mainly driven by the higher non-operating profit from the group’s insurance business.
In the same quarter, GEH saw non-operating profit surge by 368% to $168.4 million from $36.0 million previously due mainly to the mark-to-market gains on asset-liability mismatch of GEH’s non-participating business from increasing interest rates in Singapore.
During the 2QFY2022, GEH’s total weighted new sales grew by 3% y-o-y to $550.6 million backed by consistent performance across all markets.
In Singapore, total weighted new sales for the period fell by 1% y-o-y to $436.1 million due to lower sales from the agency channel.
Malaysia’s total weighted new sales on the other hand, rose by 17% y-o-y to $104.8 million in the 2QFY2022 due to higher contributions from the agency channel.
New business embedded value (NBEV), which is a measure of the long-term profitability of new sales, stood 5% higher y-o-y at $201.9 million for the quarter. This was due to higher sales from Malaysia. In the 2QFY2022, NBEV margin inched up by 0.6 percentage points to 36.7%.
For the 1HFY2022, GEH’s earnings fell by 25% y-o-y to $502.9 million due to the lower valuation of investments amid a challenging global investment climate.
Earnings per share (EPS) for the period stood at $1.06 on a fully diluted basis.
Operating profit from GEH’s insurance business for the 1HFY2022, however, increased by 11% y-o-y to $365.5 million driven by growth across the group’s core markets.
The half-year period’s non-operating profit fell by 10% y-o-y to $227.3 million due to the mark-to-market losses from widening credit spreads and equities. This was mitigated by the mark-to-market gains on asset-liability mismatch from increasing interest rates in the same period.
Profit from shareholders’ fund plunged into the red with an $89.8 million loss compared to the $102.2 million in the year before. This was due to mark-to-market losses in equities and collective investment schemes.
For the 1HFY2022, GEH’s total weighted new sales increased by 15% y-o-y to $1.06 billion driven by higher contributions from all markets.
NBEV for the period increased by 0.48% y-o-y to $393.2 million thanks to the higher contributions from Singapore and offset by the lower NBEV from Malaysia.
According to the group, its capital adequacy ratios for its insurance subsidiaries in Singapore and Malaysia remained “strong” and “well above their respective minimum regulatory levels” as at end-June.
GEH’s board has declared an interim dividend of 10 cents, which will be paid out on Aug 31.
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Looking ahead, GEH’s group CEO Khor Hock Seng warns that the business climate will be “challenging” in the near- to mid-term due to the ongoing geopolitical instability, volatile invesmtnet climate and inflationary pressures.
“We continue to monitor and assess market developments closely, responding swiftly to meet the challenges faced in this rapidly shifting economic landscape to meet customer and stakeholders needs,” he says.
Shares in GEH closed 1 cent higher or 0.05% up at $19.45 on Aug 1.