Great Eastern celebrates centenary

August 26 was a day of particular
significance for Singapore’s largest and oldest life insurer, Great
Eastern Life Assurance Company (GEL). It marked exactly 100 years
since a Canadian, AH Fair founded the company which began operating
with total assets of S$70,000 ($49,000) and a staff of 15.

From those modest beginnings GEL has grown into a company boasting
total assets of S$46.5 billion ($32.5 billion) and market shares of
28 percent in Singapore and 23 percent in Malaysia, where it also
ranks as the oldest and largest life insurer. GEL has 1.4 million
policyholders in Singapore and 1.9 million in Malaysia.

Though Singapore and Malaysia remain GEL’s primary markets,
regional expansion has seen the establishment of units in Brunei in
1975, Indonesia in 1996 and China in 2006 in a 50:50 joint venture
with Chinese state-owned property developer Chongqing Land
Properties Group.

In September 2008 GEL extended its reach further with commencement
of operations in Vietnam via a wholly-owned unit.

From a premium income perspective Singapore remains GEL’s primary
market and in 2007 accounted for S$2.41 billion, or 87 percent, of
total new business premium income of S$2.77 billion. In Singapore a
small amount of premium income, S$47.5 million was accounted for by
general insurance.

In Malaysia new premium income totalled S$363 million of which S$73
million was general insurance. New life insurance premium income in
Indonesia was about S$40 million, in Brunei $3.4 million and in
China about S$5 million.

GEL focuses on two distribution channels: tied agents and
bancassurance, with particular success having been achieved in
Singapore.

In 1992 GEL became the first insurer in Singapore to begin
developing the bancassurance channel which in 2007 accounted for
S$720 million or 30 percent of GEL’s new premium income in
Singapore and 41 percent of total bancassurance sales in
Singapore.

In Singapore GEL’s bancassurance distribution has always been
exclusively through Singapore’s largest bank, Oversea-Chinese
Banking Corporation (OCBC) which in June 2004 acquired an 87
percent stake in the insurer.

GEL’s agency force in Malaysia totalling 17,000 dominates its
distribution and in 2007 accounted for 95 percent of new premium
income. In Malaysia GEL has bancassurance agreements with OCBC and
Malaysian bank Public Bank.

Asset management has also come to play an important role in GEC’s
business and is spearheaded by Lion Global Investors in which it
has a 70 percent stake and OCBC a 30 percent stake. One of the
largest asset management companies in Southeast Asia, Lion Global
Investors had total assets under management of S$33 billion as at
31 March.

GEC celebrated the first half of its centennial year with mixed
results. From a premium income perspective GEC continued to make
strong headway, reporting total gross premium income of $3.586
billion, up 30 percent compared with the first half of 2007.

New life assurance premium income surged 60 percent to $2 billion
driven by a 70 percent increase in Singapore to S$1.84 billion. A
weaker Malaysian ringgit left Malaysian premium income flat at
S$152 million.

However, GEC was not immune to weak investment markets and reported
that in the first half of 2008 net profit from life and general
insurance operations had slumped 77 percent to S$67.2 million
compared with the first half of 2007.