Wednesday, August 3, 2011

Singapore insurer Great Eastern eyes Malaysia growth

SINGAPORE: Singapore insurance firm Great Eastern Holdings plans to roll out new Islamic insurance products to boost its business in Malaysia, its chief executive officer said on Wednesday, Aug 3.

Great Eastern, which launched its takaful business -- a type of Islamic insurance -- in Malaysia in December after obtaining the necessary license, said it expects it to account for a subatantial part of its business in Malaysia.

"If you look at industry benchmarks, we hope to achieve in excess of 20 percent in about 5 years," said Christopher Wei, Group CEO of Great Eastern, which is about 87 percent held by Oversea-Chinese Banking Corp .

The percentage takaful accounts for Great Eastern's overall business currently is "not significant" as its operations had just begun, the company said.

However, the takaful business is expected to grow significantly in the coming years, spurred by greater demand for Islamic insurance products as younger Malays become more affluent.

"It's an under-penetrated market. The Malay emerging middle class market is a very attractive segment to target. We're very encouraged by the initial trends and this is a long-term investment," Wei said.

He added that the penetration of takaful products in the Malaysian market was about 10 percent, compared to around 40 percent for conventional insurance products.

Great Eastern said on Wednesday it posted a 58 percent rise in second quarter net profit due to improvements in its underwriting and investment performance.

Malaysia accounted for about 35 percent of Great Eastern's total weighted new sales in the first half of this year.

It earned S$117.7 million ($97.7 million) in the quarter ended June, up from S$74.4 million a year ago.

Great Eastern has an insignificant exposure to U.S. Treasuries and to government bonds of the European countries that are at risk, said Yoon Mun Thim, the company's group chief investment officer.

The insurance company said long-term profitability of new sales, as measured by new business embedded value, grew 23 percent year-on-year in the second quarter.

Insurance accounted for 19 percent of OCBC's profit before tax in the first three months of 2011. - Reuters

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