LPI records commendable 2017 despite challenging operating environment
KUCHING: Lonpac Insurance Bhd (Lonpac), the wholly-owned insurance subsidiary of LPI CapitalBhd(LPI), recordedasolid performance for the financial year 2017, demonstrating its preparedness for the liberalised environment.
Last year proved to be challenging the general insurance industry as Phase 2 of the Liberalisation Framework which provided for the full detariffication of motor business and flexibility in the launching of new fire products was implemented.
This in turn had generated intense competition among insurers in their quest to defend and build market shares.
Reviewing the results of the LPI Group for 2017, LPI founder and chairman Tan Sri Datuk Seri Dr Teh Hong Piow said, “The LPI Group has again delivered a commendable performance for the financial year 2017.
“LPI registered a 6.7 per cent growth in revenue to RM1,470.6 million from RM1,378.9 million in financial year 2016. Profit before tax was lower at RM403.7 million, from RM518.9 million in the 12 months ended December 31, 2016, mainly due to the oneoff gain from sale of equities recorded in 2016.
“After adjusting for the said RM150.4 million extraordinary gain, the profit before tax for 2017 would have shown a growth of 9.6 per cent.
“Unadjusted net profit attributable to shareholders came in at RM313.8 million, a 28.2 per cent reduction from RM437.2 million in the corresponding period in 2016, while the adjusted increase was 9.4 per cent. LPI’s net return on equity stood at 16.3 per cent for the period under review while earnings per share was 94.52 sen.”
For the 12 months ended December 31 2017, Lonpac reported a 10.5 per cent improvement in profit before tax to RM372.2 million from RM336.7 million in 2016.
Its gross premium income also grew by 11.2 per cent to RM1,421.3 million in financial year 2017 from RM1,278.3 million in 2016, compared to the 0.3 per cent reduction in the general insurance industry’s gross premium written for the first nine months of 2017.
“This was attributed mainly to the continued expansion of its agency force and the contribution from its global partners.
“Its net earned premium income for the period under review similarly expanded by 10.8 per cent to RM850.2 million from RM767.3 million in the previous corresponding period.
“Lonpac posted better underwriting results in 2017, with the underwriting profit having grown by 9.8 per cent to RM305.8 million from RM278.5 million in the 12 months of 2016.
“The strong underwriting performance was on the back of a low combined ratio of 64.0 per cent, which however had creeped up from 63.7 per cent.
As the largest property underwriter in Malaysia, Lonpac was adversely affected by the floods in Penang during November 2017, with gross claims reported at RM43.3 million.
“Notwithstanding this, its claims ratio for the year increased only marginally by 0.2 percentage point to 38.5 per cent,” Dr Teh said.
He continued, “For the fourth quarter of 2017 (4Q17), LPI Group reported a 2.2 per cent growth in revenue to RM363.5 million from RM355.6 million in the corresponding quarter in 2016.
“Profit before tax increased by 3.6 per cent to RM110.7 million from RM106.9 million, while net profit attributable to shareholders was higher by 1.8 per cent to reach RM83 million.”