Great Eastern Life has decided to give a full refund to purchasers of its GreatLink Choice policies. The refund is for the full invested sum, less any payments received by the policyholders. The total loss from the buy back is estimated to be $250 million.
Great Link Choice is a structured product that guaranteed against the failure of a certain number of collaterialised debt obligations (CDO). Due to the financial crisis, several CDOs have defaulted and the value of the structured product (GLC) had dropped considerably.
Great Eastern Life probably took this decision to buy back the product, following complaints by policyholders that they were badly or wrongly advised by the insurance advisers.
I congratulate Great Eastern Life and its parent company, OCBC Bank, for taking this bold decision. This will give relief to 18,000 the policyholders, who must have agonised over the loss of their savings during the past year.
On hearing the news yesterday, I wondered whether the loss would be borne by the policyholders in general (out of the surplus used to pay their bonuses) or by the shareholders. From the Straits Times report, it appears that the loss will be borne by the shareholders, including the parent company. This is a fair and correct approach, and I congratulate Great Eastern Life and OCBC for this decision as well.
I hope that Great Eastern Life will enhance its reputation by offering life insurance products (for savings and protection) that give good value to consumers, while making a reasonable profit for its shareholders. This require the products to be kept simple, described transparently and for the commission, marketing and other expenses to be kept at a modest level.
Being the oldest local life insurance company with 100 years of history, Great Easter Life can set a lead in this new direction to serve the people of Singapore.
I hope that this decision by Great Eastern Life will encourage the banks and stock-broking firms in Singapore, who have sold similar products to their customers, including the Lehman Minibonds, DBS High Notes, Morgan Stanley Pinnacle Notes and the Merill Lynch Jubilee Notes, to make a similar buy back offer to their customers who were badly or wrongly advised on these structured products.
Even if the financial institutions do not adopt the buy back arrangement similar to Great Eastern Life, a settlement similar to the one adopted in Hong Kong will be appreciated by the investors of these credit linked notes in Singapore.
I hope that the Monetary Authority of Singapore will encourage these financial institutions to consider such a settlement.
Tan Kin Lian
- ► 2013 (310)
- ► 2012 (1270)
- ► 2011 (1873)
- ► 2010 (2369)
07/26 - 08/02
- Re-build the trust in the integrity and reputation...
- Major US financial regulation initiatives
- TKL Sudoku - Challenging Puzzles
- SCMP:Mainland investors claim HK$500m loss on 'mis...
- The Asian Banker:SFC, HKMA and 16 banks reach agre...
- Travel Picks: Top 10 cities to visit with children...
- FISCA Website
- NYT: In search of competent (and honest) advisers
- Great Eastern Life shows the way
- Great Eastern Announces One-time Redemption Offer ...
- SCMP:Investors set for legal fight over lost milli...
- Features of life insurance policies
- Coops in focus in US healthcare debate
- Aging, inequity and poverty
- Expensive car park in Singapore
- Health care realities
- The Health Debate: At a Fever Pitch
- Permits required to appeal to the public for funds...
- Petition to PM on credit linked note (6)
- Pelosi lashes out against insurance companies
- Promote the use of car sharing
- No parking space in HDB estates
- Online Donation towards Gathering on 22 August
- Waiting for the stockmarket to bottom
- BBC; Car insurance premiums rising
- Are you sure democracy cannot help you financially...
- 50% compensation for Minibond
- Company Y not wanting to pay out my insurance clai...
- Gathering on 22 August at Hong Lim Park (2)
- Books and puzzles
- The Standard:Bank wiped out my $260m
- NJ sues Merrill Lynch over $300 mln stock purchase...
- Work near your home
- For the benefit and welfare of the people
- Honesty in Politics
- What is the future for this country?
- Free market - success and failure
- Reuters: Investors dump brokers to go it alone onl...
- NY Times: Of banks and bonuses
- Lehman victims international/ planning for Sep. 15...
- Why markets can't cure health care
- The Standard:61pc of minibond investors undecided ...
- TODAY:We should follow HK's example ; Protect indi...
- Honesty and fairness
- SCMP:Monetary Authority director clarifies minibon...
- Advice on individual shares
- Pensioner Health Benefits
- Interest rate on 25 July 2009
- Winners of Intelligence Quiz and Name The Shape co...
- ▼ 07/26 - 08/02 (49)
- ► 2008 (2105)
- ► 2007 (1803)
- ► 2006 (696)
- ► 2005 (159)