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Saturday, August 01, 2009

Great Eastern One-time Redemption Offer to GreatLink Choice Policyholders Should Affect Shareholders Only

Great Eastern announced on Aug 31 that it is making a one-time redemption offer to its GreatLink Choice (GLC) policyholders. The offer will be open for acceptance from 3 August to 28 August 2009. During the offer period, GLC policyholders can, if they so choose, have their GLC units cancelled under this redemption offer and receive a sum equal to the original purchase price of $1.00 per unit, less the total annual payouts received to-date. With this, over 18,000 policyholders will be getting a full refund on the invested sum which amounts to approximately $250 million.

After reading GE financial report, the cost in the redemption is most likely to be borne by the shareholders of GE and its parent company, OCBC Bank. This is fair.

I hope the other financial institutions can take Great Eastern as their role model and come out a fair compensation to investors who have lost in structured products including the Lehman Minibonds, DBS High Notes, Morgan Stanley Pinnacle Notes and the Merill Lynch Jubilee Notes. This is a win-win situation for both Great Eastern and its policyholders. I hope Great Eastern reputation can be enhanced from this redemption.

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