Minority Shareholders Raise Concerns Over Depressed Share Prices and Governance at Great Eastern

In early March 2024, Singapore-listed Great Eastern Holdings (GEH) rejected a request from a minority shareholder, who represented a group of investors, to introduce three ordinary resolutions at the company’s upcoming Annual General Meeting (AGM) scheduled for April 25. The proposed resolutions called for the withholding of part of the board of directors’ fees, changes to the executive share option schemes, and the appointment of an independent financial adviser.

The minority shareholder’s actions stem from growing concerns over the depressed share price of Great Eastern, a subsidiary of OCBC Bank. The Securities Investors Association (Singapore) (SIAS) has also highlighted governance issues surrounding GEH’s performance and lack of transparency in its operations, particularly in light of the company’s struggle to improve investor returns.

Great Eastern has long been a key player in Singapore’s insurance market, but its current trajectory has raised questions about whether the listed status of both Great Eastern and United Overseas Insurance (UOI), owned by UOB, continues to benefit their parent companies and shareholders. Some analysts suggest that privatization could allow both insurers to operate with greater flexibility and focus on long-term growth, without the pressure of quarterly market expectations and shareholder demands.

The concern over undervalued share prices is compounded by the belief that the insurance arms are increasingly being treated as secondary assets to the parent banks, which could explain the lack of aggressive expansion or innovation in their offerings. Furthermore, with major investments and capital allocations being made by the banks in other parts of their portfolios, these insurance arms have not been given the necessary attention to unlock their full potential.

Privatizing both Great Eastern and UOI would give OCBC and UOB the ability to restructure and reallocate resources to these subsidiaries more effectively, with a focus on modernizing their operations and increasing their competitiveness in the regional and global insurance markets.

While the call for privatization may not be immediate, the increasing dissatisfaction among minority shareholders and the depressed stock prices of both companies suggest that it is time for OCBC and UOB to reassess the benefits of keeping these subsidiaries publicly listed. The possibility of taking them private could offer a fresh start and allow for better alignment between the insurance arms’ long-term growth strategies and their parent banks’ overall objectives.