LPI Capital 4Q16 earnings down 20 per cent to RM81.45 million
KUCHING: LPI Capital Bhd’s (LPI Capital) earnings for the fourth quarter of 2016 (4Q16) decreased by 20.3 per cent year- on-year (y- o-y) to RM81.45 million from RM102.21 million recorded in 4Q15.
However, the company in a filing to Bursa Malaysia added 4Q16 revenue grew by five per cent y- o-y to RM355.55 million from RM338.62 million generated in 4Q16.
For financial year 2016 ( FY16) ended December 2016, LPI Capital said turnover increased by 7.3 per cent y- o-y to RM1.38 billion from RM1.28 billion generated in FY15.
The company noted FY16 net profit gained by 36 per cent y- o-y to RM437.22 million from RM320.99 million.
Meanwhile, LPI Capital in a statement said the group ended 2016 on a high note, having put in an outstanding performance for the financial year ended December 31, 2016.
LPI Capital observed the group’s profit before tax recorded a strong growth of 32.0 per cent to RM518.9 million from RM393.1 million recorded in financial year ended December 31, 2015.
LPI Capital explained that the greatly improved results were contributed by the group’s higher gain from realisation of equity investment as well as the solid underwriting performance of its whollyowned insurance subsidiary, Lonpac Insurance Bhd ( Lonpac).
Commenting on the group’s performance for 2016 , LPI Capital’s founder and chairman, Tan Sri Teh Hong Piow, said, “Despite the lackluster economic performance in Malaysia and globally, in 2016, the group turned in a 7.3 per cent growth in revenue from RM1,284.6 million to RM1,378.9 million for the 12 months ended December 31, 2016.
“Net profit attributable to shareholders grew by an impressive 36.2 per cent to RM437.2 million from RM321.0 million, while earnings per share surged to 131.70 sen as at December 31, 2016 from 96.69 sen as at December 31, 2015.
“Net return on equity stood at a creditable 23.8 per cent, a 28.6 per cent improvement from 18.5 per cent reported in the previous corresponding period,” he said.
Teh continued, “However, in 4Q16, the group reported a lower profit before tax of RM106.9 million as compared with RM125.6 million in the corresponding period in 2015, mainly due to the extraordinary gains made from the realisation of equity investment in 4Q15.
“Net profit attributable to shareholders correspondingly declined to RM81.5 million from RM102.2 million, while earnings per share for the quarter under review came in at 24.53 sen as compared to 30.79 sen reported in 2015.
“Net return on equity reduced to 4.4 per cent from 5.9 per cent,” he noted.
Despite the slowdown in the Malaysian economy and the implementation of the Framework on Phased Liberalisation of Motor and Fire Tariffs, which came into effect on July 1, 2016, LPI Capital stressed that Lonpac saw improved underwriting results for 4Q16. LPI Capital registered a jump of 19.9 per cent in underwriting profit to RM91.1 million from RM76.0 million, on the back of a 5.7 per cent increase in earned premium to RM210.3 million from RM198.9 million in 4Q15.
LPI Capital explained the better underwriting performance was attributed to the 5.1 percentage points improvement in its combined ratio to 56.7 per cent, resulting from reductions in its claims incurred and management expense ratios from 35.2 per cent and 20.0 per cent respectively in 4Q15 to 32.7 per cent and 17.2 per cent respectively during 4Q16.
Reviewing the performance of Lonpac for the financial year ended December 31, 2016, Teh commented, “Lonpac performed well, as reflected in its impressive 17.4 per cent growth in profit before tax to RM336.7 million from RM286.7 million reported in the preceding financial year.
“Its earned premium also grew by 8.5 per cent to RM767.3 million from RM706.9 million, although its gross premium growth weakened to 2.2 per cent to reach RM1,278.3 million from RM1,250.8 million.
“Despite operating in a difficult environment, Lonpac continued to exercise strong underwriting discipline and prudent claims management thereby reducing its claim incurred ratio from 41.0 per cent to 38.3 per cent and boost its underwriting profit by 17.9 per cent to RM278.5 million from RM236.3 million in the financial year ended December 31, 2015.”
Teh announced, “In view of the outstanding performance of the group, the Board has declared a second interim dividend of 55 sen per share,” he revealed.
He noted the second interim dividend payment, which amounted to RM182.6 million was part of the group’s effort to reward its shareholders for their loyalty and strong support.
Together with the first interim dividend of 25 sen per share amounting to RM83.0 million, which was paid in August 2016, Teh said the total dividend payment for financial year 2016 of RM265.6 million was 14.3 per cent higher than the total dividend payout of RM232.4 million in financial year 2015.