SINGAPORE (May 6): Great Eastern Holdings, a member of the OCBC Group, saw its earnings plunge 90% to $33.9 million y-o-y for 1Q2020 ended March, from $342.7 million a year ago.

Operating profit from the group’s Insurance Business doubled to $298.6 million y-o-y on the back of improved contributions from its core markets of Singapore and Malaysia, as well as a reduction in insurance contract liabilities in both countries.

However, its earnings (or profit attributable to shareholders) dived due the lower valuation of investments arising from poor financial market conditions in the first quarter, says Great Eastern in its filing on Wednesday.

The group reported a non-operating profit loss from the Insurance Business of $222.8 million in 1Q2020, due to mark-to-market losses on fixed income assets and asset-liability mismatch of the Singapore non-participating business from widening of credit spreads and declining interest rates respectively.

This was offset by the adoption of the risk-based capital framework (RBC2) in Singapore, and $68 million from the release of unallocated surplus in Malaysia.

Profit from shareholders fund came in at a loss of $41.9 million due to mark-to-market losses in equities.

Total weighted new sales (TWNS) for 1Q2020 grew 21% y-o-y to $298.8 million contributed by higher sales in Singapore and Malaysia, and the bancassurance channel in Singapore.

In its outlook, Great Eastern predicts lower business volume amid the weakened demand due to Covid-19, and restricted face-to-face interactions due to the strict circuit breaker measures. The group also expects continued volatility in the financial markets, which impact its non-operating profit and profit from shareholders’ fund due to market fluctuations.

“The onset of the COVID-19 outbreak has delivered many challenges globally in Q1- 20 and will continue for a period of time. While the Group’s profit was impacted by the volatility in the global financial markets during the quarter, our investment portfolio remains sound and our capital position also remains strong,” says group CEO Khor Hock Seng.

“We expect our new business activity to be dampened as a result of weakened demand and restricted face-to-face interactions. The major digital and technology infrastructure initiatives that we have embarked on in the past two years have helped the company to cushion the impact of the COVID-19 situation,” he adds.

As at 9.31am, shares in Great Eastern are trading 17 cents higher, or 0.9% up, at $18.90.