Media Release | 19 Feb 2008
Great Eastern's Net Profit Hits Record High of $547 MillionA good performance, exceeding even the target set for 2008.
Singapore, 19 February 2008: Great Eastern Holdings Limited announces Profit Attributable to Shareholders of $546.9 million for the full year 2007, an increase of 15% over $476.9 million for the year 2006. For the 4th quarter of 2007, the Group's Profit reached $144.6 million, a drop of 18% when compared to the exceptionally good performance in the fourth quarter of 2006, but an increase of 16% over the preceding quarter.
Great Eastern is also pleased to announce that its insurance subsidiaries, Great Eastern Life Assurance Co Ltd, Great Eastern Life Assurance (Malaysia) Bhd and Overseas Assurance Corporation Ltd, will give a One-Off Special Bonus for the year 2007. This Special Bonus will be given to Participating Regular Premium Whole Life and Endowment Policies bought on or before 31 December 2006. It will be given in addition to the usual annual Reversionary and Cash bonuses declared for all Participating life policies.
In Singapore, this Special Bonus amounts to $287.4 million. The combined bonus payout, inclusive of the annual bonuses of $799 million for 2007, will amount to $1.086 billion for 2007. In Malaysia, the face amount of this Special Bonus is close to RM 900 million.
Group gross premiums totalled $5,998 million for 2007, an increase of 11% from $5,418 million for 2006.
Profit from insurance operations(both life and general) totalled $537.3 million, an increase of 33% over 2006. Profit from all insurance funds in Singapore and from the general insurance fund in Malaysia is reported net of tax in the Group profit and loss statement.
On a re-stated basis for all insurance funds net of tax, profit from insurance operations increased by 30% from $351.5 million to $457.4 million. The increase came largely from both the Participating and Non-participating Funds, due largely to the one-off special bonus declared for policyholders in Dec 2007 and the realisation of some investment profit from the Non-participating fund in Malaysia.
General insurance operations showed a profit of $28.1 million, a small increase of only 3%. The last quarter of 2007 experienced a year-on-year drop of 72% in profit to $4.3 million, because the last quarter in 2006 had included $5 million released from the reserves on the expiry of a performance bond contract.
Profit from Investments
Pre-tax profit from investments in the Shareholders' Fund totalled $111.5 million, a drop of 17% over $134.2 million for 2006, mainly because the last quarter of 2006 had included a one-off tax exempt dividend and capital reduction payment totalling $31.5 million.
Fees and Other Income
Pre-tax fees and other income totalled $105.6 million, 31% higher than $80.9 million in 2006, due mainly to an increase in assets under management and performance incentive fees received from certain managed accounts.
The Group's total assets as at 31 Dec 2007 amounted to $46.52 billion, an increase of 11% over $42.03 billion as at 31 Dec 2006. The net asset value per share was $6.94, about 12% higher than $6.20 as at 31 Dec 2006.
The Group retained its leadership position in the life insurance business in Singapore and Malaysia.
For 2007, an interim dividend of 16.12 cents net of tax per ordinary share was paid on 6 Sep 2007. On 19 Feb 2008, the Directors recommended, for shareholders' approval at their AGM, the payment of a final tax exempt (one-tier) dividend of 16 cents plus a special final tax exempt (one-tier) dividend of 26 cents per ordinary share. Upon approval, the final and special final dividends will be paid on 8 May 2008. This brings the total dividend payment for the financial year 2007 to 58.12 cents per ordinary share.
Comments from Director & Group CEO
Mr Tan Beng Lee, Director & Group CEO said, "We are very pleased with our Company's performance for 2007, especially because we have reached and even exceeded our Group's 2008 PAT target of $500 million. This is good news especially in the year when we celebrate our 100th anniversary."
Founded on 26 Aug 1908, Great Eastern is today the market leader in life insurance in Singapore and Malaysia, with about 3 million policyholders in these two countries. We also operate in China, Indonesia and Brunei, and will be starting operations in Vietnam by the middle of this year.
Mr Tan added, "Over the years, I am pleased that we have consistently achieved strong financial performance and delivered value to our shareholders and customer service excellence to our policyholders. We would not have made it without the unstinting trust and support from all our stakeholders: our policyholders, our staff, our life planners, our shareholders and our business partners.
I am particularly pleased that we are also able to celebrate our 100th anniversary with our loyal policyholders with this One-Off Special Bonus. The payment of this Special Bonus is in line with our commitment to give the best value to our customers. The strong investment returns of the Participating Funds in recent years have contributed to a stronger surplus position for the Participating Funds. Part of this surplus will therefore be distributed back to policyholders in the form of this Special Bonus. We will continue to provide the best possible returns to our policyholders and to pursue service excellence to meet rising customer expectations."
Outlook for the Year
As always, the Group's overall performance will be affected by local, regional and global economic conditions. The current trend in interest rates is expected to impact earnings from the non-participating funds in Singapore.
The Group continues to expand its operations in Singapore, Malaysia, China and Indonesia, and prepares to commence operations in Vietnam. The acceleration of activities in the regional markets will increase management expenses. It is projected that it would take a few years before operations in China, Indonesia and Vietnam break-even.