In a Q&A ahead of Great Eastern Holdings’ (GEH) AGM held on April 19, a shareholder pointed out that returns on shareholders’ funds at 5.59% over five years were low. “We would appreciate it if the board did something concrete instead of repeating the same thing (‘we will look into enhancing the shareholders’ value’) over the last few years,” the shareholder asks.
In a reply, GEH said, “We have increased our dividend this year. Dividend per share has risen to 65 cents from 60 cents a year ago. While we acknowledge the shareholder’s concerns, we believe that the headwinds that have surfaced this year warrant a strong and sound capital base. Near term, concerns of higher inflation, rising bond yields and slower economic growth have made the financial markets and business operations extremely challenging and volatile to navigate. A solid capital buffer allows us the confidence to weather financial markets’ volatility, as well as the flexibility to capitalise on internal and external opportunities to deploy capital that will provide the best shareholders’ returns.”
Life insurance - unlike general insurance - is a long-dated business. No surprise then that insurance companies usually hold excess capital to cater to different economic cycles including crises and regulatory changes.
