Great Eastern

Great Eastern: strong 2Q11 results.
Net profit at $117.7m, +58% yoy, underpinned by healthy underwriting performance.

The Spore business registered impressive growth in regular premium pdts distributed through the bancassurance channel, contributed by the increasingly successful penetration into the premier banking customer segment. Spore total weighted new sales (TWNS) jumped 45% yoy in 2Q to $106.5m.
In Msia, the takaful operations kicked off to an encouraging start. Msian TWNS at $72.9m was down 9% yoy, but up 34% qoq. The overseas business in Indonesia, China and Vietnam remained flat.
The overall long term profitability of new sales, as measured by new business embedded value (NBEV) came in at $83.9m, +23% yoy, +14% qoq.
As a result, profit from insurance operations jumped 51% yoy to $113.5m.

Profit from invmts also improved to $36.6m vs $14.9m yoy, as 2Q10 experienced the credit concerns over sovereign debt issues in the Eurozone.

Mgt and other expenses rose accordingly to $23.7m, +64.6% yoy, largely due to increase in headcount and higher staff costs to support business expansion.

Capital adequacy ratios of the Group’s insurance subsidiaries in Spore and Msia exceed 200%, well above the min regulatory ratios of 120% and 130% rptvly.

Co declared interim div of 10cts, unchg yoy.

Mgt remains positive of growth prospects as it sees the economic fundamentals and consumer sentiments in Asia remaining resilient.

Stock trades at 1.8x P/B.