4 Stocks This Week (Insurance) [18 Sep 2021] Prudential; Great Eastern; UOI; SingReinsurance

Just a week ago, a huge piece news was unveiled in Singapore's insurance space. Aviva sold its Singapore unit to homegrown digital insurer Singapore Life (Singlife) inside a deal valued at $3.2 billion, that makes it the largest of its kind in Singapore, and something of the largest in East Asia.

Singlife has said that continuing to move forward, it plans to continue expansion and seeks to list out on SGX. Singlife founder and CEO told Reuters that: “Our ambition is ultimately to list out in Singapore. As a publicly listed company of the future, that gives ownership of our firm right into a much more broad-based community.”

Singlife's listing will be a welcome addition to the insurance and financial services sector on SGX, which has remained resilient amidst the difficult economy brought about by COVID-19. While many sectors have shrunk, Singapore's financial services sector expanded 5.9% year-on-year in 1H2021 and employment rose.

For this instalment of 4 Stocks This Week, we will take a look at four listed companies that can offer investors with exposure to growth and opportunities within the insurance sector.

Prudential (SGX: K6S)

Prudential plc and its subsidiaries give a range of financial products and services, as well as asset management services to the people and businesses primarily in Asia, the United States, and the United Kingdom.

With a market cap of approximately $54.12 billion, Prudential is the largest capitalised company around the Singapore exchange, slightly inching out DBS's market cap of $51.33 billion. Listed on SGX on 25 May 2010, Prudential's primary listing in Hong Kong, along with other secondary listings in London and Ny.

On 8 September 2021, Grab revealed that it was in advanced talks with Prudential and AIA because it seeks investments to the tune of USD $300 to USD $500 million for its financial services unit, Grab Financial Group, that will allow Grab to expand beyond micro-insurance and micro-lending, into wealth management and beyond.

Prudential's closed a few days flat at USD $18.77.

Great Eastern (SGX: G07)

Great Eastern may be the insurance arm of Oversea-Chinese Banking Corporation (SGX: O39), which owns about 87.91% from the company.

Founded in 1908, Great Eastern operates in Singapore, Malaysia, Indonesia, Brunei, and has a presence in China along with a representative office in Myanmar. It currently has over $90 billion in assets and more than 8 million policyholders, including 5 million from government schemes.

In July, the organization announced that its net profit due to shareholders for 2Q2021 was $297.5 million, up 76% year-on-year. The organization attributed it to “higher Operating Profit and the higher valuation of investments as a result of improved financial market conditions throughout the quarter”.

In a media release, Group CEO Khor Hock Seng said that sales in core markets were impacted by safe distancing measures, especially bancassurance channels, since sales activities at bank branches were restricted. However, the “agency force in Singapore could adapt swiftly and transition to function digitally on the back from the major digital and technology infrastructure initiatives- [which] helped to cushion the outcome of restricted sales activities.”

Great Eastern closed now at $18.54.

Singapore Reinsurance (SGX: S49)

Singapore Reinsurance Corporation Limited, or Sing Re (as they are more widely known), operates like a general reinsurance company in Singapore, Malaysia, Greater China, the center East, and the Indian Sub-continent.

Sing Re primarily provides risk management solutions in property, liability, accident, and marine classes. Sing Re also offers management and insurance consultancy services, including training for the shipping and insurance industry.

The company had published insurance reviews, directories, and magazines, like the Asia Insurance Review and Middle East Insurance Review, through its subsidiary INS Communications Pte Ltd.

As explained in Sing Re's FY2021 annual report, “digital and social media presented “huge challenges as new entrants with no legacy issues can easily foray into the field” and that “competition in this arena has increased”. Thus, on 17 August 2021, the company announced the sale of their entire stake in INS Communications Ptd Ltd, along with a renewed focus on its core operations.

Sing Re's stock closed the week at $0.28.

United Overseas Insurance (SGX: U13)

United Overseas Insurance (UOI) is a subsidiary of United Overseas Bank (SGX: U11), which owns 58.39% from the company. It engages in underwriting general insurance and reinsurance in Singapore, the ASEAN region, and round the world.

In the personal segment, their offerings include travel, personal accident, home protection, foreign domestic worker, and car insurance policy products. In addition, through an acquisition, UOI includes a Takaful arm, allowing them to provide Islamic financial assurance to deal with misfortunes, accidents, or disasters.

For commercial general insurance, UOI provides fire, business interruption, machinery risks, burglary and theft, marine cargo, fidelity guarantee, public liability, work injury compensation, and group personal accident insurance products.

On 23 July 2021, the company announced their 1H2021 results. In all, overall profit before tax decreased by 57.0% year-on-year to $10.1 million.

Even though gross premiums decreased by $1.9 million or 3.2% to $56.Six million, mainly due to lower business activities brought on by the COVID-19 pandemic, this was partially offset by reduction in management expenses by 4.4% to $6.5 million due mainly to financial support under the Jobs Support Scheme.

UOI's stock closed at $6.58 now.