UOI says growing premiums will be challenging in 2020, claims expected to rise

MAINBOARD-LISTED United Overseas Insurance (UOI), a subsidiary of United Overseas Bank, on Thursday said growing premiums for the year would be "challenging" amid the Covid-19 crisis and global recession. 

Claims experience is also expected to worsen due to the ongoing pandemic, it said, in response to shareholder queries. 

However, even with some travel claims having been lodged in the first quarter, UOI said that these are not expected to have a "significant" impact on the group's underwriting result for the financial year ending Dec 31, 2020 (FY2020).

"The company will continue to further drive cross-selling initiatives with the parent bank in Singapore and elsewhere in the region, as well as develop the intermediary business, especially in classes of insurance with better underwriting margins," it said. 

When asked if FY2020 dividend payouts would take a hit due to the virus fallout, UOI replied that its dividends for the year will take into account the long-term interests of its shareholders.

This comes as the group aims to "pay sustainable dividends to shareholders over the long term by balancing growth with prudent capital management". 

In response to shareholder concerns over its high level of capitalisation, UOI said its share capital and reserves are necessary to determine its level of risk retention, support its insurance operation, demonstrate financial strength, provide greater financial stability amid a volatile environment, and fund new value creation initiatives.

"This prudent capital management is necessary if we are to continue to maximise risk retention, remain competitive and achieve sustainable earnings," said the group. 

In 2019 Last year, UOI  disposed a substantial part of its unit trusts and exchange traded funds. The group said this was in line with its "strategic asset allocation and investment strategy", which "actively seeks out an optimal return while balancing risk".  Funds were redeployed into equities and bonds as a result of the re-balancing of the company’s investment portfolio, said the group.

UOI further noted that its mark-to-market losses in Q1 came from the sudden drop in the investment markets following the virus outbreak, which affected both fixed-income securities and equities. Markets have since made some recovery, but continue to remain volatile, it added.

The group will hold its virtual annual general meeting on June 12. 

Shares of UOI last traded at S$6.94 on June 9.