LPI Capital’s 1Q net profit rises 20.1% to RM50.58m

by **Cals** Thu 10 Apr 2014, 01:14

Business & Markets 2014

Written by Wei Lynn Tang of theedgemalaysia.com

Wednesday, 09 April 2014 09:50

KUALA LUMPUR: LPI Capital Bhd has reported a 20.1% increase in net profit to RM50.58 million for the first quarter ended March 31, 2014 (1QFY14), compared with RM42.11 million, while revenue rose 7.47% to RM277.79 million from RM258.47 million in the previous corresponding period.
Earnings per share increased to 22.96 sen against 19.11 sen a year ago. The company, however, did not propose any dividend in the quarter.
In a filing with Bursa Malaysia yesterday, LPI said the improved profit was contributed by better performance of its wholly-owned subsidiary, Lonpac Insurance Bhd. The general insurance segment, which contributed 94% to overall revenue in the quarter, recorded an increase of 8% in revenue year-on-year.
Both gross premium income and gross earned premium income rose 12.4% and 8% respectively to RM354.6 million and RM251.6 million.
Group founder and chairman Tan Sri Teh Hong Piow said Lonpac Insurance incurred a lower claims ratio of 53.6% in the quarter against 50.8% previously.
The combined ratio — a profitability measure used by insurance companies — registered an impressive improvement to 75.8% from 81.1% previously.
The growth in gross earned premium and lower claims have translated into better underwriting results, which showed a 29% gain in underwriting profit in the quarter to RM32.9 million.
“We will continue to practise prudency in risk selection and claims management in order to further enhance our underwriting performance,” said Teh.
LPI Capital noted in its 1Q results that agency and financial institutions remained its key distribution channels and it would continue to strengthen its agency force and leverage on its partnership with Public Bank Bhd via bancassurance to expand its insurance business.
Meanwhile, the group’s investment holding segment rose marginally to RM17.3 million compared with RM17.2 million in the previous corresponding period due to higher interest income received. However, this segment recorded a lower profit before tax of RM15.5 million, compared with RM15.7 million previously due to higher management expenses.
On prospects, Teh said the government’s Economic Transformation Programme had contributed to growth of the local insurance industry.
“We will continue to monitor the potential volatilities arising from the global and domestic economies. The group is confident that with the strong foundation we have built, we will overcome the market volatilities and continue to report favourable results for the next quarter of the year,” Teh said.

This article first appeared in The Edge Financial Daily, on April 9, 2014.