SGX Market Updates

Singapore’s Insurance Trio Averages 9% YTD Return


22 May 2018

  • Singapore lists three stocks that make up the Insurance Sector - Great Eastern Holdings, United Overseas Insurance and Singapore Reinsurance Corp. The three stocks have a combined market value of S$15.5 billion.

  • Together the three stocks have averaged a 8.6% total return in the 2018 YTD, bringing their average 12M return to 31.4%. By comparison the MSCI World Insurance Index has gained 1.8% in the YTD, bringing its 12M total return to 10.5% in SGD terms.

  • While intensified competition and economic uncertainty provide challenges, the insurance industry is expected to further diversify distribution channels while exploring and engaging digital innovation.

In addition to major banks generally including an insurance business, the GICS® Insurance Industry, within the Financials Sector is made up of companies with a focus in Insurance Broking, Life & Health Insurance, Multi-line Insurance, Property & Casualty Insurance and Reinsurance.

Singapore lists three stocks that make up the Insurance Sector - Great Eastern Holdings, United Overseas Insurance and Singapore Reinsurance Corp. The three stocks have a combined market value of S$15.5 billion.

The recent performances of these stocks are tabled below.

Name SGX
1 Year
3 Year
Great Eastern Hldgs G07 14,805 15.2 44.7 36.0 12.0 1.9
United Overseas Insurance U13 456 4.9 42.2 68.4 13.8 2.3
Singapore Reinsurance Corp S49 197 5.8 7.5 12.4 14.9 4.0
Average 8.6 31.4 38.9 13.6 2.7

Source: SGX StockFacts & Bloomberg (Data as of 21 May 2018)

Together the three stocks have averaged a 8.6% total return in the 2018 YTD, bringing their average 12 month return to 31.4%. Both Great Eastern Holdings and United Overseas Insurance generated similar total returns of 44.7% and 42.2% respectively. 

Recent Financial Reports

  • Great Eastern Holdings reported its 1QFY18 profit attributable to shareholders was up 68% YoY to S$152.9 million. This was mainly due to higher profit from the Singapore insurance business offset by losses from changes in fair value of investments arising from unfavourable market conditions. Its 1QFY18 total income declined 43% YoY with total expenses declining 46% YoY. For more details click here.
  • United Overseas Insurance reported a 35.5% YoY decline in its 1QFY18 attributable profit to S$4.5 million. Management noted that if the Profit and Loss Statement was prepared on the old basis, the overall profit before tax would be S$6.8 million, a YoY decrease of 17.0%. Total comprehensive income was reported to have decreased by S$12.5 million or 76.8% to $3.8 million, when compared to the corresponding period last year due mainly to lower underwriting and investment results. Click here for more details.
  • Singapore Reinsurance Corporation reported an 11.6% YoY gain in its 1QFY18 profit attributable to equity holders. Management noted that in 1QFY18 the Group’s gross written premium rose 22.1% to S$39.5 million due to timing differences in receipt and booking of statement accounts while net written premium slid 26.2% to S$9.8 million. Click here for more details.

MSCI World Insurance Index

By comparison the MSCI World Insurance Index has gained 1.8% in the year thus far, bringing its 12 month total return to 10.5% in SGD terms.  More than 40% of the Index weight is companies listed in the United States. The Index has 80 constituents and maintains a Price-to-Earnings (P/E) Ratio of 15.6x.

As of 30 April, the MSCI World Insurance Index was weighed 36.8% to Life & Health Insurance, 26.3% to Multi-line Insurance, 23.1% to Property & Casualty Insurance, whilst Insurance Broking and Reinsurance made up the balance. For more information on the Index click here.

Opportunities & Challenges

As PWC recently highlighted (click here), a strong regulatory environment and entry of a number of global companies and brokers has seen Singapore established as a key regional centre for insurance and reinsurance, and domestically the penetration of life and health products continues to increase.

PWC added that challenges faced by insurers include the need to strengthen customer relationships and develop tailored and targeted products in the face of increasing customer demands and competition.

Monetary Authority of Singapore Deputy Managing Director Mr Ong Chong Tee also noted in March (click here) that fundamentally, an insurance company’s long-term success must be built upon a strong risk culture and good corporate governance. Mr Ong added the insurance sector will not be immune to the innovations and disruptions around it, which will bring both opportunities and challenges.

This article is provided by SGX My Gateway.

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